Doesn't matter if ROI is the same and risks are the same.

Define positive ROI. Investments that have positive nominal return in absolute terms are not necessarily "good" investments. Even investments that have positive real returns in absolute terms are not necessarily good investments, since they may be taking away resources from another investment that would have a better return.

Good investments as I see it have positive real returns greater than the average real rate of growth of the entire economy. If you can invest resources better than the rest of the world can on average, you're creating value. If you can't, even if you're getting a positive ROI, you're not doing anyone any favors. I expect the world would be better off if you abandoned that investment, freeing up resources that would be used for better investments on average.

Alright, you are about to invest 10k on a risky project expecting to get EV of 1000 with a very high chance of bust. Under which scenario would you be more inclined to invest?

scenario 1 : invest 10000 with EV 1000. don't invest 10000 your money is worth 10300 old money by the end of the year.

scenario 2: invest 10000 with EV 1000, don't invest 10000 your money is worth 9700 old money by the end of the year.


Risks are same, ROI is same. The only difference is that the decision is made under inflation or deflation. Under which scenario are you going to be more inclined to invest?

Alright, maybe you are talking about inflation adjusted ROI. If so disregard my last post.

Tired of hearing this, source please or just don't make over-dramatic claims unless you are a core developer and truly understand.

I don't, can admit that, can also read this - http://www.washingtonpost.com/blogs/...-how-to-do-it/

Namely:

What's going to be required to get beyond 7 transactions per second?

"We just need to take away the limit and get people to upgrade their nodes. The reason it hasn't been done yet is that we're still trying to figure out whether there should be a new limit or no limit at all. [If there's no limit,] how do we ensure someone doesn't mine an artificially bloated block that's just there to annoy people?
Gavin [Andresen, Bitcoin's lead developer] is working on some of the work that's needed for this to be done. He's working on reforming the fee system. The design we're heading toward is that there won't be any limit, but by default miners will refuse to process blocks that are ridiculously big."

I still don't quite understand in this day and age people citing small technical obstacles as justification for potential failure. It's crazy.

So let me get this straight, the demand, adoption and infrastructure evolves to reaching the transactional limit which is 100x where we are today, at which point the need for scalability is attacked in a way which brings down the protocol or with a method that is so obtrusive it is virtually unattainable or so unattractive as to nullify and collapse the web of demand which has been developing exponentially for at least 6 years?

Somnius, I am just challenging various issues and doubts in my mind to be able to make better decisions. I too want bitcoin to succeed.

Isn't the transaction limit more like 10x higher than today?

You're right, one too many zeroes, thank you.

Good idea, asking questions is the path to truth in that regard. And finding the right answers. Search twitter for bitcoin for a nice array of input.

You may already know of this site as well, definately a must - http://thegenesisblock.com/

Good luck.

Thanks, I have never read that site, looks good, but I will read it with a healthy dose of skepticism.

Or maybe this describes you.

Your position assumes that knowing how much money needs to be created or destroyed in order to keep the price the same is something that's trivial for the controllers of a currency to know. To me it seems like the guesses they introduce would have a higher margin of variance than the natural swings.

At least, I'm sure this is a reasonable idea that's at least worth debating. But it's hard to want to do that when you're doing the "it's ******ed to disagree with me" shtick. (Which is probably just a lame defense mechanism for not wanting to explore the idea.) I'm maybe interested in debating the point, but I'm not interested in debating why it isn't ******ed or why I'm not insane. So you set this up in a way that makes it hard to want to engage you. If you could consider it a reasonable thing that's worth talking about, I have some things I may want to say about the examples you gave.

No, it isn't. I can copy your test, whether either of us can perform a certain way on that test is a different question.

It's funny that you accuse me of being dogmatic and closed-minded when all I said about it is "I don't see why".

You're really barking up the wrong tree anyways, it's news to me that the Austrians have even said anything about it. I don't pay much attention to which economists think which thing (and as far as I know the Austrians think some wrong things about Bitcoin, so I doubt I'd even be an Austrian if I looked into it). Sorry that I independently think something that happens to be the same as them?

I could just accuse you of being dogmatic against the Austrian school (and probably be right). But it's useless, it's best to just say what you think and leave the ad-homs and the lectures out of it.

Remember that you brought this up anyways, interjecting it into some unrelated post I made. Kind of incredibly douchey to be like "oh you're a brainwashed Austrian" because I disagree with you.

I know this has been discussed somewhere, but I'd like to hear responses from the know it alls. In say 14 years when the block reward is 1.5 btc, how is the network going to work? Does btc need to be $13,000 in 14 years? That would be roughly $20,000 a block like it is now. What about in 22 years when the reward is .4btc? Block/reward equivalent would be $40,000/coin.

It just seems once the price of btc can't keep up with the halving the network fails because there is no incentive to mine. If no one mines the security of the network is gone and anybody could flip on there shutdown asics and do an attack at any time. Yes they can raise transaction fees, but then that defeats the whole purpose of btc having low costs. So in order for the network to sustain itself, the transactions fees collected have to rise ALOT.

If you look at the chart, transaction fees have essentially gone nowhere. https://blockchain.info/charts/trans...ale=0&address=
If the argument that transactions will support the network this number should be rising. It's clearly not. It will also need to grow even more considerably because when they have to drop the fees from say .001 btc to something lower, they will need to do that many more transactions to make up for the lower relative fees. They will have to lower the fees because if BTC goes to $10,000 who is going to pay the .001btc (which is $10) if they are doing a simple $20 transaction?

This cart shows how btc is becoming more expensive to use.
Yes the cost per transaction has gone up https://blockchain.info/charts/cost-per-transaction.


Tell me how my thinking is flawed please.

The first chart is in BTC. Price it in dollars and the transaction fees have been growing significantly. Your second chart shows this.

Yes, but because the block rewards for btc go down in BTC, the amount of btc earned through transactions need to go up. The only reason transactions fees have been growing significantly in USD is because the price of btc has risen. The network needs transaction fees in BTC to rise in order to sustain itself.

why? aren't asics and electricity paid in usd? as btc becomes more valuable, it seems sensible to me that fees will go down in terms of btc.

I should have said fiat currency. obviously, people outside of the US mine btc.

Yes, but what happens if the price of btc stays the same? People will have to start shutting down their asics. The hashrate will begin to contract and the whole thing about bitcoin being secure because the network grows all the time, won't be true. It will become super vulnerable to attack unless a bunch of people decide they want to lose thousands a month to electricity costs out of the goodness of their hearts to keep the network "secure".

So essentially the only way this thing stays alive is if the value of btc keeps rising, kind of like a ponzi if you ask me. OR transactions pick up DRAMATICALLY which the charts say they aren't.

You are not very precise in what you are defining to compare against. I would much prefer to invest 1000 bitcoins to get 1010 bitcoins in a year to investing $1000 and getting $1010 in a year.

If anything, the network is oversecure now. We are basically paying $30 per transaction to miners now.

I really don't care that a bunch of miners are going to start losing money. Same thing happened to CPU miners and GPU miners. Oh noes, mining has a different equilibrium.

i would appreciate more speculation post. especially short term ones. i got my account going on avatrade.

If you're pursuing this question through genuine and grounded curiosity the potential answers shouldn't be too difficult to find although it is largely speculation at this point.

All the middling stuff from here to there, you can look up on your own quite easily.

Consider something Gavin recently mentioned.

The real possibility that in time, mining will become a venture for those with alternative power sources, and a method of heat generation in itself.

Further, mining is already today becoming a service provided to the network then a predominantly profit-seeking venture. Lines will blur, vested interests from varying spectrums exist.

@ALawPoker

I'm in your audience

It's not like we are lacking growth in hashing power:


And miners seems to get rewarded more and more:
https://blockchain.info/sv/charts/miners-revenue
https://blockchain.info/sv/charts/transaction-fees-usd

If it's not profitable to mine then less people will mine and the difficulty will fall. Or miners will raise fees, but some greedy miners will accept even lower fees and it won't matter. Or bitcoin will have such high volume that even 0.01% fee will make miners rich...

There are things you should worry about with bitcoin, mining is not one of them...

These statements look completely opposite to me.
Limiting your argument to only the US does not make it any more rational. Here is a wikipedia quote:
Do you think that the Fed has ZERO ability to influence objective #2, stable prices? Do you think that in 2008/2009, if the Fed had not printed any money, we would have had the same level of price stability? Do you believe the crash would not have been more deflationary with no Fed action?

Here is a graph of the oil price, the largest commodity market in the world:

Suppose the US government could print oil if they thought a bubble was forming. Do you think that there would be nothing they could have done to prevent the giant speculative spike in 2008 as people bought up oil tankers in order to park them in the ocean to rot, hoping the price would go up?

Sangaman, you are an Austrian right? Do you think you could explain this to the other Austrians? I'm not sure what their problem is. The point I am making here should not be controversial.

BackBlood, if you could answer these questions, that would help people to understand what your problem is.
Also, read the best post I've made on why bitcoin is valuable here:
http://forumserver.twoplustwo.com/sh...postcount=1418

After the mathematical problem is solved and a new hash is started, why can't you just reuse old invalid hashes from previous blocks? What actually is the mathematical problem being solved? Yes SHA-256 is the hash. Also if you used the same hashes for 2 different mining pools, how would the mining pool know?

The security of the blockchain and resistance to 51% attack isn't really a binary thing, unless it ever manages to consume 51% of the computer power on earth which is not realistic. The bigger bitcoin is in the future, the more hashing power the blockchain needs to resist a 51% attack. The bigger bitcoin is, the more transaction fees rewarded to block miners will be worth and the more incentive there will be to mine. That's the theory, at least, I don't think anyone can say for sure that bitcoin will be viable in 12+ years without any significant changes to the protocol (at a minimum the block 1 MB cap will need to be increased), but I think there are potential adaptations and solutions to address network and blockchain security. Transaction fees might have to go up somewhat as well.

https://en.bitcoin.it/wiki/Funding_network_security This is an interesting summary on this topic

https://bitcointalk.org/index.php?to...332#msg1665332 This is a proposal to a change to the protocol that would address the free rider/tragedy of the commons problem that exists with bitcoin, everyone wants a secure blockchain but nobody wants to be the one to pay for it.

Also you should read about Proof of Stake, an alternate way of coming to a decentralized consensus that is still experimental but which can theoretically resist a 51% attack with far less energy and computing resources than Proof of Work. This is currently used by Peercoin and several Peercoin knockoffs, and I wouldn't be surprised if some elements of Proof of Stake would be included in bitcoin if they prove viable.

https://bitcointalk.org/index.php?board=57.0 Although it's really mostly worthless banter. Virtually nobody has any reliable way to predict short term movements of bitcoin price and if they did they probably wouldn't be giving it away for free.

I don't think I'm an Austrian, I don't really subscribe to any particular economic school of thought. I think there are some good ideas from Hayek and such but I also think some of the proposals from the Austrian school are flawed, like a gold standard or balanced budget amendment. I've also learned a lot from MMT.

I do like explaining things, but I'm not sure what to be explaining here. Central banks don't conduct monetary policy by simply "printing" money but rather through open market operations as I said earlier, which is effective at controlling interesting rates, base money supply, and purchasing power of the currency they control, although I believe the last one is only short term. Although short term is what you're talking about here - year to year fluctuations and such. Combined with fiscal policy and the legislature, the government as a whole has complete control over their money supply.

Tbh though I don't know how much of the US dollar's relative stability in modern history is due to the actions of the government, and not mostly the fact that it's the dominant currency in the world's largest and strongest economy. I would definitely like to learn more about that, but I suspect it could just be that steps that the central bank takes to stabilize the currency/economy are merely making up for earlier mistakes in fiscal/monetary policy that led to the instability in the first place. Putting fuel on the boom/bust cycle fire and then trying to put it out, in other words. Our fiscal policy/legislature is controlled by a bunch of demagoguing, corporatist, corrupt, narcissistic idiots and our monetary policy/central bank is controlled by a few smart, yet potentially flawed individuals with strong ties to the private banking sector. That doesn't exactly instill confidence in me.

I don't see why it's impossible that bitcoin (or something decentralized like it) in some scenario where it's extremely widely used, accepted, and distributed could actually be more stable and predictable than the USD is now. I'm open to reasonable arguments that say otherwise, though.