The economics of BitCoin

Herzlos

GreatApe wrote: »

it is not 1/10th that makes it to the website company which would be very bad in itself, it is more like 1/10,000th

It's still irrelevant to the customer. Do I have any idea how much the ads on MSE generate? No. Do I have any idea how much mining generates? No.

Do I need to care, as long as I can access the resource of value?

GreatApe

Herzlos wrote: »

It's still irrelevant to the customer. Do I have any idea how much the ads on MSE generate? No. Do I have any idea how much mining generates? No.

Do I need to care, as long as I can access the resource of value?

If you were fully informed about the cost and where it goes, ie >99.99% of it to burning more coal and gas and <0.01% of it to website and you could make that decision then who am I to stand in your way. But how many of these unwitting miners are told about the cost and where it goes?

Herzlos

But how many of these unwitting miners are told about the cost and where it goes?

None, but that's not the point. There's an issue about mining without permission, in that it's dubious at best. But if a user agreed to mine in exchange for access? Why not?

GreatApe wrote: »

If you were fully informed about the cost and where it goes, ie >99.99% of it to burning more coal and gas and <0.01% of it to website and you could make that decision then who am I to stand in your way.

Are you fully informed about the cost breakdown structure of MSE ads, or on any other site on the web? So why do you care about knowledge of mining?

Don't get me wrong - mining on anything but custom hardware is a hugely inefficient waste of time, but there's no real alternative for transaction-free micropayments, beyond mining something cheaper.

GreatApe

From another forum. Crazy

Ive had my definitive shoeshine boy moment last night, not once but twice.

One acquaintance has put his twenty grand house deposit into bitcoin. It's taken him years of scrimping and saving then just like that he's all in because "it just keeps going up".

Half an hour later a friend who knew literally nothing about crypto until I gave him a brief rundown last week is showing me his phone with his bitcoin, ripple, litecoin and IOTA holdings and he's advising ME on why ripple is the one to watch as it's going to the moon. He's put money in that's supposed to be for a house deposit with his fianc!.

These are two people who don't even know what an ISA is.

When people like this are behaving in this manner, with this amount of money then I can't see how this is heading for anything other than disaster

Malthusian

Talk about much wants more and loses all. Still, the most likely outcome is that the guy with the £20,000 will lose say 50% of it, panic, cash out and have to do half of that saving all over again. Worse things happen at sea.

I think we are doing a disservice to people by constantly saying "tulip bulbs". The general reaction from the punters seems to be "well of course it's not like tulip bulbs, because tulip bulbs are just flowers whereas Bitcoin is THE FUTURE OF CURRENCY". "The future of currency" in this sentence is, of course, totally meaningless. Ask them what things will happen so that Bitcoins replace pounds or dollars in everyday transactions and they will just stare blankly.

However, to the Bitliever the phrase "The Future Of Currency" feels like something important whereas a tulip bulb is obviously just a flower. So the Bitliever thinks "this time it's different".

Dot-com shares would be a better analogy. Like Bitcoin they just went up and up and up, like Bitcoin there was something genuinely useful and exciting behind it, like Bitcoin the price of dot com shares had absolutely nothing to do with how useful the Internet was going to be, but only with how much money and hype was flowing into it.

westernpromise

The token was tulips (or whatever) in the past and is bitcoins now, but the fact is that the best way to know whether something is a bubble is whether there's any utility for the underlying. Bitcoins do not appear to be useful for anything, hence the price is based 100% on sentiment and 0% on utility.

It was clear to a lot of people at the time that dotcoms were in a bubble, but as bubbles are fundamentally irrational there is rarely any obvious and rational entry point for someone wanting to short the bubble, whether it's bitcoins or something else.

The dotcom bust saw a lot of those companies losing 90 to 99% of their valuation pretty much overnight. Something similar beckons for bitcoin, I'd think.

Herzlos

Once a run starts on bitcoin (as people realise they can't cash it out) it'll drop fast and I doubt it'll recover.

Apparently, the founder has 1m coins across addresses which means he's in the top 50 wealthiest individuals @ $19bn, but is completely unable to turn any of it into cash because it'll either flood the market and drop the price right down, or worse it'll be seen as a lack of confidence and trigger a run. So he's loaded on paper but essentially unable to use it.

westernpromise

If the value is based on a gain that vanishes when you try to realise it then it is fairly clear it's not a gain.

GreatApe

The crash cheerleaders have a long running bitcoin thread with some owners of bitcoins beating their chests on what genius they have for getting in early and buying 5-10 bitcoins. One guy keeps posting his bitcoin daily value (around £100k) and how its going to go up another 20x and he is going to join the 1% and be driving fast expensive cars and will tell everyone I told you so. All because he was smart enough to buy 7 coins when they were 1/50th the price.

It is amazing to see a large number of people thinking this thing which adds no real value (even if it works as planned it is for 99.9% of people no better than a normal bank account and that is if every single one of its many downfalls are fixed to perfection) is going to create multi trillions for its early coin buyers

I wont be joining this plenty of ways to make a good living in business but a huge number have been dragged in from the kid putting in £500 of their savings to the idiots selling their family homes to buy bitcoins and virtually all of them in the hope for a get rich fast scheme

Certainly interesting.

economic

Human nature at work at the population level. Herd mentality basically.