Bitcoin Mining

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Re: Bitcoin Mining

Post by MachineGhost » Sat Aug 06, 2016 6:27 pm

dualstow wrote:Stocks are a little different. In addition to the regular risk that a stock may naturally fall, there's the chance of corporate mismanagement and finally, the perennial fear (in some hearts) that "the system is rigged." But, the intangibility of my stock holdings is not an issue because I trust my brokerage houses. They're not perfect, but they make me feel safe, even if that's an illusion. A stock certificate could get torn apart by a pet or lost in a flood, easily.
They're not bearer, just fancy scribbles and graphics on paper evidencing your registration on the books at the corporation.

Like cash, Bitcoins is nonrecourse once spent unless "they" hard fork the blockchain to claw back the money as they did in Etherum's case over the DAO theft. Stick to using exchanges in this country as they're regulated as money transmitters by the Treasury.

Anyway, blockchain v3 will be out soon as HEAT. Bitcoins days may be numbered since the Chinese that own the vast majority of the mining power aren't that interested in collaborating together to impose changes or evolve.
Last edited by MachineGhost on Sat Aug 06, 2016 6:31 pm, edited 1 time in total.
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Re: Bitcoin Mining

Post by dualstow » Sat Aug 06, 2016 6:30 pm

MachineGhost wrote:
dualstow wrote:... But, the intangibility of my stock holdings is not an issue because I trust my brokerage houses.
... A stock certificate could get torn apart by a pet or lost in a flood, easily.
They're not bearer, just fancy scribbles and graphics on paper evidencing your registration on the books at the corporation.
Ok, so no worse than digital holdings, then. Perhaps one rung higher in the case of identity theft.
I still feel safe with intangible stock holdings, though, and for good reason.
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Re: Bitcoin Mining

Post by MachineGhost » Sat Aug 06, 2016 6:36 pm

dualstow wrote:Ok, so no worse than digital holdings, then. Perhaps one rung higher in the case of identity theft.
I still feel safe with intangible stock holdings, though, and for good reason.
I think the core thing here is there is no rule of law about the blockchain. If a controlling majority decides to do something that isn't in your best interest including stealing your bitcoins, there is no recourse other than to quit using it. Some may like this Wild West free-market tyranny for ideological reasons, but it isn't the rule of law which typically focuses on protecting minorities from majority rule.
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Re: Bitcoin Mining

Post by Pointedstick » Sun Aug 07, 2016 2:46 am

MachineGhost wrote: Some may like this Wild West free-market tyranny for ideological reasons, but it isn't the rule of law which typically focuses on protecting minorities from majority rule.
That's basically it. The Bitcoin world is exciting in an ideologically pure way, but that excitement has to give way to a certain amount of order and stability before it can break out of the world of the early adopters and into the mainstream. If it doesn't, then it becomes irrelevant--nothing more than an interesting experiment that didn't pan out.

I say this as a former merchant who accepted payment in Bitcoins (and always delivered the goods! ;D)
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Re: Bitcoin Mining

Post by bitcoininthevp » Wed Aug 10, 2016 5:40 pm

dualstow wrote: If someone hacked into Vanguard, I think I'd still get my shares back eventually. And, if someone hacked into my bank and/or robbed my branch at gunpoint, I'd still get my FDIC-insured dollars.

I'd like to see the same thing from bitcoin, rather than, we're spreading the loss around to our customers even if they were not direct victims of the hack. Until then, as you have pointed out, we don't need those exchanges to store our bitcoins in the first place.
If the world, like you, demands insurance or a set of standards for bitcoin-related companies to adhere to before doing business with them, I believe those types of companies will appear and thrive. There are some starting. I suspect, and hope, that there will be a variety of *choices* in types of bitcoin companies. Some insured, some uninsured (and cheaper!), some getting together and following similar legal standards, some staying anonymous perhaps.

Coinbase is insured https://support.coinbase.com/customer/p ... e-insured-

Others may follow suit.

What just happened with the bitfinex theft will help shape market preferences and people will vote with their dollars... or bits.
dualstow wrote: What about spending the coins? I saw a couple of interviews in the past, possibly posted at this forum. It was a pro-bitcoin interviewer who scared me. He said that once someone tried to purchase something online and the "merchant" took his bitcoins and delivered nothing. The pro-bitcoin guy proudly announced that many people in the bitcoin community generously donated a coin each to the victim.

That's heartwarming and everything (and I don't mean that in a snarky way), but I don't think I'd like to depend on that. People have been known to buy entire automobiles with a credit card. After hearing this story, I'm not sure how I could feel safe exchanging $45- or $65,000 in bitcoins and then waiting for delivery. Or maybe there are new safety mechanisms in place since that story aired a few years ago?
If you are sending bitcoins directly on the bitcoin network to someone, its permanent. So someone can easily stiff you. So you need to be careful. Bitcoin is more merchant friendly and less consumer friendly in this regard. But how long will the market tolerate such actors? Reputation is important. Very similar to cash in this regard.

Merchants that use 3rd party payment processors like Bitpay are probably safer to use since Bitpay is the middle man in that, but even then I am unsure of the exact protections they have in place.

It is the wild west, but in some ways, isnt that the free market? Choice, I mean. Not a guarantee of safety.
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Re: Bitcoin Mining

Post by bitcoininthevp » Wed Aug 10, 2016 5:45 pm

MachineGhost wrote:Bitcoins days may be numbered since the Chinese that own the vast majority of the mining power aren't that interested in collaborating together to impose changes or evolve.
Some might see this as a feature and not a bug.

I see bitcoin as the settlement layer that things like "3rd generation blockchains" will use as the value layer, innovating on top of.

I believe Bitcoin needs to be rock solid if that is the case and cannot be the place where the "move fast, break things" innovation is being done.

You saw what happened with ethereum!
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Re: Bitcoin Mining

Post by bitcoininthevp » Wed Aug 10, 2016 5:59 pm

MachineGhost wrote:I think the core thing here is there is no rule of law about the blockchain. If a controlling majority decides to do something that isn't in your best interest including stealing your bitcoins, there is no recourse other than to quit using it. Some may like this Wild West free-market tyranny for ideological reasons, but it isn't the rule of law which typically focuses on protecting minorities from majority rule.
There may be more governance here than you think.

Miners can choose what version of the software to run, governing which transacitons are processed.
Node operations can choose what version of the software to run, governing which transactions are relayed and which blocks are valid.
Software developers can write competing implementations and even fork the code.
The blockchain can be forked in two (or more) competing currencies if there is a large enough disagreement.
Users can choose to use another crypto- or other currency for their transactions.

But most importantly and most powerfully, the holders of bitcoin, the currency, govern the price. For example, if there was a proposed change to blacklist certain transactions, or to "steal <anyones> bitcoins", the market will react and the price will change accordingly in a downward fashion. People holding dont want that. Miners, whose profit is based on the exchange rate of a bitcoin, dont want that, etc.

That doesnt mean nothing "bad" (subjectively perceived by individual market participants) can happen. It is just a different type of "regulation".
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Re: Bitcoin Mining

Post by MachineGhost » Thu Aug 11, 2016 7:40 am

bitcoininthevp wrote:
MachineGhost wrote:Bitcoins days may be numbered since the Chinese that own the vast majority of the mining power aren't that interested in collaborating together to impose changes or evolve.
Some might see this as a feature and not a bug.

I see bitcoin as the settlement layer that things like "3rd generation blockchains" will use as the value layer, innovating on top of.
I suspect the Bitcoin blockshain is going to be entirely replaced by the 3rd gen, not innovating on top of it. It just has too many flaws and the "feature" of a crony majority of miners being stubbornly resistent to common sense changes because they're all selfish greedy pricks is not good public policy. But ultimately, the free market will decide. I have a chicken in every pot (Bitcoins, MaidSafe, HEAT).
Last edited by MachineGhost on Thu Aug 11, 2016 7:52 am, edited 1 time in total.
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Re: Bitcoin Mining

Post by MachineGhost » Thu Aug 11, 2016 7:47 am

bitcoininthevp wrote: That doesnt mean nothing "bad" (subjectively perceived by individual market participants) can happen. It is just a different type of "regulation".
Yep, its not rule of law, its law of the jungle. Rule of law is what everyone agrees to ahead of time to solve the market coordination problem as well as disputes. This doesn't exist in Bitcoins and hence why it has widespread appeal only to speculators or a small subculture of crypto-anarchists. One doesn't have to be a deep intellectual to have "bad" emotional heuristics about something new.

What we really want from Bitcoins is the blockchain revolution to trickle upwards and remake traditional finance.
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Re: Bitcoin Mining

Post by bitcoininthevp » Fri Aug 12, 2016 10:31 am

MG,

I have not heard of HEAT, I need to look into that. Thanks for pointing me towards something new.

Good to have another crypto enthusiast in the PP forums. :)
MachineGhost wrote: What we really want from Bitcoins is the blockchain revolution to trickle upwards and remake traditional finance.
Agreed.

However, I think in order to "remake finance" in a way that doesnt get us right back where we started, different legal and governance constructs need to be applied.

“We can not solve our problems with the same level of thinking that created them” sort of thing.

But I suppose I am in the "bitcoin maximalist" and "crypto-anarchist" camp :)
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Re: Bitcoin Mining

Post by MachineGhost » Fri Aug 12, 2016 10:36 am

bitcoininthevp wrote:“We can not solve our problems with the same level of thinking that created them” sort of thing.

But I suppose I am in the "bitcoin maximalist" and "crypto-anarchist" camp :)
Oh, I agree with that I am just wise to the fact that the other 99.99% do not. It sucks to always be on the vanguard of everything.
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Re: Bitcoin Mining

Post by MachineGhost » Sun Sep 25, 2016 12:45 pm

Well, never count out the market leader.

Rootstock aims to transplant Ethereum's functionality to the Bitcoin blockchain, enabling all kinds of smart contracts, near instant payments and higher scalability. It works by running a Turing Complete Virtual Machine on a Rootstock sidechain. Using a two-way peg, you can lock your Bitcoins on the Bitcoin blockchain and transfer that value to "rootcoins" on the Rootstock sidechain. And vice versa. It will use merge-mining so you can still mine Bitcoins and benefit from the new functionality <wipes sweat>.

Here's the white paper: https://uploads.strikinglycdn.com/files ... erview.pdf
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Re: Bitcoin Mining

Post by bitcoininthevp » Mon Sep 26, 2016 8:32 am

I think sidechains will address the "bitcoin doesnt have any new features" concern.

I think that lightning network will address the "bitcoin cannot scale beyond 3 transactions per second" concern.
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Re: Bitcoin Mining

Post by MachineGhost » Thu Oct 06, 2016 2:43 pm

"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

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Re: Bitcoin Mining

Post by bitcoininthevp » Thu Oct 06, 2016 4:52 pm

I think fungibility is the biggest concern and should be the biggest effort in the coming years.

Coinjoin, MimbleWimble, Confidential Transactions, Ring Sigs, Zerocash.

All ideas being tossed around to solve the fungibility problem. There is hope on this front.
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Re: Bitcoin Mining

Post by MachineGhost » Mon Nov 07, 2016 12:35 pm

Bitcoin is working great as a currency hedge in China and Venzeuela. So while it may not replace gold, it has none of the negatives and scarcity is guaranteed.

I grow increasingly skeptical any of the me-too alternative currencies will be major players judging by their xxx/USD value, but ZeroCash is truly anonymous and just launched. I suspect going forward that the emphasis will be less on being a cryptocurrency and more on the specific benefit they provide to the end user via sidechains to the Bitcoin blockchain. Cryptocurrencies are literally a dime a dozen and no longer a big deal.

I'm mining Bitcoin, Steem (social network) and Zerocash at the moment and keeping an eye on Hivemind. I successfully got the HEAT IPO coins for which I had sold half of my Litecoins for (that I mined before it because unfeasible). The other half went to MaidSafe which still hasn't launched. So it's alot like startup investing now in that any "killer app" will matter a great deal in terms of first mover advantage and quasi-monopoly position.

Sure wish I knew about Bitcoin back in the beginning. The number of millionaires and billionaires that arised out of it from mining or buying a few hundred or thousand coins at <.10/BTC is astounding.
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Re: Bitcoin Mining

Post by Jack Jones » Mon Nov 07, 2016 2:57 pm

MachineGhost wrote: Sure wish I knew about Bitcoin back in the beginning. The number of millionaires and billionaires that arised out of it from mining or buying a few hundred or thousand coins at <.10/BTC is astounding.
I started following it around the $10/BTC mark. I considered buying some back then, but it seemed like a bad place to invest my money, and it still does. I don't regret my decision just like I don't regret not playing last night's winning lottery numbers.
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Re: Bitcoin Mining

Post by bitcoininthevp » Mon Nov 07, 2016 6:42 pm

MachineGhost wrote:I grow increasingly skeptical any of the me-too alternative currencies will be major players judging by their xxx/USD value, but ZeroCash is truly anonymous and just launched. I suspect going forward that the emphasis will be less on being a cryptocurrency and more on the specific benefit they provide to the end user via sidechains to the Bitcoin blockchain. Cryptocurrencies are literally a dime a dozen and no longer a big deal.
Sounding like a Bitcoin Maximalist!
MachineGhost wrote:I'm mining Bitcoin, Steem (social network) and Zerocash at the moment and keeping an eye on Hivemind. I successfully got the HEAT IPO coins for which I had sold half of my Litecoins for (that I mined before it because unfeasible). The other half went to MaidSafe which still hasn't launched. So it's alot like startup investing now in that any "killer app" will matter a great deal in terms of first mover advantage and quasi-monopoly position.
Wait... what happened to the previous paragraph and all that "dime a dozen" "skeptical of alts"?
MachineGhost wrote:Sure wish I knew about Bitcoin back in the beginning. The number of millionaires and billionaires that arised out of it from mining or buying a few hundred or thousand coins at <.10/BTC is astounding.
"The best time to plant a tree..."

This is still the beginning.
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Re: Bitcoin Mining

Post by bitcoininthevp » Mon Nov 07, 2016 6:44 pm

Jack Jones wrote:I started following it around the $10/BTC mark. I considered buying some back then, but it seemed like a bad place to invest my money, and it still does.
Perfectly reasonable stance:
Rule #9: Don't ever do anything you don't understand.
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Re: Bitcoin Mining

Post by MachineGhost » Mon Nov 07, 2016 7:11 pm

bitcoininthevp wrote:Wait... what happened to the previous paragraph and all that "dime a dozen" "skeptical of alts"?
I was referring to all of the me-too cryptocurrencies that don't offer anything that Bitcon doesn't (well other than a fancy name), i.e. Litecoin.
bitcoininthevp wrote:This is still the beginning.
Not for Bitcoin it isn't. The blockchain technology is already divorced from it if Barclays is any indication*. So the chance to become a millionaire or a billionaire in Bitcoin is over. $700 just doesn't have the same upside potential as < .10c. Short of innovative new cryptocurrencies, we'll have to start investing in actual companies using blockchain technology or mining their sidechain cryptocurrencies, if any.

I actually bought Bitcoin at around a few couple bucks but stupidly sold around $15-$20 after the "enormous" rise. ::)

* http://wavebl.com/
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Re: Bitcoin Mining

Post by bitcoininthevp » Mon Nov 07, 2016 7:37 pm

MachineGhost wrote:I was referring to all of the me-too cryptocurrencies that don't offer anything that Bitcon doesn't (well other than a fancy name), i.e. Litecoin.
"Me too" vs actual innovation is all subjective, I guess. Zcash adds to fungibility. Litecoin adds faster confirmation times and a different mining algo. They all add something subjectively and en masse the market decides the value as represented by the market cap.
MachineGhost wrote:
bitcoininthevp wrote:This is still the beginning.
Not for Bitcoin it isn't. The blockchain technology is already divorced from it if Barclays is any indication. So the chance to become a millionaire or a billionaire in Bitcoin is over.
Id be curious where these "blockchain" projects end up. I know people are investigating it, VC money going into it, but I just dont see it working out yet and dont see anything even close to approaching to bitcoins success.

Even if there are "blockchain" successes, will they be true competitors to bitcoin? I see true competitors as uncensorable currencies. That is bitcoin's value proposition. I dont think Barclays is going to create an uncensorable transaction network...

I believe bitcoin investing is still in the beginning. The price is going up over the last several months. More bitcoin millionaires and billionaires are being created every day as a result. I believe we will see a $10,000 coin.
MachineGhost wrote:I actually bought Bitcoin at around a few couple bucks but stupidly sold around $15-$20 after the "enormous" rise. ::)
You sold because you thought it rose too much? Then it rose more. Now you think it rose too much.

I think it will continue to rise.
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Re: Bitcoin Mining

Post by MachineGhost » Mon Nov 07, 2016 7:57 pm

bitcoininthevp wrote:
MachineGhost wrote:I believe bitcoin investing is still in the beginning. The price is going up over the last several months. More bitcoin millionaires and billionaires are being created every day as a result. I believe we will see a $10,000 coin.
Well, they're only being "created" every day because they bought at <.10 originally and we're still substantially down from the all time high so you could say they are just being reappointed millionaires and billionaires all over again. Going to $10K isn't going to create new millionaires or billionares as there's not enough juice to do that and if you foolishly had enough capital to risk to make such a small relative upside move make you one, you'd be better off trading or speculative in regulated financial assets where there's more safety, more variety and less crazy to predict.
bitcoininthevp wrote:You sold because you thought it rose too much? Then it rose more. Now you think it rose too much.
At the time I thought it had rose too fast on purely speculative media hype because there was no value proposition and it was becoming a bubblicious overcrowded trade. That was correct in hindsight, except for the timing! I was planning to buy back in using TA but got sidetracked (had difficulty finding clean historical data, etc.). I still don't have that I don't think, so maybe its time to deal with the issue.
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Re: Bitcoin Mining

Post by bitcoininthevp » Tue Nov 08, 2016 7:05 am

So bitcoin is not a _buy_ for MG then? :)
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Re: Bitcoin Mining

Post by MachineGhost » Tue Nov 08, 2016 11:21 am

bitcoininthevp wrote:So bitcoin is not a _buy_ for MG then? :)
No, as I already alluded, I feel other cryptocurrencies that fix Bitcoin's flaws or use blockchain technology (which do seem to be using the Bitcoin blockchain, even that Barclay's outfit I mentioned) have more upside potential at this point. The novelty is no longer in being a cryptocurrency, but in the actual end-user "killer app" potential now. Let's face it, the vast majority of humanity doesn't give two shits that Litecoin uses a different mining algorithm, its just not relevant in a real world use case.

I do think that given the hasing power and electricity used that in combination with regular difficulty increases and a fixed amount of Bitcoins to be mined, one could arrive at a fair value estimate. Have you seen anyone attempt to do this?
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Re: Bitcoin Mining

Post by bitcoininthevp » Tue Nov 08, 2016 2:49 pm

MachineGhost wrote:I do think that given the hasing power and electricity used that in combination with regular difficulty increases and a fixed amount of Bitcoins to be mined, one could arrive at a fair value estimate. Have you seen anyone attempt to do this?
The amount of money people are putting into the hashing power of the bitcoin network is tied to the price of a bitcoin but I think they play off each other mutually and it is not a one way causation.

Here is a price vs hashing power graph for the curious: http://www.bitcoinx.com/bitcoin-average ... mic-chart/
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