Yeah, this is far from best practices...

I am disappointed, but this space has a very wild-west connotation to it. Everyone will try to protect their gains/situation as best they can and, in the case of Trex, they want to cover their regulatory-compliance ASAP, but they way they are going about doing it is less than ideal.

I definitely agree with what was said here that other exchanges should be expected to follow.

Have your own wallets folks!

I find it quite intriguing that anyone could think that security of this scale can be automated... It goes against the foundation of cyber-security and it is very easy to understand why.

Hackers are adaptable and highly creative and, as such, they will look at previously unthought of methods to "break in".

Now, a certain degree of automation can be applied to already known issues, where some scanning of code can be done to ensure that known vulnerabilities are not carried out by the smart contract, but this is of limited value and certainly not worth as much as they are looking to raise.

And all the AI/machine learning aspects brandied about by most ICOs are a joke... Those again won't help you defeat a creative force (hacking).

Anyone can feel free to point out what I'm missing, but I think this is quite superficial as presented.

It depends how you define "failure". Will it beat legacy bitcoin? Most likely not...

But will it have some users, miners, etc.? Yes. Their proposal to use equihash as an algorithm will give them some ASIC-resistance for a while, which could mean a small rush back from some CPU & GPU miners.

The question is for how long will this drive last? No one knows, but if the question is 'will it take over the legacy chain', I wouldn't put my hopes in that.

The nature of markets is such that no one knows where the price will go with 100% certainty. You are in essence making a guess about the future.

Some people say bitcoin is in a bubble (which doesn't mean that the technology isn't valid, but that the price is way out of whack) and, if so, then bubbles have a way of also going much further than most people think. There are a bunch of news pieces from Bloomberg and other mainstream media that present you with "experts" (they aren't really any better than someone deeply involved in the crypto-field) that say BTC 40,000 USD, 50,000 USD and we even heard 500,000 USD...

On the other hand, others make the argument that it is like gold and better than gold and that its total supply is much smaller than gold (comparing units of BTC to ounces of gold), which give it a potential price much higher than currently. While this is interesting, it is not yet certain if bitcoin will have the kind of flows gold has and this poses a risk to that theory/analogy.

The price is likely to keep rising, but I'll emphasize that I have no idea what the long-term, equilibrium or fair value of bitcoin really is and I don't think anyone does. Be careful when people give you a specific price target, there is no such thing, no one really knows. Professional trading involves you being able to constantly assess the current situation and risk/reward.

When you use the bubble word, people tend to get triggered, so I'll give you a real-world example: Microsoft (along with Amazon and other current good tech companies). During the late 90s dotcom bubble (it was not accepted as a bubble by everyone at the time - people kept saying that "we are in a new paradigm", but now, after the facts, we all see it for what it is, a bubble), all tech stocks rose unbelievably. Those of companies that made no sense, as well as those of companies that were good (Microsoft, Amazon, etc.). In the case of Microsoft, the price of 1 share rose to $59.97 at the peak of the bubble and it took Microsoft almost 17 years to reach that price again! It reached that price just 1 year ago, in October 2016... This is to say that you can have something that is good and functional (like Microsoft or BTC), but that the price can get ahead of itself, crash hard and only get back there with a lot of time and the technology getting to a point where that price is justified.

So do the best you can to assess the situation, but most importantly: never invest or speculate more than you can afford to lose.

Awesome! Thanks for that, I'll be on the lookout.

Haha, indeed! Roger must be trying to "rally the [non-existent] troops!"

No news and couldn't find any code for BTG either. I hadn't thought about that, they may indeed have done it to emphasize how absurd it is getting, if so, hats off to them! Clever political move.

Yeah, I agree. I think subverting the bitcoin name is one of the greater risks to mass adoption. I have had similar questions asked, but as long as people are educated, things can still move forward. Anything that has some great potential will face fights/resistance and things of this sort, we just have to push though it and I think the core devs are staying their ground really well - if it weren't for them, we would have probably crashed and burned this thing a good while ago!

Yes, there are actually 2 forks happening within the next month. Bitcoin Gold (BTG) should happen sometime next week and Bitcoin Segwit2x (B2X) should happen around mid-November.

All you have to do is make sure that you have your bitcoins in a wallet where you have access to your private keys at the time of those 2 forks, with a warning.

The warning is that you should be careful about moving your coins around the time of the fork, as they could lead to the other coins (BTG & B2X) being moved as well (you can imagine the coins as initially being "stuck together").

You should wait for news and announcements by the devs, stating that the chains are all stable, before moving your coins.

Dude, relax... I specifically used 'bitcoin as a fad' as a hypothetical scenario to depict a game-theory limitation. I am not saying it will be a fad. In fact, if you read my posts, you will understand that I am a big believer in its potential to be the "king" and only survivor to any serious damage to the crypto-world.

John Nash, the father of game theory, said himself that "game theory may serve no actual purpose other than satisfying some intellectual exercise [paraphrased]." In other interviews later on in life, after he had really thought about his contribution, he equated it to "intellectual masturbation [his direct words]."

So, next time, before you go and attack others and make assumptions about what their beliefs are and say stuff like "kinda tells me you don't know nearly enough about it", go and remember that game theory has some serious limitations in understanding aspects of the world and even economics. It is very narrow and any serious investor will tell you that. Game theory gives you very limited advantage on the stock market, or more seriously established investment environments, where you are playing against big and professional players for the most part and which look at fundamentals vs. the perception of fundamentals - which game theory fails to address as it is always stuck in the 'perception of fundamentals'. As an example, are you rational? You took my hypothetical example so seriously that you assumed what my true beliefs were.

Bitcoin will win primarily because of its branding, what the technology has managed to create (by it being implemented more as a protocol than as a pure service) and by having come into existence at the right time in history. Don't let your game theory constructs pull you away from harder, real analysis of the world.

Another interesting aspect to consider is the meaning of "rationality" itself. Often times, you don't know if a behavior is truly rational until enough time has passed to prove it as such. Many things can be rationalized, which is where the trap lies.

For instance, let's say bitcoin ends up being a total fad for some reason in the future, was any participation in bitcoin rational? What would count as rational participation in bitcoin and irrational?

People forget the age-old 'it has to stand the test of time' and I think that applies in a lot of these digital economy cases. Usually, in everyday life, it's easier to judge rationality, as we all have 'life experience' and can make a good, educated judgement as to the outcome people will have if they undertake certain decisions. But for bitcoin, the most we can do is draw parallels to the current fiat economies and gold and whatnot and compare, however it will not be exact as it is a new 'game' on its own.

Time will tell, but I would caution against using 'rational' to describe a lot of the players (even those who vote for the main chain may not be voting out of rational motives).

Interesting topic!

We don't "need" different versions of bitcoin, but this is bound to happen when we have an open-source project with significant economic potential that other people can fork for all sorts of reasons (ideological, monetary, etc.).

We should always be up-to-date with what each is trying to do, but I suspect nothing will really replace legacy bitcoin with its ongoing improvements.

You have to also include short-term and long-term effects as parameters. For instance, not everyone will defect if the other chain does not offer the security (or perceived security) that the current chain does. In fact, most players are likely to remain on the main chain and ensure its survival, unless some true contender came up that challenges the core perception of legacy bitcoin.

However, most players will economically be incentivized to vote for the fork (either directly or in their own heads/wishes), because it provides them with free coins that can be worth something or nothing (but there is a chance of them getting some extra reward). It's true that sometimes this extra reward can come at the price of stability on the main chain, but that would require most users to understand that and it is questionable how many users understand this (the current mainstream bitcoin community is often excited about forks as they see them as "dividends" or "free money", without understanding potential consequences attached to this).

If the consequences of a fork would be that the old chain dies out, even if miners and users are still signaling support for it and will use it, then that could tilt the game and people will feel, in a much more direct way, the consequences of promoting all these forks - it wouldn't be very popular in my opinion, as most people understand that you do not risk all this progress for something uncertain. But how you would go about implementing such a thing is difficult.

Game theory is nice to understand things and certain behavior, but it assumes too much that players are rational or always economically-motivated. There are plenty of people who are more "rebellious" and fighting for ideologies, which throws off a lot of the game-theory stuff. I question how much of the B2X split is currently just ideological and not economically-motivated. Someone who thinks "they have nothing to lose" will make decisions in a very unpredictable way, according to rational thinking.

From my understanding of the situation, it is not necessarily a malicious thing, but has the potential to become one.

The change in the code is apparently done so that they can initiate the fork and not be stopped from the initiation process by being disconnected from the network in the process.

However, they will suffer consequences from this implementation, since they will then have a harder time connecting between themselves on the B2X network (the B2X nodes will have a harder time finding each other).

Where there may be consequences for legacy bitcoin is that the coins on the 2 networks may become "stuck" together, with risks of replay attacks, etc.

It is certainly not a best-practices approach and everyone should be careful around the fork with spending their coins (better hold off until the water settles).

There are always risks with any sort of venture/investment and, in your case, they have to do with future difficulty of the network and price of bitcoin.

At the end of the day, no one can accurately forecast these 2 variables, but you can make some educated guesses.

In terms of difficulty, the network will grow over time, we are nowhere near the big part of the adoption curve, and this means that difficulty is most likely to keep its rise.

How fast will it rise? No one knows for sure, but you can bet on months where the rise is quicker and months where it is slower - it has to do with bitcoin's price too (when the price falls, some miners automatically drop off and the difficulty levels-off or falls a bit temporarily).

In terms of the price, it is extremely volatile as anyone can attest and there is always a possibility for a big swing up or down.

If you are assuming a 5% increase per month in the price, this compounds to a 34% increase over 6 months (1.05^6), which would put the price of bitcoin ~7800 USD.

Lately, people who have had money to invest have preferred investing in bitcoin itself, rather than mining hardware and it has been a good call, but it has its own risks.

I would say that if you are comfortable with the risks outlined here and also want to mine for the experience of it, then go for it!

At worst, you will recuperate most of your investment and can potentially re-sell the miner to someone else for the difference and have a pretty-sure break-even, but unclear how much pure-profit you will make.

If you want to speculate on bitcoin, buy bitcoin instead, but you have a chance of not recuperating what you invested, while being more exposed to drastic price gains.

I look at the miners as a way to participate in bitcoin with low-risk of losing all of the money invested, it's like a call-option on the stock market!

And for the heat, the air surrounding the miner is obviously hot, but you are not running a mining-farm, so don't worry. Like you said, you have a big house, so it won't be noticeable, especially in Sweden

I'm not sure if you are asking about energy ROI as compared to bitcoin mining ROI or as they relate together, so I'll break-down on both thoughts.

1) Energy ROI: If you want to produce your own energy with solar, wind, etc. then the most important variable is the price you pay for the system.
The next important variable is the cost of electricity where you live, usually priced in $ per kWh (kWatt-hour).
You will have an ROI on your energy investment when your solar panels will have produced enough kW that you saved on your utility bill what you invested in the system.

Example: Let's say you pay $10K for a set of solar panels and those solar panels produce 10 kWatts of energy for you at peak time (around noon) and over the course of the day may give you a total of 50 kWh of power (we are assuming that all of the energy is consumed and that you aren't using a storage battery, just to make the analysis simpler). Let's say the price of 1 kWh in your area is $0.15. You generate 50 kWh a day, which amounts to saving 50 x $0.15 = $7.5 every day. It will take you $10,000 / $7.5 = 1,333.33 days (3.65 years ~ 3 years and 8 months) to have your ROI on energy.

2) Now, if you are using all the energy produced by the solar panels to mine bitcoin, then you can estimate how many bitcoins your mining hardware can produce in a day and decide if you keep the bitcoins to sell at a potentially larger (or lower) price later, or sell them right away.
One thing is certain, you can have a faster ROI on your energy investment if you mine bitcoins with the energy you produce.

However, if you have to pay for new mining hardware, then you have to include the cost of the hardware with the cost of the solar panels and you will probably still have a similar ROI overall. BUT, you will be left with free-energy from solar panels and shiny mining hardware for future use at the end, so an investment in both may be a great idea if you can afford it.

I hope this makes sense.

People underestimate the "brand value" of legacy Bitcoin. People will always herd to what is proven and accomplishes their needs.

It is very difficult to make people change their habits and, in the case of legacy bitcoin, it also has the best minds in the field working on the code, so there is a positive expectancy in terms of future features, not just security.

And when most forks are mired in controversial motives and led by sketchy characters, that further helps strengthen the original bitcoin.

That was an informative article! Thanks for putting in the time for this.

A follow-up post on how forks work (soft-forks and hard-forks) would be pretty timely

And I'm sure it would answer a lot of people's questions these days!

Keep it up, this is the kind of content we need.

Most likely all bitcoins will not be mined in our lifetime, the expected last block to be mined is around 2140, so you better get some anti-aging therapies going, haha!

But otherwise, the miners at that point will still make profits in the form of transaction fees and, as the network is showing greater and greater adoption already, there will likely be tons of transactions by then for the miners to stay profitable.

Otherwise, bitcoins will probably be held as a store of wealth by some, with some of it being sold and bought at different prices, just like gold or any other commodity.

I think we will see a larger integration of bitcoin in our every day lives in the coming decade (easily pay at most places with it, maybe even banking sector adoption?).

Nevertheless, it will be one interesting ride!

It certainly looks interesting, I find it's a clever solution to the bottleneck issues on the network.

Every chain gets to keep its ledger functional, with channels taking care of offloading transactions and even serving as decentralized exchanges in a way.

They tested it between Litecoin and Vertcoin a few weeks ago, Charlie Lee tweeted about it, it was a splendid success, both communities were pumped haha!

I'm going to download the testnet client myself later tonight and give it a spin, so thanks for this update!

From my understanding, you can make changes to the code of bitcoin and improve various aspects of it without a hard-fork. If there is consensus by everyone, then there is no split. The split happens because people literally switch over to the other version of the code. Imagine every machine running one code and then, on the hard-fork, a number of machines start running the new code --> This is the split at the fundamental level.

The new code needs a whole new infrastructure (wallets, etc.) and will be "competing" with the legacy code for users, miners, etc. If users don't migrate, then miners won't have much reward as there will not be any serious bid on the price either. This will be a self-reinforcing cycle to make the chain irrelevant, as is becoming the case with Bitcoin Cash.

The real issue is when people want to assign the name Bitcoin and the symbol BTC to the new code. That can become very problematic, as people will be confused as to which one is which and that can lead to some serious disruption. Some companies seem to want to do that on this fork and, if they do and the fork gains momentum, then we will have potentially more serious issues to deal with than network speed and high fees.

These are my observations so far, let's hope for the best!