Bitcoins - anyone else mining? (1 Viewer)

[Jojo the circus boy]

Wow, this thread has taken a turn. I find some of the postings interesting as I honestly thought there was some manipulation going on in the trading. That was back earlier in the year, way before it jumped a ton. There was lots of negative press after all of the media hype that made it jump over 200 and it went under 100. Then all of a sudden it jumped back up to 150 or so. It just seems like the price was fighting the news. Seeing the info on the trades doesn't surprise me at all. With the low volumes of trading back then, price manipulation seemed relatively simple to do, especially with such large stakes of ownership in a few hands.

I still believe what I believed before that bitcoin won't become a world currency because it was just created with nothing behind it. Here, I made a stbugscoin and while I own 40% of it, I value it overall at $10 trillion. I don't hear much about bitcoin like you did back earlier in the year when it got hot, but I still laugh when you see articles saying that each coin could end up being $1 million a piece. So, does every other currency in the world become worthless and 99% of the world becomes dirt poor?

It will be interesting to follow all of this. I definitely think this plus the Target breach will definitely start making some changes in the way credit cards and financial systems work.

That's a tall order based on the existing infrastructure that would have to change. The only change I can see coming is merchants like Target wise-up with regards to data security so that they don't open themselves up to liability.

Wait, you post that merchants are losing $190 billion a year, but you don't think they would want to change the existing infrastructure? Target just did a couple days at 10% off because they realized that they are going to get hit with a backlash because of this. My wife and I have our debit cards linked to Target Red Cards and I am going to have to take action because of the breach. I only did that because 5% off is a pretty nice deal, but consumers will make Target change and they obviously already admitted that this could affect their bottom line. Consumers are going to be wary of shopping opening them up to issues. Even if things are "covered" the inconvenience of it and the worry that it won't be covered could easily make people shop at Walmart instead of Target if Walmart accepts the more secure credit cards.I believe that whether or not bitcoin fails (I am on the side that it will), it and the Target breach are going to start more secure financial mechanisms coming into the mainstream.

What is your solution? What part of the existing infrastructure being an albatross that they cannot change it if they wanted to don't you get? Why doesn't the U.S. adopt smart chip credit cards, surely that would be better, right?

Magstripes vs. EMV ChipsIn the United States, credit cards transfer information via “magstripes”–the black magnetic stripe on the back of your card. These stripes, which are made of tiny iron-based particles that communicate with card readers, are the status quo in the U.S. They are not accepted worldwide, though.

There is another type of credit card technology on the rise. Many countries–including 73% of Western Europe–have already adopted the new standard. Instead of relying on magstripes to transmit info, EMV credit cards are embedded with a tiny microchip that serves the same function. The microprocessors provide greater security than magstripe cards.

Though the world is well on its way to making EMV cards standard, the United States has been dragging its feet. The main reason, as you might suspect, is money. The estimated cost to replace American credit cards is $3 billion, and the cost to replace payment terminals is $2.5 billion.

 

[Jojo the circus boy]

Li Ka-shing gets it, richest man in Hong Kong instead of buying bitcoin he invests in BitPay.

His profile:

The Hong Kong magnate is the richest man in Asia. "Superman's" empire spans 260,000 employees in 52 countries, and shares in his largest holdings jumped in the past year, adding $5.5 billion to his fortune. His private tech investment company, steered by his partner Solina Chau, was an early-in to Facebook, Skype and Spotify. He's also generous - lifetime donations make him one of the biggest philanthropists in Asia. The octogenarian has lined up his eldest son Victor to take over management and control of his publicly traded assets.

Asia’s richest businessman Li Ka-shing has invested in BitPay, the digital currency equivalent for PayPal, through his venture capital arm Horizons Ventures.

A spokeswoman for Horizons Ventures declined to comment on the details of the investment. Bitpay said it was “fortunate to have the benefit of many supportive investors, including Horizons Ventures.”

BitPay, founded in May 2011, currently handles transactions for 14,000 companies across 200 countries. About half of the transactions take place in the United States, 25 per cent are in Europe and 25 per cent in the rest of the world. Asia is among the top regions where BitPay is signing up new companies.

Really? Dude is a multi-billionaire, he probably has investments in thousands of companies. Do you really think he oversees every single investment his venture capital firm does? His company has 260,000 employees. I would bet his venture capital firm has a lot of busts as well. That is what they do, they invest in tons of companies and all it takes is one hit in Facebook or Google or Netflix to make them a ton of money despite having a terrible hit rate. Invest $1000 in 100 businesses is $100k in the red. If Google's investment gives them a 100x return, then they broke even despite a 1% hit rate. Yes, a made up example, but venture capital firms are looking for huge returns from a small set of hits to offset more busts.

Just laughable that you equate a calculated chance on a hit (and an acceptance if it is worthless next year) by his venture capital firm equates to Li Ka-shing "getting it" and actually believing in bitcoins. This is the type of news blurb that con men use to milk more money out of whales.

Your lack of knowledge knows no bounds. You think successful VC firms invest in companies like throwing darts at a dart board with each dart carrying an equal investment. You should read up on the companies you are insulting before making a fool of yourself.

Internet and technology[SIZE=small][[/SIZE]edit]

Li has also made a foray into the technology business, where his investment and venture capital firm Horizons Ventures is specifically allocated towards backing new internet and technology startup firms, bought a stake in doubleTwist.[19] His other firm, Li Ka Shing Foundation bought a 0.8% stake in social networking website Facebook for $120 million in two separate rounds.[20][21]and invested an estimated $50 million in music streaming service Spotify.[22]

Some time between late 2009 and early 2010, Li Ka-shing led a $15.5 million Series B round of financing for Siri Inc.[23]

In 2011, Horizons Ventures invested in Summly, a website-summarizing app. Notably, the investment made Nick D'Aloisio, Summly's founder, the world's youngest person to receive a venture capital investment at just fifteen years old.[24]

In 2012, Horizons Ventures invested $2.3 million in Wibbitz, a company that provides a text-to-video technology that can automatically convert any article post or feed on the web into a video in a matter of seconds.

In August 2012, he acquired a stake in Ginger Software Incorporated.[25]

In 2013, Horizons Ventures invested in Bitcoin payment company BitPay.[26]

 

[Mister Martie]

VC firms invest in a lot of companies and expect to hit on a very low percentage of them. stbugs is exactly right. Not sure what a copy and paste of a wiki article on their successful portfolio companies has anything to do with what stbugs said.

 

[DrJ]

Here, I made a stbugscoin and while I own 40% of it, I value it overall at $10 trillion. I don't hear much about bitcoin like you did back earlier in the year when it got hot, but I still laugh when you see articles saying that each coin could end up being $1 million a piece.

I prefer the ServoCoin . I own 51% and I value it at $100 trillion. And, it never deflates!

at both of these.

 

[DrJ]

So the currency simply has to deflate, you try and bring stability and you've pretty much destroyed it.

Let's assume this statement is wrong. The currency doesn't deflate, what happens next which "destroys" the currency?

As a currency it already has deflated in a major way.Last year I could work a couple hours to earn one bitcoin. This year I need to work a couple days to one bitcoin. If I was a merchant, last year I could give up a few shirts in exchange for one bitcoin. This year I need to give up an entire wardrobe in exchange for one bitcoin.When people have to give up more units of currency for the same amount of goods and services, that is inflationary. When people have to give up more goods and services for the same units of currency, that is deflationary.

DrJ is that you? The question remains unanswered, how is the currency "destroyed" when the currency no longer deflates.

It implodes. I've already explained this, and actually demonstrated what happened once before in the numbers. If you'd like to provide an alternate explanation along with some actual evidence to support it I'd actually welcome that. It'd be a nice change of pace for this thread.

Link to your post where you prove Bitcoin "implodes" if it does not deflate.

Prove?

Don't like the word "prove"? How about explain why you think Bitcoin cannot survive unless it deflates, this is what you are claiming, I just want to understand why you think that. Don't link to charts and blockchains or blogs, just use your own words.

I did this in the last several pages, using my own words along with supporting evidence. You obviously didn't pay attention, so I'm not going to waste any more effort spelling it out for you. Feel free to review what I've posted and explain how the outcome can be different.

So you can't sum it up in 1 sentence? Is it really that hard for you to explain yourself? Your posts go off into wild tangents, if you expect anyone to take you seriously you should be able to concisely convey your point. I asked a simple question and you scoff at it, good luck with your website.

I already summed it up in 2 words. It implodes.

 

[DrJ]

Li Ka-shing gets it, richest man in Hong Kong instead of buying bitcoin he invests in BitPay.

His profile:

The Hong Kong magnate is the richest man in Asia. "Superman's" empire spans 260,000 employees in 52 countries, and shares in his largest holdings jumped in the past year, adding $5.5 billion to his fortune. His private tech investment company, steered by his partner Solina Chau, was an early-in to Facebook, Skype and Spotify. He's also generous - lifetime donations make him one of the biggest philanthropists in Asia. The octogenarian has lined up his eldest son Victor to take over management and control of his publicly traded assets.

Asia’s richest businessman Li Ka-shing has invested in BitPay, the digital currency equivalent for PayPal, through his venture capital arm Horizons Ventures.

A spokeswoman for Horizons Ventures declined to comment on the details of the investment. Bitpay said it was “fortunate to have the benefit of many supportive investors, including Horizons Ventures.”

BitPay, founded in May 2011, currently handles transactions for 14,000 companies across 200 countries. About half of the transactions take place in the United States, 25 per cent are in Europe and 25 per cent in the rest of the world. Asia is among the top regions where BitPay is signing up new companies.

The theme I keep getting from your postings is that this has nowhere to go but up, up, up!!! You better hurry and get all of your money in bitcoins, since you don't actually own any currently.

 

[Jojo the circus boy]

So you can't sum it up in 1 sentence? Is it really that hard for you to explain yourself? Your posts go off into wild tangents, if you expect anyone to take you seriously you should be able to concisely convey your point. I asked a simple question and you scoff at it, good luck with your website.

I already summed it up in 2 words. It implodes.

Mystery solved, DrJ doesn't have to explain anything, probably because he can't, he just likes to troll.

 

[Jojo the circus boy]

VC firms invest in a lot of companies and expect to hit on a very low percentage of them. stbugs is exactly right. Not sure what a copy and paste of a wiki article on their successful portfolio companies has anything to do with what stbugs said.

First off not all VC firms act the same way and share your strategy. The "copy and paste" showed substantially different investment amounts in a variety of successful startups. You and stbugs ignore the point I made entirely, I stated he chose to invest in bitpay rather than get fixated on bitcoin the currency like the majority of the doom-and-gloom posters have done in this thread.

Investing in BitPay was as close to investing in bitcoin the payment network as you can get.

Li Ka-shing gets it, richest man in Hong Kong instead of buying bitcoin he invests in BitPay.

 

[Mister Martie]

VC firms invest in a lot of companies and expect to hit on a very low percentage of them. stbugs is exactly right. Not sure what a copy and paste of a wiki article on their successful portfolio companies has anything to do with what stbugs said.

First off not all VC firms act the same way and share your strategy.

Gotta be shtick at this point.

 

[Tom Servo]

Here, I made a stbugscoin and while I own 40% of it, I value it overall at $10 trillion. I don't hear much about bitcoin like you did back earlier in the year when it got hot, but I still laugh when you see articles saying that each coin could end up being $1 million a piece.

I prefer the ServoCoin . I own 51% and I value it at $100 trillion. And, it never deflates!

Give me a 5% cut and I will transfer 1% with you back and forth every day. We need to stabilize the price to ensure adoption, not to make ourselves rich, but to ensure stability as we can allow a farmer in Africa to support his son going to Rutgers. We pledge to be an altruistic organization and I promise that once worth $5 trillion that I will pledge to donate $1 billion to build a large ship to drag icebergs from the artic to bring clean water to Africa.

DONE!!!

 

[Tom Servo]

VC firms invest in a lot of companies and expect to hit on a very low percentage of them. stbugs is exactly right. Not sure what a copy and paste of a wiki article on their successful portfolio companies has anything to do with what stbugs said.

First off not all VC firms act the same way and share your strategy.

Gotta be shtick at this point.

If obtuseness = shtick, it's a good one.

 

[DrJ]

So you can't sum it up in 1 sentence? Is it really that hard for you to explain yourself? Your posts go off into wild tangents, if you expect anyone to take you seriously you should be able to concisely convey your point. I asked a simple question and you scoff at it, good luck with your website.

I already summed it up in 2 words. It implodes.

Mystery solved, DrJ doesn't have to explain anything, probably because he can't, he just likes to troll.

Thinking this is you. I've explained this about half a dozen times. At one point you were demanding I make a prediction, which I did. And my prediction was along these lines and about a paragraph long. I thank you for the exercise because this has helped me refine my thinking on this a bit as I go along, but I apologize that it I don't seem to have helped you as much as I'd have liked.

 

[Jojo the circus boy]

The circle jerk is in full effect

 

[Rohn Jambo]

Oh, and if you want to make some money with

I have a dumb question. Governments and central banks control interest rates by changing money supply. How would they do it with bitcoins?

That part I get - they wouldn't. That is part of the attraction many have for Bitcoin, is that it is not (in theory) able to be controlled by Governments or Central Banks.

DrJ said it is possible for someone who holds a lot of Bitcoins to cause wild price fluctuations. But if one wants to stabilize prices, is there a way to do it? Some countries peg their currencies to the dollar to control trade deficits to their advantage, but that also allows them to fix the exchange rates. Since there is no such thing as Bitcoin Treasury Bonds, are there other methods available?

Bringing stability would destroy the currency. It has to rapidly deflate, there is basically no other choice. This is a "feature", not necessarily a bug.

Here's a look at the hash rate (the amount of power) on the network. It's basically a logarithmic curve, it's increasing exponentially: https://blockchain.info/charts/hash-rate?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

Here's a look at the mining difficulty, also a logarithmic curve that's increasing exponentially: https://blockchain.info/charts/difficulty?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

The number of coins coming out actually decreases over time, though. It's looked linear for the most part to this point, but will eventually flat line and be more or less reverse exponential: https://blockchain.info/charts/total-bitcoins?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

And the number of coins coming out has nothing to do with the amount of people mining. That just reduces each of their share of the spoils and causes diminishing returns as more people compete. This is illustrated in the decisions people are making in buying this equipment (dumping 130K for 20K machines to be first), and also in the profitability calculators. Here's one, I'm going to use the defaults to start here: http://www.bitcoinx.com/profit/

My $2500 rig will take make 16.63 a day and take 167 days to pay itself off at today's rates of $800 a coin. What happens with this same rig if I bump the difficulty up a billion (slightly less than doubling it)? Now I'm making $8.84 a day and it takes 357 days. And mining difficuly is doubling about every 30 days at this point: http://www.coindesk.com/bitcoin-mining-difficulty-soars-hashing-power-nudges-1-petahash/

30 days in and I'm making half what I was? Either this guy is going to have to continually cut his profit margins, or the price is going to have to increase. And he can't cut profit margins forever - so the price simply has to increase.

This also doesn't account for things like "halving day", which happened on Nov 28, 2012 will happen once every 4 years roughly. This calculator is based off of 25 coins per block, but this number was 50 until earlier this year and will be 12.5 per block in another 4 years. Those dates essentially cut a miner's output in half overnight. The coin has to double in price on that day for the miner to maintain the same level of profitability.

This is something that was done by design entirely. Here's a message from "Satoshi" in the initial discussion phases. This is from 11-08-2008. http://article.gmane.org/gmane.comp.encryption.general/12611/match=nakamoto

Increasing hardware speed is handled: "To compensate for increasing hardware speed and varying interest

in running nodes over time, the proof-of-work difficulty is determined by a moving average targeting an

average number of blocks per hour. If they're generated too fast, the difficulty increases."

As computers get faster and the total computing power applied to creating bitcoins increases, the

difficulty increases proportionally to keep the total new production constant. Thus, it is known in

advance how many new bitcoins will be created every year in the future.

The fact that new coins are produced means the money supply increases by a planned amount, but this does not

necessarily result in inflation. If the supply of money increases at the same rate that the number of

people using it increases, prices remain stable. If it does not increase as fast as demand, there will be

deflation and early holders of money will see its value increase.

Coins have to get initially distributed somehow, and a constant rate seems like the best formula.

This clearly demonstrates that he's aware of many of the dynamics that would happen and feels a constant rate seems like the best. But when the alpha code is released on 01-08-2009 he opted to go with this formula where the supply actually decreases over time instead: http://article.gmane.org/gmane.comp.encryption.general/12776/match=nakamoto

Total circulation will be 21,000,000 coins. It'll be distributed

to network nodes when they make blocks, with the amount cut in half

every 4 years.

first 4 years: 10,500,000 coins

next 4 years: 5,250,000 coins

next 4 years: 2,625,000 coins

next 4 years: 1,312,500 coins

etc...

When that runs out, the system can support transaction fees if

needed.

So the currency simply has to deflate, you try and bring stability and you've pretty much destroyed it.

Because of this, the only rational thing to if you actually believe in the currency is to throw everything you can at acquiring it and never spend it. In fact, it seems many of the bitcoin enthusiasts (pawns) really only endorse spending them for marketing purposes. "They're going to be worth some giant amount each, but only if we actually spend a few of them". And I'm not joking with that quote - there's people on these boards actually saying stuff along these lines.

You mean it is designed to self destruct? Cool.

 

[Jojo the circus boy]

So you can't sum it up in 1 sentence? Is it really that hard for you to explain yourself? Your posts go off into wild tangents, if you expect anyone to take you seriously you should be able to concisely convey your point. I asked a simple question and you scoff at it, good luck with your website.

I already summed it up in 2 words. It implodes.

Mystery solved, DrJ doesn't have to explain anything, probably because he can't, he just likes to troll.

Thinking this is you. I've explained this about half a dozen times. At one point you were demanding I make a prediction, which I did. And my prediction was along these lines and about a paragraph long. I thank you for the exercise because this has helped me refine my thinking on this a bit as I go along, but I apologize that it I don't seem to have helped you as much as I'd have liked.

It's ok, I understand math, logic, and reason aren't your strong suit. You can make as many predictions as you like based on air.

"Bitcoin needs to deflate or it becomes worthless"

Why?

Because DrJ posted it, didn't you read his prediction?

 

[stbugs]

VC firms invest in a lot of companies and expect to hit on a very low percentage of them. stbugs is exactly right. Not sure what a copy and paste of a wiki article on their successful portfolio companies has anything to do with what stbugs said.

First off not all VC firms act the same way and share your strategy.

Gotta be shtick at this point.

Exactly, the part he bolded was my remedial math to try and give him a tangible example to think about. I am glad he gave us the copy and paste to show that VC firms actually invest different amounts. That is shocking information, I mean who would have thought that different companies were valued at different amounts thus investing 20% in two different companies could actually mean two different dollar amounts. I was pretty sure that in year 1, every tech company had to be values at $1.956 million and that in year 2 they all were $22.589 million. My mind is blown now.

Geez, if he doesn't get that VC firms spread the wealth to invest in many companies because they know they will hit on a low percent, then he won't ever get anything. I think we all know they do some due diligence, but first of all, they have employees, so "that guy" might not have any idea who Bitpay even is, the guys in his VC firm do and is it surprising that they would throw some money at a payment provider in bitcoins with the media attention they have gotten? Does it mean that they believe they are the next Google? No, it means they are worthwhile to invest because if bitcoins somehow are worth $1 million a piece, Bitpay will be a public stock and they will make a good amount of money.

Oh well, he will keep saying that I am not knowledgeable because it makes him feel better and he will post more articles as his proof. I still love his old link about Amazon taking bitcoins because some people had a prime account and if you sent them bitcoins, they used USDs to make purchases on Amazon. I am still waiting for Tom to send me my 5% in servocoins and then I will order him a Kindle on my prime account and we can paste a Wiki article about Amazon accepting servocoins and we will make shiploads.

 

[DrJ]

So you can't sum it up in 1 sentence? Is it really that hard for you to explain yourself? Your posts go off into wild tangents, if you expect anyone to take you seriously you should be able to concisely convey your point. I asked a simple question and you scoff at it, good luck with your website.

I already summed it up in 2 words. It implodes.

Mystery solved, DrJ doesn't have to explain anything, probably because he can't, he just likes to troll.

Thinking this is you. I've explained this about half a dozen times. At one point you were demanding I make a prediction, which I did. And my prediction was along these lines and about a paragraph long. I thank you for the exercise because this has helped me refine my thinking on this a bit as I go along, but I apologize that it I don't seem to have helped you as much as I'd have liked.

It's ok, I understand math, logic, and reason aren't your strong suit. You can make as many predictions as you like based on air.

"Bitcoin needs to deflate or it becomes worthless"

Why?

Because DrJ posted it, didn't you read his prediction?

A second ago you were asking for an explanation, which I've offered about half a dozen times. I've asked for some sort of explanation as to why what I've predicted won't happen, and this is your response. Go figure.

 

[mad sweeney]

The circle jerk is in full effect

You should change your name to JoJo the Toast then.

 

[Rohn Jambo]

Jojo, have you heard of Amazon Coins?

http://www.amazon.com/gp/feature.html?docId=1001166401

 

[DrJ]

I was looking at the history of the hashing power against this whole thing a little more after that last post as well, specifically the early days. Here's the CSV, numbers are in GH/s.

https://blockchain.info/charts/hash-rate?showDataPoints=false&timespan=all&show_header=true&daysAverageString=1&scale=0&format=csv&address=

Here's number of unique addresses as well, in CSV: https://blockchain.info/charts/n-unique-addresses?showDataPoints=false&timespan=all&show_header=true&daysAverageString=1&scale=0&format=csv&address=

Main reason I'm including that is I think it's interesting to see how the number of addresses climbs at various points as well. Now, this doesn't necessarily indicate that more actual people are coming online since a person can have as many addresses as they like. If the average miner starts using 2 or 3 computers instead of 1, that would also cause both the power and the number of addresses to climb. But I'd still like to see some correlation between power and addresses ideally.

When the thing first comes on, you're getting about .006 GH/s for a really long period of time, through about May of 2009. And right off the bat there's about 100ish addresses, it jumps up and down a little over this point while the power stays the same, but as a whole this seems like a pretty stable period all things considered. It was new, and being developed.

Around May of 2009 it actually drops off some, seems to hover around .003 to .004 for quite a while and the addresses drop to double digits. Would be nice to have an explanation on what happened here, but it isn't readily apparent on the surface. This stays pretty stable until about December of 2009.

In December of 2009, you start to see the power climb a decent bit. The power grows more quickly than the number of addresses, but they both grow. From December 1, 2009 through April 1, 2010 the power climbs from .003 GH/s to .057 GH/s. Number of addresses climbs from 66 to 195.

April 18th and 19th of 2010 the first really big event for addresses happens. For a couple day period you see the addresses jump to a couple of thousand, then drop right back again. Addresses goes 236, 1346, 2286, 234 in this 4 day period. I'm guessing there was a positive mention of this somewhere, but I can't find anything to back this up quite yet. And the spike in power is nowhere near the spike in addresses. That goes .085, .100, .084, .079. Based on the addresses before and after, it seems they didn't pick up any long term users off of this spike.

July of 2010 is where sparks really start to fly a little, and there's things in the history that explain them to some extent.

From bitcoin's history page:

July 11 Bitcoin v0.3 release mentioned on slashdot[5], bringing a large influx of new bitcoin users.

July 12 Beginning of a 10x increase in exchange value over a 5 day period, from about $0.008/BTC to $0.08/BTC

July 17 MtGox established

July 18 ArtForz generated his first block after establishing his personal OpenCL GPU hash farm

There's another flurry of addresses for 4 days, much like the April 18th and 19th, but most quickly drop off. It goes 240, 2822, 2122, 6109, 2015, 1683, 548, 549 and is a little unstable for a couple of weeks. By August we're back to a stable number in the 300's to 400's. The jump in power here is just insane though. This was somewhere between .15 and .20 GH/s heading into all of this. Overnight this jumps to 1.5 to 2.0 and just keeps climbing madly. There's actually a 5 GH/s day on 7/16/2010 as well, which is really strange. But whoever is doing that knocks it off quickly. It's hard to see this on the regular hashing graph because today's numbers make all previous numbers look like 0, but you can look at the hash power graph on a log scale, it jumps several orders of magnitude overnight: https://blockchain.info/charts/hash-rate?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=1&address=

You can't really explain this jump being due to "new users" - in fact since the power jumped up overnight just as these people were coming on almost all drop back off by August it almost seems like this helped to drive most of them away. The GPU mining is the only thing that makes logical sense, which only a few users are actually capable of (many of them write bitcoin code).

The power slowly climbs and is up to about 10 GH/s by October 1st when public GPU mining is first released (again using bitcoin's own history page), about 50 times more power being thrown at it in the beginning of July. Coincidentally, the number of addresses is still about 300-400 almost until this September 20, 2010. Then it starts climbing some, and the arms race is born. Also coincidentally, bitcoin's history page also indicates that the price started climbing on October 7, 2010. After "several flat months".

October 01 First public OpenCL miner released

October 07 Exchange rate started climbing up from $0.06/BTC after several flat months.

Here's the bitcoin history page, where I pulled some of the "historic" dates from: https://en.bitcoin.it/wiki/History

 

[TheAristocrat]

So you can't sum it up in 1 sentence? Is it really that hard for you to explain yourself? Your posts go off into wild tangents, if you expect anyone to take you seriously you should be able to concisely convey your point. I asked a simple question and you scoff at it, good luck with your website.

I already summed it up in 2 words. It implodes.

Mystery solved, DrJ doesn't have to explain anything, probably because he can't, he just likes to troll.

If you read this thread with an open mind, you are the troll.

 

[DrJ]

I need to get better with data visualization as part of this whole thing as well. A big problem with these current graphs is that all of the numbers from the early days basically look like 0. It's a logarithmic curve afterall. So you have to go looking at actual CSV files to get the real story. I'd like to be able to exclude current data out of some of these graphs. CSV data is all there to do it...but I suck at that stuff.

 

[Jojo the circus boy]

Jojo, have you heard of Amazon Coins?

http://www.amazon.com/gp/feature.html?docId=1001166401

They look like Microsoft Points, but to be honest I don't know much about them.

Microsoft just retired their point program this year.

 

[Tom Servo]

Oh well, he will keep saying that I am not knowledgeable because it makes him feel better and he will post more articles as his proof. I still love his old link about Amazon taking bitcoins because some people had a prime account and if you sent them bitcoins, they used USDs to make purchases on Amazon. I am still waiting for Tom to send me my 5% in servocoins and then I will order him a Kindle on my prime account and we can paste a Wiki article about Amazon accepting servocoins and we will make shiploads.

Sorry for the delay. I have to remember my 134 step security process to open my cloud wallet as well as the 20 unique 45 character passwords in order to access my ServoCoins . Then we can start MAKING MONEY!

 

[Jojo the circus boy]

30 days in and I'm making half what I was? Either this guy is going to have to continually cut his profit margins, or the price is going to have to increase. And he can't cut profit margins forever - so the price simply has to increase.

You mean it is designed to self destruct? Cool.

Yeah didn't you know "the price of bitcoin has to be manipulated otherwise nobody would mine it."



If only there was some provision to adjust the difficulty based on network hash power that make the value of bitcoins meaningless.

Let's see if 1 bitcoin costs M dollars to mine...

and 1 bitcoin yields me D dollars at the exchange...

and the difficulty to mine 1 bitcoin is expressed as F...

finally let's say at a cost of M dollars for a yield of D dollars, H represents the network hash power of the network mining bitcoins at those "rates".

...then...

if a bitcoin's value D drops below M (the cost to mine) then there will be fewer people mining bitcoins...it could go to zero but I assume it won't since there will be a lag when people get their bills and decide to turn off their rigs and some people will just continue to mine for a loss either because they are speculating that the value will go up or they just plain don't know they are losing money. I bet there are people today that still have their CPU's mining bitcoins because they don't know any better.

following that logic...

If D goes down below M, and M and F remain the same then H should go down

Since H, the total network hash power, is decreasing, then F, the difficulty, will be adjusted to meet the release schedule.

f(F) = f(H)

f(H) = f(M, D)

In conclusion, as the difficulty F increases and the price of bitcoin D goes down (or remains the same), then H should theoretically decrease thus adjusting F to sustain the release schedule. The one thing I omitted was that the cost of M should go down over time as technical advances are made. Based on these findings it seems like a well thought out and balanced arrangement but feel free to poke holes in it.

 

[Maelstrom]

What is your solution? What part of the existing infrastructure being an albatross that they cannot change it if they wanted to don't you get? Why doesn't the U.S. adopt smart chip credit cards, surely that would be better, right?

That is the part I don't buy. It can (and will) get changed. It has been getting changed. It'll cost money, but it happens everytime things that are deeply ingrained change. Used to be credit cards could only be accepted at places that had a mechanical swiper with carbon paper backing. Now it's a magnetic strip, but more and more places are accepting cards with chips in them. It's just a matter of time.

Saying it can't be changed is not accurate, as it has and will change.

Again, I don't care for the CC industry, but you can't say what you said, it is too much hyperbole and only said to try to promote a different solution.

 

[Jojo the circus boy]

What is your solution? What part of the existing infrastructure being an albatross that they cannot change it if they wanted to don't you get? Why doesn't the U.S. adopt smart chip credit cards, surely that would be better, right?

That is the part I don't buy. It can (and will) get changed. It has been getting changed. It'll cost money, but it happens everytime things that are deeply ingrained change. Used to be credit cards could only be accepted at places that had a mechanical swiper with carbon paper backing. Now it's a magnetic strip, but more and more places are accepting cards with chips in them. It's just a matter of time.Saying it can't be changed is not accurate, as it has and will change.

Again, I don't care for the CC industry, but you can't say what you said, it is too much hyperbole and only said to try to promote a different solution.

You are correct it. It cannot easily change, evidence is the fact that Europe has been using microchip for the past 8 years. Here's a blurb for the U.S.'s adoption plans:

Visa,[29] MasterCard[30] and Discover[31] in March 2012 - and American Express[32] in June 2012 - have announced their EMV migration plans for the US. In spite of these announcements, doubts remain over the willingness of merchants to develop the capability to support EMV.[33] Since the announcement, multiple banks and card issuers have announced cards with EMV chip-and-signature technology, including American Express, Bank of America, Citibank, JPMorgan Chase, U.S. Bank, and several credit unions.[34] JPMorgan was the first major bank to introduce a card with EMV technology, namely its Palladium card, in mid-2012.[35]

For example to change to the point of every merchant that can accept magnetic swipe to now accept microchip would mean replacing every single POS unit at every merchant as well as the backoffice technology that transmits the transaction to VISA/MC. All of this comes at a substantial cost, perhaps this is an opportunity for bitcoin to cheaply step in and fix the problem removing a number of middlemen in the process while lowering costs for everyone. I don't know what is involved for the changeover for brick and mortars but it certainly could fix the problem very easily for online transactions.

 

[stbugs]

Oh well, he will keep saying that I am not knowledgeable because it makes him feel better and he will post more articles as his proof. I still love his old link about Amazon taking bitcoins because some people had a prime account and if you sent them bitcoins, they used USDs to make purchases on Amazon. I am still waiting for Tom to send me my 5% in servocoins and then I will order him a Kindle on my prime account and we can paste a Wiki article about Amazon accepting servocoins and we will make shiploads.

Sorry for the delay. I have to remember my 134 step security process to open my cloud wallet as well as the 20 unique 45 character passwords in order to access my ServoCoins . Then we can start MAKING MONEY!

Sounds good. I am on vacation until the 2nd, so set it up and I'll start buying and selling coins with you at prices defined by the market. :winkwinksaynomore:

 

[Jojo the circus boy]

How is difficulty calculated?

The Bitcoin difficulty started at 1 (and can never go below that). Then for every 2016 blocks that are found, the timestamps of the blocks are compared to find out how much time it took to find 2016 blocks, call it T. We want 2016 blocks to take 2 weeks, so if T is different, we multiply the difficulty by (2 weeks / T) - this way, if the hashrate continues the way it was, it will now take 2 weeks to find 2016 blocks.

For example, if it took only 10 days it means difficulty is too low and thus will be increased by 40%.

The difficulty can increase or decrease depending on whether it took less or more than 2 weeks to find 2016 blocks. Generally, the difficulty will decrease after the network hashrate drops.

If the correction factor is greater than 4 (or less than 1/4), then 4 or 1/4 are used instead, to prevent the change to be too abrupt.

 

[DrJ]

30 days in and I'm making half what I was? Either this guy is going to have to continually cut his profit margins, or the price is going to have to increase. And he can't cut profit margins forever - so the price simply has to increase.

You mean it is designed to self destruct? Cool.

Yeah didn't you know "the price of bitcoin has to be manipulated otherwise nobody would mine it."



If only there was some provision to adjust the difficulty based on network hash power that make the value of bitcoins meaningless.

Let's see if 1 bitcoin costs M dollars to mine...

and 1 bitcoin yields me D dollars at the exchange...

and the difficulty to mine 1 bitcoin is expressed as F...

finally let's say at a cost of M dollars for a yield of D dollars, H represents the network hash power of the network mining bitcoins at those "rates".

...then...

if a bitcoin's value D drops below M (the cost to mine) then there will be fewer people mining bitcoins...it could go to zero but I assume it won't since there will be a lag when people get their bills and decide to turn off their rigs and some people will just continue to mine for a loss either because they are speculating that the value will go up or they just plain don't know they are losing money. I bet there are people today that still have their CPU's mining bitcoins because they don't know any better.

following that logic...

If D goes down below M, and M and F remain the same then H should go down

Since H, the total network hash power, is decreasing, then F, the difficulty, will be adjusted to meet the release schedule.

f(F) = f(H)

f(H) = f(M, D)

In conclusion, as the difficulty F increases and the price of bitcoin D goes down (or remains the same), then H should theoretically decrease thus adjusting F to sustain the release schedule. The one thing I omitted was that the cost of M should go down over time as technical advances are made. Based on these findings it seems like a well thought out and balanced arrangement but feel free to poke holes in it.

So the price (D) drops, people quit mining thus lowering hashing rate (H) and difficulty (F). And the cost to mine (M) is reduced. But this doesn't actually decrease the number of coins hitting the market, like you've pointed out it's simply intended to keep the release of coins on schedule. So it just means those continuing to mine get more coins and makes the market slightly less stable. How do you expect the remaining miners to react when they see the price dropping but they're getting more coins? How are people holding the coins going to react to the price dropping?

 

[stbugs]

What is your solution? What part of the existing infrastructure being an albatross that they cannot change it if they wanted to don't you get? Why doesn't the U.S. adopt smart chip credit cards, surely that would be better, right?

That is the part I don't buy. It can (and will) get changed. It has been getting changed. It'll cost money, but it happens everytime things that are deeply ingrained change. Used to be credit cards could only be accepted at places that had a mechanical swiper with carbon paper backing. Now it's a magnetic strip, but more and more places are accepting cards with chips in them. It's just a matter of time.Saying it can't be changed is not accurate, as it has and will change.

Again, I don't care for the CC industry, but you can't say what you said, it is too much hyperbole and only said to try to promote a different solution.

You are correct it. It cannot easily change, evidence is the fact that Europe has been using microchip for the past 8 years. Here's a blurb for the U.S.'s adoption plans:

Visa,[29] MasterCard[30] and Discover[31] in March 2012 - and American Express[32] in June 2012 - have announced their EMV migration plans for the US. In spite of these announcements, doubts remain over the willingness of merchants to develop the capability to support EMV.[33] Since the announcement, multiple banks and card issuers have announced cards with EMV chip-and-signature technology, including American Express, Bank of America, Citibank, JPMorgan Chase, U.S. Bank, and several credit unions.[34] JPMorgan was the first major bank to introduce a card with EMV technology, namely its Palladium card, in mid-2012.[35]

For example to change to the point of every merchant that can accept magnetic swipe to now accept microchip would mean replacing every single POS unit at every merchant as well as the backoffice technology that transmits the transaction to VISA/MC. All of this comes at a substantial cost, perhaps this is an opportunity for bitcoin to cheaply step in and fix the problem removing a number of middlemen in the process while lowering costs for everyone. I don't know what is involved for the changeover for brick and mortars but it certainly could fix the problem very easily for online transactions.

Sure, bitcoin could step in, but how many "actual" people have bitcoins? Why can't it easily happen? Sure it will cost money, but as you stated, they do it in Europe now and all the credit card companies have already announced their migration plans. You stated costs around $5 billion and fraud costs of $190 billion for merchants. Why in the world wouldn't they do it?

While I have little knowledge in my tiny brain, I was around for the dot com stock crash. I remember that stocks kept going through the roof when most intelligent people would say that it wasn't sustainable to have companies with no revenue worth as much as companies in the S&P and that valuing companies based on eyeballs wasn't prudent when you had dozens of competitors in each small market. In March 2000, a little company based in VA (DC area) called MicroStrategy exploded after a huge run up. Basically, it had gone from its core business to being an "Internet" company and they fudged their financials and got crushed. Around the same time the S&P 500 hit its all time high before starting a rapid decent to 50% of that high in 2002. I don't know if many articles on the dot com/stock market crash from 2000 to 2002 will point to MicroStrategy as the turning point, you will hear Enron and WorldCom as the examples, but I think they happened later in 2000. To me, MicroStrategy was the first company I can recall in the Internet space that was making stuff up to justify their stock price and their crash started when the S&P peaked. I think a lot of other smart big dollar folks paying attention realized it was about to come down and the stock market started a steep descent. Amazing, it was around the same descent as the financial crisis when the overall economic health of the US wasn't in question.

Well, what's my point? My point is that I see the Target fiasco as a turning point in security. Up until this point, there were concerns, but honestly it wasn't that big of a deal because the total cost was a fraction. Well, other big retailers will see the black eye that Target got (as well as Target itself) and realize that security concerns could be the next Firestone where credibility can cripple their business. I think that we will see changes coming sooner than you think.

 

[DrJ]

30 days in and I'm making half what I was? Either this guy is going to have to continually cut his profit margins, or the price is going to have to increase. And he can't cut profit margins forever - so the price simply has to increase.

You mean it is designed to self destruct? Cool.

Yeah didn't you know "the price of bitcoin has to be manipulated otherwise nobody would mine it."



If only there was some provision to adjust the difficulty based on network hash power that make the value of bitcoins meaningless.

Let's see if 1 bitcoin costs M dollars to mine...

and 1 bitcoin yields me D dollars at the exchange...

and the difficulty to mine 1 bitcoin is expressed as F...

finally let's say at a cost of M dollars for a yield of D dollars, H represents the network hash power of the network mining bitcoins at those "rates".

...then...

if a bitcoin's value D drops below M (the cost to mine) then there will be fewer people mining bitcoins...it could go to zero but I assume it won't since there will be a lag when people get their bills and decide to turn off their rigs and some people will just continue to mine for a loss either because they are speculating that the value will go up or they just plain don't know they are losing money. I bet there are people today that still have their CPU's mining bitcoins because they don't know any better.

following that logic...

If D goes down below M, and M and F remain the same then H should go down

Since H, the total network hash power, is decreasing, then F, the difficulty, will be adjusted to meet the release schedule.

f(F) = f(H)

f(H) = f(M, D)

In conclusion, as the difficulty F increases and the price of bitcoin D goes down (or remains the same), then H should theoretically decrease thus adjusting F to sustain the release schedule. The one thing I omitted was that the cost of M should go down over time as technical advances are made. Based on these findings it seems like a well thought out and balanced arrangement but feel free to poke holes in it.

So the price drops, people quit mining thus lowering H and F. And M is reduced. But this doesn't actually decrease the number of coins hitting the market - it just means those continuing to mine get more coins and makes the market slightly less stable. How do you expect the remaining miners to react when they see the price dropping but they're getting more coins? How are people holding the coins going to react to the price dropping?

Also, no - the cost of mining (M) doesn't go down as technical advances are made. The cost per unit of hashing power does, but that doesn't dictate mining yields by itself. Mining yields are determined by your hashing power vs the hashing power of the entire pool competing against you. So the cost of mining goes up as more people compete, and goes down as less people compete. And also just naturally goes up over time due to halving.

Cost of mining (M) was almost nothing back in 2009. It is now a MUCH bigger than almost nothing.

Essentially your equation is missing a ton of stuff, you're making assumptions that are actually the opposite of the truth...I'd call it a pile of garbage actually.

 

[Jojo the circus boy]

So the price (D) drops, people quit mining thus lowering hashing rate (H) and difficulty (F). And the cost to mine (M) is reduced. But this doesn't actually decrease the number of coins hitting the market, like you've pointed out it's simply intended to keep the release of coins on schedule.

The number of coins hitting the market is fixed, I never said the number of coins hitting the market decreases I said the hashing rate decreases, BIG difference.

So it just means those continuing to mine get more coins and makes the market slightly less stable.

Why do you interject these false conclusions?

How do you expect the remaining miners to react when they see the price dropping but they're getting more coins?

Some will obviously do the math to see if the increase in yield is worth the money they are spending. Some will never look at costs, some will just look at the drop in value and stop mining. You cannot make a blanket statement for what all miners will do, they all have different costs and different goals, and different measures of what is acceptable to reach their goals.

How are people holding the coins going to react to the price dropping?

Why do I care and what does this have anything to do with this post?The reason I went to this trouble was to show why your statement "that bitcoins must deflate or they become worthless" is patently false.

you can lead a horse to water...

 

[Jojo the circus boy]

30 days in and I'm making half what I was? Either this guy is going to have to continually cut his profit margins, or the price is going to have to increase. And he can't cut profit margins forever - so the price simply has to increase.

You mean it is designed to self destruct? Cool.

Yeah didn't you know "the price of bitcoin has to be manipulated otherwise nobody would mine it."

If only there was some provision to adjust the difficulty based on network hash power that make the value of bitcoins meaningless.

Let's see if 1 bitcoin costs M dollars to mine...

and 1 bitcoin yields me D dollars at the exchange...

and the difficulty to mine 1 bitcoin is expressed as F...

finally let's say at a cost of M dollars for a yield of D dollars, H represents the network hash power of the network mining bitcoins at those "rates".

...then...

if a bitcoin's value D drops below M (the cost to mine) then there will be fewer people mining bitcoins...it could go to zero but I assume it won't since there will be a lag when people get their bills and decide to turn off their rigs and some people will just continue to mine for a loss either because they are speculating that the value will go up or they just plain don't know they are losing money. I bet there are people today that still have their CPU's mining bitcoins because they don't know any better.

following that logic...

If D goes down below M, and M and F remain the same then H should go down

Since H, the total network hash power, is decreasing, then F, the difficulty, will be adjusted to meet the release schedule.

f(F) = f(H)

f(H) = f(M, D)

In conclusion, as the difficulty F increases and the price of bitcoin D goes down (or remains the same), then H should theoretically decrease thus adjusting F to sustain the release schedule. The one thing I omitted was that the cost of M should go down over time as technical advances are made. Based on these findings it seems like a well thought out and balanced arrangement but feel free to poke holes in it.

So the price drops, people quit mining thus lowering H and F. And M is reduced. But this doesn't actually decrease the number of coins hitting the market - it just means those continuing to mine get more coins and makes the market slightly less stable. How do you expect the remaining miners to react when they see the price dropping but they're getting more coins? How are people holding the coins going to react to the price dropping?

Also, no - the cost of mining (M) doesn't go down as technical advances are made. The cost per unit of hashing power does, but that doesn't dictate mining yields by itself. Mining yields are determined by your hashing power vs the hashing power of the entire pool competing against you. So the cost of mining goes up as more people compete, and goes down as less people compete. And also just naturally goes up over time due to halving.

Cost of mining (M) was almost nothing back in 2009. It is now a MUCH bigger than almost nothing.

Essentially your equation is missing a ton of stuff, you're making assumptions that are actually the opposite of the truth...I'd call it a pile of garbage actually.

I simplify the equation so I don't lose you and then you try to add in other variables. Even with your adjustments it doesn't change the fact that:

There is no requirement for Bitcoins to deflate

for fear of them becoming worthless

...which I can only assume is because you thought NOBODY would mine the coins, but as hard as I tried to get you to admit this flawed logic you kept deflecting to go "read your work from the past few pages".

 

[DrJ]

So the price (D) drops, people quit mining thus lowering hashing rate (H) and difficulty (F). And the cost to mine (M) is reduced. But this doesn't actually decrease the number of coins hitting the market, like you've pointed out it's simply intended to keep the release of coins on schedule.

The number of coins hitting the market is fixed, I never said the number of coins hitting the market decreases I said the hashing rate decreases, BIG difference.

So it just means those continuing to mine get more coins and makes the market slightly less stable.

Why do you interject these false conclusions?

How do you expect the remaining miners to react when they see the price dropping but they're getting more coins?

Some will obviously do the math to see if the increase in yield is worth the money they are spending. Some will never look at costs, some will just look at the drop in value and stop mining. You cannot make a blanket statement for what all miners will do, they all have different costs and different goals, and different measures of what is acceptable to reach their goals.

How are people holding the coins going to react to the price dropping?

Why do I care and what does this have anything to do with this post?The reason I went to this trouble was to show why your statement "that bitcoins must deflate or they become worthless" is patently false.

you can lead a horse to water...

All that your post demonstrates is some of the design decisions Satoshi made in order to ensure that the coins would be released on the desired schedule. Along with a fundamental misunderstanding of some of the dynamics at play here (when you suggest technological improvement will make mining cheaper). It doesn't do anything to demonstrate the need for deflation, or lack thereof.

As for why you should care about how people holding bitcoin will react - it's one of the components in price. Or D as you like to call it.

 

[Jojo the circus boy]

It doesn't do anything to demonstrate the need for deflation.

That's what I have been posting about for the past day...why you insist on "bitcoins need to deflate or they become worthless" is beyond me, there is certainly no mechanism related to mining that would support that assertion.

 

[DrJ]

It doesn't do anything to demonstrate the need for deflation.

That's what I have been posting about for the past day...why you insist on "bitcoins need to deflate or they become worthless" is beyond me, there is certainly no mechanism related to mining that would support that assertion.

No, your post doesn't demonstrate anything. The hashing figures, coin release schedule, past history and behavior of the coin, behavior of the user community, Satoshi's initial postings, etc all clearly signal this design feature. I'm not going to say there's no other logical conclusion that could be reached, because I haven't been debating with a logical person here. But I find it difficult to believe right now.

 

[Tom Servo]

Sure, bitcoin could step in, but how many "actual" people have bitcoins? Why can't it easily happen? Sure it will cost money, but as you stated, they do it in Europe now and all the credit card companies have already announced their migration plans. You stated costs around $5 billion and fraud costs of $190 billion for merchants. Why in the world wouldn't they do it?
While I have little knowledge in my tiny brain, I was around for the dot com stock crash. I remember that stocks kept going through the roof when most intelligent people would say that it wasn't sustainable to have companies with no revenue worth as much as companies in the S&P and that valuing companies based on eyeballs wasn't prudent when you had dozens of competitors in each small market. In March 2000, a little company based in VA (DC area) called MicroStrategy exploded after a huge run up. Basically, it had gone from its core business to being an "Internet" company and they fudged their financials and got crushed. Around the same time the S&P 500 hit its all time high before starting a rapid decent to 50% of that high in 2002. I don't know if many articles on the dot com/stock market crash from 2000 to 2002 will point to MicroStrategy as the turning point, you will hear Enron and WorldCom as the examples, but I think they happened later in 2000. To me, MicroStrategy was the first company I can recall in the Internet space that was making stuff up to justify their stock price and their crash started when the S&P peaked. I think a lot of other smart big dollar folks paying attention realized it was about to come down and the stock market started a steep descent. Amazing, it was around the same descent as the financial crisis when the overall economic health of the US wasn't in question.

I think where you saw lessons learned was with the Facebook IPO. Everyone assumed this stock was going to skyrocket after being offered based on the fact that it had ads and there were all these people on FB as members and potential customers. This, like what you describe, had a lot of hype but nothing beyond it. Now, nobody was cooking books, but there was definitely more sizzle than meat.

Most people saw through the hype and realized that FB ads weren't bringing page views or customers and that FB eventually had to refund some of the ads they did sell. (Heck, the only ones I ever see are those "One Weird Trick"-type ads.) As a result, when the stock opened, it stagnated right out of the gate. I think you can sell your FB stock for a baloney sandwich. Point is, somebody's learned the lesson from the .com bubble.

 

[Tom Servo]

It doesn't do anything to demonstrate the need for deflation.

That's what I have been posting about for the past day...why you insist on "bitcoins need to deflate or they become worthless" is beyond me, there is certainly no mechanism related to mining that would support that assertion.

No, your post doesn't demonstrate anything. The hashing figures, coin release schedule, past history and behavior of the coin, behavior of the user community, Satoshi's initial postings, etc all clearly signal this design feature. I'm not going to say there's no other logical conclusion that could be reached, because I haven't been debating with a logical person here. But I find it difficult to believe right now.

The laws of economics can be broken...albeit briefly. Eventually, something will happen to bring BTC back into compliance with those laws. From what you're posting, J, that day of reckoning will come soon.

 

[DrJ]

Sure, bitcoin could step in, but how many "actual" people have bitcoins? Why can't it easily happen? Sure it will cost money, but as you stated, they do it in Europe now and all the credit card companies have already announced their migration plans. You stated costs around $5 billion and fraud costs of $190 billion for merchants. Why in the world wouldn't they do it?
While I have little knowledge in my tiny brain, I was around for the dot com stock crash. I remember that stocks kept going through the roof when most intelligent people would say that it wasn't sustainable to have companies with no revenue worth as much as companies in the S&P and that valuing companies based on eyeballs wasn't prudent when you had dozens of competitors in each small market. In March 2000, a little company based in VA (DC area) called MicroStrategy exploded after a huge run up. Basically, it had gone from its core business to being an "Internet" company and they fudged their financials and got crushed. Around the same time the S&P 500 hit its all time high before starting a rapid decent to 50% of that high in 2002. I don't know if many articles on the dot com/stock market crash from 2000 to 2002 will point to MicroStrategy as the turning point, you will hear Enron and WorldCom as the examples, but I think they happened later in 2000. To me, MicroStrategy was the first company I can recall in the Internet space that was making stuff up to justify their stock price and their crash started when the S&P peaked. I think a lot of other smart big dollar folks paying attention realized it was about to come down and the stock market started a steep descent. Amazing, it was around the same descent as the financial crisis when the overall economic health of the US wasn't in question.

I think where you saw lessons learned was with the Facebook IPO. Everyone assumed this stock was going to skyrocket after being offered based on the fact that it had ads and there were all these people on FB as members and potential customers. This, like what you describe, had a lot of hype but nothing beyond it. Now, nobody was cooking books, but there was definitely more sizzle than meat.

Most people saw through the hype and realized that FB ads weren't bringing page views or customers and that FB eventually had to refund some of the ads they did sell. (Heck, the only ones I ever see are those "One Weird Trick"-type ads.) As a result, when the stock opened, it stagnated right out of the gate. I think you can sell your FB stock for a baloney sandwich. Point is, somebody's learned the lesson from the .com bubble.

Good postings, both of you guys. Definitely a ton of similarities between this and the .com bubble. Pouring money into something that the average citizen hasn't heard of until a month ago, can't use as of today, and almost certainly isn't going to be able to use in the very near future just doesn't make a whole lot of sense.

 

[DrJ]

At the same time, I'd guess what happened back then helped to fast track the internet being a part of the average person's life much more quickly. There will most certainly be some positive things to take away from this when all is said and done. I just doubt those things include the bitcoin itself being the currency of our future.

 

[DrJ]

Also, a question for those that were around during the .com bubble. Did any of your friends show up to your house with a DSL modem trying to force it down your throat? "This DSL modem is the way of the future! It will allow you to freely exchange information and ideas and free all of us from the shackles of tyranny... in fact, I prepared this bullet point list to demonstrate all of the exciting features it has to offer". The whole rabid community thing is kind of a turnoff to me, personally. But I do realize the strong incentives they have...

 

[Tom Servo]

Also, a question for those that were around during the .com bubble. Did any of your friends show up to your house with a DSL modem trying to force it down your throat? "This DSL modem is the way of the future! It will allow you to freely exchange information and ideas and free all of us from the shackles of tyranny... in fact, I prepared this bullet point list to demonstrate all of the exciting features it has to offer". The whole rabid community thing is kind of a turnoff to me, personally. But I do realize the strong incentives they have...

Most people don't want to miss anything, especially when it comes to making $ or having a cool gadget. That's why the big pitch for investors is getting in on the ground floor or being first with the cool gadget. Those who are adventurous will lead the pack - whether wisely OR foolishly. The pioneers do take the arrows, after all.

Personally, I'd rather get in on the 3rd or 4th floor. While the prospective ROR is less, so too is the risk. Plus, my ego isn't that big to where I need to spend 4 figures for something I can get 3 years from now at 1/4 the price and probably twice the quality.

 

[DrJ]

What is your solution? What part of the existing infrastructure being an albatross that they cannot change it if they wanted to don't you get? Why doesn't the U.S. adopt smart chip credit cards, surely that would be better, right?

That is the part I don't buy. It can (and will) get changed. It has been getting changed. It'll cost money, but it happens everytime things that are deeply ingrained change. Used to be credit cards could only be accepted at places that had a mechanical swiper with carbon paper backing. Now it's a magnetic strip, but more and more places are accepting cards with chips in them. It's just a matter of time.Saying it can't be changed is not accurate, as it has and will change.

Again, I don't care for the CC industry, but you can't say what you said, it is too much hyperbole and only said to try to promote a different solution.

You are correct it. It cannot easily change, evidence is the fact that Europe has been using microchip for the past 8 years. Here's a blurb for the U.S.'s adoption plans:

Visa,[29] MasterCard[30] and Discover[31] in March 2012 - and American Express[32] in June 2012 - have announced their EMV migration plans for the US. In spite of these announcements, doubts remain over the willingness of merchants to develop the capability to support EMV.[33] Since the announcement, multiple banks and card issuers have announced cards with EMV chip-and-signature technology, including American Express, Bank of America, Citibank, JPMorgan Chase, U.S. Bank, and several credit unions.[34] JPMorgan was the first major bank to introduce a card with EMV technology, namely its Palladium card, in mid-2012.[35]

For example to change to the point of every merchant that can accept magnetic swipe to now accept microchip would mean replacing every single POS unit at every merchant as well as the backoffice technology that transmits the transaction to VISA/MC. All of this comes at a substantial cost, perhaps this is an opportunity for bitcoin to cheaply step in and fix the problem removing a number of middlemen in the process while lowering costs for everyone. I don't know what is involved for the changeover for brick and mortars but it certainly could fix the problem very easily for online transactions.

Sure, bitcoin could step in, but how many "actual" people have bitcoins? Why can't it easily happen? Sure it will cost money, but as you stated, they do it in Europe now and all the credit card companies have already announced their migration plans. You stated costs around $5 billion and fraud costs of $190 billion for merchants. Why in the world wouldn't they do it?

While I have little knowledge in my tiny brain, I was around for the dot com stock crash. I remember that stocks kept going through the roof when most intelligent people would say that it wasn't sustainable to have companies with no revenue worth as much as companies in the S&P and that valuing companies based on eyeballs wasn't prudent when you had dozens of competitors in each small market. In March 2000, a little company based in VA (DC area) called MicroStrategy exploded after a huge run up. Basically, it had gone from its core business to being an "Internet" company and they fudged their financials and got crushed. Around the same time the S&P 500 hit its all time high before starting a rapid decent to 50% of that high in 2002. I don't know if many articles on the dot com/stock market crash from 2000 to 2002 will point to MicroStrategy as the turning point, you will hear Enron and WorldCom as the examples, but I think they happened later in 2000. To me, MicroStrategy was the first company I can recall in the Internet space that was making stuff up to justify their stock price and their crash started when the S&P peaked. I think a lot of other smart big dollar folks paying attention realized it was about to come down and the stock market started a steep descent. Amazing, it was around the same descent as the financial crisis when the overall economic health of the US wasn't in question.

Well, what's my point? My point is that I see the Target fiasco as a turning point in security. Up until this point, there were concerns, but honestly it wasn't that big of a deal because the total cost was a fraction. Well, other big retailers will see the black eye that Target got (as well as Target itself) and realize that security concerns could be the next Firestone where credibility can cripple their business. I think that we will see changes coming sooner than you think.

I also think you're right on on this Target stuff. You always have to balance risk vs cost and convenience whenever selecting security like I said before. And other human factors come into play as well - people always weigh recent bad events far more heavily in their "personal risk assessment". When no one is getting ripped off, no one cares about it. Risk factor low, not worth the bother or cost. Once someone does get ripped off, now they care. Big key is that you have to hit them right afterwards when they weight that risk factor heavily, otherwise they won't care anymore. After 9/11 a bunch of companies lost a pile of money and/or went out of business because they were being lazy. Now all sorts of companies care about DR. Some of them do something about it (especially the ones forced to do it via government regulation)....most shuffle their feet, and eventually forget about it. As time goes on, they don't weigh the risk factor all that heavily. Until some people get flooded out in Missouri, and a bunch of companies lost a pile of money and/or went out of business because they were being lazy. Rinse, repeat.

You know what would be way more secure than our current system? Let's have a multi-factor authentication system that includes biometrics. Yeah! That'll be super secure, way better than bitcoin, and nothing will ever get ripped off. It's even great for the credit card companies because now you can't say it wasn't you that spent the money. Life is great for everyone. But consumers don't want their retinas scanned unless you give them a really good reason. Partly because that's a bit more inconvenient. And I haven't had my credit card stolen. That Target thing was like 2, 3 years ago right? And also partly because they value privacy and things. Credit card companies aren't going to want to get in the business of scanning people's retinas either unless that actually makes/saves them money.

Bottom line, there's no reason that we can't have security that not only meets but exceeds what bitcoin is offering. Other than consumer acceptance and cost. Bitcoin can add certain aspects of security to their system as well. Not a lot of things are set in stone in these areas, it's really only worth discussing the ones that are. For instance, it's not immediately apparent to me how bitcoin is going to be able to add things like reversibility without sacrificing its decentralized design. This is obviously a security feature like Slash has pointed out. It's going to be difficult to get the security a bank currently offers you without getting regulation and FDIC insurance. It's tricky to figure out how you'd even get insurance like FDIC on something as volatile as bitcoin. It seems the currency is going to have to have some reasonable measure of stability to even offer something like that. If that's true, there will always be an element of "you're on your own to protect this stuff" kind of a deal. It seems difficult for us to have a service on the CC end of the spectrum that would offer anonymity like bitcoin does. It does seem to behave more similarly to cash in this regard.

 

[Maelstrom]

Sure, bitcoin could step in, but how many "actual" people have bitcoins? Why can't it easily happen? Sure it will cost money, but as you stated, they do it in Europe now and all the credit card companies have already announced their migration plans. You stated costs around $5 billion and fraud costs of $190 billion for merchants. Why in the world wouldn't they do it?
While I have little knowledge in my tiny brain, I was around for the dot com stock crash. I remember that stocks kept going through the roof when most intelligent people would say that it wasn't sustainable to have companies with no revenue worth as much as companies in the S&P and that valuing companies based on eyeballs wasn't prudent when you had dozens of competitors in each small market. In March 2000, a little company based in VA (DC area) called MicroStrategy exploded after a huge run up. Basically, it had gone from its core business to being an "Internet" company and they fudged their financials and got crushed. Around the same time the S&P 500 hit its all time high before starting a rapid decent to 50% of that high in 2002. I don't know if many articles on the dot com/stock market crash from 2000 to 2002 will point to MicroStrategy as the turning point, you will hear Enron and WorldCom as the examples, but I think they happened later in 2000. To me, MicroStrategy was the first company I can recall in the Internet space that was making stuff up to justify their stock price and their crash started when the S&P peaked. I think a lot of other smart big dollar folks paying attention realized it was about to come down and the stock market started a steep descent. Amazing, it was around the same descent as the financial crisis when the overall economic health of the US wasn't in question.

I think where you saw lessons learned was with the Facebook IPO. Everyone assumed this stock was going to skyrocket after being offered based on the fact that it had ads and there were all these people on FB as members and potential customers. This, like what you describe, had a lot of hype but nothing beyond it. Now, nobody was cooking books, but there was definitely more sizzle than meat.

Most people saw through the hype and realized that FB ads weren't bringing page views or customers and that FB eventually had to refund some of the ads they did sell. (Heck, the only ones I ever see are those "One Weird Trick"-type ads.) As a result, when the stock opened, it stagnated right out of the gate. I think you can sell your FB stock for a baloney sandwich. Point is, somebody's learned the lesson from the .com bubble.

I know this is off topic, but while the FB stock tanked after the IPO, if you had bought at the IPO you would have a $17-$20 profit per share at the moment, cause it's at $57 right now. (I bought in under $20, just didn't risk very much since my portfolio is fairly small still, didn't want the exposure.)

 

[Tom Servo]

Sure, bitcoin could step in, but how many "actual" people have bitcoins? Why can't it easily happen? Sure it will cost money, but as you stated, they do it in Europe now and all the credit card companies have already announced their migration plans. You stated costs around $5 billion and fraud costs of $190 billion for merchants. Why in the world wouldn't they do it?

While I have little knowledge in my tiny brain, I was around for the dot com stock crash. I remember that stocks kept going through the roof when most intelligent people would say that it wasn't sustainable to have companies with no revenue worth as much as companies in the S&P and that valuing companies based on eyeballs wasn't prudent when you had dozens of competitors in each small market. In March 2000, a little company based in VA (DC area) called MicroStrategy exploded after a huge run up. Basically, it had gone from its core business to being an "Internet" company and they fudged their financials and got crushed. Around the same time the S&P 500 hit its all time high before starting a rapid decent to 50% of that high in 2002. I don't know if many articles on the dot com/stock market crash from 2000 to 2002 will point to MicroStrategy as the turning point, you will hear Enron and WorldCom as the examples, but I think they happened later in 2000. To me, MicroStrategy was the first company I can recall in the Internet space that was making stuff up to justify their stock price and their crash started when the S&P peaked. I think a lot of other smart big dollar folks paying attention realized it was about to come down and the stock market started a steep descent. Amazing, it was around the same descent as the financial crisis when the overall economic health of the US wasn't in question.

I think where you saw lessons learned was with the Facebook IPO. Everyone assumed this stock was going to skyrocket after being offered based on the fact that it had ads and there were all these people on FB as members and potential customers. This, like what you describe, had a lot of hype but nothing beyond it. Now, nobody was cooking books, but there was definitely more sizzle than meat. Most people saw through the hype and realized that FB ads weren't bringing page views or customers and that FB eventually had to refund some of the ads they did sell. (Heck, the only ones I ever see are those "One Weird Trick"-type ads.) As a result, when the stock opened, it stagnated right out of the gate. I think you can sell your FB stock for a baloney sandwich. Point is, somebody's learned the lesson from the .com bubble.

I know this is off topic, but while the FB stock tanked after the IPO, if you had bought at the IPO you would have a $17-$20 profit per share at the moment, cause it's at $57 right now. (I bought in under $20, just didn't risk very much since my portfolio is fairly small still, didn't want the exposure.)

True, but based on the hype IIRC, you'd think the stock was going to split within six weeks of opening. Point is, people were aware of the risk of the stock and invested cautiously.

 

[Grace Under Pressure]

Feels a bit too much like MLM for my taste, with current investors driving the hype engine with the most to gain.

 

[Rohn Jambo]

Oh no! 21 million Dogecoins stolen on Christmas Day

http://www.latimes.com/business/technology/la-fi-tn-dogecoin-theft-currency-bitcoin-20131226,0,2575238.story#axzz2odtmyBAK

 

[Rohn Jambo]

Someone is creating "No-wallet" mode for Bitcoins. How does it work?

 

[Politician Spock]

It doesn't do anything to demonstrate the need for deflation.

That's what I have been posting about for the past day...why you insist on "bitcoins need to deflate or they become worthless" is beyond me, there is certainly no mechanism related to mining that would support that assertion.

It's a basic supply/demand Econ 101 concept. An asset with a finite supply is deflationary by it's very nature. Over time they naturally become worth more and more. On the other hand an asset with an infinite supply is inflationary by it's very nature. Over time they naturally become worth less and less.

Bitcoin is deflationary by it's very design. There is a finite limit of bitcoins that can ever be mined. It's a deflationary asset. If that ever changed, and somehow there was no longer a finite limit of bitcoin mining, then it becomes an inflationary asset, like nearly all fiat currencies. The only people who would choose it over government fiat money are those that distrust the government and banks... And even some of them wouldn't choose if.

Much of bitcoins value today comes from demand for a finite limit asset. Gold and silver are naturally finite, but banking was born out of fractional reserve lending of gold and silver, which is just naked short selling more receipts for gold and silver than the banks actually have, so fractional reserve lending makes finite precious metals infinite thanks to there being no limit on the number of paper receipts you can make for silver and gold (and yes if you own gold/silver investments and don't possess it physically, you're an idiot). People who know this about gold and silver like the finite existence of bitcoins. They like that it is naturally deflationary. Take that away and 99% of the demand for bitcoins disappears. It becomes worthless.