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A Bitcoin Battle Is Brewing

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Re: A Bitcoin Battle Is Brewing

#31

Post by danbruc »

natrius wrote: post #28
danbruc wrote: post #27

Earlier quoted context omitted.

Bitcoin transactions are way more expensive than you think, currently between 10 and 20 dollars.

Let's say I'm buying an Overstock rug with bitcoins. I do an instant buy with Circle and and send the bitcoins over. Am I paying $10-$20? Is Overstock? Block rewards have no effect on whether people will use Bitcoin, especially since there are other digital currencies that don't have that issue. Inasmuch as it's a problem, it's fixable.

Who do you think pays for the electricity bills needed to keep a 250 PH/s network online?

Re: A Bitcoin Battle Is Brewing

#32

Post by waterlesscloud »

danbruc wrote: post #30
waterlesscloud wrote: post #29

Earlier quoted context omitted.

Huh? The current fee is about 4 cents.

Not the fee, the costs, block reward divided by transactions in the block. Miners will use that to cover their electricity bills and you are paying for this indirectly when you buy Bitcoins.

That's irrelevant to the people conducting the transaction.

If I send $100 worth of bitcoin to someone, they receive $100 worth of bitcoin and I pay 4 cents worth of bitcoin to send it to them. There is no $10-20 transaction cost on either end of the exchange.

The value you're referring to is created by the block reward. It's additional value that did not previously exist, not value taken from someone else.

Re: A Bitcoin Battle Is Brewing

#33

Post by natrius »

danbruc wrote: post #31
natrius wrote: post #28

Earlier quoted context omitted.

Let's say I'm buying an Overstock rug with bitcoins. I do an instant buy with Circle and and send the bitcoins over. Am I paying $10-$20? Is Overstock? Block rewards have no effect on whether people will use Bitcoin, especially since there are other digital currencies that don't have that issue. Inasmuch as it's a problem, it's fixable.

Who do you think pays for the electricity bills needed to keep a 250 PH/s network online?

Bitcoin speculators. The folks who hook up their bank accounts to the Bitcoin network don't hold bitcoins or pay the block rewards.

Re: A Bitcoin Battle Is Brewing

#34

Post by danbruc »

natrius wrote: post #33
danbruc wrote: post #31

Earlier quoted context omitted.

Who do you think pays for the electricity bills needed to keep a 250 PH/s network online?

Bitcoin speculators. The folks who hook up their bank accounts to the Bitcoin network don't hold bitcoins or pay the block rewards.

250 PH/s, 1 W/GH/s, 0.1 $/kWh and you get 219 million dollars per year to run the Bitcoin network. At 75.000 transactions per day this yields 8 dollars per transaction. And these are real costs somebody has to pay for. Maybe most of that is currently covered by the influx of new money but this is not going to last forever. And once the block reward is gone this has to be covered by the fees. Neither lowering the hash rate nor reducing the the mining costs is an option because it undermines the security of the system. The only option is to process more transactions per block and this is not without problems on its own.

Re: A Bitcoin Battle Is Brewing

#35

Post by adrianwaj »

"I suspect most people who have heard of Bitcoin don’t even know alternatives exist." True.

In a world with fiat, bitcoin is king due to liquidity. In a world without fiat, it's much easier to consider alternatives. Personally I'd like to see a wallet that holds many currencies, and can do all the conversion automatically.

"priced in ___coin? okay"

"You want to pay with ____coin? sure!"

"You only accept ___coin? no probs!"

And apps like http://shapeshift.io can help with background conversions.

Thus, the long-tail of crypto becomes more relevant.

For me, it's not a battle of bitcoin, rather it's a battle of "either/or" (now) vs "both/and" (future.)

I also think the future is coming faster than we think. People will want bitcoin alternatives, especially people that want to make money and think there are better coins that can do that (and will give them a try.)

add:

to give an example of this war, I placed a link to http://snapcard.io in reddit-bitcoin for a shop owner in France wanting to accept digital currencies. Result: -1 downvotes, 4 hours ago. Why? I presume because they are a multi-crypto POS startup.

Bitcoin is full of the same people that were trashing it when it first came out. Now they are trashing any alternatives. I don't want to be part of that. They're neither cool, nor smart.

Re: A Bitcoin Battle Is Brewing

#36

Post by danbruc »

waterlesscloud wrote: post #32
danbruc wrote: post #30

Earlier quoted context omitted.

Not the fee, the costs, block reward divided by transactions in the block. Miners will use that to cover their electricity bills and you are paying for this indirectly when you buy Bitcoins.

That's irrelevant to the people conducting the transaction. If I send $100 worth of bitcoin to someone, they receive $100 worth of bitcoin and I pay 4 cents worth of bitcoin to send it to them. There is no $10-20 transaction cost on either end of the exchange. The value you're referring to is created by the block reward. It's additional value that did not previously exist, not value taken from someone else.

Bitcoin mining does not create money out of thin air. Running the Bitcoin network costs a lot of electricity and somebody has to pay for that. Right now it may still be mostly covered by the block rewards together with the influx of new money but the day will come where block rewards will no longer pay the bills and then you will have to pay for it with fees.

Re: A Bitcoin Battle Is Brewing

#37

Post by waterlesscloud »

danbruc wrote: post #36
waterlesscloud wrote: post #32

Earlier quoted context omitted.

That's irrelevant to the people conducting the transaction. If I send $100 worth of bitcoin to someone, they receive $100 worth of bitcoin and I pay 4 cents worth of bitcoin to send it to them. There is no $10-20 transaction cost on either end of the exchange. The value you're referring to is created by the block reward. It's additional value that did not previously exist, not value taken from someone else.

Bitcoin mining does not create money out of thin air. Running the Bitcoin network costs a lot of electricity and somebody has to pay for that. Right now it may still be mostly covered by the block rewards together with the influx of new money but the day will come where block rewards will no longer pay the bills and then you will have to pay for it with fees.

"Right now" is when you're quoting a $10-20 transaction cost.

There is no such cost for a given transaction, and it's simply incorrect to state that there is.

You're talking about something completely different and stating that it's the same. It is not.

Re: A Bitcoin Battle Is Brewing

#38

Post by lostsock »

danbruc wrote: post #26
cheald wrote: post #24

Earlier quoted context omitted.

I'm no bitcoin apologist, but off the top of my head: 1. Due to Bitcoin's cash-esque nature, you don't hand over your account keys when you make a transaction. Every time I hand my credit card to a 16-year-old waiter I'm trusting that he's not going to take a quick picture of it with his cell phone to go shopping with online later. Since a Bitcoin transaction encodes a specific transfer of a specific amount from one…

Not sure about the situation elsewhere but here in Germany credit card usages usually requires a PIN or a signature. And the credit card company will pay for abuse if you are not responsible. With transaction costs currently between 10 and 20 dollars per transaction and with a record of close to 100 dollars it does not really look like a good way to implement micro transactions.

Where are you getting the transaction costs of between 10 and 20 dollars? For bitcoin? If so I think you need to take another look at your numbers.[1]

[1] http://i.imgur.com/DgQk0og.png

Re: A Bitcoin Battle Is Brewing

#39

Post by idiotclock »

ghshephard wrote: post #20
danbruc wrote: post #17

Earlier quoted context omitted.

All the things you mention have value. But what is the value of using Bitcoins for the average person? Where are Bitcoins so obviously better than a credit card that switching is a good decision?

Bitcoin is awesome for anybody who needs to send money to family back home. And there are a lot of people who do that - and it's very expensive.

I think this is a great observation. Middle men make big money off of migrant workers.

Re: A Bitcoin Battle Is Brewing

#40

Post by danbruc »

waterlesscloud wrote: post #37
danbruc wrote: post #36

Earlier quoted context omitted.

Bitcoin mining does not create money out of thin air. Running the Bitcoin network costs a lot of electricity and somebody has to pay for that. Right now it may still be mostly covered by the block rewards together with the influx of new money but the day will come where block rewards will no longer pay the bills and then you will have to pay for it with fees.

"Right now" is when you're quoting a $10-20 transaction cost. There is no such cost for a given transaction, and it's simply incorrect to state that there is. You're talking about something completely different and stating that it's the same. It is not.

I added the math to another comment and the electricity cost per transaction should be on the order of 8 dollars per transaction. Part of it is payed by the spread between buying and selling Bitcoins, part of it is payed by the influx of new money keeping the spread narrow. The point is that Bitcoin transactions are not cheap, you are just kind of lucky that other people will pay some of the costs for you right now. But this is obviously not sustainable. If the influx of money stops, miners selling their block rewards to pay for electricity will just drive the price down and you pay all the costs with the spread.
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