OT: Ray, how's your Bitcoin investment going?

[notsew]

But an investment in Bitcoin isn't and investment in blockchain. Bitcoin doesn't control that technology. Its just speculation, your not investing in anything except the a bitcoin being worth more money. At least the purchase of dotcom stocks represented a bet on a company (and some of these worked out the second time around). Bitcoin is more like a tulip as far as I can tell.

Originally Posted by nate2351

Just because the graph looks the same doesn't mean the outcome will be the same.

If we're going to compare bubbles the I'd argue Bitcoin is more like the dot com bubble. Like the dot com bubble it is built around an idea that has a lot of potential. Back then it was the internet and now it's the public blockchain. you could almost argue that, like the dot com, people are betting on the idea more than the product. Bitcoin has it's shortfalls and I could name five other cryptos that work better, but I think we are going to see blockchain technology being used in many applications in the future.

Remember when this was the public opinion of the internet? http://www.newsweek.com/clifford-sto...nirvana-185306

And boy, that is an entertaining article. So right, and so wrong.

[jimcav]

Originally Posted by MattTuck

As I said in my earlier post, I mostly agree that the running room left for bitcoin is somewhat limited.
.

If I understand this long thread I just went through, the number of bitcoins is limited, but they are still being "mined"? Each mining operation is time consuming, and uses considerable (more) computer power with each new coin mined...so as long as there are coins to be found, that should continue to feed the frenzy, and once they are all mined, then it is anyone's guess where equilibrium will be. IF I wanted to buy some fraction of a bit coin for my 11 yr old, is there any calculation to estimate when the last bitcoin will be mined? I'm not sure I understand those shorting it already when there seems to be continued numbers jumping into the game, which should go on until the coins are mined? Or, can you take a short position with a long lead time?

[nate2351]

At current computing power the last bitcoin is expected to be mined ~2140.

[verticaldoug]

Originally Posted by nate2351

At current computing power the last bitcoin is expected to be mined ~2140.

I think computing power has nothing to do with the rate of bit mining. Computing power available just changes the complexity of the hash. More computing power available means the hash becomes more complex so the rate of awards stays constant over time. The award has a step function so periodically it halves. The next time it halves will be in June 2020. On this day, unless the price of bitcoin doubles overnight, the entire network will be unprofitable assuming the network is relatively efficient

Since the difficulty of the hash just requires more computing power, this just corresponds to the price of bitcoin. Higher bitcoin, the more profitable it is to mine, So more computing power joins.

[MattTuck]

Originally Posted by jimcav

If I understand this long thread I just went through, the number of bitcoins is limited, but they are still being "mined"? Each mining operation is time consuming, and uses considerable (more) computer power with each new coin mined...so as long as there are coins to be found, that should continue to feed the frenzy, and once they are all mined, then it is anyone's guess where equilibrium will be. IF I wanted to buy some fraction of a bit coin for my 11 yr old, is there any calculation to estimate when the last bitcoin will be mined? I'm not sure I understand those shorting it already when there seems to be continued numbers jumping into the game, which should go on until the coins are mined? Or, can you take a short position with a long lead time?

So, a couple things.

Bitcoins come into being each time a new block is calculated. The software is designed to make each block take about 10 minutes. At first, the person that calculated a block got a lot of bitcoins as a reward. As time goes by, the amount that you get as a reward for solving a block goes down.

That being said, that is only how new bitcoins come into the system. You can go out and buy an existing bitcoin from someone who currently has one. A lot of people think that mining is something that you can do easily. The reality is, in the beginning folks could buy some decent hardware and run a mining operation (read: run some software on the hardware) but today, that is pretty much dead. If you want to own a bitcoin, you need to go to an exchange (or a person who owns bitcoins) and buy an existing one.

Don't get so hung up on the rate that they're coming into existence. There are about 17million out there now, out of 21 million that will ever exist. So, the rate of inflation is predictable and should be known (and reflected in the price) by market participants.

[jimcav]

as vertical said when the step halving occurs, it doesn't seem the frenzy will continue to double value necessarily, so I don't get how the interest will remain/sustain, but then the whole valuation is a speculation, I just have to think there is some basis for the speculation, such as the limited supply driving the mining, but that is too simplistic. Hard to gamble with college money since I don't understand it well

Originally Posted by MattTuck

So, a couple things.

Bitcoins come into being each time a new block is calculated. The software is designed to make each block take about 10 minutes. At first, the person that calculated a block got a lot of bitcoins as a reward. As time goes by, the amount that you get as a reward for solving a block goes down.

That being said, that is only how new bitcoins come into the system. You can go out and buy an existing bitcoin from someone who currently has one. A lot of people think that mining is something that you can do easily. The reality is, in the beginning folks could buy some decent hardware and run a mining operation (read: run some software on the hardware) but today, that is pretty much dead. If you want to own a bitcoin, you need to go to an exchange (or a person who owns bitcoins) and buy an existing one.

Don't get so hung up on the rate that they're coming into existence. There are about 17million out there now, out of 21 million that will ever exist. So, the rate of inflation is predictable and should be known (and reflected in the price) by market participants.

[verticaldoug]

Originally Posted by jimcav

as vertical said when the step halving occurs, it doesn't seem the frenzy will continue to double value necessarily, so I don't get how the interest will remain/sustain, but then the whole valuation is a speculation, I just have to think there is some basis for the speculation, such as the limited supply driving the mining, but that is too simplistic. Hard to gamble with college money since I don't understand it well

http://www.bitcoinblockhalf.com/

This has a lot of the current data for the bitcoin.

If bitcoin becomes viable, I expect the vested interests to amend the rules and increase the issuance of bitcoins. There is no reason for this not to occur.

There are a lot of assumptions on bitcoin, and I suspect many will be proved wrong over time. Even though it is a distributed system, it is a capitalist system. I expect control of the network to become more concentrated over time. The anonymous forces in control of the network are not altruistic, they will work to maximize their own utility.

[MattTuck]

jim,
I'm not sure why you think that the halving of the reward has something to do with the current pricing frenzy. Whatever weird bubble/mania/price appreciation/global acceptance phase/crossing the chasm/etc. phase that we're in has very little to do with the actual number of new bitcoins created each day.

The mining makes money in two ways, first, if you solve a block, you get new bitcoins. second, you collect the transaction fees of all the transactions in that block. So even if there are no more bitcoins to be made, 'miners' can still make money with the transaction fees. nate could probably tell you more about the economics of running a mining operation.


doug,
It is an interesting thesis, that as hashing power continues to agglomerate, that those powers will try to change the system to benefit them more. It isn't hard to see their incentive, but it certainly runs counter to the original idea behind bitcoin. The bitcoin blockchain has already been forked a number of times and this could be another fork. People will vote with their feet and if they think the new system (with bigger rewards for longer) is better, they'll stay with it.

I've read about the shift from proof of work to proof of stake model that some other models have proposed. I tend to think that a truly decentralized system has to have some checks on the concentration of processing power. Not sure, within the existing bitcoin framework, how to accomplish that. With proof of stake, I think it is easier, because you basically put a cap of some percentage of ownership and force decentralization, or adjust the difficulty of the hashing based on the amount you have staked on you.

I do agree there is a tension between economies of scale that the miners are trying to achieve, and the original goals of bitcoin as being a decentralized peer-to-peer payment network.

[verticaldoug]

Originally Posted by MattTuck

jim,
I'm not sure why you think that the halving of the reward has something to do with the current pricing frenzy. Whatever weird bubble/mania/price appreciation/global acceptance phase/crossing the chasm/etc. phase that we're in has very little to do with the actual number of new bitcoins created each day.

The mining makes money in two ways, first, if you solve a block, you get new bitcoins. second, you collect the transaction fees of all the transactions in that block. So even if there are no more bitcoins to be made, 'miners' can still make money with the transaction fees. nate could probably tell you more about the economics of running a mining operation.


doug,
It is an interesting thesis, that as hashing power continues to agglomerate, that those powers will try to change the system to benefit them more. It isn't hard to see their incentive, but it certainly runs counter to the original idea behind bitcoin. The bitcoin blockchain has already been forked a number of times and this could be another fork. People will vote with their feet and if they think the new system (with bigger rewards for longer) is better, they'll stay with it.

I've read about the shift from proof of work to proof of stake model that some other models have proposed. I tend to think that a truly decentralized system has to have some checks on the concentration of processing power. Not sure, within the existing bitcoin framework, how to accomplish that. With proof of stake, I think it is easier, because you basically put a cap of some percentage of ownership and force decentralization, or adjust the difficulty of the hashing based on the amount you have staked on you.

I do agree there is a tension between economies of scale that the miners are trying to achieve, and the original goals of bitcoin as being a decentralized peer-to-peer payment network.

For a complex system, your original intent is generally not going to be your result.

I'd think the result of a highly speculative volatile digital asset that is subject to repeated hack attacks to steal it from providers is about as far away from the original intent of bitcoin as you can get.

[Tony T]

Originally Posted by R3awak3n

I just saw my $800 investment go to $1600 in a week. I have had xrp for a while though and should have bought some. Oh well. This is gambling but $800 is not enough that if I loose it I will loose much sleep about. Wake me up in 10 years.

Originally Posted by Tony T

I'll put a $25 chip on the table — lets see if I can also make a 100% return by next week

Talk about bad timing on my $25 bet..

[Bruce K]

Yup, BIG drop in Bitcoin valuation today.

Timing is everything.....

BK

[ultraman6970]

I was thinking last week just to drop 100 bucks in that, good did not do because i would had 50 bucks now

NK to blame? all the money they had went to hell due to the new sanctions.

[Tony T]

Coinbase couldn't keep up today:

High traffic
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[azrider]

crikey........

[sales guy]

Originally Posted by azrider

crikey........

Doesn't help when you have entire countries/governments saying no to cryptocurrency and putting up some serious laws/restrictions.