Stellar is not a cryptocurrency. It's only partially decentralized (like Ripple) - there is no blockchain, it works with a series of trusted nodes. That makes it very easy to have fast transactions, but also makes people not very confident in it.
If it uses trusted nodes why not just use Chaumian Cash, and have the trusted nodes be issuers, rather than reinvent the wheel? Chaumian Cash is perfect if you don't care about decentralization.
Honestly I think Ardor will eclipse Ethereum-- if they can get to marketing it better, the technology is light years more advanced and more secure. When the ardor chain goes live I'm hoping it is an ethereum/bitcoin killer, being able to exchange assets between child chains just makes good sense, as does some of the other tech built in.
Watching the fluctuations of BTC, ETH, and LTC they seem to be fairly strongly correlated with each other, at least over the last ~month or so, and increasingly so coming to the present time. It will be interesting to see if in the coming weeks and months they continue to track closely to each other or if they once again diverge.
Watching trends without an analytic platform, I have seen that over any period of time longer than ~1 day, ETH seems to perform better. It is common to see periods of an hour, up to a day, where BTC does perform better. (For this reason, not more than just a few weeks ago, I took most of my tiny collection of BTC blue chips and traded them in for ETH.)
It would be hard to believe that nobody has tried writing arbitrage bots. I would probably be overreaching to say that this effect is due to a large number of arbitrage bots (and likely also non-robots), but it seems like there are clear opportunities for arbitrage and likely that there are skilled individuals taking advantage of these chances on the regular.
Lots of weak hands in it right now. More scaling debates, ominous US legislation, Goldman Sachs says it looks "heavy." I got out recently - for me it was the disposition effect [1], but shortly after, one of the more compelling global macro voices that I like to listen to, Raoul Pal, announced that he sold his stake. Makes me bearish long-term. Raoul's reasons were based on the malleability of the protocol and specifically that more than 21M bitcoins can be created at the whim of developers.
Hypothetically, if miner profits went into freefall, the alternatives would be to raise tx fees even further (making the network less usable), or to change the protocol to mint more coins. You are correct that the latter would massively discredit the project's original goals, and is therefore unlikely (since it would damage the value of the currency).
The network relies on having a large ecosystem of miners to prevent anyone from mounting coordination attacks. Those miners are paid either by new bitcoins (out of the finite supply), or by tx fees.
Presumably, boosters who tell me it will eventually replace the world's various currencies do expect some level of stability, because nobody in their right mind is going to use a currency that deflates and inflates 40% month over month.
This kind of goalpost-moving drives me nuts about Bitcoin defenders. Every time it fails at one of its stated goals, that goal is not only dropped, but evangelists insist it was never there to begin with.
First the selling point was that "the USD can never be a reliable store of value because it's evil fiat currency controlled by a central bank, use Bitcoin instead!". This has quietly faded as the volatility of Bitcoin continues to exceed that of the US dollar by orders of magnitude.
Then it was about "decentralization", another argument that went away when people realized that Chinese mining pools control the whole thing.
Then it was all about the low transaction fees and freeing you from the tyranny of payment processors, until the fees went higher than PayPal, and now /r/Bitcoin will call you stupid for complaining about fees.
I don't even know what the current arguments in Bitcoin's favor are anymore, but I'm sure they'll be different next year.
And of course, in all of these cases, there's never any acknowledgement that the shift happened - "We're at war with Eurasia; we've always been at war with Eurasia"
There is definitively a narrative by Bitcoin supporters comparing the Big-Number-On-A-Harddrive to gold. It is suggested that people flee from uncertainty in the real world (Venezuela, China etc.) to cryptocurrency.
It would be nice if those who hold/held this idea would come out and critically evaluate this position in public forums like this one.
Bitcoins goal has always been censorship resistance. The fact that Wikileaks still exists despite powerful interests strong arming banks into dropping them is an example of this.
Bitcoin is nothing but a vehicle to get money out of China illegally complicated by the fawning of teenagers who see it a way to rebel and also by speculators and a few crazy Ayn Rand believers who doesn't realize what she wanted would be hell on earth (just google the words venezuela ayn rand). Did I leave any of the loonies out? I think not.
There's no legal, useful application of it. Just none. Every time I ask, people come and say but... but... international transfers! and I point it out that for that transfer the sender needs to buy bitcoins, transfer and the receiver needs to sell them because there is no legal, useful application of it :) And this is untenable, you can't have the receiver go through hoops to receive money. And when I compare this to how Transferwise combines a fantastic user experience with favorable rates (which I actually compared to an FX company not to a bank) then I am a Transferwise shill despite it's usually not me who brings up the transfer argument so I now I did just so we don't need to have that conversation again and again.
Do note that Transferwise vs traditional FX is not apples-to-apples.
When you exchange at at bank you are done now. With Transferwise you might be done now, or maybe tomorrow, or maybe they'll cancel the deal because the market moved.
It's a fine product, but the difference in risk profile needs to be taken into account when considering the price.
I am neither a defender nor an evangelist; I hold some BTC but it's purely because it's the go-between of other cryptos. I will readily admit that I am in crypto because I like speculating.
I have never heard anyone outside of the deepest idiot-evangelists call it a "stable store". I've heard it call a good investment, but that is a wholly different beast.
The only goalpost moving going on here is you hoisting the intention of Bitcoin as a "store of value" rather than the stated goals (decentralized currency, universal ledger) and practical uses (speculation, Chinese currency escape).
The one that always makes me laugh is when they say it's good because there's no chargebacks. What kind of sucker seeks that property when looking for a means to buy stuff online? Just wire money over Western Union at that point.
I've become increasingly risk-averse after realizing how devastating a 50% decline really is. Independent of asset class, you will need a 100% gain to get back to where you were. And that will take a while.
Regardless, and apologies for the dumb BTC meme, I am HODLING!
> I've become increasingly risk-averse after realizing how devastating a 2^-1 decline really is. Independent of asset class, you will need a 2^1 gain to get back to where you were.
I was trying to think of what will stabilize the price, and the best I could come up with is that on a long timeline it should be approximately equal to the amount of money it costs to mine a new one, or get one out of transaction fees. Anyone have a better idea?
That is probably approximately correct. However, there's a bit of a feedback loop there. The difficulty changes in response to the hash rate. And the hash rate changes in response to the incentive to mine the coins. When the price goes up, the hash rate goes up, so the cost of mining goes up.
So, while you are correct, the causality flows in both directions. It's really quite difficult to value any currency. Doubly so for a crypto currency.
Suppose there was someone who very badly needed to transact anonymously -- to that person, the value would be higher than the price of electricity. I think, therefore, that the price will always reflect the perceived value of the services enabled by BTC.
It can never be stable unless bitcoins are designed to lose value over time (that's why normal currencies are designed that way). Intrinsically worthless tokens engineered to have better than market risk adjusted, liquidity adjusted, real returns compared to real productive investment will always be unstable and fluctuate increasingly wildly as they get more popular.
This is a direct result of physical limits of production. As people hoard worthless tokens, their price increases which causes people to hoard them even more instead of investing in real businesses with real production capacity. This causes production capacity to eventually drop which means there is less things to buy with all the tokens. If people start buying real things with their stock of tokens, these tokens will be chasing fewer goods which means prices will rise (tokens will lose value). This might happen suddenly when people notice that token value is droping and that there are tons of tokens waiting on the sideline ready to make it drop even further. People will try to get rid of them all at the same time before they're worthless which will cause their worthlessness. This drop will bring them closer to their natural intrinsic value of zero. The cycle can then start again, such is aggregate economics. The 1920s and 1930s suffered from this type of cycle but with gold instead of cryptocoins. It's important for the world's sake to not let deflationary currencies become too popular.
When savings or financial promises are insufficiently tied to future production or to accumulation of real goods, there will be disappointment when people try to exchange them for real stuff. That is true for crypto currencies as well as government currencies (that is why the system is designed to make banks invest people's money in real businesses and minimise the amount of money that is stockpiled idly).
Imagine it would cost 10$ to produce 10$ (imagine all money would have to be real paper bills and those would be really expensive to make).
Certainly this does not work - all economic activity would be spent to make the money bills, and no activity was done to produce food or build the power plants that are busy producing energy to calculate the next "coin".
So the price of Bitcoin may be related to mining costs in the short term, as miners quit when it gets too expensive. Ultimately the price would have to be much lower to be practical, or higher if it turns out Bitcoin becomes highly useful for something. Or Bitcoin takes over the world and replaces all other currencies - then the 21 million Bitcoins would equal the entire human wealth - if you believe this then you should buy right now.
> "So the price of Bitcoin may be related to mining costs in the short term, as miners quit when it gets too expensive."
This is wrong. Supply does not decrease when mining gets too expensive and it does not increase when mining gets cheaper. This is the very special property of Bitcoin. See my other post.
> "then the 21 million Bitcoins would equal the entire human wealth"
Not necessarily. There are lost coins. And likely not all remaining coins will participate on the market. More precisely bitcoins supply offered on the market times velocity would be equal to the entire wealth offered on the market.
bitcoin is a digital commodity with a very unique property: the supply of newly minted coins is pre-determined and does not rely on market forces (because hash-rate retargets to achieve the plan regardless).
In general the price of any commodity is determined by supply and demand. Aggregated supply is S0+S1, where S0 are newly mined coins (known) and S1 is market supply (unknown). Aggregated demand is generated by the market (unknown).
So in the price equation you have two unknowns which are unlikely to be stable in the future. The cost of mining should not affect the price in the late game.
Speculation is that this is primarily due to Bitmain's announcement yesterday to hard fork if the UASF soft fork gets any momentum. Jimmy Song has a good analysis on this.
This forking of Bitcoin is a required trial that the chain must go through to prove how resilient it is to this type of attack. It is unknown which chain will win in the event of a fork, maybe Ethereum will win, probably not PotCoin.
It depends on your view point. For Bitcoin to succeed it must be able to withstand what some view as an "attack" on it. If bitcoin is vulnerable to this attack it doesn't deserve to last, it needs to be fixed, tested and tried again. All of these cryptocurrencies are still experiments and advocates equate changing the code consensus code like patching a 787 in mid flight because of how much value is dependent on the network working.
The miners fork winning will be a bad thing if you value the decentralized aspect of the currency and want bitcoin to succeed. Not everyone does.
It is not a simple topic with two sides. It has very technical details as well as economic incentives for both sides which leads to a lot of game theory.
The Chinese? miners won't upgrade the protocol b/c they are making money, and Bitcoin is running into some scaling issues with the 1 megabyte limit, so the users are revolting with a 'user-activated soft fork'. Something along those lines.
Which is short for "user-activated soft fork", meaning a group of Bitcoin users (as opposed to miners) declare that they're following a new, backwards-compatible protocol regardless of what miners think (if miners agreed, it would just be a "soft fork").
From the first paragraph: "The cryptocurrency was trading down 12.9%, at $2,161 a coin, its lowest since the beginning of June. It's now off almost 40% from its high of $2,999.97"
The author fails at basic math: this is a decrease of (2999.97 - 2161) / 2999.97 = 28%, not 40%.
I do not fully understand the cryptocurrency domain but have always wanted to gain a better understanding of it so am hoping for some insight. I thought that one advantage of Bitcoin was that it cannot lose value?
An extremely large number of people do not understand this... Take for example people who want to buy a nintento switch for $299. But it's $415 and in stock on Amazon and sold out everywhere else that is listing it for $299. Well I guess it doesn't actually cost $299 then does it? It actually costs $415 or so based on what people are willing to pay.
The majority of cryptocurrencies value is derived from what the market thinks it is worth. The market can deem any coin's value to be worth 0 at any time. The value is extremely volatile and can lose and gain value quickly. There are some projects like Tether and Bitshares who have tried to create a stable digital asset. I don't know how successful they have been.
Yeah, this is definitely false, as the other guy said -- its value in USD is whatever you're willing to pay for it in USD.
Maybe what you're thinking of is the fact that it's deflationary unlike fiat: there's a finite number of coins that will ever be created. In other words, if you own exactly one dollar, over time, the percentage of total dollars you own will decrease, whereas with bitcoin, one bitcoin represents a constant fraction of the total bitcoin that will be created. This says nothing about how many gallons of milk one dollar or one bitcoin will buy you though.
On the short scale, Bitcon is extremely volatile. Long-term, it's been trending up heavily, but it's not even a decade old yet, so making long term predictions isn't a good idea. The main benefits to bitcoin as I see it are
It's decentralized nature
That it can be anonymous, and by default is more "anonymous" than other online payments. For example, you would only know my wallet address, while something like Paypal/Venmo would give you my full name and email and maybe even physical address. You could probably do some digging with that wallet address and find my real info, but it's certainly tougher than having it emailed to you.
That payments work like a "push" rather than "pull". A store/vendor gives you an address and you send them BTC, they then wait for the funds to land in their wallet. But with a credit card, I give the store my credentials and trust them to only take as much as promised and not charge me multiple times.
Also, it's definitely used more for investing/hoarding at the moment than it is as an actual currency, though more and more companies and payment processors are beginning to accept bitcoin as payment.
It 'tumbles' and then 'skyrockets' quite frequently. Incredibly volatile.
I bought in at $16 for ETH right after the EEA announcement, pulled out my principle at $54, and now I'm just watching this crazy roller coaster ride. It's fun.
But I sure as hell am keeping my retirement in my 401k. I cannot imagine the stress on people who have a substantial investment in BTC or ETH, but they probably have a totally different mindset than I do when it comes to cryptocurrency.
I don't know - people get attached to their belongings pretty quickly. In your example, if you invested 1000 $ in Bitcoin, watched it grow to $100k and then back to $70k then you would feel like you lost the cash equivalent of brand new car. It would be very painful, despite the fact that original gains came so easily.
If anyone's interested, feel free to reach out to me directly: contact-at-projectpiglet.com. We just launched it so it's pretty rough, so we're in a beta testing phase. Thus, we are providing the service for free, provided you fill out a feedback form once a month.
The price tripled since March, for no good reason. Up from $1000 to $3000, now back to $2000. That's still quite a gain.
The fork issue makes it clear that the future of Bitcoin is controlled by about five mining companies in China. Could be worse; at one point two companies had more than half the hash rate.
82 comments
[ 3.7 ms ] story [ 159 ms ] thread[1] http://www.flippening.watch/
It would be hard to believe that nobody has tried writing arbitrage bots. I would probably be overreaching to say that this effect is due to a large number of arbitrage bots (and likely also non-robots), but it seems like there are clear opportunities for arbitrage and likely that there are skilled individuals taking advantage of these chances on the regular.
Nope, it's a convention in journalism.
[1] https://en.wikipedia.org/wiki/Disposition_effect.
This is inaccurate. Though any developers can modify the code to do such thing doesn't mean it will be adopted by the network.
There is a distinction between code written and what the network accepts.
The network relies on having a large ecosystem of miners to prevent anyone from mounting coordination attacks. Those miners are paid either by new bitcoins (out of the finite supply), or by tx fees.
It really can't be, though.
First the selling point was that "the USD can never be a reliable store of value because it's evil fiat currency controlled by a central bank, use Bitcoin instead!". This has quietly faded as the volatility of Bitcoin continues to exceed that of the US dollar by orders of magnitude.
Then it was about "decentralization", another argument that went away when people realized that Chinese mining pools control the whole thing.
Then it was all about the low transaction fees and freeing you from the tyranny of payment processors, until the fees went higher than PayPal, and now /r/Bitcoin will call you stupid for complaining about fees.
I don't even know what the current arguments in Bitcoin's favor are anymore, but I'm sure they'll be different next year.
And of course, in all of these cases, there's never any acknowledgement that the shift happened - "We're at war with Eurasia; we've always been at war with Eurasia"
It would be nice if those who hold/held this idea would come out and critically evaluate this position in public forums like this one.
Different people are attracted to different aspects of crypto currency.
You realize this is exactly what I'm talking about, right?
There's no legal, useful application of it. Just none. Every time I ask, people come and say but... but... international transfers! and I point it out that for that transfer the sender needs to buy bitcoins, transfer and the receiver needs to sell them because there is no legal, useful application of it :) And this is untenable, you can't have the receiver go through hoops to receive money. And when I compare this to how Transferwise combines a fantastic user experience with favorable rates (which I actually compared to an FX company not to a bank) then I am a Transferwise shill despite it's usually not me who brings up the transfer argument so I now I did just so we don't need to have that conversation again and again.
When you exchange at at bank you are done now. With Transferwise you might be done now, or maybe tomorrow, or maybe they'll cancel the deal because the market moved.
It's a fine product, but the difference in risk profile needs to be taken into account when considering the price.
I have never heard anyone outside of the deepest idiot-evangelists call it a "stable store". I've heard it call a good investment, but that is a wholly different beast.
The only goalpost moving going on here is you hoisting the intention of Bitcoin as a "store of value" rather than the stated goals (decentralized currency, universal ledger) and practical uses (speculation, Chinese currency escape).
Regardless, and apologies for the dumb BTC meme, I am HODLING!
So, while you are correct, the causality flows in both directions. It's really quite difficult to value any currency. Doubly so for a crypto currency.
This is a direct result of physical limits of production. As people hoard worthless tokens, their price increases which causes people to hoard them even more instead of investing in real businesses with real production capacity. This causes production capacity to eventually drop which means there is less things to buy with all the tokens. If people start buying real things with their stock of tokens, these tokens will be chasing fewer goods which means prices will rise (tokens will lose value). This might happen suddenly when people notice that token value is droping and that there are tons of tokens waiting on the sideline ready to make it drop even further. People will try to get rid of them all at the same time before they're worthless which will cause their worthlessness. This drop will bring them closer to their natural intrinsic value of zero. The cycle can then start again, such is aggregate economics. The 1920s and 1930s suffered from this type of cycle but with gold instead of cryptocoins. It's important for the world's sake to not let deflationary currencies become too popular.
When savings or financial promises are insufficiently tied to future production or to accumulation of real goods, there will be disappointment when people try to exchange them for real stuff. That is true for crypto currencies as well as government currencies (that is why the system is designed to make banks invest people's money in real businesses and minimise the amount of money that is stockpiled idly).
Certainly this does not work - all economic activity would be spent to make the money bills, and no activity was done to produce food or build the power plants that are busy producing energy to calculate the next "coin".
So the price of Bitcoin may be related to mining costs in the short term, as miners quit when it gets too expensive. Ultimately the price would have to be much lower to be practical, or higher if it turns out Bitcoin becomes highly useful for something. Or Bitcoin takes over the world and replaces all other currencies - then the 21 million Bitcoins would equal the entire human wealth - if you believe this then you should buy right now.
This is wrong. Supply does not decrease when mining gets too expensive and it does not increase when mining gets cheaper. This is the very special property of Bitcoin. See my other post.
> "then the 21 million Bitcoins would equal the entire human wealth"
Not necessarily. There are lost coins. And likely not all remaining coins will participate on the market. More precisely bitcoins supply offered on the market times velocity would be equal to the entire wealth offered on the market.
bitcoin is a digital commodity with a very unique property: the supply of newly minted coins is pre-determined and does not rely on market forces (because hash-rate retargets to achieve the plan regardless).
In general the price of any commodity is determined by supply and demand. Aggregated supply is S0+S1, where S0 are newly mined coins (known) and S1 is market supply (unknown). Aggregated demand is generated by the market (unknown).
So in the price equation you have two unknowns which are unlikely to be stable in the future. The cost of mining should not affect the price in the late game.
Here is what Satoshi had to say about this: http://satoshi.nakamotoinstitute.org/posts/bitcointalk/65
https://medium.com/@jimmysong/examining-bitmains-press-relea...
This forking of Bitcoin is a required trial that the chain must go through to prove how resilient it is to this type of attack. It is unknown which chain will win in the event of a fork, maybe Ethereum will win, probably not PotCoin.
The miners fork winning will be a bad thing if you value the decentralized aspect of the currency and want bitcoin to succeed. Not everyone does.
https://medium.com/@nopara73/explain-uasf-like-im-five-ae879...
It is not a simple topic with two sides. It has very technical details as well as economic incentives for both sides which leads to a lot of game theory.
The author fails at basic math: this is a decrease of (2999.97 - 2161) / 2999.97 = 28%, not 40%.
https://tether.to/
Maybe what you're thinking of is the fact that it's deflationary unlike fiat: there's a finite number of coins that will ever be created. In other words, if you own exactly one dollar, over time, the percentage of total dollars you own will decrease, whereas with bitcoin, one bitcoin represents a constant fraction of the total bitcoin that will be created. This says nothing about how many gallons of milk one dollar or one bitcoin will buy you though.
Value is another question altogether.
It's decentralized nature
That it can be anonymous, and by default is more "anonymous" than other online payments. For example, you would only know my wallet address, while something like Paypal/Venmo would give you my full name and email and maybe even physical address. You could probably do some digging with that wallet address and find my real info, but it's certainly tougher than having it emailed to you.
That payments work like a "push" rather than "pull". A store/vendor gives you an address and you send them BTC, they then wait for the funds to land in their wallet. But with a credit card, I give the store my credentials and trust them to only take as much as promised and not charge me multiple times.
Also, it's definitely used more for investing/hoarding at the moment than it is as an actual currency, though more and more companies and payment processors are beginning to accept bitcoin as payment.
It 'tumbles' and then 'skyrockets' quite frequently. Incredibly volatile.
I bought in at $16 for ETH right after the EEA announcement, pulled out my principle at $54, and now I'm just watching this crazy roller coaster ride. It's fun.
But I sure as hell am keeping my retirement in my 401k. I cannot imagine the stress on people who have a substantial investment in BTC or ETH, but they probably have a totally different mindset than I do when it comes to cryptocurrency.
A few friends and I also wrote an application to help us invest. We just launched a beta:
https://projectpiglet.com/
If anyone's interested, feel free to reach out to me directly: contact-at-projectpiglet.com. We just launched it so it's pretty rough, so we're in a beta testing phase. Thus, we are providing the service for free, provided you fill out a feedback form once a month.
The fork issue makes it clear that the future of Bitcoin is controlled by about five mining companies in China. Could be worse; at one point two companies had more than half the hash rate.