This is why I'm sympathetic to those who say its ponzi scheme, it only has value because of new resources continuing to be poured into it.
You talk about this like this is an easy action with profound consequences. It's like saying If everyone killed themselves, there would be no people. This is trivially true, but it's not going to happen.
>(as its worthless without continuous resources being pumped into it).
All forms of transaction has some form of resources put into it. The quantity of resources is what is at issue here. Bitcoin does not need the massive quantity of resources it currently uses to operate. That is an artifact of the high value of Bitcoin coupled with the subsidy of the mining reward.
I'm not sure if the creator(s) of Bitcoin evaluated what kind of value a Bitcoin should have over time, The mining reward halving rate suggests that they were not expecting it to have a continual average rise above 20% per year (which makes sense because that would be insane). To date, however, it _has_ been averaging more than that, resulting in an increase in value of the mining reward relative to other currencies. Should the value drop or simply not increase for a extended period, the mining subsidy becomes less. Then only the most efficient miners can make money mining and the difficulty drops to a new equilibrium as the ones who can no longer make money drop out.
We're very close to this threshold now, given what is happening now and during the next few weeks I would not be surprised if BTC is going below that threshold.
I think it's time to stash a few bottles of champagne.
As it becomes unprofitable miners stop, and the difficulty drops so that it becomes cheaper to mine, until it reaches an equilibrium
The protocol adjusts every 2016 blocks, if it takes longer than two weeks (20160 minutes) to mine the 2016 blocks then the difficulty decreases, if it takes less than two weeks to mine 2016 blocks then the difficulty increases.
"Mining" in bitcoin means two different things, creating new coins AND adding transactions to the ledger. If mining reward went to 0 (which will actually happen someday), and new coins stopped being created, miners would still be able get a profit from transaction fees, although it wouldn't be "mining" in the same sense as gold.
In contrast, only speculators would notice bitcoin going offline. They might laugh at the guys who told them they weren’t going to make it but that’d be it. Nothing would break, nobody would be in line ahead of them failing to buy something, etc.
That matters because bitcoin’s floor value is zero: as a very weak fiat currency, the only reason to use it is when you think it’ll be profitable and if that confidence drops miners will stop putting more hard money into the system.
You can be mad that people paid $$$ for Beanie Babies but that does mean that there value is nothing.
There's a big difference between something like a Beanie Baby, which has a base value of whatever someone will pay for a toy (you're not getting rich, but it's not zero), a company whose shares convey fractional ownership of assets and an ongoing revenue stream, and a very weak fiat currency like Bitcoin which has value only to the degree to which your buyer believes they will be able to resell it at a profit.
With a strong fiat currency like the US dollar, that belief is anchored by the size of the related economy and the millions of people who are guaranteed to use USD to pay taxes and other government fees, sell goods and services to the government or be paid by it, and the millions of business relationships specified in dollars. Yes, that could change over time but it's not something which happens quickly except in disaster scenarios where the value of any currency is moot and you wouldn't be running Bitcoin miners in any case.
Mining is bad for other reasons--it's a huge waste of resources when bitcoin is worth a lot of money.
but I'm in the middle of getting warned and moderated by dang for daring to ask such a question!
>if we turned off all bitcoin miners today, bitcoin would go to zero instantly
isn't true. You couldn't trade them normally with the miners off but you could start mining up the day after - it only takes a couple of computers really.
"Well yea you could do that change to tank the value, but imagine if you just undid it huh???"
The point was without mining entirely, there is no value
Once established, the idea is that transaction fees are used and the distributed nature of the network causes a natural competition to be the most efficient so miners can charge the lowest fees while making a profit.
So if we turn off all the bitcoin miners, it wouldn't be possible to transact. All you could do is look at it, like a read-only excel sheet.