$5000 per coin will never happen if PoW mining is allowed to continue - page 12.

pawel7777

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Quote from: kokojie on October 23, 2014, 12:09:23 PM

Of course not, that is just a transaction in Bitcoin.

PoW mining on the other hand, by nature will transfer value out of an eco-system. They use hash rate to process transactions, and obtain transaction fee (and possibly
new coins), then they sell these back to the eco-system. So basically, the eco-system is paying a fee for them to process transactions, and also possibly create new coins.
Then the miners use these fee to buy hardware, pay electricity bill, pay pool fee etc... These are money permanently transferred out of the eco-system.

What if they sell to the 'new' people (outside the "eco-system" whatever that is)? Or if they sell to existing bitcoinholders who then sell back 'outside'? Why did you assume that entire $500m is paid by eco-system? That would only be true assuming that bitcoin doesn't expand at all.

Keyser Soze

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Quote from: kokojie on October 23, 2014, 11:53:51 AM

Quote from: Keyser Soze on October 23, 2014, 11:51:15 AM

Can you elaborate on your $500 million figure? How is it derived, what assumptions are used, ect...

This is a very well known figure from previous discussions here:
https://bitcointalksearch.org/topic/its-about-time-to-turn-off-pow-mining-770591

It's basically a function of Bitcoin marketcap, the PoW mining expense is roughly maintained at 10% Bitcoin marketcap at annualized rate. This is why I call it charging Bitcoin holders a 10% tax

Unless I am missing something (please explain if I am), that post does not support your $500 million figure. It's a rather long thread to read, do you have a link for a post that supports your figure?

WillowRosenberg

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Quote from: kokojie on October 23, 2014, 11:48:38 AM

Quote from: Bansheroom on October 23, 2014, 11:42:46 AM

pools/miners/asic hardware vendor are not outside the bitcoin ecosystem in my eyes, they are part of it.

SHA512 SHA512 SHA512 ....

It's SHA256D.

kokojie

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Quote from: luv2drnkbr on October 23, 2014, 12:10:57 PM

LOL basic economics fail OP. POW mining is exactly what gives bitcoin its value. Miners have to expend real resources and fiat (or other value) to buy mining equipment and to run it, which they won't do unless they and other miners value those costs as lower than the amount of bitcoins they mine with them. POW mining sets a base value for bitcoin. That money you think "leaves the ecosystem" doesn't leave, it *sets the price*.

This argument has been debunked numerous times, I can't believe there are people still using it. There are many PoS eco-systems, just look at coinmarketcap.com. They have ZERO PoW, how come they have millions of dollars in value in their eco-system?

Bitcoin's value does NOT derive from useless PoW mining, that's ridiculous. If your theory were true, then if I create any altcoin, and put massive amount of ASIC mining it, then it should also have a matching value?

Saying Bitcoin purely derive value from useless PoW mining, is an insult to Satoshi Nakamoto, the developers that contributed to Bitcoin, and the Bitcoin community.

luv2drnkbr

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LOL basic economics fail OP. POW mining is exactly what gives bitcoin its value. Miners have to expend real resources and fiat (or other value) to buy mining equipment and to run it, which they won't do unless they and other miners value those costs as lower than the amount of bitcoins they mine with them. POW mining sets a base value for bitcoin. That money you think "leaves the ecosystem" doesn't leave, it *sets the price*.

franky1

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the large mining pools do not throw coins onto the crappy PHP exchanges, instead they trade privately..

please please please open your eyes people..

the exchange price is controlled by bots with small amounts of bitcoins and then a large wall of maybe 200 coins (much like the willy bot of 2013)

dont blame miners for the price drop. blame sheeple that follow exchanges thinking that its the ultimate price verifier. these exchanges volumes are crap in comparision to bitcoins in circulation. and the amount of day trading vs people actually cashing out to fiat via exchanges is even smaller.

PoW actually helps prices. because as it gets more expensive to create a bitcoin, those that do have costs, wont sell for a loss. they will create resistance points and raise prices with walls and create demand by not selling cheap.

POS puts bitcoins into the hands of those with very low costs, thus they are instantly profiting and would be more tempted to sell at any price.

pawel7777

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Quote from: Beliathon on October 23, 2014, 12:06:40 PM

No mining incentive; no miners; no network security; no bitcoin.

OP doesn't understand how this technology works.

He's preparing the ground to jump out with the "lets switch to PoS" idea.

kokojie

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Quote from: Beliathon on October 23, 2014, 12:06:40 PM

No mining incentive; no miners; no network security; no bitcoin.

OP doesn't understand how this technology works.

No, you don't understand there are superior functioning alternatives available.

kokojie

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Quote from: pawel7777 on October 23, 2014, 12:05:14 PM

Quote from: kokojie on October 23, 2014, 11:25:47 AM

PoW mining currently transfers $500 million USD worth of wealth out of the Bitcoin eco-system, into the pockets of pools/miners/asic hardware vendor/electricity company.

What do you mean?

If person A sells BTC to person B, are the money (USD) coming in or out the "bitcoin eco-system"?

Of course not, that is just a transaction in Bitcoin.

PoW mining on the other hand, by nature will transfer value out of an eco-system. They use hash rate to process transactions, and obtain transaction fee (and possibly
new coins), then they sell these back to the eco-system. So basically, the eco-system is paying a fee for them to process transactions, and also possibly create new coins.
Then the miners use these fee to buy hardware, pay electricity bill, pay pool fee etc... These are money permanently transferred out of the eco-system.

Beliathon

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https://youtu.be/PZm8TTLR2NU

No mining incentive; no miners; no network security; no bitcoin.

OP doesn't understand how this technology works.

pawel7777

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Quote from: kokojie on October 23, 2014, 11:25:47 AM

PoW mining currently transfers $500 million USD worth of wealth out of the Bitcoin eco-system, into the pockets of pools/miners/asic hardware vendor/electricity company.

What do you mean?

If person A sells BTC to person B, are the money (USD) coming in or out the "bitcoin eco-system"?

kokojie

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Quote from: Keyser Soze on October 23, 2014, 11:51:15 AM

Can you elaborate on your $500 million figure? How is it derived, what assumptions are used, ect...

This is a very well known figure from previous discussions here:
https://bitcointalksearch.org/topic/its-about-time-to-turn-off-pow-mining-770591

It's basically a function of Bitcoin marketcap, the PoW mining expense is roughly maintained at 10% Bitcoin marketcap at annualized rate. This is why I call it charging Bitcoin holders a 10% tax

Keyser Soze

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Can you elaborate on your $500 million figure? How is it derived, what assumptions are used, ect...

kokojie

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Quote from: Bansheroom on October 23, 2014, 11:42:46 AM

pools/miners/asic hardware vendor are not outside the bitcoin ecosystem in my eyes, they are part of it.

They are not, they are part of a SHA512 mining eco-system. For example, were the scrypt miners part of the Litecoin eco-system? or Dogecoin eco-system?

As shown by the scrypt mining scene, the miners only care about profits (or we could call it extracting value out of an eco-system), the most popular pools are the "auto-switch" pools, they will mine ANY coin that is profitable.

Due to the lack of viable SHA512 altcoins (ironically, this is due to PoW mining being so insecure, any SHA512 altcoin is easily attacked by the massive amount of ASIC available), the SHA512 miners mostly mine Bitcoin, but that does NOT make them part of the Bitcoin eco-system. They will switch to ANY profitable SHA512 eco-system, as long as they could extract value out of it. If mining Peercoin was more profitable than Bitcoin today, you can be pretty sure majority of miners will switch to mining peercoin.

Bansheroom

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pools/miners/asic hardware vendor are not outside the bitcoin ecosystem in my eyes, they are part of it.

kokojie

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PoW mining currently transfers $500 million USD worth of wealth out of the Bitcoin eco-system, into the pockets of pools/miners/asic hardware vendor/electricity company.

This wealth transfer will go on, perpetually, as long as PoW mining exists. Because, as long as Bitcoin relies on PoW mining to secure the network, the expense will exist, and it can
not be cheap (otherwise attack on the network will be cheap and easy too).

In order for Bitcoin price to rise, there has to be at least more than $500 million of new money to enter the eco-system, every year, just to maintain the current price.

All Bitcoin holders are essentially charged a 10% tax per year, perpetually, by the PoW mining network. How can this be sustainable?

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