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The hole in your theory is that a rational miner may think the price will multiply by 100 (for example), so buying $1000 mining equipment will be profitable bec
by lappa 13y ago
The hole in your theory is that a rational miner may think the price will multiply by 100 (for example), so buying $1000 mining equipment will be profitable because it will yield $700 worth of BTC (70% figure estimated from nothing and is really an arbitrary number as long as it is less than 100%), which will eventually be $70,000. The problem is that buying $1000 worth of bitcoins would yeild $100,000 in a $1000 investment rather than $70,000 in a $1000 investment.
The real reasons people continue to mine are one or more of these:
-It is fun
-It secures the network
-They wrongly think they will make a profit
- XorNot 13y agoThat's not rational though. There's been no rational reason to think bitcoin can yield those returns. You're talking about a 10000% return on investment. There is no investment in human history that works like that.
- sathishmanohar 13y ago> There is no investment in human history that works like that. Satoshi may disagree with you
- brazzy 13y ago> You're talking about a 10000% return on investment. > There is no investment in human history that works like that. Sure there is. Just none that is not also extremely likely to fail. The obvious example would be a lottery ticket.
- celticninja 13y agoummm, well bitcoin has done that. At one point you could get a thousand bitcoins for a $1 then it was 1 bitcoin for a $1000. So a return like that is possible and it has been possible in the last 4 years. I am not saying it is rational I am just saying you are wrong :)
- tinco 13y agoThe whole VC industry is based around the idea that there are 10000% return on investment deals to be made..
- jafaku 13y agoBitcoin has gone up 1000% every year, and 10,000% last year. Also, every successful startup ever has had those kinds of returns at some point. So I suspect you are only considering traditional or stable investments, like post IPO stock or whatever.
- adventured 13y agoBerkshire Hathaway has returned about 800,000% since inception. Oracle has returned around 80,000% since IPO. Dell, Cisco, Microsoft, AOL, numerous others all pulled a greater than 10,000% return post IPO. Las Vegas Sands managed around a 7,000% return from the 2009 bottom to recent top. What do you suppose Andy Bechtolsheim's $100k check / investment into Google returned? There are in fact plenty of examples in recent history of extraordinary returns on par with or far exceeding that 10,000% level.
- deleted 13y ago[deleted]