$500,000 per Bitcoin, baby. The math behind it. - page 11.

CoinDiver

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Quote from: labsbitforum on August 04, 2014, 01:31:16 PM

File/music sharing protocols and the entities behind them have evolved considerably.
Napster
Gnutella, eDonkey2000, Freenet
Kazaa
Limewire
Bittorrent

I think digital currency will evolve just as everything else has.

Bitcoin = 1.0 Something else will be 2.0

Sounds fine, but what did any uses have invested in those technologies? Nothing, or close to nothing. Not the case with bitcoin.

labsbitforum

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Quote from: siggy on August 04, 2014, 12:56:25 PM

Every example you have listed above is a company ( or company like) ... or maybe more apropriately a "thing" .. Bitcoin is more of a protocol, and in my view, protocols are much more resiliant with "first mover advantage" .. think more like: TCP/IP, HTTP, FTP, SMTP ... While all of these have somewhat evolved over the years, the current incarnations are still very much like the originals, and built up from the originals.

If BTC hasn't already hit critical mass with the first mover advantage, it isn't far off. And with a protocol, once critical mass has hit, it is nearly impossible to replace it with a new (even if better) non-compatable protocol.

Sigg

Your right bitcoin is a lot like a protocol. The Internet suite protocols examples you gave are all things that grew out of the formation of the internet by DARPA, IAB, IETF, W3C etc. Bitcoin is a disruptive entrant that is more similar file sharing protocols than it is to the governmental and academic bodies that created those protocols.

File/music sharing protocols and the entities behind them have evolved considerably.
Napster
Gnutella, eDonkey2000, Freenet
Kazaa
Limewire
Bittorrent

I think digital currency will evolve just as everything else has.

Bitcoin = 1.0 Something else will be 2.0

siggy

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Quote from: labsbitforum on August 04, 2014, 12:44:27 PM

Quote from: colinistheman on August 01, 2014, 06:36:39 AM

Bitcoin is the 3rd revolution I'm living through

1st revolution was Personal Computer's which are now tablets and smartphones to many (1980's-2000's)
2nd revolution was The Net the age of instant free info (1990's-2000's)
3rd revolution was Digital Cryptocurrency (2010's-)

The Digital Revolution and subsequent Information Age will be considered a transformation era every bit as significant as the Industrial Revolution and Neolithic Revolution.

But... Why are you so sure that Bitcoin will be a long term success in the digital currency space? Things evolve over time and its rare that the early versions or leaders in a space survive at all.

Some examples off the top of my head. My Space, AOL, Napster, Blockbuster, Netscape, Xerox, IBM... At one time all of those companies were the champions of their space but its normally the case that as things evolve they are not able to maintain that position. Normally someone comes along with a version 2.0 that is so much better everyone moves on to that. Then a different company comes out with 3.0 that causes another industry shift and so on. The company that did the 1.0 version becomes a footnote to history.

Bitcoin has very serious scalability issues. It is increasingly less decentralized. It does not have strong leadership or a lot of re-development happening to address core problems with its long term viability. Most likely it will be replaced by something else in the not too distant future...

Every example you have listed above is a company ( or company like) ... or maybe more apropriately a "thing" .. Bitcoin is more of a protocol, and in my view, protocols are much more resiliant with "first mover advantage" .. think more like: TCP/IP, HTTP, FTP, SMTP ... While all of these have somewhat evolved over the years, the current incarnations are still very much like the originals, and built up from the originals.

If BTC hasn't already hit critical mass with the first mover advantage, it isn't far off. And with a protocol, once critical mass has hit, it is nearly impossible to replace it with a new (even if better) non-compatable protocol.

Sigg

FUR11

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FURring bitcoin up since 1762

Bagatell

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Quote from: labsbitforum on August 04, 2014, 12:44:27 PM

Some examples off the top of my head. My Space, AOL, Napster, Blockbuster, Netscape, Xerox, IBM...

Those are brands and companies that built on underlying technologies. Those technologies are still with us.

BurtW

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All paid signature campaigns should be banned.

Quote from: labsbitforum on August 04, 2014, 12:44:27 PM

Most likely it will be replaced by something else in the not too distant future...

So... Which alt are you pumping? Wink

labsbitforum

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Quote from: colinistheman on August 01, 2014, 06:36:39 AM

Bitcoin is the 3rd revolution I'm living through

1st revolution was Personal Computer's which are now tablets and smartphones to many (1980's-2000's)
2nd revolution was The Net the age of instant free info (1990's-2000's)
3rd revolution was Digital Cryptocurrency (2010's-)

The Digital Revolution and subsequent Information Age will be considered a transformation era every bit as significant as the Industrial Revolution and Neolithic Revolution.

But... Why are you so sure that Bitcoin will be a long term success in the digital currency space? Things evolve over time and its rare that the early versions or leaders in a space survive at all.

Some examples off the top of my head. My Space, AOL, Napster, Blockbuster, Netscape, Xerox, IBM... At one time all of those companies were the champions of their space but its normally the case that as things evolve they are not able to maintain that position. Normally someone comes along with a version 2.0 that is so much better everyone moves on to that. Then a different company comes out with 3.0 that causes another industry shift and so on. The company that did the 1.0 version becomes a footnote to history.

Bitcoin has very serious scalability issues. It is increasingly less decentralized. It does not have strong leadership or a lot of re-development happening to address core problems with its long term viability. Most likely it will be replaced by something else in the not too distant future...

vuduchyld

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The massive flaw in this alleged "math" is that it is tied to GWP. That is clear and utter nonsense.

Bitcoin would be more analogous to money supply, likely M2.

Of course, the adoption rates are also plucked out of thin air.

db

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Quote from: BurtW on August 01, 2014, 02:54:09 PM

Quote from: inBitweTrust on August 01, 2014, 08:21:08 AM

ASIC space heaters?

If you think that miners can find a profitable use for the waste heat from the mining process then that would allow them to use even more power than the estimates given.

Yes, but it wouldn't be wasted. Say resistor wire with built-in mining hardware costs about the same as regular resistor wire and that 6% of electricity production goes to heating. Then all those 6% (instead of 3%) would be used for mining. No other mining would take place as it would be highly unprofitable. More power would be used for mining but used efficiently and at no cost to society.

jonald_fyookball

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Core dev leaves me neg feedback #abuse #political

Quote from: go1111111 on August 04, 2014, 05:24:53 AM

Quote from: colinistheman on August 01, 2014, 06:36:39 AM

So way over 10% of Gross World Product can eventually be Bitcoin.

10% of Gross World Product is $8.5 trillion.

Divide 12M coins into $8.5 trillion

$500,000 Bitcoin baby.

The flaw in this analysis is that it assumes each Bitcoin will only be spent once per year, on average. Or in other words it assumes Bitcoin velocity is 1.

The velocity of USD is about 10. So if Bitcoin has the same velocity as USD, that makes it $50k per bitcoin. However one advantage of bitcoins is that they can move around faster than dollars through the existing banking system. Velocity could be a lot higher with Bitcoin. If it's 100, then that's only $5k per bitcoin.

are you sure? can you explain why it wouldn't be velocity 10 instead of 1? if we are talking about 10% of the world money supply it should have 10% of the value given the same velocity.

Also there is no reason to believe Bitcoin will have a true "higher velocity" than other forms of money.
Sure, the transaction happens faster, but that doesn't mean people are buying more often.
If anything, people should be spending less because of deflation/appreciation.

ensurance982

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Trust me!

Yeah, it seems so easy. Things may be even sweeter if you consider that a market capitalization isn't directly reflecting the total worth of a single bitcoin. A single bitcoin may be worth a lot more due to the market's demand and supply - which really decides about a bitcoin's worth.

icet208

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nice OP dude. Hope that you`r right:D

go1111111

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Quote from: colinistheman on August 01, 2014, 06:36:39 AM

So way over 10% of Gross World Product can eventually be Bitcoin.

10% of Gross World Product is $8.5 trillion.

Divide 12M coins into $8.5 trillion

$500,000 Bitcoin baby.

The flaw in this analysis is that it assumes each Bitcoin will only be spent once per year, on average. Or in other words it assumes Bitcoin velocity is 1.

The velocity of USD is about 10. So if Bitcoin has the same velocity as USD, that makes it $50k per bitcoin. However one advantage of bitcoins is that they can move around faster than dollars through the existing banking system. Velocity could be a lot higher with Bitcoin. If it's 100, then that's only $5k per bitcoin.

smooth

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Quote from: Anders on August 04, 2014, 12:09:06 AM

"The price at which he bought the rig is irrelevant to this decision. It’s a “sunk cost”." -- https://bitcointalksearch.org/topic/estimating-the-energypower-consumption-of-the-bitcoin-network-694401

I don't think that's true. The miners will continuously have to buy new hardware since the price/performance of computing power doubles every year. Old hardware has to be replaced. And in addition there are costs for bandwidth and for maintenance, administration, rent of buildings etc.

Only if the cost of electricity is much larger than all those other costs over time can the assumption in the quote be valid.

Better to approach this from the opposite direction. The least efficient miners (and only the least efficient miners) will approximately break even, meaning they are spending their share of the rewards on electricity. As long as there is a range of efficiencies of miners, then electricity usage does not equal block rewards.

The simplistic model of electricity usage equal to rewards implies a cessation of ASIC R&D. That is not happening any time soon.

EDIT: Two additional points

1. If we use a simple model of most efficient miners using zero electricity and the least efficient using all of the block reward, and further assume that the distribution is linear, then approximately half the block rewards to go electricity. In reality the least efficient do not use zero, but the distribution is probably biased toward more efficient miners, so these two assumptions cancel out to some extent. Half may be a reasonable estimate. That does not substantially impair the argument that $500K bitcoin is implausible until the reward is lower.

2. Where the argument does break down is if the dollar drops in value as BTC increases relative to the dollar (i.e. $/kwh significantly increases).

littlewizard

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I think it is possible for this prediction, as long as the mass adoption of Bitcoin slowly advances.

Anders

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"The price at which he bought the rig is irrelevant to this decision. It’s a “sunk cost”." -- https://bitcointalksearch.org/topic/estimating-the-energypower-consumption-of-the-bitcoin-network-694401

I don't think that's true. The miners will continuously have to buy new hardware since the price/performance of computing power doubles every year. Old hardware has to be replaced. And in addition there are costs for bandwidth and for maintenance, administration, rent of buildings etc.

Only if the cost of electricity is much larger than all those other costs over time can the assumption in the quote be valid.

Anders

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Quote from: BurtW on August 03, 2014, 12:47:19 PM

However, more efficient mining hardware means that for a given amount of power the network will just produce a larger hash rate.

That's what my quote implies. There will be more computing power in the future for the same amount of power consumption as today.

Quote

When more efficient mining hardware hits the market miners will just buy more of it until they consume the same amount of power as before the more efficent mining hardware was on the market.

Price/performance of computing roughly doubles every year. I'm not sure power consumption follows that same pace. The price is a combination of both the cost of the hardware and the cost of electricity (plus other factors). So I'm not sure the total power consumption of the Bitcoin miners together will remain constant over time.

Quote

The total power consumed by the network is only bounded by the amount of money available in each block to spend on power.

Electricity cost plus the cost for the hardware and real estate etc, all of that has to be taken into consideration together.

Houseman

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Quote from: BurtW on August 01, 2014, 08:20:47 AM

Quote from: colinistheman on August 01, 2014, 08:15:17 AM

Yes, it will take a while to reach $50,000. Many years.

But it will hit $5000 within the next 6 months.

A sustained $5000/BTC price would drive mining to attempt to consume about 0.3% of world wide power production. That is a lot, but at least is it possible.

Everyone will get their old miners back out and turn them on again ;-)

jonald_fyookball

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Core dev leaves me neg feedback #abuse #political

Quote from: onezerobit on August 03, 2014, 07:17:15 PM

even if that is possible, it is not gonna happen in less then a year.

really? thanks captain obvious Tongue

onezerobit

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lets not get carried away.....even if that is possible, it is not gonna happen in less then a year.

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