As far as I can tell, unless they offer currency exchange features or display advertisements, they don't. It seems like most of these wallet services are just burning through venture capital to stay afloat/compete for market share. How do wallet services plan to monetize?

The first person to give the correct answer. The other guys saying "You'll never catch up" are also correct for all practical purposes, but that doesn't matter because, as impulse stated, the network wouldn't even accept a longer blockchain (by number of blocks) if it did not also have more work behind it - aka the highest computational requirement wins.

Ok so you want to be free to spam the blockchain? You have fundamentally misunderstood A) Freedom (Free Markets), B) The purpose of the TX fee, and C) How you harm the network by creating asinine transactions like sending 1 satoshi.

Tax is a time-based penalty of ownership. Bitcoin transaction fees are not time-based, they are a one-off expense. In fact, the protocol gives preference to "stagnant" Bitcoin transactions and allows for lower transaction fees. There is no taxation penalty for holding Bitcoin. Hold it a year, hold it a day, and when you go to spend it you're stuck with an independent fee.

I just want to point out that using wealth is illogical.

GDP = Income. Income is expressed in currency. Wealth is expressed in goods, like houses, which may be sold for Bitcoin but are not themselves Bitcoin.

Therefore Bitcoin's maximum value should be calculated using world GDP rather than world wealth. I'm not going to calculate, it's a vapid chain of thought.

Have you read the whitepaper? https://bitcoin.org/bitcoin.pdf

It discusses how centralized payment processors are fundamentally flawed because they provide a centralized entity to dispute transactions with. A "bank" cannot even issue such a currency due existing regulation; the SEC would likely view such a currency as an unlicensed security offering. Look into IPO regulation if you're interested. It's an expensive thing.

Furthermore Bitcoin's finite eventuality is not centralization. Miners are profit seekers. Mining profits are a function of exchange rates and market share. The difficulty for solving a block has been growing exponentially and unsustainably. A small operation can enter and exit the mining pool more easily than larger operations which require long contracts and massive overhead. Therefore, as Bitcoin's price fluctuates, we should witness a dynamic mining pool where smaller operations who pool together have an advantage over larger operations.

Additionally these new ASIC chips will only become cheaper as economies of scale comes into effect, and manufacturers cannot increase processing power indefinitely. Therefore we should see the mining pool consist majorly of the price efficient, older chips in the near future as the marginal return on more advanced chips continues to decrease for the market's purposes.

The growth in mining we are witnessing now is not indicative of how the market will act in the long run.

We would witness allopatric speciation in cryptos.

If Putin is successful we would see a hard fork based on network access between the Russian blockchain and the rest of the world. Each fork would function as an individual currency with a different exchange rate relative to its usefulness. I imagine that, should this occur, BTC's popularity/market valuation in Russia would be overtaken by an altcoin because:

A) In order to preserve wealth, aka transactions, after Russia is inevitably reconnected to the internet, Russian Bitcoin developers (do these even exist?) would have to distribute a version of the core that would refuse to acknowledge the longer blockchain the rest of the world will have at that time. After the event Russia would likely be left with a national RuBitcoin and an international Bitcoin (the "real" one), each with different exchange rates.

B) Putin could likely put measures in place to prevent Bitcoin-like entities from existing, so a specialized altcoin might likely be more resistant to attack. Also does Russia even have Bitcoin devs? They probably have a few Altcoins. Everyone does.



An event like this would demonstrate a fine form of evolution in the crypto market, I am sure. However this is working under the assumption that Russia would run a national intranet rather than shut down communications altogether. Then again, who can predict Putin? WWIII or bust.

Arbitrage should theoretically close this gap in the longer run. A Canadian study found a lack of arbitrage opportunity in closing prices over a month, which would indicate that shorter term arbitrage opportunities are being closed, as one would expect. http://www.coindesk.com/bank-canada-research-cryptocurrency-arbitrage-doesnt-exist/

Are you sure these price differences you're seeing can't be explained by exchange fees? I wonder if the differences in price, up to the point that arbitrage becomes unprofitable, would indicate a country's relative interest in BTC since one currency must have a higher relative value?

A fiat-index as you've suggested should be unnecessary, if not now then when the market matures.

That... That's not advisable. Good luck. Don't risk more than you can afford to lose.

Just calling it now, I expect a general stagnation/price decline for the next two-three weeks at a minimum, and a floor around $350. You'll notice the USD exchange rates are particularly sticky around increments of $50.

I don't know if you mean to imply that I would disagree with this statement? Because I agree with it. I don't think I've implied otherwise.

I'll say it again: The U.S. Federal Reserve is not that agency. Also the FED isn't technically a federal agency, at least according to a 1982 court ruling. Furthermore Know-Your-Consumer is also the responsibility of FinCEN, a federal agency created by the Treasury Department.

That's the first time I've gotten a video response. It feels weird. I only watched a few seconds of it, you seemed to be a bit drunk. I did not mean my first post as a personal attack, just bashing some misinformation. If you'd like a discussion then I'd prefer text format.

The FED can't exert any control over Bitcoin whatsoever, unless congress passes a law expanding their power or Bitcoin becomes a staple of the balance sheets of major banks. The FED's toolkit is very limited and can only be used to macroeconomic ends. For instance the FED could tighten credit credit by selling off bonds, thereby restoring yields to lower risk assets and theoretically drive down the price of riskier assets like Bitcoin. But that would violate the FED's tenants of price stability and maximum sustainable employment by screwing with the entire economy in an attempt to exert control over a specific asset.

The notes from the FAC states that the FED expects other government agencies to deal with Bitcoin. The FED cannot directly exert influence on any of these other agencies, so they essentially washed their hands of the cryptocurrency discussion in D.C. back in May when this report was published.

The story here is that these bankers have no bloody idea what the FED does. FinCEN (U.S. Treasury Department) is responsible for SARs. Anti-money-laundering laws are enacted by congress.

Christ, these people just point at a random government institution and say "Regulate this#!@"



EDIT: I've read the FAC report that this article has completely misrepresented. The bankers report that Bitcoin does not pose a systematic risk to the banking system and state that they expect future regulation to mitigate any future risk it may pose. I liked their language, they view Bitcoin as a burgeoning threat.

The article you've quoted is idiotic and its title is inaccurate.

Have you read this? https://bitcointalk.org/oldSiteFiles/byzantine.html

tl;dr The Byzantine Generals' problem is a problem of agreement, where no one party can come to agreement with another without fear of misinformation. The longest blockchain (in terms of hashes to produce) requires at least 51% of the network. Therefore the majority of the network agrees on the content of that blockchain. In Bitcoin's case the blockchain contains transactions, which are Bitcoin. Anyone can easily verify the blockchain's parts, nobody can practically alter part of an existing blockchain without invalidating it, and nobody can practically create a substitute.

The blockchain is an example of proof-of-work. It is a practical solution to the Byzantine Generals' problem because although it is possible to deceive network participants or cripple the network, it is prohibitively difficult.

I do not disagree. However most governments run on a cycle of debt, issuing bonds and repaying those loans through taxes. Bond yields are paid in the same fiat they are bought with. If inflation goes up, the real value of those yields and therefore those payments decreases. So inflation allows a government to decrease the burden of their payments.

I'm suggesting there's a conflict of interest, not a conspiracy. I understand that governments do not regularly cause rapid inflation in order to pay off debts, but some have. Germany after WWI is a prime example.

Assuming the market cap is in USD while transaction fees are in BTC, which miners then convert to fiat (taxes/electricity), discussing profits in USD seems appropriate.

Miners' profits should be dependent on a delicate equilibrium between a transaction publishing bottleneck decreasing Bitcoin's USD exchange rate and being able to demand higher fees, assuming people have a demand for transaction speeds. Any single miner controls a market share of potential transaction publication. Therefore any miner should be able to cause a percent increase in average tx fees as a function of USD by limiting the number of transactions published. Whether or not this sort of strategy can increase their overall profits is dependent on their market share and the demand for quick transactions at that particular time. I suspect quick tx demand shifts on a 24-hour scale. Just another reason to be concerned about concentrated mining pools.

An increase in nominal BTC profits would be very easy in this scheme, depending on market share.

Example: OPEC doesn't control all of the oil. They don't even control most of it. They still manipulate prices to increase their profits by limiting their supply.

Weed is burning in California?

These scammers have a sense of humor/are idiots.

I love this argument.

Additionally why would Scotland's government accept Bitcoin when they have free reign to keep printing fiat and inflate the money supply to pay off their debts? Governments do not give up power. Bitcoin is the people's currency.

I'd buy at $300, but I'm very conservative in terms of risk so prices will likely rally long before my mark is hit. I suspect you're correct in that BTC will fall below $400 USD because the daily exchange rate has a lot of momentum that isn't visible within hourly trades due to arbitrage or the lack thereof.

I don't think there's a single entity manipulating the price, i.e. a large oldcoin dump. More or less the market = lemmings off a cliff. If an exchange were insolvent (and this were public knowledge) then we'd see a massive price drop in that exchange, and lesser drops in solvent exchanges, as happened with Mt. Gox.

You are correct, I'm not trying to FUD despite being a bit pessimistic. Just pointing out some obvious logical flaws. However I also feel inclined to point out that miners might not want to increase block size, since keeping a constant supply against increasing demand would cause an increase in transaction fees and therefore profit. There are likely many soft limits like that which we will encounter in the future.

Again, not trying to FUD. Bitcoin is secure, these issues come up long before any casualties.

This is incorrect. The concept "works" but for practical purposes Bitcoin does not.

A) Bitcoin, with its existing 1MB limit on blocks, is limited to 7tx/sec (according to Bitcoin Wiki). Bitcoin's market cap and average BTC per address directly affect how much wealth can be transacted through Bitcoin in any given period of time. Therefore it directly affects how well the Bitcoin system can function as a payment processor.

B) Bitcoin's functions are very much price dependent. For instance, a multi-billion dollar corporation would not view Bitcoin as a suitable substitute for wire transfers if the market cannot absorb the entry and exit of a corresponding amount of wealth without vast price fluctuations.

There's a feedback mechanism here that too many people are too willing to ignore. These are some of the basic reasons that people expect Bitcoin's price to grow exponentially at some point, and not in the sense of a bubble. Needless to say, Bitcoin may currently be overvalued and continue to crash. However I believe it is too soon for a serious crash and would expect such a crash to occur when the FED (US/Japan in particular) begin tightening their monetary policy.


Therefore I would expect Bitcoin exchange rates to exhibit strong momentum around certain price points, depending on the economy's stage of growth. A decrease begets a decrease.

The government goes after the lowest hanging fruit. Keep your IP Address, shipping information, and obvious payment information (credit card => awful idea) away from any third parties and you're good to go. At the very least this means using a VPN/Tor/combination with a separate browser that won't supply tracking information. Watch those cookies and temporary files.

Less obvious information to keep away: Shared user names. Silk Road tag the same as your blog tag? That's how you get doxed. The government doesn't need probable cause to follow up on a lead.

Paying with Bitcoin through a mixing service is unlikely to do you in.