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There's going to be a problem with any Bitcoin-style currency once sophisticated algorithmic trading becomes widespread enough that compute time is always more

There's going to be a problem with any Bitcoin-style currency once sophisticated algorithmic trading becomes widespread enough that compute time is always more profitably spent day-trading than mining.

ksowocki 11y ago
OP here. I'd presume that someone who is better versed in wall-street style algorithmic trading could speculate better than i what a mature cryptocurrency trading market would look like. I'm curious to see what a mature market in this space looks like. It'll surely be different on a currency-by-currency basis, because volume, market depth, and fundamentals matter greatly and are unique on a per-currency basis. Time will tell. As to whether profitable automatic currency trading competes with mining for compute time, I posit the following question to you: Are the two mutually exclusive? In a world with (1) scalable compute power via AWS, Digital Ocean, etc, and (2) both are profitable, why not do both instead of one?
- Caprinicus 11y ago
  If it was profitable to mine with AWS, why wouldn't amazon be doing it themselves?
  - ksowocki 11y ago
    If I had to speculate, I'd hypothesize that there are lower hanging fruit with respect to profit opportunities at Amazon than cryptocurrency mining.
    - Caprinicus 11y ago
      Think about it this way though. If it was profitable to pay amazon to do it even with them taking their cut, it would be much more profitable for them to do it themselves. If it was more profitable than renting out the performance to other people, it would be the lowest hanging fruit by default. This isn't hypothetical, the CPU mined coins aren't close to profitable with web services. And the people making profitable ASICs are using them rather than selling them because it's intrinsically more profitable.
AgentME 11y ago
Bitcoin's automatically adjusting difficulty rate means that if fewer people are mining, then it becomes more profitable for them, which guides the system into an equilibrium. Also, mining profitably requires special hardware built specifically for Bitcoin mining.
- ksowocki 11y ago
  > Also, mining profitably requires special hardware built specifically for Bitcoin mining. For bitcoin yes, but there are proof of work cryptocurrency systems out there that use CPU. And there are proof of stake systems out there that neither cpu or gpu intensive. For a lot of people, cryptocurrency = bitcoin. But there's a growing number of crypto enthusiasts who see crypto as an constellation of cryptocurrencies, each with their own unique attributes and fundamentals, that complement (as well as compete with) bitcoin.

ksowocki 11y ago

OP here. I'd presume that someone who is better versed in wall-street style algorithmic trading could speculate better than i what a mature cryptocurrency trading market would look like. I'm curious to see what a mature market in this space looks like. It'll surely be different on a currency-by-currency basis, because volume, market depth, and fundamentals matter greatly and are unique on a per-currency basis. Time will tell. As to whether profitable automatic currency trading competes with mining for compute time, I posit the following question to you: Are the two mutually exclusive? In a world with (1) scalable compute power via AWS, Digital Ocean, etc, and (2) both are profitable, why not do both instead of one?

Caprinicus 11y ago
If it was profitable to mine with AWS, why wouldn't amazon be doing it themselves?
- ksowocki 11y ago
  If I had to speculate, I'd hypothesize that there are lower hanging fruit with respect to profit opportunities at Amazon than cryptocurrency mining.
  - Caprinicus 11y ago
    Think about it this way though. If it was profitable to pay amazon to do it even with them taking their cut, it would be much more profitable for them to do it themselves. If it was more profitable than renting out the performance to other people, it would be the lowest hanging fruit by default. This isn't hypothetical, the CPU mined coins aren't close to profitable with web services. And the people making profitable ASICs are using them rather than selling them because it's intrinsically more profitable.

AgentME 11y ago

Bitcoin's automatically adjusting difficulty rate means that if fewer people are mining, then it becomes more profitable for them, which guides the system into an equilibrium. Also, mining profitably requires special hardware built specifically for Bitcoin mining.

ksowocki 11y ago
> Also, mining profitably requires special hardware built specifically for Bitcoin mining. For bitcoin yes, but there are proof of work cryptocurrency systems out there that use CPU. And there are proof of stake systems out there that neither cpu or gpu intensive. For a lot of people, cryptocurrency = bitcoin. But there's a growing number of crypto enthusiasts who see crypto as an constellation of cryptocurrencies, each with their own unique attributes and fundamentals, that complement (as well as compete with) bitcoin.