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Throw in lightning and all of a sudden bitcoin can handle millions of transactions per second using only 6% of the power consumed by the world's banking sector.

Throw in lightning and all of a sudden bitcoin can handle millions of transactions per second using only 6% of the power consumed by the world's banking sector. Not too shabby.

gascan 9y ago
I still find lightning incredibly ironic. To me, it looks like: * Gold =~ Bitcoin (2009) * Gold Standard =~ Lightning Network (2018) * Fiat Currency =~ (???)
- gruez 9y ago
  > * Gold Standard =~ Lightning Network (2018) the crucial difference is that nothing is held in reserve. ie. you don't have to trust that the bank is going to run away with your deposits.
  - bunderbunder 9y ago
    Savings and loan banking, and the risks associated with it, is a separate thing from the basis of the currency. If Bitcoin-as-a-currency ever develops to the point that you can have a bitcoin-denominated savings account that earns interest, your bitcoin-denominated assets that you place into such an account will be just as susceptible to bank insolvency as any other kind of money you can deposit in a bank. That, and, I think you have the analogy backwards. It's not that nothing is held in reserve - that would be Tether ;) - it's that everything is held in reserve.
- tim333 9y ago
  Fiat currency would probably be something like Fiat = Cardano (2019) or one of the other proof of stake non mining coins. (Or Credits tokens - buy those! I'm long them.)
JustAnotherPat 9y ago
Am I missing something, or is it inevitable that bitcoin mining will lose profitability again, possibly very soon? The problem is anecdotally outlined in the article. People are willing to mine bitcoin at a loss if need be and that makes mining rough for everybody because of the increased difficulty. The problem is it's too easy to mine bitcoin. As the article points out, all you really need is somebody to keep an eye on the servers. People will push it to the edge, at which point, a tragedy of the commons will ruin it for everybody. The only hope is for bitcoin prices to increase exponentially for all of eternity.
- freejulian 9y ago
  Your uninformed opinion only serves to mislead others. You should at least have the courtesy to preface your post with a "I don't know anything about Bitcoin" to warn other readers. Anyways: The mining difficulty is dynamic. If mining becomes unprofitable and miners stop mining the difficulty will adjust downwards making it easier to mine and hence profitable again.
  - JustAnotherPat 9y ago
    I 100% understand that it is dynamic. My point is that that is not how it will work out. As the article points out, people were still mining when bitcoin dropped to $200 even though it was unprofitable. Because they were still mining even though it was unprofitable, they kept the dynamic difficulty high enough that mining remained unprofitable. Why? Because they had the infrastructure and it is easy enough to keep on mining until you are completely bankrupt. You don't quit mining just to make it profitable again for somebody else, so you hope that you can outlast them. That is the tragedy of the commons and it seems inevitable as people spend more and more money on infrastructure investment.
    - freejulian 9y ago
      Of course -- it's unreasonable to think that all miners would exit at the same time. Different miners have different margins. Miners exit when it's no longer profitable for them. I don't quite see what the problem is.
      - JustAnotherPat 9y ago
        My point is, there will always be somebody willing to mine it unprofitably. The only reason that hasn't happened now is because the price has increased too quickly for capacity to keep up.
  - SCdF 9y ago
    They literally started with "Am I missing something"

Throw in lightning and all of a sudden bitcoin can handle millions of transactions per second using only 6% of the power consumed by the world's banking sector. Not too shabby.

gascan 9y ago

I still find lightning incredibly ironic. To me, it looks like: * Gold =~ Bitcoin (2009) * Gold Standard =~ Lightning Network (2018) * Fiat Currency =~ (???)

gruez 9y ago
> * Gold Standard =~ Lightning Network (2018) the crucial difference is that nothing is held in reserve. ie. you don't have to trust that the bank is going to run away with your deposits.
- bunderbunder 9y ago
  Savings and loan banking, and the risks associated with it, is a separate thing from the basis of the currency. If Bitcoin-as-a-currency ever develops to the point that you can have a bitcoin-denominated savings account that earns interest, your bitcoin-denominated assets that you place into such an account will be just as susceptible to bank insolvency as any other kind of money you can deposit in a bank. That, and, I think you have the analogy backwards. It's not that nothing is held in reserve - that would be Tether ;) - it's that everything is held in reserve.
tim333 9y ago
Fiat currency would probably be something like Fiat = Cardano (2019) or one of the other proof of stake non mining coins. (Or Credits tokens - buy those! I'm long them.)

JustAnotherPat 9y ago

Am I missing something, or is it inevitable that bitcoin mining will lose profitability again, possibly very soon? The problem is anecdotally outlined in the article. People are willing to mine bitcoin at a loss if need be and that makes mining rough for everybody because of the increased difficulty. The problem is it's too easy to mine bitcoin. As the article points out, all you really need is somebody to keep an eye on the servers. People will push it to the edge, at which point, a tragedy of the commons will ruin it for everybody. The only hope is for bitcoin prices to increase exponentially for all of eternity.

freejulian 9y ago
Your uninformed opinion only serves to mislead others. You should at least have the courtesy to preface your post with a "I don't know anything about Bitcoin" to warn other readers. Anyways: The mining difficulty is dynamic. If mining becomes unprofitable and miners stop mining the difficulty will adjust downwards making it easier to mine and hence profitable again.
- JustAnotherPat 9y ago
  I 100% understand that it is dynamic. My point is that that is not how it will work out. As the article points out, people were still mining when bitcoin dropped to $200 even though it was unprofitable. Because they were still mining even though it was unprofitable, they kept the dynamic difficulty high enough that mining remained unprofitable. Why? Because they had the infrastructure and it is easy enough to keep on mining until you are completely bankrupt. You don't quit mining just to make it profitable again for somebody else, so you hope that you can outlast them. That is the tragedy of the commons and it seems inevitable as people spend more and more money on infrastructure investment.
  - freejulian 9y ago
    Of course -- it's unreasonable to think that all miners would exit at the same time. Different miners have different margins. Miners exit when it's no longer profitable for them. I don't quite see what the problem is.
    - JustAnotherPat 9y ago
      My point is, there will always be somebody willing to mine it unprofitably. The only reason that hasn't happened now is because the price has increased too quickly for capacity to keep up.
- SCdF 9y ago
  They literally started with "Am I missing something"