1053r

>>The value diverted to coin purchases ultimately has a cost in goods and services

This is incorrect, or rather it is incorrect that it is different from the Proof of Work example, so it should be discarded from the analysis.

Scenario 1) I work a paper route to purchase ASICs and electricity to bootstrap my mining business. The world got paper delivery out of me, and consumed some strained silicon and electricity for mining, which raised the costs of electricity and mining for other uses.

Scenario 2) I work a paper route to earn ETH to validate. The world is the same as in Scenario 1, but the strained silicon, fab time, expertise, electricity, etc. all went to work on other projects instead of mining equipment, leaving the world slightly richer. (Perhaps a startup was able to purchase microcontrollers for their new widget at slightly lower cost, improving the return on investment for their founders.)

Again, from a miner/validator perspective, PoW and PoS are the same, but from a global perspective, they are not.

This article is full of problems, but the biggest one is failing to look at the global perspective:

While it is true that an individual miner/validator will be indifferent to spending money on electricity and mining equipment vs. purchasing coin to stake with, the difference between the two is a meaningful to non-miners/non-validators.

In the mining case, the miner is purchasing equipment and electricity that divert real resources away from the production of other goods and services.

In the validating case, the validator purchases coin, which causes prices of that coin to adjust upward. The economy keeps producing the exact same goods and services as if the validation activity did not exist (after a short dislocation, which would be very short in this case because few contracts are denominated in cryptocurrency).

So "nothing is cheaper than proof of work" is a true statement if you are a miner/validator. However, it is a false statement if you are cryptocurrency designer.

Obviously, it is easy to design a coin which is MORE wasteful globally than BTC. Instead of running on electricity and hashing, make it run on proof of extinction (verified in major newspapers) of critically endangered animals. The miners will spend time and energy doing terrible things to the planet, but they will spend no more money time or energy on it than they would have spent on electricity and ASICs. Why should it be impossible to design a currency that is LESS wasteful than proof of work?

I recommend against reading the truthcoin.info blog in general. This kind of wooly headedness is widespread, and the writing style is obtuse enough to make it hard to figure out exactly why the author is correct or incorrect.

Edited for grammar/clarity.

What? The IRS gave guidance for this in 2014! It's right there under item Q-6 in Notice 2014-21. https://www.irs.gov/pub/irs-drop/n-14-21.pdf

"Q-6: Does a taxpayer have gain or loss upon an exchange of virtual currency for other property?"

"A-6: Yes." (quote continues, but there you go).

I have no idea how folks came to the conclusion that 1031 swaps were ever acceptable, but it's always been clear that the IRS did not think they were.

TL;DR Don't get your tax advice from Reddit. (Or random commenters on hacker news, for that matter.)

That's the highest AVERAGE ROLLING 30 DAY volatility.

For example, on Dec 7, 2013, volatility between the high and the low was 54.6%. [1] However, it was lower for the other days of all 30 day periods that include that day, and averaged out to under 15%.

1 - https://www.coindesk.com/price/

To be fair, while Bitshares was a pretty complete failure, BitUSD, which sits on top of it as a "stablecoin" should be regarded as a complete success. Look at the price chart relative to dollars. [1] It only has brief and small excursions away from $1 despite being thinly traded and having very low market cap, and being backed by having a nearly worthless coin, as cryptocurrencies go.

Stablecoins are a very interesting concept. They are a game-theoretically incentive compatible way to stabilize a currency WITHOUT a trusted monopoly producer. [2]

1 - https://coinmarketcap.com/currencies/bitusd/ 2 - https://blog.ethereum.org/2014/11/11/search-stable-cryptocur...

This article appears to be written under the assumption that coinbase and other exchanges are counterparties to the price. They are not. They are market makers. It's impossible to have a run on dollar demand for BTC, because the price floats. If there are sufficient people selling, the price will simply fall, and has done so several times in the past, before recovering when equilibrium returned to the market. Exchanges are not taking loans to back the dollar value of BTC.

The author appears to lack basic understanding about how markets work in this space.

Your linked argument is poorly formed. It's true that any system which periodically emits value will cause people to work towards achieving that value. However, it's not true that the work in question will necessarily be wasted in an arms race.

Specifically, a (well constructed) Proof of Stake system will cause people to work to get a piece of the value by having them purchase the coin used for staking. This will cause the value of the coin on the open market to rise, which will increase the equilibrium market cap of the coin in relation to the world.

Because "money is a veil" [1], this won't create or destroy any actual goods or services. It will just transfer value from some persons to other persons. Therefore, Proof of Stake is more efficient than Proof of Work, because it moves cryptocurrency from negative-sum (electricity wasted) to something that's approximately zero-sum.

Another way of saying this is that you can't PRODUCE value by creating any currency with zero intrinsic value. However, you can WASTE value in this activity, and Bitcoin, as currently constructed (along with all possible Proof of Work systems) is wasteful. Proof of Stake wastes less value than Proof of Work.

1 - https://en.wikipedia.org/wiki/Veil_of_money

Just to be clear, the power requirements for a supercharging station and a gas station are wildly different. The supercharging station might be putting out 75KW per car, and have a dozen cars charging at any particular point. A whole gas station might pull less than 75Kw easily.

The requirements for the kind of grid hookup you need to handle that power are wildly different. Alternatively, you can have a lower powered grid connection, and local batteries to buffer energy and lower peak power, but that is even more expensive, and only works if your charging station has low average usage.

Once built, the supercharging station might need less maintenance, but it is WAY more expensive to set one up up front. This won't stop them from proliferating, IMO, but it's still a big barrier to entry, and a nice commercial "moat" for Tesla to offer their customers.

From the "Owner's Manual" [1], it appears that this is just another ETH ERC20 token. All of the "portability" features of it are just based on atomic swaps, which means that the security of this token for most purposes is equal to the security of the lowest security chain on which it lives. Since participating in this requires being in the ETH ecosystem, and this is not designed to be an "appcoin" (single use token), but instead is designed to be a general purpose currency, I'm unclear what it really brings to the table.

Also, it appears that it will only support being on ETH initially. While I imagine it would be pretty easy to port to ETC, it's probably never going to live on top of Bitcoin, because the smart contracts would be prohibitive in terms of cost.

1 - https://www.metronome.io/pdf/owners_manual.pdf

This is the difference between individuals and organizations. At no point did the author attempt to "respect" or "open a dialog" with the KKK as an org. (I'd argue his talks were aimed at individuals.) Instead, he opened a respectful dialog with individual Klansmen.

The LGBTQ rights movement shows us the same thing. Look at how politicians who used to advocate discrimination modified their stance when family members came out to them. It didn't stop institutions from discriminating against LGTBQ rights directly, but enough brothers, mothers, sisters, sons, best friends, etc. coming out on a one-on-one basis eventually took the wind out of some of the institutional discrimination.

The idea that a group of people are less than human because of a particular characteristic is what enables this kind of institutionalized hatred. However, if we open enough one-on-one respectful dialogs across the lines that propose to divide us, the institutions that support those divisions will lose their support and melt away.

There is a long way to go. Racism, sexism, homophobia, etc. are rampant not just in the western world, but globally, and institutions reinforce these boundaries daily. However, with enough mature dialog by individuals, we can wear down hatred with respect.

Please don't spread FUD. In the DAO guidance [1] you reference, the SEC explicitly calls Ethereum a virtual currency, and does not call it a security.

"From April 30, 2016 through May 28, 2016, The DAO offered and sold approximately 1.15 billion DAO Tokens in exchange for a total of approximately 12 million Ether (“ETH”), a virtual currency used on the Ethereum Blockchain."

They might change their mind on the matter, and expand their definition of virtual currency to be securities, but they went out of their way to publish a piece which references the word "Ethereum" 39 times, "Ether" 2 times, and "ETH" 15 times. None of those times do they refer to Ethereum as as security.

[1] - https://www.sec.gov/litigation/investreport/34-81207.pdf

You answered your own question: military applications.

The US Armed Forces would pay a LOT of money to move 100+ tons of personnel and materiel anywhere on earth with a flat landing spot in under 60 minutes.

You could have tanks on the ground that were fully operational in under 3 hours (probably half that if they left the BFR packed and fueled for takeoff at all times), or a disaster recovery base set up within 24 hours of the winds dying down (to pick a more topical example.)

The irony of this article is deep. It is literally making a "First they came for the neo-nazis, and I said nothing" argument. As a coworker of mine just said, "We might be standing on a slope here, but it isn't really slippery."

As an owner of a pure electric car (and a home renter) for more than 5 years, I logged in specifically to respond to this.

In 5 years, our Leaf has needed new tires, brake fluid, and... windshield wiper fluid and blades. We didn't need any new infrastructure. We plug it into a normal outlet at night, and it's full every morning. We've been taking the money we save on not doing transmission fluid and clutches and oil changes, and all of that stuff and put it in a savings account. In another 3 years, we'll need a new battery, but by then, it will probably be twice the capacity of the old one. (Nissan has discontinued the 24Kwhr battery, so fingers crossed, we'll get a 40KWhr battery when the time comes).

From a more global perspective, even here in Northern California, electricity is very inexpensive at night, because of all the spare generator capacity. Practically everyone can plug in their car at night, and with nothing more sophisticated than a $10 outlet timer, fuel up the fleet no problem.

Will every car be electric in 2040? Probably not, because cars last a long time. But I'll bet there will be very few gas cars sold by then. Battery prices are falling over 7% a year, and that's the most expensive part of an EV.

While I can't say with certainty whether mild and predictable deflation is bad for the economy, I don't think that these standard arguments that are used are sufficiently persuasive.

1) It is clear that a deflationary spiral, defined as possessing the characteristics of being unexpected, not written into contracts or loans, and relatively severe (double digits) while accelerating is bad. The great depression makes this clear. We can also see it in the current Greek situation. However, runaway inflation is equally bad, as we can see from post WW1 Germany, and modern day Venezuela and Argentina. Is it the fact that the change in the buying power of money is large and unexpected, or is it the sign of the inflation percentage that is bad?

2) Under the current debt based money system, the negative effects of inflation fall primarily on the poor. The wealthy purchase government bonds, which protect them inflation. They also have bank accounts, or finance debt either directly or indirectly. This means that instead of inflation falling on the populace evenly, it falls doubly on the poor.

3) Under a constant money supply system that eschews debt, the rich must seek out investment that actually increases productivity, rather than doing parasitic zero-sum investments (such as bond purchases and loan giving) that merely transfer value from one person to another. This would tend to grow the economy faster.

4) Under a constant money supply (like Bitcoin in a few years), wages and prices would tend fall by however much the economy was growing (2% - 3% a year), but the raises that people give out for seniority would tend to overwhelm the wage issues.

"Manufacturers are secretive, but analysts say a lithium-ion battery pack costs an average of roughly $500 per kilowatt-hour"

This can not be true. Tesla will sell a 10kWhr pack for $3500 retail, which is $350.

Nissan will sell me a replacement 24kWhr pack for my LEAF for $5500, or $229. Are they losing money on it? Maybe, but I doubt they are losing THAT much.

I personally volunteer my backyard. My neighbors will probably disagree with me, but all I require is $100 per household-year of high level waste generated. Since nuclear power generates approximately 1 coke can worth of waste per year of powering a household, a 55 gallon concrete cask will hold 586 households worth of waste for a year.

My disposal plan will add approximately half a cent per kilowatt hour to the price of electricity, and I have a minimum order size of 10000 casks, or the waste of 5,860,000 households. My half billion dollars will be primarily invested in: 1) storing the casks in my backyard as a depot while I load them onto a container ship. 2) A single container ship which I'll float over deep ocean trenches, dodge hurricanes, and run fuel and supply ships out to. 3) Approximately 1/4th of a presidential campaign ($250 million) worth of advertising, marketing, and education about the safety of 3rd generation nuclear reactors.

I will then sell the "waste" back to the resulting 3rd generation reactors for $100,000 per cask (for around 5000 household-years worth of energy per cask). I figure I should net a profit on the scheme of around a billion dollars per iteration of this scheme, once I factor in my expenses.

Seriously. The "waste" problem is not a problem. It's a massive profit opportunity waiting for an entrepreneur.

Article contradicts itself and reality to make lithium ion seem more expensive. First it says that batteries typically cost $500 / kWh, so that a battery for a "small electric car can cost around $10,000". (As an aside, Nissan will sell me a replacement battery for my LEAF for $5499. [1]) This is $229.13 / kWh, because my LEAF has a 24 kWh battery.

Then it says Tesla is selling the 10kWh PowerWall for $3500, which of course is $350 / kWh.

Sloppy reporting. I expect better from the Economist.

1 - http://www.greencarreports.com/news/1092983_nissan-leaf-batt...

The strongest arguments for and against raising the blocksize are all about decentralization.

For the raise: As the number of transactions organically grows, if the blocks fill up, users will be pushed to "off-chain" services such as CoinBase or ChangeTip. This will hurt decentralization, because these services are basically banks.

Against the raise: As the size of blocks have grown, the number of full nodes has fallen. Further increases in block size will only make the number of full nodes decrease further (because of increased requirements for bandwidth, memory, and disk space), which will hurt decentralization.

This is just empirically false. High rise construction is massively cheaper than the current property values. Per square foot, suburban Palo Alto is $1409 per square foot at the median [1]. Heck, even the Burj Khalifa, the tallest building in the world, and hardly a bastion of affordable housing, cost only 1.5B / 3,595,146 = $417 per square foot. [2]

More reasonable construction of 10 - 20 stories could easily be put up for that cost, even once you factor in the high cost of labor in CA.

1 - http://www.trulia.com/real_estate/Palo_Alto-California/ 2 - http://en.wikipedia.org/wiki/Burj_Khalifa

This is simple supply and demand. Everyone from liberal economist Paul Krugman [1] to SF board of supervisors member Scott Wiener [2] agrees that California and bay area housing policies are horrible. The only people who actually like these policies are the people who are benefiting from them, typically because they moved to a neighborhood decades ago and are either on rent control or "rent control for property tax" (aka Proposition 13).

The solution is simple. Set aside a square mile in each city on the peninsula and zone it such that it is illegal to build a building of less than 10 stories. At the same time, and more importantly, repeal both proposition 13 and rent control statutes.

For step 3, sit back and watch the California economy go into turbo drive as there is a massive construction boom, which funnels money away from rich landlords and into the pockets of ordinary construction workers and the service workers that support both them and the engineers the region's wealth is built on.

1 - http://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-... 2 - https://medium.com/@Scott_Wiener/yes-supply-demand-apply-to-...

So since this video was made, the price has gone down by approx 35% and the difficulty has gone up by approximately 17%, for a total adjustment in revenue of about 50%, unless they added more machines, or upgraded their current ones. That's pretty brutal.

Ultimately (and not long from now if these rates of adjustment continue), mining will be a commodity business with a very small profit margin. When you consider that there are uses for low grade heat (like home and office heating), once the ASICs catch up with Moore's law, it seems likely that the profitability will be slightly negative for someone trying to run this kind of business. (As another reason, there will probably be people who have access to basically free electricity that would have been wasted, and just need to amortize the cost of the ASICS).

However, because mining is a zero sum game, we can conclude that the profitability of mining was very high at the time of the making of this video, or else the margins wouldn't have been able to drop as much as they did. This says that a rational large investor would choose to put their money into mining rather than directly buying bitcoins, if they were interested in getting into this space. That's probably why the price has been falling since the peak early last year.

According to TFA, "The next pandemic will erupt, not from the jungle, but from the disease factories of hospitals, refugee camps and cities"

The problem, as I see it, is that we have entire swaths of cities in Monrovia, Liberia being sealed off and turned into disease reservoirs [1]. These are precisely the conditions that we are supposed to be worried about!

[1] http://www.breitbart.com/Big-Peace/2014/08/22/West-Point-Slu...

Except his main point (of Bitcoin failing to grow exponentially) is just false. Look at the "number of transactions per day excluding popular addresses" (located at https://blockchain.info/charts/n-transactions-excluding-popu...). You see a clear straight line on a logarithmic scale. So while Bitcoin may not be growing as fast as mPesa did, it is definitely growing exponentially.

A few of the very earliest participants in the bitcoin community (who got in before the first big peak at $32) have 100K BTC.

As a rough order of magnitude estimate, if Bitcoin gets to be as big a thing as gold, then it will be worth about $10 trillion. Since there will be about 20 million BTC by then, those individuals will be worth about $50 billion. This is a lot of money to be sure, but there won't be many of those people, and this is not out of line with the world's very highest net worth individuals.

The people who got in after that peak will probably be worth at least an order of magnitude less. And if Bitcoin turns out to be a smaller deal than gold, it might "only" create fortunes worth 9 figures of USD.

If this system is actually combat ready any time in the near future, it has very large geopolitical consequences. The Korean peninsula has mutually assured destruction (and thus stability) because the South could destroy the North easily militarily (and with the help of the USA), but not before the North shelled Seoul (the South's capital and largest city) to the ground with artillery rounds.

Because Seoul is so close to the border, it has allowed the North to have a standoff with the south without needing a nuclear deterrence. The North will need to step up their second strike nuclear capabilities, or get strong assurances from China that China will step in in case of invasion if this defense system works and is deployed over Seoul.

Given that ASIC mining runs more like 10 W / GigaHash [1] (not 650W as stated on blockchain.info/stats), we are actually looking at more like ~$150K per day, or $56M per year to run.

At the moment, the value of bitcoin is $7.2B [2], so we can assume that if it scales up to $2T (about the same as M1 of the dollar[3]), then if cost scales linearly, it will cost about $15B per year to run the bitcoin network. That is probably less than it costs to pay the mint, federal reserve, and secret service.

1) http://millybitcoin.com/does-bitcoin-mining-use-a-large-amou... 2) http://www.bitcoincharts.com/bitcoin/ 3) https://www.cia.gov/library/publications/the-world-factbook/...

So the biggest problem with this post is that blockchain.info specifically says that they assume 650W per GigaHash. This is just out of date.

Modern ASIC miners (which are doing the majority of the mining) are doing more like 10W per GigaHash.[1]

So we only need 1/65th of what is being estimated.

1) http://millybitcoin.com/does-bitcoin-mining-use-a-large-amou...

This system suffers from the same political economy problems that democracies have. For example, if I am a corn producer in the USA, I have a strong incentive to spend lots of money lobbying and contributing to political campaigns to ensure a strong protectionist policy for sugar. It ensures that my corn is purchased and used for corn syrup, and that Brazilian sugar cane doesn't destroy my market.

The good from this policy is concentrated on the corn producers, and the harm is spread diffusely across all people who consume sweets. If I am an average consumer of sweets, I see little benefit fighting this policy today, since it will only change the price of a soda by a few cents.

Under a "Futarchy", the corn lobby can spend lots of money to "predict" that a sugar tariff will make the country better. They might even believe it, but I will have little incentive to vote with my wallet against such a policy, since the harm will be diffuse and extremely difficult to conclusively pick out from the noise using econometric techniques. Result: a strong tariff, which almost all economists agree is a bad policy. [1]

Just because Futarchy is vulnerable to some of the same problems as democracy as practiced in the USA doesn't mean it is a bad system, but I fail to see how it is functionally different than a plutocracy. [2]

The problem with prediction markets is that they are only accurate in so much as one's incentive to "waste" money producing an incorrect prediction is smaller than the amount of money to be made by having that incorrect prediction.

Hanging all law off of the results of prediction markets creates HUGE incentives for me to game the prediction markets, then extract rents elsewhere in the economy to more than recoup my investment.

[1] https://en.wikipedia.org/wiki/Tariff

[2] https://en.wikipedia.org/wiki/Plutocracy

(Edited for grammar, citations).

I had no idea that they were sitting on such a large stash of bitcoins (from the article, 250K). This leads me to believe that they have been trading on their own exchange to keep the USD / BTC price depressed.

For example, if the "market" decided that there was a 50% chance Mt. Gox was never going to solve their banking problems and allow unlimited fiat withdrawals, then you would expect there to be a 100% price premium for BTC on Mt. Gox. However, that would send a VERY scary message in terms of their viability, which would quickly become a self fulfilling prophecy, so Gox could sell some of their stash to keep the price premium to say, 10%. If they tried to push it all the way down to a 0% premium, though, they would quickly run through all their BTC.

Since the price premium has been stable at almost exactly 10% for months, that suggests SOMEONE is manipulating it, probably to keep it low. Does anyone care to look in the blockchain and do the deobfuscation to see if my theory is correct?