It's a self-correcting equilibrium though, since the block difficulty is tied to the hashrate, which will fall as miners pull out.
That said, the hashrate is not showing major drops yet:
That said, the hashrate is not showing major drops yet:
But, and correct me if I'm wrong, there is't much damping in the correction.
This means that if 50% of miners pull out, then it'll be longer before the correction.
The correction will then "over-correct" in a sense and the difficulty will be easier, and then there'll be a short half-week if that causes all the dormant miners to come back online.
If miners are serious about turning off miners when the difficulty is high we could see a ping-pong effect where we end up with "easy weeks" lasting 2-3 days when the difficulty makes it super profitable and then hard-weeks lasting 2-3 weeks where the difficulty makes it unprofitable.
That will get worse and worse as people are less inclined to mine the hard weeks.
That said, that assumes that the depreciation of miners and overhead of switching based on difficulty makes it worth turning them off rather than just running them full time anyway because there's a time window before they're out-scaled.
( Is mining tech still getting out-scaled or has it plateau'd per device now? Originally when I supposed this theory, mining devices only had a 3-6month window before more efficient devices would replace them) .
What matters is whether the system is convergent. The best thing that could happen (for POW digital currencies in general) is that it stabilises, around the current value long term. Then we know an upper bound on the energy cost and speculation will evaporate leaving BTC as a utility. The worst thing that can happen is it stays oscillatory with increasing amplitude as various interests try to push it one way then the other. After that most systems go chronically and irreversibly chaotic, and that will be the end of that experiment.
Note that bitcoin mining is independent of anyone else mining. At difficulty X you are expected the same number of blocks regardless of how many others are mining, so others' dropping out doesn't increase your bitcoin income per hour.
To me that's the fundamental missing part that could deliver stability. As others drop out, you aren't incentivised by the economy to mine. You might think you're getting a bigger share of the pie, but you're still getting the same number of blocks per hour no matter how many or few others are mining.
There are two main factors for why this scenario can be avoided:
1. The difficulty can't go beyond what the Potential Total Hashrate can bring to the table. In other words, even if the difficulty were to suddenly drop to 2010 levels and the block-week solved essentially instantly, the new difficulty after that block-week has been mined would still be what that hash-rate is capable of.
2. There are limits to how much the difficulty can drop, so it can't actually fully drop that far in one go. To get to full "easy week / hard week" pattern would be a slow oscilation that could be corrected with new algorithms including a bit of damping / smoothing via a soft fork.
But it's still an interesting scenario for a real "death" of bitcoin and how it could play out.
I don't think this is correct, because not everyone has the same hashing power.
Yes the amount of blocks you would statistically generate per hour is dependent on your hash rate and the current difficulty.
However, other miners with higher hash power will mine blocks quicker than you, and therefore take the rewards for those blocks ahead of you.
The amount of rewards you get is dependent on your share of the total hashing power, which includes other miners, and not just your own hashing power relative to the difficulty level.
An artificially low difficulty level simply means that blocks are mined more quickly, so yes in a way miners are making more money per unit of time, but the rewards are distributed according to your percentage of the total hashing power.
This is even more explicit in mining pools, where you might never mine a block, but still get rewards simply by virtue of providing hashing power to the pool itself.
Mining a block is just brute-forcing until you find a SHA hash that is small enough. Your chances of successfully finding a small-enough hash are completely independent of everyone else. It's not some sort of race to find a block, and as soon as someone finds a block everyone has to start again. (Other than that they can't reuse the same transactions, and need to update the parent block pointer).
If I give you £100 every time you find a random number that satisfies some property, the amount of £100s you get is independent of how many other people are making money with the same scheme.
The only reason competition matters at all is because of the difficulty adjustment.
Or until someone else mines a block, in which case you have to start again from scratch.
It's not some sort of race to find a block, and as soon as someone finds a block everyone has to start again.
If miner A and miner B are both mining, and miner A mines a block, then miner B has to start from scratch with a new block because in all likelihood miner B was including transactions in his un-mined block that are now already mined by miner A.
So yes, as soon as someone finds a block, everyone has to start again and that's why mining is in fact a race to find a block.
If I give you £100 every time you find a random number that satisfies some property, the amount of £100s you get is independent of how many other people are making money with the same scheme.
This is not how Bitcoin mining works. The "random number that satisfies some property" is dependent on the transactions included in your block, and if other miners include those transactions that are mined in blocks before yours, then you have to start from scratch.
You seem to think that mining a block is something that takes a long time, and that work is wasted if someone else managed to mine a block first. Mining a block takes an incredibly short amount of time, but pays off with incredibly low probability. You have to do lots of attempts to find a block. You don't spend 10 minutes trying to compute one hash, and then throw up your hands in disappointment if it wasn't low enough.
> Or until someone else mines a block, in which case you have to start again from scratch.
You always start again from scratch after every single hash. Billions of times per second. You're no more likely to find a block on your millionth hash than on your first. The work doesn't add up. Each hash you try is either low enough or it's not, and either way you try again.
> The "random number that satisfies some property" is dependent on the transactions included in your block, and if other miners include those transactions that are mined in blocks before yours, then you have to start from scratch.
That's correct, but you only wasted a small amount of time during the overlap between the other miner finding a new block and you hearing about it.
Not only that, but the number you're trying to hash is also dependent on the previous block (hence it being called a blockchain).
So as soon as another miner mines a block, the block you're mining immediately becomes invalid. For two reasons, the block height of your block is now too low (it has the wrong parent) and it (most likely) includes already mined transactions.
So even if you happened to still mine your current block, it will be rejected by the nodes in the network for having the wrong block height and for including already mined transactions.
So, you have to assemble a new block, which uses the latest mined block as parent and you have to include new transactions from the mempool.
There's a cost to doing this, it takes time away from the actual hashing, which is what I meant with "starting from scratch".
For the reasons outlined above, you're not mining blocks independently from everyone else.
Which seems relevant here (I think you’re both right?) because with more competition the next adjustment will be very quick, and will adjust your expected returns to your hash rate fraction of the competition?
> At difficulty X you are expected the same number of blocks regardless of how many others are mining, so others' dropping out doesn't increase your bitcoin income per hour.
So, yeah, you're right. Others dropping out increases your total income because you get to mine at low difficulty for longer. But the claim was about income per hour.
Given that the difficulty period is variable, and becomes shorter when more hashing power comes online, the amount of blocks you'll mine for the current difficulty period does decrease, even if the amount of blocks you mine per hour stays the same.
But not if they only drop out when the difficulty swings high and rejoin when it swings low.
This is precisely what it is, every pool operator I've worked with put considerable engineering expense into ensuring that they could broadcast their solved blocks as quickly as possible to the network.
This is the definition of a race. It's somewhat common for a pool to mine a block a second or two before another pool.
Mining is zero sum. If you have more guesses per second than your neighbor, you will win. Only in a pedantic sense could this not be considered a race. If my neighbor then doubles his hashrate, I will lose comparably to his increase. We just each make less overall money as the difficulty increases since we're engaged in an arms race with each other.
Yes, broadcasting solved blocks quickly matters, but the principal deciding factor in how quickly you find blocks, for any given difficulty target, is how quickly you compute hashes, independent of how quickly everyone else is computing hashes.
Yes, but the difficulty adjustment will now also happen more quickly because the confirmation times will decrease due to the higher hashing power, and then after that you'll be finding blocks at a much slower rate.
The idea of an "easy cycle" and "hard cycle" is interesting, but I'm not convinced it's an issue, because if many miners decide to only mine during the easy cycle and not at all during the hard cycle, the difficulty adjustment will mean that the hard cycle will take much longer (due to increased difficulty AND decreasing hashing power) than the easy cycle, in a way that evens out and removes the arbitrage of only mining during the "easy" cycle.
apart from a very small percentage of the time where you find blocks at roughly the same time as someone else
Not only that, every time a block is mined you have to spend time to construct a new block, which takes time.
Yes, you will mine blocks at the same rate you were before the network hash doubling, until the difficulty reset.
However, this is still zero sum and the network just beat you. You will mine less blocks now that the network increased even prior to the difficulty reset.
The reason why is the difficulty algorithm is block-based not time-based. After N number of blocks are mined, difficulty will then reset itself. You only get that number of blocks to mine at a given difficulty, not a set window of time. Once those blocks are solved, it's on to the next difficulty window regardless of if it took a day or 10. Someone doubling the hashrate the moment difficulty resets will cut your expected return in half for that round as "people other than you" are now solving blocks at double the previous rate.
Mining rig costs are usually sunk costs: turning off never saves depreciation (which is just an accounting entry). Unless the miner can do something else with the mining rig (repurposed, sold, withhold purchasing new rigs), then t variable costs dominate their decision.
A miner should keep mining if marginal revenue (expected from minting new blocks and receiving block tx fees) exceeds marginal costs (mostly electricity if miner doesn’t get free electricity). https://www.investopedia.com/ask/answers/041315/how-marginal...
Not to say that the system is not unstable (which is an interesting idea). Maybe a control engineer could inform us of the parameters for instability.
Disclaimer: crypto novice.
So I meant the depreciation would need to be low enough to make turning them off a worthwhile strategy.
Edit: I see what you mean about sunk costs, I had worded it badly but you were still arguing against my intended meaning.
Understanding marginal economics is difficult because it is counter-intuitive. I am currently on a personal binge trying to help understand the economic theory because it helps me challenge whether I have understood and whether I can pass that understanding on to others.
Unfortunately marginal economics is poorly explained - the link I referenced was the only one of five I quickly skimmed that seemed to be free of gross errors and had no misleading content.
Edit: latchkey seems pretty froody and made a couple of relevant comments:
* Bitcoin OPEX (marginal cost) estimation of $7k to $9k per Bitcoin: https://news.ycombinator.com/item?id=31797201
* CAPEX vs OPEX: https://news.ycombinator.com/item?id=31796669
The only valid reason to continue mining would be that you expected that the price of Bitcoin would exceed the mining costs in the future. Then you would stockpile them and take advantage of the reduced hashrate as other market participants exited.
I suspect crypto mining rigs are a very different beast, actually burning out after a relatively short period of overuse. Turning it off may well extend the actual life of the assets. And if they’re regularly buying more for the rig then that’s worth considering too.
Disclaimer: just thinking aloud with no evidence
As a result, the power is only going to be useful if you can move whatever consumes it to that location.
Since power demand isn’t entirely predictable, flexibility is rewarded in these markets. For example, if there’s a downward spike in demand that causes an imbalance, you can earn extra money by either having a power plant that can ramp down very quickly, or by being a consumer that can ramp up very quickly.
I wouldn’t be surprised if mining rigs participated in these spot markets. In theory, they should be able to adjust their power consumption within seconds.
BTW, it’s been theorized that overnight charging of electric cars could do the same thing and dynamically adjust the charging speed based on spot prices.
It's also under-provisioned but increasing supply is a problem because of excess energy.
So they started making deals with miners where the miners act as a sponge for excess energy and in turn pay much less.
Taking the same situation just more extreme (and likely more local) and being payed for handling excess energy doesn't seem absurd.
(I intentionally didn't judge anything about the Texas gird here, it's just meant as an example.)
We have no technology to quickly store and release huge amounts of energy.
In the short term, sure. There'll probably be fireworks for the next month or two. But thread ancestor might well be talking medium-long term where the economics are really simple - the amount of resources the miners put in to hashing will drop until they are making a profit again.
The miners will be profitable again inside 12 months. Even if all that means in practice is that "miners" is some kid in a basement in Khazakstan with an old Pentium.
Once bitten, twice shy? We’ll see.
On the PCs he runs an app that basically manages the mining for you, automatically switching between cryptos to get the most microcents per watt per second.
I have no idea why the allotment gardens got the cheap deal on electricity and I don't know if the mining gives him a significant "discount" on the heating.
At least for GPUs, the cost of switching workloads on the fly, is actually quite high.
And yes the auto switching which in this case is almost certainly nice hash is a joke. For years the only thing you would mine on a gpu has been ethereum.
Nicehash takes an absurd fee and their software might as well be return "Ethereum".
A lot of GPU miners really believe that since they are paid in bitcoin, they are mining bitcoin. Just look at any FB group of GPU miners. It goes to show that a lot of people really don't understand what they are doing at all, which is kind of neat actually... all this stuff still works even though the underlying infrastructure is run by people who don't even fully understand it.
[1] https://securityaffairs.co/wordpress/66417/hacking/nicehash-...
It depends what you mean by mining at a loss.
It's never rational to mine when the cost of power is higher than the expected return. Turn off your equipment and go buy bitcoin directly.
Amusing fact: if we go look up dollar auctions [0] the process described sounds superficially like Proof of Work mining.
All in all agree than BTC will adjust is difficulty with long term economics, and so, it will not be quick, short-term actors will lose money.
No, a 1000 watt heater is just as efficient as a 1000 watt computer in heating.
Not to mention that heat pump efficiency isn't linear as it depends on the humidity and temperature in which it's operating.
Electric heaters more or less just lose energy in light that they produce, which is quite often negligible.
An electric heater uses 1000W of electricity to increase the energy in an air volume directly.
Heat pumps use 1000W of electricity to transfer energy from one area to another.
In the former case, the energy in the warmed air is entirely from the supply of electricity.
In the latter case, the energy in the warmed air comes from the intake air and the electricity is only used to move that energy around.
So absolutely a heat pump using 1000W of electricity can move 3000W of thermal energy from the hot side to the cold side.
This, by the way, is why you're absolutely right that efficiency is variable, as it depends on the energy gradient between intake and output.
Only in a closed system, heat pumps are not a closed system, they take advantage of ambient heat in the environment which brings efficiency above unity if measured as power input vs heat output.
And best of all, it becomes completely obsolete at around 6 months when better specialised hardware comes out. So the only thing the miners can do is stop and throw their hardware in the dump.
But not on GPUs in bulk for a decade, that is likely a true statement.
I imagine there are more than a few dorms where this kind of thing is going on.
It really wasn't anyway practical or fun experience.
I'm sure you wouldn't be interested, but for people who are doing it for other reasons and do t really care about the return rate, why would you try to deny their existence?
So I'll say again, it's likely that a graphics card mining bitcoin right now would produce nothing. Ever.
I'd be looking for proof that these people exist before assuming that there are people who are wasting their time and energy on doing something that will never produce a single cent's worth of bitcoin, 'for fun'.
Hell, Jeff Geerling is the kind of guy who would attach a GPU to his Raspberry Pi(s), just to prove that he could. And then turn around and do some Bitcoin mining on those rigs, again -- just to prove he could. And he'd get lots of hits on his YouTube channel for doing so.
And he's not the only one to try to do that sort of thing. Have you eliminated all the possible YouTube channel owners who might be inclined to pull this kind of stunt, just for publicity and traffic to their YouTube channel?
Right, but is he actually doing it? Or are you just supposing again that someone might?
> Have you eliminated...
I don't need to, that's not how evidence works. You're claiming this thing happens, it's up to you to prove that. Unless you can find any actual evidence of people still mining BTC on a GPU at this point, you're just grasping at straws to try and justify your position.
The original point was that bitcoin mining is not done on GPUs any more. This is true in the sense the original post was meant, because the industry moved on years ago and mining on GPUS is now entirely unproductive. It's also true philosophically - if you don't produce anything, can you really be said to be 'mining' anyway?
And even if you show that one person or a few people are still doing it "for fun", it doesn't really contradict or disprove the post you replied to.
Yeah, no. Waiting for this massive crypto bubble to finally deflate so I can see if there's anything worth caring about in the mess that'll be left over.
Unless someone launched a miner ten years ago, before the advent of protocol switching software, they do not mine Bitcoin.
Here is a list of profitability of coin mining on GPU. Bitcoin is not even on a list. https://whattomine.com/coins
I’ve met multiple people from the bitcoin mining and research community in my 10 years and I don’t remember a single person doing gpu mining since 2013.
edit: also, you can’t even find an up to date gpu bitcoin mining software novadays. I dare you to provide a link here if I’m mistaken
Didn't think so.
The former is popular on gpu, looks the same from the user perspective (to the point of users only needing a bitcoin wallet and receiving payouts only in bitcoin), but doesn’t actually mine any bitcoin underneath - just other cryptos that get transparently exchanged into btc.
But there are still some people in this world who are panning for gold.
The functionality is burned into the silicon at the factory and cannot be changed. There are also specialized devices that can give you the benefits of an asic and can also be changed and reprogrammed. these are called field programmable gate arrays (fpgas). Large scale miners do not use gpus or fpgas due to cost and efficiency reasons.
for some other crypto currencies small and mid-sized miners do use graphic cards but large sized ones still use custom chips
for some other all miners use graphic cards
and for some no one uses graphics cards
The non-miners that need to use that hardware would suffer because of increased demand
[0] https://www.coindesk.com/business/2022/04/26/bitcoin-miner-c...
[1] https://www.coindesk.com/business/2021/12/31/miner-bitfarms-...
[2] https://www.coindesk.com/business/2022/04/28/battered-bitcoi...
So the same hardware that becomes useless when the btc price falls?
False. For westerners who have to pay market price on electricity that's true, but GPUs have still been used in geographic areas where dirty energy is super cheap of even free for the right connected people (China, Iran, Russia and former Soviet republics, disputed conflict zones in former Yugoslav states, etc.)
That's also where most of the mining is still happening.
Other coins are minable with GPUs (because their algorithm was purposely designed to be ASIC resistant)
But bitcoin has been exclusively ASIC mined since probably 2013 at least
Even with free electricity and stolen GPUs you cannot profitably mine bitcoin (you'd get a fraction of a penny a month, less than the cost of simply storing a gpu)
And even if you could mine it profitably, you would be better off mining the worst shitcoin instead, much less a reasonable alternative like ETH or RVN.
How much intelligence is required to mine bitcoins?
Not true. Almost 40% of the hashrate is being generated from the US. https://ccaf.io/cbeci/mining_map
So instead of being dependent on central banks, crypto is dependent on inside knowledge held by plain criminals or at least very shady businessmen. That much about the openness and transparency in real life.
The discussion is not interesting. It is well-known GPUs are not used for mining BTC. Mining other cryptocurrency? Sure. BTC? No.
Sure you won’t make money if you are lying 35c/kWh, but bitcoin could be seen as a way of exporting abundant renewable electricity from isolated areas.
For example: heavy industry that's located in Mexico instead of U.S for environmental regulation reasons.
Take a step back and look at what you're doing: lamely attempting to justify and carry the water for Bitcoin's horrible energy waste and pollution, when you already know quite well what the counterarguments to your ridiculous shilling and apologetic whataboutism arguments are.
https://en.wikipedia.org/wiki/Whataboutism
Your arguments have been thoroughly and widely debunked already, in glorious detail, and claiming you don't have enough time in your busy online shilling and gambling schedule to educate yourself by watching a factually accurate video about reality is a cop-out that shows you're afraid to look at the facts because you know you're wrong.
https://www.youtube.com/watch?v=YQ_xWvX1n9g
Surely you don't actually believe what you're saying, that factories are as useless as bitcoin, and already know why that is an invalid argument, so I should not have to remind you.
Or do you really not give a flying fuck about the environment or public health? Then say so.
I'm bending over backwards trying to give you the benefit of the doubt that you're not that dumb to believe your own argument that heavy industry justifies bitcoin, so if you've simply lost a lot of money gambling on cryptocurrencies and you're just trying to trick other suckers into covering for your unforced mistakes, then just admit it and stop pretending.
I think I'm not doing that. I'm just part of a conversation and my goal is not to make excuses for Bitcoin. Broadening the view and mentioning other facts doesn't mean that I make excuses for something else. I just don't want to argue pointlessly about this. I'm already in the "ban bitcoin" camp, so anything you try to say to convince me is also time wasted :)
I would advise, do more conversation and less argumentation on the forums
You're the one who is throwing whataboutism arguments around. So don't say you don't want to have an argument, after you started with an invalid whataboutism argument and an inconsistent position, in defense of another invalid argument that bitcoin is "a way of exporting abundant renewable electricity from isolated areas".
In case you haven't been paying attention for the past few years, of if you're only pretending to be incredulous, your argument and the argument you're defending are regularly made by bitcoin shills, and always shot down by the facts because they make no sense.
If you'd watch Line Goes Up or read any other comprehensive analysis critical of cryptocurrencies, you'd already know quit well how terribly bad and insincere your whataboutsim argument and the "exporting abundant renewable electricity" arguments you're defending are, and how thoroughly they have already been debunked, and how tired the HN community is of hearing them mindlessly parroted again and again.
You're not the first person to think of using whataboutism to justify bitcoin.
You're just very rude in your first reply. That's one thing.
The second thing is that I don't care to argue so much about bitcoin, so I just want to not be in your path, you seem to really be angry about this. That's fine, but I don't want to be in the way. Let me leave thanks.
Bitcoin uses electric power. So does electric cars, your iphone, lights that businesses leave on overnight. If you are against bitcoin because it uses power.. you really need to lobby for a law that would ban businesses polluting the night sky with lights that aren't needed.
The electricity is simply wasted, not exported. It cannot be used to do work anymore.
They should be able to, with the yearly supply of mined coins at just over 1% of the circulating supply.
Selling off large amounts will push the price down, simply because you're going to run out of people buying for the high price. Then people realize you're dumping coins, and then realize since you need to get rid of them, they can buy for cheaper since you need to unload them, so why spend more? And also the psychological aspects of dumping coins (why are miners dumping unless they thought they would go down).
[0] https://www.coindesk.com/business/2022/06/17/bitfarms-looks-...
The protocol adjusts the hash rate every 2160 blocks, or about once every two weeks, and the maximum negative slew rate is -75%. If sufficient miners pull out of the network within a fortnight or two, it's conceivable that Bitcoin will enter into a death spiral.
It goes something like this:
1. Miners realise that their operations are unprofitable, and do some mix of raising tx costs and/or turning off their kit.
2. The tx rate drops, so instead of one hash found per 10 minutes, it might be one every 20-30 minutes or even slower. The competition to get into these blocks heats up, further pushing up tx costs.
3. Bitcoin is no longer usable for small transactions, because the tx cost makes it a total loss. Small-to-medium users panic, as they realise that Bitcoin is not only plummeting, but that they can't get their money out without spending a significant fraction of it.
4. There's a rush to withdraw lump sums, creating a "run on the bank". This nearly instantly skyrockets tx costs.
5. Bitcoin value keeps plummeting, because nobody in their right mind would put USD into the system, and everyone wants to get out. Miners won't shut down their equipment at this point, because with high tx costs they're still profitable or nearly so. But they're paid in Bitcoin, so the real value of those tx fees is plummeting also.
If the above happens fast enough and with the right timing, with the most precipitous downturn happening right before a difficulty epoch, then the difficulty might not adjust enough downwards at the right time.
Then there's a chance that Bitcoin will go to 0 in the subsequent 14 days as miners walk away from their operations and users loose all faith that there's any value left in their coins.. and even if they do believe in that value, there's nothing they can do with their coins because hashes are found only every few hours and it costs the price of a new car to get into those blocks.
"It'll just adjust", you say. Sure... -75% after that fortnight[1], and if that's not enough, it'll be nearly a full month of an absolute crypto bloodbath. How long did it take Terra/Luna to crater? Days?
Caveat: Having said that, I suspect there's enough momentum in the system because of all the HODL-ers and self-interest in the miners. The miners have much of their earnings tied up in Bitcoin. If they let the system crash, they lose their profits. But there is a point where they'll realise they're throwing good (fiat) money after bad (crypto) and literally pull the plug and turn off the kit.
[1] Or longer! Remember, it's every 2160 blocks. If too many miners give up mining all at once, this could be over a month.. or longer.
Theoretically, BTC could make a similar adjustment and avoid the doomsday scenario that you outline.
PoS opens up its own can of worms. Namely, it is vastly more complicated and not as well understood or executed in as large of a scale as PoW currently is. The Merge is honestly terrifying to me given the amount of money on the line.
As a software engineer who's built large distributed systems. I've always relied heavily on having robust test suites so that I know that when I'm deploying code, there is little risk of failure. In this case, the devs have had years to get the test suite passing [1] and the plan is to launch in a few months. I really wish that this was looking a bit better than it is at this point.
There also isn't a published set of plans for what happens if things go wrong. We could end up with a forked chain and ETC situation again and I'm not sure it would survive that.
So yea... I'm optimistic, but I'm also a doubter. I'm more than fine with them taking as long as they need to get it right. The current rush seems entirely unnecessary to me. Especially since the devs claim they don't care about the price.
I had a lot of doubts too about the pace of dev but the shadowforks and ropsten testnet makes me thing it's going to happen.
I think that even if the devs don't care about the price, they care about the image and they want to get rid of the stigma that eth is bad for the environment.
When that stigma became so widespread is when eth went all in on the PoS development.
If ETH PoS was the end all solution of PoS, we wouldn't need Mina. Everyone would just focus on making ETH PoS better (or just getting it shipped). In a similar way that there is just one Bitcoin, the rest of the contenders (BCH/BSV) are just shitcoins nobody cares about.
Instead, we have dozens of competing PoS chains which have little value, debatable security (there just isn't enough of a financial / political target to attack, yet), and even less real world utility (because nobody is developing apps for them). While ETH PoS is sitting there with broken unit tests.
Hopefully that explains my arguments a bit better.
The relative simplicity is a feature, not a bug. As soon as you add features, you add complexity.
BTC has tonnes of drawbacks, but the drawbacks are stable and known. And this confidence in Bitcoin stabilizes bitcoin, beleive in bitcoin because it has critical mass.
This may of course all be wrong, something may go wron tomorrow and completely hose the thing. But people generally don't think that.
It will crash. It might even crash all the way back down to pre-pandemic levels. But it wont bankrupt. If you cant see this you are really missing the forest for the trees.
I mean, one person buying all the bitcoin would be an excellent way to cause the value to go to zero. If every bitcoin is held by a single person, who else would care?
- pay the salaries of state workers
- pay your tax
It may not look like much, but it's the reason why a regular currency is always worth at least something : some people are legally bound to using it.
There are many fiat currencies that went to zero and no longer exist. Most recently is the Zimbabwe dollar which ceased to exist some years ago and the country had to start using USD and ZAR.
pay the salaries of state workers
When the fiat currency collapses like in Zimbabwe, state workers no longer accept salaries in the currency and demand something else.
And also, when I say one person buy it for a million in actuality the probable “floor value” scenario is a million speculators trying to buy it for a billion dollars.
Bitcoin has been unleashed on the world and it will forever have a life of its own. Unless, of course, enough governments ban it and enough citizens obey the ban. Eventually even this scenario will become impossible.
Conversely there's an outside chance a really big crash will make it useful.
A sufficiently large crash of Bitcoin will leave most current holders burned. Those that have Bitcoin as a purely speculative play will take some big losses, and get out (maybe permanently).
Ridding Bitcoin of speculators will maybe improve Bitcoin usefulness as currency - but I think main-stream will ignore it and it'll become niche.
At its heart Bitcoin cannot decide if its a fast-appreciating asset, or a currency, and it can't be both. Perhaps a really big correction now can kill the fast-appreciating asset approach for good.
Unfortunately though it seems like as a currency its primary benefit seems to be making risky (aka illegal) face-to-face transactions safer, and hence will likely aquire an ever seedier reputation.
A real solution would be truly decentralized. It needs controlled inflation to avoid incentivizing the capture of the supply and it needs CPU only mining to prevent the eventual emergence of parasitic mafia miners.
I think you're right but I'm pretty sure you missed GP's point...
> You really think there isn't a single person on this planet willing to put in 1-10 million to buy up all the bitcoin?
Of course there are people/companies willing to do this: they'd short squeeze the entire supply if they could but... It's not GP's point: GP's point is that there exist a scenario in which the "work" (the "proof of work") required to find one block would be so expensive compared to the value of BTC that it'd be impossible to ever mine a new block on the blockchain. That's be a "death spiral": a PoW forever too high and nobody willing to put in the $$$ in electricity required to mine one block and let alone the huge number of blocks required before the PoW difficulty is lowered. These blocks would be mined at a gigantic loss. The problem is made worse by the PoW only being able by -75% at most: so should some big miner mine at a loss for a very long time, the -75% difficulty "easing" may not be enough.
If anything, of all the dramatic scenario about Bitcoin since it came out, this death spiral has always been the most concerning one.
Compared to the rest of the whitepaper/code this part of Bitcoin always seemed very weak due to poorly choosen parameters (way too many blocks before the difficulty adjusts itself). This poor choice of parameters may be Bitcoin's eventual downfall.
Now... There's a group of devs who basically control the code and you can bet that should the death spiral happen, these devs would magically agree with miners and big players to "vote" on adopting new parameters / relaunching the chain/mining with a much easier difficulty.
That's why I think you're right: it's highly unlikely BTC would go to zero because there'd be an army of people coming to its rescue. But it's quite a range between $18 K (as I type this) and zero.
Again: missing the first for the trees.
I expect that in the "hope dies last" spirit some of the miners will double down, to get higher share of the fees. Whether that's going to be enough to carry through till the network algorithm adapts.. I don't know but wouldn't underestimate the zeal.
Less than zero, because you have to keep putting energy into the network to keep it running.
Hey man, you're _totally free_ to pay the price of a used car to process a transaction. Ain't it grand.
Meanwhile I can send instant bank transfers for free all day long.
It's free for you, but not for the bank (work & time) and nether for a merchant (fees)
Also you are likely talking about Defi or NFTs on ETH which got ridiculous expensive. However that's contracts driving up the fee. Money sending fees rarely got above normal international banking fee prices and are usually WAY below.
I should have specified that I'm thinking of intra-EU bank transfers. They're as close to free for all parties involved as something can be.
One year I paid more than $500 banking fees in a year with zero monthly fee. For withdrawals abroad, exchange rates for deposits and withdrawals, calling with a more specific problem, etc.
Also as a merchant I do pay a fee on incoming swift transfers just to have a little automation. (Plus a monthly fee to use my company name instead of private name) Nothing is free
Edit:// also you can't send instand swift transfers on a holiday or Sunday. Sometimes not even Saturday. (or at night for that matter) Sometimes delaying up to 4 days (Easter) It's a imperfect solution either way.
'Low' amounts (varies by country, call it under €20,000) are processed at evenings and weekends too.
https://www.ecb.europa.eu/paym/integration/retail/instant_pa...
Totally possible, but I don't think it will happen simply because there will always be some percentage of miners who aren't making ideal financial decisions, or who are using free electricity. Those miners will eventually bring the network back into operation, although you're right, it might take months.
Having said that, the bitcoin core developers really ought to be considering ways to fix this risk without making bitcoin too vulnerable to network splits (which is the flip side of the same issue - if there was suddenly a world war and the internet gets split into many country-nets, how do we want the network to behave?)
We seem to have lots of these. In the last few months, the price of bitcoin is down 60%, yet the mining rate has barely decreased. Surely at least some miners have been priced out of the market now?
As the hash rate gets more and more decentralized price tolerance approaches infinity. Some guy running a small number of ASICs at his house is going to have near zero price sensitivity.
If the hash rate and BTC/USD became very low (on their way to the 0 you're mentioning), there'd quickly be an incentive for deep pockets (it's HN, so read "VCs") to start mining operations and create a new speculation wave they'd be well-positioned to benefit from.
There's nothing that says equilibrium has to be reached above zero though...
but after Luna-fiasco and self-proclaimed "stable" coins being unstable, how does anyone keep trust in crypto-coins?
After Chernobyl and self-proclaimed "stable" nuclear reactors being unstable, how does anyone keep trust in nuclear power?
The answer is that we analyze each design for soundness, rather than making blanket statements about an entire class of technology.