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The title may be a bit link-baity, I'll admit 
But the underlying conceit isn't a stretch at all.
Whether BTC would ever be accepted by the IMF / international community as a modern-day bancor - well, that's impossible to say - but saying that it fits the criteria for the bancor is simple observation.
But the underlying conceit isn't a stretch at all.Whether BTC would ever be accepted by the IMF / international community as a modern-day bancor - well, that's impossible to say - but saying that it fits the criteria for the bancor is simple observation.
...they just gave it a funny name, the bancor 
From http://en.wikipedia.org/wiki/Triffin_dilemma:
"The Triffin dilemma or paradox is the conflict of economic interests that arises between short-term domestic and long-term international objectives when a national currency also serves as a world reserve currency. The dilemma of choosing between these objectives was first identified in the 1960s by Belgian-American economist Robert Triffin. He pointed out that the country whose currency, being the global reserve currency, foreign nations wish to hold, must be willing to supply the world with an extra supply of its currency to fulfill world demand for these foreign exchange reserves, and thus cause a trade deficit.
The use of a national currency, e.g., the U.S. dollar, as global reserve currency leads to tension between its national and global monetary policy. This is reflected in fundamental imbalances in the balance of payments, specifically the current account: some goals require an overall flow of dollars out of the United States, while others require an overall flow of dollars into the United States.
Specifically, the Triffin dilemma is usually cited to articulate the problems with the role of the U.S. dollar as the reserve currency under the Bretton Woods system."
Keynes argued that a national currency could not function as the world reserve currency for exactly this reason and proposed the bancor, a supranational currency, to solve this problem. Unfortunately the idea died with Bretton Woods, but in 2010 the IMF revived it:
"On April 13, 2010, the Strategy, Policy and Review Department of the IMF published a comprehensive report[6] examining these aforementioned problems as well as other world reserve currency considerations, recommending that the world adopt a global currency (bancor) and that a global central bank be established to administer such a currency. In this report, the current issues with having a national global reserve currency are addressed. The merits, difficulties and effectiveness of establishing a multi-currency reserve system are weighed against that of the SDRs, or "basket currency" strategy, and those of establishing this new "global reserve currency". A new multilateral framework and 'multi-polar system' for managing capital flows and national debts is also called for, but the IMF cautions that it prefers a gradual shift to this new framework, rather than a sudden change."
Moral of the story: next time someone tells you Bitcoin is a libertarian fantasy, point out that Keynes and the IMF would love it if the world ditched the USD for BTC.
From http://en.wikipedia.org/wiki/Triffin_dilemma:
"The Triffin dilemma or paradox is the conflict of economic interests that arises between short-term domestic and long-term international objectives when a national currency also serves as a world reserve currency. The dilemma of choosing between these objectives was first identified in the 1960s by Belgian-American economist Robert Triffin. He pointed out that the country whose currency, being the global reserve currency, foreign nations wish to hold, must be willing to supply the world with an extra supply of its currency to fulfill world demand for these foreign exchange reserves, and thus cause a trade deficit.
The use of a national currency, e.g., the U.S. dollar, as global reserve currency leads to tension between its national and global monetary policy. This is reflected in fundamental imbalances in the balance of payments, specifically the current account: some goals require an overall flow of dollars out of the United States, while others require an overall flow of dollars into the United States.
Specifically, the Triffin dilemma is usually cited to articulate the problems with the role of the U.S. dollar as the reserve currency under the Bretton Woods system."
Keynes argued that a national currency could not function as the world reserve currency for exactly this reason and proposed the bancor, a supranational currency, to solve this problem. Unfortunately the idea died with Bretton Woods, but in 2010 the IMF revived it:
"On April 13, 2010, the Strategy, Policy and Review Department of the IMF published a comprehensive report[6] examining these aforementioned problems as well as other world reserve currency considerations, recommending that the world adopt a global currency (bancor) and that a global central bank be established to administer such a currency. In this report, the current issues with having a national global reserve currency are addressed. The merits, difficulties and effectiveness of establishing a multi-currency reserve system are weighed against that of the SDRs, or "basket currency" strategy, and those of establishing this new "global reserve currency". A new multilateral framework and 'multi-polar system' for managing capital flows and national debts is also called for, but the IMF cautions that it prefers a gradual shift to this new framework, rather than a sudden change."
Moral of the story: next time someone tells you Bitcoin is a libertarian fantasy, point out that Keynes and the IMF would love it if the world ditched the USD for BTC.
I'm a professional software engineer / devops type with experience writing algorithmic trading software. Interested in your own trading bot that implements your own strategies instead of just simple dual moving average trading? Send me a message detailing your requirements and I'll let you know if it's feasible / possible / how much I'd ask for in BTC!
Strategies I've written / backtested in the past:
Sentiment Analysis w/ Naive Bayes
Deep Learning w/ Theano
Means reversion between two securities (e.g. track treasuries or gold index against BTC price)
Linear Regression of existing trends
the standard DMA/EMA/MACD algos
...oh just boatloads really. Ask me!
After payment is agreed on I'll ask for BTC to be placed in escrow until you sign off on the work that I submit. Also, I'm a real software dev, which means once we start swapping messages we'll also have to talk IRL, sign a contract, etc.
What I'll hand off to you:
A docker container and a github repository with your code and documentation on running it. All work will be done in python.
One note: I STRONGLY recommend using algorithmic trading for backtesting and manual alerting only. My personal opinion is that an algo bot properly written works great if it's job is to backtest data, apply the algo to existing data on a daily / 4h / even 1h basis, and then *SMS a human being* with Twilio to let them know of possible entry / exit positions.
If you want more than that, you're probably not looking for a bot but rather a trading system that includes algorithmic trading (read: long term consulting deal and probably between several months to a year of development time. If you're an uberwhale who wants to have that discussion, ping me )
Strategies I've written / backtested in the past:
Sentiment Analysis w/ Naive Bayes
Deep Learning w/ Theano
Means reversion between two securities (e.g. track treasuries or gold index against BTC price)
Linear Regression of existing trends
the standard DMA/EMA/MACD algos
...oh just boatloads really. Ask me!
After payment is agreed on I'll ask for BTC to be placed in escrow until you sign off on the work that I submit. Also, I'm a real software dev, which means once we start swapping messages we'll also have to talk IRL, sign a contract, etc.
What I'll hand off to you:
A docker container and a github repository with your code and documentation on running it. All work will be done in python.
One note: I STRONGLY recommend using algorithmic trading for backtesting and manual alerting only. My personal opinion is that an algo bot properly written works great if it's job is to backtest data, apply the algo to existing data on a daily / 4h / even 1h basis, and then *SMS a human being* with Twilio to let them know of possible entry / exit positions.
If you want more than that, you're probably not looking for a bot but rather a trading system that includes algorithmic trading (read: long term consulting deal and probably between several months to a year of development time. If you're an uberwhale who wants to have that discussion, ping me
)Xiaoxiao are you still holding any bitcoins?
I want to help you get rid of them - how about 1 dollar each? We both agree they aren't worth anything at all, so a dollar per BTC is quite a deal. I will even buy your satoshis! Deal?
I want to help you get rid of them - how about 1 dollar each? We both agree they aren't worth anything at all, so a dollar per BTC is quite a deal. I will even buy your satoshis! Deal?
I think the "no one knows who Satoshi is" canard is going to get us a lot of mileage in terms of depressing the price. No need to kill that golden goose.
(Why is it important who Satoshi is if the bitcoind code is open source? Do you care about the name or full transparency into his work? If I told you Satoshi was Brad Pitt, what would change about bitcoin? What if I told you it was George Soros? Or the ghost of Pol Pot?)
(Why is it important who Satoshi is if the bitcoind code is open source? Do you care about the name or full transparency into his work? If I told you Satoshi was Brad Pitt, what would change about bitcoin? What if I told you it was George Soros? Or the ghost of Pol Pot?)
this post got deleted as its own topic, but i did spend quite a bit of time creating it, so I will post it here i guess:
http://i.imgur.com/ALwg2Dn.png
http://i.imgur.com/ALwg2Dn.png
http://i.ytimg.com/vi/RtWT0TJKOKk/maxresdefault.jpg
Interesting how the trolls die down during upswings. If i didn't know better I'd say they had an agenda...
Whoah. GABI calls the bottom the day that Paypal announces three partnerships? Someone call the SEC, that's a little too closely correlated to not wonder if there was collusion or some shared information between parties (personal opinion).
I just watched the price shoot from 400 to 420 over the last half hour, and volume is appearing out of nowhere... thank god I ate lunch in the office today
I just watched the price shoot from 400 to 420 over the last half hour, and volume is appearing out of nowhere... thank god I ate lunch in the office today
Re: Butterfly Labs (BFL) raided today by U.S. Marshalls 9/19/14
http://arstechnica.com/tech-policy/2014/09/feds-label-bitcoin-miner-maker-butterfly-labs-as-systematic-deception/ - Cyrus Farivar's article for Ars Technica on the FTC civil lawsuit, dated 9/23.
I predict the rise of the portable ultra efficient "my office or co-working space won't notice the power draw" miner There will be a sharper divide between people who are paying for power at scale and those who are using surplus power with no additional realized costs. Make friends with people who have long term contracts in data centers with unused power and empty cages, is my advice.
There will be a sharper divide between people who are paying for power at scale and those who are using surplus power with no additional realized costs. Make friends with people who have long term contracts in data centers with unused power and empty cages, is my advice. Bitcoin has gotten a lot of attention.But I wish people would stop wasting energy.
I often hear this from nature activists and groups like that. Yes, mining coins (and by that, making transactions possible) does take a lot of energy. Yes, it was better if this didn't took as much energy as it does now, but you know this "difficulty" makes the coin gain value.
Now, the current system of banks. I think they use even more energy for ordinary transactions of money..
but coin is heavier than paper money, and feel free to convince me money transaction costs more energy than mining coins.
Sure. Let's factor in everyone that is employed by the banking system - the energy cost of paying them and putting them in an office and making them productive workers and their car rides to and from work and their A/C and computers and all the rest - just as a start....
When calculated in the OP over the time period from March 14, 2013 to March 13, 2014 the average increase in the difficulty and hash rate was 23.92% per adjustment period and the average length of each adjustment period was 11.38 days.
Recalculated over the period June 29, 2013 to June 29, 2014 it was 23.45% and 11.41 days.
Now, recalculating over the period August 24, 2013 to August 31, 2014 it is 21.12% and 11.63 days.
Assuming the network growth rate over the next year is the same as it was this last year we get:
In other words something has got to give by the end of the year, or actually before December 1
Recalculated over the period June 29, 2013 to June 29, 2014 it was 23.45% and 11.41 days.
Now, recalculating over the period August 24, 2013 to August 31, 2014 it is 21.12% and 11.63 days.
Assuming the network growth rate over the next year is the same as it was this last year we get:
Code:
Hash Rate Power Energy Cost Cost
Date Difficulty TH/s MW MWh $/Period $/BTC
--------- ------------------ ---------- ------ ---------- -------------- ----------
11-Sep-14 33,220,936,877 237,808 238 66,349 $6,634,853 $131.64
23-Sep-14 40,236,446,759 288,028 288 80,360 $8,035,984 $159.44
04-Oct-14 48,733,473,526 348,853 349 97,330 $9,733,002 $193.12
16-Oct-14 59,024,880,009 422,523 423 117,884 $11,788,392 $233.90
28-Oct-14 71,489,598,585 511,750 512 142,778 $14,277,833 $283.29
08-Nov-14 86,586,583,575 619,820 620 172,930 $17,292,988 $343.11
20-Nov-14 104,871,710,060 750,712 751 209,449 $20,944,876 $415.57
02-Dec-14 127,018,241,359 909,246 909 253,680 $25,367,960 $503.33
13-Dec-14 153,841,618,762 1,101,258 1,101 307,251 $30,725,098 $609.62
25-Dec-14 186,329,486,300 1,333,819 1,334 372,135 $37,213,544 $738.36
05-Jan-15 225,678,056,071 1,615,491 1,615 450,722 $45,072,202 $894.29
17-Jan-15 273,336,153,086 1,956,646 1,957 545,904 $54,590,430 $1,083.14
29-Jan-15 331,058,561,407 2,369,846 2,370 661,187 $66,118,694 $1,311.88
09-Feb-15 400,970,635,767 2,870,303 2,870 800,815 $80,081,465 $1,588.92
21-Feb-15 485,646,557,708 3,476,447 3,476 969,929 $96,992,858 $1,924.46
05-Mar-15 588,204,117,648 4,210,593 4,211 1,174,756 $117,475,554 $2,330.86
16-Mar-15 712,419,512,763 5,099,775 5,100 1,422,837 $142,283,732 $2,823.09
28-Mar-15 862,866,387,600 6,176,732 6,177 1,723,308 $172,330,835 $3,419.26
08-Apr-15 1,045,084,236,901 7,481,119 7,481 2,087,232 $208,723,207 $4,141.33
20-Apr-15 1,265,782,371,309 9,060,961 9,061 2,528,008 $252,800,823 $5,015.89
02-May-15 1,533,086,956,002 10,974,431 10,974 3,061,866 $306,186,635 $6,075.13
13-May-15 1,856,840,218,301 13,291,983 13,292 3,708,463 $370,846,321 $7,358.06
25-May-15 2,248,962,841,151 16,098,949 16,099 4,491,607 $449,160,670 $8,911.92
06-Jun-15 2,723,892,885,897 19,498,682 19,499 5,440,132 $544,013,236 $10,793.91
17-Jun-15 3,299,117,405,623 23,616,363 23,616 6,588,965 $658,896,517 $13,073.34
29-Jun-15 3,995,816,323,188 28,603,604 28,604 7,980,405 $798,040,547 $15,834.14
10-Jul-15 4,839,642,281,734 34,644,038 34,644 9,665,686 $966,568,646 $19,177.95
22-Jul-15 5,861,665,181,962 41,960,074 41,960 11,706,861 $1,170,686,065 $23,227.90
03-Aug-15 7,099,516,184,307 50,821,092 50,821 14,179,085 $1,417,908,463 $28,133.10
14-Aug-15 8,598,773,298,472 61,553,356 61,553 17,173,386 $1,717,338,634 $34,074.18
26-Aug-15 10,414,639,578,109 74,552,032 74,552 20,800,017 $2,080,001,680 $41,269.87
07-Sep-15 12,613,975,712,232 90,295,733 90,296 25,192,510 $2,519,250,952 $49,985.14
Date Difficulty TH/s MW MWh $/Period $/BTC
--------- ------------------ ---------- ------ ---------- -------------- ----------
11-Sep-14 33,220,936,877 237,808 238 66,349 $6,634,853 $131.64
23-Sep-14 40,236,446,759 288,028 288 80,360 $8,035,984 $159.44
04-Oct-14 48,733,473,526 348,853 349 97,330 $9,733,002 $193.12
16-Oct-14 59,024,880,009 422,523 423 117,884 $11,788,392 $233.90
28-Oct-14 71,489,598,585 511,750 512 142,778 $14,277,833 $283.29
08-Nov-14 86,586,583,575 619,820 620 172,930 $17,292,988 $343.11
20-Nov-14 104,871,710,060 750,712 751 209,449 $20,944,876 $415.57
02-Dec-14 127,018,241,359 909,246 909 253,680 $25,367,960 $503.33
13-Dec-14 153,841,618,762 1,101,258 1,101 307,251 $30,725,098 $609.62
25-Dec-14 186,329,486,300 1,333,819 1,334 372,135 $37,213,544 $738.36
05-Jan-15 225,678,056,071 1,615,491 1,615 450,722 $45,072,202 $894.29
17-Jan-15 273,336,153,086 1,956,646 1,957 545,904 $54,590,430 $1,083.14
29-Jan-15 331,058,561,407 2,369,846 2,370 661,187 $66,118,694 $1,311.88
09-Feb-15 400,970,635,767 2,870,303 2,870 800,815 $80,081,465 $1,588.92
21-Feb-15 485,646,557,708 3,476,447 3,476 969,929 $96,992,858 $1,924.46
05-Mar-15 588,204,117,648 4,210,593 4,211 1,174,756 $117,475,554 $2,330.86
16-Mar-15 712,419,512,763 5,099,775 5,100 1,422,837 $142,283,732 $2,823.09
28-Mar-15 862,866,387,600 6,176,732 6,177 1,723,308 $172,330,835 $3,419.26
08-Apr-15 1,045,084,236,901 7,481,119 7,481 2,087,232 $208,723,207 $4,141.33
20-Apr-15 1,265,782,371,309 9,060,961 9,061 2,528,008 $252,800,823 $5,015.89
02-May-15 1,533,086,956,002 10,974,431 10,974 3,061,866 $306,186,635 $6,075.13
13-May-15 1,856,840,218,301 13,291,983 13,292 3,708,463 $370,846,321 $7,358.06
25-May-15 2,248,962,841,151 16,098,949 16,099 4,491,607 $449,160,670 $8,911.92
06-Jun-15 2,723,892,885,897 19,498,682 19,499 5,440,132 $544,013,236 $10,793.91
17-Jun-15 3,299,117,405,623 23,616,363 23,616 6,588,965 $658,896,517 $13,073.34
29-Jun-15 3,995,816,323,188 28,603,604 28,604 7,980,405 $798,040,547 $15,834.14
10-Jul-15 4,839,642,281,734 34,644,038 34,644 9,665,686 $966,568,646 $19,177.95
22-Jul-15 5,861,665,181,962 41,960,074 41,960 11,706,861 $1,170,686,065 $23,227.90
03-Aug-15 7,099,516,184,307 50,821,092 50,821 14,179,085 $1,417,908,463 $28,133.10
14-Aug-15 8,598,773,298,472 61,553,356 61,553 17,173,386 $1,717,338,634 $34,074.18
26-Aug-15 10,414,639,578,109 74,552,032 74,552 20,800,017 $2,080,001,680 $41,269.87
07-Sep-15 12,613,975,712,232 90,295,733 90,296 25,192,510 $2,519,250,952 $49,985.14
In other words something has got to give by the end of the year, or actually before December 1
Thanks so much for this.
Yes, something has to give.
If it's the price, some people will come out of the woodwork and say this is proof that "price follows hashrate". I will still disagree.
If the hashrate actually goes down (like in 2011), at least part of the reasoning that "hashrate follows price" is supported (namely: "if price is lower than production cost, miners will switch off their equipment").
If nothing gives (bitcoin price is below production cost) we know: Either at least some miners are economically irrational or we're making wrong assumptions about either the production cost or the price miners are able sell at.
Interesting times ahead
I love the technical analysis, and it's good solid math, but there is a flaw I keep noticing (think I commented on another BurtW thread about them a while back...)
The global energy supply available over time isn't a static number as measured today - it will increase annually, and by a decent amount each year (in 2018 we could potentially have an additional 10% more power available globally than we do today.)
In the interest of adding more fundamental data, here's a link to the U.S. Energy Information Administrations projections for US energy production and imports forecasted through 2021. http://www.eia.gov/oiaf/aeo/tablebrowser/#release=AEO2014&subject=0-AEO2014&table=1-AEO2014®ion=0-0&cases=full2013full-d102312a,ref2014-d102413a
The price of energy could also spike due to heightened geopolitical volatility playing havoc with supply and demand. (E.g. do you think it will be easier or harder to get oil from Russia/Iraq/the Mid-East in the next four years than it is today, or will things just stay the same? Will we bring more renewable energy online to make up for potential scarcity of any existing energy sources? Enough for a surplus? Will there be no scarcity at all?)
"May you live in interesting times."
Keep the data coming BurtW, this is awesome. It might be worth it to correlate the price of BTC with the price of, for example, the NYSE Energy index (http://www.marketwatch.com/investing/index/nye.id)...are you still hodling?
at price of how will you sell?
at price of how will you sell?
If someone offered you 1000 dollars for your car or 2000 dollars for your car, which offer would you be more likely to accept? Its weird to me that in bitcoin sometimes people are more inclined to accept low offers than high offers. Well not me. Just like everything else in life. the more you offer me for it the more likely i will be to sell it, so as the price of bitcoin falls i become LESS inclined to sell my bitcoins, not more.
Is that how the market works? You just imagine a price and that's how much the asset is worth? LOL
The market is comprised of actors who, by definition, disagree on value and agree on price.
Re: $415...$410...how much more? Still want to lose money? Then keep hodling
I agree with Sevvero and DeadCoin and falllling! Bitcoin is dying, dying, dying!
Anyone who wants to spare themselves the shame of ever having owned bitcoins, message me and you can send them to my own personal address. I'll save you from the humiliation and you can tell others you were hacked or that I installed a miner on your PC or whatever you like.
Just doing what I can to help out
Anyone who wants to spare themselves the shame of ever having owned bitcoins, message me and you can send them to my own personal address. I'll save you from the humiliation and you can tell others you were hacked or that I installed a miner on your PC or whatever you like.
Just doing what I can to help out
Re: These are the 2 main events that start the next rally:
Huh, well there are some people who claim that the ETF is already priced in and people may even not be that interested in the ETF as much as everyone seems to think! If the ETF fizzles, the price will suffer even more. I for one am afraid of that ETF!
Those people are wrong.
Why? Could you give me a rational explanation why you think that the ETF will be a truly unique investment vehicle and thus a "game-changer" for Bitcoin? I do see that people keep on proclaiming this, but I fail to see what is changing here, really!
There are literally trillions of dollars of fiat that could (hypothetically) be invested into an ETF that simply can't be invested now, legally or morally. Hedge funds, retail investors, pension fund managers, and (most) securities traders aren't exactly lining up to buy Bitcoins through Cryptsy/Mintpal/Coinbase/LocalBitcoins/IRC-OTC transactions to manage their customers wealth.
You want big money in BTC, then you want Wall Street. You want Wall Street, you want an ETF.
Once Wall Street goes in and we go through *that* bubble, we need to get Real Estate into the mix....
Again, efficiency does not matter.
Look at it this way:
Assume every block is worth $50,000.
The amount of power that can be consumed to produce that block is $50,000 minus some overhead number (real estate, cost of hardware, labor, profit, etc.) The higher the price the more power can be consumed. Power consumption is directly proportional to price regardless of efficiency.
The more efficiently the power is used the higher the hash rate and difficulty of the network can and will be. Efficiency drives difficulty and hash rate, price drives power consumption.
Sure some miners are better situated (cheaper power, cheaper cooling, better hardware, etc.) so they are more profitable than other miners. This extra profit allows them to afford to buy even more hardware - pushing out the less efficient miners who will be losing money. As new hardware comes on line and old hardware is retired the power consumption remains proportional to price.
Also, I am looking at the overall averages for the entire network and looking at estimating the power consumption of the entire network. Local variations do not matter when looking at overall averages.
Look at it this way:
Assume every block is worth $50,000.
The amount of power that can be consumed to produce that block is $50,000 minus some overhead number (real estate, cost of hardware, labor, profit, etc.) The higher the price the more power can be consumed. Power consumption is directly proportional to price regardless of efficiency.
The more efficiently the power is used the higher the hash rate and difficulty of the network can and will be. Efficiency drives difficulty and hash rate, price drives power consumption.
Sure some miners are better situated (cheaper power, cheaper cooling, better hardware, etc.) so they are more profitable than other miners. This extra profit allows them to afford to buy even more hardware - pushing out the less efficient miners who will be losing money. As new hardware comes on line and old hardware is retired the power consumption remains proportional to price.
Also, I am looking at the overall averages for the entire network and looking at estimating the power consumption of the entire network. Local variations do not matter when looking at overall averages.
"Allows them to buy more hardware" and "necessarily leads them to spend all new profits into recycling and building more efficient hardware in a never-ending always forward moving cycle" are two different things. I agree that what you're proposing is a possible scenario, but not the most likely.
We've seen this same scenario play out with the move from dedicated servers to multi-core virtualized cloud servers - the question people were asking with datacenters in 2007 was "how the hell are we gonna get enough power for this?!" and now in 2014 that question seems absurd.
Purchasing, deploying, running, and managing the cap-ex and op-ex of all this new hardware at scale is *costly*. It's not frictionless in terms of time and effort. Having the money to buy new hardware and being able to do so are different things at scale.
It is silly to assume that by such a date we would not have much more efficient ways of powering this technology with the vast amount of money which IS being and WILL be poured into the infrastructure of maintaining this epic ecosystem.
2/10 for effort
2/10 for effort
I hope those who did the math included this:
"Combined with Moore's law, performance per watt would grow at roughly the same rate as transistor density, doubling every 12 years." -- http://en.wikipedia.org/wiki/Moore%27s_law#Other_formulations_and_similar_laws
Neither one of you saw or understood that mining efficiency does not matter when calculating the total power consumption of the Bitcoin Network."Combined with Moore's law, performance per watt would grow at roughly the same rate as transistor density, doubling every 12 years." -- http://en.wikipedia.org/wiki/Moore%27s_law#Other_formulations_and_similar_laws
Efficiency only affects total hash rate and difficulty, not power consumption.
It is a given that mining hardware will become more efficient for the reasons you stated. However, more efficient mining hardware means that for a given amount of power the network will just produce a larger hash rate. When more efficient mining hardware hits the market miners will just buy more of it until they consume the same amount of power as before the more efficent mining hardware was on the market.
The total power consumed by the network is only bounded by the amount of money available in each block to spend on power.
Couple of things:
1) That assumes an even distribution of "most efficient" mining hardware, and that access to available power is uniformly distributed. Right? I don't think that's likely - and "When more efficient mining hardware hits the market miners will just buy more of it until they consume the same amount of power as before" is assuming that anyone can get their hands on the capital/BTC to keep upgrading, and that they'll never be told "nope, no more power for you" from the electric company. It's more likely that people who would be otherwise be spending lots on power will be able afford very efficient mining hardware that doesn't use much power, and the rest will use inefficient hardware and soak up as much power as they can get. I think this makes it hard to predict how much power consumption is for a certain target hash rate. At least I think that's true... check my logic please?
2) Morgan Stanley's just released a report re: Tesla and home solar, suggesting that available power will increase by 39GW a year through 2020. http://forms.greentechmedia.com/Extranet/95679/Morgan%20Stanley%20Solar%20Power%20&%20Energy%20Storage%20Blue%20Paper%20July%2029%202014.pdf So new power is coming online all the time apparently
(Though if I'm right, then this means Russia / Saudi / China / some other major energy producer and user will have to a) replace their dependence on using and selling existing fuels with new technologies and b) shift a ton of their new surplus power straight to mining BTC... like, mining would have to happen on the nation-state or Google/Apple corporate level. We're not getting this much power from nerds with asics anymore, it's gotta be datacenters in remote cold locations where energy can be spent solely on mining and not on cooling...)
If I were Putin I'd open a colo in Siberia and send 10% of Gazprom's reserves straight to it to power my ASIC farm /conspiracy
Re: Do you really believe that Bitcoin will hit 1,000,000
Well you can continue to talk about GDP or GWP or whatever, both are fundamentally unmeasurable, and have no relation to the value of money. The same goes for the fundamentally unmeasurable velocity.
And this ...
Quote
The point the original poster was making was that somehow there wasn't enough money around for BTC to hit 1MM [...]
is totally absurd. There does not have to exist any money outside of bitcoin (although in the market, there always tend to be alternatives). And if there are alternatives, like fiat, and the demand to hold value in reserve in the form of money in total is fixed, less value to the alternatives just means higher value to bitcoin.
The value is decided in the market from the mind of the actors in the demand and supply. The market consist of pairs, where each bitcoin supplier decides that it is worth it to trade a number of coins for a number of someting else. And vice versa for the bitcoin buyer. You could say the supply is the absens of demand to have, compared to the other good. What underlying reasons each actor has for his decision is unknown, maybe even for the individual actor himself. The urge to slush the money around doesnt give it any special value, only the demand to have or not to have.
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I think this is reflecting a conflation of two questions in the original thread title - does BTC have a certain value vs. can you swap out BTC for a certain amount of USD.
And wait, GWP is fundamentally unmeasurable? That seems strange. If you believe it's fundamentally unimportant for this calculation, that's one thing, but you're saying that the sum total of world economic activity is something that we can't measure, or at least make an educated guess at within an order of magnitude, and that it's not a relevant economic indicator?
Here's a chart from the world bank measuring current world GDP: http://data.worldbank.org/indicator/NY.GDP.MKTP.CD/countries/1W?display=grapht
Is the world bank lying to me?
Re: Do you really believe that Bitcoin will hit 1,000,000
What does GDP have to do with market cap?
There is 30 something trillion dollars in offshore bank accounts. How much in physical gold and silver? How about paper gold and silver? USD? EURO? 1m/btc would be easy if we reach universal adoption. Of course, you'll start to measure inflation (or deflation) by a basket of good purchased with btc... and measuring btcs value in fiat currency will be idiotic.
There is 30 something trillion dollars in offshore bank accounts. How much in physical gold and silver? How about paper gold and silver? USD? EURO? 1m/btc would be easy if we reach universal adoption. Of course, you'll start to measure inflation (or deflation) by a basket of good purchased with btc... and measuring btcs value in fiat currency will be idiotic.
Nothing. Even in the most optimistic case of bitcoin taking over, you can not compute the value. You can not predict how large part of the value each actor has produced, he wants to have in reserve, in the form of value compressed into bitcoins.
You know, given the fact that his compressed value tokens are safe for plunder, an actor might want to have much more than now in reserve, consequently the value of all bitcoins might be larger than the current value of all fiat money.
Hmm. I agree with most of this as well as the subsequent posts, but I don't think GDP (actually GWP, gross world product) is completely unrelated to value of bitcoin. Mind talking me through this?
Of course we can't predict anything
Even modeling BTC network growth is hard, and I'm a network nerd. Predicting BTC value is economics mixed with voodoo and I'm out of my depth there. But here's how I think GWP fits in (please correct me if I'm wrong, but go into detail!):If a large number of people are holding long term, they're causing artificial scarcity for bitcoins. Assume that this takes a large number of BTC out of circulation for a decent amount of time. We've seen this with domain name squatters, we've seen it in the ip address black market, and we'll see it here - people like holding large swaths of imaginary numbers if they're scarce. *shrug*
The remaining available coins value will be in their utility to the people who are actually using them - either you're holding, or you're engaging in a transaction, right? Buying phone cards, sending remittances, gambling, silk road, those are all part of the GWP.
If the total value of these "utility coins" has to be more than the GWP to hit 1 million, that still tells us not much I think
But if the value is a factor of the current world GWP, that's a more likely scenario than "GWP has to double and everyone has to use BTC for all transactions that contribute to GWP in order for the spot price to be 1 MM".It's the difference between saying 25% of the world's population has to pay their rent at current market rates in BTC for a year in order for the spot price in BTC to hit 1 million that year vs 99% of the population has to pay for everything in BTC to hit 1 million. You can only subjectively say which is more likely, but the second scenario implies a LOT more effort and progress for BTC.
The point the original poster was making was that somehow there wasn't enough money around for BTC to hit 1MM, and for my part - if a few billion people all start buying their shitty 99c smartpone apps in satoshi, and then move on to paying their phone bills and other utilities through that same mobile wallet, I think that's the quickest way we get there. Smartphone users are projected to hit 5 billion in 2017.
Predicting what long term holders do is impossible, and I agree with your analysis there, but the people who will use bitcoin for some fraction of transactions made in their otherwise "normal" fiat lives must exist as a function of GWP, I can't see how they wouldn't. (Again, network geek heavy, econ lite, so be gentle
)Re: Do you really believe that Bitcoin will hit 1,000,000
I think 50 to 100k is possible in the far away future if a lot of things come together
1m is just a ridiculous number, far too abstract almost
1m is just a ridiculous number, far too abstract almost
Just because it seems "ridiculous" does not mean it isn't possible.
Many people thought $1000 a coin was a ridiculous price and it would never get there.Once all the BTC is mined there will be 21,000,000 BTC in circulation.
If one BTC is worth $1 then the market cap of bitcoin would be $21 million
If one BTC is worth $100 then the market cap of bitcoin would be $2.1 Billion
If one BTC is worth $1,000 then the market cap of bitcoin would be $210 Billion
If one BTC is worth $100,000 then the market cap of bitcoin would be $21 trillion
If one BTC is worth $1,000,000 then the market cap of bitcoin would be $210 Trillion.
As of 2012 the GDP of the US was ~15 trillion dollars and the GDP of the world was ~46 Trillion
Does it still seem plausible for bitcoin to reach $1,000,000?
Here's an idea, bear with me:
This wikipedia article claims that the world GDP is ~85 trillion as of 2012: http://en.wikipedia.org/wiki/Gross_world_product
Assuming that number is accurate - what if there's only 2.1 million coins available instead of 21 million? E.g. because most people will hold for very long periods of time, it's entirely possible that most of the value is concentrated in the number of coins being used for economic activity. Let's say only 10% of coins are "in play". Divide those 2.1 million by 1 billion people (smartphone users would be a good example) that have a need to use BTC for economic activity, and you have something like each person on average gets .0128 BTC. If BTC are 1 MM USD, then each person on average is responsible for 12,800 dollars of economic activity in BTC, with a market cap of 12.8 trillion USD. (Compared to the previous numbers 2.1 million coins available reduces this by a factor of 10x and the updated GDP halves it - with your numbers it's more like each person needs to
be responsible for 250K of economic activity in BTC).
This implies that the long term holders of bitcoin - people in the top 1% of ownership - will have a heavy incentive to cash out REALLY slowly (slow enough to maintain a nash equilibrium between new USDs going into BTC and their BTC cashing out to USD) - but they may not be able to coordinate well enough to maintain an equilibrium, causing a crash as the market gets flooded with BTC the first time someone cashes out hard and supply increases.
I think BTC can easily hit 1 million USD assuming it becomes 'the paypal of smartphones', and as long as finance + tech sector maintains interest in it - a broad base of users who small amounts of value, and a large group of whales in semi-collusion or at least who recognize their own self interest and won't crash the system for a while. The question is, can it stay at 1 MM USD for even more than a single femtosecond, and who's going to be making money off of the short trades and the exchange vig?
The difference between