Discussion
Behemoth said:
Why would miners be paid in a currency other than BTC? The tx fees are in BTC. They already exist. Why would any fees accrue to holders? If transaction volumes increase, the use of the currency is increasing and so the price of BTC relative to other currencies will increase. This is because supply is limited and demand is up. Bitcoin is inherently deflationary. Please do some reading.
Ok. So after a suitably large number of transactions (from each of which a miner shaves a tiny tx fee denominated in BTC) ALL of the BTC will be owned by miners. You are making a case to own Bitcoin miners not the BTC themselves.I am pretty well read but by nature always open to further learning. My experience is that the deepest and most accelerated learning on any topic comes from talking with experts. I will continue to look for one in this field.
WindyCommon said:
Ok. So after a suitably large number of transactions (from each of which a miner shaves a tiny tx fee denominated in BTC) ALL of the BTC will be owned by miners.
Nope. If they did that, transactions would collapse, values would plummet, difficulty would drop off a cliff and they would lose the their incentive to mine. Please read up & kindly stop trolling.Happy hunting
Behemoth said:
Nope. If they did that, transactions would collapse, values would plummet, difficulty would drop off a cliff and they would lose the their incentive to mine. Please read up & kindly stop trolling.
Happy hunting
Asking questions isn't trolling. I am genuinely interested and working hard to improve my understanding of this topic. The problem I find is that there are finance experts who are too quick to deride crypto as a bubble without understanding the technology and underlying concepts sufficiently well. And there are crypto/tech experts who are woefully (if unknowingly) out of their depth in terms of their understanding of finance/economics/business. Both become defensive when asked questions that straddle the two areas. Neither has the confidence to acknowledge the limitations of their knowledge.Happy hunting
But somewhere out there will be people whose understanding is more comprehensive. They will be identifiable by the knowledge and grace they display in their responses to questions. I will keep looking.
WindyCommon said:
But somewhere out there will be people whose understanding is more comprehensive. They will be identifiable by the knowledge and grace they display in their responses to questions. I will keep looking.
The economy of the bitcoin ecosystem and how miners work to secure the network and the built in incentives they get for doing so, rising (and falling) in tandem with the value and use of the network is explained in the white paper and in many online resources you can search for. You seem to want the last word and seek some kind of moral high ground. I'm patient to answer questions but move on if you want to win an argument. You don't exhibit the grace to review the most basic of technical information about this subject and you repeatedly employ dismissive language when time is taken to answer. I'm sure you're a nice person in real life 
Behemoth said:
The economy of the bitcoin ecosystem and how miners work to secure the network and the built in incentives they get for doing so, rising (and falling) in tandem with the value and use of the network is explained in the white paper and in many online resources you can search for. You seem to want the last word and seek some kind of moral high ground. I'm patient to answer questions but move on if you want to win an argument. You don't exhibit the grace to review the most basic of technical information about this subject and you repeatedly employ dismissive language when time is taken to answer. I'm sure you're a nice person in real life
The paper - which I first read about a year ago - describes Bitcoin only as an endogenous system. It doesn’t consider changes in the value of BTC in fiat terms, which is what we are discussing. To remind you the conversation started with a post[er] discussing the relative possibilities of ETH at $300 and BTC at $60,000 within two years. I have been (and am still) seeking a rational explanation of why such huge changes might be possible.The explanation you have given is: “If transaction volumes increase, the use of the currency is increasing and so the price of BTC relative to other currencies will increase. This is because supply is limited and demand is up.”
This explanation lacks any consideration of the intrinsic value of a BTC, relying instead on the idea that the price will continue to rise because there will always be someone willing to pay more for one “because supply is limited and demand is up”. As such I think it fails to consider adequately that (in economics terms) demand is constrained by willingness/ability to pay. It may also fail to recognise that the potential availability of substitutes - not necessarily other crypto coins - might undermine the limited supply factor.
We can - of course - agree that our views on this differ.
Separately, I have looked back over all my posts in this conversation up until the point you started lecturing me on my lack of reading/knowledge etc. Perhaps you could highlight where I “repeatedly employ dismissive language”?
WindyCommon said:
This explanation lacks any consideration of the intrinsic value of a BTC, relying instead on the idea that the price will continue to rise because there will always be someone willing to pay more for one “because supply is limited and demand is up”. As such I think it fails to consider adequately that (in economics terms) demand is constrained by willingness/ability to pay. It may also fail to recognise that the potential availability of substitutes - not necessarily other crypto coins - might undermine the limited supply factor.
The 'intrinsic value' will depend on the use you put the currency to. If it's to be a purely transactional system then the market cap needn't be very high as users will on average hold coins for a very short time and the total value required to be stored will be relatively low. Based on current (non speculation/exchange based) transaction volume you could get away with a BTC price in the single digit range.If people want to store value long term, you need the market cap to be much higher. Instead of storing coins for just a few minutes while you conduct your business, you might keep a balance for years or even permanently. Sky's the limit in that case as what you have there is a self contained economy. Most bitcoin users follow this model though they are hoarding for speculative purposes rather than just storing and spending money, hence the very high price despite very little actual 'real' use going on.
I don't see unwillingness to pay 'high prices' as much of an obstacle in either scenario. In the first one, you only hold for a few minutes and all you care about is that your fiat money value is transferred wherever, so the BTC price matters very little. In the second one, people would presumably choose to save and spend crypto for the intrinsic properties (low friction, transaction speed yada yada) and because they want to be part of that particular economy. The price might be extremely high when they buy in, but there is still a benefit to using the currency beyond mere speculative profit seeking. As the networks grow the benefits increase, provided the currency does what it says on the tin.
Edited by MiggyA on Wednesday 1st November 02:49
MiggyA said:
The 'intrinsic value' will depend on the use you put the currency to. If it's to be a purely transactional system then the market cap needn't be very high as users will on average hold coins for a very short time and the total value required to be stored will be relatively low. Based on current (non speculation/exchange based) transaction volume you could get away with a BTC price in the single digit range.
If people want to store value long term, you need the market cap to be much higher. Instead of storing coins for just a few minutes while you conduct your business, you might keep a balance for years or even permanently. Sky's the limit in that case as what you have there is a self contained economy. Most bitcoin users follow this model though they are hoarding for speculative purposes rather than just storing and spending money, hence the very high price despite very little actual 'real' use going on.
I don't see unwillingness to pay 'high prices' as much of an obstacle in either scenario. In the first one, you only hold for a few minutes and all you care about is that your fiat money value is transferred wherever, so the BTC price matters very little. In the second one, people would presumably choose to save and spend crypto for the intrinsic properties (low friction, transaction speed yada yada) and because they want to be part of that particular economy. The price might be extremely high when they buy in, but there is still a benefit to using the currency beyond mere speculative profit seeking. As the networks grow the benefits increase, provided the currency does what it says on the tin.
Thank you. I agree that intrinsic value is qualified by utility. Also that the spot rate doesn’t really matter if BTC are only held for short periods to facilitate transactions, although I think this only holds true if those transactions are fundamentally denominated in fiat currencies.If people want to store value long term, you need the market cap to be much higher. Instead of storing coins for just a few minutes while you conduct your business, you might keep a balance for years or even permanently. Sky's the limit in that case as what you have there is a self contained economy. Most bitcoin users follow this model though they are hoarding for speculative purposes rather than just storing and spending money, hence the very high price despite very little actual 'real' use going on.
I don't see unwillingness to pay 'high prices' as much of an obstacle in either scenario. In the first one, you only hold for a few minutes and all you care about is that your fiat money value is transferred wherever, so the BTC price matters very little. In the second one, people would presumably choose to save and spend crypto for the intrinsic properties (low friction, transaction speed yada yada) and because they want to be part of that particular economy. The price might be extremely high when they buy in, but there is still a benefit to using the currency beyond mere speculative profit seeking. As the networks grow the benefits increase, provided the currency does what it says on the tin.
Edited by MiggyA on Wednesday 1st November 02:49
The second scenario - which you describe using an interesting phrase “”...that particular economy” is essentially one where there is price stability in BTC terms. This doesn’t mean that BTCUSD rate becomes less volatile, it means that the prices of goods and services denominated in BTC exhibit greater stability. Whilst a pizza reducing in price from BTC5000 to BTC0.001 is great for holders of BTC, it isn’t great for the makers/sellers of pizza especially if their inputs are denominated in (say) USD. Buyers and sellers will need mutual confidence that pizza prices will be stable at BTC0.001 in the way that we do when considering USD denominated activities today.
I can see that this could be caused by a sudden debasement in the value of fiat currencies, but I don’t see a strong case that this is about to happen. Those who see hyperinflation in fiat will find BTC (or gold) an attractive hedge, but this is a marginal view and it is hard to see it becoming prevalent despite the strenuous exhortations of the gold bugs etc. I guess we now have to consider Bitcoin bugs in the same category.
So it is hard to see how the “particular” or “self-contained” economy that you describe, with its inputs and outputs denominated in BTC, becomes established for everyday goods and services. For this reason I don’t think we will see the fiat price of BTC continuing to spiral to ever higher levels, despite this being precisely what has happened to date. The closest I see today is the related world of ICOs where BTC is essentially required to participate. These of course may be castles built on sand.
TLDR; It is hard to see that transactional efficacy supports a high BTC spot rate in the long run.
Edited by WindyCommon on Wednesday 1st November 07:30
WindyCommon said:
TLDR; It is hard to see that transactional efficacy supports a high BTC spot rate in the long run.
Perhaps we can come at this from another angle.Lots of people have been completely screwed by the current financial system, actually lets make that every single person in the world with the exception of those who own them.
BTC (and crypto in general) offers a system that is not under the control of governments or banks. There are no fractional reserves, there is no fake gold bars (Royal mint of Canada this week I believe), there is no possibility of fraud (and to be clear I am talking about a blockchain re-write here - not some noob losing BTC because they got hacked). Additionally there is also a degree of anonymity (which of course is the governments first line of attack).
All these things appeal to a lot of people. Banks do not have a great reputation and politicians even less.
And at the end of the day why does BTC have to fit into one of your compartments - or even why does it have to follow your rules?
WindyCommon said:
TLDR; It is hard to see that transactional efficacy supports a high BTC spot rate in the long run.
In the long run, this is a natural path for a deflationary currency to take whilst all other currencies remain inflationary. I think we're a long way from regular transactional use except in some niche areas. I prefer it that way. Bitcoin should scale for transactions organically and (relatively) slowly. Meanwhile, store of value is the elephant in the room.I think major battles loom in the coming years, and therefore huge volatility, since Bitcoin is a fundamentally libertarian project. Vested status quo interests will fight hard. Whether it's the existing banking infrastructure or nation states, plenty of organisations and political entities have good reason to fear losing control of money movement.
I am very confident Bitcoin will not be stopped. Its primary volume uses will first show through in kleptocracies, economically failing states & the remittance markets, not buying pizzas. It's worth recalling the core utility of Bitcoin: permissionless value transfer.
WindyCommon said:
So it is hard to see how the “particular” or “self-contained” economy that you describe, with its inputs and outputs denominated in BTC, becomes established for everyday goods and services. For this reason I don’t think we will see the fiat price of BTC continuing to spiral to ever higher levels, despite this being precisely what has happened to date. The closest I see today is the related world of ICOs where BTC is essentially required to participate. These of course may be castles built on sand.
TLDR; It is hard to see that transactional efficacy supports a high BTC spot rate in the long run.
Yes I agree it's definitely hard to see, as what we have with crypto is the cart before the horse and prices based not on some previously established intrinsic base value but the (somewhat fragile) hope that in the future some intrinsic value can/will be solidified through real use. Odd and unprecedented for sure. I suppose if you ask how we get to everyday transactions in bitcoin alone, the answer could be 'backwards'. Build up a big market cap with hype (which happens naturally due to the design of bitcoin) and meanwhile as the user base gets bigger more and more people who dislike the current money system gradually migrate their finances to bitcoin. This won't happen without a fair bit of risk and neck-sticking-out happening from merchants, businesses and consumers alike.TLDR; It is hard to see that transactional efficacy supports a high BTC spot rate in the long run.
Edited by WindyCommon on Wednesday 1st November 07:30
Absolutely agreed that it isn't yet proven that this use case really exists, and long term crypto is sure to fail if that transition doesn't happen.
So much information and so many options...
What’s the easiest, simplest and secure way to purchase £500 of bitcoin and £500 worth of ethereum?
I’m not overly tech savvy but essentially want to purchase 1000 of currency and then forget about it for 5 years ...
In 5 years then want the easiest way to sell where I can turn it into GBP...
Any simple guide?
What’s the easiest, simplest and secure way to purchase £500 of bitcoin and £500 worth of ethereum?
I’m not overly tech savvy but essentially want to purchase 1000 of currency and then forget about it for 5 years ...
In 5 years then want the easiest way to sell where I can turn it into GBP...
Any simple guide?
fizz47 said:
So much information and so many options...
What’s the easiest, simplest and secure way to purchase £500 of bitcoin and £500 worth of ethereum?
I’m not overly tech savvy but essentially want to purchase 1000 of currency and then forget about it for 5 years ...
In 5 years then want the easiest way to sell where I can turn it into GBP...
Any simple guide?
I created an account with coinbase, easy to buy BTC and ETH. What’s the easiest, simplest and secure way to purchase £500 of bitcoin and £500 worth of ethereum?
I’m not overly tech savvy but essentially want to purchase 1000 of currency and then forget about it for 5 years ...
In 5 years then want the easiest way to sell where I can turn it into GBP...
Any simple guide?
fizz47 said:
So much information and so many options...
What’s the easiest, simplest and secure way to purchase £500 of bitcoin and £500 worth of ethereum?
I’m not overly tech savvy but essentially want to purchase 1000 of currency and then forget about it for 5 years ...
In 5 years then want the easiest way to sell where I can turn it into GBP...
Any simple guide?
I'm trying to get my head around this myself. I went for Kraken as I heard that's a good exchange. What’s the easiest, simplest and secure way to purchase £500 of bitcoin and £500 worth of ethereum?
I’m not overly tech savvy but essentially want to purchase 1000 of currency and then forget about it for 5 years ...
In 5 years then want the easiest way to sell where I can turn it into GBP...
Any simple guide?
In terms of storage: if you're planning on hanging on to for any period of time you're going to want to store the coins offline on a hardware wallet. These aren't especially cheap but there are many stories of online wallets getting hacked / going down / people being scammed. Not to mention who knows what will be in 5 years. You're best off (from my understanding) in getting either a Ledger Nano S or Trezor wallet.
Personally i'm still struggling to feel comfortable with the whole concept of putting a few thousand £ on a memory stick and hoping that the software will work X years from now and that i'll be able to retrieve the coins and then sell them.
modeller said:
I created an account with coinbase, easy to buy BTC and ETH.
A colleague of mine had an issue as coinbase took his £4k and had it for over a month, saying that transaction had failed and he asked for a refund, then they said some other excuse - eventually he got it back after 4 weeks. During which time that £4k would have made decent profits if BTC was purchased.I don't know ins and outs but was very put off by how long it took them to not provide him with bit coin.
I use Bittylicious and bank transfer method and it has been a piece of cake.
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