Bitcoin shatters $60K milestone for the first time
- Thread starter Shawn Knight
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NightAntilli
Posts: 929 +1,195
Neither does your dollars. In fact, the dollar almost crashed in 2008, WITH electricity enabled.
Ultimately, an independent medium will always be required to function as a currency. It is exactly because Bitcoin has no other function, that it fits this role perfectly.
It doesn't have to be defined that way. Bitcoin can work perfectly within itself. If the dollar or the whole global fiat system collapses, Bitcoin will keep existing.
It might be. Still not nearly as bad as fiat.
And a lot of fools made, are making, and will make a bunch of money with it. The only thing you're guaranteed to do with fiat is lose value... So...
QuantumPhysics
Posts: 6,306 +7,258
My dollars are backed by the military industrial complex and about 10,000 nuclear weapons.
My dollars is insured up to $250,000 by the FDIC.
What backs Bitcoin?
What insures it?
NightAntilli
Posts: 929 +1,195
None of those could have done nothing to save it in 2008. Therefore they are not really backing it.
And when it crashes again, which is closer than you think, those nuclear weapons will be standing by as if nothing happened.
The most powerful computer network on the planet.
QuantumPhysics
Posts: 6,306 +7,258
#1 The most powerful computer network is 100% useless when the power goes off.
Please let me watch you try to buy some gasoline, milk or food when a hurricane, natural disaster or a war knocks out the power.
#2 2008 was a bunch of bankers lining up to "get theirs" from Bush's government cronies (Paulson) before cutting off credit cards to the regular people - and then reactivating them to put them into debt.
What exactly is Bitcoin doing about Student loan debt?
Besides allowing the IRS to effectively tax the world?
NightAntilli
Posts: 929 +1,195
Gasoline, milk or food can no longer be produced when the power goes out. So they're practically in the same boat as Bitcoin... Not counting the miners that will simply remain online because they are running on renewable energy, and will most likely be using StarLink...
I recommend you go watch Inside Job.
It doesn't have to do anything about it. It's the government policies, aka the current financial system, that allowed student loan debt to become what it is. It's not Bitcoin's resonsibility... Although, if they would have put that money into Bitcoin, they would actually be able to pay back the debt by now
If they do that it's only a matter of time before everyone on Bitcoin switches to Monero.
QuantumPhysics
Posts: 6,306 +7,258
You purposefully ignored my implication.
When the power goes out, my CASH dollars will get me goods and services and your crypto won't.
That is all.
NightAntilli
Posts: 929 +1,195
In case you didn't notice, we're on the verge of a cashless society.
QuantumPhysics
Posts: 6,306 +7,258
I believed that the cashless society was coming immediately but there are a lot of people still fighting it. Specifically poor people who continue to keep them selves low tech.
Bottom line is: you should be investing in Square, bank stocks with dividends and other transfer methods like I did back in March during the crash.
The returns that I’m getting from Square are far higher than any return that I would’ve gotten from crypto.
NightAntilli
Posts: 929 +1,195
People will fight the cashless society. But they will lose. You can guess what their alternative is... Not to mention that wanting dollars at this point is.... risky, to say the least.
As for crypto not netting the same returns as Square... Let's test that;
Square low of March 2020; $38
Square high since then; $276
Increase; 7.3x
Bitcoin low of March 2020; $3700
Bitcoin high since then; $61700
Increase; 16.7x
Yeah... Doesn't hold up. Even if you get dividends, you're not reaching above 10x. And then we didn't even pick the best performing crypto (to my knowledge);
Cardano low of March 2020; $0.02
Cardano high since then; $1.49
Increase; 74.5x
There is no higher return than in crypto. Obviously, it comes with a higher risk than stocks that exist for many decades and are more well-established. There are still stocks that are more risky than the most established crypto currencies. It depends on what your risk tolerance is and how well you know the markets.
I'm not trying to discount your way of doing things. A lower return is always better than no return. Not saying your return is 'low' either. So, you're doing fine.
QuantumPhysics
Posts: 6,306 +7,258
Tesla, Square, Pinterest, Nio and a few others outperformed Bitcoin in 2020.
Bitcoin sat well under $19,000 from 2018 till 2021 when it suddenly got boosts from welfare checks and corporate welfare (Elon musk).
In order to double your money on Bitcoin, at this point, you'd need to see Bitcoin rise from its current value to double its current value. Plenty of stocks did way better than that.
Since March I did better with apple (pre split), for example, and Tesla (pre split)
Not to mention my oil stocks and bank stocks paying dividends.
It all depends where you try to start counting.
I'm not gonna waste energy arguing about it. If you believe in crypto, then risk your money on it.
Well, since crypto in general doesn't provide such sovereignty... In fact, as a percentage of money, I and people I know lost more to crypto theft and fraud (or plain inability to access a wallet) than we lost to anything else.
What's sad is that there are people who on one hand believe in a distributed crypto network and on the other hand support mining, which is the exact opposite of that, as is puts the vast majority of the network in the hands of a handful of individuals with mining farms in places where electricity is cheap.
It's sad that if people think there's any security in those mined currencies when it's clear that if there was any value then a company like NVIDIA could just take over the network.
It's sad that people accept inequality in "money" distribution that's much higher than anything in the real world.
In short, anyone who argues that proof of work coins are good in any way is either extremely naive or disingenuous.
NightAntilli
Posts: 929 +1,195
Actually, it does. The whole crypto space doesn't necessarily, but Bitcoin and Ethereum do.
The only way to lose money through crypto theft or fraud is if you keep your crypto on exchanges and the exchanges got hacked, if you used a buggy or fake DeFi protocol, or if you were stupid enough to type in your private key on a shady website.
Inability to access a wallet is either carelessness or simply not doing your homework.
With crypto, you have to delete the mentality of having mommy or the government take care of you when you're irresponsible or immature. Once you do that, it is the safest and most secure space that has ever existed.
Nothing is stopping anyone from mining with their graphics cards. And since you're small, you simply join a mining pool and get a pro rata reward for your hashrate. Whether big mining farms exist or not is irrelevant. The moment that one farm becomes too big, the whole thing collapses. That means that as long as it is working well, it is decentralized. Simple as that.
Decentralized does not necessarily mean that everyone has the exact same share. That would never happen anyway, because there are always naysayers. And for every naysayer, someone else will take their place, creating the discrepancy in equal distribution. That is not a contradiction to decentralization.
No they could not. The moment one entity takes over the network, its value literally becomes zero. If it was that easy, any company would have simply bought Bitcoin or Ethereum when their market cap was low. No one does it, because it is the equivalent of burning money.
What...? In the US, the top 1% owns 99% of wealth.
Ok
terzaerian
Posts: 1,517 +2,260
Can you at least level with us whether you're arguing against crypto in general, or just being a stealth maximalist for whichever proof-of-stake bag you're holding? In finance it's good form to clarify these things.
terzaerian
Posts: 1,517 +2,260
Bitcoin Obituaries - "Bitcoin is Dead" Declared 400+ Times
Until today "Bitcoin is dead" was declared more than 400 times. This is the official source for all Bitcoin obituaries since 2010.
99bitcoins.com
NightAntilli
Posts: 929 +1,195
You seem to love Square a lot... Did you know that Square actually bought Bitcoin....?
Square buys $170 million worth of bitcoin
The company said it bought approximately 3,318 bitcoins, expanding on its October 2020 purchase of 4,709.
www.cnbc.com
I'm not arguing against crypto in general. I'm arguing against proof-of-work mining, which is plain stupid. I don't have any current stake in crypto. I held a little crypto years back, then realised how bad mining was and got anti-crypto, then realised that proof-of-work isn't all of crypto so there's no reason to be against it in general. I think that there are some good ideas there and personally admire what Vitalik Buterin has done. That hopefully clarifies my stance.
I think I'll go into a series of posts about the misconceptions of mining. A series just so it's easier to discuss instead of bundling everything together as I did before. If you'd rather I put more points together, say so. If you agree with a point, just say so and I'll go on.
Misconception 1: Proof-of-work crypto is backed by a completely decentralised network.
In reality, while mining is somewhat distributed, it's distributed to only a small number of locations: mining farms and mining pools. According to this, 65% of mining hash power is in China.
That map also misrepresents some of the data by attributing the mining people do at home to their geographic location.
People who mine at home don't get coins or contribute to the blockchain directly. They do work for a mining pool, which in turns gets the mined coins and rewards its users.
So all the work the users of a mining pool are doing is centralised at the mining pool. If there is a problem with that mining pool, its collective mining power is lost. (Or, if the mining pool is acting in bad faith, could be misused. But that's for another point.)
NightAntilli
Posts: 929 +1,195
Alright. Let's go.
This is true. But, countries are pretty much irrelevant in the crypto world.
This is true. Basically, you're giving the mining pool your hashing power, and they ultimately pay you for it pro rata, after you reach a certain milestone, which is normally denoted in a specific amount of coins.
But this has been done as a benefit to small miners. You CAN mine directly to the blockchain with your single graphics card, but your chances of getting a reward are extremely small. You would have to wait for example 10 years, to finally mine a block. This is why mining pools were introduced. It's so the small miner can get paid more regularly.
A mining pool might be centralized, but what maintains the pool is still decentralized, for the simple fact that anyone can join whichever mining pool they wish at any given time.
And literally anyone can start a mining pool.
I will quote something....;
"A larger pool has a larger impact on the global hash rates. In traditional oligopoly models, a larger firm charges a higher price and produces less. A similar effect manifests in our setting: a larger pool charges a higher fee and accommodates proportionally less active mining. Consequently, absent other considerations, in the long run we expect a relatively decentralized market structure to sustain in the global mining industry, and no single pool grows too dominant. "
Misconception 2: Mining supports the blockchain.
While people in crypto occasionally offer some comment about their view of mining power usage, I don't think they give it much attention beyond trying to excuse it.
Though it's not really that excusable. Mining does, at the basic level, make the blockchain work, but still, 99.99...% of the power use is completely wasted, and doesn't actually help with anything, just makes it worse.
Crypto mining is designed such that the more computing power you put into the system, the less efficient it becomes. Other systems might require more work the more transactions there are or the more users there are, but mining is infinitely inefficient, in that no matter how much computing power you put into it, it will all go to waste.
The idea behind this is to make the blockchain continue to grow at the same rate, and produce the same number of coins, regardless of how much power is put in. Most of what's behind mining is human engineering rather than software engineering, and that's part of it. That's also where it fails, as people are still incentivised to shift the balance of mining to their favour by using more power.
If the value of crypto was limited, then that would have put a limit on the power people are willing to put in, but a lot of crypto (such as Bitcoin) is designed to infinitely deflate, due to a limited number of coins.
People in crypto sometimes compare how wasteful the banking system is compared to the crypto system. They tend not to make a comparison of efficiency in the first place (ignoring how much larger number of people and transactions the banking system supports). With the inefficiency of crypto being unbounded, if mining based crypto is ever truly successful, it will suck down as much power as is available.
While people in crypto occasionally offer some comment about their view of mining power usage, I don't think they give it much attention beyond trying to excuse it.
Though it's not really that excusable. Mining does, at the basic level, make the blockchain work, but still, 99.99...% of the power use is completely wasted, and doesn't actually help with anything, just makes it worse.
Crypto mining is designed such that the more computing power you put into the system, the less efficient it becomes. Other systems might require more work the more transactions there are or the more users there are, but mining is infinitely inefficient, in that no matter how much computing power you put into it, it will all go to waste.
The idea behind this is to make the blockchain continue to grow at the same rate, and produce the same number of coins, regardless of how much power is put in. Most of what's behind mining is human engineering rather than software engineering, and that's part of it. That's also where it fails, as people are still incentivised to shift the balance of mining to their favour by using more power.
If the value of crypto was limited, then that would have put a limit on the power people are willing to put in, but a lot of crypto (such as Bitcoin) is designed to infinitely deflate, due to a limited number of coins.
People in crypto sometimes compare how wasteful the banking system is compared to the crypto system. They tend not to make a comparison of efficiency in the first place (ignoring how much larger number of people and transactions the banking system supports). With the inefficiency of crypto being unbounded, if mining based crypto is ever truly successful, it will suck down as much power as is available.
NightAntilli
Posts: 929 +1,195
Mostly true... Except for...
The more power is put into the network, the more secure it is. The power doesn't just vanish into thin air. You would have to overcome the hashrate (which is proportional to power consumption) to control or hack the network.
Additionally, the miners are proportionally the biggest pushers and users of green energy on the planet. It is a direct influence on their profits. No one has a bigger push for innovation of energy technology than miners.
Moreover, even though the transactions per second are limited compared to other systems, it is still faster in practice to send Bitcoin from for example South America to Japan in terms of waiting time, than doing it through the traditional banking system.
Which brings me to
Misconception 3: proof of work coins are secure.
I'll only discuss the majority attack, since that's a vulnerability shared by all coins. If someone has more than 50% of the mining power, then they can add whatever they want to the blockchain.
That's hardly a far fetched situation, and indeed has happened. It's a lot easier to carry out than most people think. The typical crypto fan response would be that people won't gain much by it, but that's about as relevant a defence as "security by obscurity". If there's an easy attack vector, then people will find use for it.
For example, suppose that crypto becomes big in the US, to the point where China, which has 65% of mining in its area, feels that it would be useful to disrupt it. It could take over the mining equipment in its area and disrupt any coin it wants, and do it repeatedly over time, unless a kind of "cold war" starts in which the US and China put more and more power into crypto (at the expense of other things), in which case we'd still have complete instability of the coins.
But there's no real need for having over 50% of total mining power to disrupt pretty much any coin. I don't know who owns the mining farms (if there's any information, it'd be helpful), but it's certainly not out of the question that a single player has, let's say, 10% of the mining power. That should be enough to steal from most coins' blockchains, or disrupt them.
It wouldn't have been enough if there was just one coin, but that's not the case. Most miners don't support any particular coin, but rather mine the most profitable coin. Less profitable coins have fewer people mining them, so any large player should be able to easily take over the coin.
If the player wants to take over another coin, that's profitable, all they need is to make another coin more profitable, which for a large player shouldn't be hard by playing both the mining efforts and the exchanges.
Mining pools are similar to single players (that's part of the centralisation problem), in that if they act in bad faith, they can give miners whatever work they want done.
Going back to what you said, it's true that the more power is put into a network, the more secure it is against outside attack. On the other hand, putting more power into mining doesn't make any particular network more secure, since for most coins this is "outside power" that could be used for attack.
It's also worth noting that other aspects of coins, such as mining pools and exchanges, are dependent on trust, and that trust has certainly been broken in the past (I personally lost coins to both).
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NightAntilli
Posts: 929 +1,195
Well, people generally won't gain much from it, because, everyone else can decide to go back to another block before the attack. It's basically what happened with Ethereum, splitting into ETC and ETH.
Disrupting the mining operations has a cost. And if it ultimately kills the coin, it's money spent with pretty much zero return. No one is going to do that.
Besides, even if they do it, another coin can always pop up. Good luck trying to do it with Monero for example...
Uh... Not at all... The other 90% of the network will recognize the fraudulent transaction and kill that chain automatically. The only way to disrupt the network is a 51% attack.
It's not that easy though. If we take Bitcoin for example, it uses ASICs... That means that any coin that uses something other than SHA256 cannot be mined on Bitcoin miners. And there are many different ASICs out there.
It is true that less profitable coins have less people mining them. It is true that theoretically, someone can manipulate such a coin. But that requires the main actor to act quickly, because when people find out and dump the coin, the actor will be left holding the bag of a bunch of coins with little value. It's theoretically possible, but not so simple nor easy.
True. But acting in bad faith has built in consequences, I.e. you're wasting power and not gaining any rewards, because the blockchain rejects the results of the pool. Only with a 51% attack would it be an issue. And if we take Bitcoin, things are looking quite good;
Blockchain.com | Charts - Hashrate Distribution
The most trusted source for data on the bitcoin blockchain.
www.blockchain.com
Well... It's pretty much impossible to have an issue with Bitcoin at this point. The network is too powerful, and there is no incentive for the miners to stop their operations, which is pretty much the main danger to Bitcoin.
If you're gonna mine knock-off coins or low cap coins, you definitely put yourself at a higher risk for this.
(Sorry for the late reply.)
If the idea is to kill the coin, then that's quite a big return. You might not have understood the example. The point is, currently coins are marginal. As long as they remain so, it's the same old security by obscurity. If coins ever become valuable enough that disrupting them can cause big players to lose big money, then that's incentive enough. Imagine that all big US companies are invested in coins and people use them every day, then, as I said, China can leverage this to deal a significant blow to the US economy.
This is also true in even smaller scenarios. Players can make money by disrupting coins. I lowers their value and allows other coins to grow.
If your only argument is that it might not happen, then, yes, it might not happen, but you see cyber attacks every day, and there are armed conflicts in the world, and if you think that nobody is going to leverage vulnerability of proof-of-work coins, then as I said at the start, you're naive.
True, but who controls these ASICs? Bitcoin has often been in a situation when it could have a 51% against it. While, as you say, there might not be incentive for it currently, if it ever becomes big enough that disrupting it is valuable to someone, then it should be easy to do. That's what centralisation leads to. If the network is centralised enough, and I'd certainly guess so, then perhaps building a competing facility is a problem, but someone could take the existing ones by force.
If mined crypto coins always stay as a marginal, then sure, I can see them as reasonably safe. If they ever replace money or become anything more than speculative risky investments for a few brave souls, then I don't see why they won't be subject to much more ruthless playing, because unlike "real" money, they are fundamentally flawed.
NightAntilli
Posts: 929 +1,195
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