Author Topic: Bitcoin and other crypto-currencies discussion thread  (Read 16746 times)

L.A.S.

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #100 on: August 01, 2017, 07:14:59 PM »
What if, under the contract law of your jurisdiction, someone owes a person a bitcoin for goods or services rendered and refuses to transfer it?  What does that person do?

lifeanon269

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #101 on: August 01, 2017, 07:35:55 PM »
I'm not sure I fully understand the premise. Clearly the individual could take that other to court.

If it is a huge lump sum then I'd imagine that if using bitcoin for such a transaction or contract, then trusted escrow services would likely be the best thing to use to avoid such circumstances to begin with. I would think such services would become more and more common as irreversible transactions on the blockchain become more mainstream.

L.A.S.

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #102 on: August 01, 2017, 07:48:59 PM »
I'm not sure I fully understand the premise. Clearly the individual could take that other to court.

If it is a huge lump sum then I'd imagine that if using bitcoin for such a transaction or contract, then trusted escrow services would likely be the best thing to use to avoid such circumstances to begin with. I would think such services would become more and more common as irreversible transactions on the blockchain become more mainstream.

What is the court going to do?

L.A.S.

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #103 on: August 01, 2017, 08:22:18 PM »
Lets say someone wants to invest their bitcoins.  They are supposed to be money after all! 

So, person A loans 100 bitcoins to person B for one year.  At the end of the year person B will pay back the 100 bitcoins, plus 11 bitcoins in interest -- an 11% rate of return (this is an unsecured loan).  They can't be put in escrow for the year since this would freeze them up, and person B would not be able to be spend them in the mean time before repayment is due, which is the point of borrowing money.  The loan is legally binding. 

At the end of the year person person B has 111 bitcoins and refuses to transfer them back to A.  This is substantially all of the valuable "property" that B has -- no other cash, investments, cars, valuable chattels, or real estate, etc. A can see them because he knows B's wallet address and can watch it. 

What does person A do?  How does person A get the bitcoins they are legally entitled to back from B? 

lifeanon269

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #104 on: August 02, 2017, 05:46:23 AM »
Lets say someone wants to invest their bitcoins.  They are supposed to be money after all! 

So, person A loans 100 bitcoins to person B for one year.  At the end of the year person B will pay back the 100 bitcoins, plus 11 bitcoins in interest -- an 11% rate of return (this is an unsecured loan).  They can't be put in escrow for the year since this would freeze them up, and person B would not be able to be spend them in the mean time before repayment is due, which is the point of borrowing money.  The loan is legally binding. 

At the end of the year person person B has 111 bitcoins and refuses to transfer them back to A.  This is substantially all of the valuable "property" that B has -- no other cash, investments, cars, valuable chattels, or real estate, etc. A can see them because he knows B's wallet address and can watch it. 

What does person A do?  How does person A get the bitcoins they are legally entitled to back from B?

I'm still not sure I follow the point you're trying to make.

In traditional lending, a lot of times there is collateral given to insure the risk of the debt for the issuer. People don't take out loans just to simply store the currency away. That doesn't really make sense. So how is your scenario any different than today? If a bank issues an auto loan to an individual, the bank has no option for reclaiming the money itself. Why? Because the money was used already and went to the dealership. The bank's only recourse is to repo the car in this case.

Bitcoin isn't really any different than currency today. If someone loans me $10,000 and I go spend it somewhere (they have no idea what I did with it), what recourse would that lender have in getting that money back? The lender is in the same position whether that money was bitcoin or the US dollar. It doesn't matter whether that loan was originally issued in dollars to a bank account, in check form, or in bitcoin. In fact, I'd make the claim that at least in the case of bitcoin, there is a public ledger that could be used to trace the bitcoin and law enforcement could use that to investigate the individual. The situation is the same though. The lender would need to take the borrower to court and look for a resolution there. If the person literally has no other assets that can be claimed, then that is the fault of the lender for issuing out risky loans to people who probably shouldn't be carrying debt.

How is that any different from today? In fact, I can think of a recession that was caused by subprime lending recently...

L.A.S.

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #105 on: August 02, 2017, 06:27:19 AM »
Lets say someone wants to invest their bitcoins.  They are supposed to be money after all! 

So, person A loans 100 bitcoins to person B for one year.  At the end of the year person B will pay back the 100 bitcoins, plus 11 bitcoins in interest -- an 11% rate of return (this is an unsecured loan).  They can't be put in escrow for the year since this would freeze them up, and person B would not be able to be spend them in the mean time before repayment is due, which is the point of borrowing money.  The loan is legally binding. 

At the end of the year person person B has 111 bitcoins and refuses to transfer them back to A.  This is substantially all of the valuable "property" that B has -- no other cash, investments, cars, valuable chattels, or real estate, etc. A can see them because he knows B's wallet address and can watch it. 

What does person A do?  How does person A get the bitcoins they are legally entitled to back from B?

I'm still not sure I follow the point you're trying to make.


Apparently.

Quote

In traditional lending, a lot of times there is collateral given to insure the risk of the debt for the issuer. People don't take out loans just to simply store the currency away. That doesn't really make sense. So how is your scenario any different than today? If a bank issues an auto loan to an individual, the bank has no option for reclaiming the money itself. Why? Because the money was used already and went to the dealership. The bank's only recourse is to repo the car in this case.
I know collateral is often used in lending.  However many loans are unsecured -- I indicated this in the hypo.  These are still legally binding and enforceable.

Quote

Bitcoin isn't really any different than currency today. If someone loans me $10,000 and I go spend it somewhere (they have no idea what I did with it), what recourse would that lender have in getting that money back? The lender is in the same position whether that money was bitcoin or the US dollar. It doesn't matter whether that loan was originally issued in dollars to a bank account, in check form, or in bitcoin. In fact, I'd make the claim that at least in the case of bitcoin, there is a public ledger that could be used to trace the bitcoin and law enforcement could use that to investigate the individual. The situation is the same though. The lender would need to take the borrower to court and look for a resolution there. If the person literally has no other assets that can be claimed, then that is the fault of the lender for issuing out risky loans to people who probably shouldn't be carrying debt.

How is that any different from today? In fact, I can think of a recession that was caused by subprime lending recently...

Although you may know about some of the technical details of a nascent crypto currency, you know very little about law.  The very same reason touted for a crypto-currencies security is also the reason it will never be taken serious as a medium of exchange in commerce.  Namely, this reason is that bitcoin is not subject or answerable to any government jurisdiction.  If parties disagree on who is entitled to a bitcoin, there is no remedy.

Credit is the life-blood of modern economies around the world.  People lend and borrow money, or commit products and services on invoice payable at a later date, and 99 times out of 100 counterparties will comply.  One of the reasons they do, as you hint at, is that if they don't they will be taken to court.  What does a court do exactly?  Well, they decide cases between plaintiffs and defendants on the merits.  And if a plaintiff is entitled to damages, the court will issue a judgment in their favor.  The plaintiff then asks the defendant to pay on the judgment. The defendant will usually pay at this point.  But what if he doesn't?  What happens next? Well, a court will issue a writ of execution on the unsatisfied judgment.  A writ of execution is a legal order to seize the property of the judgment-debtor.  And here is the critical difference between cash in the bank, or gold bars in a safety deposit box, and a bitcoin:  a writ of execution can be served on a custodian such as a bank and they are duty bound, under the courts contempt power, to confiscate the property of the debtor (be it cash or deposit box contents) and deliver it to the judgment creditor or convert it to cash to satisfy the judgment -- there is no such mechanism in bitcoin.  Now, as I said above this mechanism does not need to be used in every case -- people comply -- precisely by virtue of the fact that this mechanism exists and is available as a last resort.  The fact that it does not exist in bitcoin means that the level of default in credit arrangements will necessarily go up, because there is nothing for a creditor to do if the debtor defaults.

As to your indication that law enforcement will perform some investigation.... The answer to that is: No. Not in a civil matter such as a breach of contract.  And private investigation would be fruitless since a debtor could simply start using new wallets at any time -- using new wallets through the tor network is apparently one of the selling points of bitcoin as I understand it.  And you say it is the lenders fault for making a bad loan.  Why is it the lenders fault if the loan is legally binding, the debtor has the capacity to perform by returning the bitcoins, but just chooses not to?

« Last Edit: August 02, 2017, 06:31:05 AM by L.A.S. »

L.A.S.

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #106 on: August 02, 2017, 06:42:24 AM »
Here's another hypo:

What happens if Person A loans 100 bitcoins to Person B for 3year.  In three years Person B is to pay back the 100 bitcoins and 33 bitcoins as interest.  Now, what happens if in the first year bitcoin hard forks: Fork A is called bitcoin prime and Fork B is called bitcoin Ultra, for the first six months bitcoin Ultra is the dominant one, but then it switches and people flock to bitcoin prime as having more advantageous block mining conditions using a new video card that just hit the market.  In bitcoin prime person B keeps using the same wallet address and Person A can still keep track of whether there are bitcoins there.  However, in bitcoin Ultra person B decides to start using a new wallet address and doesn't keep any bitcoin Ultras in the wallet address that the loan was originally made to under the pre-fork bitcoin.  In the second year bitcoin prime undergoes another hard fork: it is now divided into Fork AA bitcoin prime squared and Fork AB bitcoin prime power.  In Fork AA person B continues to use the same wallet address for some stuff but not for others so it has a few bitcoins in it by not most of person B's prime squared coins, they are elsewhere.  In Fork AB, person B was using another wallet address for a while and had a good business deal in the second year after the second fork, so there are a shit-ton of bitcoins in there, but he claims he lost his private keys and those bitcoins in his bitcoin prime power wallet are allegedly effectively lost forever.

Now.  Its the end of the third year, and Person A is due back his payment.  What does he get and how?
« Last Edit: August 02, 2017, 06:50:15 AM by L.A.S. »

lifeanon269

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #107 on: August 02, 2017, 06:58:03 AM »
A writ of execution is a legal order to seize the property of the judgment-debtor. 
...
The fact that it does not exist in bitcoin means that the level of default in credit arrangements will necessarily go up, because there is nothing for a creditor to do if the debtor defaults.

As to your indication that law enforcement will perform some investigation.... The answer to that is: No. Not in a civil matter such as a breach of contract.  And private investigation would be fruitless since a debtor could simply start using new wallets at any time -- using new wallets through the tor network is apparently one of the selling points of bitcoin as I understand it.  And you say it is the lenders fault for making a bad loan.  Why is it the lenders fault if the loan is legally binding, the debtor has the capacity to perform by returning the bitcoins, but just chooses not to?

Disclaimer: I work for a financial institution in information security, so I have a firm grasp on the ability for an institution to reclaim unpaid debts (hint: it isn't much and it is usually just sold off to collectors).

You see this what you're not understanding. You're making the misunderstanding that people are taking out loans and then letting that loaned money sit in an account somewhere waiting for it to be seized. No no no! Loans are not issued to people where that person just has the money sit in an account somewhere. That money is spent. There is very little recourse for a lending institution to take to reclaim spent money unless there is a lien something that was paid for. I could just as easily spent $10,000 in cash without anyone knowing where that money went or ever knowing how to get it back. Once money is spent there is no legal action that could be used to get it back. Usually that debt is just written off and sold to a collector to deal with. Collectors then take it up on themselves to attempt to reclaim that debt. Very often though, if there is nothing to collect and they have very little recourse themselves.

You see, you're looking at bitcoin as if it is in a bubble. The bubble you're putting it in is as if bitcoin is the only asset/currency in the world. It isn't nor will it ever be. If loans are given out for purchases, there will be assets to be claimed. If no assets are to be claimed, then those loans are written off as losses just as they are today. That's why we had a recession. That's why banks had to be bailed out. If banks were so good as reclaiming debt as you say they are, then we wouldn't have had to bail them out to the tune of billions of dollars.

Also, how would using a new wallet end an investigation into tracing that bitcoin? I agree with you that a law enforcement investigation would likely not be made for civil matters, but simply transferring the money to a new wallet would still be tracked on the public block chain. I'm not sure you understand how the technology works and how addresses are created. A wallet consists of numerous addresses each with a private key. Transferring bitcoin to a new wallet would be no different from a tracking perspective as transferring the bitcoin to a different address in the same wallet.

maizeman

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #108 on: August 02, 2017, 07:07:52 AM »
All these hypotheticals assume an entirely unsecured personal loan and the the person receiving the loan has no other assets , savings, or income streams which could be seized in lieu of payment, correct? In that case it is worth asking how our legal system would deal with a person with no assets, savings, or sources of income, who took out an unsecured personal loan, withdrew it from the bank in cash, buried the cash in the woods, and then in court claimed that they forgot where they buried it. Essentially all the same issues with finding a way to legally enforce repayment are present, which makes me thing these problems result from the assumptions used rather than from some unique property of bitcoins or other cryptocurrencies.

Also this isn't your question but contracts specifying payments in numbers of bitcoins over periods of months or years would be an incredibly bad idea. 1) bitcoin in volatile 2) even if that ultimately goes away bitcoin is likely to be deflationary. It would make much more sense to adopt something like the ether:gas model of setting prices to handle contractually obligated future payments in cyptocurrencies so that the value of the payment stayed roughly fixed regardless of what happened to the value of the cyptocurrency being used.
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Digital Dogma

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #109 on: August 02, 2017, 11:12:49 AM »
I seem to be reading the complaint that "no government or organization can seize bitcoin" for any reason what-so-ever. This is not a mistake, it is a feature.

MVal

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #110 on: August 02, 2017, 08:49:57 PM »
Following, this is interesting.
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L.A.S.

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #111 on: August 03, 2017, 07:21:49 AM »
I seem to be reading the complaint that "no government or organization can seize bitcoin" for any reason what-so-ever. This is not a mistake, it is a feature.

Maybe so.  But it has serious implications as to whether bitcoin will ever be taken seriously as a currency in the ordinary course of legitimate business.

bender

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #112 on: August 03, 2017, 10:31:02 AM »
Interesting point.  It seems Bitcoin could be used as a store of value that's out of reach from the courts.  I wonder if people facing asset seizure will convert their assets to Bitcoin to keep it untouchable. 

dougules

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #113 on: August 03, 2017, 11:22:30 AM »
Interesting point.  It seems Bitcoin could be used as a store of value that's out of reach from the courts.  I wonder if people facing asset seizure will convert their assets to Bitcoin to keep it untouchable.

It wouldn't be the first time in history somebody tried to keep their assets untouchable to the courts.  If the judge found out, the assets might be untouchable, but the person hiding them wouldn't be. 


jlcnuke

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #114 on: August 03, 2017, 11:46:00 AM »
Interesting point.  It seems Bitcoin could be used as a store of value that's out of reach from the courts.  I wonder if people facing asset seizure will convert their assets to Bitcoin to keep it untouchable.

It wouldn't be the first time in history somebody tried to keep their assets untouchable to the courts.  If the judge found out, the assets might be untouchable, but the person hiding them wouldn't be.

There are many ways that a creditor can legally collect on payment. The agreed upon currency is not something the court can't get around. They can take physical property as payment, garnish wages/earnings/etc depending on the specific laws in their jurisdiction. That's true whether the deal was in USD, bitcoin, stamps, or bales of wheat. The courts can assign a value to whatever the thing of value is and enter judgements and assign methods of collection (as required and petitioned for).

As with any other transaction for things of value, there is always the risk of nonpayment and the default risk would need to be evaluated carefully, but there's nothing about bitcoin that makes it less significantly less safe to lend with regards to potential collection efforts since "cash" can disappear just as easily (other than the more volatile valuations which would make it a really really stupid thing for someone to use as the primary valuation for a loan imo).
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bender

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #115 on: August 03, 2017, 11:57:52 AM »
Let's say for example, someone who owes millions from a lawsuit judgement is found to have significant assets in bitcoin.  If the assets were in a bank, brokerage or real estate, they could be seized.  Since the bitcoin wallet is encrypted, he chooses not to pay.  What can the court do?  Throw him in jail?  For life if he doesn't pay?

jlcnuke

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #116 on: August 03, 2017, 12:16:14 PM »
Let's say for example, someone who owes millions from a lawsuit judgement is found to have significant assets in bitcoin.  If the assets were in a bank, brokerage or real estate, they could be seized.  Since the bitcoin wallet is encrypted, he chooses not to pay.  What can the court do?  Throw him in jail?  For life if he doesn't pay?

Same thing they'd do if he hid his money in a Swiss bank account, or buried it, or any other method of hiding his assets from seizure. As a general rule though, commonly used methods to collect debts when the person can't or won't pay and money is not available in traditional banks/etc to be seized directly include garnishing wages, seizing physical assets, placing judgement liens on their property, etc

Plus the standard stuff like reporting of the unpaid debt to credit agencies.
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shotgunwilly

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #117 on: August 03, 2017, 02:20:04 PM »
Let's say for example, someone who owes millions from a lawsuit judgement is found to have significant assets in bitcoin.  If the assets were in a bank, brokerage or real estate, they could be seized.  Since the bitcoin wallet is encrypted, he chooses not to pay.  What can the court do?  Throw him in jail?  For life if he doesn't pay?

Same thing they'd do if he hid his money in a Swiss bank account, or buried it, or any other method of hiding his assets from seizure. As a general rule though, commonly used methods to collect debts when the person can't or won't pay and money is not available in traditional banks/etc to be seized directly include garnishing wages, seizing physical assets, placing judgement liens on their property, etc

Plus the standard stuff like reporting of the unpaid debt to credit agencies.

Right.  I could take out $1,000,000 in loans, liquidate every single asset and object I own, and turn it into cold hard USD and bury it (hide it), refusing to pay it back.  I'm failing to understand how this is any different than the arguments saying "but lenders won't be able to seize the BTC if they don't pay it back!"

MVal

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #118 on: August 03, 2017, 03:43:41 PM »
They should fork all the time - it seems to generate new wealth out of thin air!

Makes sense. In biology, forking tends to lead to reproduction as well.
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Proverbs 13:11
Wealth obtained by fraud dwindles, but the one who gathers by labor increases it.

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L.A.S.

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #119 on: August 07, 2017, 02:40:08 PM »
I was just thinking that Mining Bitcoin, or any moderately adopted crypto-currency, just seems incredibly energy intensive and wasteful. 

Here are some videos of real bitcoin mines:

https://youtu.be/ELA91d_mx80

https://youtu.be/K8kua5B5K3I

All this  computing equipment and actual energy consumption is not being put towards solving real world problems like protein folding to try to find drugs for rare diseases, parkinsons, or cancer.  No, its all being put towards trying to brute force attempts to find a hash so that a new block of transactions can be placed in a public ledger. 

I think bitcoins have an extremely high carbon footprint, especially compared with other forms of electronic payment.

https://motherboard.vice.com/en_us/article/ypkp3y/bitcoin-is-still-unsustainable


lifeanon269

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #120 on: August 07, 2017, 05:38:11 PM »
I agree that bitcoin is extremely energy intensive at the moment, but I wouldn't call it unsustainable. Unsustainable nor would I call it wasteful. Unsustainable would imply that it could never be continued indefinitely and that all factors that go into bitcoin's energy consumption today remain static. But it is actually quite the contrary. First off, the article calculates energy consumption on a per transaction basis. Which is fair when comparing it to traditional transaction systems since that's really the only metric you can use in comparison. But with regard to bitcoin itself, it is unfair to calculate energy consumption on a per transaction basis and then use that as the basis for the argument that bitcoin is unsustainable. The reason for that is the fact that the transaction rate for bitcoin will inevitably go up. It has to if it ever wants to be able to scale and compete with other transaction systems.

So the energy today for today's bitcoin network to process transactions at 2 transactions per second is roughly the same for the network to process transactions at 7 transactions per second. The reason for that is the fact that the real brunt of the workload is done in the hashing algorithm, not the size of the input to that algorithm.Therefore, it stands to reason that as the network scales and is able to process more transactions per second, then it will actually become more sustainable over time.

Also, as stated in the article, payment channels like the Lightning Network (which will be possible with this month's SegWit activation), have the capability to allow millions/billions of transactions per second without the heavy workload of hashing on the blockchain. These advancements have the capability to make bitcoin even more energy efficient than today's payment networks on a per transaction basis (although the underlying bitcoin network would still be in place and operating). All this adds up to the fact that the more the bitcoin network gets used (necessitating higher transaction rates), then ultimately the more sustainable the network becomes. This in my opinion would counter the argument that bitcoin is unsustainable. That being said, in its current form and usage today, it is extremely energy intensive.

This also underlines the fact that our energy infrastructure is at the heart of the problem and with bitcoin's profitability relying directly upon that infrastructure's costs, the transformation that our energy infrastructure takes will have a direct impact on bitcoin's sustainability long term. In otherwords, the faster we see technologies like solar and wind become bigger economic competitors to coal and gas, then we'll see bitcoin become one of the first adopters of said sources of energy for the sake of mining profitability. In fact, depending on whether or not Moore's law continues long into the foreseeable future, we may even see the bitcoin network drive renewable energy investments as the network demands cheaper electricity from renewable sources as a means of staying profitable if computing power advancements/efficiencies ever slow. In fact, if we solve the energy problem itself, bitcoin's network could become one of the biggest beneficiaries of such advancements in the sense that mining for bitcoin would no longer be based on energy efficiencies and more based on hashing power alone. That would ultimately help make the bitcoin network become more decentralized since anyone with a free processor to spare could essentially become part of the mining network without worry of energy consumption.

I realize in just my one post I went from talking about bitcoin's extreme energy consumption to talking about mining bitcoin without regard to energy efficiency, but it is still an interesting idea to think about where things could go into the future.

TLDR: is bitcoin extremely energy intensive today? Yes, it is. But I don't think it will stay that way long term. The network is still young and is no where near being fully matured. The downside is that bitcoin's highest energy consumption per transaction is most heavily weighted toward its early life which also happens to consist of the dirtiest electricity that bitcoin will consume in its lifetime. In the long run though I do think the benefits outweight the downsides with regards to society and that looking at bitcoin as a culprit of our energy/environmental problems is shortsighted with blinders on. In otherwords, bitcoin's energy problems will likely solve themselves over time, let's instead worry about trying to solve the energy problems or contributors that won't solve themselves.

phil22

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #121 on: August 07, 2017, 06:39:40 PM »
global bitcoin mining uses several times the electricity of a global corporation:  bitcoin in 2017 is using 5.5x the electricity annualized that Bank of America used in 2012:

https://about.bankofamerica.com/assets/pdf/2012-environmental-report.pdf (page 18: 10.6M GJ ~ 3 TWh)
http://digiconomist.net/bitcoin-energy-consumption (15.46 TWh)

--

yes, energy consumption going forward is a crucial issue.  i am mostly concerned about bitcoin mining driving up the price of renewable electricity for everyone else.  i'm not too concerned about pollution/emissions because bitcoin miners rely on cheap renewable power.  mining happens on very thin margins and paying for fossil fuel-generated power isn't profitable and will just get more expensive in the future.

it will be interesting to see how Ethereum handles its switch to proof-of-stake.  if that works well it might signal the end of large-scale proof-of-work cryptocurrencies.  this competition between cryptocurrencies is another reason to not be too worried about it -- the market will pick the best currencies and the winners probably won't be wasteful world destroyers.

i agree with lifeanon269 that measuring energy consumption per transaction is silly.  bitcoin secures all historic transactions with every block, not just all new transactions.  and besides, 8MB of transactions does not require 8x the electricity to hash than 1MB of transactions.

another point:  bitcoins are not free to create.  that's the point of a proof-of-work system.  the electricity cost to produce a bitcoin is what makes them hard to counterfeit and is part of what makes them valuable.  this is in contrast to inflationary government currencies where money is created, for free, which has the effect of reducing the value of the existing money. 

although securing a currency isn't "wasting" power, for future sustainability i hope we find better uses for the heat generated from mining bitcoin instead of just dissipating it.  many of us use electricity to power water heaters and furnaces and we might as well generate some bitcoin while we're at it:

https://www.coindesk.com/winter-is-coming-bitcoin-mining-for-heat-and-profit/

Digital Dogma

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #122 on: August 08, 2017, 12:35:30 PM »
The knock-on effect of the Cryptocurrency gold rush is also changing the technology we all rely on. For the first time in a LONG time, AMD has given Intel some serious competition in the processor market. Radeon is competing with Nvidia for high efficiency parallel processing. Customers are under-volting their equipment for efficiency instead of simply over-clocking for speed and consuming more power.

There is now a demand for high efficiency processing power thats not cell-phone based, and its being driven by people who believe they can make money speculating on cryptocurrency. It is likely laying the groundwork for tomorrow's must-have technology.

Tonyahu

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #123 on: August 08, 2017, 05:14:24 PM »
Ethereum will change the entire platform of how many businesses are run and will usher in Web 3.0.

It will become mainstream within 3-10 years and will then be seen as a "good investment". The time to buy is now.

Cheers to all who welcome this information and do more research, eventually realizing the truth.

accolay

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #124 on: August 09, 2017, 03:38:58 AM »
Ethereum will change the entire platform of how many businesses are run and will usher in Web 3.0.

It will become mainstream within 3-10 years and will then be seen as a "good investment". The time to buy is now.

Cheers to all who welcome this information and do more research, eventually realizing the truth.

If you've still got some cash after the bitcoin mania, I could probably come up with some beanie babies to sell you.

dougules

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #125 on: August 09, 2017, 11:07:49 AM »
global bitcoin mining uses several times the electricity of a global corporation:  bitcoin in 2017 is using 5.5x the electricity annualized that Bank of America used in 2012:

https://about.bankofamerica.com/assets/pdf/2012-environmental-report.pdf (page 18: 10.6M GJ ~ 3 TWh)
http://digiconomist.net/bitcoin-energy-consumption (15.46 TWh)

--

yes, energy consumption going forward is a crucial issue.  i am mostly concerned about bitcoin mining driving up the price of renewable electricity for everyone else.  i'm not too concerned about pollution/emissions because bitcoin miners rely on cheap renewable power.  mining happens on very thin margins and paying for fossil fuel-generated power isn't profitable and will just get more expensive in the future.

it will be interesting to see how Ethereum handles its switch to proof-of-stake.  if that works well it might signal the end of large-scale proof-of-work cryptocurrencies.  this competition between cryptocurrencies is another reason to not be too worried about it -- the market will pick the best currencies and the winners probably won't be wasteful world destroyers.

i agree with lifeanon269 that measuring energy consumption per transaction is silly.  bitcoin secures all historic transactions with every block, not just all new transactions.  and besides, 8MB of transactions does not require 8x the electricity to hash than 1MB of transactions.

another point:  bitcoins are not free to create.  that's the point of a proof-of-work system.  the electricity cost to produce a bitcoin is what makes them hard to counterfeit and is part of what makes them valuable.  this is in contrast to inflationary government currencies where money is created, for free, which has the effect of reducing the value of the existing money. 

although securing a currency isn't "wasting" power, for future sustainability i hope we find better uses for the heat generated from mining bitcoin instead of just dissipating it.  many of us use electricity to power water heaters and furnaces and we might as well generate some bitcoin while we're at it:

https://www.coindesk.com/winter-is-coming-bitcoin-mining-for-heat-and-profit/

Wow.  I guess the term "mining" is appropriate since it sounds like it has all the environmental effects of actual mining. 

Do those numbers take into account all the energy it takes to make and distribute the hardware they're using?


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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #126 on: August 09, 2017, 04:51:11 PM »
If you've still got some cash after the bitcoin mania

mania? please explain.

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #127 on: August 09, 2017, 06:01:15 PM »
Do those numbers take into account all the energy it takes to make and distribute the hardware they're using?

those numbers are purely electricity usage from the links provided since that's a simple comparison.  i'm not counting BoA's indirect energy usage in the "Petroleum" and "Natural gas" categories from that PDF either (page 19).  if you want to count indirect, those categories raise BoA's energy consumption by 78%.

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #128 on: August 10, 2017, 02:18:40 AM »
If you've still got some cash after the bitcoin mania

mania? please explain.

http://www.investopedia.com/articles/stocks/10/5-steps-of-a-bubble.asp
I think your answer is somewhere in the article between "Dutch Tulip Mania" and "3. Euphoria"

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #129 on: August 10, 2017, 10:34:43 AM »
Someone informed me recently that a popular computer parts online distributor newegg has begun accepting bitcoin directly as payment, people are very happy to spend their bitcoin directly on new hardware to expand their mining capability. In the past people would have to convert their bitcoin to gift cards, then use the gift cards on a site like Amazon. This is a far more direct way to use the currency, and given the high-end tech they sell, it should mean an increase in business going to newegg as opposed to other popular online retailers.

Once Amazon responds in kind and allows direct purchasing with bitcoin, we will know its become an accepted mainstream part of US culture.

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #130 on: August 10, 2017, 04:33:57 PM »
Ethereum will change the entire platform of how many businesses are run and will usher in Web 3.0.

It will become mainstream within 3-10 years and will then be seen as a "good investment". The time to buy is now.

Cheers to all who welcome this information and do more research, eventually realizing the truth.

If you've still got some cash after the bitcoin mania, I could probably come up with some beanie babies to sell you.

What is the utility of a beanie baby?

I can name more than 1,000 use cases for the Ethereum Blockchain.

Tonyahu

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #131 on: August 10, 2017, 04:35:45 PM »
Someone informed me recently that a popular computer parts online distributor newegg has begun accepting bitcoin directly as payment, people are very happy to spend their bitcoin directly on new hardware to expand their mining capability. In the past people would have to convert their bitcoin to gift cards, then use the gift cards on a site like Amazon. This is a far more direct way to use the currency, and given the high-end tech they sell, it should mean an increase in business going to newegg as opposed to other popular online retailers.

Once Amazon responds in kind and allows direct purchasing with bitcoin, we will know its become an accepted mainstream part of US culture.

Overstock.com already accepts it.

Amazon is currently looking to hire a Blockchain developer.

The time will come, the early investors will be the ones rewarded while the bubble callers will cry "bubble" all the way until the end, when they must buy in as well but near the plateau....

lifeanon269

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #132 on: August 10, 2017, 04:54:52 PM »
Overstock.com already accepts it.

Amazon is currently looking to hire a Blockchain developer.

The time will come, the early investors will be the ones rewarded while the bubble callers will cry "bubble" all the way until the end, when they must buy in as well but near the plateau....

Overstock also just recently stated that they're now changing their strategy and will be keeping 50% of their bitcoin sales earnings as an investment going forward. That's a clear sign that they see value in the currency itself and that they're not just accepting bitcoin payments as a mere PR stunt. Other retailers will certainly take notice of that move.

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #133 on: August 10, 2017, 05:26:39 PM »
I wonder (speculate?) if the real winners here will be the people developing the blockchain technology to get completely new industry jobs at Amazon, Google, Apple etc? Or if they will potentially only get the less skilled ones as it'd be hard to imagine making as much money at a company as it is in the value of some of these currencies now.
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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #134 on: August 10, 2017, 06:22:01 PM »
Overstock.com already accepts it.

Amazon is currently looking to hire a Blockchain developer.

The time will come, the early investors will be the ones rewarded while the bubble callers will cry "bubble" all the way until the end, when they must buy in as well but near the plateau....

Overstock also just recently stated that they're now changing their strategy and will be keeping 50% of their bitcoin sales earnings as an investment going forward. That's a clear sign that they see value in the currency itself and that they're not just accepting bitcoin payments as a mere PR stunt. Other retailers will certainly take notice of that move.

Or another way to look at it is that they've completely lost their minds and its time to go short Overstock...

If a company wanted to, How would it even pay out bitcoin as a dividend?  Would all shareholders be required to have a crypto currency wallet? Would this mean that all transfer agents and brokers would need to know the bitcoin wallets of the registered and beneficial owners in order to credit the dividend?  I mean most dividends today are credited electronically, but if all else fails they company will send a check to the registered owner -- but there's not such thing as a bitcoin check.  And, for U.S. owners a bitcoin dividend would be reported to the IRS how? Oh wait ,thats right...the bitcoins would have to be converted to real money first. Nvr mnd.

I hope, for the sake of their shareholders, Overstock's bitcoin private keys don't get lost or stolen in the meantime while the speculate in this baloney.

lifeanon269

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #135 on: August 11, 2017, 06:37:44 AM »
Or another way to look at it is that they've completely lost their minds and its time to go short Overstock...

If a company wanted to, How would it even pay out bitcoin as a dividend?  Would all shareholders be required to have a crypto currency wallet? Would this mean that all transfer agents and brokers would need to know the bitcoin wallets of the registered and beneficial owners in order to credit the dividend?  I mean most dividends today are credited electronically, but if all else fails they company will send a check to the registered owner -- but there's not such thing as a bitcoin check.  And, for U.S. owners a bitcoin dividend would be reported to the IRS how? Oh wait ,thats right...the bitcoins would have to be converted to real money first. Nvr mnd.

I hope, for the sake of their shareholders, Overstock's bitcoin private keys don't get lost or stolen in the meantime while the speculate in this baloney.

Whoa whoa, easy there, pump the breaks a little. Don't go off the deep end. You seem to always go full throttle on your analyses. We go from having a company see value in the currency itself and not just a means of "being trendy" or promotion ...to... "How would they ever pay their investors in bitcoin go short Overstock now!!!".

Seriously, I read that their bitcoin sales only account for about 1% or less of their total sales volume. So no need to get ahead of ourselves here. Keeping half of their 1% bitcoin sales in bitcoin is just simply a smart investment strategy as they recognize the value in the currency itself long term.



EDIT: Reworded "half of 1% of their bitcoin sales" to be more accurate to what I meant.
« Last Edit: August 11, 2017, 07:47:38 AM by lifeanon269 »

maizeman

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #136 on: August 11, 2017, 07:06:26 AM »
Apple certainly holds significant amounts of euros, RMB, and Real as part of their $250B foreign earnings stockpile. It would be just as impossible for them to pay dividends to their investors in any of these currencies, but I don't see that anyone is too concerned by the prospect.
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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #137 on: August 11, 2017, 07:16:03 AM »
Apple certainly holds significant amounts of euros, RMB, and Real as part of their $250B foreign earnings stockpile. It would be just as impossible for them to pay dividends to their investors in any of these currencies, but I don't see that anyone is too concerned by the prospect.

This is true.

But, bitcoin is not a foreign currency. 

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #138 on: August 11, 2017, 07:44:40 AM »
Apple certainly holds significant amounts of euros, RMB, and Real as part of their $250B foreign earnings stockpile. It would be just as impossible for them to pay dividends to their investors in any of these currencies, but I don't see that anyone is too concerned by the prospect.

This is true.

But, bitcoin is not a foreign currency.

When a foreigner is paid dividends in "USD", but their account is in GBP (for instance), their balance isn't "XYZ" GBP and "ABC" USD. The USD is converted to GBP for them. No reason a company couldn't pay out in Bitcoin, and have the bitcoin amounts converted to another currency to be deposited in people's accounts.
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maizeman

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #139 on: August 11, 2017, 08:26:03 AM »
Apple certainly holds significant amounts of euros, RMB, and Real as part of their $250B foreign earnings stockpile. It would be just as impossible for them to pay dividends to their investors in any of these currencies, but I don't see that anyone is too concerned by the prospect.

This is true.

But, bitcoin is not a foreign currency.

I don't disagree with this statement but I'm clearly missing the point you are intending to make with it.
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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #140 on: August 11, 2017, 09:06:08 AM »
Apple certainly holds significant amounts of euros, RMB, and Real as part of their $250B foreign earnings stockpile. It would be just as impossible for them to pay dividends to their investors in any of these currencies, but I don't see that anyone is too concerned by the prospect.

This is true.

But, bitcoin is not a foreign currency.

I don't disagree with this statement but I'm clearly missing the point you are intending to make with it.

The original comment from LA269 that I was responding to was that the company's earnings would be kept in the form of bitcoin.  Absent debt financing or a partial liquidation of a company, dividends are necessarily paid from earnings.  So either the bitcoin would need to be converted to cash to pay dividends from it, or the dividends would be paid from the cash portion of earnings and the bitcoin would just "sit" and comprise a speculation (in my opinion, anyway).

I don't think your comparison of bitcoin with foreign currency holdings is apt.  Foreign currencies are currencies in the foreign jurisdiction and can be used to settle taxes, pay judgments, etc in those jurisdictions immediately and without intermediate steps.  They derive inherent value from this.  They are also kept on the corps balance sheet as foreign currency holdings, and can be accounted for in the companies cash flow statement by adjusting using the prevailing exchange rate.  Further, foreign currencies can be converted at will to another currency using an incredibly deep currency exchange market and which is facilitated by the bank for international settlements. 

How exactly does Overstock plan to account for bitcoin on the balance sheet and in cash flow statements?  The exchange rate with USD anyhow is too volatile, and its not like the exchange is based on an actual quote from a legit foreign exchange dealer or a published exchange rate from a legally recognized market.  Further, how can conversion to a currency such as USD be reasonable assured, especially at large quantities of bitcoin or high dollar amounts? There are websites that hold themselves out as exchanges and which publish rates for sure, but how are these to be taken seriously?

Also, no one has commented on my implied question of what is to happen with the corporation's private keys?  Are these kept by a single person? A group of people?  How can they be trusted and what happens if there is a breach of trust? What if these keys are lost or stolen by a third party?   With currency in a bank an individual's authority to transact in an account can be controlled by an agreement between the company and the bank where the currency is held.  But with bitcoin, the private key is the authority to transact.

maizeman

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #141 on: August 11, 2017, 09:34:08 AM »
Ah gotcha.

I'd argue apple's ridiculously large foreign currency holdings are also a form of speculation (that at some point there will be another tax holiday like the one in 2004 that let corporations bring bring in foreign earnings at a 5% tax rate instead of a 35% tax rate). Until then they just sit. (And are not being used to pay dividends). So to me this seems more similar to overstock holding some of their non-USD income in the original currency they were paid in.

Regarding your concerns about how to carry bitcoins on a corporate balance sheet, a lot of bitcoin exchanges are legally recognized. "Legit" is more of a value judgement though, so I suppose one could argue none of them are legit. It'd be interesting to compare the volatility of the the bitcoin USD exchange rate to the variation in the price of commodities that are carried on corporate balance sheets. I agree with you it would be higher than the USD exchange rates for many or most government backed currencies. It is certainly lower than the volatility of some stocks, yet companies have no trouble carrying those on a balance sheet.

Implied questions get answered a lot less often that explicit questions. I honestly didn't realize you were curious about that, but now that I do:

I don't know what overstock is doing in this case specifically, but one option would be to use cryptographic techniques to split the private key into several "shards" which are held by different people. These can be constructed in such a way every piece is needed in order to use the private key, or that, for example any 5 of 7 pieces are needed to use the private key. This provides redundancy in the case of the loss of pieces of the key, while also not requiring complete trust in any one individual not to run off with the contents of the bitcoin wallet.
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dougules

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #142 on: August 11, 2017, 10:43:56 AM »
Apple certainly holds significant amounts of euros, RMB, and Real as part of their $250B foreign earnings stockpile. It would be just as impossible for them to pay dividends to their investors in any of these currencies, but I don't see that anyone is too concerned by the prospect.

This is true.

But, bitcoin is not a foreign currency.

Actually it is.  It's a currency and it was started in Japan.  (I'm assuming you're not in Japan because then it wouldn't be foreign). 


Apple certainly holds significant amounts of euros, RMB, and Real as part of their $250B foreign earnings stockpile. It would be just as impossible for them to pay dividends to their investors in any of these currencies, but I don't see that anyone is too concerned by the prospect.

This is true.

But, bitcoin is not a foreign currency.

I don't disagree with this statement but I'm clearly missing the point you are intending to make with it.

The original comment from LA269 that I was responding to was that the company's earnings would be kept in the form of bitcoin.  Absent debt financing or a partial liquidation of a company, dividends are necessarily paid from earnings.  So either the bitcoin would need to be converted to cash to pay dividends from it, or the dividends would be paid from the cash portion of earnings and the bitcoin would just "sit" and comprise a speculation (in my opinion, anyway).

I don't think your comparison of bitcoin with foreign currency holdings is apt.  Foreign currencies are currencies in the foreign jurisdiction and can be used to settle taxes, pay judgments, etc in those jurisdictions immediately and without intermediate steps.  They derive inherent value from this.  They are also kept on the corps balance sheet as foreign currency holdings, and can be accounted for in the companies cash flow statement by adjusting using the prevailing exchange rate.  Further, foreign currencies can be converted at will to another currency using an incredibly deep currency exchange market and which is facilitated by the bank for international settlements. 

How exactly does Overstock plan to account for bitcoin on the balance sheet and in cash flow statements?  The exchange rate with USD anyhow is too volatile, and its not like the exchange is based on an actual quote from a legit foreign exchange dealer or a published exchange rate from a legally recognized market.  Further, how can conversion to a currency such as USD be reasonable assured, especially at large quantities of bitcoin or high dollar amounts? There are websites that hold themselves out as exchanges and which publish rates for sure, but how are these to be taken seriously?

Also, no one has commented on my implied question of what is to happen with the corporation's private keys?  Are these kept by a single person? A group of people?  How can they be trusted and what happens if there is a breach of trust? What if these keys are lost or stolen by a third party?   With currency in a bank an individual's authority to transact in an account can be controlled by an agreement between the company and the bank where the currency is held.  But with bitcoin, the private key is the authority to transact.

A nitpick, but an important nitpick, bitcoin IS cash.  "converted to cash" should be "exchanged into USD"  I know it's semantics, but people can't seem to remember that bitcoin is just another form of cash.  That leads people to think bitcoin is an investment when it's just currency speculation the same as if you were playing the exchange rate with the rupee or the baht. 

If a company had a breach of trust with the company's keys, how would it be any different than any other form of embezzlement?  If you worked for a diamond dealer you could have the diamonds hidden in a secret vault in Juarez, and it would be the exact same thing. 
« Last Edit: August 11, 2017, 10:54:20 AM by dougules »

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #143 on: August 11, 2017, 11:04:04 AM »
I agree that bitcoin is a currency.  It's different because it's a totally new currency from a nation that didn't exist before.

It's like the currency of a new island nation being formed by a volcano.  It's a volatile place with new eruptions happening all the time that could make the island bigger and better or could kill everyone on it.  A few people are starting to move to this island to live and use the currency.  Some are poor people with few other options.  Some are rich who want to try something new and exciting and can afford the risk. 

The people on the island only control a tiny fraction of the currency.  There are orders of magnitude more people looking in from the outside and engaging in currency speculation/investment.  Most believe the island has a future, and want to participate in the gains.  These investors/speculators drive the price movement of the currency. 

It's impossible to tell if the island will grow into a huge nation or fall back into the sea. 


dougules

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #144 on: August 11, 2017, 11:23:04 AM »
I agree that bitcoin is a currency.  It's different because it's a totally new currency from a nation that didn't exist before.

It's like the currency of a new island nation being formed by a volcano.  It's a volatile place with new eruptions happening all the time that could make the island bigger and better or could kill everyone on it.  A few people are starting to move to this island to live and use the currency.  Some are poor people with few other options.  Some are rich who want to try something new and exciting and can afford the risk. 

The people on the island only control a tiny fraction of the currency.  There are orders of magnitude more people looking in from the outside and engaging in currency speculation/investment.  Most believe the island has a future, and want to participate in the gains.  These investors/speculators drive the price movement of the currency. 

It's impossible to tell if the island will grow into a huge nation or fall back into the sea.

Totally agree.

alena30

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #145 on: September 27, 2017, 06:45:45 AM »
It is useful and always be till the time bankers don't prove it a fraud. By the statement of many big investors the entire scenario becomes dicey but one thing is for sure if the cryptocurrency grows one sector is gonna face a massive fall and that is banking. So for everything digital medium is used so why not for money. 

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #146 on: September 27, 2017, 01:56:15 PM »
It may have something to do with the CEO of JP Morgan assailing Bitcoin as a "scam" while simultaneously purchasing Bitcoin for their "customers" after it dropped in value in response to comments the CEO of JP Morgan made. http://fortune.com/2017/09/18/jpmorgan-buy-bitcoin-ceo-callingfraud/

A month of news in the cryptocurrency world is like a years worth of regular economic happenings, a lot of this stuff is common knowledge to people who hold/trade the stuff. Lots of "Fake News" like JP Morgan's CEO statement out there too, trying to manipulate the markets.

alena30

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #147 on: September 29, 2017, 04:08:09 AM »
They are not only useful but they can be called as a future of currency same as the internet became the future of communication, everyday activities today relies on internet and the same way change needs to be accepted if we are turning digital then why not the currency and till how long we are going to be dependent govt and their central system. Today for every basic thing we depend on technology so it cryptocurrency,  let the currency turn digital in this technical era.

bender

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Re: Bitcoin and other crypto-currencies - are they useful?
« Reply #148 on: October 09, 2017, 02:51:14 PM »
You may find this Overstock news article interesting:
https://finance.yahoo.com/news/overstock-deals-bitcoins-wild-price-swings-145542616.html

Overstock.com is the biggest company that accepts bitcoin.  Their CEO is very pro-bitcoin and is driving this policy.  They convert a percentage of each bitcoin transaction to cash and keep a percentage as an investment in Bitcoin.  Since 2014, when they started accepting bitcoin, the ratio was 90% converted to cash and 10% saved.  This year they changed the policy to 50/50.

Overstock's bitcoin holdings totaled $300k at the end of 2016, so it was a tiny fraction of their assets.  The 300k is now worth about $1.5M given bitcoin's price growth.

About 0.15% of their revenue is from Bitcoin (apparently the most frequently bought item is bedding).  With annual revenues approaching $2B, this would mean they see around $3M in annual bitcoin purchases.  Saving half as an investment makes about $1.5M in annual bitcoin investment.

Overstock holds around $180M in cash (2016), so their bitcoin assets are likely approaching 1.5-2% of that value.  I'm guessing they have about 500 coins, which puts them somewhere around #3000 in terms of the richest bitcoin wallet owners.  That's still a small amount for a company their size, but they have doubled down (5x) on continued investment.  It will be interesting if the board allows the investment to continue longer as the investment grows to a more significant portion of their cash holdings.

(Information was compiled from the article, 2016 annual report and bitcoincharts.)

seattlecyclone

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Re: Bitcoin and other crypto-currencies discussion thread
« Reply #149 on: October 09, 2017, 06:19:45 PM »
I think that cryptocurrencies can't be too useful as currencies until the value stops fluctuating by multiple percent each day. To be useful as a medium of exchange, people on both sides of the transaction should believe that those coins will be worth about the same tomorrow and next week as they were today.

We can see from episodes of hyperinflation what happens when people believe a currency has nowhere to go but down: they treat that currency as a hot potato and spend it as quickly as possible with any merchant foolish enough to accept it. In the case of a currency where most people believe it will rapidly appreciate in value: why would you ever spend it?

Volatility isn't as much of a problem with a token such as Ripples where you're not intended to buy everyday goods and services with them.
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