Crypto-currencies - a discussion

Little John · Post by **Little John** » 23 Dec 2017, 08:12

This all feels like a discussion about the production costs of the emperor's new clothes.

Peter1010 · Post by **Peter1010** » 23 Dec 2017, 09:35

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

With normal PC hardware, the cost in electricity is enomous (too costly in electricity), You have to invest in low power, high speed ASIC hardware which is a large investment (its about large scale low power high speed solutions). The risk here is you make that initial hardware investiment and then the price of Bitcoins crash.

Personally there are better uses of this computing power than finding bitcoin hashes,

RevdTess · Post by **RevdTess** » 23 Dec 2017, 15:16

In an efficient market (ie one with sufficient liquidity and no barriers to entry), we should see increasing computing power (and therefore energy resources) dedicated to bitcoin mining until the return on investment drops to a level comparable to other investment opportunities.

A few years back I did consider whether it might be a good investment to buy some BTC mining equipment and join a syndicate but my back-of-the-envelope maths put me off. Not only was the reward marginal over cost, but because mining bitcoin gets intentionally slower over time, it wouldn't be long before my box of linked GPUs would become obsolete and need to be replaced.

If I did the maths again with bitcoin at $15000 I've no idea what the result would be, but given that it's currently orders of magnitude easier to buy BTC than to set up or join a mining syndicate, the price seems far more driven by gullible latecomers than mining costs. It's basically a pyramid scheme at this point. You only get a return if others are willing to buy in, because almost no one actually needs bitcoin for any other reason than speculation.

I'm glad I didn't buy into it really. It's morally pretty evil despite its technical genius. Although actually it's not much different to all the other ways we use excessive energy to make imaginary and crappy things for people to buy. After all, the whole point of a modern economy is to turn resources into landfill or poison as fast as possible via our bank accounts.

Oh, and Happy Christmas everyone

. Thought I'd just stick my head in and see how everyone is.

Little John · Post by **Little John** » 23 Dec 2017, 20:28

Merry Christmas Tess. Nice to hear from you.

woodburner · Post by **woodburner** » 23 Dec 2017, 21:32

Nice to hear from you again Tess. I think your summary of the situation is accurate. The western economy is geared to be totally inefficient by mostly producing shit which we can really do without. Some of it is useful, like some logs to warm the house, 50â€� plasma tv I can do without.

Lord Beria3 · Post by **Lord Beria3** » 23 Dec 2017, 21:38

Not sure why bitcoin is morally evil.

A bubble maybe, probably, but certainly not on the same scale as selling addictive drugs to kids or selling arms.

woodburner · Post by **woodburner** » 23 Dec 2017, 22:22

Itâ€™s evil because itâ€™s merely a tool for pyramid selling. There is no substance, there is no intrinsic value. It is a f*****g useless flag in the internet which greedy twats will pay a fortune hoping that a bigger a**e than them will pay even more. It is another capitalist destabiliser.

johnhemming2 · Post by **johnhemming2** » 24 Dec 2017, 07:21

I don't think you can say its evil. Nor can you really say necessarily that the people selling bitcoin to greater fools are evil. This is basically all about greed overcoming ignorance and people not learning from history.

Human Nature is not always that nice.

Post by **adam2** » 24 Dec 2017, 08:03

I consider it possible that the bitcoin boom MIGHT carry on almost forever.

The supply is fundamentally limited, there is said to be an absolute upper limit to the number of bitcoin that can EVER be mined.
A growing population, and a growing proportion of that population apparently wishing to hold bitcoin, COULD suggest an ever growing value.

Also bitcoins can be and have been lost, by forgetting or loosing passwords. In such circumstances they are said to be gone forever. Each such loss would tend to increase the value of the remaining coins.

This is in contrast to established currencies such as Sterling, this can be inflated to worthlessness by printing more (both actual physical printing, and the creation of money by fractional reserve banking)
Taking a long term view, it could even be argued that Sterling HAS become nearly worthless in but a few generations. My late grandfather purchased his first house for Â£85, a similar property recently sold for well over Â£1000,000. The original purchase price in say Â£5 notes would have fitted in a pocket, the present price in Â£5 notes would be several large bags full, despite the modern notes being much smaller.

Even gold is only slightly limited in supply, vast amounts of gold exist in seawater. The concentration is minute and effectively worthless at present, but advances in large scale automatic machinery and ample cheap energy might make extraction from the sea worthwhile in the future.

Something as new and untried as bitcoin carries risks of course, but even a fall to say 10% of the present value would still leave bitcoin worth a lot more than when first launched.

woodburner · Post by **woodburner** » 24 Dec 2017, 08:34

Bit coin has fallen from a peak of Â£14738 to Â£10697 in the past week, with a few humps and troughs, in the last week. A lot more than 10%, and I expect the falls to be greater as greed fails to drive it.

Post by **adam2** » 24 Dec 2017, 08:37

I was referring to a fall TO 10% of the present value, not a fall OF 10% of the present value.

UndercoverElephant · Post by **UndercoverElephant** » 24 Dec 2017, 09:51

adam2 wrote:I consider it possible that the bitcoin boom MIGHT carry on almost forever.

The supply is fundamentally limited...

That statement is misleading though. Yes, the supply of bitcoin is limited, but not in the way the supply of precious metals is limited, because there are unlimited amounts of other cryptocurrencies that operate in the same way. Just because bitcoin was the first and remains the largest, it doesn't follow that the existence of the others isn't relevant. By contrast, not only is the supply of any particular precious metal limited, so is the range of precious metals that can exist.

Cryptocurrencies are limited only by the cultural-economic reasons for not allowing them to proliferate in an uncontrolled manner, which puts them firmly in the same camp as fiat currencies, not precious metals. The main difference is that crypocurrencies aren't controlled by central banks and/or governments.

Lord Beria3 · Post by **Lord Beria3** » 24 Dec 2017, 13:01

With respect woodburner, that is your opinion.

Some bitcoin owners genuinely think that cryptos will end up replacing paper money due to the reasons outlined by adam2.

If you think bitcoin is superior to fiat currencies then it is not only rational but morally good to buy and hold bitcoin.

Myself, I think that crypto-currencies DO have a future but i think that bitcoin is a beneficiary of being the first out and will eventually crash and be replaced by better designed cryptos down the line.

In other words, its like any other new industry (tech, railways etc) where lots of money is made, and lost in the excitement of a new technology being born (e.g. blockchain and crypto-currencies).

fuzzy · Post by **fuzzy** » 24 Dec 2017, 13:56

It's superiority as a currency is that it allows invisible flow of money. The high exchange rate is benefiting speculators, but eventually it will reach an equilibrium, the speculators may drift away, and it will still be useful for hiding from the taxman.

Post by **kenneal - lagger** » 24 Dec 2017, 18:01

Someone somewhere is making an awful lot of money for nothing then.