Yesterday I watched some actors on a national media broadcast / stream who were interviewing some public attention-seekers about about the future of bitcoin. I consider it a woefully inadequate source of useful information, but there are clearly some people who utilize it. These attention seekers were quick to elevate themselves from simple experts in any field they study for a few hours to the position of divine oracles who can predict the future with absolute certainty. History has always provided a forum for such charlatans, and we continue to provide them today. If nothing else, it can provide some brief entertainment.

I make no claim to expertise, for no matter the degrees and certificates on a wall, a senile professor is no longer an expert on anything. Such is how fleeting the value of our opinions are. But having owned and been involved with cryptocurrencies for over 11 years, I think it is possible that some may benefit from my experience and insight.

I consider the most important question being asked today to be the one of what the future of cryptocurrencies will look like. The only real answer is that we do not know. We can't possibly know, and anyone who says they do is being either dishonest with you, or dishonest with themselves. But here I will provide my best guess.

When one considers gold, it has a tremendous number of uses, we can all easily identify several. It is used for jewelry, electronics, aerospace, dentistry, and many others. Of course, gold has historically been used as a store of value or a currency. To suggest that gold has only one use would be contrary to the truth. So it is with cryptocurrencies.

Cryptocurrencies provide a wider and wider range of uses each day. To argue whether or not it is a currency or a store of value ignores these other important uses, and in the end no different that trying to use shades of grey to define a rainbow. However, one must recognize that some things have a single use or purpose that completely overwhelm the other. The purpose of a cannon is to be fired. While it can be used as decorative lawn art, or as a museum exhibition, it was not intended for that purpose when created. Sometimes, the use that it finds is not the use for which it was created. So too do I expect bitcoin and other cryptocurrencies to evolve these uses.

I consider the evidence overwhelming that bitcoin was created as an alternate currency, a role that quickly shifted to a store of value, and is now shifting again to become a settlement instrument and an investment. Etherium provides a framework for smart contracts and much more, yet also is evolving into an investment instrument, especially with the staking paradigm being advanced. I would posit that these many uses we see in cryptocurrencies are like the uses in jewelry or electronic that gold fulfills. While important and valuable, they are not the final use these instruments will fulfill. I believe that the end-use that cryptocurrencies will attain is a use that few have yet considered.

Cryptocurrencies have been designed as almost the perfect collateral. I joking call this possible future the "Cryptocurrency Pawn" model. Banks may eventually realize that bitcoin is the best collateral identified to date. here is a simple example:

Joe wants to buy a new car. He has bitcoin, but of course, he does not want to give up his $50,000 bitcoins expecting them to be worth $100,000 next year. Spending deflationary currency comes with it's own expensive repercussions, as anyone who as ever spent cryptocurrencies can attest. So Joe gets a pawns (gets a loan) on some bitcoins. The bitcoins are locked into a smart contract. The bank advances Joe $50,000 on two $50,000 bitcoins. Joe pays back $1000 a month worth of stablecoins, and when he pays back the $50,000 his bitcoins come back to him, probably worth $250,000 by then. If he fails to make a payment, the bank gets his coins.  There is a great incentive for Joe to pay, and essentially no risk to the bank. The bank can charge some nominal interest for an easy profit that in the end costs them essentially nothing.

There are some experiments along this line being used in Defi, but I tend to think that this is the major future use case. Not as a currency, not as a store of value, but as deflationary collateral. In this manner, cryptocurrencies do not replace fiat currencies. They do not even compete with them. They each coexist in an environment where they each perform those functions for which they are best suited. The banks won't go away, they will just evolve to become more like pawnshops, a a role they often try to fulfill with houses or cars as collateral. But cryptocurrencies can fulfill that role far more effectively and efficiently.

This is the future I see, a million problems solved and a million applications created by cryptocurrencies and blockchain technology. But one with a single major use case: The cryptocurrency Pawn model. A world where selling cryptocurrency would be a last resort, like selling grandma's gold watch.

Well, in the meantime we have some cool ones!

Yeah, there is certainly always going to be competition. However, no one can sell you a sticker and ship it to you for pennies. Even if you could have your stickers produced for free, transaction fees, commissions, and postage will eat up the lions share of $1.00.

The truth be told, it is nearly impossible to sell a physical good online for less than $1.00 and expect to make any profit unless you sell tens of thousands, and even then you are only making a few cents per sale. Unless your customers decide to buy in bulk.

Actually, the sticker ecommerce site was completed some time ago for the original series. (bingies.com)

As to the cost, it is not unusual for similar sized / quality stickers to retail for $4.99 on Amazon and other sites. Selling stickers comes with lots of hidden costs most don't recognize, which only become trivial when you sell them by the tens of thousands. Ours seem rather reasonably priced compared to current market trends. Sure, you can find random stickers for less, but you could pay quite a bit more as well.

Hello all!

We have just launched a kickstarter project for a series of stickers relating to bitcoin! Including such memes as "HODL" and "To the Moon", these stickers would be awesome for computers, car windows, or even skateboards! Come on over and check them out!

https://www.kickstarter.com/projects/752729543/bingies-collectible-binge-stickers-for-bitcoin-ent

Thanks!

Looking at the news that the NASDAQ will use the blockchain via colored coins is clearly positive on it's face. But look at the derivatives, a few of which have been touched upon.

1) With Wall street using colored coins of a greater than dust size it will not be long before some percentage of coins are tied up as markers for property. The number available for currency will be decreased, which is also positive for fiat values.

2) Wall street firms will each still handle most transactions in-house, meaning most transactions will not happen on the blockchain. The blockchain will likely only be touched when firms make large trades between each other, basically clearing house trades. Of course, a small investor could cause a transaction to hit the blockchain if they wished to take personal possession and storage of their shares.

3) HFT would all occur in-house as most of those trades are never executed anyway. Just like trades in gold futures, physical gold rarely ever moves, just entries of ownership in a ledger. In this case, the bitcoins are the bars of gold, the in-house ledger would track temporary ownership. This means that since it rarely touches the blockchain itself, the transactions can be instantaneous.

4) Although most transactions would not hit the blockchain, they certainly would from time to time, and if you add up hundreds of firms doing this the number of transactions would certainly increase, so too would the transaction fees. Even more incentive for miners.

5) I would be interested to see if dividends from companies could be paid in bitcoins to the address holders even if they are anonymous.


There are many other effects, both great and small. These are just a few. How it shakes out no one can predict accurately, but it will definitely become a game changer once live. Hold on to your hat!

I registered in May 2013. It seems like a hundred years ago, not just two years. So many things have come and gone. Like everyone else I mined with graphics cards back then because that was about all you could get. We were amazed when Bitcoin was mentioned in any news media, it was very very rare. I witnessed the rise of the ASICs, security after security rise and fall, media hype, ATMs, Silk Road, Mt Gox, silicon valley investments, Overstock, and now the NASDAQ will use the blockchain. All in just a short two years.

God only knows where it will be in two more years. We are all early adopters still.

New hash comes online every day via a variety of manufacturers and sales. Hence the track record of endless increases in the hashrate since ASICs were released. However, for a period of months a fairly large amount of hash was diverted to crapcoin.This led to two months of rather atypical stability in bitcoin hashrates. It was being pointed to crapcoin faster than new hash was coming on line and so the diff even dropped. Now that it is all being redirected back at btc we have over two months of growth showing up all at once. It makes it appear as if a bunch of new machines all just appeared out of nowhere, but like I said, it is just two months of growth showing up in just a few days. Of course it spikes the hashrate. You could easily end up with a 40% diff increase by the time the dust settles.

The hashrate is jumping because after losing their butts mining the latest crapcoin scam they are pointing their rigs back to bitcoin.

Today the bitcoin fairy visited my mining rig. She sprinkled some magic sparkle dust on it and now it it will be useful for two weeks longer than it was supposed to be... again, for the third time in a row.

Edit: perhaps I should have referred to the ROI Fairy.

News from 2017:

Microsoft today announced the latest Xbox incarnation, the Xbox BTC edition. In addition to providing seamless content delivery and an all-encompassing gaming experience, the BTC edition will include Bitcoin wallet functionality to make in-game micropurchases available to their users. Additionally, several ASIC mining chips have been included in the system to allow your Xbox BTC edition to search for coins to fund those very micropurchases.

Several Bitcoin mining insiders look at the strategy as "closing the loop", wherein users of the Xbox mine small amounts of BTC through mining, and then can send the coins directly to Microsoft for in-game virtual goods, content, and music / video access. It is expected that with over 300 million pre-orders for the Xbox BTC edition, this userbase will constitute nearly 40% of the total Bitcoin network hash, ensuring  decentralization of the network for years to come. This constant stream of micropayments to Microsoft are expected to make Microsoft the second largest holder of BTC known, behind of the massive immovable Satoshi Nakamoto hoard.

In other news, the intellectual property from the Mastercard bankruptcy was purchased for 0.134 BTC by a wealthy anonymous investor, who is said to have a stash which totals well over 7 BTC from mining on his GPU in 2012.

You certainly can, especially in an environment where difficulty increases are being tamed. Here are some factors to consider:

1) juice/hash. You need to know your operating expenses. Figure out exactly what it costs to run the unit each month in electricity. Once you have that number (say $50.00 per month for a 1 TH Dragon) you have a good starting point.

2) expected returns. Look at the unit return in BTC with a 2%, a 5%, a 10%, a 20%, and a 30% average difficulty increase. Find the date for each where at current USD/BTC prices it will be unprofitable to run. Figure out your total profit at each diff if you turned it off that day minus the electricity. This tells you exactly how much you have to spend on the miner assuming each diff.

3) Price of the miner. Lets say you figure out that at 2% diff increases a 1 TH Dragon will net you $1165 by July 2015 after electricity costs. And lets say you buy a used one on ebay, delivered for $399. It does not take a genius to realize that you will over double your money.  Of course, with 30% diff increases you will probably never get the $399 back, you would need to buy the unit for more like $70. Buying new equipment at retail prices will usually get you burned. Look for good second-hand deals, they are out there, not just every single day.

4) Lastly, resale. Believe it or not, people will still buy unprofitable miners. You may well recoup $100 selling your unit when you are done with it. Not everyone can do math.

You are a microcosm of why small miners will reap benefits. As you are forced out, those who do not need to sell BTC to continue mining will find their ROI increasing as the difficulty increases decline. I think you just much proved my point. I (or someone like me) will likely buy your gear at a discount and be quite happy.

It seems odd that so few understand the dynamics of exponential growth on even a basic level.

The difficulty level cannot continue to double every few months forever. You can start with the laws of thermodynamics, and realize that in just a 5 more years of doubling it would utilize the entire energy output of the sun for hashing with even quantum computing. It had to stop increasing at that rate, and it did.

Additionally, from a commercial standpoint, many endeavors were built with a specific BTC/$ value. If you built out a large mining operation based upon $500/btc you are bleeding and will probably shut down in the near future. However, if you bought a miner for your home and are running it, you are dancing in the street. You can watch the $/btc rate jump from $100 to $1000 and back to $100 and afford to keep hashing. You can hold pretty much forever, unlike an ongoing major mining concern. And when the difficulty steadfastly refuses to increase, the life of your gear just got extended, and so does your ROI.

My crystal ball predicts a movement towards decentralization of mining. Larger mines find it difficult of survive large $/btc swings for extended periods.

PS: Try running a mining calculator on some current devices where the difficulty increases around 2% per cycle and see what happens. It's raining ROI like never before for devices you can have delivered in a few days on the secondary market. Expect prices on second-hand devices to go through the ceiling shortly. Even at current prices, a 1Th machine with 1KW usage will make around $85/month after electricity costs. Projections at 2% per cycle says 100% ROI in 3 months, and profits continue well into 2016.

The fact that thousands of 333 Mhs USB miners still change hands on ebay each month should indicate that there is a large demand for usb miners.

My directs showed up just fine.

That best kept secret in mining. The second best secret is just how well you do when you sell your old equipment on the secondary market when you are done with it.

Buy a unit for $500-$600, mine a coin out of it, and then sell it for $300. Happens every single day.

Gen3 chips roll out, Rockminers released, tubes released, prismas released, 5PH cloudmining comes online...

yet still... no divs.

What exactly is FC waiting for to happen to pay divs? The resurrection of Satoshi?

If you are mining now and are still making more in btc than you are spending in electricity you are dancing in the streets. The lifetime of your miners just got increased, as did your profit. No one realistically bought miners expecting less than 5% increases when the did the calculations. The longer it stays subdued the more gravy gets poured on the current miners.

Perhaps you get 1000 (or 1100?) watt power supplies for free, but I don't. It is my understanding that the Prisma does not come with a power supply. The dragon came with PS installed.

I have been mining for years, starting with graphics cards, to butterfly rigs, to AM BE, cube, and all manner of USB miners.

$550 delivered for a complete 1 TH solution running today will do just fine. I have no doubt I can shake a few coins out of it.

PS: There isn't a mining calculator out there worth a crap. That's the first thing you learn as a miner.