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. "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."
He blames Bitcoin for having an inefficient solution, but comes up against a brick wall when trying to explain his own "solution".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?
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.
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.
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.
I finally did get some useful information that I think will help my clients to avoid making imprudent choices with respect to Bitcoin World 1.0, and I gained a better understanding of how it has painted itself into a corner in which it will remain until it passes out of general interest completely or becomes something other than a second rate collection of clones of traditional institutions. It was interesting while it lasted, too bad currency exchange and speculation resulted in it becoming a de facto centralized system of the type some would tell me it was meant to replace.
It's really unfortunate that no one competent and willing to take ownership of the design decisions is around. That alone is enough to set expectations very low. There's an "enterprise software" company, Computer Associates, that would be an ideal final resting place for bitcoin if there ever turns out to be any real money in it. CA is known as the mausoleum of software, it creates nothing but instead acquires the work of others who by and large disconnect from their work after selling it. The result is that the software is never enhanced, it's only maintained enough to keep it salable by people who only ever work around the edges of it. Bitcoin already seems to be frozen in amber, so there wouldn't even be an uncomfortable transition to the realization that everybody's favorite cryptocurrency is in an evolutionary cul de sac.
BTW, your comment on the economics of mining presumes rational behavior, and yet economic behavior and choices are full of examples that are famously irrational, enough so to merit a Nobel Prize for work done in this area. Here's a Sunday magazine section light read on the subject, there's tons more where this comes from if you are interested.
harvardmagazine.com/2006/03/the-marketplace-of-perce.html
Oh, and regarding "the unspoken rules of investment". Are they part of another magical cult? Is that why they are unspoken?
Yes, my comment on the economics of mining presumes rational behavior. What do you base your own forecasts and predictions on - irrational behavior? LOL.
No, real-world people won't always act rationally, but there are usually plenty of rational people around to correct for the irrational ones. Especially within a project with as many participants as Bitcoin has. And it would be downright foolish to base a business analysis like this on irrational behavior.