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Bitcoin's Use in Commerce Keeps Falling

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Re: Bitcoin's Use in Commerce Keeps Falling

#181

Post by CryptoPunk »

This is a totally expected consequence of Bitcoin Core abandoning the original plan of raising the block size limit in favor of 'the Lightning Network', which is a technology that does not even work at the conceptual level, let alone being production ready.

A blockchain limited to 3 transactions per second cannot be a global currency. Before Bitcoin came up against its 1 MB per 10 minute (1.67 KB/s) limit, which is its life from launch to 2017, its daily transaction volume was growing exponentially, yoy.

Re: Bitcoin's Use in Commerce Keeps Falling

#182

Post by antidesitter »

bobthepanda wrote: post #85
socrates1998 wrote: post #70

It sounds weird, but I think a big part of Bitcoin's, and other crypto's value, isn't in the day to day ability to use it to buy and sell things, it's the inability of the government to devalue it. This isn't as big a problem in many richer countries with relatively stable currencies, but I sure as hell would prefer Bitcoin to anything the Venezuelan government or the Argentinian government would issue. The kinks are…

I mean, what advantage does it have over gold? Advantages of gold vs. Bitcoin: - gold is pretty easy to find, not that hard to buy for the average consumer; BTC is anything but - gold is physical in form and securing it is not hard; BTC is not physical, exchanges get hacked with losses to accounts, in the event of a natural disaster or some event where power generation and internet is lost you lose access to BTC. (So…

How are gold bars easier to secure and transport than private keys?

Re: Bitcoin's Use in Commerce Keeps Falling

#183

Post by jstanley »

klodolph wrote: post #66
jstanley wrote: post #34

Earlier quoted context omitted.

> The miners will not sell for less than their electricity costs, which makes the smaller piece of the block reward they receive have a higher price. That's not how it works. If you spent $100 in electricity and you have an asset that's worth $50, you can either sell it for $50 and only be down $50 on your electricity, or you can not sell it at all and be down $100 on your electricity. Electricity cost of mining does…

> That's not how it works. Obivously, the meaning of the original sentence is that miners will turn off the mining equipment when they decide that it's more profitable to leave it off than leave it on. > …you can either sell it for $50 and only be down $50 on your electricity, or you can not sell it at all and be down $100 on your electricity. This is a false dilemma, the question is not just whether you sell the coi…

Are you claiming that the cost of electricity sets a lower bound on what the price of 1 BTC can possibly go to? If not, you haven't really disagreed with what I said.

Re: Bitcoin's Use in Commerce Keeps Falling

#184

Post by CryptoPunk »

gammateam wrote: post #122
Nursie wrote: post #115

Earlier quoted context omitted.

> better UX and lightning network will help with that. Lightning appears to be a bit of a joke - routing payments is almost impossible, lots of attempts seem to fail, and there also appear to be requirements like keeping a node up constantly.

yeah I read and repeated all of that stuff without investigating too, at one point. they aren't fundamental flaws to the concept. just like with tcp/ip packets, routing will improve with robustness of the network. I saw a couple of work in progress efforts to address the full node requirements. they'll be growing pains but bitcoin is interesting because the protocol doesn't go away, even as the payment processing com…

It's different than TCP/IP in that every transaction changes the topography of a payment channel network, by changing the maximum amount that can be sent across various channels. This is a fundamental difference.

Moreover, even if LN worked as a full substitute for on-chain transactions (all indications point to only a very centralized hub and spoke LN model working efficiently), Bitcoin's three transactions per second limit makes the maximum proportion of the global population that could participate in a LN very limited.

Afterall, LN payment channels do still need on-chain transactions to set up, and do need to be replaced from the time to time. Given every user would need, at the very least, a few payment channels, the math for global adoption of the LN with a 3 tps limit doesn't work.

Re: Bitcoin's Use in Commerce Keeps Falling

#185

Post by mortdeus »

ttoinou wrote: post #28
chrismorgan wrote: post #26

Earlier quoted context omitted.

One of your points is of dubious validity: fees may not be higher. Fees went very high when the network became congested; but when it’s not congested, they’re much lower than credit card systems are for normal businesses. https://bitcoinfees.earn.com/ suggests that right now, what equates to about nine US cents is sufficient for a basic transaction. And if you’re happy to wait an hour, then two cents ought to do you…

Yes. But don't forget credit cards offer others services, such as charge refund and fraud protection

Are you talking about credit cards or debit cards? There is a big difference when making a comparison to bitcoin.

The reason why bitcoin doesn't have these features is that there isn't a bank sitting between the two parties doing business. To exchange a bitcoin with somebody, you are essentially trading "in cash". When you do business with somebody directly in cash, the same kind of shortcomings are involved, especially when it's not a transaction with a vendor that has a policy that allows you to return and refund the products you bought using cash when you can provide the receipt.

In fact once you lose the receipt, in most places, if they allows you to return the items you bought, they won't give you back your cash. Rather they will give you the ability to exchange what you returned for something of equal value within the store. They still get to keep the cash you gave them in that scenario.

When it comes to being able to dispute charges on a debit/credit transaction, like I said before, that is only because there is a middle man bank that is holding the funds in escrow. While I am not up to date on the way things are currently regulated with regards to bitcoin, there is nothing technologically getting in the way of somebody being able to build a banking/brokerage type system around bitcoin exchange if they wanted such guarantees.

Re: Bitcoin's Use in Commerce Keeps Falling

#186

Post by cc439 »

lisper wrote: post #124
bobthepanda wrote: post #112

Earlier quoted context omitted.

You can literally go to a gold dealer shop; it's like forex for gold. Even in my moderately sized American city there are twenty that show up in Google Maps within a twenty minute drive. And you buy gold and it's physically in your possession; verifying it is easy, and the best part is you can verify it at some other gold dealer if you're super paranoid. With BTC, you have to find a trusted exchange and a trusted wal…

> verifying it is easy Actually, it's not. It's nearly impossible to non-destructively distinguish gold from tungsten wrapped in gold.

That's why it makes senss to only buy gold cast in a thin shape (like a coin). It's much harder to cast in any meaningfully large tungsten core and it significantly raises the likelihood of that fake core being discovered as one can verify the authenticity of the gold piece by scraping away a millimeter or two of gold using basic hand tools.

Considering how expensive gold is per ounce, it's not like any of us will be buying it by the bar.

Re: Bitcoin's Use in Commerce Keeps Falling

#187

Post by lossolo »

fwip wrote: post #94
lossolo wrote: post #77

Earlier quoted context omitted.

> Obivously, the meaning of the original sentence is that miners will turn off the mining equipment when they decide that it's more profitable to leave it off than leave it on. Well, it all depends on price of electricity in your region. If you mine for almost free using solar/other renewable energy/your energy is subsidized by government then you will still make profit while miners in high cost electricity regions w…

Even with subsidies, there's an effective price floor. Even with renewable energy there's an opportunity cost - you can sell it back to the grid. Plus the fixed costs of buying the solar panels and mining equipment in the first place.

> Even with renewable energy there's an opportunity cost - you can sell it back to the grid. Plus the fixed costs of buying the solar panels and mining equipment in the first place.

In many cases this doesn't matter, as it 's being paid by someone else. Millions of teenagers mining crypto on their GPUs, their parents pay for electricity, what about enthusiasts? They will mine even if price is higher than the value of the bitcoin, there are bitcoin mines that steal electricity from the grid etc.

And as I wrote before, this is self regulating mechanism, difficulty is adjusted every 2016 blocks. Less miners? then less power needed to mine the block, which means less resources/money needed to mine the block. Price of electricity dosen't matter.

Re: Bitcoin's Use in Commerce Keeps Falling

#188

Post by ledriveby »

gammateam wrote: post #122
Nursie wrote: post #115

Earlier quoted context omitted.

> better UX and lightning network will help with that. Lightning appears to be a bit of a joke - routing payments is almost impossible, lots of attempts seem to fail, and there also appear to be requirements like keeping a node up constantly.

yeah I read and repeated all of that stuff without investigating too, at one point. they aren't fundamental flaws to the concept. just like with tcp/ip packets, routing will improve with robustness of the network. I saw a couple of work in progress efforts to address the full node requirements. they'll be growing pains but bitcoin is interesting because the protocol doesn't go away, even as the payment processing com…

A lot of software projects fail. Why the blind faith that LN will inevitably get better?

ICOs are like this too. Billions of dollars are rallied for technologies that don't exist, for founders who don't exist (their headshots are usually pilfered from stock photos), for problems that don't exist. And yet, funding!

This insanity would never happen if cryptocurrency wasn't involved. The multilevel marketing energy of crypto turns off critical thinking.

Re: Bitcoin's Use in Commerce Keeps Falling

#189

Post by lalaland1125 »

klodolph wrote: post #66
jstanley wrote: post #34

Earlier quoted context omitted.

> The miners will not sell for less than their electricity costs, which makes the smaller piece of the block reward they receive have a higher price. That's not how it works. If you spent $100 in electricity and you have an asset that's worth $50, you can either sell it for $50 and only be down $50 on your electricity, or you can not sell it at all and be down $100 on your electricity. Electricity cost of mining does…

> That's not how it works. Obivously, the meaning of the original sentence is that miners will turn off the mining equipment when they decide that it's more profitable to leave it off than leave it on. > …you can either sell it for $50 and only be down $50 on your electricity, or you can not sell it at all and be down $100 on your electricity. This is a false dilemma, the question is not just whether you sell the coi…

> Obivously, the meaning of the original sentence is that miners will turn off the mining equipment when they decide that it's more profitable to leave it off than leave it on.

This doesn't cause a price floor either as fewer miners does not correspond to a drop in supply. The cost for miners has no causal effect on the price of Bitcoin because the new supply of Bitcoin is constant.

Note that this is somewhat counterintuitive compared to "physical" mining (of gold, copper, oil, etc), where fewer miners correspond to less supply (which usually causes an increase in price).

TLDR: there is no price floor for Bitcoin based on the mining price

Re: Bitcoin's Use in Commerce Keeps Falling

#190

Post by slavik81 »

anbende wrote: post #72
Scaevolus wrote: post #48

Earlier quoted context omitted.

More than just power, you have depreciating assets (mining chips, servers, buildings) that are effectively losing money constantly. Operating them at a small loss is better than leaving them idle for a huge loss. You see similar economics when farmers sell crops at a net loss.

This is only relevant if your clearing bit coins above the cost of the electricity. If not, you’re losing more turning them on than off.

In economic terms, suppliers will continue producing so long as the sale price is greater the marginal cost of production. The average cost is irrelevant in the short run because it includes sunk costs.
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