- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: Is bitcoin gaining legitimacy?
Posted on 11/19/13 at 9:33 am to RebelOP
Posted on 11/19/13 at 9:33 am to RebelOP
quote:
If we know there are going to be 21Billion bitcoins created eventually, how will the price be determined of the coins?
Benny hit the nail on the head, but I just wanted to mention a few thing.
First, the total number of bitcoins will be 21 million. Currently about 12 million have been mined. The final bitcoins will be mined around the year 2140, however, by the year 2033, the vast majority will have been mined.
As for pricing, I defer to Benny. However, you can make some rough estimations if you want to play with some numbers.
For instance, ask yourself what you think a realistic market cap/monetary base (Benny, what would be the best term for that?) for all bitcoins would be?
Right now all bitcoins available are worth approximately 7.5 billion.
Could bitcoins ever have a market cap of 100 billion? If so, then that would make a single bitcoin worth $4761.90 (math: $100,000,000,000 / 21,000,000 = $4761.904)
Could bitcoins ever have a market cap of 500 billion? 1 trillion?
To make your estimation, think about the uses of bitcoin and how much people around the world value those uses. We're talking things like remittances, store of value, black markets, system-d, legitimate commerce, etc.
1
Posted on 11/19/13 at 9:34 am to Poodlebrain
quote:
Once all Bitcoins are mined, what is the incentive to keep mining? How will transactions be verified without steep transaction fees necessary to cover the cost of operating the mining computers?
I think that mining will still be needed to verify the transactions. The more people use bitcoins the more spending and transactions will continue so I think it will still have a place.
Posted on 11/19/13 at 9:35 am to Poodlebrain
quote:
Once all Bitcoins are mined, what is the incentive to keep mining? How will transactions be verified without steep transaction fees necessary to cover the cost of operating the mining computers? According to Blockchain.info, mining already costs more than it earns in new Bitcoins. How will the economics change to make the endeavor worthwhile? Once you can provide an answer to the questions as they pertain to Bitcoins extend them to any distributed network.
Mining will be funded by transaction fees.
Mining isn't as expensive as you claim, however, it isn't cheap either.
Done properly, mining is currently profitable, despite your rhetoric and poor calculations.
Posted on 11/19/13 at 9:39 am to WikiTiger
quote:
Could bitcoins ever have a market cap of 500 billion? 1 trillion?
Could it be zero? Just like bitcoins came into existance, others can as well. Perceived flaws or benefits of other systems could drive participation and acceptance to nil collapsing it's usefulness.
Posted on 11/19/13 at 9:41 am to C
quote:
Could it be zero?
yep
What percentage chance do you give the following scenarios?
Bitcoin market cap goes to:
$0
$10 billion
$100 billion
$1 trillion
Posted on 11/19/13 at 9:43 am to WikiTiger
I'm curious to your thoughts on this article. Bitcoin and Keyne's General Theory
I've met Izabella before. She is one of the smartest people I've met in the media, if not the smartest I've ever met, she is really incredible. She echoes a lot of my concerns in this article.
I've met Izabella before. She is one of the smartest people I've met in the media, if not the smartest I've ever met, she is really incredible. She echoes a lot of my concerns in this article.
This post was edited on 11/19/13 at 9:49 am
Posted on 11/19/13 at 9:51 am to BennyAndTheInkJets
quote:
I'm curious to your thoughts on this article. Bitcoin and Keyne's General Theory
i can't read it. it requires a subscription
eta: i was able to read some of her comments in the comments section, and let me just say that after reading them I question your judgment because she surely doesn't seem that smart to me.
example:
quote:
Capitalism needs socialism at the right times to make it the best it can be.
This post was edited on 11/19/13 at 9:57 am
Posted on 11/19/13 at 9:56 am to WikiTiger
MODS: IT ONLY TAKES A SIGN-UP ACCOUNT, THE BELOW ISN'T PAY MATERIAL.
Just an FYI, the article hyperlinks a couple words like 'bullshite' job for reference.
The crypto coalmine thought experiment
Izabella Kaminska | Nov 19 13:10 | 16
Part of the BITCOINMANIA SERIES
Bitcoin had its day in front of the Senate Committee on Homeland Security and Governmental Affairs 0n Monday, promptly roofing the price to over $900 per BTC on the back of the hearing, then crashing by 30 per cent and then recovering once again.
At pixel time the crypto currency was fetching about $690 on the MTGox exchange, with the community no doubt preparing for another day of extreme volatility.
Representatives at the hearing argued that the currency wasn’t as anonymous as many believed it was, that it wasn’t a greater criminal or laundering enabler than traditional cash, that there was plenty of scope for regulated supervision, and that above all the industry had the scope to create jobs.
The job case, in particular, proved interesting not least because it immediately brought the following passage from Keynes’ General Theory to mind:
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.
The difference between the vision being outlined by Keynes and the one being outlined by the Bitcoin community is that in the Bitcoin case the money is being buried not by a state Treasury but by a protocol that encourages people to waste energy and computer power for the chance of social elevation. It also involves something of a Jedi mindtrick to establish faith in the units being dug up.
Nevertheless this is still an extremely Keynesian economic case for the legitimacy of a crypto currency.
The weak point in the Bitcoin incarnation of the experiment, however, is the rigidity of the system and the lack of intervening authority. Remember, the Keynesian thought experiment is mainly about creating a stealth distribution mechanism for the additional cash that’s needed in the system, as well as an incentive for people to compete against each other for economic gain — something which in its own right creates supporting jobs.
But while the experiment represents the nearest thing to a laissez faire solution to an aggregate demand problem, even Keynes himself admitted the policy should only be used as a last resort. True, it was better than taking no action at all — because the experiment would help to circulate money through the system — but the flaw was that it depended on fooling people into thinking they were doing something useful when they were not.
In Keynes’ eyes it would be much better to direct spare labour and capacity (by a mindful supervisor, no doubt) to something more socially useful, with the potential to improve quality of life.
The fact that Bitcoin resembles the Keynesian thought experiment, however, by definition suggests it suffers from the Jedi Mindtick ‘bullshite job‘ distraction issue.
Though this is not its worst crime. The greater flaw is that the Bitcoin system concentrates wealth in the hands of a group of early adopters, and support industries, which end up forming a new elite. It’s a libertarian-minded reward doctrine, but it’s a highly warped one because the incentives which are put in place reward economic agents for unproductive and socially costly behaviours. Talk about a misallocation of capital in a world where there are still genuine needs and more worthwhile risks to take.
If there are social benefits they lie only in the jobs which are created for a small section of society, the innovation sparked by an incentive to produce faster and more efficient task-specific computers and the evolution of the payments infrastructure (innovations wherein can be replicated and adopted by other currency regimes). The most compelling social benefit is probably that the scheme encourages people to learn about programming, cryptography and computers and develop skills for a digital age.
But none of these benefits currently outweigh the socially destructive aspects of Bitcoin — the most destructive of which is the fact that the system transfers wealth to a small technological elite who had the foresight to invest in infrastructure which can now extract rents from the system (even after supply is no longer growing) in the form of transaction fees.
Late comers, however, will never have the means to compete or accumulate anything but a fraction of the wealth of the early adopters.
Most importantly, the system fails to protect the economy from the hoarding problem or supply crunches. This is true even if Bitcoins begin to trade as fragments, because the means to fragment the unit does little to distribute wealth from the early stakeholders to the fractional players.
Meanwhile, if fractional lending ensues after the end of Bitcoin’s money expansion period (in response to continued demand) the system would only end up replicating the very same leveraged system we already have today — complete with its propensity for debt-deflation crises, money supply crunches and/or liability-asset mismatches — but without the safety net of a money creator of last resort.
As for the retail payment practicality argument, the Bitcoin community neglects the fact that there is a reason why most nations are currently pursuing competitive devaluation strategies.
The advocates say “ah but this won’t matter when all nationalities and retailers use Bitcoin”.
We concede, this is probably a fair statement. But such a scenario would also be the effective realisation of Keynes’ global bancor system (the bare bones of which exist in the special drawing rights system of the IMF).
The teeny weeny problems that remain:
1) For this to work all sovereigns would need to give up tax collection in domestically denominated currencies.
2) The global “currency” would remain a poor and volatile medium of exchange unless nation states broke down national borders and jurisdictions, and allowed international trade to flow completely freely.
3) The world would have to come together to forge a new-Bitcoin based Bretton Woods equivalent, ironing out inequalities via a mutually agreed tax redistribution policy.
On the plus side, if all that happened you might end up with a global reserve currency which encouraged energy-based computer efficiencies, more scrupulous cryptographic security practices and a good blend of privacy and transparency.
But it’s a big “if.”
Just an FYI, the article hyperlinks a couple words like 'bullshite' job for reference.
The crypto coalmine thought experiment
Izabella Kaminska | Nov 19 13:10 | 16
Part of the BITCOINMANIA SERIES
Bitcoin had its day in front of the Senate Committee on Homeland Security and Governmental Affairs 0n Monday, promptly roofing the price to over $900 per BTC on the back of the hearing, then crashing by 30 per cent and then recovering once again.
At pixel time the crypto currency was fetching about $690 on the MTGox exchange, with the community no doubt preparing for another day of extreme volatility.
Representatives at the hearing argued that the currency wasn’t as anonymous as many believed it was, that it wasn’t a greater criminal or laundering enabler than traditional cash, that there was plenty of scope for regulated supervision, and that above all the industry had the scope to create jobs.
The job case, in particular, proved interesting not least because it immediately brought the following passage from Keynes’ General Theory to mind:
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.
The difference between the vision being outlined by Keynes and the one being outlined by the Bitcoin community is that in the Bitcoin case the money is being buried not by a state Treasury but by a protocol that encourages people to waste energy and computer power for the chance of social elevation. It also involves something of a Jedi mindtrick to establish faith in the units being dug up.
Nevertheless this is still an extremely Keynesian economic case for the legitimacy of a crypto currency.
The weak point in the Bitcoin incarnation of the experiment, however, is the rigidity of the system and the lack of intervening authority. Remember, the Keynesian thought experiment is mainly about creating a stealth distribution mechanism for the additional cash that’s needed in the system, as well as an incentive for people to compete against each other for economic gain — something which in its own right creates supporting jobs.
But while the experiment represents the nearest thing to a laissez faire solution to an aggregate demand problem, even Keynes himself admitted the policy should only be used as a last resort. True, it was better than taking no action at all — because the experiment would help to circulate money through the system — but the flaw was that it depended on fooling people into thinking they were doing something useful when they were not.
In Keynes’ eyes it would be much better to direct spare labour and capacity (by a mindful supervisor, no doubt) to something more socially useful, with the potential to improve quality of life.
The fact that Bitcoin resembles the Keynesian thought experiment, however, by definition suggests it suffers from the Jedi Mindtick ‘bullshite job‘ distraction issue.
Though this is not its worst crime. The greater flaw is that the Bitcoin system concentrates wealth in the hands of a group of early adopters, and support industries, which end up forming a new elite. It’s a libertarian-minded reward doctrine, but it’s a highly warped one because the incentives which are put in place reward economic agents for unproductive and socially costly behaviours. Talk about a misallocation of capital in a world where there are still genuine needs and more worthwhile risks to take.
If there are social benefits they lie only in the jobs which are created for a small section of society, the innovation sparked by an incentive to produce faster and more efficient task-specific computers and the evolution of the payments infrastructure (innovations wherein can be replicated and adopted by other currency regimes). The most compelling social benefit is probably that the scheme encourages people to learn about programming, cryptography and computers and develop skills for a digital age.
But none of these benefits currently outweigh the socially destructive aspects of Bitcoin — the most destructive of which is the fact that the system transfers wealth to a small technological elite who had the foresight to invest in infrastructure which can now extract rents from the system (even after supply is no longer growing) in the form of transaction fees.
Late comers, however, will never have the means to compete or accumulate anything but a fraction of the wealth of the early adopters.
Most importantly, the system fails to protect the economy from the hoarding problem or supply crunches. This is true even if Bitcoins begin to trade as fragments, because the means to fragment the unit does little to distribute wealth from the early stakeholders to the fractional players.
Meanwhile, if fractional lending ensues after the end of Bitcoin’s money expansion period (in response to continued demand) the system would only end up replicating the very same leveraged system we already have today — complete with its propensity for debt-deflation crises, money supply crunches and/or liability-asset mismatches — but without the safety net of a money creator of last resort.
As for the retail payment practicality argument, the Bitcoin community neglects the fact that there is a reason why most nations are currently pursuing competitive devaluation strategies.
The advocates say “ah but this won’t matter when all nationalities and retailers use Bitcoin”.
We concede, this is probably a fair statement. But such a scenario would also be the effective realisation of Keynes’ global bancor system (the bare bones of which exist in the special drawing rights system of the IMF).
The teeny weeny problems that remain:
1) For this to work all sovereigns would need to give up tax collection in domestically denominated currencies.
2) The global “currency” would remain a poor and volatile medium of exchange unless nation states broke down national borders and jurisdictions, and allowed international trade to flow completely freely.
3) The world would have to come together to forge a new-Bitcoin based Bretton Woods equivalent, ironing out inequalities via a mutually agreed tax redistribution policy.
On the plus side, if all that happened you might end up with a global reserve currency which encouraged energy-based computer efficiencies, more scrupulous cryptographic security practices and a good blend of privacy and transparency.
But it’s a big “if.”
Posted on 11/19/13 at 10:00 am to BennyAndTheInkJets
First problem I have with her argument:
She thinks she is the arbiter of what is socially useful. Typical Keynesian bullshite. They know what's best for society.
let me continue reading
She thinks she is the arbiter of what is socially useful. Typical Keynesian bullshite. They know what's best for society.
let me continue reading
Posted on 11/19/13 at 10:00 am to WikiTiger
quote:
Capitalism needs socialism at the right times to make it the best it can be.
What about the rest of it?
quote:
This is because during output gaps and demand shocks, capitalism turns nasty. That's not a case against capitalism, it's a case for flexibility and an appreciation that one size fits all policy doesn't necessarily work. I am neither a socialist or a capitalist, I am always about the optimum solution for the mutual economic environment.
Technically the government stepping in for stimulus isn't a form of capitalism.
Posted on 11/19/13 at 10:01 am to BennyAndTheInkJets
second issue:
She criticizes the fact that early adopters will get rich. That is ridiculous. Early adopters should get rich because they are the ones that invested their time, energy, and money into an unproven system. They took the biggest risk, they reap the biggest reward.
She criticizes the fact that early adopters will get rich. That is ridiculous. Early adopters should get rich because they are the ones that invested their time, energy, and money into an unproven system. They took the biggest risk, they reap the biggest reward.
Posted on 11/19/13 at 10:02 am to WikiTiger
quote:
She thinks she is the arbiter of what is socially useful
Don't care about her thoughts on what's socially useful. More focused on the last 6-7 paragraphs.
quote:
She criticizes the fact that early adopters will get rich. That is ridiculous. Early adopters should get rich because they are the ones that invested their time, energy, and money into an unproven system. They took the biggest risk, they reap the biggest reward.
Then it's a commodity or 'company'.
This post was edited on 11/19/13 at 10:05 am
Posted on 11/19/13 at 10:04 am to BennyAndTheInkJets
quote:
It also involves something of a Jedi mindtrick to establish faith in the units being dug up.
Posted on 11/19/13 at 10:05 am to BennyAndTheInkJets
third issue:
She just repeats the typical Keynesian hogwash about the evils of deflation and the wonders of inflation, albeit indirectly.
Conclusion:
She comes off as a bleeding heart concerned more about fairness and equality than any real economic principles.
She, along with many other economists, are going to be left shaking their heads wondering why all their theories were wrong. Because bitcoin is going to prove the Austrian's right.
She just repeats the typical Keynesian hogwash about the evils of deflation and the wonders of inflation, albeit indirectly.
Conclusion:
She comes off as a bleeding heart concerned more about fairness and equality than any real economic principles.
She, along with many other economists, are going to be left shaking their heads wondering why all their theories were wrong. Because bitcoin is going to prove the Austrian's right.
Posted on 11/19/13 at 10:06 am to WikiTiger
quote:So much for your claim of free or low cost transactions.
Mining will be funded by transaction fees.
quote:These people disagree with you. LINK What is wrong with their determination that the operating margin for Bitcoin mining was -298.62% for the past 24 hours, or that the profit margin for mining operations was -532.44% for that same 24 hours?
Mining isn't as expensive as you claim, however, it isn't cheap either. Done properly, mining is currently profitable, despite your rhetoric and poor calculations.
I'm not going to spend the time necessary to work out the math for you, but transaction fee revenue for the entire network was only 0.83% of $2,738,957.68. I'll let you figure out what the transaction fees will have to be at various transaction volumes in order to breakeven. Suffice it to say, the cost per transaction would be prohibitive to any business. Can you imagine a transaction cost of several dollars to purchase a pack of chewing gum? Assuming you can find someone willing to exchange chewing gum for Bitcoins.
Mining is not currently profitable, and you should stop spreading lies. The only way you can mine profitably is if you have a more vastly efficient method of solving the mathematical problems, or you get lucky. Are you claiming the game is fixed in favor of some players so that they can mine profitably while others are destined to fail?
Posted on 11/19/13 at 10:08 am to WikiTiger
quote:
She just repeats the typical Keynesian hogwash about the evils of deflation and the wonders of inflation, albeit indirectly.
You're reaching there, actually doesn't even indirectly say one is good/bad. Her point was that it will act the exact same way as the current system does, something I have stated several times.
quote:
She comes off as a bleeding heart concerned more about fairness and equality than any real economic principles.
The last 6-7 paragraphs say anything about social fairness? Start at "Meanwhile" till the end.
quote:
oing to be left shaking their heads wondering why all their theories were wrong. Because bitcoin is going to prove the Austrian's right.
Oh frick not again
This post was edited on 11/19/13 at 10:10 am
Posted on 11/19/13 at 10:14 am to BennyAndTheInkJets
quote:
The greater flaw is that the Bitcoin system concentrates wealth in the hands of a group of early adopters, and support industries, which end up forming a new elite
Quick, somebody tell me what this sounds like.
Posted on 11/19/13 at 10:14 am to Poodlebrain
quote:
These people disagree with you. LINK What is wrong with their determination that the operating margin for Bitcoin mining was -298.62% for the past 24 hours, or that the profit margin for mining operations was -532.44% for that same 24 hours?
I'm not going to spend the time necessary to work out the math for you, but transaction fee revenue for the entire network was only 0.83% of $2,738,957.68. I'll let you figure out what the transaction fees will have to be at various transaction volumes in order to breakeven. Suffice it to say, the cost per transaction would be prohibitive to any business. Can you imagine a transaction cost of several dollars to purchase a pack of chewing gum? Assuming you can find someone willing to exchange chewing gum for Bitcoins.
Mining is not currently profitable, and you should stop spreading lies. The only way you can mine profitably is if you have a more vastly efficient method of solving the mathematical problems, or you get lucky. Are you claiming the game is fixed in favor of some players so that they can mine profitably while others are destined to fail?
Poodlebrain, you continue to amaze me with your stupidity regarding the technology side of bitcoins.
As I stated, done properly, mining is profitable. In fact, there are many companies out there mining profitably.
The advent of ASIC technology has made mining extremely efficient, that is to say it uses significantly less power than previous mining methods, while performing immensely more calculations.
The local cost of electricity comes into play, as well as the costs for cooling. There are many variables involved, and yes, some people are better poised to profit off of mining than others.
Poodle, you continue to spread techo-FUD that is full of half truths and misunderstood technologies. You do not understand this as well as you think you do. Please go do some real research. Talk with the miners. Go to bitcointalk.org and join the forum and post your questions on the mining board. Go to reddit.com/r/bitcoinmining and ask questions. Talk to people that do this.
Also, understand the mining process better and how it will naturally find an equilibrium of profitability. If mining becomes too expensive, then miners will drop out. If miners drop out, then the difficulty goes down. If difficulty goes down, then mining becomes more profitable. If mining becomes more profitable, then more people will mine.....wash. rinse. repeat. An equilibrium will be found.
However, it seems you lack the ability to understand this concept.
Posted on 11/19/13 at 10:18 am to BennyAndTheInkJets
quote:
Oh frick not again
Benny, I admire your persistence and patience with wiki. You still hold the Gold Standard (no pun intended) for the post where you gave him a lesson on how currency exchange rates are determined and how he was misinterpreting the rates shown on the bitcoin exchanges.
Having said that, you're wasting your time with him. Even though wiki is anti-religion, bitcoin IS his religion. There is no amount of logic or facts you can use to change his mind.
For him, bitcoin can walk on water, raise the dead and turn water into wine. It's all based on faith, not facts.
Posted on 11/19/13 at 10:23 am to WikiTiger
quote:This is simply untrue. The cost to mine the first block of Bitcoins was insignificant compared to the cost today. The potential reward was also much greater since you got more Bitcoins for each solution that cost less to derive. If anything, they took less risk. They just happened to take the risk earlier.
They took the biggest risk, they reap the biggest reward.
Page 4 of 9
Popular
Back to top
Follow TigerDroppings for LSU Football News