Bitcoin

[ack]

Anyone care to read this https://www.extremetech.com/interne...ail&utm_campaign=extremetech&utm_medium=title

Economists recently took a look the spike that first sent Bitcoin over $1,000, finding it was most likely the result of a single person using bots to make a quick buck.

 

[NorthStar]

It almost sounds terrible.

 

[Norbertho]

Do you know any ICO listing websites other then www.listico.io or coinschedule.com?

 

[Folsom]

Every January is a lull.

 

[Steve williams]

A lull is hardly the word I would associate with the drop

 

[NorthStar]

• http://markets.businessinsider.com/...ss-twins-millions-wiped-out-2018-1-1013164917

 

[marty]

This is one of the most informative articles I have read on bitcoin and blockchain. Reading time 20 minutes but worthwhile.
Still not sure I get any of it, but slowly getting educated thanks to articles like this.

https://www.nytimes.com/2018/01/16/magazine/beyond-the-bitcoin-bubble.html

 

[Ron Resnick]

Yes, I agree it was an interesting article. (But I think a lot of the article was conceptual and unnecessarily cryptic in that slightly pompous The New York Times style.)

 

[Folsom]

When he tries to get technical about blockchain and terminology... If he were talking about audio, he'd be telling you speakers plug into the preamplifer and the amplifier tells the phonopreamp how much gain it should have. His words are all mixed up.

If you wanted to be real technical you'd say, "I have Bitcoin coins." But it sounds redundant, and didn't serve a purpose as an expression until other cryptos came along with different names and functions. With that example I can explain that for you'd say, "I have Ethereum Ether." Where Ether is the "gas" you pay in order to use the Ethereum decentralized computer that operates based on blockchain technology. You pay Bitcoin coins to transaction Bitcoin coins as well.

The big difference is that on Ethereum you can pay Ether to transact Ether, or tokens. Tokens are not a different name for coins. Tokens run on existing blockchains. So on Ethereum you can have tokens representing, say, Golem. The Golem token was created as a means to organize the use of the Ethereum blockchain like a super computer. So you pay Ether to move Golem, but you need Golem tokens to give you access to their software that enables the Ethereum Blockchain to be used like a super computer. Essentially anyone can make tokens and use them, so long as they pay gas (ether) - as the price to pay for the security and computing power of the bigger blockchain.

And no single miner solely records the block for which they mined the sealing string, they simply get the reward and everyone records the same block. If it were not this way then the blockchain would have no inherent value because you could simply hack individual computers to make changes... as in a centralized individual blocks.

He left things out, like how Vitalik is for censorship on Ethereum, based on his morality. You like shooting firearms, Ron? Vitalik might just put out a call to have you expunged from the blockchain if his politics align differently on ownership of firearms. (it's public that core members of the team want to find ways to oust political opponents on the blockchain)

Also there should be competing offerings for things like digital identity. What if it doesn't define you correctly, and there are no options? Just because it is consensus based, doesn't mean you and a lot of other people will agree with the consensus. It simply won't and shouldn't be "InternetOne".

One of the beauties in Bitcoin is that it doesn't have any information so it has no censorship function, and therefor no incentives for all the nodes to act against individuals using it.

 

[Pb Blimp]

This is one of the most informative articles I have read on bitcoin and blockchain. Reading time 20 minutes but worthwhile.
Still not sure I get any of it, but slowly getting educated thanks to articles like this.

https://www.nytimes.com/2018/01/16/magazine/beyond-the-bitcoin-bubble.html

Yawn.......

Open source architecture is available at will, with no barriers to entry. If there are market demands it can be used to meet those demands and that has nothing to do with bitcoin. In addition, prior to bitcoin, encryption was already a highly advanced and relevant technology used in very sophisticated ways by very sophisticated companies in vast commercial applications. These uses are exponentially superior to bitcoin from a commercial standpoint. On the other hand, while Bitcoin is indeed an open source application (so what), it uses uses an outrageously archaic form of encryption to replicate an existing system that is already served by exceptionally efficient market mechanisms.

The concept of millions of random number generators running constantly across the globe wasting insane amounts of energy generating brute force, mundane, numeric permutations to compare to a required solution all to avoid using the system controlled by "the man" is insane! It is no more an example of the rebirth of open architecture which is going to somehow put Google and Facebook in there place than it is a viable means of payment or store of value.

The real (and only) beauty of bitcoin is that it appears to the unknowing as something quasi-sophisticated and (more importantly) it can be very easy manipulated in a trading sense to create the appearance of value for the purpose of manipulating others. There is no transparency in the market and as such victims are easily had. Picture two guys in their garage sitting down with $10,000 and 20,000,000 marbles. These two take one of the marbles and trade it back and forth a million times and each time increase the price by a penny. At the end of the day the price of that marble will be $10,000 and the total market vale for all marbles outstanding will be $200,000,000,000. Yet there would still be just 2 guys, $10,000 and 20,000,000 marbles in the garage. Welcome to the world of bitcoin.

 

[Ron Resnick]

The trading example makes no sense to me.

Alternatively, if the example does make sense, then the exact same thing could be said of any other asset which does not pay a dividend.

 

[edorr]

Yawn.......

Open source architecture is available at will, with no barriers to entry. If there are market demands it can be used to meet those demands and that has nothing to do with bitcoin. In addition, prior to bitcoin, encryption was already a highly advanced and relevant technology used in very sophisticated ways by very sophisticated companies in vast commercial applications. These uses are exponentially superior to bitcoin from a commercial standpoint. On the other hand, while Bitcoin is indeed an open source application (so what), it uses uses an outrageously archaic form of encryption to replicate an existing system that is already served by exceptionally efficient market mechanisms.

The concept of millions of random number generators running constantly across the globe wasting insane amounts of energy generating brute force, mundane, numeric permutations to compare to a required solution all to avoid using the system controlled by "the man" is insane! It is no more an example of the rebirth of open architecture which is going to somehow put Google and Facebook in there place as it is a viable means of payment or store of value.

The real (and only) beauty of bitcoin is that it appears to the unknowing as something quasi-sophisticated and (more importantly) it can be very easy manipulated in a trading sense to create the appearance of value for the purpose of manipulating others. There is no transparency in the market and as such victims are easily had. Picture two guys in their garage sitting down with $10,000 and 20,000,000 marbles. These two take one of the marbles and trade it back and forth a million times and each time increase the price by a penny. At the end of the day the price of that marble will be $10,000 and the total market vale for all marbles outstanding will be $200,000,000,000. Yet there would still be just 2 guys, $10,000 and 20,000,000 marbles in the garage. Welcome to the world of bitcoin.

The value of the stock of marbles could go to $200,000,000 after the first trade if one guy offers the other guy $10,000 for a single marble right away. No need for small incremental price increases.

 

[edorr]

Alternatively, if the example does make sense, then the exact same thing could be said of any other asset which does not pay a dividend.

Which is precisely why we have bubbles.

 

[Pb Blimp]

The trading example makes no sense to me.

Alternatively, if the example does make sense, then the exact same thing could be said of any other asset which does not pay a dividend.

Of course not Ron. Entities like publicly traded stocks create value through products and services that extract a price in excess of there cost in the market place. This creates cash flow all of which is reported in accordance with financial reporting statutes and can be valued. Public exchanges have trading activity that can be readily scrutinized as opposed to a black box of the crypto market. The comparisons are night and day.

 

[Pb Blimp]

The value of the stock of marbles could go to $200,000,000 after the first trade if one guy offers the other guy $10,000 for a single marble right away. No need for small incremental price increases.

The purpose of using a very high trading activity in my example is very important. It is exactly what is happening in the bitcoin market. Massive trading between the same players to create the illusion of market depth and liquidity when actually there is none is a critical element of the charade. It is whats behind the extreme volatility. I did not finish the math but the daily trading value would be $500,000,000 in my example giving people false confidence the market is deep as opposed to the two guys in the garage. Because of ZERO transparency no one knows the difference.

 

[Steve williams]

The purpose of using a very high trading activity in my example is very important. It is exactly what is happening in the bitcoin market. Massive trading between the same players to create the illusion of market depth and liquidity when actually there is none is a critical element of the charade. It is whats behind the extreme volatility. I did not finish the math but the daily trading value would be $500,000,000 in my example giving people false confidence the market is deep as opposed to the two guys in the garage. Because of ZERO transparency no one knows the difference.

Thanks for that post and helping my understanding. What you say through your example makes perfect sense. I’m not an investor and never will be. Not good for my anal sphincter.

Unlike eorr I have yet to own a stock that I’m prepared to watch go all the way to zero. Not my way of investing.

 

[Folsom]

Yawn.......

Open source architecture is available at will, with no barriers to entry. If there are market demands it can be used to meet those demands and that has nothing to do with bitcoin. In addition, prior to bitcoin, encryption was already a highly advanced and relevant technology used in very sophisticated ways by very sophisticated companies in vast commercial applications. These uses are exponentially superior to bitcoin from a commercial standpoint. On the other hand, while Bitcoin is indeed an open source application (so what), it uses uses an outrageously archaic form of encryption to replicate an existing system that is already served by exceptionally efficient market mechanisms.

The concept of millions of random number generators running constantly across the globe wasting insane amounts of energy generating brute force, mundane, numeric permutations to compare to a required solution all to avoid using the system controlled by "the man" is insane! It is no more an example of the rebirth of open architecture which is going to somehow put Google and Facebook in there place than it is a viable means of payment or store of value.

Cryptos don't have to be mined. Bitcoin is the most basic of all cryptos, so why bother to look at the commercial standpoint?

I don't really think you understand the implications of blockchains and what can be done with them with simple value attachment. "currency" is the bare minimum function we'll be seeing in the future.

 

[Pb Blimp]

Cryptos don't have to be mined. Bitcoin is the most basic of all cryptos, so why bother to look at the commercial standpoint?

Maybe because the thread happens to be about Bitcoin and its value.

I don't really think you understand the implications of blockchains and what can be done with them with simple value attachment. "currency" is the bare minimum function we'll be seeing in the future.

Well we may disagree on the size of these commercial opportunities but I believe I do recognize them and understand blockchain technology. However, this discussion is about bitcoin and my point is about the insanity of ascribing the value of this commercial potential (be it large or small) to the value of bitcoin. I am not sure you are reading the thread. My post #205 below may help:

There are two distinct aspects to the bitcoin paradigm that IMO the market is wrongly comingling from a valuation perspective. One is blockchain technology (which is merely a form encryption) and the other is its use as a currency. I have explained in Post #140 why its use as a currency is fraught with peril over the long term. As far as opportunities for value creation using blockchain technology goes (as I pointed out with regard to IBM in post #165) there are a multitude of (real life existing) technology companies looking at commercial applications for everything from processing transactions to project management and everything in between. To the extent that these companies develop products using blockchain technology to improve the efficiency of these activities they will be able to price these products to take share and create value. This process is a completely different thing than what is going on with bitcoin (or Ethereum for that matter). Their valuations are mistakenly attaching blockchain technology opportunities to the currencies as if they had some sort of a competitive advantage for its use over traditional technology companies that are deep into the encryption space. Nothing could be farther from the truth.

Even for the technology companies with huge armies of technologists evaluating these applications, there are minimal barriers to entry in encryption (i.e., limited from an IP standpoint) and the returns will be more about the effectiveness of the solution than the technology itself. Think of it as Blockchain being the internal combustion engine that all car companies will use. Value creation ultimately will be determined by whether you make a Ferrari or a Yugo. That said they both are at least car companies and have the potential to create value in the space. Bitcoin is nothing more than a speculative illusion that is being portrayed as the reservoir of value of a technology for which it has no proprietary claim. Furthermore, it employs the technology in a product (currency) attempting to compete in a tightly regulated and controlled market that is already fully satisfied by fiat money throughout the entirety of governed society.

As it relates to defining the size of commercial opportunities for the blockchain, I would add to this my Post #306 below which accentuates that the extreme negative energy metrics of the blockchain and negligible barriers to entry will ultimately be impediments to its commercial success. Take away the archaic, brute force employment of massive amounts of energy and you are basically left with nothing more than encryption which is an important but crowded market.

As I have said bitcoin and blockchain technology are two very different things with very different investment opportunities. One is wholly illegitimate with value based on speculation and covert transacting and the other is based on real commercial potential. That said, even the commercial applications are fraught with problems related to extremely negative energy metrics and no barriers to entry.

 

[DaveC]

It's a plot devised by the power companies to get people to waste billions.

IMO the power consumption alone is worth a worldwide ban. What was the hottest year? 2016. 2nd hottest? 2017. We're getting to the point we're all going to be screwed by climate change and we think it's a good idea to use power for THIS? Really? Let alone the fact people are investing in a net loss for humanity over investing in people and businesses that actually provide the world with value? This is another nail in our coffin, another reason we'll suffer more, another bad decision. Oh well.

 

[Folsom]

So I'm restricted to Bitcoin specific, but you get to talk about IBM and everything else under the sun?

Don't think you really "get it", yet, Paul.

The implication of pay to play being built in, is alone a staggering benefit that we haven't had. There is a lot more to it than "encryption", because of what it does at the actual level of interfacing on top of more than you're giving credit for with "encryption". If "encryption" isn't that interesting of a topic to you, then you must not care at all that Equifax basically emailed your personal information to the dark web.