Status of the first million Bitcoins
bitcointalk.org
bitcointalk.org
Though there are some interesting comments:
> But what is true is that anybody running Bitcoin
> that year with a consumer Core 2 would make about
> 2000 BTC a day.
>
> [Bounty] 201600 BTC for a time machine, I only need
> a few hours...
> I think the likeliest scenario is that hundreds of
> people downloaded and ran the client then, got a
> bunch of blocks that were at the time useless because
> they were valueless, then deleted their clients.
[1] "Status of the first million Bitcoins ever created" as of this writing.
[2] "Satoshi's Fortune lower bound is 100M USD"
So I'm kinda curious, as the power of the collective network grows, how difficult would it be to turn the incredible hashing rate toward discovering the the private keys of wallets lost long ago?
I suppose you could try and reach a consensus when possible, rather than have a majority dictatorship.
I wouldn't see any real opposition to changing the protocol to allow mining of lost coins for example if some precise and correct definition of a lost coin could be specified.
Now there are only 50 coins because 50 were lost. Do they still count as that same value X? What if you can't know how many coins were lost?
Bitcoins shouldn't be considered an investment -- the business about hoarding them like taxi medallions because they only go up in value is nonsense. Their value is limited by the low transaction fee for another blockchain. But you're right, you'd have to factor that in if you were actually investing.
The first 1.6 million bitcoins were mined by at most ~15 people.
I obviously didn't foresee Cypress.
Anyway...https://en.wikipedia.org/wiki/2012%E2%80%932013_Cypriot_fina...
Cyprus on the other hand: that's a country that was just recently rocked by the world banksters.
There is more mining to be done of hard drives, indeed, in your average metropolis ..
Not something I think anyone will actually do. Yet. But check those hard drives before you sell/donate any old PCs!
Given the famous quality of its cryptographic design, it seems at least plausible to me that bitcoin is in fact a research project out of academia or a national government, with the Satoshi mythology a brilliant marketing wrapper.
It's definitely plausible it could be an institution, or a small group. But I'd bet my bitcoins that it's a single dude.
Today, Satoshi's true identity has become a mystery. But at the time, I thought I was dealing with a young man of Japanese ancestry who was very smart and sincere. I've had the good fortune to know many brilliant people over the course of my life, so I recognize the signs.[1]
Remember too that at the time noone could have foreseen the popularity and success of Bitcoin.
[1] https://bitcointalk.org/index.php?topic=155054.msg1643833#ms...
Somewhere in my house, or perhaps at my old workplace, there is a USB stick with approx 250 bitcoins on it, the gains from early mining and experimenting. I'd backed them up before I rebuilt my main machine, and then didn't restore them immediately (mining was approaching diminishing returns and I gave up).
I'm pretty sure I haven't over-written them, but I also have no idea where they are. A few weeks ago I looked again, fruitlessly. I'm sure they'll turn up some day.
Though I really didn't comprehend they were worth so much. The last time I looked they were GBP 750. Am now leaving the keyboard to look again.
But no USB sticks.
They're here somewhere. May be time for a weekend of spring cleaning.
If we have one main cryptocurrency, we'll also have a number of secondary ones, filling various niches.
For some reason, a lot of criticism of bitcoin seems to focus on it becoming the sole currency, but that's never going to be the case.
You'd also have to keep in mind that he would have been through the previous crash in which his coins varied in worth between $29 M before falling back down to $2M.
It would take a special someone not to sell those coins before they hit the prices we've seen these past few weeks.
(Also, I think you'd get no more than $50M for 1M BTC but that's a minor detail.)
To him, USD is riskier than BTC.
I'm used to cult of personality on HN, but cult of anonymity is a novel thing! Who is Satoshi, and why do you put so much trust in them? What if I told you that "Satoshi" was brilliant quant working on Wall St., who came up with a scheme to invent an asset, give it incredible unreasonable value, then cash out for that value in USD, all while spinning a clever narrative about decentralized cryptocurrency for a new world?
Note: I haven't looked at the bitchain and am guessing that you can't make assumptions about large holders from the bitchain alone.
The average price realized would be $14.288 USD, so you'd get $14,000,000. Not bad, really.
Source- "Gribble", the bot on the bitcoin irc channels that calculates these things based on the MtGox order book.
What could be done though, is selling a little at a intervals, or selling a chunk whenever the price hit some level.
There are only 21M bitcoins possible. 1M is about 5%. The goal of many bitcoin-folk is for bitcoin to be in the top 3 currencies. Imagine only 5% of all the Euro in circulation... or 5% of the USD... $250M is nothing in comparison to that prize.
(BTW this is one problem I have with bitcoin)
There are certainly easier ways to make 100 million dollars.
This comment on that post seems to calculate the number of people mining bitcoins for the first year: http://www.reddit.com/r/Bitcoin/comments/1c48u0/how_did_bitc...
If satoshi was indeed just testing the network... why not use "testnet" or simply re-set the blockchain once you were satisfied with the results of your work and release it to individuals?
Oh, wait... because you wouldn't hold 7.8% of all the Bitcoins that will ever exist then if you did that.
Just because almost half of those first 1.8M bitcoins mined were "transferred", doesn't mean that they ever transferred ownership.
I don't think it's right to get on the case of the earliest bunch though for not being more egalitarian. How could Satoshi have been more fair to you? After all, nearly everybody had the short-lived opportunity to mine 50 BTC blocks with ease. Clearly Satoshi believed in his concept more than most of us did, and deemed it worthy of putting in lots of effort into mining. He did his part to warn the world of his invention. Fair's fair.
More accurately, asking the most ardent followers of bitcoin to help launch an investigation into their prime diety.
This discussion and variations of it has been going on for years now. Each new attempt has/will be dismissed by the faithful with some combination of the following:
A) You're wrong.
B) He deserves it.
C) That's just like everything else.
D) You're just envious.
I can see how relatively small amounts of money could be invested into Bitcoins as speculation or just play. Several tens of millions of dollars have presumably been transferred to Bitcoin holders so far, in the aggregate. But many people are investing on claims that a single bitcoin will eventually be worth $10,000, $100,000, or $1 million. For that to happen, the world would have to transfer massive wealth to the early adopters, as this early adopter explains:
https://bitcointalk.org/index.php?topic=175833.msg1830933#ms...
Why would anyone do that rather than setting up an alternative? Massive delusions are possible, but it seems far more likely that the claim that a bitcoin will be worth $10,000 will start to seem ludicrous to everyone, as it obviously is.
After that, why would anyone buy a bitcoin for $100, or even $30 or $10? There's little practical use for them other than drugs or illegal gambling. And they're hardly worth speculatively buying at $100 just so that they could be sold at $120 or $150.
It's got to die eventually, unless everyone decide that they don't mind depreciating the value of everything else just so that the early adopters of this scheme can have untold wealth dumped into their laps. It's a fascinating technology, but that doesn't mean the speculative delusion will last forever.
Pyramid scheme? Just so. Of course, to some degree so is gold -- but gold has a much wider existing distribution (compared to Bitcoin), a much deeper history, and backers far more significant, both intellectually and financially, than the childish ideologues of bitcointalk.org.
Everyone had the chance to mine in the earliest of days, that's certainly true for me and I sometimes kick myself about it. Hindsight is 20/20.
If you lacked the vision, the luck, the timeliness, etc. of an early adopter, fair's fair. Pay them their respects. I still kick myself for not having my wits about me when I first heard about Bitcoin.
As for your alternative, I don't see why not. You could create a clone of Bitcoin today, why not do it yourself? They did that with Litecoin, too. In fact the author of Litecoin created it because he felt "wronged" the same way you do now. He felt as if too many people missed the boat with Bitcoin, and clearly people should have a second chance of early adopting such a revolutionary concept.
I don't feel the same way.
I sign onto most of what is written here: http://www.slate.com/articles/news_and_politics/view_from_ch...
In any event, the article raises two points.
1 - the currency is deflationary.
I'd argue that it is an inherently stable currency no different than gold. Many economists may say that a hard currency is not a good basis for an economy, but many economists say it is. That includes Hayek who won a Nobel for his theory of how best to allocate resources.
So to say that bitcoin will fail because it is deflationary is at best an opinion. You're free to hold it but that hardly makes bitcoins a scam.
2. Something better may come along.
That is basically saying bitcoins may fail, therefore it is a scam. In that case, most of the companies YC funds are a scam. They too disproportionately reward the founder and the first employees. You may say but they create a hard product of value or offer a service. Firstly, I'd say bitcoins is a product. It is not tangible, it is only 0s and 1s, but it is a product created out of applied mathematical theories and formulas and computational power. I'd also say it is a service for obvious reasons.
Even assuming you disagree with the latter points, lets go back to the YC funded company. Lets say they create something like google - a service - facebook - a service - wordpress - a product. Lots of people invest in these - making the founder and first employees rich beyond means - then something better comes along. Are you suggesting google is a scam? Oh but google has value. Say who? It provides a service - so does bitcoin.
What do you suggest, we tax them 90% so that we can all be equal?
If it's just a proof of concept of cryptocurrency in general, it's cool. It might remain a decent currency for certain uses in addition to other more transactional currencies, though.
1. Early adopter wants more buyers in their market to drive up share price? Check.
2. Price bubbles up and crashes due to high expectations? See number 1? Check.
Unlike any asset I'm aware of, this one is open-source and completely transparent.
> There's little practical use for them other than drugs or illegal gambling.
I think these types of statements will be looked back at contemptuously years from now, even if bitcoin fails and is replaced by something else. This is a completely new field. How can you imagine bootstrapping a currency like this? It can't start with nobody receiving any coins, or it couldn't be used. You could give all the coins to a single entity and have that entity distribute (like Ripple is doing) but this is even less fair than Bitcoin, especially since OpenCoin is keeping half of the coins they're minting.
Practically speaking, there is plenty of use for Bitcoins. I don't have to give anybody my personal information to transfer value, which is impossible to fathom in any other existing commodity. There's even more use for them as it grows and concepts which have not been fully implemented (smart property and the like) are developed into/around the protocol. Every month a great new idea pops up, like fidelity bonded ledgers or some zero-knowledge proof system which makes bitcoins pop into and out of existence without a linear path -- all without a central entity and only some crazy tricky math and sometimes game theory.
Gold itself has had a nasty history too. Remember, it was bootstrapped (relatively speaking) off a market of financing war and has been periodically seized by governments for that end. I personally think gold is much more secure of an asset now, as we have to trust that nobody will seize a majority of the hashing power in the bitcoin network for our coins to be valuable, whereas with gold we only have to trust that they are scarce. It's something like NSA vs. Science, really.
Every bubble could be its last bubble and just like the early adopters who were smart enough to cash out in 2011 when they saw the opportunity, there are some who were smart enough to cash out during this last bubble. This is why it is absolutely pointless to call it a ponzi scheme. The economic base does not depend on new users financing it. Massive bubbles do, which is why they should be ignored/hedged against.
I think the technology is great. The technology itself gives absolutely no reason for those who don't own bitcoins (in the main block chain) to buy them for any value.
Want to transfer value to someone half-way around the globe without dealing with Western Union, paying huge international fees, or giving your personal information out? I invested in a Chinese company which went on to pay my investment back and I still collect weekly BTC dividends. I never had to pay more than a dollar in fees the entire time, or give anybody my information (except the tax man).
Circumventing government controls is part of the value, the other part is removing the balkinization of finance which has made a global economy impossible or extremely unaffordable. Imagine being able to 'settle' a gold transaction with someone within 10 minutes, knowing it's not fake gold, half-way around the world, and being able to spend it immediately after back in the 1800's. What is this USD you speak of?
Secondly it also excels in that I can send money to someone I don't know for a service, and while they could disappear and run without me having much recourse, they can't steal/lose my bank details or credit card number. There's a different level of risk, one that pays off with small transactions rather than large. Credit cards are the other way, I'm unlikely to call mastercard to reverse a $0.2 transaction, and lots of the consumer protections (in the UK) only apply on certain size transactions.
To pay for something, I have to give someone enough information to take money out of my account. To send bitcoins to someone, it's up to me to send it.
The other reason is that they feel that, without transaction rate limits, mining won't be profitable when the rate of coin subsidy drops off. Some argue that we need the competition for limited block space in order to drive fees up enough to keep mining profitable. Those same fees kill microtransactions.
Since a hard fork would require agreement from essentially everyone involved in Bitcoin, there's essentially no chance of this limit being increased.
That's simply not a lot of data anymore.
The bitcoin network underwent a hard fork a couple weeks ago due to a bug in the implementation of the on-disk database.
The developers reached out to the mining pools and got the vast majority downgraded within 8 or 12 hours. A day or two later a new version was pushed out that mimicked the old behavior up until the point that a supermajority of nodes were upgraded, and then switched to the new behavior.
Forks have happened before, and the community is close-knit enough to resolve them. Everyone's primary goals are a) being ideologically neutral and b) keeping the network running, in equal measure.
Suppose that BitCoin becomes so popular that a country wants to join in. The normal way to do that is to have the central bank exchange your current currency with newly minted 'new' currency. With BitCoin, that isn't possible. The only way to join in is to somehow get BitCoin from existing owners. That will make the BitCoin exchange rate go up. The ones benefitting from that are those who already are 'in'.
Another way to look at this: if this becomes the world's currency, that 1 BTC you mined years ago for $1 of electricity on that $500 PC will be worth 1/21M-th of the wolrd's wealth, and will keep its worth forever.
Similarly it's not a Ponzi scheme because it doesn't involve the fraudulent transfer of new capital into fictional profits. Nothing remotely like this happens with bitcoin.
If we alter the definition of pyramid scheme so that Bitcoin qualifies, that definition would match every successful startup company.
It's different from startup in that a startup's shares increase in value, at least theoretically, on the likelihood of future dividends from the company. Startups can have bubbles or be Ponzi schemes too, but if they're indeed successful, they can earn money, and that money (or at least the bet that it will materialize) is a basis for sound investment by passive third parties who have capital.
Bitcoins increase in value only if you can sell them to future owners who are willing to pay more than you did. It's not quite a Ponzi scheme, but it has all of the important characteristics of one: old money is paid back from the new, and the value increases only on the hope that you can involve more new money.
You make it sound as if there is a set amount of buyers and transactions and the only way bitcoin can have value is if its price goes up which isn't the case.
As long as people are willing to accept bitcoins as having value then people are willing to buy it at a certain price. What that price is is determined by the market. It isn't necessary for bitcoin to either go up or go bust.
"old money is paid back from the new, and the value increases only on the hope that you can involve more new money."
Old money isn't necessarily paid back from the new. Money has already exchanged hand. Those that hold bitcoins hold a value of whatever the market considers worth. That may be 0, that may be 1m. That isn't any different from anything else. I.e. those who have dining tables hold such a value as the market is willing to pay.
And of course the value increases only if more people are willing to buy than sell i.e. involve more money.
What exactly is the ponzi part?
As for "money has already exchanged hands," that can be true of any Ponzi scheme as well. When we talk of "old" and "new" money in a Ponzi investment scheme, we don't mean two literally segregated categories. You might have some old money and some new money at the same time.
What really matters though is that whoever owns 7.8% of existing bitcoins has the ability to manipulate the market, due to their 'I got there first with my old gpu farm' advantage. Want to crash the market? Go for it... Of course they don't have the control that the Federal Reserve has, but they also don't have anywhere near the flak. Treat bitcoin like you treat going to the casino, except Mt. Gox doesn't give out free drinks.
Take my advice with a grain of salt, but I would put my faith in currencies that are backed by strong operational second-strike nuclear capability and a developed economy. This leaves USA/FR/UK as the winners, with India/Russia/China as runners up, since they are not developed nations yet. CHF is also a good reserve, but everyone especially the Europeans have been fleeing to it, and the Swiss caved to the USA so their 'banking secrecy' is not what it is advertized to be.
Namely comments like this: https://bitcointalk.org/index.php?topic=175996.msg1834237#ms...
It's obvious what's going on. They own a lot of bitcoins, but can't be made to look stupid by admitting to this travesty of a pre-mine that they all overlooked.
> The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
He made bitcoin public exactly after this. He even announced it on a mailing list months before. Unless he had a time machine it's impossible for there to be foul play.