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Why bitcoin may never get much above $5,000 again

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iam4liberty:

--- Quote from: FreeLancer on March 31, 2019, 02:34:31 AM ---How is it gamed?

--- End quote ---

There is a cycle time for the algorithm to adjust difficulty.  So it can be pumped like an engine with bursts of blocks creation then backing off, then bursts of blocks creation. Already six months have been taken off the life of when 21 mil is hit.


--- Quote from: FreeLancer on March 31, 2019, 02:34:31 AM ---What would be the expected effect of mining with free energy on velocity and fees?

--- End quote ---

As the awards diminish and only transaction fees remain the zero variable cost producers drive out all the others.  They become a cartel able to push losses on competion.  This gives them pricing power for transaction fees.  As transaction fees increase the value drops.  This reaches a point which maximizes the amount they can receive, with rate of transactions and transaction fees set to optimal levels for them.  We have already seen retailors pull out because of transaction fees.  When your own advocate conferences stop accepting the currency because of high transaction costs you know you have a problem.  And this is still during times while there is stll an award. Think forward to time when it is transaction fees only.

https://news.bitcoin.com/miami-bitcoin-conference-stops-accepting-bitcoin-due-to-fees-and-congestion/
Miami Bitcoin Conference Stops Accepting Bitcoin Due to Fees and Congestion
Next week the popular cryptocurrency event, The North American Bitcoin Conference (TNABC) will be hosted in downtown Miami at the James L Knight Center, January 18-19. However, bitcoin proponents got some unfortunate news this week as the event organizers have announced they have stopped accepting bitcoin payments for conference tickets due to network fees and congestion.

Net, with bitcoin one holds an assett whose liquidity is directly controlled by another entity, the miners. The only way out of this is to institute inflationary mining cycle, that is reinstate significant miner awards so ineffecient miners can compete.  This again caps value but not all returns will accrue to a handful of players.

This is a fundemental flaw in the thinking of the architecture of the currency.  They did not predict zero variable cost producers.  The currency depended on assumption that there would be cost in terms of time and electricity to process transactions that would be supported by a competitive bidding market.


--- Quote from: David in MN on March 31, 2019, 06:43:55 AM ---There is no limit to Bitcoin. If a limit ever was a threat to the Bitcoiners they would just do another fork (already done 3 [Cash, Gold, SV]). The dev team can print them out of thin air just like greenbacks. They are not a limited commodity like coal or oil or even goat poop.

--- End quote ---

Yes. There is a reason bitcoin has lost 75% of its value vs other currencies. And that is simply that it has become clear that it is not decentralized, just dispersed.

David in MN:
While true none of that even matters. We're about 18m Bitcoin mined. About 17.5m Bitcoin Cash mined. And about 17.5m Bitcoin SV mined.

So in a currency STRICTLY limited to 21,000,000 we have 53,000,000 "Bitcoin" floating. If a publicly traded company did this with their stock they would be murdered in the market and the SEC would investigate. And if you're sitting at home believing your Bitcoin should be worth about 2.4 times more than it's trading you're correct. But it's because the dev team allowed so many spinoff coins that your market value is diluted.

I agree one could game the algorithm and the transaction fees are an issue but the whole sales pitch of a limited currency has been the driving failure.

Just work through in your head the stuff my idiot friends emailed me. "Cryptocurrency isnt a currency because it's a store of wealth and it's value comes from its limitation which isn't real and a proof of work that amounts to digging a hole in the morning and filling it in the afternoon. Work is value whether anything was actually produced just like Marx said."

It's amazing. You can publicly predict the fall of Sears, GE, and Bitcoin and people still think you're some fool wandering the forest.

iam4liberty:

--- Quote from: David in MN on March 31, 2019, 10:02:42 AM ---While true none of that even matters. We're about 18m Bitcoin mined. About 17.5m Bitcoin Cash mined. And about 17.5m Bitcoin SV mined.

--- End quote ---

But the forks are a symptom of the above.  For example Bitcoin Cash came about because of the transaction fee issue and disattisfaction of the China based miners.  Fundementally, the problem is the competitive mechanism for ensuring rule enforcement is an illusion.  The system is not truly decentralized.  The miners hold the key to liquidity.  As they become more and more centralized (whether this be by government subsidization like in China, miner pools like the traditionalists, or by energy companies) they hold the ability to make changes with holders essentially powerless.  It is the HOA of currencies. 

David in MN:

--- Quote from: iam4liberty on March 31, 2019, 11:16:26 AM ---But the forks are a symptom of the above.  For example Bitcoin Cash came about because of the transaction fee issue and disattisfaction of the China based miners.  Fundementally, the problem is the competitive mechanism for ensuring rule enforcement is an illusion.  The system is not truly decentralized.  The miners hold the key to liquidity.  As they become more and more centralized (whether this be by government subsidization like in China, miner pools like the traditionalists, or by energy companies) they hold the ability to make changes with holders essentially powerless.  It is the HOA of currencies.

--- End quote ---

Oh... I think I understand your argument. Your concern is that, at the end of the day, there is centralization in a few big mining pools. Somebody holds all the cards whether it's Amazon cloud computing, a Government, or the power company. No matter what it will be a case of top-down control where there is a king.

I skew much more in that the dev team has committed fraud and anyone who can look you in the eye and tell you their currency (which isn't a currency) has been capped at 21m but there are 53m floating because they forked new money probably belongs in prison.

It's a subtle difference. I'm claiming a financial crime happened and you are claiming that the incentives would prevent an honest system. Similar but different.

iam4liberty:

--- Quote from: David in MN on March 31, 2019, 11:59:45 AM ---Oh... I think I understand your argument. Your concern is that, at the end of the day, there is centralization in a few big mining pools. Somebody holds all the cards whether it's Amazon cloud computing, a Government, or the power company. No matter what it will be a case of top-down control where there is a king.

--- End quote ---

Yes.  Though it may be posdible to have a truly decetralized fiat currency.  But this approach isnt it.


--- Quote from: David in MN on March 31, 2019, 11:59:45 AM ---I skew much more in that the dev team has committed fraud and anyone who can look you in the eye and tell you their currency (which isn't a currency) has been capped at 21m but there are 53m floating because they forked new money probably belongs in prison.

It's a subtle difference. I'm claiming a financial crime happened and you are claiming that the incentives would prevent an honest system. Similar but different.

--- End quote ---

Well their argument will be that with every fork the holders at tgat time received the new currency too.  So theoretically, if everyone agreed in the switch (census) then it would have been a fair solution.

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