we are in a bull market wait until there is a big correction and these lenders go belly up and lose all their customers' funds
Or unless government regulations slap it around. And as far as other coins supplanting it, supplanting it at doing what? Being popular?
Regulations is what will lead to more adoption. Bitcon to 100k or 1M isn't happening from retail investors. Gemini and Coinbase are banks and no longer just exchanges. Emerging markets will be using Bitcoin as banking and not use it as a 1% speculative asset.
That was my biggest fear, but so many influential US institutions are loading up... I think we're at the point of no-return. Other countries are already regulating against it. But other countries are going all-in.
I've been thinking a bit more about Bitcoin after the last series of posts (thanks to @Space Ghost and others for contributing). Trying to move on from "Bitcoin is stupid!" and more "Can Bitcoin be improved?" discussions, at least from my point-of-view. 1) Per the recent talk about possible government regulations, what regulation do you think governments *should* enact to help improve the situation (if any)? Don't know if it is possible (especially without some major pushback from those in favor of the current Bitcoin network), but I'm wondering if it might be possible to enforce some of the rules that responsible miners already follow (in regards to renewable energy or whatever). Given this is a global network, I realize it is difficult to force rules on some miners while others get to follow their own set of rules (e.g., China, Russia, etc.). Don't know if anything could be done about that though (unless the network itself enforced rules tougher than what governments would want to enforce). 2) Are there any estimates on how many computational cycles are "wasted" in the race to be the first to verify a transactional block? This occurred to me when reviewing the explanation @Space Ghost provided earlier, and as a software engineer, it seems incredibly wasteful. And I mean computationally wasteful (which correlates to energy, but that's an old discussion point for now ). I'm assuming individual miners/groups have ways of picking the "best" transaction to attempt to solve (vs all of them blindly going to the same ones), but I'm curious how efficient this is in practice. I'm wondering if the protocol/network could be updated to perhaps limit the number of "entities" attempting to solve a problem. Or something way smarter than that naïve approach to solve the problem. Again, this would probably offend those that strongly believe in the philosophy of Bitcoin (plus might be hard to do with mining groups), but from a technical standpoint, I'm wondering if some things could be changed to hopefully (drastically) improve the efficiency of the network as a whole. I'm assuming the network has huge amount of computational power, and it would be a shame if most of the power was more or less wasted. I did see talk about changing the size of the transaction blocks, which I think would help, but wondering if anything could be done beyond that. I suppose moving to a different model (I guess PoA would be the best?) would result in the most "efficiency," but let's just suppose the goal is to make PoW as efficient as possible. 3) Who are some good people to follow (on Youtube or whatever) about the technical details and happenings of Bitcoin (and maybe other crypto)? Preferably more about the current happenings from a technical/engineering perspective (also less "what-ifs"/more concrete stuff), and probably more about the network itself vs anything useful for an individual. No Elon Musk/Michael Saylor types please.
Regulating power consumption will send miners else where. Im not sure if the government can even do that. When regulation is brought up, people tend to automatically gravitate towards 'restrictions' when in reality its more about integrating digital assets into the current financial industry. They are not going to let scammy projects into the financial system. This gets way above my understanding. We are getting into lending and borrowing, not just holding a digital hash hoping someone else values it. I hate to tell you this but Bitcoin was designed to be very very inefficient. Look at it as burning energy to convert to Bitcoin. The more energy bitcoin uses, the more the value goes up, the more (digitally) structural sound the instrument becomes. If the original founders wanted it to be efficient, the design would allow best efficiency using CPU and Graphic cards. Bitcoin ASIC miners are designed to do one thing; crunchy bitcoin code. Outside of that, they are largely useless. I understand that goes against everything you stand for.
True, although I was assuming that if most mining was done in an energy responsible way (as was semi-implied in previous discussions I think?), then the numbers turned away would be fairly minimal. Like that company that mines entirely from renewable energy wouldn't be affected (besides providing whatever theoretical paperwork that would "prove" this). Plus, perhaps if well implemented, this might encourage those of us that have had concerns about Bitcoin/crypto to maybe be less critical and even embrace the platform. In other words...more miners to replace the ones that left (or maybe more investment would be more accurate to say). To be clear, I am mostly dealing with thought experiments here ("Wave your hand and it is magically done"), and not necessarily talking about any regulations that would likely be enacted. For sure, the more likely regulations are something like those involving the financial industry as you mentioned, or full on bans of Bitcoin/cryptocurrency in general (which I'm not sure how that's enforced). Not particularly interested in thinking much about either of those personally (although I'm sure the former is super interesting to some). Yeah, I understand that efficiency is one of the last things that the Bitcoin protocol is worried about. Still, I'm wondering if there are ways to improve it while also keeping other aspects of the system more or less the same (or perhaps even better). Some article I read discussed the possibility of the network issuing more bitcoins than the 21 million limit, and it also talked about changing the size of the transaction blocks (which I think some group did via a fork?). I don't think these things are intended to tackle the issues I mentioned (not directly anyway), but it did seem to imply that the network could definitely adopt new changes if they made sense. I'm guessing, as inefficient as the system is, it could certainly be *more* inefficient (e.g., maybe require processing time to take ~60 minutes on average instead of ~10 minutes?). And if it could be more inefficient, it could be more efficient too, no? Perhaps the current system is at the point where the value to miners is being maximized, but I'd like to think there could be tweaks to improve that. I'd think reducing "wasted" cycles could do that if done "right" for example, but maybe I'm wrong. I suppose even if any of these changes could happen, the Bitcoin network might be too big of a behemoth to smoothly make a change like that, so it might be lost cause. But I still wouldn't mind the thought experiment. Essentially what is the best design for a PoW protocol in terms of efficiency for a theoretical cryptocurrency with similar goals as Bitcoin (not necessarily 100% identical, but something close enough).
No, what I am trying to tell you that it is intentional. Imagine trying to find the most inefficient way to brute force a puzzle....and it has to work. Its the complete opposite logic of a programmer. If you subscribe to the theory that needlessly burning one of societies scarcest resources and in turn transferring it to digital hashes that retain their value based on a trustless self govern network, then you can understand the value of of using the most inefficient way to run code actually has its benefit. It waste more energy, thus transferring it to the network. Its so wasteful that specially designed chips run this inefficient code in a very efficient manner. ASICs can be programmed to run it very effectively. But it can't run other coding very well. Essentially you have two very different kinds of computer systems that are separate from each other. Someone couldn't create a botnet and force people to mine bitcoin while they reap the rewards. There are PoW coins that are very optimal and designed to run on basic computers. But they are frequently plagued with malware. Pointlessly wasting your devices resources is a terrible waste of use of the device. I see Bitcoin as a store of value, nothing else. A temporary one at that. More so than what many want to believe. All store of values fade over time. Gold is rapidly fading, but by no means is it uesless. That said, Bitcoin was designed to be a temporary solution. It is a well engineered mathematical financial solution. If you start throwing off the balance, you get what we have as a financial market now. Adding in extra coins will not be distributed fairly. It doesnt solve anything in the first place. The block size doesnt need to increase. If the mem pool gets too full, they can go offchain. That is what is happening now. If you need to move payments fast, go through a trusted PoA network. If you want to test your risk tolerance, put it in ethereum for investment. If you want to put it somewhere where nobody is going to **** with it like adding coins to the network, or changing block time or block size, put it in Bitcoin. If crypto doesn't have a safe and secure place to hide in, it will never hold. I dont encourage people to get in Bitcoin. If they want to learn about it, Im happy to share my experience and let them make their decision. Its not risk free.
proof of work is not wasteful, it is how the network secures itself without an authority it doesn't matter how rich you are (proof of stake), your reward is proportional to the work you contribute in support of securing the network
Maybe I'm not explaining myself well. I 100% understand the point of the inefficiency you describe, particularly in the design of the "puzzles." I have more questions about the design of the network/protocol itself, not so much the puzzles. One point I tried to make is that the current Bitcoin design is obviously not the *most* inefficient design as you could always add more complexity. In fact, I believe this already happens when the average solution time gets too far below 10 minutes (which you explained previously). Why not make these computations even more difficult (and thus, more inefficient/wasteful)? Why not push for an average solution time of 2 hours? I'd assume that would throw off the block production rate and/or put off miners. There's a balance to keep in terms of how complex (i.e., inefficient) to make the system. I'm assuming they're trying to find a sweet spot to keep a particular number in mind with the block production rate. Make it too efficient or inefficient and you throw off those numbers. Am I wrong? My question is can the protocol be tweaked to keep that block production rate stable while possibly reducing the waste in computation cycles of the network as a whole. Not necessary the waste of the individual that was first to compute the solution, but maybe for the other machines that attempt to verify these blocks but miss out on being first. For all I care (at least for this thought experiment), keep the puzzles super inefficient in terms of code, complexity, etc. There appear to be a number of variables involved in the system (bitcoin supply, block size, block rate, puzzle difficulty, the number of blocks verified before re-evaluating difficulty, etc), and there's even a built-in "voting" system to handle changes to the protocol. I'm interested in that stuff and how these things get decided. To this point, let's say I start mining, but after 10 years of mining constantly, I never end up receiving any reward (i.e., I'm never the first to verify a transaction). Have I contributed to the network at all, and is my contribution valuable? I suppose it can influence the overall computing power of the network, although I'm not sure how that is calculated. If it is just by average solution time, then maybe my work has no value, right? Perhaps I'm just missing a bunch of big picture stuff, and the work put in by the "losers" of each puzzle is still very important to the network as a whole. I suppose this could increase energy costs of the network as a whole, which in turns results in the output of the network being more valuable. Not exactly sure how this can be accounted for, but perhaps with a bit more work, it would make better sense to me. Fake Edit: I actually bothered to just look at the source code change log for Bitcoin, and it sorta address the things I thought might be possible (e.g., "misbehaving" nodes, handling nodes that broadcast too much, etc.). I might just dig more into the source code and specific design of the network and see if it answers the questions I have.
You would not mine by yourself, you would join a mining pool, and if the pool wins the block reward, it is distributed to each member of the pool based on how much they contributed.
I understand that. I was pointing out a hypothetical that shows where your statement might not be entirely accurate. You can change the variables a bit if you simply don't want to think of it as an individual mining. I could possibly see the thought that not receiving rewards (as an individual or group) would either push you to invest in more hardware (i.e., more energy), or to simply stop contributing to mining altogether. Which I'm assuming is what happens from a practical standpoint. This introduces a lot of complex external factors though IMO, and I wonder if the network itself could minimize those things (while still prioritizing block rate, ~10 minute solution times, etc.).
The secret sauce of the bitcoin protocol is that it adjusts the mining difficulty to ensure blocks are only found every 10 minutes. If miners turn off, the difficulty drops. If miners spin up, the difficulty increases. Bitcoin is the only resource where the more energy you devote to making more, the harder it is to make. Nothing like that has ever existed before.
Sell calls. Sell puts on red days. Enjoy the ride. Crypto is the only thing working hard for me these days. Bitcoin is going to blast through $60,000 sooner rather than later.
I bought some bitcoin as a light hedge. Plan to make it around 10% of my total investments combined across all my accounts. Is Bitcoin the only viable long term hold?
