6 ms·

As much as I would like to believe BTC's market is completely fake, there has to be some real liquidity there. The hashrate is ~421 EH/s which represents a trem

As much as I would like to believe BTC's market is completely fake, there has to be some real liquidity there. The hashrate is ~421 EH/s which represents a tremendous amount of ongoing spending on mining equipment and energy. That spending has to be funded somehow and the only way that makes sense is by selling the mined BTC. So there may be a lot of wash trading and games played with stablecoins trying to prop up the price, but there also must be enough real buyers to purchase the 6.25 BTC (~$175k) generated every 10 minutes. Otherwise the miners would not be able to pay their bills (surely owed in Real Money), would shut down, and we would see evidence of that in the network's hashrate plummeting.

gobip 3y ago
Yes, thank you for your comment. Altcoins are terrible, NFTs are terrible, it was all a trend and I'm glad it's gone now. Bitcoin is different, always has been, always will be. Bitcoin is the digital gold. In my opinion it's not a currency and will not function like a currency but rather like gold. You don't buy your latte with gold, but you own gold stocks. Same thing with Bitcoin. It's the safest, oldest, most tested blockchain out there. You can't beat that.
- Baeocystin 3y ago
  Even Etherium? I was impressed they seemed to manage the transition to proof of stake and not blow up the whole thing. (not a stakeholder myself, so this is only an outside view opinion)
- mindslight 3y ago
  I personally see Bitcoin itself falling apart because it lacks the critical ecash property of untraceability, meaning it is the original non-fungible token. Regardless of how many honest verifiers are following the protocol, it's always possible to build a parallel system that judges which transactions/flows are legitimate or not according to completely different criteria - eg AML. This is happening slowly from both the bottom and the top - from the cryptocurrency industry with "blockchain analysis" and from the incumbent financial system with slowly creeping KYC rules. Right now you can still squint, use a mixer, and perhaps a less regulated exchange - just as ten years ago many people blissfully thought the whole thing was "anonymous". But the writing is on the wall. As soon as the more regulated exchanges start routinely rejecting transactions based on the source wallets' provenance, anything that's touched those wallets will become less desirable. Everyone will be drawn to the attractor of heeding the augmented rulesets to make sure they're not receiving tainted coins, and the currency will essentially fork.
- rspeele 3y ago
  One problem I see with the store of value idea, in the long run, is that I don't know if BTC's double spend prevention will survive its design. The point of mining is to prevent double spend attacks. It does this in a rather brute-force way: the network as a whole always maintains a higher hashrate than any attacker. The network always out-spends the attacker to maintain security. As described in my prior comment the funding for this massive hashrate comes from newly generated BTC. But Bitcoin is designed to wean itself off of emitting new coins as a mining reward. This is done by halving the block reward arbitrarily every 4 years. This is necessary to fulfill the promise that there will only ever be 21M coins, which has been a huge selling point to anti-inflation investors. Ultimately the mining is supposed to be funded entirely by fees. But there is no market mechanism to ensure that fees "make up for" the lost emissions of new coins. The only reason to pay a high transaction fee is if there is high transaction volume, causing blocks to fill up, so you are competing for space with other people trying to make transactions. If transaction volume is fairly low, fees remain low. You can see fees only become a meaningful part of the reward at times of unusually high volume[0]. So, it seems plausible to me that if Bitcoin mining was funded entirely on transaction fees, the total mining reward would not be high enough to sustain enough hashrate to be impervious to 51% by a powerful attacker. That's especially true if most users are holding onto BTC as a store of value not attempting to transact in it. As far as I know, there is no successful cryptocurrency that functions using fees alone. Bitcoin is in a very slow march towards being the first to do that. Basically the network is currently funded with a "tax" on holders of BTC -- newly generated coins dilute the value of held coins. This to me makes a lot of sense for a store-of-value. But the coin is trying to transition to funding security with a "tax" on users of BTC. Nobody really knows whether this will work. In fact nobody knows how much is the "correct" amount for the network to spend on mining at all. All we know is that with the current level of spending we haven't had a 51% attack yet. Are we spending 2x more than needed? 10x? 100x? It's impossible to say but the design of BTC seems like a slowwwww experiment to find the level at which it fails. [0]https://charts.bitbo.io/fees-percent-of-reward/ https://charts.bitbo.io/fees-percent-of-reward/
  - deleted 3y ago
    [deleted]
  - 3y ago
- ouiouibaguette 3y ago
  Exchanges and whales manipulate Bitcoin's price regularly through spoofing and wash trading to build up illusions of optimism/"bullishness" and then sell off suddenly to profit off the rubes who bought into the hype. Also - how much actual real-world money backs a USDT? When Tether comes undone and people realize there is only a suitcase of IOUs, there is going to be a run for the exits and BTC will sell at a huge discount. Real world commodities don't have that problem.
ChainOfFools 3y ago
You have to consider that mining has traditionally been gently and benignly disregarded by most of the media interest in crypto. This is not an accident, the miners are very aware that calling attention to themselves would reveal exactly how suspiciously the valuations in crypto are constructed, and they've done a fantastic job of deflecting attention (with enormous help from the unbelievably clownish behavior of certain exchange operators) and acting like the adults in the fun house. Serious scrutiny of how exactly the hash rate in Bitcoin is generated would not reflect well on the ecosystem, because of the amount of outright corruption involved, as well as theft, that goes back a decade. A couple years ago an operation was uncovered in Thailand where something on the order of 100 million dollars worth of mining equipment had been found burning stolen electricity from government enterprises, IIRC primarily public schools, and one of the investigators involved speculated that this was likely less than 10% of the illegal mining that was happening in their country, let alone the recognized legal stuff. Consider that similar things are happening all over the world, not just Thailand, and even entire countries (DPRK) participating due to total systemic corruption crossed with no questiins asked access to natural resources and national treasuries, to be spent in any way they choose, and an investment in destabilizing the world economy - or at least evading financial controls - is well worth the cost of subsidizing mining both within their borders and beyond. You've also got quasi crackpots in charge of places like the government of El Salvador who are also helping to support this ecosystem. Miners, I will conjecture without offering any support on the bet that eventually this will be found out and publicized, have been sitting on a warchest of nearly free coins mined long ago, when almost nobody was looking for corruption or theft of resources, and when block rewards were multiples higher to boot. The argument that miners have barely made a profit because of the adjustable difficulty level has always been an open lie due to a willingness to completely disregard the mining done using off market access to electricity and facilities, which was rampant in the early days and is still a significant chunk of the hash rate even today. Miners can continue to slow sell their coin bases because they have effectively paid for them for over a decade at a massive discount to "market," and since the only major source of downward price pressure are the miners themselves, they can prop the price up for as long as they like by simply selling fewer coins into the market whenever there is an adverse social signal that they need to counter with a " honey badger of money doesn't care" price signal.
thedrbrian 3y ago
>421 EH/s Still 4 transactions per second?

gobip 3y ago

Yes, thank you for your comment. Altcoins are terrible, NFTs are terrible, it was all a trend and I'm glad it's gone now. Bitcoin is different, always has been, always will be. Bitcoin is the digital gold. In my opinion it's not a currency and will not function like a currency but rather like gold. You don't buy your latte with gold, but you own gold stocks. Same thing with Bitcoin. It's the safest, oldest, most tested blockchain out there. You can't beat that.

Baeocystin 3y ago
Even Etherium? I was impressed they seemed to manage the transition to proof of stake and not blow up the whole thing. (not a stakeholder myself, so this is only an outside view opinion)
mindslight 3y ago
I personally see Bitcoin itself falling apart because it lacks the critical ecash property of untraceability, meaning it is the original non-fungible token. Regardless of how many honest verifiers are following the protocol, it's always possible to build a parallel system that judges which transactions/flows are legitimate or not according to completely different criteria - eg AML. This is happening slowly from both the bottom and the top - from the cryptocurrency industry with "blockchain analysis" and from the incumbent financial system with slowly creeping KYC rules. Right now you can still squint, use a mixer, and perhaps a less regulated exchange - just as ten years ago many people blissfully thought the whole thing was "anonymous". But the writing is on the wall. As soon as the more regulated exchanges start routinely rejecting transactions based on the source wallets' provenance, anything that's touched those wallets will become less desirable. Everyone will be drawn to the attractor of heeding the augmented rulesets to make sure they're not receiving tainted coins, and the currency will essentially fork.
rspeele 3y ago
One problem I see with the store of value idea, in the long run, is that I don't know if BTC's double spend prevention will survive its design. The point of mining is to prevent double spend attacks. It does this in a rather brute-force way: the network as a whole always maintains a higher hashrate than any attacker. The network always out-spends the attacker to maintain security. As described in my prior comment the funding for this massive hashrate comes from newly generated BTC. But Bitcoin is designed to wean itself off of emitting new coins as a mining reward. This is done by halving the block reward arbitrarily every 4 years. This is necessary to fulfill the promise that there will only ever be 21M coins, which has been a huge selling point to anti-inflation investors. Ultimately the mining is supposed to be funded entirely by fees. But there is no market mechanism to ensure that fees "make up for" the lost emissions of new coins. The only reason to pay a high transaction fee is if there is high transaction volume, causing blocks to fill up, so you are competing for space with other people trying to make transactions. If transaction volume is fairly low, fees remain low. You can see fees only become a meaningful part of the reward at times of unusually high volume[0]. So, it seems plausible to me that if Bitcoin mining was funded entirely on transaction fees, the total mining reward would not be high enough to sustain enough hashrate to be impervious to 51% by a powerful attacker. That's especially true if most users are holding onto BTC as a store of value not attempting to transact in it. As far as I know, there is no successful cryptocurrency that functions using fees alone. Bitcoin is in a very slow march towards being the first to do that. Basically the network is currently funded with a "tax" on holders of BTC -- newly generated coins dilute the value of held coins. This to me makes a lot of sense for a store-of-value. But the coin is trying to transition to funding security with a "tax" on users of BTC. Nobody really knows whether this will work. In fact nobody knows how much is the "correct" amount for the network to spend on mining at all. All we know is that with the current level of spending we haven't had a 51% attack yet. Are we spending 2x more than needed? 10x? 100x? It's impossible to say but the design of BTC seems like a slowwwww experiment to find the level at which it fails. [0]https://charts.bitbo.io/fees-percent-of-reward/ https://charts.bitbo.io/fees-percent-of-reward/
- deleted 3y ago
  [deleted]
- 3y ago
ouiouibaguette 3y ago
Exchanges and whales manipulate Bitcoin's price regularly through spoofing and wash trading to build up illusions of optimism/"bullishness" and then sell off suddenly to profit off the rubes who bought into the hype. Also - how much actual real-world money backs a USDT? When Tether comes undone and people realize there is only a suitcase of IOUs, there is going to be a run for the exits and BTC will sell at a huge discount. Real world commodities don't have that problem.

ChainOfFools 3y ago

You have to consider that mining has traditionally been gently and benignly disregarded by most of the media interest in crypto. This is not an accident, the miners are very aware that calling attention to themselves would reveal exactly how suspiciously the valuations in crypto are constructed, and they've done a fantastic job of deflecting attention (with enormous help from the unbelievably clownish behavior of certain exchange operators) and acting like the adults in the fun house. Serious scrutiny of how exactly the hash rate in Bitcoin is generated would not reflect well on the ecosystem, because of the amount of outright corruption involved, as well as theft, that goes back a decade. A couple years ago an operation was uncovered in Thailand where something on the order of 100 million dollars worth of mining equipment had been found burning stolen electricity from government enterprises, IIRC primarily public schools, and one of the investigators involved speculated that this was likely less than 10% of the illegal mining that was happening in their country, let alone the recognized legal stuff. Consider that similar things are happening all over the world, not just Thailand, and even entire countries (DPRK) participating due to total systemic corruption crossed with no questiins asked access to natural resources and national treasuries, to be spent in any way they choose, and an investment in destabilizing the world economy - or at least evading financial controls - is well worth the cost of subsidizing mining both within their borders and beyond. You've also got quasi crackpots in charge of places like the government of El Salvador who are also helping to support this ecosystem. Miners, I will conjecture without offering any support on the bet that eventually this will be found out and publicized, have been sitting on a warchest of nearly free coins mined long ago, when almost nobody was looking for corruption or theft of resources, and when block rewards were multiples higher to boot. The argument that miners have barely made a profit because of the adjustable difficulty level has always been an open lie due to a willingness to completely disregard the mining done using off market access to electricity and facilities, which was rampant in the early days and is still a significant chunk of the hash rate even today. Miners can continue to slow sell their coin bases because they have effectively paid for them for over a decade at a massive discount to "market," and since the only major source of downward price pressure are the miners themselves, they can prop the price up for as long as they like by simply selling fewer coins into the market whenever there is an adverse social signal that they need to counter with a " honey badger of money doesn't care" price signal.

thedrbrian 3y ago

>421 EH/s Still 4 transactions per second?