4 ms·

They are just arbitrarily declaring various things to be non-economic transfers. They have enough economic value for the participants to pay to execute them.

by paulmd 8y ago

They are just arbitrarily declaring various things to be non-economic transfers. They have enough economic value for the participants to pay to execute them. If you are going to slice it like that, there are plenty of ACH/SWIFT transfers that are actually just people moving money from account to account or institution to institution too, rather than actual inter-party transactions. And specifically, if mining pools distributing rewards to participants don't have economic value, then neither does Uber. Mining pools are literally just "the gig economy" for computational power. I'm as critical of Bitcoin as anyone else but this is just an ad for Elementus's services. "If you want to understand what you're getting into, pay us!".

frgtpsswrdlame 8y ago
Well you could define 'economic' transactions as those that leave one of the participants with less bitcoin and another participant with more bitcoin. In that sense mining pool distributions are double-counting - the distribution of the mining reward to the pool and then the distribution of that same reward from the pool to an individual member. (I understand that correctly right?) A mixer is just shuffling it's coins around so it's non-economic. Spoofed trades are obviously non-economic. 'Market Manipulation' could mean lots of stuff but I wouldn't be surprised if there are bots that enter lots of offsetting trades on both sides of the orderbook to generate volume around specific events. If they're offsetting that's non-economic. Now maybe 'non-economic' isn't the best term but I do think those sorts of activities should be given a meaningful distinction from the other third of the volume that is 'normal transactions' of individuals buying and selling from/to each other.
- hobofan 8y ago
  > Spoofed trades are obviously non-economic. In a model where Bitcoin is the only available currency, you could certainly assign an economic value to a mixer - the value of the created privacy (yes, I know that mixers are flawed). There are also cryptocurrencies that have (a higher level of) built-in privacy, like ZCash, and that people are using it should also be an indicator that there is economic value in those transactions since the only real reason to use ZCash is to get that additional bit of privacy.
  - frgtpsswrdlame 8y ago
    >In a model where Bitcoin is the only available currency, you could certainly assign an economic value to a mixer - the value of the created privacy (yes, I know that mixers are flawed). Are mixers spoofing? Here, consider a market with three people: A, B, C all with 100 BTC. At 12:01 A sells 50 shares to B. Starting at 12:01 and going until 12:00 B and C sell 1 share back and forth, one transaction per minute. So after 24 hours they have: A - 50 B - 150 C - 100 Is the 'true' trading volume for the day 50 or is it 1490? It's a matter of perspective but Elementus views that 50 as an important number that investors should have. I agree that using the term 'economic' is dumb but investors want to understand the actual dynamics of buyers and sellers in the market, not the dynamics of ultra-noisy zero-netting mixers.
- Canada 8y ago
  > In that sense mining pool distributions are double-counting Let's say I have a customer who pays me, and I pay a bunch of employees or contractors who helped me deliver services to that customer, keeping some profit for myself. Does that have no economic value? Because that's what mining pools do. > I wouldn't be surprised if there are bots that enter lots of offsetting trades on both sides of the orderbook to generate volume around specific events. There is no order book on Bitcoin, Ethereum, and others. The order books are on web based exchanges, and yeah, there's a lot of fake trading. Most of it is clearly generated by the exchanges themselves and is completely fake. That stuff is so obvious when you look. In those cases the volume dwarfs the depth, so most orders miraculously attract counter parties instantaneously while the rest of the orders just sit there. Exchanges fake it to get a better rank on coinmarketcap, which blindly trusts the trade data from the APIs. And there's wash trades by users of these web based exchanges, but I believe it's significantly less volume than the pure fakes because those guys have to put up real funds so it's only useful to make shitcoins look more popular. In any case, none of that actually makes a transaction on a blockchain. It's just shifting balances in some centralized database.
  - frgtpsswrdlame 8y ago
    >Let's say I have a customer who pays me, and I pay a bunch of employees or contractors who helped me deliver services to that customer, keeping some profit for myself. Does that have no economic value? Because that's what mining pools do. Again we're really getting hung up on the term 'economic.' Okay you're the pool, you receive 50 BTC and you pay 45 of that out to miners. Have we transacted 95 BTC or 50 BTC? Is the 'economic value' of our transaction 50 or 95? The best thing is it doesn't even matter what you answer because what's best for everyone is if we know both numbers. Right now all parties interested in BTC can see is the 95. But if I'm investing in BTC I don't care about the 95, I care about the 50 because 50 tells me how much BTC actually changed hands here. And this firm is just trying to find all the double counting and completely fake transactions and remove them from our number. >There is no order book on Bitcoin, Ethereum, and others. The order books are on web based exchanges I mean yeah? I don't understand what difference you're trying to draw here. >yeah, there's a lot of fake trading >It's just shifting balances in some centralized database. Exactly and it's the same way in a mining pool as per the above example. 45 BTC is getting counted twice because we shifted it twice.
webkike 8y ago
A lot of transfers between banks that seem arbitrary have incredible amounts of economic value. Consider inter banking lending (the overnight market), which on the surface seems like banks arbitrarily swapping money between each other, but in reality controls inflation and the monetary supply.
cwkoss 8y ago
Also, the article provides no supporting figures for the assertion in the title. All of the data is from the Ethereum network. How are they accurately identifying the purpose of Bitcoin transactions? I cannot think on any methodology that would not be wildly speculative. Elementus seems like perhaps they don't understand what they are getting into either.
EthanHeilman 8y ago
>On any given day, as much as two-thirds of the transaction activity registered on the Bitcoin network has nothing to do with buying goods and services or trading the virtual currency. Is this two-thirds of the amount transacted? Two-thirds of total transaction count? Two-thirds of bytes written to the blockchain? I assume this doesn't involve economic activity transacted in bitcoin which isn't recorded on the blockchain; for instance payments made between users on coinbase or trades on cryptocurrency exchanges.
VectorLock 8y ago
>Mining pools are literally just "the gig economy" for computational power. Thats a great analogy. I'm amused by then thinking about what would happen if 51% of the drivers were able to band together and take control of Uber.
Theodores 8y ago
Typical splitting of hairs. We have a group of people playing a glorified game of tiddlywinks/Monopoly/cards, proclaiming that they know more than us about the dreaded blockchain, believing that the blockchain will change everything and giving themselves grand 'fintech' job titles. A respected publication deems this activity 'non-economic' with some broad brush strokes, actually being generous by including the exchange of 'tiddlywinks' for 'marbles'/'Monopoly money' as actually 'economic'. Before the web when kids had to interact you could have a grand game of monopoly playing, kids and neighbours kids involved. There could be high stakes rents being 'earned' and all kinds of virtual activity. Meanwhile the gardening-jobs for pocket money, the car washing for pocket money, the preparing of food for actual food might not be getting done due to the distraction of the all important Monopoly game. A parent could gently infer that the Monopoly game with side bets for tiddlywinks was not real economic value, thinking that getting the car washed, the garden done and the food prepared was 'economic value' as pocket money, albeit in mere 'fiat' currency was involved. Wanting to perpetuate the game the most irksome of the children could claim that their Monopoly game was economic value, after all the light and heat is on and some distant coal miner is getting paid for that. They could also claim that there is wear and tear going on and that Parker Games/Waddingtons are profiting from making replacement Monopoly games. They could also claim that washing the car was not 'economic value' as that pocket money is merely transferred inside the household. Give the article some credit, we have got some rather self absorbed individuals devoting their lives to playing around with digital tiddlywinks, ponzi-kittens and the coin to rule them all - Bitcoin. In the broader sense, after the closing of The Silk Road, evidence is extremely thin on the ground that any of this activity is economically useful. Is Uber 'economically useful'? I'm as critical as the next person of Uber however, love it or loath it, Uber does get people from A to B and provides a means for people to earn a living. That much is clear and I don't have to ask my inner nine year old child for spurious reasons to argue otherwise.
kadenshep 8y ago
>there are plenty of ACH/SWIFT transfers that are actually just people moving money from account to account or institution to institution too, rather than actual inter-party transactions. You're transferring banking systems/locations. That affects money supply, transfer fee's, lending, etc. It definitely has an economic impact, far larger than transferring bitcoins around.

by paulmd 8y ago

frgtpsswrdlame 8y ago

Well you could define 'economic' transactions as those that leave one of the participants with less bitcoin and another participant with more bitcoin. In that sense mining pool distributions are double-counting - the distribution of the mining reward to the pool and then the distribution of that same reward from the pool to an individual member. (I understand that correctly right?) A mixer is just shuffling it's coins around so it's non-economic. Spoofed trades are obviously non-economic. 'Market Manipulation' could mean lots of stuff but I wouldn't be surprised if there are bots that enter lots of offsetting trades on both sides of the orderbook to generate volume around specific events. If they're offsetting that's non-economic. Now maybe 'non-economic' isn't the best term but I do think those sorts of activities should be given a meaningful distinction from the other third of the volume that is 'normal transactions' of individuals buying and selling from/to each other.

hobofan 8y ago
> Spoofed trades are obviously non-economic. In a model where Bitcoin is the only available currency, you could certainly assign an economic value to a mixer - the value of the created privacy (yes, I know that mixers are flawed). There are also cryptocurrencies that have (a higher level of) built-in privacy, like ZCash, and that people are using it should also be an indicator that there is economic value in those transactions since the only real reason to use ZCash is to get that additional bit of privacy.
- frgtpsswrdlame 8y ago
  >In a model where Bitcoin is the only available currency, you could certainly assign an economic value to a mixer - the value of the created privacy (yes, I know that mixers are flawed). Are mixers spoofing? Here, consider a market with three people: A, B, C all with 100 BTC. At 12:01 A sells 50 shares to B. Starting at 12:01 and going until 12:00 B and C sell 1 share back and forth, one transaction per minute. So after 24 hours they have: A - 50 B - 150 C - 100 Is the 'true' trading volume for the day 50 or is it 1490? It's a matter of perspective but Elementus views that 50 as an important number that investors should have. I agree that using the term 'economic' is dumb but investors want to understand the actual dynamics of buyers and sellers in the market, not the dynamics of ultra-noisy zero-netting mixers.
Canada 8y ago
> In that sense mining pool distributions are double-counting Let's say I have a customer who pays me, and I pay a bunch of employees or contractors who helped me deliver services to that customer, keeping some profit for myself. Does that have no economic value? Because that's what mining pools do. > I wouldn't be surprised if there are bots that enter lots of offsetting trades on both sides of the orderbook to generate volume around specific events. There is no order book on Bitcoin, Ethereum, and others. The order books are on web based exchanges, and yeah, there's a lot of fake trading. Most of it is clearly generated by the exchanges themselves and is completely fake. That stuff is so obvious when you look. In those cases the volume dwarfs the depth, so most orders miraculously attract counter parties instantaneously while the rest of the orders just sit there. Exchanges fake it to get a better rank on coinmarketcap, which blindly trusts the trade data from the APIs. And there's wash trades by users of these web based exchanges, but I believe it's significantly less volume than the pure fakes because those guys have to put up real funds so it's only useful to make shitcoins look more popular. In any case, none of that actually makes a transaction on a blockchain. It's just shifting balances in some centralized database.
- frgtpsswrdlame 8y ago
  >Let's say I have a customer who pays me, and I pay a bunch of employees or contractors who helped me deliver services to that customer, keeping some profit for myself. Does that have no economic value? Because that's what mining pools do. Again we're really getting hung up on the term 'economic.' Okay you're the pool, you receive 50 BTC and you pay 45 of that out to miners. Have we transacted 95 BTC or 50 BTC? Is the 'economic value' of our transaction 50 or 95? The best thing is it doesn't even matter what you answer because what's best for everyone is if we know both numbers. Right now all parties interested in BTC can see is the 95. But if I'm investing in BTC I don't care about the 95, I care about the 50 because 50 tells me how much BTC actually changed hands here. And this firm is just trying to find all the double counting and completely fake transactions and remove them from our number. >There is no order book on Bitcoin, Ethereum, and others. The order books are on web based exchanges I mean yeah? I don't understand what difference you're trying to draw here. >yeah, there's a lot of fake trading >It's just shifting balances in some centralized database. Exactly and it's the same way in a mining pool as per the above example. 45 BTC is getting counted twice because we shifted it twice.

webkike 8y ago

A lot of transfers between banks that seem arbitrary have incredible amounts of economic value. Consider inter banking lending (the overnight market), which on the surface seems like banks arbitrarily swapping money between each other, but in reality controls inflation and the monetary supply.

cwkoss 8y ago

Also, the article provides no supporting figures for the assertion in the title. All of the data is from the Ethereum network. How are they accurately identifying the purpose of Bitcoin transactions? I cannot think on any methodology that would not be wildly speculative. Elementus seems like perhaps they don't understand what they are getting into either.

EthanHeilman 8y ago

>On any given day, as much as two-thirds of the transaction activity registered on the Bitcoin network has nothing to do with buying goods and services or trading the virtual currency. Is this two-thirds of the amount transacted? Two-thirds of total transaction count? Two-thirds of bytes written to the blockchain? I assume this doesn't involve economic activity transacted in bitcoin which isn't recorded on the blockchain; for instance payments made between users on coinbase or trades on cryptocurrency exchanges.

VectorLock 8y ago

>Mining pools are literally just "the gig economy" for computational power. Thats a great analogy. I'm amused by then thinking about what would happen if 51% of the drivers were able to band together and take control of Uber.

Theodores 8y ago

Typical splitting of hairs. We have a group of people playing a glorified game of tiddlywinks/Monopoly/cards, proclaiming that they know more than us about the dreaded blockchain, believing that the blockchain will change everything and giving themselves grand 'fintech' job titles. A respected publication deems this activity 'non-economic' with some broad brush strokes, actually being generous by including the exchange of 'tiddlywinks' for 'marbles'/'Monopoly money' as actually 'economic'. Before the web when kids had to interact you could have a grand game of monopoly playing, kids and neighbours kids involved. There could be high stakes rents being 'earned' and all kinds of virtual activity. Meanwhile the gardening-jobs for pocket money, the car washing for pocket money, the preparing of food for actual food might not be getting done due to the distraction of the all important Monopoly game. A parent could gently infer that the Monopoly game with side bets for tiddlywinks was not real economic value, thinking that getting the car washed, the garden done and the food prepared was 'economic value' as pocket money, albeit in mere 'fiat' currency was involved. Wanting to perpetuate the game the most irksome of the children could claim that their Monopoly game was economic value, after all the light and heat is on and some distant coal miner is getting paid for that. They could also claim that there is wear and tear going on and that Parker Games/Waddingtons are profiting from making replacement Monopoly games. They could also claim that washing the car was not 'economic value' as that pocket money is merely transferred inside the household. Give the article some credit, we have got some rather self absorbed individuals devoting their lives to playing around with digital tiddlywinks, ponzi-kittens and the coin to rule them all - Bitcoin. In the broader sense, after the closing of The Silk Road, evidence is extremely thin on the ground that any of this activity is economically useful. Is Uber 'economically useful'? I'm as critical as the next person of Uber however, love it or loath it, Uber does get people from A to B and provides a means for people to earn a living. That much is clear and I don't have to ask my inner nine year old child for spurious reasons to argue otherwise.

kadenshep 8y ago

>there are plenty of ACH/SWIFT transfers that are actually just people moving money from account to account or institution to institution too, rather than actual inter-party transactions. You're transferring banking systems/locations. That affects money supply, transfer fee's, lending, etc. It definitely has an economic impact, far larger than transferring bitcoins around.