Re: Replacing Bitcoin with something less wasteful (split from Is deepbit.com stealing coins?)

So in summary:
"Bitcoin is wasteful, and here are much better ways to do it. I haven't got the implementation down because there is no simple answer but Bitcoin is wasteful because there are much better ways to do it."

Somehow, I knew it would come to this. Roll Eyes

He blames Bitcoin for having an inefficient solution, but comes up against a brick wall when trying to explain his own "solution".

Quote from: Flip Tulipcoin on December 19, 2011, 11:28:53 PM

Well, clearly then, the return to mining is an economic inefficiency that should tend to zero over the long term, that it does seems to be the consensus. Besides, the mining capacity arms race results in equilibrium being a moving target. I seriously doubt most miners who make a hardware investment for that purpose at this point in time will ever reach break even before something better to do comes along.

Not true. Mining won't tend to zero over the long term. Mining will always be present, as long as Bitcoins continue to hold value, as mining generates Bitcoins for the miners.

Yes, the equilibrium is a moving target. Same as the equilibrium in any industry. Every miner must make a calculated decision whether to invest in more hardware (or sell off their current hardware) based on future projections of profit and risk. Same as profit/risk analysis in any industry. Your point?

I said "the return to mining".

Your analogy fails in that Bitcoin mining isn't an industry, it's a game that serves only the claustrophobic world of bitcoin, which is itself a game. Bitcoin mining produces nothing and would not be missed if it disappeared tomorrow. Seriously.

The return to mining? You would think that someone with so many prestigious degrees would use proper terminology. How about, "the return on mining", "the return on investment of mining", or "the profitability of mining" will tend to zero over the long term. "The return to mining" does not mean what you were trying to say, hence my confusion.

Even then, I do not believe it to be true. Anyone with their head on straight will only make investments when the projected return on investment (inclusive of risk) is above the real cost or opportunity cost of those funds. In the case of a real cost, the projected return would have to exceed the cost of financing - say, 5-6% for someone with good credit on a small loan. In the case of an opportunity cost, the projected return would have to exceed the return of other potential investments - say, 4-5% on a (virtually) risk-free CD.

So no, I do not agree that returns will tend towards zero over the long term. Returns will tend towards the cost of funds. No one is going to invest in hardware when the return is less than they would receive if they just threw the money into a bank CD.

My analogy doesn't fail at all. No, Bitcoin is not an industry, but analogies don't require the items being discussed to be of the same type - analogies only require similarities to be present. And the unspoken rules of investment for any given industry apply just as much to investments made towards Bitcoin mining.

Maybe you should have studied more while acquiring your dozens of degrees. Then you would know what an analogy is. Wink

Oh, and you still haven't shown me how you would solve any of the problems that Bitcoin solves with regards to a decentralized currency. So far, your "solution" has fallen flat on its face. It doesn't work. Come up with something that works, THEN come back and tell us all how Bitcoin is wrong.