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> As I argued, once Bitcoin’s price falls below its cost of mining, the incentive to mine will deteriorate, thrusting bitcoin into a death spiral. When bitcoin

by 21 8y ago

> As I argued, once Bitcoin’s price falls below its cost of mining, the incentive to mine will deteriorate, thrusting bitcoin into a death spiral. When bitcoin appeared it's price was zero, yet people still mined it despite being a clear "worthless" activity.

konschubert 8y ago
Because the cost of mining adjusts depending on how many people are mining. It goes down when the hash rate goes down.
yen223 8y ago
Back then, Bitcoin was full of possibilities. Right now, it seems Bitcoin's utility was, let's just say perhaps exaggerated.
joering2 8y ago
The complexity back then was much simpler; you could mine more with less equipment in less time. So you made more “money”. Heck I mined my first 100 coins on AMD Frozer card in one week time.
raducu 8y ago
The only problem is if the hashrate keeps dropping, it will be much easier for some disenfranchise individual/group to just hire the excessive hashrate for just enough time to do a 51% attack and completely destry bitcoin's credibility.
m-i-l 8y ago
> When bitcoin appeared it's price was zero, yet people still mined it despite being a clear "worthless" activity. It was as simple as pressing a button, labelled "Generate" on the original Bitcoin client if I recall, which used your CPU to mine a block of 50 BTC. The button was removed after it started taking more than the time between blocks (10 mins) to mine a block on an average CPU. Interesting concept that you could simply press a button to generate something that was worth at its peak a few years later US$1M. If you think that sounds like it comes from an old episode of The Twilight Zone you may be thinking of https://en.wikipedia.org/wiki/Button,_Button_(The_Twilight_Zone) https://en.wikipedia.org/wiki/Button,_Button_(The_Twilight_Z... : "One day they receive a mysterious locked box with a button atop it ... a smartly dressed stranger ... [gives them] the key to the box and explains that if they press the button then two things will happen: they will receive $200,000..."

by 21 8y ago

konschubert 8y ago

Because the cost of mining adjusts depending on how many people are mining. It goes down when the hash rate goes down.

yen223 8y ago

Back then, Bitcoin was full of possibilities. Right now, it seems Bitcoin's utility was, let's just say perhaps exaggerated.

joering2 8y ago

The complexity back then was much simpler; you could mine more with less equipment in less time. So you made more “money”. Heck I mined my first 100 coins on AMD Frozer card in one week time.

raducu 8y ago

The only problem is if the hashrate keeps dropping, it will be much easier for some disenfranchise individual/group to just hire the excessive hashrate for just enough time to do a 51% attack and completely destry bitcoin's credibility.

m-i-l 8y ago

> When bitcoin appeared it's price was zero, yet people still mined it despite being a clear "worthless" activity. It was as simple as pressing a button, labelled "Generate" on the original Bitcoin client if I recall, which used your CPU to mine a block of 50 BTC. The button was removed after it started taking more than the time between blocks (10 mins) to mine a block on an average CPU. Interesting concept that you could simply press a button to generate something that was worth at its peak a few years later US$1M. If you think that sounds like it comes from an old episode of The Twilight Zone you may be thinking of https://en.wikipedia.org/wiki/Button,_Button_(The_Twilight_Zone) https://en.wikipedia.org/wiki/Button,_Button_(The_Twilight_Z... : "One day they receive a mysterious locked box with a button atop it ... a smartly dressed stranger ... [gives them] the key to the box and explains that if they press the button then two things will happen: they will receive $200,000..."