Bitcoin - Part 2

[Ampulla of Vater]

Without knowing how clued up you are on the technicalities of the internet I don't know what level of detail to go into.

The blockchain is a "distributed" network meaning that each miner stores a copy of it on their computer.

When an individual initiates a wallet transaction let's say that this transaction is "broadcast". Each miner can then read and validate the transaction. Part of the validation is going through your copy of the blockchain to verify that the individual has enough bitcoins to make the transaction (this eliminates "double spending"). Once a miner assembles a block and generates the correct "nonce", they "broadcast" the block. The other miners then read it and once they verify that it is a valid block (and that all the transactions in it are valid), they add it to their copy of the blockchain.

There are many technicalities involved including how to deal with "forks" (where 2 or more miners broadcast a valid block at the same time) but you will need to look up a more technical website if that is the sort of detail you are looking for.

I guess maybe like peer to peer or the old Napster. Or tor. Maybe not. As I think about it there was no need for everyone to have the same files on their computers. If someone dropped offline during a download, it immediately picked up from someone else's copy, but that was different than what you are saying. I do understand this explanation. Thanks. Every little bit helps.

 

[psionl0]

Not sure what you find to be so funny, but I'll assume it revolves around some fundamental different in understanding about how economics works.

The idea that the value of money only comes from its use in goods and services is naive to say the least. You should investigate the amount of money that is used to trade purely financial products. It dwarfs the trade in goods and services.

"May or may not" certainly covers all the possibilities, but why is comparing the cost of tools to the return from investing in finance relevant?

Because tools that can be used to generate an income generally fetch a better price than useless tools. It is the same reason why coupon bonds generally get a higher price than zero coupon bonds.

 

[Mycroft]

The idea that the value of money only comes from its use in goods and services is naive to say the least. You should investigate the amount of money that is used to trade purely financial products. It dwarfs the trade in goods and services.

Money is itself a commodity, yes. Recognizing that doesn’t contradict anything else I’ve said.

You can invest in all kinds of financial products, but the return on those products isn’t just measured in how much more money you get back on your investment, but also in measuring the change over time of the purchasing power that money has for goods and services. Said in more simple terms, adjusted for inflation.

Yes, trading in bonds and securities can be very profitable, but not necessarily more profitable than trading in goods and services. At the end of the day, if you can’t trade your dollar for food, clothing, and shelter, it’s value collapses even if you’re getting a great return (measured in more dollars) on your financial investment.

Because tools that can be used to generate an income generally fetch a better price than useless tools. It is the same reason why coupon bonds generally get a higher price than zero coupon bonds.

What?

If a tool is useless it’s not a tool. The tool that’s seldom used could be more expensive than the tool that’s used every day. Supply and demand, remember? Everybody that makes tools makes hammers and wrenches so the supply of those commonly used tools is pretty good. That rare tool that’s only used every few years or so could easily cost a premium because not everyone makes it, and not every tool store wants to stock it.

 

[Roger Ramjets]

If a tool is useless it’s not a tool.

Bitcoin is a useful tool - useful for separating fools from their money.

Actually it's more than that. Here are some other practical uses for the Bitcoin tool:-

- purchasing illegal drugs.

- paying hitmen to kill people.

- evading taxes.

- providing material for hundreds of websites that otherwise would have no reason to exist.

- propping up your libertarian/anarchist fantasies.

That last one is Bitcoin's most enduring use, because there will always be a hard core of selfish individuals who fantasize about not having to meet their social responsibilities.

 

[Roger Ramjets]

Meanwhile, back in the Real World...

Bitcoin was supposed to go mainstream in 2018. Then the price plunged.

Bitcoin’s price has been in steady decline since May and the cryptocurrency is now floundering below $4,000, an 80% fall from its peak. Its market cap has sunk from $327 billion to $66 billion over the last 12 months. Roughly speaking, it’s gone from the size of Exxon Mobil to about the size of FedEx...

the number of bitcoin wallet addresses active daily has declined from 1.1 million in December 2017 to 450K. And the network lost about 1,500 nodes—the computers that connect to the bitcoin network—a 12% decline over the last year,

the number of transactions confirmed per day have also fallen, suggesting that fewer people used bitcoin this year than last year. And per Google Trends, during 2018, bitcoin’s worldwide popularity score dropped from 100 to 18—another indication of its crushing descent...

Finally, as crypto-focused companies, like ConsenSys and Bitmain, lay off employees, it’s one more reminder that bitcoin’s price last year may have been just a blip on the radar. The year 2018 was supposed to be bitcoin’s victory lap. Instead, it’s looked more like a goodbye tour.

And so totally unexpected!

 

[Samson]

Bitcoin was supposed to go mainstream in 2018. Then the price plunged.


And so totally unexpected!

In my view the fundamental lie conjured by bitcoiners remains comparing it to gold.
While it gets harder to add elements to the periodic table it gets easier to add cryptos to the list. Instead of getting harder and heavier they become lighter and easier. Who can name crypto no 10, no 100, no 1000 on the capitalisation list?
What is the maximum number of crypto currencies that can be created?
Looks like an 8 lying down to me.

 

[psionl0]

Bitcoin is a useful tool - useful for separating fools from their money.

Actually it's more than that. Here are some other practical uses for the Bitcoin tool:-

- purchasing illegal drugs.

- paying hitmen to kill people.

- evading taxes.

- providing material for hundreds of websites that otherwise would have no reason to exist.

- propping up your libertarian/anarchist fantasies.

That last one is Bitcoin's most enduring use, because there will always be a hard core of selfish individuals who fantasize about not having to meet their social responsibilities.

Of course. The old "only criminals are interested in bitcoin" argument. Why don't you go back to your star chamber?

Bitcoin was supposed to go mainstream in 2018. Then the price plunged.


And so totally unexpected!

Who would have thought that if you trawled the internet you might find another negative article about bitcoin?

 

[psionl0]

In my view the fundamental lie conjured by bitcoiners remains comparing it to gold.
While it gets harder to add elements to the periodic table it gets easier to add cryptos to the list. Instead of getting harder and heavier they become lighter and easier. Who can name crypto no 10, no 100, no 1000 on the capitalisation list?
What is the maximum number of crypto currencies that can be created?
Looks like an 8 lying down to me.

And you call yourself a TA specialist.

You would have us believe that if there is an equal number of alt-coins and bitcoins then the market for bitcoins would automatically divide into two equal halves - one half for bitcoins and the other half for the alt-coins.

You could easily research the market cap for bitcoins and the market cap for all cryptos combined but you would be disproving yourself.

 

[psionl0]

Said in more simple terms, adjusted for inflation.

So? That is just a simple formula.

Your problem is that you believe that economics includes non-economic issues or that individuals care if their investment is "sustainable" or not. Neither could be farther from the truth.

If there was a choice between investing in a tool manufacturing company and investing in a finance company and the former generated a smaller rate of return than the latter, then some altruistic individuals like yourself might still prefer the tool manufacturing company but most (especially corporate executives) wouldn't give it a second thought.

Inflation? Instability? Yes, these are consequences of investing only in money itself and we have that in spades. Why do you think that the price of properties has risen beyond the reach of families with single bread winners? Yet we are told that these practices must continue otherwise growth will not maintain its unsustainable levels and wealth would decline.

 

[Mycroft]

Of course. The old "only criminals are interested in bitcoin" argument. Why don't you go back to your star chamber?

He didn't say that.

He did point out that many of the best uses of Bitcoin are for criminal purposes, which is true.

You could also use it for non-criminal uses, but that doesn't offer any advantage over using money, and also has the disadvantage of not holding a stable value.

 

[psionl0]

He didn't say that.

Every use on that list was an illegal activity so my inference stands.

 

[Mycroft]

So? That is just a simple formula.

Irrelevant to the point. Simple or complex doesn’t matter.

Your problem is that you believe that economics includes non-economic issues or that individuals care if their investment is "sustainable" or not. Neither could be farther from the truth.

I don’t recall ever making a statement that people want “sustainable” investments. Some people do care about that, others don’t. I don’t see the relevance to this discussion.

That Bitcoin requires a lot of power to mine and maintain is a legitimate criticism of Bitcoin. That, I think, is undeniable.

If there was a choice between investing in a tool manufacturing company and investing in a finance company and the former generated a smaller rate of return than the latter, then some altruistic individuals like yourself might still prefer the tool manufacturing company but most (especially corporate executives) wouldn't give it a second thought.

I don’t understand the point you’re trying to make.

Inflation? Instability? Yes, these are consequences of investing only in money itself and we have that in spades. Why do you think that the price of properties has risen beyond the reach of families with single bread winners?

There are lots of investments that are not investing in money. The stock market, and commodities trading for examples. I don’t agree that investing in money (bonds and securities) in and of itself creates inflation and instability, but either way I don’t see how it relates to our discussion here.

The cost of properties, like everything else, is a function of supply and demand. The population explosion worldwide is the primary driver of the demand side of that equation. But again, what does that have to do with this discussion?

Yet we are told that these practices must continue otherwise growth will not maintain its unsustainable levels and wealth would decline.

Which practices specifically? Told by whom, specifically? And again, what’s the relationship to this discussion?

 

[Mycroft]

Every use on that list was an illegal activity so my inference stands.

Fine. It's a hair not worth splitting.

That Bitcoin lends itself to a lot of illegal uses is also a point that stands.

 

[psionl0]

That Bitcoin lends itself to a lot of illegal uses is also a point that stands.

That doesn't mean that it is only for illegal uses which was implied.

That Bitcoin requires a lot of power to mine and maintain is a legitimate criticism of Bitcoin.

But it doesn't mean that bitcoin has "negative" economic value.

I don’t understand the point you’re trying to make.

Then I will stop trying to make it. This discussion can only end badly.

 

[Myriad]

You surprise me that you are totally unaware that scads of economists do not.

What on earth provoked you to make such a false claim?

There are economists who do not "preach growth." If you look at the raw number of them rather than the percentage of practicing economists, they might even qualify as "scads."

But are any of them in a position to set or influence public economic policy in any major nation? Or in any major corporation? I haven't seen any. The anti-growth economists I've read have been mavericks writing blogs and occasional contrarian books.

What politician has campaigned on a platform of de-growth? What investment company will promise me that my investment money will shrink, but at less than the rate of deflation? What active current economic plans and policies don't depend on growth to make them feasible?

Non-growth or even de-growth might be an excellent or even necessary idea, but it's not on the radar of mainstream economics, even if there are individuals out there advocating them.

 

[kayle]

psion: but yeah but no but yeah but no (loop)

 

[psionl0]

kayle: Are you going for a dumbest poster award or something?

 

[applecorped]

 

[Roger Ramjets]

Bitcoin's Past predicts the Future?

Logarithmic Bitcoin Price Chart Shows Similarity Between Previous Market Cycle and Current Market Conditions

On a logarithmic chart, the space between price levels becomes increasingly condensed as price rises, and this reveals the true nature of Bitcoin’s price action...it can be seen that, after the peak of the rally in November 2013, the market did not hit bottom until January 2015...

The current Bitcoin bear market has been ongoing for just over 12 months so far, and if past market behavior is a good predictor for the current market... then perhaps this bear market will end in late 2019. A recovery to the previous all-time high of $20,000 would not be expected until early 2021.

But the time between 'all-time highs' has also been increasing. Looking at the last three 'similar' peaks, we see that the distance between the second and third was ~6.25 times longer than between the first and second. If this trend continues then the current 'bear' market may last for at least another 7 years, with the 'recovery' to $20,000 20 years away or more.

Past data is not a solid indicator of what will happen in the future, especially since there is relatively little historical data for Bitcoin. Therefore, using a logarithmic chart to make these predictions is not certain to be accurate.

...especially when you don't analyze it correctly!

The shills are now saying that Bitcoin is fulfilling its promise as 'digital gold'. Perhaps they are right. If so, perhaps Bitcoin's price trend will also mimic gold's - 7 years from its last 'all-time-high' and still no sign of 'recovery'.

 

[psionl0]

Past data is not a solid indicator of what will happen in the future

That is much less radical than your usual doomsday scenarios.