Topic: Do you really believe in bitcoin as a currency? (Read 8274 times)

I attempted to value the bitcoin currency based on Money Supply and velocity trying to come up with a real value. I came up with $60-120/ btc.

The problem with this method is that the user base of bitcoin is constantly expanding creating a higher intrinsic value. It will eventually stabilize when non-speculative use peaks and stabalizes. Then there will be a crash down to its intrinsic value.

That's hot.
I love it.
Waste heat isn't,
unless you waste it.

Or the heat trace cable asic miner, so that institutions can freeze protect their plumbing assets while also protecting their bitcoin assets.  No, really, I'm not joking here.

By itself, no.  However this is simply leveraging the merkle tree to reduce bandwith redundency.  There is nothing that requires that all nodes, even all mining nodes, store a complete blockchain.  Locally set pruning rules will permit any nodes that choose to prune to maintain a fairly stable blockchain size, as each new transaction confirmed permits at least one older transaction to be pruned, after a point.

Build the water heater / miner.
Then you can get one in every home that needs hot water.

Right.  The plan as I understand it is that miners will announce the blocks with a list of tx, and then the rest of the network (who already have most of these tx in their memory pool) will assemble the blocks to store in the local blockchains themselves.  

That reduces the size of blocks (for propagation purposes only) by 90%, making inclusion of a particular tx only about 10% as expensive in orphan costs as it is now.  It has no effect on the size of the stored blockchain, unfortunately.

And it was a straight-up waste of bandwidth to fix:  as matters are every client is downloading every transaction twice (once when it's made and once when it's included in a block) so something like 40% of bandwidth is wasted. Kudos to Gavin for working on fixing that, but he can only fix it once.


3.3 millibitcoins per kilobyte:  https://bitcointalksearch.org/topic/m.3648359  He estimates that it ought to be easy to get a factor of 10 or 20 by optimizing the protocol.  But that won't change the way it scales.  That will only change the ratio of scale to performance.  And we need more than one order of magnitude in performance to get where we need to be, so that's critical.

This is the cost to them of the increased chance of losing the 25BTC mining award.  Reduce the award by half, and that reduces their lost opportunity by half.  As Moonshadow said, it's based on a lot of assumptions - but the assumptions amount to "a typical miner today."  

Changing the scaling means redesigning.  If bandwidth, storage, and compute requirements grow linearly at *EVERY* client with the growth of the network, the scaling will fail.  And with every node checking every transaction, that's what's happening now.  We need a different design where the growth of bandwidth, storage, and compute requirements at each client are either constant, or grow at a sublinear rate like logN, with growth of the network.  Right now that is fundamentally impossible unless bitcoin changes its operation completely.


Nope.  The size of the blockchain on local storage would remain the same.  We're only talking about eliminating some wasted bandwidth in the protocol.

The 7TPS limit *is* there mainly to keep people from abusing the blockchain for data storage and transport layers for other protocols.  But they're doing it anyway.  Further, the 7tps limit cannot just be "switched off" allowing scaling to VISA levels. Lifting that limit involves changing the blocksize, changing the rate at which the blockchain grows eating local storage and bandwidth, and convincing miners that it won't reduce their profits to include these transactions in blocks.  


Yes, and that's a good idea too.  It enables people to check the blockchain from most recent back, rather than from the genesis block forward.  It doesn't change the size of the locally stored blockchain, nor the bandwidth it requires to download it.  It greatly enhances convenience but doesn't address the way the underlying limits limits scale.


All true, and all good, and will make a much faster, better-behaved client. And so will pruning transactions after all their txout are spent.  But unless we can get it down to where it's under the curve of Moore's Law, it's going to continue getting harder instead of easier.  


And in the long term, I think that both mining and running a full node needs to be easy and provide no-one any reason to not do it.

Well, it's not really parallel blocks.  It's just that the blocks will be "naked"; in the sense that a block is really just the 80 byte header, the 'reward' transaction and the merkle tree.  The transactions can be included, or not, by any node.  However, as a matter of simplicity of the early network, blocks are still published with all of the transactions included.  This has never been the end goal.  It was intended from the start that blocks be published naked, which will reduce the network's overall bandwidth because transactions won't have to propogate twice.

This figure is based upon a rising risk of orphan blocks, and includes a great many assumptions about how the "average" miner is connected.  The figure varies based upon the current exchange rate, the current block reward, the average rate of orphans and the difference between the average rate and the rate that adding the extra transactions provide.  In short, the figure is a very well educated guess, but it's still a guess.  The fact that it exists, can be calculated based upon a lot of changing variables, and is higher than the minimum transaction fee only establishes that a market rate for transactions will always exist. If you need your transaction processed faster, provide a fee that exceeds whatever Gavin's Cost is at any given moment.  If you don't need your transaction included immediatly, then lower your fee and you can still expect it to process at some point.  This is not an issue at the moment, and with the decreasing block reward, isn't likely to be a limiting factor in the future.


Are you taling about the plan to permit blocks to be published as only the header and merkle tree?  And letting the netowrk nodes aquire the transactions that fit into those merkle trees from their peers "loose", in a manner similar to how the Stratum network functions?  This would do that, but this isn't the primary motive for doing this.  Right now, blocks are published complete, which means that the network bears the burden of propogating all transactions twice, which is just inefficient since most nodes already have all of these transactions in their own queues by the time any block is published.


We haven't given up on that, such solutions are simply off network/ out of band; take a look at the Stratum overlay netowrk, which does some things similar, and then imagine what happens when wallet services/bitcoin banks agree to link together over a similar overlay network.  They can simply agree to accept the word of their institutional peers that a member of theirs has issued a payment of such-n-such to a member of the receiveing institution.  Would work much like Ripple is intended to work with individuals, but can't really because individuals don't really know enough about each other to really develop the credit trust.  While there would have to be an imbalance limit, to be settled up periodically over the main bitcoin network, most of the time major instituions' interlinked balances would simply cancel each other out.  Micropayments of arbitrarily small amounts of bitcoin then become possible.

GAvin's Cost will naturally decrease over time, as it's primarily the block reward (and the market price) and the risks of losing all of one that imposses this theoretical costs of including transactions.  If the market rate remains steady, Gavin's Cost cuts in half the next time the block reward drops.  Eventually the transaction fees become the primary finacing method of professional miners, and Gavin's Cost only sets a theoretical price floor over time.


There is a method of mining that does not require a full blockchain, that was noted by Satoshi in the white paper.  Also, rapid bootstrapping of a fresh node is also possible out-of-band, simply by downloading a recent snapshot of the blockchain from a trusted source and letting the new client scan it.  Neither method is yet implimented, simply because it's not really an issue.


It wold reduce to less than that by simply instituting block pruning, which was described in the white paper as well, and is the real reason that the merkel trees were included in the protocol from the start.  You can hack your node to prune your own client now, if you like.  It's just not a standard feature in the reference cleint yet.


Again, take a look at Stratum.


Maybe, but I'm still willing to bet that hardware will outpace Bitcoin network demand growth.

The best expert quote I have heard (and I wish I remembered who it was by) is

Bitcoin doesn't work in theory. Only in practice.

I have been told by experts that bitcoin is not money because...
Bitcoin is a ponzi, money laundering, a bubble, drug money, etc.
It's not backed by anything!
It can't be money because only a government can make money!
Bitcoins can't have value because they are just numbers!
Bitcoin can't work because they now cost to much!
On and on...

Luckily, I don't listen to people who call themselves experts.  A financial expert who just discovered bitcoin is as useful as a 19th century fisherman who has just been handed a sonar fish finder.

Woah, that's new. Source? From what I understood, miners will have to take the fees they are given, and if the fees don't pay their bills, shut down until difficulty decreases to make it worthwhile to mine again.


Sounds like I need to hang on the dev forum more often. I thought Gavin was working on improving security, the merchant protocol, and multi-signature based two-factor authentication. When did this new project come up, and can you describe, or point me, to how he plans to reduce the block size? (I thought it was mostly raw, uncompressible data already). Regarding the 7 per second limit, from what I understand, that is there ONLY to keep hard drive storage requirements in check. Reducing the size of a block by a factor of 10 should allow to increase transaction limit by a factor of 10, too.


I know they are working on two parallel blockchains, one consisting of headers, the other of actual blocks, so a new full node will essentially start working the same way as Multibit, being ready for use within a minute or two once it downloads the headers, and then downloading the rest of the blockchain in the background. Even better, right now you are forced to download and verify blocks sequentially, one by one, but with the new system, you will download the tiny-by-comparisoon headers, verify them, and then download the blocks themselves asynchronously from many sources at the same time like a torrent file, making it download MUCH faster (likely in an hour or two). After that, they will probably focus on pruning, where we only keep records of unspent transactions. My guestimate is that would make the total blockchain only take up maybe 400 megs in size.
In the long term, though, I agree, full nodes will be rare specialty, same as mining. I don't think that will necessarily make bitcoin any less secure, since nodes can still be verified against each other by SPV clients. Are there any issues you are aware of regarding bandwidth and storage with SPV clients? Or any blockchain optimization plans and methods I'm not aware of (haven't listed above)?

Okay, the limits I'm talking about are this.   Currently there's a maximum block size that won't allow more than 8 transactions per second.  And in practice blocks are mostly limited to about 250k by the miners.  They're limiting size because bigger blocks are more likely to be orphaned, so they'd lose the block reward. It's not worth it to them to include tx above that limit without fees of $3.30 per tx according to Gavin's figures.

So he's working on a plan to reduce block size by 90% which ought to reduce the miners disincentive to include tx in a block.  That would reduce the risk of an orphaned block by 90% but it wouldn't change the tx per second limit.

We've already given up on doing micropayments.  That's a huge opportunity lost. But there's no way the current protocol can do it cheaply enough.

And it wouldn't eliminate the disincentive.  It would just reduce the fee level needed to overcome it.  To about ten times what people are paying now.

The block chain is already a barrier to entry for running a full node. It's huge. Downloading it takes a week with the current protocol.  You might get lucky and get a high bandwidth peer to download from but most people don't.

The block chain can come down to a tenth of that time by optimizing the protocol but that's still too long. And the block chain is growing faster and faster.

The client eats a lot of upstream bandwidth and currently allows no way to throttle it,  so nodes drop out of the network and catch up every so often.  That turns them into a drag on the network rather than an asset.

The client can be made better behaved, but bandwidth will continue to scale with the number of transactions.  Even a better behaved client will still crumble under a transaction volume that justifies Bitcoin's current price.

I'm seeing all of these things as protocol design problems.  People are optimizing but optimization won't fix design issues.

Can you explain why Bitcoin won''t just implement those scalability designs itself, once they are proven to work?

I believe in the idea of a cryptocurrency. 

But the more I think, the more I think it probably isn't bitcoin.

Bitcoin has and more or less isn't fixing its problems with scalability and speed.  If it fails to do so for another three months, it's going to die a horrible death.

There will be other cryptocurrencies with a more scalable design, after it does.

Funny how that works, huh 

This forum is mostly composed of delusional people who think they are logical.

I am not trying to get a hearing, nor am I trying to convince any one. I am actually trying to push the delusional Bitcoiners further into their delusion, as this will be the perfect outcome. Delusional people always get defensive and harden their position. Try to tell a drug addict they are addicted and observe the reaction.

I would love to take a long break from posting. I am only replying now to people are challenging me. If they stop, I go quiet.

As noted in another thread, this forum is mostly composed of INTJ's and INTP's. We are not emotion-driven fanatics, we are very logic driven thinkers. As such, it should be very easy to get your arguments a fair hearing. All you have to do is come up with a logical, coherent argument, and when faced with a counterargument, try to defend your origina, position, or learn something new and change your position. In AnonyMint's case, though, he presents an incoherent argument that is based on incorrect logical and bitcoin-operational assumptions, and calls those who post counter arguments "too stupid to understand his higher intellect" claims, because


is a perfect description of AnonyMint's modus operandi.

With regard to AnonyMint...

I can't help but respect those who are confident enough to go against the grain and think through things themselves. Nevertheless, spamming the forum faster than anyone can keep up with or counter, with both quantity of posts and number of notions posited per post, is an unwelcome tactic.

As a highly unconventional and independent thinker myself, disagreeing with the mainstream on many key aspects of just about every field (economics, physics, mathematics, psychology, linguistics, nutrition, and even some of the "mainstream" Bitcoin analysis), I'm well aware of the difficulty in getting your arguments a fair hearing in an unsympathetic forum. The only way to do it is find one or more pivotal concepts to focus on and relentlessly debate those. Resist the urge to wander off track or be diverted, or else no one but those susceptible to raw propaganda and information overload will be convinced. Once you've established that you can change minds and do it somewhat succinctly you can parlay that into discussing the ancillary points.  

And if you happen to be wrong on those key concepts (and for the record I think you are, though right about some other things), the focused debate should help you realize that. In any case it is far more efficient for both parties.

Yes.

Huge part of my believe doesn't actually come from the bitcoin itself, but the disbelief of the current fiat-money and especially the banking system.

Banking system itself has so many negative things that are straightforwardly harming people and their usage of currency.

Just to mention a few:

• Slow as hell when transfering from one bank to another, at least one day in my country (+weekends)
• Your assets can be frozen at will
• The value of money is on hands of people I don't trust, such as politicians and officers of central banks

Those are just from top of my head and good enough reasons to want something better.

I do believe in bitcoin as a currency, but even more because it also works like a commodity. Most of all because of the potential that it holds. It's constantly evolving.

Not to mention the huge momentum around it: more and more people are learning about it, it's got extremely dedicated community and merchants are adapting it daily.

I do however consider the possibility of bitcoin failing in one way or another, but I firmly believe that cryptocurrencies will spawn some innovations that will in one way or another change the current, shitty system of money and banking.

AnonyMint, you neither understand of what you speak, nor know of whom you speak. 

The reading comprehension of dolts is unfathomable. Never did I write "going out of business". What I said is the level of mining (although profitable for those miners) will not be funded sufficiently (relative to the size of the Bitcoin economy) to prevent a 50+% attack because  either you penalize transactions (which Bitcoin needs in order to be viable) or you incentivize my Transactions Withholding Attack.

The problem with you novices is you don't understand the issues well enough to even be making any decisions. You are ignorant.

---

Note I've just put Rassah on ignore (he and LauraM are the only two in my ignore list), so I won't be reading his character assassination campaign and thus won't be responding to it.

Have real work to do it. After much experience with him including he being the first person to call me crazy, I have concluded he presents only 60 Hz noise. Never had I learned one fact or new morsel of information from all of his posts. The low signal-to-noise ratio thus earns him my highest and rarest medal-- an ignore.

I think the rise of these currencies are a result of increased globalization of the economy. Therefore this is the groundwork for how exchange will be transacted in the future.

Maybe this transformation will come faster than anyone thinks! Not only are these great currencies for storing value and/or speculation but the prospect for innovative business models that the small investor can participate in make it a financial model that will surely come to dominate the scene.

No longer will people have to live in a certain place to be well employed or to be entrepreneurs, investors etc. There is also potential for innovation in streamlining the process of funding, security, marketing etc.

To use a cliche, the possibilities are endless. So yes I do believe in the concept as well as a way to speculatively experiment for fun and profit. (as soon as my account is verified that is lol)

cheers!

Judging by your current reputation and ignore status, I would say I had excellent foresight! Must be my 160 IQ 

I suggest instead of continuing to allow him to fill thread after thread with his nonsense and allow him to continuously burry rebuttals to his idiocy under more FUD, that people simply reply that AnonyMint doesn't understand the system, is wrong, and that others should just ignore him.

P.S. I said that AnonyMint was the one hurrying rebuttals to his FUD with even more FUD, not that others, or I, should cover his FUD with our own FUD. As in AnonyMint makes up bullshit claims, people reply to point out and explain why his claims are bullshit, and AnonyMins responds with so many of his own posts, self-replies, and extra bullshit, that the explanations of why his original claims are wrong get covered up in even more bullshit. Hope that clears it up a bit.

Unfortunately I think the "miners are going out of business" concern troll will be with Bitcoin for a long time.  There is just way too much potential profit to be made by erecting even the smallest roadblocks in the way of mining competition for them to ever die out completely.

I for one am looking forward to the next six months or so, during which the growth of Bitcoin will be fueled by the sweet tears of regret produced in the coming, massive miner holocaust.  I can only lament the fact that most of them will be doing their pleading and complaining in a language I don't speak.   

Rassah has stated that he is intentionally spreading FUD to try to discredit me.

Here are the posts to read where he says that and makes a fool out of himself:

https://bitcointalksearch.org/topic/m.3774203 (quote of where he stated)
https://bitcointalksearch.org/topic/m.3774588

Here is the post from Rassah a month ago where I was being polite to everyone and he called me crazy:

https://bitcointalksearch.org/topic/m.3525437

And here are the posts as to why Bitcoin's funding for mining is insufficient and proportional to its value (BTC price can't grow if mining funding doesn't grow proportionally):

https://bitcointalksearch.org/topic/m.3764768 (most direct to the point)
https://bitcointalksearch.org/topic/m.3773927
https://bitcointalksearch.org/topic/m.3773318

Checkmate Rassah and Bitcoin.

Yeah, uh, don't listen to this guy. He just found out about Bitcoin very recently,  claims to have read most of the forum, and has made a decision that Bitcoin is a scam, which he is so convinced of that he refuses to even consider any conflicting evidence. That, plus he is convinced that he is a super genius who is much smarter than you, so anything you say to him is automatically stupid and wrong.

If you want to read the definitive authoritative explanation is scalability, by the developers who actually know what's what, read this https://en.bitcoin.it/wiki/Scalability

As for the block size and transaction costs, those will be allowed to float, and will stay low enough to be cheap, but will still be high enough from increased transaction frequency to keep the system secure (instead of 7 transactions a second paying $0.05 each, we'll have 1000 transactions a second paying ¢0.001 each, or something like that). The question of whether transactions will be high enough, or spiral towards zero, was thoroughly discussed over two years ago, and the conclusion was that there are a few ways for miners to compete on transaction costs that keep them above 0, and keep Bitcoin secure.

I am hoping to get a look at correlations between propagation delay and block size.    This would give us a good sense of what will happen as we work to grow the TPS.   4.5 seconds only gives me one data point and does not also provide the block size.   If someone has prop. delay plus block size source of data that would be awesome to take a look at.   Perhaps my question belongs in the dev forum.

I do believe in Bitcoin as a currency.  I think Bitcoin's value will skyrocket and other currencies will come into regular everyday use.  But, I believe Bitcoin will continue to be traded for a long time. 

The block propagation time is already 4.5 seconds (I don't know why they took down that linked page, I had discussed in depth a solution to selfish-mining attack on that page). As you may know the equation for orphan rate depends on block propagation time, and  500MB block sizes will increase that propagation delay.

Any way, that "coming" (we can't be sure the vested interests of mining will accept it) fix doesn't fix the fact that transaction fees in Bitcoin are always rising nominally or the relative security must implode, but debit card payments I believe have a fixed fee in some cases (not percentage). Bitcoin devs propose lowering the fee, to counter-act this effect, but the transaction fee is a market rate and it appears to me it will be a Spiraling Fee.

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Copying those posts here, just in case they delete the blog page again.

Have not seen the recent work by the devs and you don't know me :-).   That said, spent a lot of time reviewing the design and firmly believe that this sucker will scale quite well (so I agree with you Rassah).

Not everyone will be able to run a full node, that is very very clear.  There will be plenty of people who donate a node due to the advantage it brings in transaction speed/identification and the bandwidth available to the typical business should allow for full nodes.

Also, am doubting that the speed to push new blocks (from a miner perspective) is as bad as folks think.   Decent size datacenters have at least 10G uplinks and the main penalty is going to be on those miners/pools that are far away from each other.    Australia, for example, may struggle to win at mining as consistently as places that are "closer" and "denser."

It would be interesting to see an analysis of time to block vs. block size to date (just to see if there are any correlations on this).   Still need to do that unless someone has already done it?

Hahah Good you didn't start in 2010. I mean, if you had to pay them out now... (and didn't invest yourself..)

But to be ontopic: yes I do believe in BTC

Bitcoin specie, for one.
Gyft cards for another
Bitcoin Asset backed debit cards...
New code...

The market will resolve this, probably around the time that a few more coffee shops start accepting bitcoin.

I feel like I should be adding #bitcoinisinbeta to everything now.
Unrealistic expectations are overextending it and folks will be let down if this is not all done yesterday.

Yes.

http://kids.britannica.com/elementary/art-88145/Different-countries-have-different-currencies-or-kinds-of-money

Only temporary limit while devs still work on improving the system. It's still in beta, and they don't want it to explode in use before its ready. Eventually, transaction limits will be removed, blockchain will be pruned, and the system will be able to handle way more transactions per second than VISA or anyone else (it can already handle such volume with current technology, but we don't want to force people to download 500MB blocks just yet  )

Payment providers, credit cards... Which is basically back to status quo...

I've seen the "coffee" argument before (and may have used it once before). What would be possible outcomes to overcome it?

if I have it right the maximum number of transactions btc network can handle is 7 per sec. coffee purchase and walmart trip has to go offchain eventually.

Well... yes... but in my defence, it turned out that my initial gut instinct wasn't wrong 

Let's remember who was the first douchebag.

https://bitcointalksearch.org/topic/m.3525396

Typically, people ignore you not for sticking your neck out, but for being a complete douchebag about it. Also, it's rather difficult to get 62 people to think you are so not worth their time, that they actually take the time to click the "Ignore" button instead of simply scrolling past your post.

The prior two posts made me smile in spite of my 62+ ignores. At least my nose isn't brown.  

The ignore browning is the most inane, asinine feature of this otherwise excellent forum design. So with 10,000 members, one gets 62, i.e. 0.5% ignore rate then that is supposed to be meaninful? How about showing our non-ignore rate instead, i.e. 99.5%.

Lack of browning should logically be embarrassing. It can be interpreted to mean one hasn't stuck their neck out at all. Played it ultra-safe, not written enough controversial statements to justify the wrath of the groupthink.

Ultra-safe is not how you win big in this life. No risk, no cookies.

The true advocates of cryptocurrencies should give up notion that because they were early adopters they are entitled to massive gains.

Bitcoin has many real issue, these are likely only solved with more advanced versions. Like we are slowly replacing IPv4 with v6.

It's good proof of concepts which can also show the issues with such systems...

Bitcoin is in beta.  That fact should be in front of every news story and public appearance.
I wouldn't say the developers suck so much as they are overwhelmed with too many priorities, due to a too-fast growth.
Bitcoin is being overextended, partly by its supporters, but also by its opposition.

There is a risk that the broader cryptocurrency effort will be discredited by a great failing of its most noteworthy example.  Killing the ponzi element would not be a bad thing.  If Bitcoin grows in its season, blooms, casts off its seeds and browns for the winter, we ought yet look forward to seeing what may come.  Its in beta.

wha? transaction fee would adjust accordingly.

i think BTC is a viable currency, but for more expensive goods. buying $5 worth of something in BTC takes confirmation times, and people usually want to get in and out as soon as possible.

no, not yet, now as wealth storage, who wants to spend coins when it will be 100 times worth in 2 years?

When the exp growth stops, transaction fee would become huge, and it's not suitable for buy everyday good(well maybe offchain), but more for transfering wealth from bank to bank or cross country

If that is the case, the government will go after it aggressively, and then you won't have merchants to spend to, especially considering Bitcoin is very weak on anonymity.

And Bitcoin has so many points of failure for the government and others to attack it.

Thus I would not trust it as a safe haven with my money.

If nothing better comes along, I will hold gold coins and Yuan paper cash. The Yuan is going to skyrocket in value.

If there was a reliable altcoin, there is the advantage of being able to move value across borders more easily, etc.. Bitcoin is not reliable as far as I can see looking at the many technological weaknesses, such as the Transactions Withholding Attack, the Spiraling Transactions Fees tragedy of the commons (which may be occurring), the Selfish-Mining attack which has now been confirmed, concentration of mining pools, etc, etc.

I wasn't joking when I said Bitcoin's developers suck.

Your observation NOW is that most of the money flowing into bitcoin is for short-term speculation, but I would suggest that as the "bubble" rapidly inflates over the next year or two, more and more people will realize its use as a secure store of value and a means to circumvent capital controls, not just as a speculative investment, and this will support its high valuation.

Personally, a prick of the bubble would not send me stampeding to the exit, and I don't see why others who individually invested only a small percentage of their portfolio as a hedge against confiscation (but who collectively would have a massive amount invested) would stampede either. Thus I do not believe a prick of the bubble would be fatal.

Yes we all love those, except I don't think we will have low transactions fees.

Chargebacks aren't necessarily good for customers, yet no worries on that one, because Bitcoin supports M of N signers for decentralized escrow.

Problem is none of the above is a reason to remain a long-term value investor if it isn't leading to high use of BTC as a currency, which is impossible as I have outlined in my recent posts in various threads.


You've missed many of the threats. Search my recent posts. Also add a new one yesterday:

http://hackingdistributed.com/2013/11/25/block-propagation-speeds/


None of that matters if the transactions can not possibly grow, because of the concentration of the currency. I don't understand why people can't do that logic in their mind. I guess I don't understand what it is like to have an average IQ. Seems so obvious to me that it is impossible. I guess someone will need write a "Bitcoin Ponzi Primer for Dummies" 15 page guide. I don't have time to write that.

You could try to argue that as investors cash out to numerous consumers, then the concentration diminishes. Well that is what happens before a ponzi bubble pops. The few rich silently exit (that is why they are rich, they aren't foolish). But due to the tiny float, it is impossible for all (nor even a minority of) the investors to cash out while transitioning the ownership to the consumers. And to draw in enough consumers to make that not so, we would need to see transactions increasing faster than they are. And if that was the case, then investors wouldn't sell. It is vicious circle. There is no way out other than collapse.

The only other argument is society will significantly transfer to using this new currency, then the investors can invest their BTC directly and no need to cash out to dollars in order to buy stocks, etc.. Problem is for that to happen, then society would need to agree to be impoverished relative to the early adopters of this new currency. Society simply won't agree. And they have all the means they need to make it sure they don't have to agree.

The only possible way to make a new currency is to continuously debasement the existing investors and distribute new coin rewards to new entrants, especially not ASIC miners. That is the only chance. Bitcoin will never do that.

Note Bitcoin's 12.5% per annum debasement is not preventing gains from accruing. Debasement doesn't stop appreciation of value!

That is a reasonably strong counter-point. I have also thinking there would be a rush into crypto-currencies to avoid the coming wave of confiscations as the global sovereign debt crisis reaches the SHTF end game.

However, I am observing that the vast majority of investment money in Bitcoin is from people who expect gains, and do not expect the doomsday outcome of confiscation. Thus they will exit and since the float is so minuscule even they were a tiny minority, it won't take much cashing out to prick the bubble and send a stampede to the exits.

So our concept of holding value as a safe haven won't work if the value is collapsing.

Thus I am speculating that a collapse of Bitcoin circa 2015 +/- 1 year, will send massive stampede into gold and silver (the capital that wasn't already in Bitcoin when it collapses), assuming there is no viably superior altcoin.

i believe bitcoin as a currency. why? a few simple reasons. first off, the the obvious upsides.

no middle (parasitic and psychopathic banking financial mafia) man to deal with.
low transfer rates from one exchange or online wallet (compared to traditional system)
fast transfers from country to country with minimal fees
no way to charge back or reverse charge (as a business, you HATE dealing with this)
no international exchanges
we live in a digital age, so why do we not have a digital currency for the people by the people

the downsides of course:
not accepted everywhere
very volatile (when pegged to say USD, GBP, EURO, CNY, etc
little tech savy knowledge required
US suppression and hurdles

but with all those listed ups and downs (course i have missed a lot) but the point is, if you accept it as money, your neighbor, the stores you shop at, then it is a currency. and we are inching towards that. virgin now accepts btc, and starbucks will begin accepting next year. so it is a free money for a free people. even if the us gov't decides to create a btc like currency, it won't work. it's too late. if they wanted to stop it, they should have done so back in 2009. and even if btc does fail, it is the idea behind it that will keep it alive.

when the time comes for an idea, nothing can stop it. NOTHING.

Why wouldn't investors remain partially invested in bitcoin as a hedge against government confiscation (gold, real estate, bank deposits, cash, can be confiscated) even if the gains stopped accruing? I think that demand will remain and support a very high value. I just don't think your money velocity equations cannot accurately calculate the value of bitcoin because bitcoin is much more than that.

Ponzi-bubbles eventually return to their intrinsic value. The logic is presented in that linked thread. I don't know why it is so difficult for readers to comprehend that investors only stay invested while gains accrue. Eventually the supply of greater fools ends, then the value has to be supported by those who hold it not for gain, instead for use as a currency, i.e. its intrinsic value. An investor would sell that point (retaining only enough needed for spending and rest moved to an investment which can accrue more gains), because gains would not continue to accrue and Bitcoin pays no dividend because it has no income (note BitShares is an altcoin that claims it will have an income and pay dividends).

If you could argue that the masses will use it as a currency (which I think is impossible), then that value could be higher than the current price. However, you are asking what the valuation will be otherwise.

Edit: I did an estimate of Bitcoin's intrinsic value earlier this year.  Compare with the past performance of wider-eyed estimates.

I don't understand how you come to the conclusion that it would be an incredibly small market cap. It is already approaching 10 billion dollars, and its use as a store of wealth is minuscule compared to things like gold and offshore bank accounts. Why couldn't it increase in popularity for this purpose tenfold or one hundredfold?

Because that would be an incredibly small market cap. One fact is the richest 3% control most of the money, but the masses (the 97%) spend most of the money that is spent.

 "Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States" by A. A. Dragulescu and V. M. Yakovenko

If bitcoin proves to be fundamentally impractical for small, high-volume transactions, why couldn't it still have great value for use in large transactions such as real-estate, yachts, gold, etc. and as a secure store of value?

No.

Well if its going to go over 1 million per bitcoin they have to lower the dlfees at least because you can't pay 1000 dollars for a single transaction...

I'm going to jump in here. The way I see it, IF bitcoin does take off in a big way, I think people would spend less money on things they dont need, only spending there precious bitcoins on things they NEED. This I hope will bring in a long overdue change to society, from care free spenders of debt riddled money, to something more careful, perhaps even beautiful.

Quoting only a part of discussion to throw in a remark that has nothing to do with the current thread , well i call that need for attention.

That is also what Charles Ponzi and Bernie Madoff claimed.

And did you comply with FATCA then, which was one of Armstrong points of how they will put you in jail (if you are a US citizen).

That is kinda crazy statement in itself... But there is quite a lot truth in it...

I agree, bitcoin "will not replace the dollar" and it also won't wash your dishes.

But its best damn offshore online speculative investment the internet has ever seen.

Armstrong has reiterated some (but not all) of my points against BitCON:

http://armstrongeconomics.com/2013/11/19/congressional-hearings-on-bitcoin/

Yeah , it's called investment.

Barely most people dont buy with it, but trade to fiat

I think of it like internet currency not a real one, just something it could substitute paypal  and all internet transactions.

I have rebutted all the replies since my prior post upthread, at the following post:

https://bitcointalksearch.org/topic/m.3625475

Prepare to have your jaw drop to the floor.

Maybe, like it's the case from the begining.. some peoples are visionaire and understand the potential of the breaktrought that BTC is.

Those visionaire beleive in the future of BTC  and are just buying until it reach what they think it will worth in five or ten years.

We must take in account that the chineese govt is very tired and pissed off of what the USA is doing with the international reserve currency.  And AFAIK, This CNY govt is actually encouraging chineese citizens to invest in BTC.  Maybe, just maybe, this CNY govt sees in BTC a nice alternative to U$.. 

I notice that the USA is the country that is the most worried and tends to be the most restrictive/repulsive country to BTC..  Maybe this have something to do with the fact that they control the international currency..  I bet they fear BTC because it could undermine the power they have by owning THE actual international reserve currency.

Imo, this is a world changing issue (BTC).  USA will be more and more restrictive about BTC, and other countries, tired of being the victim of the Federal Reserve policies will embrace BTC to defend themselve against the U$ oppression they actually have to deal with.

Long live to China, and hope there will not be too much suffering in western countries.

Sure BTC is a currency.. and it's a revolution because it decentralized and it is also a paiement protocol in and of itself..
One of the great revolution of the 21st century, like 3D printing and other disruptive technology that should emerge in the future.

BTC will be part of our children lives like the internet is part of ours !

+1

Currency use will come later. Now is the store-of-value phase, mostly. Then comes the remittance phase, soon, and then finally when enough people are conversant in Bitcoin we will see the major merchant adoption.

People invest now based fundamentally on the promise of other uses in the future. Bitcoin rewards such risk-taking and insightful people. In so doing it becomes a store of value now. It's beautiful.

I don't see why any big fiat players would move to BTC... When they have an option to start new one with rest of the big players. And they can get the regular folk behind that one. Just by starting to pay with it and only accepting it...

And I mean the billionaires, large financial institutions and such...

Bitcoin could be considered a currency if people start buying and selling things with it.
Many users tend to compare the price to which a bitcoin is traded right now , to it's actual use.

Bitcoin has grown 100 times in value in the last year , while the number of transactions has barely doubled.
Currently most people see it as an investment rather than a currency.

i really want to believe btc can be a viable currency. several things have to happen first though. let me explain. i was thinking of setting up a business, prob online, accepting btc as primary payment method. then the more i thought about it, the practicalities came to mind. assuming customers make a transaction and pay me in btc, then i have a few probs, namely

i how do i do my accounting? i have to base my accounts in GBP, so what do i do, do i treat btc as a current asset? what exchange rate to use and how to verify? how do i convince tax authorities that i am not swindling them (those who have not had actual conversations with said tax authorities need not comment)

ii i be doing the business to make profits for me and family to buy other goods. now here in the uk, there is nothing to buy that doesn't involve international delivery.

so we need to have some kind of ecosystem. hey looking at my own post, maybe i can some sort of pioneer in uk market? be the change!

Interesting and surprising to see this coming from someone with such a high post-count here.  Surely you've heard all the arguments by now?  I guess you're not persuaded?  Let me have a go if I may...


I believe what you are saying is that there is 'no way to distribute the coins' in such a way that would satisfy your utopian 'fair' distribution criteria.  It is not the same at all as saying that bitcoin can not be distributed sufficiently to be usable as an everyday currency by the majority.

If as has been discussed aplenty elsewhere it is not an insurmountable task to break bitcoins down to further decimal places then it doesn't matter in practical terms if a small number of holders hold 99.9% of the coins in cold storage with the remaining .1% of bitcoins being distributed between 7 billion people because whatever value it holds for them it can still be used for transactions.

And the reason I can not see this 'big pop' happening is it doesn't matter how tiny the fraction of a bitcoin being purchased by those among the last to purchase them (or receive them in payment) if with it they can purchase the equivalent of what they could with the currency they would otherwise have used.

I personally see the .1% bitcoin wealthiest as being much more likely to do something constructive with their money to the benefit of many than the .1% fiat wealthiest today.  But that's mere speculation.  What we can see is that bitcoin undoubtedly facilitated distribution from a few crypto enthusiasts to the numbers of people holding bitcoin today.  Why would that not continue?

I also suggest everyone 'just think it out' but I don't expect most to come to the same conclusions as you have

It is functional as a currency. If it will be used in the future the value of each bitcoin must be much higher than now. The only way to get from 0 value to necessary value is via volatility.



First come first serve of a deflationary currency is probably the only fair way to distribute a new currency, if it were easy to convince people otherwise the SDRs would already be adopted. I imagine during the transition phase from gov fiat to the new currency the new currency will first be given as a benefit rather than the entire paycheck. What is your idea for a fair way to initially distribute?

If it is not a currency, then why does it have any value at all, other than as a ponzi scheme where new investors provide the gains for earlier investors?  

When the market cap of those naive enough to buy this is saturated, then we play pop-goes-the-balloon.

I am not saying that Bitcoin doesn't show us the way towards a real decentralized currency. But Bitcoin ain't it and can't be, because there is no way to distribute the coins such that it could be, i.e. there are 7 billion people on this planet and by the time 1% of them own Bitcoin, the rest of them will be worth 1/1000000 if Bitcoin becomes the global currency. And Bitcoins are concentrated into investors hands, and investors don't spend all their networth as a currency. And if all the people don't use it as currency, then how do you invest with it and pay employees with it. Just think it out.

Distribution is the critical factor nowadays in any business. How did facebook win? Distribution!

How with the elite win when setting up the next currency regime for the world? Distribution!

Mimicking sweaty armpits Steve Ballmer, instead of "developers, developers, developers", this gorilla is chanting "distribution, distribution, distribution".

And I am not saying I don't admire the genius of what Bitcoin shows us might be possible.

I believe in Bitcoin as a commodity. As a proper currency, no...the price fluctuates far too rapidly.




Perhaps once the price stabilizes in the future, I will amend this statement.

+1
It's not currency and doesn't need to replace it.  It's more like a reference currency for all other currencies.

Yes one day, but not only change but rule the world!

I believe it will change the world in quite a significant way.  Crypto anyway, maybe not bitcoin.

It is a currency so yes Indeed I do believe in it

I agree. Since day 1 (about $0.85 in my case), I've saw far greater potential was as a speculative asset / offshore value-storage account, than as a grandma's e-currency for online payments. Gavin was one of the people always pushing to sign up merchants to use as a "currency" (he signed up his neighbors to sell alpaca socks), instead of a game about "buying low and selling high". But clearly, such efforts are futile.

cryptocurrencies have a great potential to become somethig like LTC was before. I mean some of cryptos

Not currency, but valuable commodity.

Given the fact it is P2P, bitcoin cannot be banned, seized or whatever 

No.

It won't replace fiat. Other cryptos might but not the bitcoin...

Yes, I like it as a commodity, and for person-to-person transactions.

I hope not to see any meaningful altcoin competition, though.  Altcoins are fine if you want to invest in them as a commodity, but I don't think they add anything as a yet another payment method. 

Absolutely!

And I think Bitcoin is just the beginning! What we'll see next is a recognition by consumers that alternatives exist, then a demand for these alternatives, then an integration of these alternatives into the existing Bitcoin merchant POS systems. Like Visa, Mastercard, and Discover, people will use different coin payment methods via a common POS device.

As this process evolves, capital will begin spilling over into the altcoin sector and a healthy competition will develop between currencies.

Yes,  there is an interesting bitcoin to company gift card economy growing. The dollar should have been worthless for over 40 years now, the situation is unsustainable. It is in everyone's best interest, including central bankers, to have alternative means of doing business for when the dollar is finally done in.

As a currency no, as a commodity yes. It's a bit slow to use for purchases and everyone is hoarding like crazy!

I hope not...I want immortality, but will settle for full body rejuvenation.

The thing is that in order for that to happen, Bitcoin MUST be successful or I won't be able to afford it before entropy ends my life.

I don't care that much about money, but living a thousand years...that is a goal worth reaching for and the reason I am all in.

That's ridiculous. I hope you are trolling.

I think bitcoin as a currency will help promote spending awareness. For instance, 2 years ago I spent 400 bitcoins on a $200 item that has since been long gone.. That was a really bad decision. Today, I spend my btc alot more cautiously, or just use fiat. Which then makes me question.. Will everyone start doing the same thing? Does deflation encourage hoarding? And if so, how will we be able to promote wealth redistribution?

I don't think it's the most groundbreaking thing we'll witness in a lifetime, but... that's because we live in some  particularly interesting times.    I expect to see human-scale AI and permanent off-earth colonies before another 20 or 40  years go by.

I believe in Bitcoin as a payment mechanism.  It is faster, cheaper, safer, and less hassle to send a payment with bitcoin than it is to send a payment virtually any other way.  

Therefore, it solves a multi-trillion dollar problem for the world and I believe in its future.

I don't think it's going to replace "currency" except for in a few places where currency is particularly plagued with problems (Argentine currency crises, Cypriot 'bail ins', Brazilian 'Economic warfare countermeasures' etc).  People will flee to it when their governments betray them, but contrary to what some suppose, governments aren't 100% betrayal 100% of the time.  Some of them even do a better job of regulating their currency supply than Bitcoin's rather rigid rules will allow.  A bitcoin economy will boom and crash on fairly short cycles, consistent with an absolutely fixed money supply -- better than a completely idiotic financial policy which booms much longer, crashes much deeper, and occasionally melts down completely and has to issue a new currency and start over, but not as good as a well-considered monetary policy which doesn't boom and crash much at all.  

In the extreme case bitcoin may become a 'reserve currency' for financial institutions, but more traditional reserves (such as gold) have properties that are just as good for that purpose so it has to be considered as a diversification rather than a primary strategy.

Absolutely, won't touch my cold storage wallet till I can use it for everyday purchases. I am using my hot wallet to make small purchases to help the economy grow.

Waiting for my local Subway to accept bitcoin so I have an excuse to buy an android phone.

Bitcoin is the most groundbreaking invention you will witness during your lifetime.

I believe in bitcoin as a currency. That's why I accept payments in bitcoin on my small libertarian onlineshop. :-)

http://www.libertystore.de

I think crypto is neat, that is crypto based currencies

Unfortunately for me, I haven't been around bitcoin for long enough, just a few months, however I really believe in it.

I believe this first one is a world first:- (unless ofc you know better?)

To do my bit I've setup wallets on my daughters Phones and I pay their pocket money (allowance I think USA refer to it as) in bitcoins. They love to watch it increase daily. To cash out I buy them back at the current rate whenever they require.

I have also setup accepting payment by bitcoin for a couple of small real world (not online) business that I own.

I'm working on paying staff by bitcoins too, if not fully, at least in part.

What's your help in spreading it to the masses?

Do you really believe in bitcoin as a currency?