BITCON... WHY its totally FLAWED

[spdz]

Hi, what costs are involved in producing.. i dont see any legitimate reason why they would be capped at that quantity stated, as they are a law unto themselves with no government backing id assume as profit maximisers.. they will just keep the free money rolling..

These guys remind me of diamond traders.. drip feed the supply and claim scarity.

I have read about all i can.. to me this is worse than a ponzi as no-one benefits except those that PRODUCE the coin (albeit with ZERO overheads)!

Ok, lets go get rich!

25x Quad-Spartan 6 LX150 FPGA Board @ US$950ea (volume pricing) = US$23,750
..gets us 21.5Ghash/sec. By comparison, deepbit.net (distributed mining effort) is currently running 3,455 Gh/s and claiming to have mined 1m coins in its first year.

Current difficulty of 1155038 allows us to 'mine' 18 bitcoin a day / ~$185 a day.
39W of power per unit x25 = 970W plus control system (probably 1000W total). I'll let someone else do the power costing.


Obvious problems - difficulty change, exchange rate crash, power price hike, hacks....

 

[1for1]

What a Crock of Schitt

If you cant dazzle them with Brilliance, Baffle them with BS...

THere is no reason youd need anything other than your mummas laptop... All i am hearing is hollow strawman shout em down arguments... "the science has been confirmed" the talk is over its legit.. it must be because they use a super computer "calculated Algorithm" to incrementally increase the supply.. like this is a reason to pay for something that has no value... i doubt "there complex" method of feeding the public an electronic coin would fool many when a simply time release would do the same thing.. im sorry but mining for gold has real costs... no ones that are just on papaer to make there scheme seem like something its not.. a finite commodity with actual properties making it useful as a monetray alternative,


things it is not.

1for1

 

[bron suchecki]

Hi, what costs are involved in producing.. i dont see any legitimate reason why they would be capped at that quantity stated, as they are a law unto themselves with no government backing id assume as profit maximisers.. they will just keep the free money rolling..

These guys remind me of diamond traders.. drip feed the supply and claim scarity.

I have read about all i can.. to me this is worse than a ponzi as no-one benefits except those that PRODUCE the coin (albeit with ZERO overheads)!

You clearly have not read all about it. There are no "these guys" who issue bitcoins (it is a peer to peer system), there are legitimate hard cash costs to the transaction validation process (which "produces" bitcoins) and the maximum limit of bitcoins that can ever be produced is hard coded into the mathematics.

I don't have any problem with those aspects and think it is a very smart design. The issues I have are:

1. all transactions are visible, so you have to use randomising services to mix up bitcoin addresses
2. you have extra risks trying to secure your bitcoin "files" from loss
3. because the costs of validation are high it seems this is becoming limited to "miners" who have the big dollars to set up the hardware, which means over time you may well end up with a limited number of these validators, who then effectively "own" the system and if enough of them with a majority of processing power agree with each other, they can change the rules (and thus I assume the max number of bitcoins).
4. Is electronic, relying on the internet and electricity, without either you can't spend bitcoins.

The first two points I see as a turnoff for average people. There is a tradeoff between ease of use and security/robustness. Unfortunately average person wants ease of use.

 

[LTEK4NZ]

Hi, what costs are involved in producing.. i dont see any legitimate reason why they would be capped at that quantity stated, as they are a law unto themselves with no government backing id assume as profit maximisers.. they will just keep the free money rolling..

These guys remind me of diamond traders.. drip feed the supply and claim scarity.

I have read about all i can.. to me this is worse than a ponzi as no-one benefits except those that PRODUCE the coin (albeit with ZERO overheads)!

Ok, lets go get rich!

25x Quad-Spartan 6 LX150 FPGA Board @ US$950ea (volume pricing) = US$23,750
..gets us 21.5Ghash/sec. By comparison, deepbit.net (distributed mining effort) is currently running 3,455 Gh/s and claiming to have mined 1m coins in its first year.

Current difficulty of 1155038 allows us to 'mine' 18 bitcoin a day / ~$185 a day.
39W of power per unit x25 = 970W plus control system (probably 1000W total). I'll let someone else do the power costing.


Obvious problems - difficulty change, exchange rate crash, power price hike, hacks....

and once you've set the system up. you hope you can live off it.
or you can go get a real job and earn real AUD which you then exchange for REAL food and Ag / Au as you see fit.
or you do both at the same time and have a nice little win lose project on your computer system.

 

[thatguy]

3. because the costs of validation are high it seems this is becoming limited to "miners" who have the big dollars to set up the hardware, which means over time you may well end up with a limited number of these validators, who then effectively "own" the system and if enough of them with a majority of processing power agree with each other, they can change the rules (and thus I assume the max number of bitcoins).

Currency with Finite Supply
Number of bitcoins over time
Bitcoins are created each time a user discovers a new block. The rate of block creation is approximately constant over time: 6 per hour. The number of Bitcoins generated per block is set to decrease geometrically, with a 50% reduction every 4 years. The result is that the number of Bitcoins in existence will never exceed 21 million[1]. This algorithm was chosen because it approximates the rate at which commodities like gold are mined. Users who use their computers to perform calculations to try and discover a block are thus called Miners.

https://en.bitcoin.it/wiki/Controlled_Currency_Supply
From what I have read it would not be possible

Deflation
Because the monetary base of Bitcoins cannot be expanded, the currency would be subject to severe deflation if it becomes widely used. Keynesian economists argue that deflation is bad for an economy because it incentivises individuals and businesses to save money rather than invest in businesses and create jobs. The Austrian school of thought counters this criticism, claiming that as deflation occurs in all stages of production, entrepreneurs who invest benefit from it. As a result, profit ratios tend to stay the same and only their magnitudes change. In other words, in a deflationary environment, goods and services decrease in price, but at the same time the cost for the production of these goods and services tend to decrease proportionally, effectively not affecting profits. Price deflation encourages an increase in hoarding - hence savings - which in turn tends to lower interest rates and increase the incentive for entrepreneurs to invest in projects of longer term.

Kick Keynes where it hurts. Still prefer G&S but when bitcoins crash again I may be tempted

 

[spdz]

3. because the costs of validation are high it seems this is becoming limited to "miners" who have the big dollars to set up the hardware, which means over time you may well end up with a limited number of these validators, who then effectively "own" the system and if enough of them with a majority of processing power agree with each other

Collusion in a finance market, who would have thought..

or you can go get a real job and earn real AUD which you then exchange for REAL food and Ag / Au as you see fit.

Yep!

(bitcoin / aud / coles gift cards) ......... (food / water / silver / 3000000 cans of beans )

 

[1for1]

I was expecting a strawman "you dont understand" generic statement.. please i was trying to be more sophisticated here and discuss specific points and what is recoverable from the basics of a good idea. Rather than tell me i need to understand basic computer facts can you please address actual posts im making as your generic response could be pasted into any thread even posing the question.

I understand P2P as its a rather simple process. Although id say baffling people with Jargon is the marketing strategy... i actually think part of the strategy is TO MAKE THE BARRIERS TO ENTRY SEEM SO GREAT they get no compeition.. if it was a simple time trigger there would be various competitors already.. by inventing a complicated expensive system they hoodwink idiots and make it appear difficult for anyone else to emulate there business model (whereis the truth is a simple program could generate this very system to the tee).

OF course limiting there creation is key, yet the way they do so is revolutionary/ a total waste of time.. a time trigger would be a basic sustitute and could even mirror results.

Not sure how this validates the fact a private individual profits at the expense of those who buy into something that ticks the WORTHLESS box in all catagories. ... its much like why we want to stop the private banks (IRB IMF) from creating money as debt..

Im not impressed they have BIG COP (costs of production) when the system would work the same as if they did it with a trigger... as i said.. they are a law unto themselves.. to me the MAX is like a govts debt ceiling, have it there until it gets close and then bump it up... not sure why you put so much trust in the hands of the owners/creators... HAVENT WE LEARNT COMPANIES ARE ONLY AS GOOD AS THERE WORD AND THAT THEY CAN GO BACK AND SCREW INVESTORS MAKING UNPOPULAR DECSIONS PURELY FOR PROFIT MAXIMISISING REASONS? Are Bitcoin a charity or for profit?

Not sure why regurguitating their speil makes it more legit... not saying its not a good short term buy... just saying its a poor model if the goal is to create an optimum monetary system.. this totally blows like our current money as debt system..

Im sure Bill Still would critique this well... anyone heard Bill (the money master) talk about (SH)it coin?

the whole idea of a decent system would be money created debt free to benefit society, not private hands..

1for1

 

[bron suchecki]

From what I have read it would not be possible

Keynesian economists argue that deflation is bad for an economy because it incentivises individuals and businesses to save money rather than invest in businesses and create jobs.

I understand the coded limit, but the code can be changed if agreed, and this happens now for minor improvements. The code can be changed by anyone, the problem is the other users running on a different code version would not recognised your different bitcoins because the validation process is working off the old code. But if you have a majority of validators agree to accept a new code version (with a higher limit of bitcoins) and tell users they need to "upgrade" their code accordingly (for whatever reason), then the bitcoin system will fork into that new version.

People could still continue to use the older 21 million limited version, but if the majority of users and validators are using the new version then you have an incentive to upgrade as well or get left out.

Re deflation, yes who would want people to save but I don't see how saving means people don't invest in businesses and create jobs, that is exactly how most save.

The biggest problem with deflation for governments is that you could "invest" your cash at very low rates (say 1%) but if prices dropped 10% per year, your are 11% better off. Problem is govt can only tax you on the 1%, whereas in inflation environment you would earn 11% interest and pay tax on that.

 

[bron suchecki]

Follow on, this just appeared in my RSS feed

http://themonetaryfuture.blogspot.com.au/2012/08/top-10-bitcoin-statistics.html

5. Hash Rate Distribution - This pie chart is an estimation of hash rate distribution amongst the largest mining pools. It is important to monitor because the integrity of the network depends on a single actor not exceeding 50% of the overall hashing power.

[I note if you go to the link given in the article there are not many who could get ove 50% easily]

9. Average Transaction Confirmation Time - This measures the average (mean) amount of time in minutes that it takes for a transaction to be accepted into a block. Reasonable estimates differ on the amount of time and confirmations for a transaction to be considered cleared and 'good' but that appropriate risk level would be associated with the transaction's value.

[note that it takes about 10 minutes before a transaction is confirmed, better than a bank account but not instantaeous as it is often presented]

 

[Water&Food]

HAHAHAHAHAHAHA holden vs ford

Can understand both sides. Personally, I side with IF IT AIN'T PHYSICAL.

Two words:
Tulip Bubble.

However, it is the future, but I will not be joining in. Might see you in sewer city in the future, put a rat burger on the barbie mate.

 

[Dogmatix]

It does sound a tad ponzi. The ones who benefit the most from mining are the early adopters. I guess that isn't the definition of a ponzi though.

So what they've essentially done is try to engineer artificial scarcity - and they've somewhat achieved it. But it also lacks any kind of sovereign control - ie, a country having control of its own money, which means it can be used as leverage. Can you imagine the US witholding bitcoins from Iran? Iran would stop using them. That kind of thing is happening now, but not because there are not enough USDs floating around, but simply because they have no value. Bitcoin can lose value in a similar way, not because it is not scarce enough, but because it is not universally accepted.

Probably the biggest few biggests hurdles bitcoin has are:
- being accepted for payment of taxation
- being 'allowed' by Govt and not being made illegal, eg for money laundering
- being proven to be stable and not just a speculative instrument (big price swings in its short life)
- getting over this BS mining crap...seriously?

Conversely, it would be nice if bitcoin was 'untouchable' by Govt, like PMs, but i'd say it is fairly easily confiscatable.

 

[Guest]

Bitcoin may turn out to be a good investment, in a certain time frame. In fact I reckon it may spike up handsomely. But the following reasons prevent me from even looking at them seriously.

1. What's to stop a bitcash or something from coming out tomorrow?

2. Any problems with computers is a problem with bitcoin.

3. Technology in 20 years could make the foundation that bitcoin is built upon look like a joke.

4. Gold and silver surge ahead and make bitcoin look like a very silly investment

 

[thatguy]

Bitcoin may turn out to be a good investment, in a certain time frame. In fact I reckon it may spike up handsomely. But the following reasons prevent me from even looking at them seriously.

1. What's to stop a bitcash or something from coming out tomorrow?

Free market economics

2. Any problems with computers is a problem with bitcoin.

no more or less the electronic cash

3. Technology in 20 years could make the foundation that bitcoin is built upon look like a joke.

unlikely... HIGHLY UNLIKELY

4. Gold and silver surge ahead and make bitcoin look like a very silly investment

Finally a winner

 

[Dogmatix]

Bitcoin may turn out to be a good investment, in a certain time frame. In fact I reckon it may spike up handsomely. But the following reasons prevent me from even looking at them seriously.

It already did that, once. I can't recall the spread exactly, but it was up around $30USD and now is sitting around $10.

http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zv

It's pretty flakey so far, but so is silver

So... what about bitcoin numismatics? "Check this bitcoin out, i got it in 2010"

 

[spannermonkey]

Just like fruitbook

 

[Jislizard]

I thought bitcoins were more a 'means of transaction' than a 'store of wealth', enabling secure online transactions without needing to pay for a service such as Paypal.

When I start seeing lots of websites accepting bitcoins then I might join in but I am done with early adopting.

It is not something I would speculate with, having read up on it I have chosen to go with physical metals, it is hard enough explaining a silver bar to people, explaining bitcoins is way too hard to make it worthwhile.

 

[Lovey80]

Did I mention snake oil?

 

[JulieW]

Leaving the good dog bad dog arguments out of it. The US has the ability to create stuxnet and bring down the Iranian nuclear program.

What makes you think that they wouldn't have a vested interest and a lot of motivation to just collapse the bitcoin enterprise with any number of trojan virus bomb code disrupters which would just give you a large binary collection of diddly squat electrons.

When they release government authorised bitcoin clones then original bitcoin will be outlawed or destroyed.

 

[spdz]

I thought bitcoins were more a 'means of transaction' than a 'store of wealth'

Exactly this. 'Investing' in bitcoins would probably be a bad idea - using them for transactions (instead of USD etc) is a great idea.

 

[Dogmatix]

I thought bitcoins were more a 'means of transaction' than a 'store of wealth'

Exactly this. 'Investing' in bitcoins would probably be a bad idea - using them for transactions (instead of USD etc) is a great idea.

Except that their inherent design is to create scarcity - to act as a store of wealth.

A medium of exchange does not require scarcity - only a rate of exchange with the 'store of wealth' is required. The point is that people shouldn't hold the medium of exchange for any significant length of time.

(Obviously you wouldn't want a medium of exchange that increased in volume exponentially from day to day)

/End of FOFOA rant.