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Old 11-12-2017, 11:25 PM
 
9,277 posts, read 9,521,620 times
Reputation: 4841

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Quote:
Originally Posted by Hoonose View Post
But the bitcoin user/investor know this or should know this.
Most scams should be obvious to the person being scammed. Even Madoff never had a negative month. The only kind of investment that is never negative returns very low cumulative rates.

Bitcoin computational rates
April 30, 2011 broke 1 Terahashes per second
Dec 25, 2013 broke 10,000 Terahashes per second
Jan 23, 2016 broke 1,000,000 Terahashes per second
Jun 04, 2017 broke 5,000,000 Terahashes per second
Oct 08, 2017 broke 10,000,000 Terahashes per second
Hash rate seems to have peaked at 13,000,000 Terahashes per second (October 26, 2017) .

A Terhash takes about 1 kW of electricity. So the rate of growth is unsustainable.

While there is large electricity costs with any system (of banks, producing banknotes, etc.) they tend to increase linearly. If a bank branch costs $300K one year, it may cost $310K the next year. The BTC costs are increasing exponentially.

Last edited by PacoMartin; 11-12-2017 at 11:38 PM..
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Old 11-13-2017, 09:17 AM
 
8,496 posts, read 3,638,309 times
Reputation: 1657
Quote:
Originally Posted by PacoMartin View Post
Most scams should be obvious to the person being scammed. Even Madoff never had a negative month. The only kind of investment that is never negative returns very low cumulative rates.

Bitcoin computational rates
April 30, 2011 broke 1 Terahashes per second
Dec 25, 2013 broke 10,000 Terahashes per second
Jan 23, 2016 broke 1,000,000 Terahashes per second
Jun 04, 2017 broke 5,000,000 Terahashes per second
Oct 08, 2017 broke 10,000,000 Terahashes per second
Hash rate seems to have peaked at 13,000,000 Terahashes per second (October 26, 2017) .

A Terhash takes about 1 kW of electricity. So the rate of growth is unsustainable.

While there is large electricity costs with any system (of banks, producing banknotes, etc.) they tend to increase linearly. If a bank branch costs $300K one year, it may cost $310K the next year. The BTC costs are increasing exponentially.
And this will obviously favor miners having access to cheap juice. This is not a new concept. Earlier miners were renting office space where the utilities were included in the rent.

If bitcoin numbers don't grow, they will either be worth more per, or the systems crashes. Was this the plan by the inventors? I don't know.
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Old 11-13-2017, 10:35 AM
 
1,270 posts, read 470,526 times
Reputation: 1077
Quote:
Originally Posted by Hoonose View Post
And this will obviously favor miners having access to cheap juice. This is not a new concept. Earlier miners were renting office space where the utilities were included in the rent.

If bitcoin numbers don't grow, they will either be worth more per, or the systems crashes. Was this the plan by the inventors? I don't know.
Honestly I think the designers of Bitcoin were partially afflicted with the goldbug disease, and also foresaw the likelihood that a fixed asset with increasing entry costs would encourage a gold rush mentality and user adoption.

I don't think they thought too much about what happens when mining stops. I believe the system will crash once Bitcoin stops appreciating and people realize it's much less fungible than your local fiat currency.
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Old 11-13-2017, 10:58 AM
 
8,496 posts, read 3,638,309 times
Reputation: 1657
Quote:
Originally Posted by Avondalist View Post
Honestly I think the designers of Bitcoin were partially afflicted with the goldbug disease, and also foresaw the likelihood that a fixed asset with increasing entry costs would encourage a gold rush mentality and user adoption.

I don't think they thought too much about what happens when mining stops. I believe the system will crash once Bitcoin stops appreciating and people realize it's much less fungible than your local fiat currency.
Then it becomes a more simple store of value. Time will tell. I find it all very interesting, but not my investment cup of tea.
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Old 11-13-2017, 11:10 AM
 
146 posts, read 63,667 times
Reputation: 345
Quote:
Originally Posted by Hoonose View Post
Set by system protocol/developers.
Oh, thank God! Who could be more trustworthy than that!
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Old 11-13-2017, 11:27 AM
 
9,277 posts, read 9,521,620 times
Reputation: 4841
Quote:
A Ponzi scheme is an investment operation where the operator generates returns for older investors through revenue paid by new investors, rather than from legitimate business activities or profit of financial trading.
According to the above definition, Bitcoin is certainly a Ponzi scheme because it's value only grows from new investors. Although people claim it has a utility, the increasing electricity costs mean that Bitcoins are not really fungible. They may be divisible to 8 decimal places, but you can't really scale down their use so that they can be used to purchase a pizza, or even an automobile.

Quote:
Originally Posted by Avondalist View Post
Honestly I think the designers of Bitcoin were partially afflicted with the goldbug disease, and also foresaw the likelihood that a fixed asset with increasing entry costs would encourage a gold rush mentality and user adoption. I don't think they thought too much about what happens when mining stops.
That is almost a textbook definition of a scam. You try to create a mania, and don't worry about the long term sustainability.

If the founder really has close to a million BTC, then he either pocketed or will pocket several billion dollars.

Quote:
Originally Posted by Avondalist View Post
I believe the system will crash once Bitcoin stops appreciating and people realize it's much less fungible than your local fiat currency.

Banknotes and Coin as percent of GDP (end of 2016)
19.96% Japan
16.86% Hong Kong SAR
12.32% Switzerland
10.73% Euro area
10.36% Singapore
10.23% Russia
8.79% India
8.34% Saudi Arabia
8.10% United States -------------------------
7.27% Mexico
5.94% Korea
4.83% Turkey
4.71% Australia
4.17% Canada
3.91% United Kingdom
3.70% Brazil
2.27% South Africa

The problem is that the smaller national fiat currencies (Sweden, Denmark, Iceland, Norway, South Korea and Great Britain) are looking the most seriously at electronic currencies to supplement and possibly replace banknotes. If electronic currencies backed by central banks, then private electronic currencies will look more familiar. I think BTC will initially be helped, and not hurt, by electronic kronas, Won, and pounds.

The Nordic countries are typically noted as being in the lead in eliminating banknotes or reducing their importance. However South Korea is the only country to announced that coins will no longer be legal tender in three years. Without coins, the smaller banknotes are not as useful, because people get tired of being shortchanged. The only banknote that will probably be in common use in a decade is the largest 50,000 KRW = USD$44.61 . Small transactions will be done electronically, and the largest bill will be reserved for transactions involving larger amounts of money that you don't want to be traceable (covers wedding gifts to illegal drug purchases).

Quote:
Originally Posted by Hoonose View Post
And this will obviously favor miners having access to cheap juice. This is not a new concept. Earlier miners were renting office space where the utilities were included in the rent.
Well cheap juice is on a linear scale. Obviously you are better off in Louisiana @9.82 cents per kWh than you are in California @19.02 cents per kWh.

But you are battling exponential growth. Ultimately it won't matter where you do your mining, as exponential growth will eventually outstrip everything.

Last edited by PacoMartin; 11-13-2017 at 11:50 AM..
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Old 11-13-2017, 11:39 AM
 
8,496 posts, read 3,638,309 times
Reputation: 1657
Quote:
Originally Posted by Fifty Percent Off View Post
Oh, thank God! Who could be more trustworthy than that!
Well beyond my pay grade. But with all the exposure I would think that many would understand the intricacies and implications of the system.
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Old 11-13-2017, 11:43 AM
 
8,496 posts, read 3,638,309 times
Reputation: 1657
Quote:
Originally Posted by PacoMartin View Post
According to the above definition, Bitcoin is certainly a Ponzi scheme because it's value only grows from new investors. Although people claim it has a utility, the increasing electricity costs mean that Bitcoins are not really fungible. They may be divisible to 8 decimal places, but you can't really scale down their use so that they can be used to purchase a pizza, or even an automobile.



That is almost a textbook definition of a scam. You try to create a mania, and don't worry about the long term sustainability.

If the founder really has close to a million BTC, then he either pocketed or will pocket several billion dollars.




Banknotes and Coin as percent of GDP (end of 2016)
19.96% Japan
16.86% Hong Kong SAR
12.32% Switzerland
10.73% Euro area
10.36% Singapore
10.23% Russia
8.79% India
8.34% Saudi Arabia
8.10% United States -------------------------
7.27% Mexico
5.94% Korea
4.83% Turkey
4.71% Australia
4.17% Canada
3.91% United Kingdom
3.70% Brazil
2.27% South Africa

The problem is that the smaller national fiat currencies (Sweden, Denmark, Iceland, Norway, South Korea and Great Britain) are looking the most seriously at electronic currencies to supplement and possibly replace banknotes. If electronic currencies backed by central banks, then private electronic currencies will look more familiar. I think BTC will initially be helped, and not hurt, by electronic kronas, Won, and pounds.



Well cheap juice is on a linear scale. Obviously you are better off in Louisiana @9.82 cents per kWh than you are in California @19.02 cents per kWh.

But you are battling exponential growth. Ultimately it won't matter where you do your mining, as exponential growth will eventually outstrip everything.
Again I don't know if the system is fraudulent. Many more conventional equities might meet your description.

And it was my understanding that the system relies on each successive coin being harder to mine.
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Old 11-13-2017, 12:44 PM
 
17,949 posts, read 12,663,088 times
Reputation: 13219
Quote:
Originally Posted by PacoMartin View Post
Most scams should be obvious to the person being scammed. Even Madoff never had a negative month. The only kind of investment that is never negative returns very low cumulative rates.

Bitcoin computational rates
April 30, 2011 broke 1 Terahashes per second
Dec 25, 2013 broke 10,000 Terahashes per second
Jan 23, 2016 broke 1,000,000 Terahashes per second
Jun 04, 2017 broke 5,000,000 Terahashes per second
Oct 08, 2017 broke 10,000,000 Terahashes per second
Hash rate seems to have peaked at 13,000,000 Terahashes per second (October 26, 2017) .

A Terhash takes about 1 kW of electricity. So the rate of growth is unsustainable.

While there is large electricity costs with any system (of banks, producing banknotes, etc.) they tend to increase linearly. If a bank branch costs $300K one year, it may cost $310K the next year. The BTC costs are increasing exponentially.

Madoff actually had 3 down months iirc
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Old 11-15-2017, 07:16 PM
 
96 posts, read 44,341 times
Reputation: 73
This whole Bitcoin and Ethereum craze has become a little too much. I expect a very sharp pullback in the near future.
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