Crypto-currencies - a discussion

woodburner · Post by **woodburner** » 21 Dec 2017, 17:58

Went up to Â£14,500 on the 17th, now down to Â£11,500. Some people may not have a happy christmas.

Lord Beria3 · Post by **Lord Beria3** » 21 Dec 2017, 20:07

http://www.wsws.org/en/articles/2017/12 ... c-d21.html

There are warnings that the speculative bubble could soon burst, including from one of its earliest proponentâ€”Emil Oldenburg, a founder of Bitcoin.com, who said he had now liquidated all his holdings.

â€œI would say an investment in bitcoin is right now the riskiest investment you can make. Thereâ€™s an extremely high risk,â€� he told the Swedish tech site Breakit.

Oldenburg sparked another surge, however, when he said he was moving into bitcoin cash, a split off from bitcoin created in August. On Tuesday bitcoin cash jumped in price by $450 in 90 minutes.

The appetites of financial speculators continue to be whetted by reports of massive gains being made by hedge funds which specialise in bitcoin and numerous other cryptocurrencies, including Ethereum, Ripple and Litecoin.

On Tuesday the New York Times reported that the Pantera Bitcoin Fund, set up in 2013 to specialise in cryptocurrencies, had delivered a 25,004 percent return since its establishment, most of it made this year due to the staggering rise in the price of bitcoin.

According to the report, more than 150 hedge funds based on cryptocurrencies have been set up this year, bringing the total to 175.

In a note to clients this week, Morgan Stanley said this year an estimated $US2 billion had been invested by specialist hedge funds focusing on cryptocurrencies.

Interesting analysis by the WSWS.

emordnilap · Post by **emordnilap** » 22 Dec 2017, 13:16

a commenter wrote:I don't understand most of this article. But it sounds insane to me.

Neither do I. And it is.

UndercoverElephant · Post by **UndercoverElephant** » 22 Dec 2017, 15:13

woodburner wrote:Went up to Â£14,500 on the 17th, now down to Â£11,500. Some people may not have a happy christmas.

The sound of a bubble bursting. A big one. Could go right down below Â£1000.

And the wider "crytocurrency" bubble is very much like the dotcom bubble, where for a short while some people thought that anything with a website was going to become DODGY TAX AVOIDERS. 99% of them went nowhere, and it will be the same with most of these lesser cryptos.

johnhemming2 · Post by **johnhemming2** » 22 Dec 2017, 15:20

The only thing it cannot do is go below zero.

Little John · Post by **Little John** » 22 Dec 2017, 15:34

speculative vehicles in it can though

johnhemming2 · Post by **johnhemming2** » 22 Dec 2017, 16:04

Some of them.

Post by **kenneal - lagger** » 22 Dec 2017, 18:01

The people doing the bitcoin mining must be making a fortune at the moment. They are the equivalent of *ankers who give you a loan as far as I can see. They get something for virtually nothing but, unlike the *ankers, they see no liability at all when the thing goes tits up!

Peter1010 · Post by **Peter1010** » 22 Dec 2017, 21:23

kenneal - lagger wrote:The people doing the bitcoin mining must be making a fortune at the moment. They are the equivalent of *ankers who give you a loan as far as I can see. They get something for virtually nothing but, unlike the *ankers, they see no liability at all when the thing goes tits up!

When I last looked at this; the cost of the electricty exceeds by far the value earned from the bit coins created. Hence why there is in effect a limited supply.

Post by **adam2** » 22 Dec 2017, 23:37

If the cost of electricity used in bitcoin mining really does exceed the value of the resulting bitcoins, then why do people do it ?

It cant be the hope that the newly mined bitcoin will appreciate in value to beyond the value of the electricity used to mine it, because one could simply purchase bitcoin at the prevailing price and hope that it appreciates, without the bother of mining.

Some bitcoin miners are probably stealing the electricity, but not all of them, surely ?

Little John · Post by **Little John** » 22 Dec 2017, 23:51

Also, something else doesn't make sense.

If it's true that the cost of production (in electricity) exceeds the face value - but it is also true that the face value of bitcoins has risen several thousand fold over time - then either the cost of electricity has risen a thousand fold alongside - or the algorithm used to "mine" them has become more difficult and therefore time consuming over time.

So, which is true?

woodburner · Post by **woodburner** » 23 Dec 2017, 06:03

Last figure I saw was 215kWh per coin mined. It needs a lot of computers do do it as well, so a significant investment.

Post by **adam2** » 23 Dec 2017, 06:49

Little John wrote:Also, something else doesn't make sense.

If it's true that the cost of production (in electricity) exceeds the face value - but it is also true that the face value of bitcoins has risen several thousand fold over time - then either the cost of electricity has risen a thousand fold alongside - or the algorithm used to "mine" them has become more difficult and therefore time consuming over time.

So, which is true?

IIRC, the algorithm HAS become more difficult over time, I do not know how this is done, but I believe that it is a feature of bitcoin that mining new ones becomes steadily harder.

Post by **adam2** » 23 Dec 2017, 06:58

woodburner wrote:Last figure I saw was 215kWh per coin mined. It needs a lot of computers do do it as well, so a significant investment.

215kwh would cost very roughly Â£20 to Â£40, at retail prices on a domestic tariff.
Less on an off peak tariff, or if purchased in bulk, or if the miner had access to large scale renewables.

Little John · Post by **Little John** » 23 Dec 2017, 08:10

Well, then, that nowhere near matches the price of a single coin, which currently stands over 10k

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Crypto-currencies - a discussion

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