Cryptocurrency (or "What the hell is a bitcoin?")

25! and on the garlicmarket subreddit people are trading it for 1.25 each already!

Well heck maybe I should do this as my PC has been sitting mostly idle the past few months... lol Is this one of those things where my gaming PC can mine when I am not using it or is this really only dedicated machine thing?

manta173 wrote:

Well heck maybe I should do this as my PC has been sitting mostly idle the past few months... lol Is this one of those things where my gaming PC can mine when I am not using it or is this really only dedicated machine thing?

I'm using my gaming PC as sell as a minecraft/other game server that has a cheap old GTX660ti.

When I want to use the PC I just ctrl-c the script.

Edit, I broke 50 coins yesterday

A gaming PC can definitely mine Garlicoins. Bear in mind a few things:

1) This causes a lot of stress on your video card, and it may burn out.
2) You almost certainly won't get rich doing this.
3) The cost of electricity for this added stress is likely to be more than the value of the coins, unless something crazy happens in the market.

I ran my PC as a miner for about 12 hours off/on and accrued about 10 Garlicoins. I did this mostly just to see how it all worked and learn more about how cryptocurrencies/mining/pools worked, and admittedly, a bit so I could be part of the zeitgeist.

Yeah... I am here for the zeitgeist not the money... it would be fun to get in on a new one especially like I said earlier because of all the PC downtime...

I noticed this morning that the Microsoft Store allows you to redeem bitcoin. I didn't try it, as I was having enough trouble trying to pre-order Sea of Thieves, but it was there.

merphle wrote:

A gaming PC can definitely mine Garlicoins. Bear in mind a few things:

1) This causes a lot of stress on your video card, and it may burn out.
2) You almost certainly won't get rich doing this.
3) The cost of electricity for this added stress is likely to be more than the value of the coins, unless something crazy happens in the market.

I ran my PC as a miner for about 12 hours off/on and accrued about 10 Garlicoins. I did this mostly just to see how it all worked and learn more about how cryptocurrencies/mining/pools worked, and admittedly, a bit so I could be part of the zeitgeist.

1- I toned it down so I'm not over-cooking. Definately don't want to fry my card.
2- Not planning to get rich from it. I know that is mostly unlikely. It was for my own education. Though, I did trade 4 coins for Brutal Legend on the Market subreddit.
3- Really? Even on a single card on a single machine? I could see it if the card were fried, then I'd need to sell $1000 worth of coins to recoup.. Ya, not likely to happen.

I'll probably mine up to 100 coins and stop. I'm at 63 now. Then maybe I'll revisit later to do more. Maybe I'll build a dedicated machine if I upgrade my card some time.

So Bitcoin has gone from around $18000 to something over $6000 and back up to the mid-sevens in around two months. How does the theory behind it explain this? That is, yes, there, are externalities and internalities, both of which can exert favorable and unfavorable influences. But Bitcoin was designed to compete directly with state-sponsored currencies, which of course are subject to boundaries created through the use of monetary policies (or subject to abuses by bad policies, of course).

But I’m not seeing what intrinsically stops Bitcoin’s volatility over time? What mechanisms will damp it down? Or... Is this behavior all there is? Was it anticipated?

Government opposition is pretty obviously a major cause, but the fact that it's still a very small market in experimental commodities means that it is going to be volatile - particularly with all the dollars sloshing around in the stock market from the Fed's "quantitative easing", which has been driving the stock market up. I would argue that because all the cryptos are pretty much moving together, a lot of the volatility is institutional investors who are treating cryptos just like any other risky commodity - and thus the same factors that are driving the correction in the stock markets in the last few days contributed a great deal to the drop in crypto exchange rates.

The test bitcoin needs to meet is adoption - people wanting to hold bitcoin in order to use it. This is a long-term thing, but increases in inflation could easily drive it faster. That's what drove the increase in crypto usage in Venezuela, for example. Since major world governments are unlikely to be that stupid, adoption will likely creep along at a pace that parallels inflation.

Surely the simplest explanation for the fall in bitcoin's price is that lots of people are selling them? Presumably, those who rode the bull run between October and December, and are now cashing out.

As I understand it, transaction times are comparatively long (and sometimes transactions don't complete at all), transaction costs are comparatively high, so I don't see lots of those people buying back in any time soon.

I'm not sure I'm persuaded that 'institutional investors' are part of the volatility problem. Most institutional investors are banks, pension funds, and insurance companies, aren't they? I can't imagine that many of their investment rules would permit buying bitcoin.

Perhaps a few hedge funds are involved, but even then surely bitcoin is too small for them to invest in meaningfully? I just had a look and the total value of bitcoin in circulation is just over $100 billion.

But what, internally, as part of the design of Bitcoin, is intended to stop the volatile swings in value? I mean, we learned that having few or zero controls on currencies was bad nearly 200 years ago (in the US, anyway). Surely some part of the design presents a built-in alternative to monetary policy controls externally imposed?

I’m struggling to differentiate Bitcoin from private currencies in the 19th century, mechanically.

Well. The evidence provided by my eyes says "Nothing exists to reduce volatility"... because we are seeing precisely the volatility you describe.

But this is the whole point of bitcoin, no? It cannot be influenced by monetary policy as implemented by a central bank or 'circuit breakers' as implemented by central administrators.

EDIT: There are no levers that can be pulled, because there is nowhere for anyone to stand to apply leverage.

I think we're reaching the end-game here. Bitcoin's dramatic fall in price, together with ongoing worries about the role of Tether and the massive increase in Initial Coin Offerings (whatever that phrase actually means), means that some form of concerted and coordinated government intervention is inevitable. Presumably by re-classifying these coins as regulated investments (or something?)

Initial Coin Offerings is alt-coin equivalent of an Initial Public Offering for a company's stock. They drive the cost of bitcoin up in that many of them can't be bought with anything else, so people looking to participate have to buy bitcoin first.

Sorry, Stengah. I should have been less flippant and more specific ; I understand that an ICO is a way of raising money - usually from unsophisticated investors - without going through a conventional, regulated capital-raising process.

What I was getting at was that ICOs are a way of raising money, without giving something of value in return. No interest on a bond. No share of ownership in the company, together with the potential for a dividend or voting rights. No physical product. Nothing.

sh*t like this cannot remain legal for much longer... I hope.

Even though GRLC is only at 24 cents right now, going to mine some up for the heck of it. Not sure I understand everything I'm seeing on Garlicpool but maybe I need to wait a little longer. I have an account balance of 0.16 which is unconfirmed. If my calculations are correct, I have 3.84 cents out there somewhere owed to me. I think I'm going to retire early

Also, what do the donations do through Garlicpool? Is it really just a donation and that's it or are there any other perks to donating a percentage?

I still haven't figured out how to get it up and running, but I would love to mine some just to say I did.

Robear wrote:

But what, internally, as part of the design of Bitcoin, is intended to stop the volatile swings in value?

Consider a couple of things - what, internally, in the design of the oil market is intended to stop the volatile swings in value? The answer, of course, is nothing, because it's a commodity and the most important thing about the price is that it is accurate.

Bitcoin, internally, is as stable as it has ever been - the miners keep churning out blocks and get new bitcoins for it on a regular and predictable schedule, heading for the cap. You're seeing it as volatile because the dollar exchange rate is volatile, but that goes both ways, as well as being subject to market demands. If you were pricing things in bitcoin, you'd be wondering what the heck was going on with the dollar - and there's likely some truth to that, although it's probably overshadowed at this point by various market occurrences.

I mean, we learned that having few or zero controls on currencies was bad nearly 200 years ago (in the US, anyway). Surely some part of the design presents a built-in alternative to monetary policy controls externally imposed?

To skirt D&D, some people learned very different lessons from 19th century monetary policy in the United States. In short, it's critically important that the price level be allowed to fluctuate without distortion.

I’m struggling to differentiate Bitcoin from private currencies in the 19th century, mechanically.

Some fundamental differences:

- bitcoin cannot be created arbitrarily - by anyone (government or private)
- assuming that you keep your bitcoin on the blockchain, no one can stop you from withdrawing / using it (see banks refusing payment of specie on demand)
- bitcoin is perfectly fungible, and thus can't suffer from physical supply limitations

manta173 wrote:

I still haven't figured out how to get it up and running, but I would love to mine some just to say I did.

Sent you a Steam message. Let's get you up and running!

Government assault on crypto is fairly explicable. It is discrete (can hide money laundering and tax evasion) and no regulation is possible (no consumer protections). Bearing that in mind, when China and South Korea moved against crypto trends, it was a precedent that suggests other nations may follow in a bid to protect their tax base.

The theory of Bitcoin was premised on enough computing power coming online to mine the keys so that transaction speeds wouldn't suffer. But they have. So that particular currency is doomed to fail as it gets less practicable to transact in it unless they branch off with less encryption, hence the rise of the other cryptocurrencies. Basically it's an irrational market as people invest in every form of crypto hoping it will become a stable form of transactional systems thus having value from an investor perspective. Not saying it cannot work out eventually but regulatory bias against it and present technological practicality limit the possibilities of crypto overtaking traditional fiat currencies.

Bfgp wrote:

The theory of Bitcoin was premised on enough computing power coming online to mine the keys so that transaction speeds wouldn't suffer. But they have. So that particular currency is doomed to fail as it gets less practicable to transact in it unless they branch off with less encryption, hence the rise of the other cryptocurrencies.

The bitcoin system has a fixed transaction rate, based on the block size. The amount of computing power available to mine is only relevant to the security of the block; in fact, the code adjusts automatically as more computing power comes online to keep the transaction rate consistent. Increasing that block size has been a subject of much debate. There has already been a block size increase implemented (SegWit). The primary blocker is not a technical limitation, but rather getting consensus on how and when to implement the block size increase. It's definitely possible that failure to get consensus will cause bitcoin to eventually fail.

It is definitely true that one of the differentiators of other cryptocurrencies is how they handle block sizes. Ethereum, for example, has a theoretically more flexible system, but it also ran into similar issues. While the Ethereum system did eventually adjust, It's not an easy problem to solve.

The reason I asked about *internal* controls on volatility is that regular currencies have *external* controls on volatility precisely because of the lessons learned by just letting currencies fluctuate. Any currency system that does not have controls on volatility, external or internal, will be more volatile than a system that uses those controls responsibly. (IE, Zimbabwe is not a good example of currency controls since they were deliberately abused. Any control system comes with the possibility of abuse, but that’s not what we see normally over the last 100 years or so.)

For me, I’ll stay out.

Yay I mined almost 1 whole garlicoin overnight. 38 cents worth. lol

Thanks for the help Dethroned!!

Bitcoin has an interesting vulnerability.

I spent part of the holidays poring over Eric Budish’s important paper, The Economic Limits of Bitcoin and the BlockChain. Using a few equilibrium conditions and some simulations, Budish shows that Bitcoin is vulnerable to a double spending attack.

In a double spending attack, the attacker sells say bitcoin for dollars. The bitcoin transfer is registered on the blockchain and then, perhaps after some escrow period, the dollars are received by the attacker. As soon as the bitcoin transfer is registered in a block–call this block 1–the attacker starts to mine his own blocks which do not include the bitcoin transfer. Suppose there is no escrow period then the best case for the attacker is that they mine two blocks 1′ and 2′ before the honest nodes mine block 2. In this case, the attacker’s chain–0,1′,2′–is the longest chain and so miners will add to this chain and not the 0,1… chain which becomes orphaned. The attacker’s chain does not include the bitcoin transfer so the attacker still has the bitcoins and they have the dollars! Also, remember, even though it is called a double-spend attack it’s actually an n-spend attack so the gains from attack could be very large. But what happens if the honest nodes mine a new block before the attacker mines 2′? Then the honest chain is 0,1,2 but the attacker still has block 1′ mined and after some time they will have 2′, then they have another chance. If the attacker can mine 3′ before the honest nodes mine block 3 then the new longest chain becomes 0,1′,2′,3′ and the honest nodes start mining on this chain rather than on 0,1,2. It can take time for the attacker to produce the longest chain but if the attacker has more computational power than the honest nodes, even just a little more, then with probability 1 the attacker will end up producing the longest chain.

As an example, Budish shows that if the attacker has just 5% more computational power than the honest nodes then on average it takes 26.5 blocks (a little over 4 hours) for the attacker to have the longest chain. (Most of the time it takes far fewer blocks but occasionally it takes hundreds of blocks for the attacker to produce the longest chain.) The attack will always be successful eventually, the key question is what is the cost of the attack?

Another journalist discovers the 51% attack. This is not news, it's been known since the very beginning (see the Nakamoto 2008 quote in section 1.2 of the paper).

The paper is actually more interesting: it postulates that if bitcoin became sufficiently economically important, a 51% attack is more-or-less inevitable. That's an interesting and debatable assertion.

Also, for those who are interested, a 51% attack against Ethereum Classic just occurred in the last few days, and is being investigated.

A very interesting topic and I enjoyed reading through it, considering the history.
I only got into blockchain recently, trying to study as much as possible, even signed up for the Ivan on Tech Academy.

What are your favorite crypto related websites? Both for news and learning. Any good Youtube channels?

Easily broke $10K again. Real FOMO now?

I wonder if it will increase demand for gpu’s again.

Someone was saying that bitcoins are now twice as hard to mine as they were two years ago, so probably GPUs won't be cost effective anymore for that specific coin type. I have no idea what's up with any of the others.

1 billion tethers have been released into the system since April.

Easy to pump (and then dump) with freely created "money".