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Crypto currency endeavours

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odysseus2000
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Crypto currency endeavours

#98911

Postby odysseus2000 » November 26th, 2017, 10:39 am

There has been a huge surge in the issuance of crypto currencies over the last few months. It is likely that the folk who have done the ipo's for these new ways to spend & hold wealth have done well, the scale of issuance which as far as I can tell exceeds all equity ipos over the same time tells me this.

Additionally the returns for holders of bit coin have been stunning while the folk who "mine" (as I understand it, they keep the leadgers of ownership) bit coin using distributed arrays of current hungry processors have only weakly prospered.

Crypto currencies, as I inderstand matters are not sponsored by any governments & could be banned by any government such that the value of any holding could instantly go to zero. However, on the flip side if crypto currencies are the next stage in the evolution of money, it may be that conventional money & banks will be in trouble. E.g. If the US was to launch $Fed-crypto or something would that undercut traditional banking? I have no idea on the probability of this or anything concerned with crypto currencies, I just see a few making a lot of money & that tells me I should pay attention & research it more. There may be opportunities here, there may be bottomless pits of danger, I just don't know & feel I had better get some feel for what is happening. Truth is I would rather not bother with bit coin and have been too lazy to study it. This lethargy has already potentially cost me a lot of profit, so reluctantly I have convinced myself that I should make some effort

With bitcoin at circa $8000 per coin that is a lot of money that could go away in a flash, but as I understand it one can buy fractions of a bit coin. But how?

Interested in other comments & any experience buying/selling crypto currencies.

Regards

Midsmartin
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Re: Crypto currency endeavours

#98933

Postby Midsmartin » November 26th, 2017, 12:03 pm

You buy a fraction of a bitcoin simply by specifying 0.01BTC as the number you wish to buy for your chosen source (eg coinfloor.co.uk ), or that you wish to buy £10 worth to dip your toe in.

I think it's unlikely that governments would promote a cryptocurrency, for the very reasons that some people like them. By design it's pretty much impossible to trace transactions. You can see publically that x bitcoins have been transferred to a particular address, but you have no way of discerning who that is, or where they are. Perhaps you could design one with some traceability - but what would be the point - who would use it? Current cryptocurrencies by design have a maximum number of 'coins' that can exist - something that might be a limitation for a government who wanted to print money (sorry, engage in quantitative easing).

Bitcoin as experienced surges and collapses in price as various institutions haev made decisions about accepting or rejecting it.

Bitcoin has also been a victim of its own success: transactions are so slow to confirm, and the price so volatile, that it is not really being used for transactions as originally intended, but purely as an investment asset.

I have around 0.8 of a bitcoin (I almost bought £100 worth back in 2011 to see what happened but didn't quite get around to it. At the time I was given 0.01 BTC as a free sample - now worth £50 or so).

My feeling is that bitcoin may well continue to climb very steeply, the more the rest of the world looks a precarious and dangerous place, with risks of inflation, wars, etc.
It could also collapse to zero overnight if some devastating software problem arises, or as you suggest if governments take some actions to discourage its use. If you store your bitcoin online somewhere, they could get stolen by a hacker. If you store your bitcoin wallet locally on your PC you could just lose it! And in any apocalyptic scenario, it's worthless without a working internet; a bag of gold sovereigns would work better there.

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Re: Crypto currency endeavours

#99134

Postby mosschops » November 27th, 2017, 9:01 am

I think there are some huge issues with Bitcoin in the way that it works that would prevent it from general use and acceptance.

The first is the power issue, it currently uses the equivalent of the entire power consumption of Ireland to process about 300K transactions today, which is nothing really. It also uses a crazy amount of hardware, about 5% of all chip output is now being consumed by Bitcoin mining. Both of those will have to increase exponentially for it to remain profitable for miners to continue to verify those transactions.

The second is the structure of the exchanges at the moment. I don’t think they are backed by enough dollars if a large amount of people try to withdraw at the same time. There have already been issues with exchanges in the space, most notably MtGox which disappeared taking a lot of people’s money with it, and if one of the large US based ones gets hacked/explodes then it could result in a general panic. Add that to the fact that you would then have to queue to get your transaction processed which could take a long time and it means that the very market structure is a magnifier of crashes. There isn’t sufficient liquidity at either the dollar end or the processing end of the exchanges.

Thirdly it’s too volatile to be considered as a cryptocurrency in my view. It’s not a store of value because it fluctuates too much. It’s more akin to a commodity really. There’s also the issue that the amount of currency is controlled only by an algorithm. A lot of Bitcoins have already disappeared, there was that famous case where someone threw away a hard drive with what would be billions on it these days. The amount of currency in circulation should be dictated by economic need, not by an arcane algorithm and mining processor speed.

I have more problems, like Bitcoin being pretty much unnecessary for most transactions unless you are a drug/arms dealer and so on, but the above are the major ones. I think blockchain is going to be huge though, but it’s future is likely in private block chains between businesses for specific purposes, public block chains, at least how they are implemented at present, seem overkill or fix problems that aren’t really there.

I’ll throw up some links later to support the above.

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Re: Crypto currency endeavours

#99136

Postby PeterGray » November 27th, 2017, 9:21 am

The first is the power issue, it currently uses the equivalent of the entire power consumption of Ireland to process about 300K transactions today

Is this correct? Is this the amount of power required to create 300k bitcoin, or just to do a transaction? If the latter then I am amazed at the inefficiency!

However, for me the likelihood of some form of government intervention is the investing no-no. AFAICS the only significant current uses of bitcoin are bubble speculation and illegal trading. Crypto currencies must be a prime target for intervention.

Peter

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Re: Crypto currency endeavours

#99139

Postby mosschops » November 27th, 2017, 9:27 am

Citation for the power usage: http://uk.businessinsider.com/bitcoin-m ... ?r=US&IR=T

I can’t remember where I read the 300k thing, I’ll try and dig that out as well.

EDIT: see this also https://www.google.co.uk/amp/s/motherbo ... ate-change

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Re: Crypto currency endeavours

#99159

Postby PeterGray » November 27th, 2017, 10:14 am

Thanks for the links MC,

So those energy figures are in really for mining not for transactions as such. They produce a power per transaction figure by looking at power to mine per month and number of transactions per month. Clearly if bitcoin became widely used then mining would reduce relative to transactions - the same bitcoin being involved in multiple transactions.

However, the power usage figures for mining are still startling - I knew they were high and the system is set up so mining continually requires more processing per bitcoin as more bcs are mined, but it does show how unsustainable the bitcoin model is over time.

Peter

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Re: Crypto currency endeavours

#99164

Postby mosschops » November 27th, 2017, 10:23 am

PeterGray wrote:Thanks for the links MC,

So those energy figures are in really for mining not for transactions as such. They produce a power per transaction figure by looking at power to mine per month and number of transactions per month. Clearly if bitcoin became widely used then mining would reduce relative to transactions - the same bitcoin being involved in multiple transactions.

However, the power usage figures for mining are still startling - I knew they were high and the system is set up so mining continually requires more processing per bitcoin as more bcs are mined, but it does show how unsustainable the bitcoin model is over time.

Peter


Mining is transactions though isn’t it? My understanding of it is that mining is validating outstanding transactions and the reward for undertaking the work is the Bitcoin that you mine at the end of it. So as the amount of transactions increase you need an increasing amount of mining taking place which increases the difficulty of mining so the price has to increase over time, along with the power consumption, to make it worthwhile. You can also jump the queue by offering an upfront fee to process your transaction as a priority.

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Re: Crypto currency endeavours

#99181

Postby stewamax » November 27th, 2017, 11:12 am

I think blockchain is going to be huge though, but it’s future is likely in private block chains between businesses

Definitely. I could see much of OTC trading moving this way: if a transaction doesn't need an intermediary exchange now (with all the overt pricing and overhead this entails), blockchain appears ideally suited to managing it with its complete transaction audit trail between 'consenting businesses' . Whether the settlement is in bitcoin or not is a secondary issue.

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Re: Crypto currency endeavours

#99187

Postby PeterGray » November 27th, 2017, 11:43 am

Mining is transactions though isn’t it?

Mining is the equivalent action to mining gold surely. Once a bitcoin is mined it can take part in any number of transactions, just as a gold bar can.

Peter

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Re: Crypto currency endeavours

#99191

Postby mosschops » November 27th, 2017, 11:53 am

PeterGray wrote:Mining is transactions though isn’t it?

Mining is the equivalent action to mining gold surely. Once a bitcoin is mined it can take part in any number of transactions, just as a gold bar can.

Peter


A Bitcoin is just a list of transaction records which requires to be processed, which is done by a miner, who then receives a Bitcoin once that particular block has been processed. So a Bitcoin is basically an abstraction of future processing power. Miners are performing transaction processing as the “digging” to get more Bitcoins as their incentive. As this gets more complex over time it requires more processing power and blocks get longer and so more chips and power and time.

https://www.coindesk.com/information/ho ... ions-work/

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Re: Crypto currency endeavours

#100117

Postby mosschops » November 30th, 2017, 9:01 am

I think we all know the bull case for crypto, but here’s a series of blog posts presenting the bear case for crypto from someone involved in the space:

https://prestonbyrne.com/2017/09/01/the ... or-crypto/

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Re: Crypto currency endeavours

#103142

Postby xiox » December 10th, 2017, 11:21 am

Yes - it's horrendously environmentally unfriendly. Bitcoin uses 240 kWh per transaction currently: https://digiconomist.net/bitcoin-energy-consumption. That's 2.5 times the average weekly power consumption for a UK household.

Some more interesting discussion here: http://www.antipope.org/charlie/blog-st ... d-tha.html (note the domain name is nothing to do with religion!)

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Re: Crypto currency endeavours

#103496

Postby odysseus2000 » December 11th, 2017, 9:02 pm

If it takes 240 kWh at 15p per unit that is £36.

With a bitcoin worth we'll over $10k, the mining which currently is paid in bit coin is not a bad business.

The mining costs are expected to fall which is why miners face a steady decline in the payment, till it is just a fee, not a payment in bitcoins. The rational was to start the venture off by paying the distributed ledger keepers well to give time for technology to catch up.

Almost all technology is funded like that, e.g. Apple release watch 1, gets some interest, they make a better watch, more interest, more sales, rinse & repeat, just like how the Internet started.

It is almost always wrong to think about technology as how things now are, more correct to think how things can be & with new chips that are more powerful parallel processors the cost & power to mine bit coin will likely come down dramatically.

Regards,

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Re: Crypto currency endeavours

#103503

Postby GoSeigen » December 11th, 2017, 9:36 pm

odysseus2000 wrote:If it takes 240 kWh at 15p per unit that is £36.
[...]

It is almost always wrong to think about technology as how things now are, more correct to think how things can be & with new chips that are more powerful parallel processors the cost & power to mine bit coin will likely come down dramatically.

Regards,


It really doesn't matter how much technology improves, the processing will always be criminally expensive and wasteful. As soon as enough marks realise they are paying £36 per transaction in energy alone they will crucify the people responsible for this abomination.

GS

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Re: Crypto currency endeavours

#103508

Postby odysseus2000 » December 11th, 2017, 10:08 pm

GoSeigan

It really doesn't matter how much technology improves, the processing will always be criminally expensive and wasteful. As soon as enough marks realise they are paying £36 per transaction in energy alone they will crucify the people responsible for this abomination.


Maybe, but if distributed ledgers are to be the future of banking & record storage and the expected improvements in processing occur it will all be rather Luddite.

Let's not forget that a significant portion of human suitable food is converted into alcohol for use in cars. One can argue that this is more of a crime.

Regards,

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Re: Crypto currency endeavours

#103525

Postby funduffer » December 12th, 2017, 1:33 am

By February 2020, at current growth rate, Bitcoin mining will require more power than the entire global output......

https://grist.org/article/bitcoin-could ... gy-future/

Not sure about the integrity of this site, but makes interesting reading!

If true, Bitcoin is truly unsustainable.

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Re: Crypto currency endeavours

#103550

Postby Mapfumo » December 12th, 2017, 8:40 am

odysseus2000 wrote:It is almost always wrong to think about technology as how things now are, more correct to think how things can be & with new chips that are more powerful parallel processors the cost & power to mine bit coin will likely come down dramatically.


That makes me think you don't really understand bitcoin, Ody. The cost and power to mine bitcoin go up over time, not down. This is a feature, not a bug. When my kids were mining bitcoin in 2011/2012 or so, it was possible to do so on their home PCs and I didn't notice the effect on my electricity bill. The computation required to mine a new bitcoin gets more and more difficult computationally, in order to keep the block creation rate reasonably constant - around ten minutes per block is the target. To mine bitcoins today requires an array of massively parallel chips custom designed for exactly this task, plus a significant amount of power because the laws of physics place some fundamental limits on things - billions of transistors turning on and off billions of times per second. If it gets easier or cheaper, then the computation - by design - gets harder to perform.

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Re: Crypto currency endeavours

#103558

Postby odysseus2000 » December 12th, 2017, 10:26 am

It takes something like 70 billion kilowatts to run the internet with about 3.5 billion users:

https://www.forbes.com/sites/christophe ... 79f3801fff

When the Internet began experts noted the power consumption & breathed deeply issuing various statements about difficulties. Since then it has grown exponentially & no one worries about the power consumption as everyone is worried anout the consumption of an electric car economy.

So I expect the energy consumption of bit coin overall to grow, but the consumption per transaction to fall significantly & in the by & by folk will stop worrying about it & also about electric cars as we get more & more solar & better storage.

Regards,

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Re: Crypto currency endeavours

#103563

Postby GoSeigen » December 12th, 2017, 11:15 am

odysseus2000 wrote:It takes something like 70 billion kilowatts to run the internet with about 3.5 billion users:

https://www.forbes.com/sites/christophe ... 79f3801fff

When the Internet began experts noted the power consumption & breathed deeply issuing various statements about difficulties. Since then it has grown exponentially & no one worries about the power consumption as everyone is worried anout the consumption of an electric car economy.

So I expect the energy consumption of bit coin overall to grow, but the consumption per transaction to fall significantly & in the by & by folk will stop worrying about it & also about electric cars as we get more & more solar & better storage.

Regards,


Please read and understand Mapfumo's post.

GS

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Re: Crypto currency endeavours

#103625

Postby justfisk » December 12th, 2017, 2:37 pm

Mapfumo wrote:
odysseus2000 wrote:It is almost always wrong to think about technology as how things now are, more correct to think how things can be & with new chips that are more powerful parallel processors the cost & power to mine bit coin will likely come down dramatically.


That makes me think you don't really understand bitcoin, Ody. The cost and power to mine bitcoin go up over time, not down. This is a feature, not a bug. When my kids were mining bitcoin in 2011/2012 or so, it was possible to do so on their home PCs and I didn't notice the effect on my electricity bill. The computation required to mine a new bitcoin gets more and more difficult computationally, in order to keep the block creation rate reasonably constant - around ten minutes per block is the target. To mine bitcoins today requires an array of massively parallel chips custom designed for exactly this task, plus a significant amount of power because the laws of physics place some fundamental limits on things - billions of transistors turning on and off billions of times per second. If it gets easier or cheaper, then the computation - by design - gets harder to perform.


I understand the point but fail to see the logic. Bitcoins energy requirements has grown substantially in a short time, however that does not mean that its energy consumption would continue to grow at that rate. Also, the incentives of a Free Market ensures that it is in the market players own interest to deliver the most energy-efficient equipment with the most cost-efficient capital and operating costs.
A positive for Bitcoin is that it is beginning to force people to ask the question of "What is money" and for us to compare it to other forms of what we have in place today. Comparing consumption rates:

Global cash and coins - 11 terawatt-hours per year
Gold mining alone - 132 terawatt-hours
Bitcoin - 8.27 terawatt-hours per year
US Data Centers alone consume over 64 terawatt-hours per year - should we shutdown the internet because of this?

With that comparison in mind, Bitcoin appears to compare quite favourably with the competition. I share here an article of interest:
https://www.bloomberg.com/view/articles ... tics-think

thanks,
JF


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