Author Topic: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion  (Read 168029 times)

arebelspy

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #150 on: July 17, 2017, 02:17:56 PM »


consider looking back through history with how every market downturn resulted in a market come back at some point.

Well that's not true.

Quote
those who kept buying (dollar cost averaging) or just held on, ultimately fared better than those who panicked and sold.

Nor that.

Do you think there's never been any assets that went to zero?

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gp_

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #151 on: July 17, 2017, 07:20:39 PM »
Well that's not true.

well, it is. financial markets ultimately recover at some point.

Quote
Nor that.
i'm not talking about a single asset, i mentioned markets.

onewayfamily

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #152 on: July 17, 2017, 09:55:44 PM »
There are also some markets that don't go to zero, and do recover, but you'd have to wait decades for the recovery. Which for many people would simply mean they have to exit all/part of their position as they need the money to spend or for other things, or the downturn in that market/asset class simply outlives them.
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cheddarpie

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #153 on: July 18, 2017, 06:52:19 AM »
Following with some questions but haven't read the whole thread yet so will do that first ... :)

arebelspy

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #154 on: July 18, 2017, 04:49:54 PM »
Well that's not true.

well, it is. financial markets ultimately recover at some point.

Quote
Nor that.
i'm not talking about a single asset, i mentioned markets.

Tell me how the tulip market is doing.
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gp_

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #155 on: July 18, 2017, 05:06:11 PM »
Tell me how the tulip market is doing.

great, my tulip portfolio is up 8.7% over the last 24hrs.

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #156 on: July 18, 2017, 06:35:53 PM »
why does tulip mania always come up in these discussions?  of course there are such things as bubbles in all kinds of markets.  looking at the charts in the wikipedia link or in the link below, tulip mania (even if the popular retelling is overblown) lasted only a couple years at most. 

cryptocurrencies have enjoyed an 8 year run.  so far so good outlasting the tulip bubble :)

https://stratechery.com/2017/tulips-myths-and-cryptocurrencies/

another note: bubbles in cryptocurrencies have popped, dramatically, and several times even, and yet they are still hanging around.

arebelspy

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #157 on: July 18, 2017, 08:35:42 PM »
It comes up because it's an easy comparison.

I agree cryptocurrency is different, and I wouldn't even say it's necessarily in a bubble.  But it's a good ridiculous counter to ridiculous statements like these:
consider looking back through history with how every market downturn resulted in a market come back at some point.

Well that's not true.

Quote
those who kept buying (dollar cost averaging) or just held on, ultimately fared better than those who panicked and sold.

Nor that.

Do you think there's never been any assets that went to zero?

Those who kept buying always do better?  What about when it goes to 0? No market has ever gone to 0?  Tell that to the currency market for the Zimbabwe dollar.

What about when they sell (yes low) and put it into a market or asset that performs better going forward? The opportunity cost going forward is all that matters, and you can't say that someone who held always did better than someone who sold (and invested in something else).

Cryptocurrency has a lot going for it, possibly. We don't need hyperbole and inaccurate statements to muddy the waters.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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lifeanon269

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #158 on: July 19, 2017, 05:51:55 AM »
Tell me how the tulip market is doing.
great, my tulip portfolio is up 8.7% over the last 24hrs.

The interesting question is why did it go up 8.7% in one day? 
Was there a major announcement? 
Have the fundamentals changed? 
Where do we expect the value to go tomorrow or next week?

I believe this kind of growth/speculation is damaging in the long run.  I experienced the dot com hysteria and subsequent crash - this feels very similar.

Actually yes, there was pretty good news yesterday that a large number of Bitcoin miners have begun running the new code release yesterday that supports Segwit adoption. That's very good news. The recent drop in prices was related to concern about whether or not there would be a chain split come August first. The fact that so many miners are now adopting SegWit means that a chain split is less likely and users of Bitcoin are more confident. I think the August 1st upgrade date will be a non-issue and Bitcoin will be able to facilitate a lot more transactions than previously and this will result in a large price increase by the end of August.

mcampbell

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #159 on: July 19, 2017, 05:59:17 AM »
I purchased 16 ethereum coins in november at ~$12 a coin then got fed up with the price moving sideways as btc took off from $600 to $2k+ and sold out at $12 or $13 then it took off to nearly $400..... If only I had put a couple thousand on eth at $12/coin.... thats a life changing amount of gains...

My biggest problem is that I don't understand the true fundamentals behind it.  I would have no idea how safe any coin is or how easy it would be for them to split etc... thus its extremely difficult to hold as it drops.

Any helpful info on that?

regarding ETH, keep in mind that there is NO SUPPLY CAP. they were smart to capitalize on the enterprise aspect, which was extremely smart and IMO is the reason why they've managed to hold on.

even though cryptocurrencies are a new asset class, i would study investing psychology and fundamentals as most of them probably apply. many people have panicked and sold (some at huge losses), assuming the market will never come back. consider looking back through history with how every market downturn resulted in a market come back at some point. those who kept buying (dollar cost averaging) or just held on, ultimately fared better than those who panicked and sold.

*to add, when choosing a token to invest in/buy, look at tokens which have a real use case that could result in widespread adoption and active dev teams. with the proliferation of ICO's, read that company's white paper, and engage with the general crypto-community (bitcointalk.org for instance). good luck.

There currently isn't a single ICO with real world value. The ICOs are not equity in the company but based on some future value of utility. They are really dangerous instruments compared to Bitcoin/Ethereum that have at least some proven themselves with at least one use case currency


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lifeanon269

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #160 on: July 19, 2017, 06:40:52 AM »
There currently isn't a single ICO with real world value. The ICOs are not equity in the company but based on some future value of utility. They are really dangerous instruments compared to Bitcoin/Ethereum that have at least some proven themselves with at least one use case currency


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There is so much wrong with this statement. To make a bold claim that there isn't a single ICO with real world value is vastly ignorant to the technology and what ICO's represent and the benefit they provide.

No, they're not equity in any company themselves, but they are equity in a protocol that a company could build itself completely off of. ICOs give developers the opportunity to develop protocols while giving incentive to users to adopt the protocol by giving them a share of the monetization that the protocol provides. Previously it was always a "chicken or the egg" scenario when trying to develop a new technology protocol. A developer might want to create a brand new protocol that would provide a huge benefit, but it might rely on a vast amount of early adopters to get the protocol off the ground.

A great example of this is decentralized cloud storage (ie, Siacoin and Storj). To get a new decentralized cloud storage solution off the ground, it would require a large number of users in the system to ensure there are enough nodes to decentralize the storage of files for new users looking to store their files. But, if there is no incentive to give people to put their hard earned free space up for rent, then it would be very difficult for a solution like that to ever get off the ground. ICOs provide an immediate stake into the solution by creating an incentive in the form of a crypto-currency to those individuals that become a part of the protocol. This allows a system like this to immediately build the framework needed to bring users and adoption to their new protocol. To say that this has no real-world value is insane. These solutions could dramatically shake up the cloud storage market that is in need of one desperately. A decentralized cloud storage solution you can trust is exactly what the market needs.

AlanStache

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #161 on: July 19, 2017, 10:43:33 AM »
Thanks for the great read.  I am nearly at a point to start small level speculation. 

Up thread ARS asked "is it worth it?":  My thought would be to dollar cost average into a few currencies at a total of few hundred
 per month total.  Doing this would postponed my barebones FIRE date by 2-3 months if the entire speculation went to zero.  I tested it assuming the buys were not part of my RE budget.  So the downside seems manageable while there is a good upside potential. 

Any thoughts on how crypto currencies would fair in a broad scale market down turn?
« Last Edit: July 19, 2017, 10:49:54 AM by AlanStache »
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thenextguy

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #162 on: July 19, 2017, 11:00:58 AM »
Tell me how the tulip market is doing.
great, my tulip portfolio is up 8.7% over the last 24hrs.

The interesting question is why did it go up 8.7% in one day? 
Was there a major announcement? 
Have the fundamentals changed? 
Where do we expect the value to go tomorrow or next week?

I believe this kind of growth/speculation is damaging in the long run.  I experienced the dot com hysteria and subsequent crash - this feels very similar.

Actually yes, there was pretty good news yesterday that a large number of Bitcoin miners have begun running the new code release yesterday that supports Segwit adoption. That's very good news. The recent drop in prices was related to concern about whether or not there would be a chain split come August first. The fact that so many miners are now adopting SegWit means that a chain split is less likely and users of Bitcoin are more confident. I think the August 1st upgrade date will be a non-issue and Bitcoin will be able to facilitate a lot more transactions than previously and this will result in a large price increase by the end of August.

This also happened yesterday: https://entethalliance.org/enterprise-ethereum-alliance-becomes-worlds-largest-open-source-blockchain-initiative/

mcampbell

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #163 on: July 19, 2017, 01:06:27 PM »
There currently isn't a single ICO with real world value. The ICOs are not equity in the company but based on some future value of utility. They are really dangerous instruments compared to Bitcoin/Ethereum that have at least some proven themselves with at least one use case currency


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There is so much wrong with this statement. To make a bold claim that there isn't a single ICO with real world value is vastly ignorant to the technology and what ICO's represent and the benefit they provide.

No, they're not equity in any company themselves, but they are equity in a protocol that a company could build itself completely off of. ICOs give developers the opportunity to develop protocols while giving incentive to users to adopt the protocol by giving them a share of the monetization that the protocol provides. Previously it was always a "chicken or the egg" scenario when trying to develop a new technology protocol. A developer might want to create a brand new protocol that would provide a huge benefit, but it might rely on a vast amount of early adopters to get the protocol off the ground.

A great example of this is decentralized cloud storage (ie, Siacoin and Storj). To get a new decentralized cloud storage solution off the ground, it would require a large number of users in the system to ensure there are enough nodes to decentralize the storage of files for new users looking to store their files. But, if there is no incentive to give people to put their hard earned free space up for rent, then it would be very difficult for a solution like that to ever get off the ground. ICOs provide an immediate stake into the solution by creating an incentive in the form of a crypto-currency to those individuals that become a part of the protocol. This allows a system like this to immediately build the framework needed to bring users and adoption to their new protocol. To say that this has no real-world value is insane. These solutions could dramatically shake up the cloud storage market that is in need of one desperately. A decentralized cloud storage solution you can trust is exactly what the market needs.

Cloud storage market won't be shaken up from this. If you are technical you will realize that the extra redundancy requirements and high chance of data loss. Means they will never be competitive with Amazon. I worked for a large cloud hosting company and it's difficult even at massive scale to come to pricing parity with Amazon. Having some random people host it and with many more copies is a joke. It will never be in the same price realm. Each of these ICOs is hyping some future vaporware.


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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #164 on: July 19, 2017, 01:48:09 PM »
There currently isn't a single ICO with real world value. The ICOs are not equity in the company but based on some future value of utility. They are really dangerous instruments compared to Bitcoin/Ethereum that have at least some proven themselves with at least one use case currency


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There is so much wrong with this statement. To make a bold claim that there isn't a single ICO with real world value is vastly ignorant to the technology and what ICO's represent and the benefit they provide.

No, they're not equity in any company themselves, but they are equity in a protocol that a company could build itself completely off of. ICOs give developers the opportunity to develop protocols while giving incentive to users to adopt the protocol by giving them a share of the monetization that the protocol provides. Previously it was always a "chicken or the egg" scenario when trying to develop a new technology protocol. A developer might want to create a brand new protocol that would provide a huge benefit, but it might rely on a vast amount of early adopters to get the protocol off the ground.

A great example of this is decentralized cloud storage (ie, Siacoin and Storj). To get a new decentralized cloud storage solution off the ground, it would require a large number of users in the system to ensure there are enough nodes to decentralize the storage of files for new users looking to store their files. But, if there is no incentive to give people to put their hard earned free space up for rent, then it would be very difficult for a solution like that to ever get off the ground. ICOs provide an immediate stake into the solution by creating an incentive in the form of a crypto-currency to those individuals that become a part of the protocol. This allows a system like this to immediately build the framework needed to bring users and adoption to their new protocol. To say that this has no real-world value is insane. These solutions could dramatically shake up the cloud storage market that is in need of one desperately. A decentralized cloud storage solution you can trust is exactly what the market needs.

Cloud storage market won't be shaken up from this. If you are technical you will realize that the extra redundancy requirements and high chance of data loss. Means they will never be competitive with Amazon. I worked for a large cloud hosting company and it's difficult even at massive scale to come to pricing parity with Amazon. Having some random people host it and with many more copies is a joke. It will never be in the same price realm. Each of these ICOs is hyping some future vaporware.


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Sia already offers this service to users for the insane cost of $2 per TB.  I suspect the price will go up as an incentive to attract more hosts but the business model has worked so far on a smaller scale, the developers are actively improving the model and there is a group of successful tech investors that have a stake in Sia's parent company.  Your statement regarding redundancy and high chance of data loss seems contradictory.  Data hosts only get paid at the end of the contract and there are currently 4 copies of every tiny piece of data spread, so if three are offline the fourth will allow a complete set of data to be opened.  The developers have also indicated in their announcement that they will continue research into where the sweet-spot is to ensure there is a 99.999% chance the user's data will be accessible.  If they can continue to do this and still price their services at anything close to the 10x cheaper than the competition then I don't see why anyone would dismiss them.  It's a young company, that recently received a $400k grant from an investor, that is not yet ready to host Netflix's data but give it a couple years to see if they can deliver.  As you may have guessed, I personally believe in the business model.

Their model has the added benefit of being more secure as well because only the "tenant" has the key to the data and the data is broken down, encrypted and stored in small packages on various hard-drives.
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CanuckExpat

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #165 on: July 19, 2017, 08:09:42 PM »
And i just checked, coinbase doesn't support the selling of digital currency in Canada.  So, i can buy, pay 4%, plus possible cash advance charges, and I can't ever sell it.  What the hell?

Can you withdraw to Paypal account? Then from Paypal to Canadian bank.

I dunno, the site just automatically knows im in Canada, and only gives me the option to link a credit card and as far as I can tell, no paypal or other options

Should have the option when you go to sell, if you click through "add payment method"
Something like the following screens:
1)

2)

3)


I can imagine not linking to a Canadian bank account, but would be surprised if Paypal was not supported for Canadians

Barring that, you can always send me the Bitcoin and I could send it to you. I'm totally trustworthy. On an unrelated note, everyone, I might have found an even better way of getting bitcoin than mining :)

JAYSLOL

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #166 on: July 19, 2017, 09:23:12 PM »
And i just checked, coinbase doesn't support the selling of digital currency in Canada.  So, i can buy, pay 4%, plus possible cash advance charges, and I can't ever sell it.  What the hell?

Can you withdraw to Paypal account? Then from Paypal to Canadian bank.

I dunno, the site just automatically knows im in Canada, and only gives me the option to link a credit card and as far as I can tell, no paypal or other options

Should have the option when you go to sell, if you click through "add payment method"
Something like the following screens:
1)

2)

3)


I can imagine not linking to a Canadian bank account, but would be surprised if Paypal was not supported for Canadians

Barring that, you can always send me the Bitcoin and I could send it to you. I'm totally trustworthy. On an unrelated note, everyone, I might have found an even better way of getting bitcoin than mining :)

LOL.  Yep, sounds totally safe.  On another note, I did actually buy ~$100 or so of ETH and BTC when prices dipped early Monday morning.  I haven't decided if I'm going to buy a fixed amount per week or just throw random chunks of money at it when prices dip.  I mean, it's already highly speculative, why not make it full on gambling with some market timing too?  No matter what, I do plan to keep this as a very small percentage of my portfolio. 

lifeanon269

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #167 on: July 20, 2017, 06:23:25 AM »
Cloud storage market won't be shaken up from this. If you are technical you will realize that the extra redundancy requirements and high chance of data loss. Means they will never be competitive with Amazon. I worked for a large cloud hosting company and it's difficult even at massive scale to come to pricing parity with Amazon. Having some random people host it and with many more copies is a joke. It will never be in the same price realm. Each of these ICOs is hyping some future vaporware.


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Maybe not immediately, but it will become a major competitor I believe. How is it vaporware? The Storj network infrastructure is usable today. I used it the other day to store files and those files were stored redundantly, encrypted (with a private key that I own), and split into small fragments across 5+ geographically diverse nodes. If you were technical, you'd know why your statement is ridiculous. The only downside is that it isn't as usable at the moment. You need to use some cli scripts to upload and download files and the commands used require specifying unfriendly file and bucket IDs to upload and download files. So technically, the system works as designed, they just need to work on the usability of it so that it can appeal to a broader market.

Because the files are fragmented across many nodes, download speeds are high because the bandwidth is split across those nodes similar to how Bittorrent achieves its high download speeds.

Decentralized cloud storage will be way cheaper than what any other cloud storage provider. The cost of Storj is about $0.015/GB per month. Amazon is $0.023/GB per month and Microsoft is $0.030/GB per month. It is way easier to achieve scale when it is distributed and decentralized as opposed to one single entity trying to match those costs at scale.

Just look at Bitcoin itself. It is capable of achieving processing speeds that are more than 500 times more powerful than the top 500 supercomputers on earth combined. No single entity could ever achieve that. The reason is because the costs are distributed across the network and share among the network's users. The same thing happens with any decentralized solution. Whether it is Bittorrent, cloud storage, computing, etc.

Why do you think that even some larger providers choose to host larger downloads via Bittorrent as opposed to trying to serve those downloads themselves? Because it is simply cheaper to do it in a distributed/decentralized method as opposed to paying the higher costs of hosting it centrally.


EDIT: Just noticed OneCoolCat responded similarly. Kudos.
« Last Edit: July 20, 2017, 06:26:28 AM by lifeanon269 »

mcampbell

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #168 on: July 20, 2017, 06:48:16 AM »
Cloud storage market won't be shaken up from this. If you are technical you will realize that the extra redundancy requirements and high chance of data loss. Means they will never be competitive with Amazon. I worked for a large cloud hosting company and it's difficult even at massive scale to come to pricing parity with Amazon. Having some random people host it and with many more copies is a joke. It will never be in the same price realm. Each of these ICOs is hyping some future vaporware.


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Maybe not immediately, but it will become a major competitor I believe. How is it vaporware? The Storj network infrastructure is usable today. I used it the other day to store files and those files were stored redundantly, encrypted (with a private key that I own), and split into small fragments across 5+ geographically diverse nodes. If you were technical, you'd know why your statement is ridiculous. The only downside is that it isn't as usable at the moment. You need to use some cli scripts to upload and download files and the commands used require specifying unfriendly file and bucket IDs to upload and download files. So technically, the system works as designed, they just need to work on the usability of it so that it can appeal to a broader market.

Because the files are fragmented across many nodes, download speeds are high because the bandwidth is split across those nodes similar to how Bittorrent achieves its high download speeds.

Decentralized cloud storage will be way cheaper than what any other cloud storage provider. The cost of Storj is about $0.015/GB per month. Amazon is $0.023/GB per month and Microsoft is $0.030/GB per month. It is way easier to achieve scale when it is distributed and decentralized as opposed to one single entity trying to match those costs at scale.

Just look at Bitcoin itself. It is capable of achieving processing speeds that are more than 500 times more powerful than the top 500 supercomputers on earth combined. No single entity could ever achieve that. The reason is because the costs are distributed across the network and share among the network's users. The same thing happens with any decentralized solution. Whether it is Bittorrent, cloud storage, computing, etc.

Why do you think that even some larger providers choose to host larger downloads via Bittorrent as opposed to trying to serve those downloads themselves? Because it is simply cheaper to do it in a distributed/decentralized method as opposed to paying the higher costs of hosting it centrally.


EDIT: Just noticed OneCoolCat responded similarly. Kudos.

Centralized system will have better pricing, the core costs are hard drives and electricity. Both are cheaper at scale. P2p file sharing has been around for 20 years. This is great for piracy, not if you want to have consistent reliable storage. There is a whole thread on hacker news where people go into more detail here, this is actually a technical forum https://news.ycombinator.com/item?id=14806440

If you want to look at pure underlying economics, one of our competitors has a great post detailing how much it costs to run a storage costs.

* From https://www.backblaze.com/blog/hard-drive-cost-per-gigabyte/ 1TB of storage cost around $25. * I'll assume 3 year life-span for a drive. * Add 50% costs for the infrastructure and electricity to support the storage. * Add another 17.6% due to redundancy (17 data shards + 3 parity) - https://www.backblaze.com/blog/vault-cloud-storage-architecture/

Gives a minimum cost (before employee costs, marketing etc) of $1.22/TB/month.
If we do the same with Siacoin (which I believe stores 3 copies of your data) we get $3.12/TB/month.


I know the company I'm at has a few million clients and even at our scale competitions with Amazon on price is nearly impossible on the storage side. It's not where the margins are

I think people are just hyped about ethereum so just trying to find any valid usecase to use blockchain.


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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #169 on: July 20, 2017, 02:32:24 PM »
Tulip mania is an interesting analogy because it's a story of a failed alternative currency.  Tulip bulbs experienced explosive growth in a short time and attracted many speculators. 

Items that attract speculators and have their value driven irrationally upwards are at high risk of major crashes.  The explosive growth in value could be the trigger that invalidates the currency.  The value must stabilize for the currency to be useful.

ir doesn´t matter, tulip was still a MARKET, so for purposes of the discussion it is a valid one, since it shows how MARKETS not ALWAYS RECOVER... , I don´t know that much about crypto but it is very comparable to the tulipe mania because I can tell you, people are just buying in hopes to sell higher and make a profit, not investing because of the VALUE these  "currencies" give.... like many say, nobody knows when it is a bubble until it pops and everyone is left behind, I bet you in those times nobody knew tulip was becoming a gigantic bubble

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #170 on: July 20, 2017, 02:44:14 PM »
sorry, REPLIED to the wrong POST, this was the one I was trying to REPLY to:


Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #168 on: July 18, 2017, 06:35:53 PM »
Quote
why does tulip mania always come up in these discussions?  of course there are such things as bubbles in all kinds of markets.  looking at the charts in the wikipedia link or in the link below, tulip mania (even if the popular retelling is overblown) lasted only a couple years at most. 

cryptocurrencies have enjoyed an 8 year run.  so far so good outlasting the tulip bubble :)

https://stratechery.com/2017/tulips-myths-and-cryptocurrencies/

another note: bubbles in cryptocurrencies have popped, dramatically, and several times even, and yet they are still hanging around.

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #171 on: July 20, 2017, 02:49:04 PM »
A couple good points have been raised earlier, directly and indirectly: what portion of your portfolio would you allocate to cryptocurrencies, and how would you know when to sell?

I don't know how to answer either one in my case, which leads me to believe I don't have a good reason for holding any. I guess if you had a specific allocation, then you could sell as you rebalance out. I don't have a target price, but might institute monthly profit taking, or find some small portion of my portfolio I'm comfortable with it at.

We do allow 5% of our portfolio for other (non stocks or bonds), but that also includes high yield bonds and lending, and variety of private investments, so any crypto currency allocation would have to also be carved further out of that. Which is fine with me.. I don't want to hold that much at this point.

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #172 on: July 20, 2017, 04:46:38 PM »
The interesting question is why did it go up 8.7% in one day? 

i have a large / diversified crypto portfolio, so some fared better than others. the volatility in general is ridiculous...

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #173 on: July 20, 2017, 05:00:54 PM »
I agree cryptocurrency is different, and I wouldn't even say it's necessarily in a bubble.  But it's a good ridiculous counter to ridiculous statements like these:

Those who kept buying always do better?  What about when it goes to 0? No market has ever gone to 0?  Tell that to the currency market for the Zimbabwe dollar.

What about when they sell (yes low) and put it into a market or asset that performs better going forward? The opportunity cost going forward is all that matters, and you can't say that someone who held always did better than someone who sold (and invested in something else).

Cryptocurrency has a lot going for it, possibly. We don't need hyperbole and inaccurate statements to muddy the waters.

how is it a ridiculous statement? you're comparing 1 country's currency (a country who is one of the most corrupt), to an entire market which in theory eliminates most of the problems with what traditional "currency" is/can be - comparing the 2 is beyond foolish.

you're taking everything i've said and "ran" with it, instead of just reading it at face value. of course you can always buy into something else, but again, i was using the comparison to a market not an single asset. please feel free to roll the dice and time the market if you'd like.

"muddying" the water is stating that cryptocurrencies "possibly" have a lot going for it... you're obviously a bystander.

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #174 on: July 20, 2017, 05:03:17 PM »
The interesting question is why did it go up 8.7% in one day? 

i have a large / diversified crypto portfolio, so some fared better than others. the volatility in general is ridiculous...

up 26.5% today!

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #175 on: July 20, 2017, 05:30:40 PM »
The interesting question is why did it go up 8.7% in one day? 

i have a large / diversified crypto portfolio, so some fared better than others. the volatility in general is ridiculous...

up 26.5% today!

it's up because miners are finally (seemingly) organizing to implement a years' overdue protocol upgrade.  also the price could be rising more than usual because lots of folks removed their coins from exchanges in anticipation of a possible fork.

depending on what the miners/forks do in the next few days and weeks the volatility could get even crazier.

Hvillian

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #176 on: July 20, 2017, 07:43:25 PM »
After some background reading and a couple podcasts, I think I (generally) understand the blockchain technology and some of the possible uses.

My question is what are the coins for, particularly with the applications of the technology that don't seem like they want to be an alt-currency.  For example, two of the coins mentioned up thread, Sia and Storj.  I checked both websites, generally understand what they are trying to do with the distributed storage and content access, but don't understand why anyone would want to own the coins.   

Anyone have an explanation for amateur?
Thanks.

lifeanon269

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #177 on: July 21, 2017, 07:41:37 AM »
Centralized system will have better pricing, the core costs are hard drives and electricity. Both are cheaper at scale. P2p file sharing has been around for 20 years. This is great for piracy, not if you want to have consistent reliable storage. There is a whole thread on hacker news where people go into more detail here, this is actually a technical forum https://news.ycombinator.com/item?id=14806440

If you want to look at pure underlying economics, one of our competitors has a great post detailing how much it costs to run a storage costs.

* From https://www.backblaze.com/blog/hard-drive-cost-per-gigabyte/ 1TB of storage cost around $25. * I'll assume 3 year life-span for a drive. * Add 50% costs for the infrastructure and electricity to support the storage. * Add another 17.6% due to redundancy (17 data shards + 3 parity) - https://www.backblaze.com/blog/vault-cloud-storage-architecture/

Gives a minimum cost (before employee costs, marketing etc) of $1.22/TB/month.
If we do the same with Siacoin (which I believe stores 3 copies of your data) we get $3.12/TB/month.


I know the company I'm at has a few million clients and even at our scale competitions with Amazon on price is nearly impossible on the storage side. It's not where the margins are

I think people are just hyped about ethereum so just trying to find any valid usecase to use blockchain.


Sent from my iPhone using Tapatalk

Comparing the costs of a decentralized cloud storage system to a centralized cloud storage system (Amazon, iCloud, etc) on a per TB basis completely ignores the underlying premise of a decentralized system. A decentralized cloud storage system doesn't depend on the per TB costs to operate. Which is exactly the reason why it can offer prices way lower than what Amazon can compete with.

That's exactly the same mistake that the user "hudon" makes in the thread you linked to. He/she tries to estimate the economic costs at scale for hosting data. The mistakes are numerous, but the biggest reason why this thought is not correct is because it doesn't realize the fact that unused storage (just like unused bandwidth) doesn't earn any money. So if a user tried to scale an operation to the point where economies of scale came into play, no amount of economies of scale can compete with someone who wants to give something away of the same quality that they don't use. Let me further clarify this...

Amazon, in order to achieve economies of scale, must scale their own network in order to sell it extremely cheap in a way that meets demand. If Amazon purchases way too much network than the demand can meet, then their costs will be way too high and they won't be able to meet the demand price point required to be competitive. So Amazon must scale their network extremely carefully so that they can offer supply that meets demand precisely. Why? Because as I said, unused bandwidth and storage don't earn you anything.

This is exactly why distributed systems are effective at beating centralized systems at scale. Why? Because there is a crap ton of unused storage/bandwidth out there that has already been purchased that goes unused every single day. That's why when downloading a file over bittorrent that has a lot of seeders, you can achieve a way faster download speed than I can ever achieve downloading something from Amazon or Microsoft. This is because you're taking advantage of bandwidth offered from 50 different people who's bandwidth is just sitting idle anyway. You can't compete (from an economic stand point) against someone who is willing to give away something that they aren't using. So while economies of scale makes sense from a centralized solution perspective, those same economies of scale don't apply to decentralized solutions. Further elaborating on this..."John" purchases a 1TB hard drive for a personal reason, but then he only ends of using 50% of it. The other 50% of it goes unused until he realizes that he could earn a little bit of extra money with it. It isn't enough extra money to allow him to turn it into a business model, but it is better than letting unused space go to waste. So why not? This is the very reason why a decentralized solution will out-price any centralized solution. Because it takes economies out of the picture. A little bit here and there from millions of users turns into a massive solution that prices way lower than anything Amazon could provide at any scale.

That's why applying the "per TB costs" to Sia as you didn't is not the correct approach. The network doesn't depend on per TB costs to operate. It just depends on people realizing that unused disk space doesn't earn them anything at all and costs them nothing to "rent out". Therefore, earning something on something that costs them nothing additional makes perfect economic sense.

Look at Bittorrent, you can download a file way faster than any centralized provider and there isn't even an economic incentive provided by Bittorrent simply because people have bandwidth that their paying for anyway (for internet access) doing nothing throughout the day. The same is true (probably even more so) for storage.

This is true for Bittorrent. It is true from a compute perspective with crypto-currencies (it is why a 51% attack would be extremely difficult to perform by a single entity). It is also true for storage.

My question is what are the coins for, particularly with the applications of the technology that don't seem like they want to be an alt-currency.  For example, two of the coins mentioned up thread, Sia and Storj.  I checked both websites, generally understand what they are trying to do with the distributed storage and content access, but don't understand why anyone would want to own the coins.   

Anyone have an explanation for amateur?
Thanks.

Crypto-currencies don't necessarily need to be used as a medium of exchange to hold value. For example, Sia and Storj, as mentioned are essentially a coin that represents a holding of value in the particular system they represent. Just like anything that has a represented value to it, as long as there are buyers and sellers agreeing on the value, then they can be traded or exchanged for something else of equal value. So while you can't go out and buy bread with Siacoin, there are exchanges (like Poloniex) where you can then go and exchange Siacoin for another currency that can be used as a medium of exchange (Bitcoin). Or, in these two cases, the coin as part of the storage is used to purchase storage space in their respective solutions. So buyers of Siacoin can use Siacoin to purchase storage and store their files in the network. It's all about buyers and sellers really. After all, isn't that what all markets are about?

Check out the Poloniex and OpenLedger exchanges. A whole world of Crypto-currency trading will open up to you. Fees are almost neglible.
« Last Edit: July 21, 2017, 07:48:38 AM by lifeanon269 »

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #178 on: July 21, 2017, 07:52:10 AM »
Good explanation on the distributed storage 

In a similar vein, think about why airbnb or Uber can be cheaper than hotels or taxis.

People can make money off their idle assets. If it's stilling unused, it's making nothing. So you can undercut prices and still make more than nothing.
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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #179 on: July 21, 2017, 08:58:03 AM »
How do people feel about SegWit and this august 1 possible change/fork whatever you want to call it? This seems like a huge risk to any stability from BTC.  BTC's widespread actual use (compared to other alt-coins) is its big advantage and this seems like it could mess up that real work use.

I've sold enough BTC to be net ahead on everything I bought about a year and a half ago so I can hold the last couple coins with Coinbase for the long haul and feel like I still did ok. In the libertarian spirit of alt currencies, the most recent BTC sale proceeds will be put into physical silver and stored in a secure, non disclosed location.  I hope I am on the correct side of the fork!

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #180 on: July 21, 2017, 09:29:38 AM »
How do people feel about SegWit and this august 1 possible change/fork whatever you want to call it? This seems like a huge risk to any stability from BTC.  BTC's widespread actual use (compared to other alt-coins) is its big advantage and this seems like it could mess up that real work use.

I've sold enough BTC to be net ahead on everything I bought about a year and a half ago so I can hold the last couple coins with Coinbase for the long haul and feel like I still did ok. In the libertarian spirit of alt currencies, the most recent BTC sale proceeds will be put into physical silver and stored in a secure, non disclosed location.  I hope I am on the correct side of the fork!

Don't hold them in coinbase. Transfer them back to a wallet where you control the private key personally before August 1st. Then in the (unlikely) event of a fork, you'll be on both sides of it instead of hoping to only be on the right side. ;-)

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #181 on: July 21, 2017, 10:26:28 AM »
Coinbase will not permit the purchase or sale of Bitcoin on July 31.  I'm not sure if the other exchanges will also shut down. 

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #182 on: July 24, 2017, 07:11:43 PM »
Decided it was about time to update the numbers on the ZEC mining experiment again.



Mining continues to make a profit even after factoring in the cost of electricity, but remains much less profitable than June. A rebound in the price of bitcoin (and to a lesser extent in the price of zcash) moved my capital gains/losses back into positive territory. Some folks had speculated that if prices stayed as low as they were in mid-July a lot of higher end nvidia cards might start showing up on ebay and hashrates for some currencies might have started to fall, but with the recent rebound (thanks in part to segwit) this seems less likely.

Apparently two major darknet marketplaces (more recent versions of silkroad) were shutdown in July one of which was turned into a honeypot by european law enforcement for some weeks beforehand, but that seems to have had much less impact on the prices of either currency than the segwit issue. I'm not sure whether to take that as a sign that legitimate commerce is driving a lot more of the demand for bitcoin than the drug trade, or that currency speculation is driving a lot more of the demand for bitcoin than actual financial transactions of any sort.

Link to the original description of the ZEC mining experiment.

Link to details of how I updated to include electrical costs (thanks CanuckExpat)

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #183 on: July 25, 2017, 10:14:34 AM »

[/quote]

Don't hold them in coinbase. Transfer them back to a wallet where you control the private key personally before August 1st. Then in the (unlikely) event of a fork, you'll be on both sides of it instead of hoping to only be on the right side. ;-)
[/quote]

Ok, getting out of coinbase gives control and it appears the overall risk of a fork is greatly diminished.  Warning! ramble of an old guy trying to understand BTC :)

This really ties into the Tulip discussion that always goes on with BTC/Eth/lite coin/wankercoin/trollcoin ect. BTC can actually be used to conduct business right now. I compare it to PayPal. My dad doesn't accept PayPal is real money because "its not a real bank". OK fine.   I've got a paypal balance I just used to order some tools online instead of my credit card so it sure feels like real money to me. Can I use the term fungible?  With BTC I would take a haircut on fees/conversion rates but there are out there in the world retail chains taking BTC and legit places like overstocked.com taking BTC, so I don't know if I could have bought the tools but I can buy the light fixture the wife wants. This helps establish some value as a practical medium of exchange even if its not a currency or store of value. 

I don't know what BTC is intrinsically really worth right now, but I do know it trades at a value and I can both sell my BTC for that value or trade my BTC for goods I need (well, maybe want :) )  at that value.

Even if one is on the majority side of a Fork, the fork splits users and it would seem the two halves will always be worth less than the sum.

lifeanon269

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #184 on: July 25, 2017, 01:58:55 PM »
Quote from: trollwithamustache
Even if one is on the majority side of a Fork, the fork splits users and it would seem the two halves will always be worth less than the sum.

A hard fork doesn't split users, it splits miners. It may seem like a small difference, but it is technically an important detail to differentiate between. Users would end up holding the same amount of coin on both chains. Whereas the miners would be split between supporting one blockchain's rules or the other. How much value each coin has on each chain depends upon the market and how much value its users place on each chain's coin.

Also, it isn't true that the two halves would be less than their sum prior to the split. For example, after Ethereum's split, both halves were totaled to more than it was prior to the split. So users who held their keys on both chain's ended up with more money following the split simply because the market's continued to value the coins on both chains.

It has already been shown that there is plenty of room in this world for numerous crypto-currencies. So it is very likely that any split of one of these currencies could still yield enough support behind it from both miners and users to continue to exist within the marketplace. Though, generally it is in the best interest of miners to reach a consensus among the mining community. Since they're all likely trying to run a business and stay economically solvent, it behooves them to operate on a blockchain that has widespread usage and value.

NOTE: When I say "users", I mean in reference to the holder of the private key on the bitcoin blockchain. So in the case where a user keeps their bitcoin in an exchange (Coinbase), the exchange would actually own the private key on both blockchains and it would be up to the exchange whether they would want to support both blockchains or not. Whether they chose to support both chains is still irrelevant to whether or not the private/public key pair exists on the chain though. The blockchains are identical at the time of the split. Hence why it is critical in the event of a potential blockchain split that you own your private keys yourself. That way you own the coins on both chains and thus own the total value of the sum of the coins on both chains.
« Last Edit: July 25, 2017, 02:01:58 PM by lifeanon269 »

maizeman

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #185 on: July 29, 2017, 02:06:45 PM »
Random figure looking at the correlation of daily price changes across bitcoins and a bunch of the altcoins.



Some things make sense. The prices of ethereum and ethereum classic tend to move together and are also closely correlated with Dash. All three allow much faster payments than most cryptocurrencies.

Zcash and Monero (both currencies focusing on better anonymity than bitcoin) also tend to move together, but not with bytecoin (also focused on anonymity, but with some weird pre-mining stuff going on that really destroyed the currency's credibility early on).

Litecoin (the original altcoin) is tightly linked with bitcoin (the original cryptocurrency), although peercoin is in there too. Don't have a good story for that.

I don't know that this provides anything actionable and even the proposed explanations above are only "just so" stories. I've just been curious about where there are obvious "market sectors" within cryptocurrencies like there are within the stock market.

lifeanon269

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #186 on: July 29, 2017, 06:09:44 PM »
Good analysis maizeman. It definitely makes sense that there would be price correlations between currencies in the same niche.

With SegWit inevitably coming to Bitcoin, I've been reading a lot on the Lightning Network and what it can provide. It seems like there are a ton of benefits and would really help Bitcoin scale indefinitely and do so with zero to low fees. But there are some draw backs such as possible centralization if it were to go mainstream, capital being tied up in the network, and transaction monetary size limitations. But it is a completely opt-in network and wouldn't require a change in Bitcoin itself in anyway (once SegWit activates that is). So I do think it will be good for Bitcoin in the long run since it would help it go mainstream. Much of the mainstream probably doesn't care about decentralization much and so centralized "credit unions" could help the lightning network scale and provide the capital necessary to keep many payment channels open to facilitate payments across the globe.

I thought this was a good video explaining how it works by Jackson Palmer (creator of Dogecoin).
https://www.youtube.com/watch?v=v2Gz6d-xaVU

The original whitepaper is here:

https://lightning.network/lightning-network-paper.pdf

I could really see a tech like this competing against the likes of VISA or Mastercard.

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #187 on: July 29, 2017, 07:46:17 PM »
Wondering if someone can clear something up for me.  Bitcoin is supposed to be inherently deflationary, correct?  Presumably good as a store of wealth if that all works out, however isn't having a predominately deflationary currency (in the case of the depression, a gold-backed us dollar) a good part of what caused the Great Depression to be so severe?  Aren't we setting up what could be the largest global depression in history if Bitcoin goes mainstream and everybody hoards it because it always goes up?  Spending and real investing stop, economy tanks, causing a deflationary feedback loop making everything worse.  Thoughts? 

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #188 on: July 29, 2017, 08:35:38 PM »
Wondering if someone can clear something up for me.  Bitcoin is supposed to be inherently deflationary, correct?  Presumably good as a store of wealth if that all works out, however isn't having a predominately deflationary currency (in the case of the depression, a gold-backed us dollar) a good part of what caused the Great Depression to be so severe?  Aren't we setting up what could be the largest global depression in history if Bitcoin goes mainstream and everybody hoards it because it always goes up?  Spending and real investing stop, economy tanks, causing a deflationary feedback loop making everything worse.  Thoughts?

I completely agree.  How can it function as a medium of exchange if people are just going to horde it. I know that gold was an effective store of wealth and medium of exchange because at the time it was able to keep in step with productivity and creation of value.

Since bitcoin at its present state will eventually run out of new issued coins it cannot represent the creation of new value through productivity.  I for one would not be incentivized to compete for a fixed asset by working and making those who just hold more wealthy.  It just doesn't feel right.

phil22

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #189 on: July 30, 2017, 12:30:00 PM »
agreed, i think the deflationary aspect of bitcoin will limit its adoption as a medium of exchange in the long term.  i'm not too worried about a deflationary spiral or anything because unlike with gold or national currencies, a "peasants revolt" in cryptocurrencies is as easy as just creating a new currency.

i think since cryptocurrencies compete with each other, the best currency for the most people will win in the long term.  it may not be bitcoin or any other deflationary cryptocurrency.

lifeanon269

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #190 on: July 30, 2017, 05:06:12 PM »
Regarding deflation, I actually think that property of bitcoin will help its adoption as a medium of exchange. If a merchant has a choice to make a transaction in dollars or bitcoin, it ultimately comes down to the choice of whether the merchant prefers the properties of the dollar versus bitcoin. If the merchant understands that after making an exchange in bitcoin the result of that transaction will hold its value for a longer period of time, then it makes sense for the merchant to want to accept bitcoin as a payment option. If more merchants see the value in bitcoin as a payment option, then it will end up being adopted quicker in the marketplace.

On the consumer side, deflationary spirals are bad in a traditional economy because they are unexpected. But, deflation with bitcoin is expected and static. It is a property of the currency and cannot be manipulated. Therefore the concept of a traditional deflationary spiral doesn't apply to bitcoin. If someone wants a TV today, then they'll purchase it when they can afford it knowning that the next bitcoin they earn will have the same deflationary property as the one they just spent. Traditional deflationary spirals can't provide that assurance when the government controls the currency because there is no telling when the currency supply contraints will fluctuate. Therefore, currency hoarding takes place under those circumstances.

phil22

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #191 on: July 30, 2017, 07:21:38 PM »
it ultimately comes down to the choice of whether the merchant prefers the properties of the dollar versus bitcoin

that and also whether the customer would prefer to spend some bitcoin vs some fiat currency.  if they had both, i'd expect the customer to choose to spend the fiat first.  well, perhaps unless the merchant can give a substantial discount for bitcoin purchases.

--

another thing to mention WRT deflation is transaction fees.  if for example the typical household has some bitcoin miners (the "household water heater" example) then there would be some redistribution of bitcoin happening there through transaction fees and mining payouts.

also, if deflation gets out of hand then presumably the volume of transactions would shrink, which would make transactions cheaper, which would increase the velocity of money to offset some of the hoarding.

JAYSLOL

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #192 on: July 30, 2017, 07:22:11 PM »
Regarding deflation, I actually think that property of bitcoin will help its adoption as a medium of exchange. If a merchant has a choice to make a transaction in dollars or bitcoin, it ultimately comes down to the choice of whether the merchant prefers the properties of the dollar versus bitcoin. If the merchant understands that after making an exchange in bitcoin the result of that transaction will hold its value for a longer period of time, then it makes sense for the merchant to want to accept bitcoin as a payment option. If more merchants see the value in bitcoin as a payment option, then it will end up being adopted quicker in the marketplace.

On the consumer side, deflationary spirals are bad in a traditional economy because they are unexpected. But, deflation with bitcoin is expected and static. It is a property of the currency and cannot be manipulated. Therefore the concept of a traditional deflationary spiral doesn't apply to bitcoin. If someone wants a TV today, then they'll purchase it when they can afford it knowning that the next bitcoin they earn will have the same deflationary property as the one they just spent. Traditional deflationary spirals can't provide that assurance when the government controls the currency because there is no telling when the currency supply contraints will fluctuate. Therefore, currency hoarding takes place under those circumstances.

I still don't get why that couldn't happen with Bitcoin.  If it goes up consistantly and there is a limited supply, why wouldn't people hoard it?  Its not even mainstream yet and people are already hoarding it and paying exponentially higher amounts for it practically every day. 

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #193 on: July 30, 2017, 10:40:56 PM »
Because it's really not money, it's more like electronic gold. It's designed to be hoarded, not spent.

-W

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #194 on: July 30, 2017, 11:09:59 PM »
Because it's really not money, it's more like electronic gold. It's designed to be hoarded, not spent.

-W


See, the thing is that's totally cool with me, i don't really care if people hoard an electronic asset designed to preserve wealth, i'd probably participate.  I'm also totally cool with a crypto currency designed to make digital commerce easier/cheaper/better, i'd definitely participate.  The problem comes when the asset being hoarded ALSO becomes the global mainstream currency on which commerce depends on, then it seems to me we'd be up shit creek soon after.   
« Last Edit: July 30, 2017, 11:13:11 PM by JAYSLOL »

maizeman

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #195 on: July 31, 2017, 05:43:07 AM »
Because it's really not money, it's more like electronic gold. It's designed to be hoarded, not spent.

-W


See, the thing is that's totally cool with me, i don't really care if people hoard an electronic asset designed to preserve wealth, i'd probably participate.  I'm also totally cool with a crypto currency designed to make digital commerce easier/cheaper/better, i'd definitely participate.  The problem comes when the asset being hoarded ALSO becomes the global mainstream currency on which commerce depends on, then it seems to me we'd be up shit creek soon after.   

I think that the two functions can largely co-exist at least the way things are right now.

Generally folks selling things in bitcoin don't have fixed bitcoin prices. They have fixed prices in euros or dollars or RMB or what have you. If you pay in bitcoins you send them however much of a bitcoin corresponds to the price in the local currency at that particular moment. Similarly, lots of folks paying for things in bitcoins aren't keeping a lot of bitcoin around, but go out and buy some (either personally or the program they're using to send money does it for them) depending on how much they need to spend on a particular transaction.

As long as that stays the case, the deflation of bitcoin doesn't really present any economic challenges. The deflation issue would only be a problem if contacts started specifying future payment amounts in bitcoins:

If a hypothetical person took out a mortgage where the monthly payment was 3 bitcoins a month back when bitcoin was $900/coin, that person would be in trouble right now (actually so would the bank if they made a lot o these mortgages and no one could pay them anymore).

If a cryptocurrency startup had hired a super programmer at 20 bitcoins/month hack when the price was $900/coin the startup would be in trouble right now.

lifeanon269

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #196 on: July 31, 2017, 06:55:53 AM »
I still don't get why that couldn't happen with Bitcoin.  If it goes up consistantly and there is a limited supply, why wouldn't people hoard it?  Its not even mainstream yet and people are already hoarding it and paying exponentially higher amounts for it practically every day. 

As long as that stays the case, the deflation of bitcoin doesn't really present any economic challenges. The deflation issue would only be a problem if contacts started specifying future payment amounts in bitcoins:

If a hypothetical person took out a mortgage where the monthly payment was 3 bitcoins a month back when bitcoin was $900/coin, that person would be in trouble right now (actually so would the bank if they made a lot o these mortgages and no one could pay them anymore).

If a cryptocurrency startup had hired a super programmer at 20 bitcoins/month hack when the price was $900/coin the startup would be in trouble right now.

First, it should be noted that the rapid price increases we are seeing today with bitcoin are not related at all to deflation. Bitcoin at the moment is a very inflated currency. The increase in price has more to do with an extreme increase in demand because it is so new.

The discussion about deflation isn't relevant to bitcoin until demand has stabilized, new bitcoins are no longer created (or at at least created at a much slower pace than today), and bitcoin becomes the primary currency of society. These three 3 won't happen for a very long time. When they do happen, the value of bitcoin will rise at a slow and gradual rate, not like the rate that we're seeing today. This means that there will still be an incentive to invest that currency into businesses who would be able to turn that investment into profits better than if that currency were to just sit around idle in a wallet. At the time of this slow transition, the economy will likely contract as it adjusts, but over time it will lead to a slower growing economy that is more resilient to recessions.

If those three things do occur, then it will likely be a very slow process to get there. We're so used to the inflationary nature of our currency, that many things are just tailored to an inflationary economy. For example, as Maizeman mentioned, things like wages are designed around today's inflationary nature of our currency. Every year people receive wage increases (hopefully) to help their earnings keep pace with inflation. With a deflationary currency, we'd no longer need these wage increases annually. Naturally, lower and middle class earnings would rise with the economy instead of stagnating today relying upon our governments to increase earnings for the poor. This will provide higher buying power for people who currently lack it today.

As far as lending goes, interest rates are part of the lending process because the government manipulates those rates along with the currency supply. With a static deflationary currency, we'd no longer need interest rates when lending. Instead, if you take a loan to purchase something and that something costs 5 bitcoin, then you simply pay say 5 bitcoin back over the course of 5 years. Because the currency is deflationary in nature, the lender will make their money through the lending process simply because of the fact that the currency is deflationary, unlike today where lenders make money through interest rates. Or, in the case of borrower risk, the lender can simply measure the interest rate based on that risk without the need to adjust that rate based on the government prime rate. The borrower won't have any problem paying it back because the payments are steady as well as their wages. Nothing would really change there. The only thing that would change is no longer requiring manipulated interest rates by the government to artificially inflate the economy.

Also, because the government can no longer artificially inflate the economy through the money supply, recessions wouldn't be as common as they are today and our economy would become more resilient. This will result in less of a wealth gap because recessions lead to increasing wealth gaps in society. Combine that with a lower and middle class who's wages increase naturally and you have a much healthier financial economy and society.

These things won't happen for a long time. We're a long way off from ever being paid by our employers in bitcoin. In the mean time, prices for goods sold in bitcoin will be continued to be measured in fiat currency and thus the government will continue to control the price of goods, the monetary supply, wages, etc and bitcoin won't have much of an impact on any of that.
« Last Edit: July 31, 2017, 06:57:58 AM by lifeanon269 »

JAYSLOL

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #197 on: July 31, 2017, 07:44:13 AM »
Because it's really not money, it's more like electronic gold. It's designed to be hoarded, not spent.

-W


See, the thing is that's totally cool with me, i don't really care if people hoard an electronic asset designed to preserve wealth, i'd probably participate.  I'm also totally cool with a crypto currency designed to make digital commerce easier/cheaper/better, i'd definitely participate.  The problem comes when the asset being hoarded ALSO becomes the global mainstream currency on which commerce depends on, then it seems to me we'd be up shit creek soon after.   

I think that the two functions can largely co-exist at least the way things are right now.

Generally folks selling things in bitcoin don't have fixed bitcoin prices. They have fixed prices in euros or dollars or RMB or what have you. If you pay in bitcoins you send them however much of a bitcoin corresponds to the price in the local currency at that particular moment. Similarly, lots of folks paying for things in bitcoins aren't keeping a lot of bitcoin around, but go out and buy some (either personally or the program they're using to send money does it for them) depending on how much they need to spend on a particular transaction.

As long as that stays the case, the deflation of bitcoin doesn't really present any economic challenges. The deflation issue would only be a problem if contacts started specifying future payment amounts in bitcoins:

If a hypothetical person took out a mortgage where the monthly payment was 3 bitcoins a month back when bitcoin was $900/coin, that person would be in trouble right now (actually so would the bank if they made a lot o these mortgages and no one could pay them anymore).

If a cryptocurrency startup had hired a super programmer at 20 bitcoins/month hack when the price was $900/coin the startup would be in trouble right now.


I still don't get why that couldn't happen with Bitcoin.  If it goes up consistantly and there is a limited supply, why wouldn't people hoard it?  Its not even mainstream yet and people are already hoarding it and paying exponentially higher amounts for it practically every day. 

As long as that stays the case, the deflation of bitcoin doesn't really present any economic challenges. The deflation issue would only be a problem if contacts started specifying future payment amounts in bitcoins:

If a hypothetical person took out a mortgage where the monthly payment was 3 bitcoins a month back when bitcoin was $900/coin, that person would be in trouble right now (actually so would the bank if they made a lot o these mortgages and no one could pay them anymore).

If a cryptocurrency startup had hired a super programmer at 20 bitcoins/month hack when the price was $900/coin the startup would be in trouble right now.

First, it should be noted that the rapid price increases we are seeing today with bitcoin are not related at all to deflation. Bitcoin at the moment is a very inflated currency. The increase in price has more to do with an extreme increase in demand because it is so new.

The discussion about deflation isn't relevant to bitcoin until demand has stabilized, new bitcoins are no longer created (or at at least created at a much slower pace than today), and bitcoin becomes the primary currency of society. These three 3 won't happen for a very long time. When they do happen, the value of bitcoin will rise at a slow and gradual rate, not like the rate that we're seeing today. This means that there will still be an incentive to invest that currency into businesses who would be able to turn that investment into profits better than if that currency were to just sit around idle in a wallet. At the time of this slow transition, the economy will likely contract as it adjusts, but over time it will lead to a slower growing economy that is more resilient to recessions.

If those three things do occur, then it will likely be a very slow process to get there. We're so used to the inflationary nature of our currency, that many things are just tailored to an inflationary economy. For example, as Maizeman mentioned, things like wages are designed around today's inflationary nature of our currency. Every year people receive wage increases (hopefully) to help their earnings keep pace with inflation. With a deflationary currency, we'd no longer need these wage increases annually. Naturally, lower and middle class earnings would rise with the economy instead of stagnating today relying upon our governments to increase earnings for the poor. This will provide higher buying power for people who currently lack it today.

As far as lending goes, interest rates are part of the lending process because the government manipulates those rates along with the currency supply. With a static deflationary currency, we'd no longer need interest rates when lending. Instead, if you take a loan to purchase something and that something costs 5 bitcoin, then you simply pay say 5 bitcoin back over the course of 5 years. Because the currency is deflationary in nature, the lender will make their money through the lending process simply because of the fact that the currency is deflationary, unlike today where lenders make money through interest rates. Or, in the case of borrower risk, the lender can simply measure the interest rate based on that risk without the need to adjust that rate based on the government prime rate. The borrower won't have any problem paying it back because the payments are steady as well as their wages. Nothing would really change there. The only thing that would change is no longer requiring manipulated interest rates by the government to artificially inflate the economy.

Also, because the government can no longer artificially inflate the economy through the money supply, recessions wouldn't be as common as they are today and our economy would become more resilient. This will result in less of a wealth gap because recessions lead to increasing wealth gaps in society. Combine that with a lower and middle class who's wages increase naturally and you have a much healthier financial economy and society.

These things won't happen for a long time. We're a long way off from ever being paid by our employers in bitcoin. In the mean time, prices for goods sold in bitcoin will be continued to be measured in fiat currency and thus the government will continue to control the price of goods, the monetary supply, wages, etc and bitcoin won't have much of an impact on any of that.

Thanks both for the responses.  I do get that theres no issues with deflation as long as Bitcoin is being used as a medium of exchange between traditional currencies.  I also get that if Bitcoin ever became a primary currency for trade without other government issued currencies involved it would either be, or have to become, much more stable and slower growing than it is now.  That said, gold is about as stable as an asset can get historically, but when the US currency was backed by gold, a deflationary asset, we ran into some serious problems when the markets tanked and people preferred a deflationary currency over spending and investment.  I realize that wasn't the only reason the Great Depression was so severe, but when you compare it to the Great Recession, it's the one thing really seems to stand out

maizeman

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #198 on: July 31, 2017, 07:55:11 AM »
JAYSLOL, the only extra thing I'd add to your most recent response is that bitcoin wouldn't have to mediating transactions between people who are pricing things in traditional currencies. A good example of how to divorce fixed prices from the effects of a currency that fluctuates widely in value is the ether:gas model for pricing computer services on the ethereum network. No government issued currencies involved, but it still produces the same protection from default/inflation issues as the current bitcoin:USD model.

maizeman

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Re: OFFICIAL: Blockchain / Crypto-Currency Portfolios and Discussion
« Reply #199 on: July 31, 2017, 07:48:39 PM »
Any wallet where you have access to your own private keys would mean you'd be able to spend on both blockchains if there really is a fork.

I looked more into the ethereum fork and it turns out that even some places like coinbase where your coins aren't stored in a wallet where you control the private key and didn't support "ethereum classic" still allowed people who had ethereum deposited with them to withdraw the forked currency for several months after the split (although there is no guarantee that they'd do that again).