231–240 of 295 posts
Just another thing people went wild for without thinking about externalities. You don't need to be a genius computer scientist to realize a thing that requires a constantly rising amount of processing power just to keep pace will eventually need an unreasonable amount of power.
If I look at the US currency as a technology that enables trade and cooperation, I notice:
- falsifiable; see the North Korean super dollar;
- pieces of metal alloy; coins are a souvenir from the past we shouldn't be bringing them into the future.
- porous fibre carry bacteria; See here: http://www.newsmax.com/health/Health-News/paper-money-germs-...
This makes me doubt if I can trust it and unlikely that I'll carry it on me.
On the other hand Bitcoin and other cryptos are currencies from the future that we all can buy and use today.
These are currencies designed to assure trust between unknown parties, so they are most definitely a means of exchange with no significant counter-party risk.
As a store of value, they suffer from the same speculative price fluctuations all too common in the FX markets, as we can see with the GBP over the last year or so. In crypto, this natural movements are amplified because there are no jurisdictions and very low barriers of entry, so when the coin supply doesn't increase to meet the demand prices go up, as they should. And lets not forget that several countries have already moved to recognise crypto-currencies as legal tender, so demand is increasing by reaching wider portions of consumer market.
As for crashes, to the best of my recollection, all major ones were caused by panic selling following news of major hacks (https://storeofvalue.github.io/posts/cryptocurrency-hacks-so...) or rumours of impending legislative crackdown in China and now in the US.
The intrinsic value of crypto-currencies is in the platforms that support them, so not only the market cap but also what the project stands for and what it can deliver in terms of market proposition, for instance:
- Ether is used to pay for resource utilisation on the Ethereum platform which I use to develop smart contracts, but the Foundation is re-inventing the internet so that's how I value the currency.
- Monero, ZCash are in the forefront of cryptographic research and are some of the most accessible and privacy protecting financial instruments available so that's how I value them.
- Bitcoin is all about economic resilience and self-sovereignty, unfortunately the in-fighting is bound to decrease its usefulness.
(edit: formatting)
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According to this it costs almost 21 cents to "make" a dollar of bitcoins. According to the mint's 2015 annual report[1] they made 1,114 million dollars in circulating coins at a cost of .51 cents per dollar in coins. However bills cost 4.9 cents/dollar for $1 bills and half a cent per dollar for $20 bills. So the vast majority of money is much, much cheaper than a bitcoin. [1]: https://www.usmint.gov/wordpress/wp-co…
That's to make it. What about trucking it around, accounting for it, securing it, etc.?
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The fairer comparison would be Bitcoin vs Visa the corporation, which includes buildings, people, air-con, employee traveling for work, to begin with. Still, let's hope Bitcoin moves away from wasting energy soon.
Also the courts that enforce the contracts visa makes, the FBI that chases people who commit fraud, the police and jails who enforce the decisions of the court, etc etc. Blockchains can operate without all of those.
Bitcoin doesn't even try to replace contracts. Hard-line Ethereum Classic fans think they can replace contracts (they won't).
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But "socially useful" does not imply saleable (to the bane of venture capitalists everywhere). It's possible for something to provide a social benefit but not make sense for anyone to pay for as a for-profit business because others would get the same benefit and free ride off them. (Hence the problem of public goods in economics.) So if the proof of work is only solving some general research problem, then it might no…
There are very few things that are actually useful (socially or otherwise) but don't provide economic incentive. As pointed out by others primecoin isn't really a very good example. A good application to shoot for, if there are any budding cryptographers in the audience, is a ticking timelock encryption. A set of keys known in advance, and each block solves the next key. This would let you encrypt messages into the f…
Edit: See my here for a model of how NP complete problems could fill the role of you could predict difficulty in advance. There wouldn't be double dipping because the person wanting the answer wouldn't pay both bounties.
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But "socially useful" does not imply saleable (to the bane of venture capitalists everywhere). It's possible for something to provide a social benefit but not make sense for anyone to pay for as a for-profit business because others would get the same benefit and free ride off them. (Hence the problem of public goods in economics.) So if the proof of work is only solving some general research problem, then it might no…
Primecoin also ultimately had limited utility. It found the world's largest prime number thousands of times, continually beating it's own record. At some point we had more prime numbers than had mathematical utility. My unprovable guess is that any other non-sellable problem will ultimately have the same outcome. It's interesting and useful for a bit, but when you have a billion dollars of hardware grinding nonstop f…
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The fairer comparison would be Bitcoin vs Visa the corporation, which includes buildings, people, air-con, employee traveling for work, to begin with. Still, let's hope Bitcoin moves away from wasting energy soon.
Bitcoin can't move away from wasting energy - the entire design is based on that aspect.
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> The mining algorithm cares not one bit about number of transactions Actually it does to some extent because the transaction hashes are used to calculate the block header hash.
Yes, but the hashing of the merkle tree to obtain the merkle root takes like 10^4 hashes for 10^3 transactions. Compared with 2^80 that is about the number of hash operations needed to find a POW block header, it it trascurable.
Did i get this wrong?
Why don't we compare Bitcoin's energy footprint with that of all the banks, remittance shops and associated infrastructure instead? The PoW is quite expensive, but remember that mining is a subsidised activity amounting to billions of dollars worth of rewards for the miners, many of whom make extensive use of hydro-electric and solar power. There's the question of wether we need all this hashing power to protect the…
Both ASIC mining and the arms race were anticipated as early as 2008: "[As] the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware." https://www.mail-archive.com/cryptography@metzdowd.com/msg09... "We should have a gentleman’s agreement to postpone the GPU arms race as long as we can for the good of the network. It’s much easer to get new user…
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Cash and coins are not a store of value and are also a fiat currency associated with a central authority. Gold is a better analogy.
You can't buy a pizza with gold. You can with cash. BTC is trying to do both, and is failing as a store of value right now due to volatility though that may change.
War economy also functions on gold.