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The long term value of gold is based on the price of mining new ounces of gold. Likewise, the long term value of Bitcoin is based on the price of mining new co

by pdq 10y ago

The long term value of gold is based on the price of mining new ounces of gold. Likewise, the long term value of Bitcoin is based on the price of mining new coins, which is based on the mining network. The only way Bitcoin would go to zero is if a fatal architecture fault is found, which is quite unlikely.

pavel_lishin 10y ago
But isn't there a maximum number of bitcoins to be mined? Eventually the price of mining new coins becomes infinite.
- llamataboot 10y ago
  yes, this is an oft-reversed causation. The price of bitcoin is determined by the same thing the price of everything is determined by in a market system. What the current supply of bitcoins is and what the current demand for those bitcoins is. The "cost" of mining doesn't even enter into the picture. How mining does enter into the picture is the ingenious way that difficulty auto-corrects. If bitcoin prices plummet and the cost to mine them is more than they are worth, many miners will drop out, and the difficulty to mine them will get easier, until the difficulty stabilizes around a place where it is slightly profitable to mine them -- this is why mining has always been a race to the bottom and why eventually economies of mining scale (server farms, etc) would beat the person with 4 GPUs running in their basement.
TheOtherHobbes 10y ago
The long term value of gold is based on price fixing. Crazy conspiracy talk? Not according to Reuters: http://www.reuters.com/article/deutsche-bank-lawsuit-metals-idUSL2N17H1OS http://www.reuters.com/article/deutsche-bank-lawsuit-metals-...
- deleted 10y ago
  [deleted]
- riprowan 10y ago
  Fortunately Bitcoin is immune to such things /s
JonFish85 10y ago
"The only way Bitcoin would go to zero is if a fatal architecture fault is found, which is quite unlikely." Or if people just forget about it and move to something else. At least gold has some physical properties that make it useful for things.
- deleted 10y ago
  [deleted]
CJefferson 10y ago
There is already a fatal architecture flaw - someone owning 51% of the mining power could reck havoc. We just need some way for someone to make enough money out of bitcoin's failure.
- vinceguidry 10y ago
  That problem also exists with 'normal' currencies.
- daveguy 10y ago
  Someone owning 51% mining power could reak havoc by falsifying transactions... Could they control the price in general?
  - maaku 10y ago
    They could take all the coins. All of them.
- cb18 10y ago
  Also, when gox tried to blame "transaction malleability," people rightly saw that as a ruse. But when people said transaction malleability was a non-issue, they were quickly proven wrong when someone used it to DOS the network. But that was quickly swept under the rug, down the memory hole in the bitcoin community.
mikeokner 10y ago
Actually, Bitcoin is having some pretty serious problems at the moment. The stability is surprising. https://www.cryptocoinsnews.com/block-size-halving-bitcoin-network/ https://www.cryptocoinsnews.com/block-size-halving-bitcoin-n...
- brador 10y ago
  It's almost like it's being artificially propped to prevent panic selling.
- maaku 10y ago
  What problems?
  - mikeokner 10y ago
    ...click the link.
    - maaku 10y ago
      I did, it's a massive distortion of non-issues. What are the _actual_ problems?
      - mikeokner 10y ago
        Basically, the current block size limit of 1MB isn't sufficient for the current volume of transactions. Some transactions aren't making it into blocks in real-time and have to sit waiting in a queue to be processed. This leads to delays in processing commercial payments, which in turn threatens Bitcoin's viability as a mainstream currency. Some people argue the issue could be easily fixed by simply raising the block size limit, but others disagree and believe that would become too costly in bandwidth and processing capacity for miners, so AFAIK there's still no consensus on a resolution. A couple other good explanations: http://rusty.ozlabs.org/?p=535 http://rusty.ozlabs.org/?p=535 https://medium.com/@octskyward/the-resolution-of-the-bitcoin-experiment-dabb30201f7#.s44pxu3o5 https://medium.com/@octskyward/the-resolution-of-the-bitcoin...

by pdq 10y ago

pavel_lishin 10y ago

But isn't there a maximum number of bitcoins to be mined? Eventually the price of mining new coins becomes infinite.

llamataboot 10y ago
yes, this is an oft-reversed causation. The price of bitcoin is determined by the same thing the price of everything is determined by in a market system. What the current supply of bitcoins is and what the current demand for those bitcoins is. The "cost" of mining doesn't even enter into the picture. How mining does enter into the picture is the ingenious way that difficulty auto-corrects. If bitcoin prices plummet and the cost to mine them is more than they are worth, many miners will drop out, and the difficulty to mine them will get easier, until the difficulty stabilizes around a place where it is slightly profitable to mine them -- this is why mining has always been a race to the bottom and why eventually economies of mining scale (server farms, etc) would beat the person with 4 GPUs running in their basement.

TheOtherHobbes 10y ago

The long term value of gold is based on price fixing. Crazy conspiracy talk? Not according to Reuters: http://www.reuters.com/article/deutsche-bank-lawsuit-metals-idUSL2N17H1OS http://www.reuters.com/article/deutsche-bank-lawsuit-metals-...

deleted 10y ago
[deleted]
riprowan 10y ago
Fortunately Bitcoin is immune to such things /s

JonFish85 10y ago

"The only way Bitcoin would go to zero is if a fatal architecture fault is found, which is quite unlikely." Or if people just forget about it and move to something else. At least gold has some physical properties that make it useful for things.

deleted 10y ago
[deleted]

CJefferson 10y ago

There is already a fatal architecture flaw - someone owning 51% of the mining power could reck havoc. We just need some way for someone to make enough money out of bitcoin's failure.

vinceguidry 10y ago
That problem also exists with 'normal' currencies.
daveguy 10y ago
Someone owning 51% mining power could reak havoc by falsifying transactions... Could they control the price in general?
- maaku 10y ago
  They could take all the coins. All of them.
cb18 10y ago
Also, when gox tried to blame "transaction malleability," people rightly saw that as a ruse. But when people said transaction malleability was a non-issue, they were quickly proven wrong when someone used it to DOS the network. But that was quickly swept under the rug, down the memory hole in the bitcoin community.

mikeokner 10y ago

Actually, Bitcoin is having some pretty serious problems at the moment. The stability is surprising. https://www.cryptocoinsnews.com/block-size-halving-bitcoin-network/ https://www.cryptocoinsnews.com/block-size-halving-bitcoin-n...

brador 10y ago
It's almost like it's being artificially propped to prevent panic selling.
maaku 10y ago
What problems?
- mikeokner 10y ago
  ...click the link.
  - maaku 10y ago
    I did, it's a massive distortion of non-issues. What are the _actual_ problems?
    - mikeokner 10y ago
      Basically, the current block size limit of 1MB isn't sufficient for the current volume of transactions. Some transactions aren't making it into blocks in real-time and have to sit waiting in a queue to be processed. This leads to delays in processing commercial payments, which in turn threatens Bitcoin's viability as a mainstream currency. Some people argue the issue could be easily fixed by simply raising the block size limit, but others disagree and believe that would become too costly in bandwidth and processing capacity for miners, so AFAIK there's still no consensus on a resolution. A couple other good explanations: http://rusty.ozlabs.org/?p=535 http://rusty.ozlabs.org/?p=535 https://medium.com/@octskyward/the-resolution-of-the-bitcoin-experiment-dabb30201f7#.s44pxu3o5 https://medium.com/@octskyward/the-resolution-of-the-bitcoin...