>the currencies have no inherent value and can be manipulated, making them a poor investment.
So is that wrong then ?
Does this mean that patriotic Americans should own BTC ?
Prices for graphics processors in China have plummeted following the nation's crackdown on cryptocurrency mining, ownership, and trading. The decrease in demand for the chips, and therefore price, is a direct result of Beijing all but banning the digital cash, according to the South China Morning Post. The Middle Kingdom's …
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This crypto is totally not a fake asset being sold to gullible idiots, its a *real* deal to do with blockchains and the like. MATH! Don't break that chain! DON'T BREAK MATH! Buy today before the price gets too high, others are getting rich and you are missing out.
I wouldn't exactly say that the U.S. is a reliable partner in war.
The United States showed up late in both World Wars. The Koran War was a stalemate and it took the U.S. 68 years(!) to achieve that. The Vietnam War was won by the Viet Cong. The war in Afghanistan is still ongoing, looking more and more like a repeat of Vietnam.
"The Koran War was a stalemate and it took the U.S. 68 years(!) to achieve that."
You are ruining your credibility here. First, the Korean war, unless you're talking about something related to the central book of Islam. Second, it did not take 68 years. It took 3 (less, really). Fighting stopped in 1953. You act as if there were active hostilities from 1953 to 2018. There were not. Third, it's entirely normal that it was a stalemate and you should probably be glad they didn't try to make it an ultimate victory. China was fighting against them, and if they wanted to defeat China entirely, it would have certainly meant use of nuclear weapons. People had suggested that at the time. They prevented the invasion of South Korea and, when it became obvious that forcing both North Korea and China to surrender was going to involve a lot of dying, mostly of the people there, they decided not to.
This doesn't necessarily mean I disagree with your other points or take a position at all on this America vs Europe argument going on, but next time you want to talk about military history to make a point, please stick to what actually happened.
Bitcoin has the potential to destabilize economies. It's not surprising that governments would be against ceding the economic control that fiat currencies have. China is pushing their new digital yuan and I don't think it will be that long before the US Federal Reserve releases their own digital currency.
Bitcoin probably won't be made illegal in the US, or any other freedom-oriented democratic country but there is a good chance it'll get out-competed by more convenient and government supported digital fiat currencies.
There is no way that Bitcoin in its current state can replace the currency of even a medium sized city, let alone a major economy.
However, it could easily destabilise economies if enough people throw their money at it, in a manner similar to the Albanian pyramid schemes of the 1990s, because that's about all it's useful for.
The fundamental problem with Bitcoin is that it needs subsidized power to function economically. BTC transactions are already time consuming and costly so if they have to move somewhere where they have to pay market price for power then trading in BTC is going to be even less attractive. Miners were based in interior provinces of China because of its subsidized power. This subsidy was designed to promote economic development and I'd guess that there flagrant abuse of this resource (generated from coal) initially got them evicted. They then moved to an adjacent province with cheap hydro power but I'd guess that by this time the central government had realized they were hosting a parasite and decided to get rid of it.
It was initially reported that they were planning to move to Texas but the power grid just doesn't have the capacity to support them. Florida's governor has offered them a home and "cheap nuclear power" so maybe they'll turn up there. (This raises an interesting question -- suppose the BTC industry had to develop and support the power generation, internet infrastructure and even the computing resources needed to support it? Without their social subsidy, that's everyone providing the infrastructure regardless of whether they benefit from the entity, I reckon that these currencies would be totally uneconomic, just interesting concepts.)
"needs subsidized power to function economically"
No. Subsidies just hand an advantage to those being subsidised. It doesn't need subsidies to *function* economically, you need subsidies to *compete* with those already being subsidised.
If the hashrate drops because the subsidies stop, the block difficulty is adjusted.
"The on-chain transaction processing capacity of the bitcoin network is limited by the average block creation time of 10 minutes and the original block size limit of 1 megabyte. These jointly constrain the network's throughput."
Neither of those things are dependant on hashrate.
Remember, once BTC has all been mined, the miners are expected to continue based on the transaction fees alone.
Bitcoin has no inherent value, until you realise a function that Bitcoin can do extremely well for you.
If you are Chinese and there are strict controls on money crossing the border, Bitcoin has a use.
Same if you have your money stashed in some exotic Caribbean island.
If VISA and Mastercard stop being accepted at PornHub... (note: that did coincide with a remarkable boom in Bitcoin demand).
The irony of fiat-based currencies stating that globalised bitcoin-variants have no inherent value is hilarious.
"Dear sir, please accept this piece of paper as an IOU from our government, backed by nothing of any value, except a promise to tax our citizens if we fuck up too badly."
Me? I'm not a big fan. Wish I'd latched onto Bitcoin in the early early days like everyone else, but I could also have thrown away cash at plenty of other get rich quick schemes, and "internet drugs and pizza coins" wasn't high on my lists.
There are controls, but it's by no mean impossible to get money in and out of China, particularly for the average citizen who is not moving millions around.
So wanting to escape *all* controls is no more, no less suspicious that it would be in the EU, UK, US, where there are also strict controls in pace (largely because of the US).
"IOU from our government, backed by nothing of any value, except a promise to tax our citizens" - which is precisely why it has value, that and the fact that most currencies have an army backing them that will not let another currency just pop up and replace the incumbent.
Downvoted because it expresses a dubious -- if not uncommon -- viewpoint.
A "currency" that isn't either an IOU or a share of some commodity is a currency backed only by happy thoughts. From tulips to The South Seas Company to phony gold mines to Credit Default Swaps, in the past people have invariably stopped thinking happy thoughts sooner or later. Of course, things might truly be different this time. But that's really not a good bet.
If nothing else, you can use government IOUs to pay taxes. You do plan to pay your taxes ... right?
"Downvoted because it expresses a dubious -- if not uncommon -- viewpoint."
I'm afraid I didn't follow your explanation at all. In what way was the viewpoint expressed by @Natalie Gritpants Jr "dubious", and indeed how does it even differ from your viewpoint? (Your downvote was from someone else.)
Just because some of the world's major currencies are controlled by countries with armed forces (Dollar, Renminbi, Sterling, etc.) doesn't mean the two are in any way linked. I don't see the Icelandic Króna under threat because Iceland has no standing armed forces, and unless you're one of those that believe that by leaving the EU, we somehow dodged the bullet of being conscripted into a fictitious EU army, the Euro isn't backed by armed forces either.
Like it or not, most fiat currencies are accepted because users of them mostly don't have a choice (try buying a pint of milk with shiny pebbles, and you'll find the shopkeeper much more likely to accept Sterling), and, to varying degrees, trust the issuers. The stability of the GBP is backed by the stability of the Bank of England, not the British armed forces. Control of supply is also a big part of this. Anti-forgery techniques have grown in sophistication since the original hand-written pound notes.
Interestingly, Bitcoin, and some other "cryptocurrencies" are designed to be cryptographically secure in a way that controls the supply (there will only ever be a finite number of Bitcoins, Ether is another matter), and prevents "forgery" (network consensus on the blockchain means that you can't make a so-called "double-spending" attack without controlling more than half of the entire network).
Assured value is a definite weakness of BTC, but at the same time, fiat currencies sometimes spiral into hyperinflation too. All it takes is reckless management from the currency's central bank, and to be honest, in this country, all it would take is for Johnson to appoint Dido Harding as the head of the Bank of England.
There are valid arguments against cryptocurrencies, but the argument that they have no inherent value, whilst fiat currencies do, is questionable at best. If you don't believe this, I'd be happy to exchange 1 trillion Zimbabwean Dollars* for 1 BTC. Even with Bitcoin dropping in value like last week's warm sausagemeat, that would still net me a millionfold profit...
*The old ones, not the current Zimbabwean currency, which hasn't (yet) caught fire.
Interestingly, Bitcoin, and some other "cryptocurrencies" are designed to be cryptographically secure in a way that controls the supply (there will only ever be a finite number of Bitcoins, Ether is another matter), and prevents "forgery"
The weighting used by BTC where you get your fraction of a BTC based on your fraction of the summed compute power spent is an environmental disaster. They could instead used this power to fold DNAs or Seti analyzing or something, just not heat you need to cool down.
"They could instead used this power to fold DNAs or Seti analyzing or something, just not heat you need to cool down."
An interesting point. If they had expended the same energy on SETI calculations, I wouldn't find that worth the spend. If I was in a position to do so, should I have banned SETI because I don't think it's worth very much?
The environmental damage that crypto mining does is very real, but those who argue against it on that basis alone seem to say that using energy for that purpose is terrible, but using energy on other things they like more is fine. If the environmental impact of that energy use bothers you as it does me, the answer is to increase the restrictions on energy use, including taxing it more and regulating emissions. Not to pick someone you don't need and tell them they're not allowed to use any energy. If we're using the model where things we don't like don't get to use energy, then I'd like to deny any energy use to the people who make Chromebooks because I don't intend to buy one and I consider them a waste of resources. That doesn't make very much sense.
I'm not going to claim that Bitcoin's environmental impact isn't horrific. As I said, it's not without its problems. The name "cryptocurrency"is a misnomer, because it has a lot of features that are un-currency-like. For example, the fact that it generally takes an hour to confirm a transaction (if you take six blocks as confirmation against double-spending), the engineered-in block time is ten minutes, transaction fees are high, you have to rely on "exchanges" of varying trustworthiness, "lost" Bitcoin being unrecoverable, and thus reducing the supply over time, and so on.
None of these are an argument about whether fiat currencies are backed by anything more real than the same consensus that Bitcoin is backed by, though. Bitcoin can, and most likely, will, crash again at some point in the future. Real currencies crash too, for some of the same reasons, and also for others that Bitcoin is "immune" to, such as hyperinflation from a central bank issuing vast quantities of new currency to prop up a failing state.
"I think you'll find that the Euro is backed by quite a number of armies, including one with nukes."
No, it's not. It is used by countries with armies but that's not the same thing. The original point, that it is not the power of an army which gives currency value, is still correct. Some of the world's worst economies have powerful armies. North Korea has had to reissue its currency, wiping out all their citizens' wealth (they don't care) because their currency isn't worth much. They have the strongest army by size of nation in the world, the fourth largest in absolute terms, and they also have nukes. It isn't doing their Won any favors. The power of a fiat currency is based on trust of the institutions which handle it. The central banks of the EU, UK, and U.S. are generally trusted, so their currencies are strong. The only connection to their army would be if they were being invaded, but most countries with weak currencies aren't experiencing that because of an active military threat.
"Dear sir, please accept this piece of paper as an IOU from our government, backed by nothing of any value, except a promise to tax our citizens if we fuck up too badly."
... that is what a currency _is_ worth
In my case,
-I pretty much have to be paid in GBP
-and pay for things in GBP
unless the local shops all start accepting BTC and my $employer starts paying BTC and BTC is as easy as paper money (it isnt and never can be) GBP it is.
The usability of local currency may fall to the level of BTC in parts of Africa / S. America, but probably not.
My more likely bet would be the Chinese offer the Yuan as a replacement (with _conditions_ as they like control and do not like BTC) . Taking another step towards making the Yuan a replacement for USD.
Everyone as strict controls on money crossing their borders. If you don't believe me try crossing the UK or US border with more than $10K (for the US) in cash or equivalent. If you don't declare it then you'll lose it. If you do declare it then you might have to explain what its for and where you got it (the UK has this wonderful 'unexplained wealth order' business and I daresay there's something similar over here).
Those of us who've worked with Chinese colleagues know that they're likely to gain significant weight from even quite short visits to their families. (Pure gold belt buckle, anyone?)
Hmmm, an IOU issued by a government usually is backed by something ... It's called a state which usually has power to extract value from its citizens. You might not like that, fair enough, but to pretend that bitcoin is essentially the same as normal fiat currency is simply nonsense.
> I'm making the big assumption here that the digital coins they wish to introduce will not be mineable per se?
I would say that is a safe assumption. The Chinese Governement will only tolerate digital coins whose supply they can control, the same way as that of ordinary money.
The planet thanks the banning of mining!
True. However, it is also true of just about every central bank anywhere on earth. No central bank wishes (if they have any choice in the matter) to have currencies in their country which cannot be regulated as far as the amount in circulation goes. That is fundamental to any central bank, not just China's.
"The Chinese Governement will only tolerate digital coins whose supply they can control, the same way as that of ordinary money."
Not that it matters to your argument, but neither China nor any other country can actually control their money supply. The vast majority of the money supply is private debt, not government IOUs. About the best the government can do is try to influence the money supply by tinkering with interest rates, forbidding or impeding some types of transactions, taxing some transactions and maybe throwing some folks who have annoyed the regulators or the public sufficiently into jail.
I doubt the Chinese actually much care one way or the other about crytocurrencies except to the extent that their energy usage and risk of collapse are potentially destabilizing. Crypto's problem in China is probably that it has grown or is growing too large.
"The planet thanks the banning of mining!"
Yes, I always have to laugh when people talk about green, carbon free mining. There is a finite amount of green energy available, so if you waste some of it on something stupid like crypto mining then it's not available for some other more worthy use. And then there are the huge amount of resource wasted in all the technology that goes in to mining, that is not helping the planet any, though it's making plenty of money for the GPU makers
There is a finite amount of green energy in various senses, but much potential untapped or undeveloped due to financial and logistical reasons.
The thorny problems of geographical distribution and cyclical supply and demand are unsolved. The batteries are not good enough. Crypto mining during off-peak demand periods and in remote locations incentivizes/subsidizes capacity expansion because it is an ideal consumer of excess capacity that might not be developed because it could not be sold absent crypto mining demand. Perhaps you prefer tax credits or simply lowering living standards? Or maybe you just like to laugh.
I doubt there is a high enough concentration of miners anywhere for them to be a factor in planning new power generation.
But let's assume there is. So you suggest the run during off-peak hours? How long do you want bitcoin transactions to take? They are already stupidly slow, this will just make it even slower.
Blockchain's only point is that the distributed ledger eliminates the need for a trusted intermediary. Once you have a trusted intermediary (for currency a bank of issue, but especially a Central Bank) then the point of blockchain is lost. The cryptocurrency bit is just a way of turning heat into value (see Northern Ireland and the Cash for Ash scheme) to add to the ledger.
The problem isn't China banning Bitcoin, as you say. That seems a pretty good thing.
However China's new digital currency - not so much. Sure it'll be better for the environment, but it's also designed to let the government track everything you do. If you read about what they've been doing in Xinjiang, for example, that should really worry you.
Apparently, if you're a foreigner (or exile), the way to learn that one of your loved ones has been in a concentration camp for 6 months is a text message praising Xi Jinping about a year after they get out. So they'll disappear, and you'll not be able to get news of them. They only get out if they toe the party line, say all the right things in political re-education lessons and do their slave labour properly.
But they also have their mobile phones taken off them. They're only allowed a Party controlled mobile once released. Clearly talking to foreigners is suspicious behaviour, and they're liable to end up back in the camps if they do that. So apparently what you do is wait a reasonable time, showing how good you are with your monitored communications device (if you don't use it every day that's equally suspicious - that you've got an safe phone). So after keeping your nose clean for a bit, you can now contact your friend abroad, so apparently the code for "I've been in a camp and am on a compromised device" is to send them a party slogan. But at least they know you're alive. And hopefully won't get re-arrested.
The Chinese government already tracks its subjects all the time anyway. And, as recent events have shown, any kind of digital currency can be tracked until it enters the banking system, which is why banks all over the world are being told to comply with account holder requests or risk being thrown out of the clearing and transfer systems. The Chinese government is worried about credit growth in the various shadow banking systems, which is why it is introducing its own digital currency and imposing controls on the various payment systems.
Crypto currencies are yet another example of tech solutionists praising something almost entirely because it's unregulated. Presumably, this is based on the idea that whatever is unregulated is just waiting to have its price discovered and exploited: low orbit internet service providers would be another example.
There is a lot to dislike about their stance on electronic currencies.
It is the typical behavior of dictatorial communist regimes, who tell what their citizens can and can not do, those who deviate, wake up in high fenced encampments guarded by arm security guards.
In the end, the strong point of freedom and capitalism is that many get to choose what is good, and not a clique of those who "are more equal than others".
Disliking crypto coins is something else as liking the CCP or what they stand for.
In a decent society people should be allowed to invest in what they seem good and allowed by law, and not get ordered around. That made our society great, and will be the doom of China as soon we stop propping them up with money.
Love that - "In a decent society people should be allowed to invest in what they seem good and allowed by law".
In other words obey the elite who make the laws or suffer the punishment laid down by that elite.
That's exactly what China expects.
Curiously, that's exactly what our great society expects too ... unless you actually believe we live in any sort of open, fair and free democracy without either corruption or a small number of powerful puppet-masters pulling the political strings?
"... unless you actually believe we live in any sort of open, fair and free democracy without either corruption or a small number of powerful puppet-masters pulling the political strings?"
I am more cynical than most, but what you are suggesting belongs to the realm of conspiracy theory. I believe we live in a somewhat open, somewhat fair and somewhat free democracy with some corruption and a number of would-be puppet-masters doing their utmost to pull the political strings. Yes, with a great deal of effort, we could do better. Or, with no effort whatsoever, we could do a great deal worse.
I haven't given much thought to government backed digital currency other than that it sort of sounds like a good idea. Off the top of my head it seems like the overriding requirements might be that it is impossible to counterfit with any technology we have or can envision, and that it is easily verifiable by pretty much anyone as genuine. It'd also be good if it didn't require functioning digital infrastructure for transactions. Which is to say that I might like to transfer $10 to the little girl selling Girl Scout Cookies door to door even if some company's latest poorly tested update has crippled half of North America or my cell phone needs charging.
Is any of that even possible?
If payment is digital, it absolutely require a working digital infrastructure at some point, whether the currency is fully digital or not. There's no realistic way around that.
In your example, the girl scout could be carrying a payment terminal on which you can tap your card or phone, that terminal might be allowed to defer connecting for a while, but ultimately, it will need to, so the transactions can be accounted for. There's nothing that needs a dedicated digital currency.
"There's nothing that needs a dedicated digital currency."
Agreed. No one actually needs a digital currency for any reason I can think of. But digital transactions are convenient. And they don't require wandering around with a pocket full of change. I usually use a credit card at the grocery store just because it gets me out of the way of the way of whoever is in back of me in line more quickly than tying up the cashier with counting and sorting a handful of banknotes. (I do sometimes wish that the lady in front of me with seven credit cards, most of which are expired and the remainder of which have PINs she can't keep straight and eventually ends up writing a check would pay cash).
There is already such a digital currency. It is your current currency. Transactions in it usually go over electronic means unless you decide to use cash. They don't need to reinvent each part of the digital transaction system which already exists. At most, they could build a government-backed system which allows those who do not like or cannot afford to use the electronic services of banks to do the same things, but that's all that is needed. A system similar to cryptocurrencies doesn't offer much that the existing electronic transaction system doesn't already do unless you want to avail yourself of the pseudonymity or lack of regulation that actual crypto does. If you want government backing, you don't want those things.
That's the future, but ultimately it turns cryptocurrency into exactly what credit is.
Keeping cryptocurrency "decentralized" does open doors for manipulation and most importantly stealing, very similar to what the USA went through with "land grabs", the kind president Abraham Lincoln's family fell prey to... the kind any Jane, Dick or Harry can do.
Currently, I do feel all out banning crypto is a better move than all out acceptance, as it's worth has factually been proven to be extremely malleable by loud mouth types like that Tesla guy and Carl Icahn.
I consider cryptocurrency to be a very bad investment, but why exactly does that make it logical to ban it? Unless it is an active fraud which somebody can control, it's just a very volatile investment. We know from the source code for these currencies that nobody has a backdoor over them. Why should cryptocurrencies be illegal when investing in any number of other volatile things is allowed? Or should we also ban trading of things like very small companies, certain minerals, or futures contracts which can also have unreliable values?
Isn't this essentially nerdy fraud? Running complex calculations to generate valid combinations that are accepted as legitimate bitcoin, and thus essentially trying to create real world money out of thin air?
(though I do wonder if the hardware and electricity investments outweigh the eventual gains)
Yes, it's nerdy fraud as opposed to government fraud that creates real world money out of thin air via their central banks.
Though I feel governmental vapourcoin is a little harder to manipulate than nerdy vapourcoins are, not by much but fiat currency is slightly more stable.
If I happened to a good artist of some kind, I could perhaps create desirable artworks that have a higher value than their inputs (perhaps by whittling amusing penguins out of old bits of wood); but that isn't "arty fraud", it's just art. If people want to generate and use mysterious computer-calculation based tokens as a unit of exchange, that isn't (necessarily) fraudulent either, nerdy or not. Bitcoin mining isn't creating "traditional money" out of thin air, it's creating a token than (one presumably hopes) other people might value; and, if they consider it of value or utility, might give you traditional money, property, or services for it.
If I recall - and this is going back a while, well before the current hype - one of the early hopes for bitcoin was that it might allow one to convert or transfer money into other currencies, thus avoiding the retail price-gouging and/or exchange-rate "tweaking" of traditional banks and exchanges; i.e., an attempt to avoid unfair behavior. If that had worked out - would that have been fraud?
Any *fraud* arises *not* because of the particular type of token or object of exchange in question, but because of dishonesty about its origin, authenticity, or long- or short-term value to yourself or others, in an attempt to gain unfair advantage, typically by tricking a target into exchanging a token with something else. Bitcoin might perhaps be an ideal token or enabler for fraud - but it's not the bitcoin perpetrating the fraud. I
Some of the early promises are still unfulfilled and technical challenges remain. They are being addressed by a plethora of projects and layer 2 protocols.
As you note, it's not fraud. The inherent nature of bitcoin and other cryptocurrencies make them at least as transparent as the machinations of any central bank.
f I recall - and this is going back a while, well before the current hype - one of the early hopes for bitcoin was that it might allow one to convert or transfer money into other currencies, thus avoiding the retail price-gouging and/or exchange-rate "tweaking" of traditional banks and exchanges; i.e., an attempt to avoid unfair behavior. If that had worked out - would that have been fraud?
As such, it does have some utility as a means of payment. For example, there are sites (Pimoroni is an example) who will allow you to pay with Bitcoin. The mechanism for doing so is via BitPay, and I suspect what Pimoroni get is actual cash from BitPay. From my perspective though, I have to transfer some BTC to a wallet held by BitPay (which costs me a transaction fee, so the amount arriving at BitPay is less than what I send), and then pay the current BTC price to Pimoroni via the BitPay app, plus another transaction fee, which is taken from that wallet. Because of the size of the transaction fees, it’s really not worth it for small purchases, and part of the problem here as I see it, is that the transaction fees, although a very small portion of 1 BTC, correspond to several pounds of "real" money because the value of one individual BTC is high. The process does work, though, and I've bought several things from them this way (usually several things at once to make the transaction fees worthwhile, and on a day when the price of Bitcoin is spiking). I "spend" my bitcoin, and Pimoroni get cash. Who's being defrauded here?
though I do wonder if the hardware and electricity investments outweigh the eventual gains
That's kind of the point - to make it increasingly uneconomic to mine more. Arguably that point has already passed for most practical purposes, which is why we're seeing more reports like this.
"Nerdy fraud" makes it sound quite tame. I'm not convinced that harnessing human greed to the needless consumption of natural resources is ever going to work out well.
No, you are not creating real money.
Bitcoin is like 50 million lottery tickets. Each ticket is supposedly worth $37,000. But there is no cash anywhere. The way to get your $37,000 is by finding some idiot who is willing to pay $37,000 for your lottery tickets.
And these tickets are very hard to forge. There's a known way to forge them which means spending about $20,000 or so on electricity in countries where the cost of electricity is subsidised to let people live better, like in Venezuela. That's why when you mine bitcoin in Venezuela using subsided electricity, you are effectively stealing from the country, and they put you in jail for it. In the UK, the same electricity costs $60,000 so it only happens when people steal electricity from their neighbours.
But in the end, all you created is not real money, but a lottery ticket where you hope someone will give you money for it.
Most that I know about used one of two methods:
1. They would find a power plant which didn't always have full demand and use additional power generated. Hydroelectric plants were popular because they're also environmental, but nuclear plants also work well. If the plants were generating more power than consumers were requesting, the miners could use the remaining generation capacity at a cheap price because, if they weren't there, that generation would still happen and nobody would pay for it.
2. They would steal it. Usually, they would find a power plant and give the operators some bribes to run it a little above capacity, then use the excess generation to mine. As long as they weren't obvious, they could evade police investigations of the practice.
Just to demask this popular myth: no, he did not. The plans to this were already made by the Weimar Governement and some building had started before the take-over by the NSDAP ( https://en.wikipedia.org/wiki/Autobahn ). Of course the Führer claimed to be the genius who had this brilliant idea and dr.Goebbels made sure the whole world believed it.
Sometimes it takes a dictatorship to get things done.
When China decides to start some massive infrastructure project then it gets done before most western countries could have finished arguing about it.
And then we have the pandemic. When the Chinese government says stay home, people stay home. When we tell people to stay home we get all the whiny toddlers out complaining about their freedoms.
"Freedom makes a huge requirement of every human being. With freedom comes responsibility. For the person who is unwilling to grow up, the person who does not want to carry his own weight, this is a frightening prospect." - Eleanor Roosevelt
Actually they are pretty stupid. That's the nature of an autocratic regime. Loyal but stupid people get promoted.
For example, the Chinese government doesn't trust its own GDP figures because it knows that the regional rulers lie ( because they will be punished if the figures aren't too low ).
That will cost them in the long run.
I expected this response but it was so obvious that I thought anybody who thought of it would think "no, I won't post this because it's so obvious that I will be embarrassed to put my username above it".
But no, somebody stooped to that level. Congratulations.
The icon is for you.
I was thinking through different ways that cryptocurrencies could become more stable. Basically, the rate of coin mining needs to be related to the current exchange rate (e.g. vs the Dollar).
Maybe there's a way that the blockchain nodes can "agree" the current conversion rate "coin to $" and fiddle the mining rate to keep a more stable price?
I would guess that the rate of mining remains a small fraction of the total number of coin (to avoid bitflation).
But the other problem is the volatility, which (IMO) has little to to do with the rate of mining, and is instead due to speculation and external shocks to its perceived value and/or utility. I'm not an economist, but I'd have thought you wanted something like the total value transferred in transactions to be overwhelmingly made in very-many, very-small amounts; and that even the biggest transactions remained significantly smaller than this background; and that conversions of other value into or out of bitcoin were similarly distributed.
You can get that by using a cryptocurrency pegged to the dollar, but that A) is useless and B) can still collapse when the people supposedly holding the dollars mess up or lie about having them. Many adherents of cryptocurrency want one which isn't controlled by central banks (or often by anyone), so letting the Federal Reserve control the value by their decisions about U.S. monetary policy is going to be an unpopular suggestion.
"They merely observed that it hadn't risen when the supply fell by 90%."
The supply didn't fall. The same number of existing coins is around. The only thing to fall was the speed of creating new coins. That does restrict supply, but much less than you're saying. Consider a parallel:
Your savings, supply down 90%: I am taking away all but a tenth of your savings. I have already removed it from your bank and investment accounts and I'm selling your stuff as well.
Your savings, supply increase reduced by 90%: I am not going to pay you much for your job anymore. Probably you will have to get a new job.
Neither is fun, but one is a lot worse than the other.
Neither analogy is accurate.
The bitcoin network adjusts its difficulty automatically so that on average 6.5 new BTC are mined every ten minutes.
The more miners there are, the harder this is. The less miners there are, the easier this is.
But 6.5 BTC are still generated on average every 10 minutes.
Now, imagine what would happen to the price of a precious metal (gold, silver, palladium, etc.) if 90% of its mining capacity had been removed?
I can guarantee that its price would not be going down!
It's interesting to note the dichotomy.. between a pure concept vs. physical. Recognize that neither cyptocurrencies or gold have any intrinsic value, but being able to take (and presumably own) physical possession might have advantages.. Both are speculative in nature and not an "investment" in the the classical sense of the word since neither produce anything - the expense is in the mining operation and the result is based on that + an artificial "profit". The latter contributing to the volatility.
Not knowing a lot about crypto, but it seems like it can be manipulated (if a single entity owns enough of the processing endpoints) just like fiat monies can be.
> Now, imagine what would happen to the price of a precious metal (gold, silver, palladium, etc.) if 90% of its mining capacity had been removed?
It's not 90%, but about 50%.
But the reason it's different is that the Bitcoin network is designed to adjust the difficulty depending on the global hash rate so that a consistent rate of new coins are mined.
Like if gold hid if it heard a rumour that more people were out looking for it.
"neither cyptocurrencies or gold have any intrinsic value"
Commodities like Gold, Silver, Copper,etc have an underlying value set by their actual usage in business and industry. For most of them, the underlying value is (probably) very close to the market price. Gold is an exception because it is extraordinarily subject to speculation, government manipulation, etc, etc, etc. But still, it's almost always worth something if for nothing other than melt value.
The consequence. If things get tough, you'll probably be able to hock your grandmother's Gold ring in order to buy food. My guess is that in tough times, trying to hock your Bitcoin Wallet will get you laughed at.
"Now, imagine what would happen to the price of a precious metal (gold, silver, palladium, etc.) if 90% of its mining capacity had been removed?"
Imagine what would happen to that metal if it was forbidden to buy or sell it in China. Now imagine that China has long liked it more than other countries. Because that happened too. Now imagine that the value for that metal outside of using it as money was zero. Now imagine that the mining capacity had been decreased but was expected to return in half a year. The price would fall.
A lot of metals have value for uses of that metal in industry. Gold is the largest exception because a lot of it is stored for monetary value only, but even it has some uses elsewhere. Cryptocurrency doesn't have any other uses. A ban on trading is going to radically affect its value.
"90% of mining capacity has been removed... price goes down. Proof if ever it was needed that VapuourCoin *really* isn't a commodity or currency."
You're missing a major point: China also blocked trading of it, destroying a large chunk of demand. Prices go down if you can't use it in a large country which previously had been quite involved in the process.
I can see that I have to post something like this several times.
Except, that it has now bounced back to slightly higher than it was before China made this announcement. The sort of thing you might expect from lots of Bitcoin holders suddenly trying to sell their holdings, people buying them up cheap, and then this stopping. The exact pattern you see after the mass sell-off of any asset that still holds value for others.
I assume non-Chinese miners will take up the slack pretty soon.
If you remove a large chunk of mining capacity, the rewards will increase ( although maybe not enough to offset the halving of the BTCUSD price ).
We're down to 104M TH/s. The peak was 198M TH/s. So the hashrate has roughly halved and the price has roughly halved. Assuming you think that Bitcoin will recover, it is more worthwhile to invest in mining than it was last month.
Pick any time in the history of Bitcoin. Buy whatever quantity you want at that price point. Hold for four years. You won't lose money. Now is a good time to buy, especially if you bought during the recent run up. Use dollar cost averaging to bring the overall price of your holdings down.
Remember, Bitcoin is an idea based on real math. There isn't a big building with a BTC logo on it that the government can seize. Bitcoin has value because we believe it has value.
As for China banning ownership of Bitcoin....
"Surrender your Bitcoins!".
"Gee, I wish I could. I lost my Recovery Phrase, so I don't have access to them any more. Such a bummer."
And China banning trading of Bitcoin...
Don't use a "Know Your Customer" coin exchange. From my wallet to your wallet is our own business. Or use a privacy based coin and be untraceable.
If you look at the price of BTC over a day, it's often all over the shop (today is no exception). If you look at the last five days, it looks like a poor investment. If you look at the last month, equally so. Last year... hold on, that's a 200% increase, 5 years, 4,000%.
None of this actually means anything though, the price could fall back to £100 tomorrow, and anyone putting their life savings into BTC is either a fool, or knows the future.
I wish I'd bought some when 10,000 BTC bought you a pizza, rather than now, when 10,000 pizzas gets you 1 BTC.
I have a small amount of BTC, mostly out of curiosity when I bought some USB miners at the time when such things could still mine a measurable share in a mining pool. Even with the recent price fall, what I have now is still worth about 10 times what I paid for the hardware, and that includes having spent some of those mining profits to buy some hobbyist electronics and a Raspberry Pi 400.
"...we believe it has value
I'm a level 42.8b Sapphire Zurgonist within our legion and just because we have no tangible evidence of Zurgon (besides what Frank wrote up on a piece of beaver skin), our beliefs still have value and should be recognized during tax time.
the tax dodge Zurgon!!
About 60% of all global bitcoin mining was happening in China. In theory China could have seized all the hardware in China and hypothetical subverted the block chain with the 51% attack. That is off the table now.
Every 2016 blocks (every 2 weeks approximately) the mining difficulty is adjusted so that the average mining time between each block remains 10 minutes. It was last adjusted 2021-06-13 21:07:16* so the next one in theory should happen about that time on the 27th but with China out of the game, it might take a little bit longer for that to happen as 10 minutes per block could easily become 25 minutes per block with 60% less hashing.
(*ref: https://btc.com/stats/diff ).
One positive is that the difficulty should lower on the next re-evaluation sometime after the 27th. The prize for solving each block will be the exact same as it currently is (6.25 BTC for the next 1146 days, then it will be lowered to 3.125 BTC) but with less players in the game in theory for a short while each player should win a bit more.
One negative is that all that mining hardware in China will extremely rapidly be moved elsewhere in the world where overheads are favourable. The logic action would be to keep ALL that hardware powered off until after the difficulty changes down. But the hardware devalues very fast, so greed means it will be powered back up long before then, and the mining difficulty may remain the same.
But the big positive take away for me is that China has efficiently removed their ability to subvert the Bitcoin block chain. Long term that can only be a good thing.
Until the dust fully settles, my guess would be at least 2 to 6 difficulty adjustments (1 to 3 months), there will be large fluctuations in peoples valuation of BTC up and down individuals are scared by changes. The vast majority of people who own Bitcoin have no idea how it works under the hood, it is a lot like computers very very few understand how they work at the transistor level and everything in between. Bitcoin having no government control means that it's valuation is mostly decided by individual people, most of which are working more on feeling than understanding and logic. A single tweet can cause a major fluctuation in people valuation of BTC.
Why has nobody mentioned that cryptocurrencies are a blessing for organized crime.
Untraceable, easily transportable. Can be used to launder money, transfer money cross borders, pay for contract killings, drug shipments, kiddie porn, arms dealing terrorism.
Is this not a bigger deal than whether a government can control a currency, the electricity* used to mine it, and how stable an investment it is?
Makes me think people on this forum can't see the wood for the trees.
I'm genuinely interested in your thoughts on this. Didn't realise? Don't care?
*Maybe the electricity=carbon issue is the most important in the long term.
...and "untraceable" probably applies less to Bitcoin than it does to the USD. The blockchain is in essence a ledger containing every single transaction. The only thing that may be untraceable is *who* is making those transactions, and even then, de-anonymisation of wallets is not impossible, especially when Bitcoin is transferred to exchanges that require user verification and authentication.
Governments have software now that can track the flow of bitcoins from, for example:
exchange > user wallet > dark web market > drug dealer's first wallet > tumbler* > second wallet > exchange > cash money bank account
* Tumblers are falling out of use because governments can see through them now, but they used to, basically, mix up multiple people's bitcoin together and spit it out in different sized amounts in order to ( in theory ) stop tracking.
Although they can't do this with privacycoins such as Monero.
"Why has nobody mentioned that cryptocurrencies are a blessing for organized crime."
Because you overestimate how useful it really is to them and also underestimate how useful its alternatives are. Let's take each adjective in turn:
"Untraceable,": Nope. The most popular ones, E.G. Bitcoin are very traceable and used so often that there are already automated programs specifically for tracing transactions. And it's not just law enforcement which has that. You can go trace it for fun if you like. Some other ones are much less traceable, but they're harder to exchange and spend. Now, compared to real currencies, a lot of crypto is more traceable. If I transfer cash, you probably won't find it again. Unless I stole an easily-numbered bunch, the chances of you knowing which notes are good and which are bad is low. Even if I did, I likely get to spend it before someone scans the numbers.
"easily transportable.": Crypto transaction fees make transport more expensive. Meanwhile, for most organized crime, the organization has already figured out the cheap way of moving money. It's core to their business. Given the large number of fraudulent bank transfers, banks willing to launder money for criminals, and similar structures, moving other currencies doesn't appear to be very hard.
"Can be used to launder money,": Not really. Crypto is like money in most respects, meaning if you suddenly have a bunch of it and make that known, people are going to ask how you got it. To launder money, you need a good excuse for the legal method you used, which is why a cash-based business works so well. "I got a hundred grand worth of Bitcoin yesterday" is not such a good one.
"transfer money cross borders,": Well yes, it does that, but you can already do that. See also easily transportable above.
"pay for contract killings, [list of crimes]": Right. Like everything else. It does not help your argument to list a bunch of criminal activity that you could pay for. If I said that the U.S. dollar was used to pay for all those things, plus government corruption, environmental destruction, [editor's note: this sentence would take about ten minutes to read. This list has been cut here], it still wouldn't be a reason to prohibit use of U.S. dollars unless your alternative was better.
There's some very, very bitter communist bootlickers in this thread that are praising a government that is currently committing genocide. Well done (slow clap).
Also, you can see the bitterness in every negative comment that they missed out and they are pissed about it because now they're stuck at work forever whilst the likes of me are set for life due to having a more open minded view earlier on and continually over the years.
If bitcoin is a scam, as quite a few people have posted why have I been able to convert millions of pounds worth back into fiat currency, pay tax on it and use it as money.
Grow up and stop whining. Honestly. It's pathetic.
Bitcoin is a scam in that it's the world's greatest pyramid scheme, manipulated by a handful of whales and propped up by stablecoin fraud. And because it's negative-sum, it means there is far more losers than winners.
You got in early on the ponzi and made money. Congratulations, you must be an investment genius.
If you're going to complain about mining wasting energy, then what about gaming, There is no net output, and it doesn't solve even an equation or produce any financial gain?
Maybe we should ban the domestic use of any computer but tablets and chromebooks, after all those 400+w power supplies are just wasting energy hand over fist whilst browsing the internet looking at social media.
There is control of currency - China's economy can't handle nearly as much black market fake money as the USA's, and can you imagine the drain on their power grid, they can't build power plants fast enough right now. So bye-bye crypto and a big chunk of real money that was turned into a reddit meme craze.
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