Difficulty Adjustment Is Why Bitcoin Will Never Die

New Mining Difficulty Metric Points to $31K Bitcoin Price by 2021

New Mining Difficulty Metric Points to $31K Bitcoin Price by 2021
https://preview.redd.it/1zwifsa2x3m31.png?width=1903&format=png&auto=webp&s=27aa22541ecdc66f8fa4c1f254a41253480a2c0f
Bitcoin (BTC) price should hit $30,000 during its current price cycle, new data based on mining difficulty suggests.
Published by well-known analyst PlanB on Sept. 10, the statistics combine Bitcoin price as a percentage of difficulty lows, along with the number of blocks since the last low.
The difficulty is a measure of how difficult it is to find a hash below a given target. Simply put, it measures the complexity of the equations miners must solve in order to validate blocks of Bitcoin transactions.
It can act as a measure of how much competition there is among Bitcoin miners to find the next block, as the higher the competition, the more incentive for the difficulty to increase.

Bitcoin to hit $31,000 if the trend continues

According to PlanB, Bitcoin has seen several difficulty cycles in its history, each time price rising an order of magnitude less relative to the last difficulty low.
The stabilization means that in late 2013, Bitcoin’s price high of $1,300 represented a 50,000% increase versus the last difficulty low. In late 2017 meanwhile, its rise to $20,000 was a jump of around 9,000%.
https://preview.redd.it/0cm1cf42y3m31.png?width=770&format=png&auto=webp&s=689048c4a8ef295b18732d680ee3f8f9987d6477

No price action yet

According to the model, the next peak will be lower still -— at around 1,000% or roughly $31,000 by 2021. When difficulty last hit a floor in December 2018, BTC/USD traded at $3,100.
“Wee baby bull market,” fellow Bitcoin social media personality Parabolic Trav commented on the findings.
As Cointelegraph continues to report, Bitcoin’s technical prowess has become increasingly at odds with its price. While aspects such as hash rate keep hitting record highs, the price has stayed sideways, failing to capitalize on a bull market which began in earnest in April.
submitted by Rajladumor1 to omgfin [link] [comments]

Bitcoin Hits Its Hash Rate All-Time High Amid Volatile Weekend

Bitcoin Hits Its Hash Rate All-Time High Amid Volatile Weekend
The leader of cryptocurrencies, Bitcoin (BTC), saw a massive spike on Sunday, breaching over $9,000 to record a January-high of $9,184. However, the price of Bitcoin fell rapidly below the $8,750 support zone and settled around the $8,600 mark. The volatile weekend, according to some experts, is mainly due to Bitcoin registering a new all-time high in computing power, or hash rate.

Source: Bitinfocharts
Hash rate resembles how many operations per second the network is capable of. Bitcoin recorded its all-time high of 126 Exhash, which equals to 126 quintillions solved cryptographic equations per second. The all-time high also enhances the security of Bitcoin’s blockchain, as the higher hash rate resembles increased difficulty of hackers successfully attacking and control at least 51% of all computing machines on Bitcoin’s blockchain – the so-called “51% attack”.
Despite the increased interest in Bitcoin mining, some experts think the all-time high is a consequence of BTC miners’ expectations of an upward price swing. Indeed, the Bitcoin network is set to undergo a “halving”, scheduled for the 14th of May – the rewards for successfully mining a block would drop in half. The “halving” occurs on every 210,000 mined BTC blocks. However, some experts disagree with the all-time high being such a noticeable event, stating that if Bitcoin miners join the game now, they have a mere five months to profit off from the current mining rewards.
However, the hash rate all-time high has also split experts on the opposite sides, regarding the correlation between computing power and Bitcoin’s price. Some experts believe the recent price spike was caused mainly due to Bitcoin recording an all-time high hash rate. Max Keiser stated his confidence about the correlation between Bitcoin’s hash rate and price, claiming that “BTC price follows hash rate, which is on a continuous 9-year bullish run.”
On the other side are the experts, linking Bitcoin with global market forces like supply and demand, rather than computing power. Alex Kruger tweeted his disagreement with hash rates defining Bitcoin’s price, explaining that “hash rate follows the perceived mining profits.”
Pricewise, Bitcoin’s swing above $9,000, as well as its later correction, indicates a stiff resistance at $8,750. Indicators like the Relative Strength Index, or RSI, show that the upward momentum could stall in the near future. Bitcoin’s price most likely would drift sideways, between the strong support and resistance zones at $8,500 and $8,750, respectively. As of press time, the world’s largest cryptocurrency is trading at $8,630.51.
submitted by Crypto_Browser to u/Crypto_Browser [link] [comments]

Why so much speculation

Short answer
If people are incapable of estimating the correct number logically, the only method to the answer is by genetic algorithm where cloud wisdom hopefuly takes time to solve and volatility is inevitable.
Long answer
Believe it or not, the valuation of a currency-purpose asset is in fact much easier than the valuation of a stock. To be a currency-purpose asset, a somewhat universal valuation opinion must be among the mass. For a stock, on the contrary, one needs to evaluate many factors such as marketing/product/… and people have different opinions about the possible gain of a stock.
Every asset has a production cost, the piece of paper of stock certificate has little production cost. For currency-purpose asset, the production cost is thought to be independent of W-questions such as "who produces this asset", "where is this asset produced", "how many sale a producer has done", …etc. It is this property that the so-called universal opinion is formed. Money is also supposed not to have capital gain like stocks such as "I will have a generous dividend next year", so there is indeed not a "calculate the present value of all future gain by having a stock" but a "global understanding of the cost to fake/rollback/cheat a trust" for currency-purpose asset.
Let
Story 1 Assume all miners calculate the production cost in the coming 8 years and users are not investors. Let's express price in real term so that weird fiat monetary policy has nothing to do with the following argument we shall focus on.
The equation for cost of the production is 0 = KI + sum(KT - ( F+C(t, t+2)) * P, from t to t+2)
Therefore P = K * (T + I/210000 * 2 )/(F + C(2.41, 4.41)). Note that C(2.41, 4.41)=7.4515 so the miner will sell at least at this price. A user, as a non-investor who never cares P, may buy the coin from the miner and sell the coin for a merchant service/goods who will adjust the service bitcoin-nominated price with P accordingly. For your curiosity, by current data, the P by Story 1 is 3.49444E+11 Joule.
Is the Story 1 reallistic ? Not at all.
What about a miner who is thinking to run the business till t1=3 only. Then C(2.41, 3)=12.5 and this miner can undercut other miners in Story 1. Every users, as non-investors, do not care any bit about P because the user will always need to commit the same real-term service price from the merchant. Being undercut means death, so all the miners will split the pricing logic so that two P numbers, one for time 2.41 to 3, the other for 3 to 4.41; for your curiosity, C(3, 4.41) = 5.3413
Story 2 As the miners competition settled down, the P is not constant any more; there will be two P numbers, one, being lower, for time 2.41 to 3, the other, being higher, for 3 to 4.41.
Is the Story 2 reallistic ? Not at all.
What about a user who starts noticing that the P will increase and being investors is a good deal. While this user may observe the increasing of P empirically but never logically understanding, knowing nothing about math and miners' plan, this user will speculate between market price of P; he might buy at 5000 and see it explode at 10000 and take profit at 6000 (in USD term) and has no idea the 5000 may be much lower than the correct number. Should the P is pricing at the correct number so that there is no room between the two P, speculators are gone and people are comfortable the stable price with store-of-value and media-of-exchange.
Is the Story 2 realistic ? Not at all.
What about a hobby miner wants to be investor too and starts mining from time 2.41 to 3 and never sell all the coins for users but only pay partially little for the electricity while price bullish and keep the rest coins as investment for himself after time 3 ?
Story 3 Being also speculation. While other users investors may increase the volatility (mainly because being without fundamental knowledge but rather TA or market-sentiment orientated traders), this move will shrink the room between the two P and therefore decrease the volatility of P. So the ratio of time 2.41-to-3 miners to time 2.41-to-4.41 miners increases up to the two P are equal then no more new miners of such plan.
Is the Story 3 realistic ? Not at all.
What about there are miners/investors for all possible time frame t0 to t1 in the future ?
Let
Story 4 Therefore, the only setting where no arbitrage for miners and investors is such that P=KT/F and the graph of (Kt + K ) / K is like this.
We know T and F and the ratio of Kt/K, but what is exactly K ?
No one really knows. K could be low or high, one can only guess by observation. We know the difficulty is proportional to hash rate and hash rate is proportional to Kt and K. So you can see the graph of difficulty to have a guess of K. Should the two graph looks similar, we know people are finally logical and feel delight. By the difficulty graph and miners' time frame to amortize fixed cost so that it can be averaged out, taking the current global hash as K and updating it as time goes by may be a good guess. For your curiosity, currently KT/F is 2.13007E+12 Joule.
BUT. It is not logical to assume people are all logical. If people are never logical and never investors, a graph of KT/( F + C(t, t+1) ) which is increasing till KT/F shall resemble the graph of P. If some people are logical and some are not, the empirical graph will be hysterical around and between.
I tend not to comment about pricing in public. But since I know wall street and I know what wall street knows, feeling sad about the mass, bear me. I thought these information could leak to the mass if there were future contracts after each halving date, but no luck for such contracts.
Credit: not me. I knew this long after someone knew it.
submitted by LucSr to BitcoinDiscussion [link] [comments]

7 Smart Ethereum Price Prediction Methods for HODL’ers

It is incredibly difficult to predict where the price of Ethereum will go.
This is not a matter of talent, or how "smart" you are - I mean, shit, you have possibly made a good deal of money investing in Ethereum. But now you have additional money to invest, and are unsure if now is the best time to buy.
Even the best Ethereum traders/investors in the world are left dumbfounded about when to invest.
Luckily, Ethereum price prediction tools have emerged that are helping investors and analysts better predict where Ethereum prices are going to go.

Why is it so difficult to predict Ethereum prices?

Putting a value on a cryptocurrency is fundamentally different from a stock.
Stock valuations are typically heavily based around one big component: cash flow. The most well-known methods for valuing stocks: DCF, Graham Formula and EBIT Multiples are all based in some form or another on cash flow and profitability.
Cryptocurrencies do not have cash flow, and thus it becomes impossible to use the traditional methods of stock forecasting. What this means is we have to find alternative methods for pricing this amazing technology.
I have outlined 7 different ways we can come to an Ethereum price prediction to help out future investing.

1. Chris Burniske's cryptoasset valuation, aka "I am very thoughtful in my analysis"

Chris Burniske of Placeholder capital and author of the book "Cryptoassets: The Innovative Investors Guide to Bitcoin and Beyond" recently released a very promising and thoughtful piece on Medium outlining a new way to value Cryptoassets.
The outline of the model is this:
Instead, valuing cryptoassets requires setting up models structurally similar to what a DCF would look like, with a projection for each year, but instead of revenues, margins and profits, the equation of exchange is used to derive each year’s current utility value (CUV). Then, since markets price assets based on future expectations, one must discount a future utility value back to the present to derive a rational market price for any given year.
Said a different way, the goal of the model is to derive the asset's utility (for example, Filecoin's utility is price per GB)and what that utility will look like in the future. Then, discount the utility value to what it would cost today.
The model does have a good amount of subjective inputs, so the price estimates I came up with varied significantly. I highly recommend heading over to the Medium piece and completing your own analysis.

2. Cost of Production Model, aka "The cake is a lie"

Initially created for Bitcoin, the cost of production model can be tailored for Ethereum. This analysis was completed by Adam Hayes in March 2015 at the New School for Social Research.The basis of the paper explains that pricing is not based on more traditional methods, but instead centered around the uniqueness of cryptocurrencies - mining statistics.
Directly from the paper:
Break-even points are modeled for market price, energy cost, efficiency and difficulty to produce. The cost of production price may represent a theoretical value around which market prices tend to gravitate.
The authors did state that certain factors such as future technology and utility may prove to be more valuable than the coin in and of itself. These factors could prove challenging for putting a true value on a cryptocurrency.

3. Economics of Price Formation, aka "I am most likely smarter than you"

The Economics of Price Formation method captures the relationship between BitCoin price and supply-demand fundamentals of BitCoin, global macro-financial indicators and BitCoin’s attractiveness for investors.
Written by Pavel Ciaian, Miroslava Rajcaniova, and d'Artis Kancs, the bones of the analysis focuses on vector autoregression (VAR) which I am definitely not covering here. However, the finding of the paper suggests that:
BitCoin market fundamentals have an important impact on BitCoin price, implying that, to a large extent, the formation of BitCoin price can be explained in a standard economic model of currency price formation.
Since the inputs used in the paper are the same, the findings can be carried over to Ethereum. Also of note, is that one of the main inputs of the 1st method, velocity, is also used in this paper.

4. Compound Annual Growth Rate (CAGR), aka "I work in Finance"

Borrowed from the financial world, CAGR seeks to estimate the size of an industry (or in this case, market cap of Ethereum) over a period of a few years.
The cryptocurrency world is expected to grow by 35%, based on CoinDesk data. Using this data, we can estimate what the market cap of Ethereum will be in five years. The required inputs are:
As of 10/23
  1. Current Market Cap ($27B, sourced from CoinMarketCap)
  2. Available supply of coins (95M, sourced from CoinMarketCap)
  3. CAGR (35%, from CoinDesk)
  4. Coin inflation, or anticipated coins (1%, per Ethereum whitepaper)
I have provided a handy Google Sheets spreadsheet utilizing the Spreadstreet Google Sheets plugin to automatically bring in coin information for the calculation. You can find that sheet here:
https://docs.google.com/spreadsheets/d/1HJ8ibUUs8k6vhUyUo7u7jq0nKS0CIb5E7Wti4_zJdCI/edit?usp=sharing

5. Max Market Cap, aka "Ethereum will grow to be bigger than Bitcoin"

Max market cap is a theoretical maximum that is calculated taking the market cap of the most popular coin (in this case Bitcoin) and plugging it in for a seperate cryptocurrency.
In the Ethereum example, the formula is very simply:
Available Coins (Ethereum) / Market Cap (Bitcoin)
This results in a max theoretical value of $1,038 for Ethereum, which as of 10/23 would be a 364% increase. This analysis gets really hilarious when you start using some of the less popular coins such as BAT (46,000% increase) and the useless Dogecoin (88,000% increase). Take with a grain of salt, but still very interesting to see.

6. NVT Ratio, aka "I also sometimes engage in technical analysis"

NVT Ratio is another valuation methdology outlined by Chris Burniske, albeit at a much simpler calculation method.
The calculation is:
Network Value / Estimated Transaction Volume
Where I differ from Chris' advice is I tailored the calculation to give me the value of Ethereum if it were to hit it's max historical peak. For this example, the 30-day trailing average of transaction volume in the last year peaked on December 16th, 2016 at ~126. If we take the current daily transaction volume of ~$498M, this gives us a new market cap of $63B (126 * $498M).
Using this new market cap of $63B, if we divide that by the current supply of 95M, we get a new price of $664.

7. Dartboard, aka "Go f**k your methods, I don't need you"

Because, the dartboard method of Ethereum price prediction is honestly better than most of the crap out there. HODL.

How you can implement these methods with the valuation spreadsheet

The spreadsheet can be setup to update as often as you like by using the following instructions:
  1. Download the Spreadstreet Google Sheets add-in
  2. Click the Google Sheets link here. In the new window, click File - Make a copy.
  3. Important Open the template, click the menu Add-ons / Spreadstreet / Help / View in store, and then click Manage and in the dropdown menu click Use in this document.
  4. All formulas should update as expected. If not, try refreshing the sheet
The sheet includes CAGR, Max Market Cap, and NVT Ratio. The sheet does not include the cryptoasset valuation, cost of production model, or the economics of price foundation as those methods are significantly more involved. This sheet also does not include the dartboard method, as that requires a physical dartboard.
Good HODL'ers aren't sprinters. They choose each and every investment with care. They know the rules. But they also know how to break the rules. Deliberately. Emphatically. Ruthlessly.
Original Medium post can be found at: https://medium.com/@spreadstreet/7-smart-ethereum-price-prediction-methods-for-hodlers-7f08aad60cb1
John
submitted by 1kexperimentdotcom to EthAnalysis [link] [comments]

Next block reward halving date is now estimated at: May 25, 2016

We've now reached a bitcoin mining difficulty of 40,000,000,000. Judging by the conditions present at the first half of the year, we should've hit this level some time ago. But the increase in hash rate has slowed down recently, according to the chart on Bitcoin Wisdom.
If we stay at the current difficulty from now on, with no percentage increase, then we can expect to see the next block reward halving on July 31, 2016, matching bitcoinclock.com. But that's not the case in reality; the difficulty is still rising.
If you average together the last 20 changes in difficulty increases, you get 11.98%. Assuming current mining conditions and continuing production of ASIC chips, we can calculate a more accurate estimated date for the next halving.
The equation:
(Number_of_Blocks_Remaining) / (1+Average_Difficulty_Change) * Average_Seconds_per_Block = Seconds_Until_Next_Halving
Inputs:
Next halving block = 420000
Current block = 330788
Average seconds per block = 600
Average difficulty change = 0.1198
This equates to: (420000-330788) / (1+0.1198) * 600 = 47800678 Seconds
Or 553 days from now.
submitted by klynastor to Bitcoin [link] [comments]

Here is a transcript from the Ripple Consensus Presentation (May 22nd)

https://www.xrpchat.com/topic/5203-ripples-big-demo-and-why-you-missed-the-big-deal/?do=findComment&comment=49659
MY TRANSCRIPTION... 0:19
PATRICK GRIFFIN: All right I think we're gonna get started. There's total capacity. People at the door - there's a little room over here inside. There's chairs here - there’s chairs over here don't be shy. All right in case you don't know this, you are in “XRP In Action,” a live demo and expert Q & A.
I’m Patrick Griffin [with] David Schwartz and Stefan Thomas. We've got an hour today. We'll walk you through, we’ll do a quick round of introductions. Stefan is going to do a demo. We have a self-guided Q&A where I basically tee up some questions for these guys that will all be softballs don't worry! Then we'll turn it over to you guys to ask questions for the technical experts. Maybe we'll do it the quick round of intros, starting with Stefan:
1:07 STEFAN THOMAS: Yeah so, my name is Stefan Thomas I am CTO with Ripple. Before Ripple I was involved with BitCoin for several years and now I work on the vision and technical direction for Ripple.
1:22 DAVID SCHWARTZ: My name is David Schwartz. I'm the chief cryptographer at Ripple. I’ve been working on Ripple since 2011 and public ledger tech. Before that I was working on cryptographic messaging systems and cloud storage for government and military applications.
1:35 PATRICK GRIFFIN: I am Patrick Griffin. I’m the head of business development. I don’t know why I’m up here, but there’s our CTO and our head of cryptography, but actually I think we are the, to be honest here, I think we are the, we are the one two and three first employees of Ripple. Well, two one and three. We've been here for quite some time and it's been a long journey. So why don't we first start off with the demo and I think I'll tee it up: This is a demo that demonstrates our technical our technology start of the inter ledger protocol, moving payments in and out of XRP and Stefan will do a better job of articulating what you are about to see.
2:22 STEFAN THOMAS: All right thanks Patrick. So here we're gathered to have a quick round table on XRP. I want to go through the demo pretty quickly so we can get to the actual discussion Q&A which I thin is the meat of this session. Basically, what we're trying to do at Ripple is we're trying to make money move like information. This has been our mission since day one, and it has never changed and so we're building a number of different technologies that all integrate to make this vision a reality. And so what we think about how information actually moves I think it's really it's really this chart that captures it.
So what's happened is that the cost of moving information has really declined over the last couple decades and very strongly so. And as a result the volume of information that’s been moving has exploded. And so, very often you know, our customers will be talking to me about, you know:
Oh are you focused on corporate payments? Are you focused on consumer payments?
I think what you have to realize is that we're somewhere down here in that curve and so you know when you say like two-thirds of all payments are corporate payments you're really talking about two-thirds of almost nothing. I think what we're focused on is this growth that you can create if you increase the efficiency of the system enough.
And so the way that we're kind of approaching that is we want to streamline the way that liquidity works today. So today you have 27 trillion dollars in float sitting around the world that is essentially there to facilitate real-time payments when the underlying systems are not real time.
3:59 STEFAN THOMAS: So, for instance, I swipe my credit card somewhere there has to be an actual creditor or money available to pay that merchant if that's supposed to happen instantly if the underlying money can't move in real time. And so that's been the case ever since we were using gold and fiat currencies in order to move money internationally, but with digital assets there's actually opportunity to improve upon that and actually move real assets in real time.
So if you have something like XRP you don't need to pre-fund float all around the world. You can actually just have this digital asset and if you want to transfer value to somebody, you want to transfer value internationally, you can just transfer that asset and that moves instantly okay?
4:40 STEFAN THOMAS: So that's really the improvement. So with that I want to give you sort of a case example in a demo. This is something that already happens on blockchains today where there are money sources business that are using, businesses they're using block chain in order to move funds so they might sort of offer this as a service to small and medium businesses where if I want to let's say pay somebody in a different country I can go to one of these companies and they will move that money for me.
5:09 STEFAN THOMAS: So, in this example, we're kind of pretending that we're a publisher, we have a reporter in the field. and we’d like to pay them. And so, you know we don't really build apps, but we enable banks and other money service businesses to build apps on top of our platform. So this is kind of a mock-up that we’ve developed where, you can imagine, this would be just built into the the particular app of that company. And so I can basically pick any amount, so let’s say I want to send, say $7, and what happens is that you can see is that amount updates so what happens during that time is that we actually try to find the cheapest path from where the sender is to which are provided at the recipient uses and then once we found that cheapest path, we figure out what the exact cost is going to be, so we have that transparency upfront. What is the cost of this payment and this is all powered by the open source protocol InterLedger. Now, when I send this payment, it goes through right away. I don't have to wait for a ton of confirmations and so on.
6:11 STEFAN THOMAS: So let's talk a little bit about what is happening there in the background. So first, we basically look at the topology of the network and then we try to find a path. So say it found a path through XRP. Once we select the path, we basically send a code request to figure out what we think that cost is going to be and then we send the money through in two phases as per InterLedger Protocol, and that's enabled on XRP using a feature called escrow that we just launched earlier this year and so now XRP is it's fully InterLedger enabled.
6:50 STEFAN THOMAS: So, if we look at the kind of a cost calculation, this is kind of some fictional numbers but it's correct in terms of order of magnitude, right. So you have Bitcoin, you have Theory, we have XRP, we have Swift, and so our algorithm basically goes in and it tries to select the best option and so people often ask me like why does InterLedger help XRP? or why are you guys working on InterLedger as a completely neutral protocol when you actually have this vested interest in XRP?
7:18 STEFAN THOMAS: Well, because the reason is that XRP is right now by far the best digital asset but it's not being used as much as Bitcoin, for instance, and so in order to close that gap we want to get to a point where the selection of asset is kind of automated and you have algorithms to just pick the best one in which case, right now, XRP would get picked all the time. So that's why we have such a vested interest in just enabling more efficient selection. All right. So as you can see, it's the lowest fee right now and it’s the fastest turn right.
7:48 STEFAN THOMAS: Now, going a little bit further into the future, I was kind of talking about that huge explosion in volume and I think where that comes from is completely new user inter faces that we don't necessarily think about today. So one example would be, you have something like a publisher and a reader and a reporter and the reader is actually browsing an article and they're not having to sign up and go through a paywall in order to do that Their browser just pays them on their behalf automatically and then as a publisher I can see the money sort of coming in, in real time as users are browsing my website. And so you're basically providing the sort of metered access to your content. There's just one example. I think there's a lot of cases of APIs and other parts the industry that could benefit from micro-payments as a more granular way of transacting. So I don't have time to talk about that, but with that I hope you've got sort of a taste of both what XRP looks like today as well as what the future holds in terms of doing micro payments through payment channels, and so on, on InterLedger. So with that, I'll hand it over to Patrick to start the discussion.
9:00 PATRICK GRIFFIN: Very cool. So maybe it’s worth stepping back and also looking at our company strategy and having a conversation around what it means when we talk about an Internet of Value, which I think well this is a Silicon Valley company and for most people that doesn't mean a whole lot so maybe we can take a first stab at trying to explain what is an Internet of Value and Stefan, I’ll start with you. Actually, why don’t we start with David and give you a break.
9:24 DAVID SCHWARTZ: Yeah, so what is the Internet of Value and what are we working on? Well, the Internet has brought connectivity to billions of people around the world. They have smart phones. They have easy access to the movement of information but money is still siloed. It's still trapped in systems that don't talk to each other. Moving payments are expensive. They're slow. There's high friction. There's trillions of dollars that moves across borders and that's moved mostly by financial institutions, and we need to move that money more efficiently. We need to know where it is. We need to improve that flow.
10:02 DAVID SCHWARTZ: I don't know if any of you have made international payments or most of you have on traditional systems and you know that it's very hard to know where that money is. It’s very hard to know how much it's going to cost you ahead of time. The user experience is not great. A significant fraction of those payments fail. It takes several days. It's almost easier to ship money than it is to use our existing payment system. So we want to provide an Internet of Value where there is instant payment. Payment on demand, without failure. When you know ahead of time how much money is going to deliver. You know what path is going to take and because that transaction is set up using modern internet protocols you know ahead of time exactly what the requirements are at the destination so you don't have a failure because you didn't have the right information at the beginning.
10:45 STEFAN THOMAS: Yeah so um whenever I think of the Internet of Value, I think the number one thing that happened with the internet was that it kind of commoditized reach. So, before the Internet, if you wanted to be an online service provider like AOL or CompuServe the number one thing that you needed to have in order to be competitive is a lot of users. And if the main thing you're competing over is just having a lot of users it's very hard to get into that market for obvious reasons because you start out with zero users so how do you attract the first couple? But once you have something like the internet where all the different networks are actually tied together, suddenly the number of users you have is completely irrelevant, right? Because all of the networks are tied together you can reach all the websites, you can email all the people on the internet and so the competition has to be about something else and what does it become about? It becomes about about the efficiency of the system.
11:35: STEFAN THOMAS: And so, this fundamental transition has not happened with money yet. Like right now the the biggest consumer payment systems are things like Visa and MasterCard and they're very much competing on: We’re the biggest. We have the most merchants. We have the most customers, and so how are you going to compete with us, right? We would not even have to try to be efficient, necessarily, right? Because we're only competing with each other. It's very hard to get into that market, and so what we're trying to do with InterLedger, by creating an internet working protocol we're allowing you to go across multiple hops across multiple steps through the financial system and as a result you can tie a lot of smaller providers, a lot of smaller banks together and as a result make a system that’s much more competitive.
12:15: PATRICK GRIFFIN: I’ll just add my two cents in. I when I talk about the Internet of Value with customers it's typically the conversation on the cost and opportunities and for us you know, one of the analogies it's overused in the internet I think the Internet of Value, at least for me, is the function of bringing the marginal cost of payment processing down to as close to zero as possible. Now you can do that in one of two ways: Lower the cost of payment processing. Just for the sake of conversation these two things are 50/50. Payment processing: the messaging going between institutions and the cost of reconciling transactions as they go from one siloed network to another siloed network. Those are huge costs that the system currently bears just as a function of tracking down lost payments or fixing mistakes and broken transactions.
13:00 PATRICK GRIFFIN: Something like 12% of all international wires fail. That is an astonishing number if you come from Silicon Valley where you're typically used to five nines of reliability. The financial system isn’t working even with one nine of reliability. The other side of the equation so that it’s a processing function. We are able to achieve better processing by starting that sort of settlement layer, it’s a little bit academic, but then ultimately what our customers are buying from us today is just a payment processing capability.
13:30 PATRICK GRIFFIN: The second stool, leg of the stool, if you will, this two-legged stool, for this Internet of Value, is liquidity. And this iquidity cost is a huge component of the payments that infrastructure today. And so, when you think about the cost that you pay when you wire money internationally, it's not just processing costs and fees. Banks and financial institutions and payment processors have to cover their cost of capital. They are laying out a massive amount of cash in different overseas accounts to make sure that when you send a payment to Japan there's cash on hand in Japan to service your payment.
14:05 PATRICK GRIFFIN: The whole visual that we saw here with XRP that's really where we see there being a large opportunity to bring the liquidity costs down if you can fund your payment instantly on demand without pre-floating cash or opening up credit lines with your counter-parties you can really bring down this component of that cost so those two things together in my mind at least that's that is what really comprises the internet of value. You tackle those two things: processing and liquidity really starts to open up and level the playing field. And on leveling the playing field maybe a question back to you Stefan is and a little bit about the strategy so as we go out and roll out these new APIs for bank to bank or financial institution processing, this narrative around using the digital assets upon payment certainly there's no reason why you couldn't insert Bitcoin in there or Etherium or some other digital assets do you view this as maybe leveling the playing field for all digital assets and creating an opportunity for other digital assets to come in and basically compete for that case?
STEFAN THOMAS: 15:12 Yeah so, we definitely look at it as as a way to create more competition I think that I'm just looking at the market today, most of the digital assets out there are not really designed for enterprising spaces, right? There they're coming from a background of direct to consumer use. They're kind of designed in a way that maybe isn't always necessarily totally in line with how regulators think about the financial system and as a result it’s quite difficult for companies to use these assets, so I think maybe some of people in the room are Bitcoin entrepreneurs and so you may know some of these struggles and you know some of these difficulties of using an asset like Bitcoin. I think you know me, speaking as CTO, more from the technical side, there are definitely big differences between the different digital assets, and so if you look at things like settlement speed on Ripple you get below four seconds most of the time four seconds on average. On Bitcoin you have to wait nine minutes between just to get one confirmation.
16:14 STEFAN THOMAS: There's things like finality. On Ripple when you get one confirmation you can hundred percent trust it, it cannot get reversed because the set of validators that are known so it can't be some validator you've never heard of suddenly coming up with a different answer. Whereas on Bitcoin, there can always be a longer chain that you just haven't heard of yet so you have to wait for multiple confirmations to gain more confidence. Another difference is that you know Ripple is non-deterministic and so bitcoin is is random so what that means is that the actual delay between blocks on Ripple is pretty consistent. It's four seconds with the standard deviation of 0.8 seconds so it's almost always exactly four seconds. And so, with Bitcoin it's more variable, right? So you could have a block after a minute. You can have a block after half an hour. And so, it's much harder for businesses to kind of rely on a system that has that high variability because it increases your risk as you holding an asset.
17:12 STEFAN THOMAS: So these are just some examples of why we think that XRP is best suited for payments use cases. And I think I'll give, be giving a talk later today on on going into a bit more depth on some of these differences
17:28 DAVID SCHWARTZ: And and we're not afraid of a level playing field. As Stefan said we think we can succeed on a level playing field but also you can get people to build a level playing field. It's very hard to get other people to stand behind something that has a built-in bias in favor of one company. Twitter doesn’t, it doesn't mind the fact that the internet wasn't built for Twitter. Facebook doesn't mind. They like the fact that there's an open platform that everybody can support and use and they're willing to compete on that level playing field and if they lose on that level playing field you know, so be it, somebody else will win and the world will be a better place for it. We believe that we have the advantages today and we believe that we can get the industry behind an open standard that facilitates these types of instantaneous payments.
18:07 PATRICK GRIFFIN: So David, this is a question coming back to you. In this level playing field obviously there are digital assets can compete on different characteristics. Obviously I think that Bitcoin as scalability challenges have been I think very famous recently could you comment a little bit on Bitcoin’s recent lows some of the things that have come up around resiliency scalability and maybe draw a contrast to XRP and how XRP is working.
18:32 DAVID SCHWARTZ: Sure. I think the idea that you don't need governance. The idea that you can just have this decentralized system that magically government itself doesn't really work. The internet is a decentralized system it has governance. Bitcoin currently is experiencing a little bit of a governance failure due to with dis-alignment of incentives. Historically the minerss have had an incentive to keep the system working. Everybody needs the Bitcoin system to work, whether you hold, whether you try to do payment’s, whether you're mining. This system has to work or nobody has anything. Everybody's benefited from the value of Bitcoin going up. If you’re a miner, you want the value to go up. If you hold Bitcoin, you want the value to go up. If you're using it for payments having more liquidity and lower risk and holding bitcoins is good for you.
19:11 DAVID SCHWARTZ: So everybody's incentives were aligned. They're starting to become dis-aligned recently because miners have been getting a lot of revenue from transaction fees Miners like high transaction fees. Users obviously would prefer to pay less for their payments. People who want to use Bitcoin as a payment platform want frictionless payments and they're not getting them because of the fees. So there's been a little bit of a governance breakdown due to that misalignment of incentives and it's not clear how you resolve that. It's not really clear how the stakeholders can realign their incentives.
19:39 DAVID SCHWARTZ: I’m confident that Bitcoin will come out come through it but I think it shows that governance is important. You should understand how a system is governed whatever system it is because there is going to have to be governance. It’s not going to magically govern itself. Now Ripple, the stakeholders are the validators and the validators are sort of chosen by the other validators, so right now Ripple is obviously very big in that space. We’re the major stakeholder on the network, but the recent interest into the price increase has begun diversifying the stakeholders and so we hope to see different jurisdictions, different companies and those will be the people who will be the stakeholders and they'll make the decision if there are going to be changes in the rules behind in that market. We think that that will work better and I think if you, once you accept that there has to be governance, you really want it to be the people who are using the network. You don't want the technology to force you into having other stakeholders whose interest may be adverse to the people who just want to use the system to store value and make payments.
20:32 PATRICK GRIFFIN: So what stuff, I mean do you have anything to add just in terms of the underlying design of the systems and how they're confirming transactions? I think when you go way way way back to our company's beginning it was billed as Bitcoin 2.0. And you know we felt like there was another way you could build a decentralized digital asset without without mining. So maybe talk a little about the confirmation engine behind XRP and some of its advantages over other systems
21:04 STEFAN THOMAS: Yeah, so as I mentioned in the introduction, I was fairly involved in the in the Bitcoin community back in 2010-2011 and one of the features that I contributed to was paid to script hash as a reviewer it was one of the first people to re-implement Bitcoin and I pointed out some flaws and you know we ended up with a much better solution. And so, through that experience going through the cycle of new feature on Bitcoin, even back then when the committee was much smaller I realized that it was actually very painful to do even a uncontroversial improvement to the system and that was partly because people had a very strong tendency to be conservative which is a good thing, for any, like whenever you're modifying a live system. But there was also just like no good process for introducing changes.
22:00 STEFAN THOMAS: We had to come up with a process ad hoc. We came up with this whole voting on mining power and so on. Now, from that experience I remember going back to a wiki page on the big part of working called the hard fork wish list and I kind of looked at and is sort of the list of things other things that we wanted to do and a lot of them were in my opinion, in my humble opinion, must haves for any kind of mainstream or enterprise adoption and so I was kind of like putting numbers next to them like this would take eight months this would take 12 months this would take two years and it started to add up like I'm not going to see this get to that point if we go at this rate.
22:38 STEFAN THOMAS: And then you know Ripple approached me and they had a lot of that hard fork wish list already implemented but maybe more importantly they had a different idea on the governance structure and I think there's sort of two key differences: The first key difference is there is an entity that's actually funding the development of the asset and all the technology behind the asset. And so you know, I was looking at the Bitcoin foundation website the other day and they're currently, their most recent blog post is to promote this lawsuit in New York to try to strike down the bit license and apparently the foundation feels that it's strategically important for Bitcoin to kind of fund this lawsuit and they looked at how many people had actually donated to the donation address that they were giving and it was just over a thousand dollars basically. Almost nothing
23:31 STEFAN THOMAS: And I was thinking like well if XRP you know had any strategic issue like that there would be millions of dollars immediately that just Ripple would put behind the issue and so as a holder of the asset that's really important for me to know that, you know, there is some some entity that's actually defending it from a technical standpoint, from a legal standpoint, from a business standpoint. That makes a big difference
23:53 STEFAN THOMAS: And then the second big difference that I saw was how features and how generally the evolution of the technology is managed. So on Ripple, there's voting among the validators, which is not too dissimilar from you know the kind of mining voting that we're doing on Bitcoin. However the validators on Ripple are largely chosen by the users or they are chosen by the users. And so they're not chosen by so this algorithm or just by their virtue of being very efficient in mining. And so as David pointed out earlier, the incentives are very different. On Ripple, the incentives are you know I want the people who are appointing me to be validators to be happy with my validations because otherwise you know there's what they will stop paying me. And so you know there's a much more closely aligned incentive for the value of some Ripple to do what the actual users want to do.
24:46 DAVID SCHWARTZ: And I would add that there there are sort of vulnerabilities in both types of systems. Like with the miners, it would be a double spend. With the validators, they could simply stop validating and the network would halt, but one tremendous difference is that you know how to fix one and it's not clear how you would fix the other so if you had the miners that were being pressured, let's say by a friend in government, or they were double spending or for whatever reason they are holding transaction fees high, let's say the block size issue got to the point where it was absolutely critical and there was no ability to come up with an agreement. It's not clear how you solve that. You change the mining algorithm? Like that's the nuclear option? Nobody knows what you do. With the system on consensus it is clear what you do. You can, you can change the validators. The validators work at the pleasure of the users, the holders, the real stakeholders of the network.
25:33 DAVID SCHWARTZ: That, I think that is a fairly significant advantage once you realize how important governance is. And it's not just a handle of failure as Stefan pointed out there's going to be evolution of the system unless you think the systems are absolutely perfect today. Well bitcoin is already proven that there they're not absolutely perfect today. I can’t, I certainly wouldn't try to claim the Ripple is perfect today. We have a wish list of features too, limited by engineering time, but we have to get people to agree to implement those features and I think that's also an argument why you can't have one blockchain to rule them all. There are features that also have costs and every feature has a cost because if you have a public blockchain everybody that uses that public blockchain, at a minimum, when there's a new feature they have to do a security review and make sure that that feature doesn't create a vulnerability for them. So there's a fixed cost that's fairly high. There's a huge bug bounty on Bitcoin and on Ripple right? Billions of dollars if you could steal money on the system. So the cost to implement a feature is high. So if there's a feature that somebody really wants it would be really useful for them they're probably not going to get that's not enough to get any feature on the system, so you're going to have a diversified system of multiple block chains and multiple ledger systems of all kinds competing with each other for share. that's why I think InterLedger is important because InterLedger will permit people who use different block chains and different systems, for good reasons, to be able to make payments to each other quickly seamlessly and without the risk associated with little pays problem.
26:53 PATRICK GRIFFIN: hmm Maybe just a last question before we turn it over to the audience and you've mentioned InterLedger. Stefan is the creator of InterLedger or the chief architect of it. When you walk around the conference today, you'll see a lot of companies that have blockchain offering. So, sort of going back to 2014, now if you remember, the the terminology and the marketing was all about it's not about Bitcoin it's about the blockchain. And so now we have some sound perspective on that. What's your take on the fundamental premise of a de-centralized distributed database without a digital asset and what's the trade-offs in terms of functionality versus utility? What's your opinion given the architecture IOP.
27:42 STEFAN THOMAS: Well that's a question I could easily spend hours on, so let me try to summarize. So as you mentioned, my colleague Evan Schwartz and I, we we came up with this protocol InterLedger and that came out of actually in a couple of different work streams but one in particular I remember was I was trying to figure out how to make Ripple more scalable and I was thinking about a particular kind of scalability which is similar to what David just mentioned, which was scalability in terms of functionality not just in terms of how many transactions can you do per second. Like how do I serve very different use cases that have you know mutually conflicting trade-offs. So as I was thinking about that problem I was kind of saying well maybe you don't even have to keep that one set of global state. Maybe you can have state in different places and a lot of that is honestly just rediscovering database knowledge that we've had since the 70s. Now just looking at Jim Gray's papers and just oh yeah that works for blockchains too
28:41 STEFAN THOMAS: So we took those ideas and we combined them with ideas around from the internet from the internet background in terms of networking and the concept of internet working and so on. And so, when I look at these private blockchains type approaches I think they are doing the first of those two steps namely they're applying sort of modern data, modern database thinking or classical database thinking to blockchain but I don't think they're really applying the Internet thinking yet because they're if they're attempting to achieve interoperability just by homogeneity which does not give you that diversity of use cases and so if you want that you have to think about what are the simple stateless protocols they can actually tie these different systems together without dictating how they work internally. So I can have my private blockchains that has all these like special features and it works in this way and you can have your private box and it works in the other way but we can still talk through a neutral protocol and you know the way that we're thinking about InterLedger, we're not married to InterLedger being a thing like I'm completely happy if it's lightning or if it's something else but I think as an industry to agree on some kind of standard on that layer.
29:51 STEFAN THOMAS: I think one of the reasons that we can is because unlike a blockchain a standard is neutral you know there's no acid anyone's getting rich off of. There's no there's a lot less to agree on. The list of decisions you have to make is a lot shorter. You know my colleague Evan, he makes a point, a very good point about with InterLedger only like seven eight major decisions that you have to make in the architecture to really arrive at it and so I think we have really good reasons for each one of them and so we think that there will be a certain convergence on on one standard protocol for again not just blockchains, but like any kind of ledger.
30:26 DAVID SCHWARTZ: I just ant to add that InterLedger is completely neutral to how the ledger works internally. Any ledger that can support a very short list of very simple operations. Every banking ledger can perform those operations. Almost anything the tracks ownership of value of any kind is capable of confirming that value exists, putting that value on hold, transferring that value between two people and those are the only primitives that InterLedger builds on. It's just by the clever combination of those operations in a way that provides insurance that all of the stakeholders get out of the transaction the thing that they're supposed to get out and get back whatever they were going to put in if they don't get out what they're supposed to get out. It’s, it's astonishingly simple at the protocol level.
31:08 PATRICK GRIFFIN: Okay, with that I will turn it over to the room for questions and some Q&A Aany questions in the back?
QUESTION: Yeah, I’m kind of new to this and I just have some really basic questions. I read something recently where, Ripple was now the second most funded, or invested. Bitcoin was first, and Etherium was third. Can you tell me how you got to that position? You seem like you’re poking up about Bitcoin and how Ripple probably is more efficient and better. Then I had a second question - Where do I get a Ripple T-Shirt?
32:06 PATRICK GRIFFIN: The first question is how did, how did we get to this position we're in and does that generally capture the essence of that question and then Ripple t-shirts I'm not sure about that (Come work for us!) I will attempt to answer the first question and if you guys want to jump in. I think that is a function of one: Silicon Valley companies do one thing I think very well, they pick a lane and they go deep on it. For us, what we've been very very focused on it the use case. as a company we but we picked a long time ago to go deep on cross-border payments and in particular wholesale cross-border payments that’s financial institution to institution. It’s at the enterprise level and so when we look at digital assets today we think that there is a very very very use case around the consolidation of capital to fund payments overseas, which is exactly what we just demonstrated. Being able to transfer an asset from a server in one country to a server in another country and basically allow for payments companies to operate with much less capital deployed overseas. It's a, it's a quantifiable use case. Today there's 27 and a half trillion dollars in float in the banking system just wait sitting idly waiting for payments to arrive. That's compounded when you go to look at corporates and you look at payment service companies. So there's a very very very very very big number and I think that the recent traction that we've gotten has been an acknowledgement of the use case how it fits into our overall product offering. Ssome of the technical benefits of XRP itself and then when you look around, I mean I think that its head, you're hard-pressed to find another digital asset with as clearly articulated the use case that where the time horizon is now. I think there's lots of really exciting things going on in IOT and device-to-device payments and sort of the future some of things that I that Etherium people talk about for example, but it still feels like it's still at the horizon and I think this is being deployed today. There is a a path to commercial production and ultimately I think that's part of the reason why we're getting some traction.
34:18 DAVID SCHWARTZ: I think we also sort of crossed an important threshold. If an asset doesn't have value and it doesn't have liquidity you can't really use it even if it has the properties that are perfect for your use case simply because you can't you can't get enough of it without moving the market and I think we crossed a threshold (not the end) -
*use the link above to view the entire transcript.**
submitted by ripcurldog to Ripple [link] [comments]

On the Security Economics of Public Blockchains: Why using the Ethereum public chain for STO contracts is not a good idea

by Hendrik C

We coin the term “security economics” to mean the system of economic incentives designed to guarantee the security required for a public chain to operate. For example, with PoW (proof of work), honest miners are incentivized to contribute compute power for mining reward. The higher aggregate hash rate of a network, the more difficult it will be to perform a 51% attack. We will introduce a new framework to analyze this relationship, and study the limiting cases where the current security economic relationship might breakdown.
In a given period T, the blockchain network will release n coins according to its predetermined mining schedule. For example, bitcoin currently reward 12.5 coins per block. Its mining difficulty is adaptively set so it produces 144 blocks per day, with a very small margin of error. Whether total network hashpower is 50 ExH/s or 5 ExH/s, total reward per day is always 1800 bitcoins. Only difference is that the expected reward per hash diminishes when total network hash increases. But hashpower cost money, 50 ExH/s will cost 10 times as much as 5 ExH/s, assuming they’re running on the same kind of hardware. The economic equilibrium is arrived when reward per day (RPD) = cost per day (CPD).
We further breakdown CPD to its components: sunk cost (e.g. cost of the miner) and operating cost per day (OCPD). We make the following postulates about the mining process and miner’s behavior.
1, When price of a coin goes up, temporarily RPD > CPD, new hash power will be introduced as it will be profitable.
2, When price of a coin goes down, but RPD > OCPD, then nothing will happen.
3, When price of a coin goes down so much, that RPD < OCPD, some miners will stop mining, total network hash will fall, until RPD > OCPD again.
4, Mining hardware have a useful life of approximately 2 years, miners would only deploy new hardware if they can cover cost within 1 year of mining.
Assuming the above behavior of miners, in the equilibrium state, the total hash power (per second) of a network is bounded above by the market value of expected reward (per second). To stage a 51% attack on the network, the adversary will need to match all of the existing hashpower on the network. The required investment is approximately equal to the market value of minable coins in 1 year. Take bitcoin for example, a total of 52560 BTC are released to miners a year, which equate to about $189m, assuming $3600 / BTC. The total hashpower of the bitcoin network is about 42 ExH/s, which equates to about 3 million Antminer S9’s. This is what it takes to stage a 51% attack, the cost of staging such an attack is a good measure of how safe a network is.
Would anyone do it? Perhaps not, which is the ingenuity of Satoshi Nakamoto. Assume you did invest $189m, and compromised the bitcoin network. What returns will you get? Sure, you double spend bitcoins, but bitcoins will be worthless when people find out its security is being compromised. The delicate game theoretic equilibrium, which we shall call the Nakamoto equilibrium, is just as important as all the cryptographic wizardry in keeping a blockchain safe.
The Nakamoto equilibrium design has a number of drawbacks, although none of them were of interest for Nakamoto to consider, they do not apply to bitcoin.
1, Nakamoto equilibrium only guarantees the security of the public chain itself, and not the smart contract tokens which runs on it.
2, Out of all the blockchains that use the same hash algorithm, only the one with the most honest hashpower is safe.
We will focus the remainder of this paper elaborating point number 1, and leave 2 to another article.
The utility tokens created in the ICO hype, were predominately ERC 20 contracts executed on the ethereum network. Despite of their huge speculative value, these tokens do not have much intrinsic value right now. They simply represent the access right to a particular utility, which will be built (if ever) far into the future. The aggregate market value of all ERC 20 tokens, have never exceeded that of ethereum. Hence, the hashpower required to guarantee the safety of ethereum is automatically extended to the ERC 20 tokens running on the network.
We now consider a scenario with securities tokens produced from STO’s. A security token represent a share of a securitized asset. These could be company stocks, bonds, buildings, infrastructure etc, indeed everything in the world could be securitized and tokenized on a blockchain. The fundamental difference between securities token and utility token is that securities token have an intrinsic value attached to it. The intrinsic value of a securitized asset could be several times the market cap of the public chain it’s running on.
For example, as of Feb 2019, ethereum have a market share of about $8 - $10 billion dollars. About 7 million ETH is minable a year (before the Constantinople fork), the total value at current market price of $120/ETH is about $840 million. The total network hashpower is 140 TH/s. A Bitmain E3 miner has an advertised performance of 180 MH/s, so total network hashpower is equivalent to about 777777 E3 miners, which would cost roughly $800 million (though the exact cost could be quite volatile). This is how much one would have to invest to stage a 51% attack on ethereum network. If the network consists of only ETH and utility tokens, whose value would plummet if such an attack were to be successful, nobody is incentivized to do so. But (imagine sometime in the future), if the ethereum network has securities token contracts, whose underlying asset worth a total of a trillion dollars, then carrying out such an attack would seem quite profitable.
A new security economic model is clearly required for any public chain to run securities token. The biggest problem with ethereum, is that miners are not incentivized to contribute hashpower, as a function of total market cap of tokens running on ethereum. This is not a problem in the era of utility tokens, when they are worth significantly less than the main ethereum network. In the era of securities tokens however, this will become a significant risk, as securities tokens can easily worth several folds more than the public chain itself. We need to figure out a new economic model, where the public chain’s hashpower is a direct function of total token value running on the public chain.
submitted by True_Chain to ethereum [link] [comments]

Has the Bitcoin Hash Rate Peaked? Comparisons with Oil Show Interesting Findings

Has the Bitcoin Hash Rate Peaked? Comparisons with Oil Show Interesting Findings

https://preview.redd.it/85lpl2md4e221.png?width=690&format=png&auto=webp&s=2d3bab69f0570a96f55d790d25f1b1ab08c0a49b
https://cryptoiq.co/the-bitcoin-mining-hash-rate-has-similarities-to-peak-oil/
The Bitcoin mining hash rate had been exponentially increasing on average since the genesis block in 2009, from MH/s, to GH/s, to TH/s, to PH/s, to EH/s, and it reached an all-time record high of 62 EH/s on 26 August 2018. Since this peak was reached, the Bitcoin mining hash rate gradually plateaued and has now decreased. The chart of Bitcoin mining hash rate actually looks quite similar to a peak oil chart except on a much faster time-scale, as can be seen in the comparison between Bitcoin’s hash rate over the course of 2 years from Blockchain.com and North Sea oil production from an article in The Oil Drum: Europe by Euan Mearns. As explained below, the dynamics between peak oil and peak Bitcoin mining are similar, with the key difference that Bitcoin mining is decentralized and oil is not.

https://preview.redd.it/op5ept1g4e221.png?width=512&format=png&auto=webp&s=2b3b35eb631f31a64ed7beb01f283832bd231e4c

https://preview.redd.it/nfyhlf4h4e221.png?width=678&format=png&auto=webp&s=46a0ca7e11f274c5678f6421b1eebb788eab5197
Geologist M. King Hubbert is the founder of the peak oil theory, which states that there is a point when the maximum extraction rate of petroleum is reached, after which a terminal decline in production ensues. The peak rate of extraction of Bitcoin of course occurred during the period after the genesis block and before the first block halving, when the block reward was at its maximum of 50 Bitcoins. However, this is not the peak rate of mining profitability, since Bitcoin increased in price by orders of magnitude through the year 2017. The peak rate of Bitcoin mining profits undoubtedly was simultaneous with Bitcoin’s all-time record high of USD 20,000 in December 2017.
The reason the peak hash rate did not coincide with the peak rate of Bitcoin mining profits is because the rally happened so quickly that mining operations were not able to add rigs fast enough, so there was a lag effect. Even for mining operations with large amounts of capital it can take months to obtain the amount of mining equipment that they want, and for other mining operations it took even longer because they had to obtain investors, buy land, build infrastructure, and only then could they install the rigs and begin hashing.
The Bitcoin mining hash rate chart implicitly indicates that 30 EH/s of Bitcoin mining equipment has been taken offline due to lack of profitability, which represents tens of billions of USD of wasted rigs. This suggests that Bitcoin miners were caught by surprise by the decline in Bitcoin’s price from USD 20,000 to less than USD 4,000 as of 4 December 2018.
Coming back to the peak oil comparison, the current Bitcoin mining scene is like a rapid version of peak oil, combined with lack of coordination. Oil mining is a centralized and coordinated activity, where the oil is prospected, land is leased out and then an appropriate number of wells are drilled. With oil mining, companies cannot drill as many wells as they want, or drill wells on someone else’s lease, since this is all closely controlled by contractual agreements. Bitcoin mining is decentralized, and no one has a lease or contract to only mine with a certain amount of hash rate. Anyone in the world can run as much Bitcoin mining rigs as they can afford. The effect is that people all around the world are sticking their straws into the Bitcoin mining network all at the same time, and they sucked it dry. Essentially, so many people started up new mining operations at once without coordination, that the Bitcoin mining hash rate went way past its equilibrium, which hurt everyone involved. This is akin to if oil drilling was a decentralized process, and anyone who wanted to drill for oil could drill in the same field. The oil field would be sucked dry really quick, and then most of the drills would be shut down due to lack of profits.
There is hope for Bitcoin miners however. The price of Bitcoin simply has to rally, and all of the disenfranchised miners could restart their rigs, and then it would be back to the races and new rigs could begin being added. However, due to the decentralization of Bitcoin mining, the network hash rate will likely periodically rise past its equilibrium point, leading to catastrophic conditions for miners like we are experiencing today at points in the future. The only thing that could prevent the scenario we are experiencing today is a Bitcoin rally that lasts forever, which is obviously not possible.
James McAvity tweeted that Bitcoin mining is still profitable in the current environment, and does some simple linear calculations to prove this point. He also argues that miners are forced to keep mining due to business agreements, choose to HODL in expectation of a rally, and continue mining in expectation of a downward difficulty adjustment as other miners go offline.
https://twitter.com/jamesmcavity/status/1069669073552736256
Some of what McAvity says is true, but the reality is that Bitcoin mining is a highly non-linear system, and calculating the support level for mining is somewhat pointless, since it is different for every miner. Bitcoin mining profitability depends on Bitcoin’s price, the Bitcoin network hash rate which is directly correlated to mining difficulty, and the technological efficiency of Bitcoin mining rigs. These 3 factors are related in a non-linear and ever-changing way.
Instead of trudging away at trying to develop a set of equations that determine mining hash rate behavior, one could simply look at the Bitcoin mining hash rate chart at the beginning of this article to understand what is going on. Bitcoin mining profitability is different for each individual miner, and the hash rate has trended downwards as individual miners have made the decision to shut down rigs. Clearly there was a fundamental mining profitability support level in the USD 6,000-7,000 range, since that is where Bitcoin’s price was when mining peaked and plateaued. There are clearly numerous miners who became unprofitable on the descent from that level to less than USD 4,000 today, and now approximately 50% of the Bitcoin mining equipment that exists cannot profitably mine. The decrease in Bitcoin’s mining difficulty of 15% on 3 December 2018 could help bring some of those miners back online, at least if the price stays at current levels around USD 4,000, but this will not change the overall trend.
When it comes down to it, Bitcoin’s price is in control of Bitcoin mining profitability, and if the price goes up we could see a reversal of the hash rate downtrend and eventually a 2nd peak in Bitcoin’s network hash rate. However, if price continues to go down, the Bitcoin mining hash rate chart will follow a similar pattern to peak oil charts. The reality will likely be a combination of both. Bitcoin bear markets tend to last years, and get more severe, but eventually the rally comes and then Bitcoin exceeds its all-time record high. This would lead to a steady decrease in Bitcoin’s mining hash rate like the peak oil chart, followed by a rapid re-engagement of old mining rigs that have been taken offline, and then the addition of new generation Bitcoin mining rigs once the equilibrium hash rate exceeds 60 EH/s.
submitted by turtlecane to Bitcoin [link] [comments]

Power consumption might be the death of BTC

With all the exuberance over the continual stream of ATH never-ending meme-fest that goes along with it, it seems that the citizens of /bitcoin only focus on good news. There is a pretty dark shadow hanging over the future of BTC, and any other proof-of-work crypto, and that is power consumption. Any time this topic comes up, there are maybe 10 semi-serious replies and the topic rarely gets above double-figure upvotes... seems like nobody wants to have their happy place invaded by reality.
So... some facts... today, the energy expenditure per transaction block is 275kWh (Source: https://digiconomist.net/bitcoin-energy-consumption) which is apparently the daily energy consumption of 9.3 US households... which in itself is a pretty high level of consumption. This is for one block. So the 0.05 BTC I sent my brother a couple of days ago cost (using my local energy costs) anything up to €38.50, which is (a) much more than the current TX fee, and much much more than the cost of the energy in whatever country the block was actually mined. The energy consumption, and more importantly, the CO2 output is, however, the same, being ~ 0.205 metric tonnes. (Source: https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator)
Yes, there is a renewable component to this energy consumption, but by and large, mining concentrates in areas of low energy cost, and that generally equates with fossil-fuel burning. This may change in the future, but it will be slow... possibly too slow.
Based on current transaction rate increase, current difficulty increase and current world energy production, there is an intersection point somewhere in the future where the energy demands of BTC transaction verification exceeds available energy resources. Add to this the fact that mining is a wholly consumptive process. It produces nothing except heat. Yes, it produces valid blocks, but only one block is valid... all other computation during that block cycle is completely wasted
People get hung up on various hard-forks, fake news and propaganda campaigns, attempts at regulation and control by state and other entities, but the real threat is sustainability. If this isn't addressed, that will be the death of BTC.
submitted by nowonmai to Bitcoin [link] [comments]

Hello, I summarized what I could find out about Bitcoin for my convenience, thought you might find it useful.

First introduced in 2008, Bitcoin is the first example of a peer-to-peer cryptographic currency.
In Bitcoin;
• Computers solve randomly created equations, whose difficulty automatically adjusts so that they are solved to the tune of one every ten minutes, regardless of processing power.
• Difficulty of these equations is set to adjust every 2016 blocks, or two weeks. So after significant advances in mining technology (Such as Asic miners) up to two weeks of Bitcoins might be mined in a significantly shorter period of time.
• Through solving these equations “Blocks” are created, which encode all new transactions, and impart a set number of Bitcoins to the solver.
• The number of Bitcoins rewarded per block is set to halve every 210,000 blocks or approximately every four years.
• The current Block reward of Bitcoins is 25 Bitcoins, the reward has been halved once so far. The next halving is set to occur in late 2016.
• This reward structure means that assuming the value of Bitcoins continues to rise, while the total number of new Bitcoins minted yearly may continue to fall, their value might not.
• The total number of Bitcoins is capped at 21 million units, the last of which is expected to be minted in the year 2140 AD.
Regarding Bitcoin;
• Bitcoins are sub-divisible up to the eighth decimal place, although this limit may easily be removed if the value of Bitcoins rises to the point of requiring it.
• This smallest unit (0.00000001 Bitcoins) is currently called a Satoshi, and should cover most needs until valuations of more than a million USD, at which point a Satoshi would be worth 1 us penny.
• The number of possible Bitcoin addresses is 2160 as each address is a 160 byte hash of a public key
Benefits of Bitcoins;
• Bitcoin allows near instant transactions with no required cost, although speeds can be expedited through a reward of approximately 1-5 US cents (0.0001-0.0005 BTC currently) attached to the transaction for the first miner who verifies it.
• This is quite useful for merchants as methods of payment such as credit cards or paypal generally have high fees of up to 3%.
• Wallets can be generated at will, without need of any form of credentials or verification.
• Transactions are unblockable so long as the sending party has access to an internet connection.
• Bitcoin Funds do not exist in any specific country (unlike regular money which even when in digital form must exist in some country) but exists on the internet, and hence essentially in all countries at once.
• Lack of inflation, Bitcoin is designed to prevent any third party from being able to artificially increase the supply of Bitcoins, although minor predetermined inflation will occur through mining until approximately the year 2140.
• Irreversibility of transactions, A Bitcoin transaction confirmed once is essentially irreversible from the sender’s side, reversing transactions before the first confirmation, meanwhile, is possible, but highly difficult, and only useable with goods which are dispatched instantly such as internet downloads.
• Ease of movement, Bitcoin is one of the first means of Capital which is essentially perfectly mobile, as owners of Bitcoin can easily transfer funds(in Bitcoin) over any regional/political boundaries.
History of Bitcoins;
Intro; Bitcoin is currently one of the world’s most volatile currencies, and although the average price of a Bitcoin has been rising continuously when looked at from a yearly point of view, it has several times crashed and lost up to 68 percent of its value over a relatively short period of time.
• This is commonly attributed to Bitcoins similarity to both economic bubbles in the seventeenth century, and the advent of the tcp/ip(internet) protocol in the more recent past.
• After each bubble the total viability of Bitcoin as a currency grew as more people gained Bitcoins, became aware of Bitcoins, as more businesses started accepting Bitcoins, and as more services grew around Bitcoins.
Crashes;
• The first crash in Bitcoins value was in June2011 when Bitcoins price fell from a high of 32 USD to a low of 2 USD.
• The second crash occurred approximately seven months later in January 2012 when Bitcoins price fell from a high of 7.20 USD to a low of 4.6 USD , eventually settling at around 6.23 USD
• The third crash occurred another seven months later in August 2012, when Bitcoins price fell from a high of 15.25 USD to a low of 7.5 USD.
• Two mini crashes occurred approximately another seven months later in March 2013, when Bitcoins price twice fell from a high of 49 USD to a low of around 34 USD, Bitcoin ended the month on a high note however at above 90 USD.
• The fourth crash occurred a month after these two mini-crashes in April 2013 when Bitcoins Price fell from a high of 266 USD to a low of approximately 54 USD, before settling at a price of around 100 USD around which value it remained until early October 2013
• In early October 2013 the price of Bitcoin once again began to rise, reaching a six month high of approximately 200 USD by the end of the month. Rises in Price continued in November, where the news concerning Bitcoins senate hearing briefly propelled Bitcoins to values of over 1000 usd, before a price correction to approximately 500 USD from where it has since been rising to a current value of approximately 700 USD.
Limits/Criticisms of Bitcoin;
  1. • Bitcoin currently has a transaction limit of 7 per second, due a 1mb per block restriction on Block size, created to prevent block chain bloat. This is quite low compared to Visa’s average of 2000 transactions per second. Bitcoin is currently, however, only averaging one transaction per second, and it is expected that the limit will be removed long before the average number of Bitcoin transactions reaches this point.
  2. • Bitcoins relatively unstable value renders it unsuitable for merchants or as a store of value.
• Supporters of Bitcoin claim that this this relative instability of value only exists as Bitcoin is currently in its introductory stage, and that these fluctuations in value will reach usual levels when Bitcoin approaches it’s true valuation.(estimates of this range from 10 thousand USD per Bitcoin to 1 Million USD per Bitcoin)
• Supporters also point out that services such as Bitpay allow merchants accept Bitcoin while distancing themselves from its risks, as through these services they link the items price in Bitcoins to the conversion rate between Bitcoin and a chosen currency, and through this get paid in their chosen currency, despite accepting Bitcoin.
  1. • Bitcoins once lost are irretrievable. If a Bitcoin key is lost, or the Bitcoins are sent to an inactive or non-existent address there is no recourse by which to re-obtain those Bitcoins.
  2. • Ease of duplicating the Bitcoin code. Although it is impossible to generate fake Bitcoins, critics point out that there is nothing to stop the generation of new and improved versions of Bitcoin, as has already occurred through coins such as Namecoin, or Peercoin.
• Supporters point out several issues with this
• The First school of thought says that Bitcoin has several advantages over altcoins, such as having the greatest amount of services and developers, which form a barrier to success for other crypto currencies. They also point out that Bitcoins great sub-divisibility renders any need for alternate crypto currencies moot, and that if a notable improvement does come out, bitcoin can just build it into their own code.(see colored coins/mastercoin/zerocoin)
• The second school of thought claims that although Alternate coins debuted early enough with significant differences from Bitcoin(see Peercoin, Namecoin, Zerocoin, Primecoin) might manage to capture a portion of the crypto coin market, Bitcoins will remain the most prominent Crypto currency for the foreseeable future.
  1. • Governments/Big banks will not allow Bitcoin to succeed.
• Supporters argue against this point on several fronts claiming;
• Firstly that although some governments might decide to outlaw Bitcoin, or some Big businesses might try to stop it, Crypto currency is a new technology whose time has come and the most such actions will be able to do is to stall/delay the success of Bitcoin, and in the process lose any business generated by Bitcoin.
• Secondly that it would be very difficult to legally stop Bitcoin, as laws outlawing Bitcoin leave several avenues open for lawsuits, and although it might be possible to hinder Bitcoin through inefficient legislation/red tape this would be against a countries best interests, due to potential growth offered by upcoming Bitcoin industries.
edit; some formatting issues occured in the last line, the numbers should go 1 2 3 4 5 6... rather than 1 2 1 2 1 2
The dots and explanation only apply the one point(number) above them not both.
submitted by Bagog- to Bitcoin [link] [comments]

On the Security Economics of Public Blockchains: Why using the Ethereum public chain for STO contracts is not a good idea

by Hendrik C

We coin the term “security economics” to mean the system of economic incentives designed to guarantee the security required for a public chain to operate. For example, with PoW (proof of work), honest miners are incentivized to contribute compute power for mining reward. The higher aggregate hash rate of a network, the more difficult it will be to perform a 51% attack. We will introduce a new framework to analyze this relationship, and study the limiting cases where the current security economic relationship might breakdown.
In a given period T, the blockchain network will release n coins according to its predetermined mining schedule. For example, bitcoin currently reward 12.5 coins per block. Its mining difficulty is adaptively set so it produces 144 blocks per day, with a very small margin of error. Whether total network hashpower is 50 ExH/s or 5 ExH/s, total reward per day is always 1800 bitcoins. Only difference is that the expected reward per hash diminishes when total network hash increases. But hashpower cost money, 50 ExH/s will cost 10 times as much as 5 ExH/s, assuming they’re running on the same kind of hardware. The economic equilibrium is arrived when reward per day (RPD) = cost per day (CPD).
We further breakdown CPD to its components: sunk cost (e.g. cost of the miner) and operating cost per day (OCPD). We make the following postulates about the mining process and miner’s behavior.
1, When price of a coin goes up, temporarily RPD > CPD, new hash power will be introduced as it will be profitable.
2, When price of a coin goes down, but RPD > OCPD, then nothing will happen.
3, When price of a coin goes down so much, that RPD < OCPD, some miners will stop mining, total network hash will fall, until RPD > OCPD again.
4, Mining hardware have a useful life of approximately 2 years, miners would only deploy new hardware if they can cover cost within 1 year of mining.
Assuming the above behavior of miners, in the equilibrium state, the total hash power (per second) of a network is bounded above by the market value of expected reward (per second). To stage a 51% attack on the network, the adversary will need to match all of the existing hashpower on the network. The required investment is approximately equal to the market value of minable coins in 1 year. Take bitcoin for example, a total of 52560 BTC are released to miners a year, which equate to about $189m, assuming $3600 / BTC. The total hashpower of the bitcoin network is about 42 ExH/s, which equates to about 3 million Antminer S9’s. This is what it takes to stage a 51% attack, the cost of staging such an attack is a good measure of how safe a network is.
Would anyone do it? Perhaps not, which is the ingenuity of Satoshi Nakamoto. Assume you did invest $189m, and compromised the bitcoin network. What returns will you get? Sure, you double spend bitcoins, but bitcoins will be worthless when people find out its security is being compromised. The delicate game theoretic equilibrium, which we shall call the Nakamoto equilibrium, is just as important as all the cryptographic wizardry in keeping a blockchain safe.
The Nakamoto equilibrium design has a number of drawbacks, although none of them were of interest for Nakamoto to consider, they do not apply to bitcoin.
1, Nakamoto equilibrium only guarantees the security of the public chain itself, and not the smart contract tokens which runs on it.
2, Out of all the blockchains that use the same hash algorithm, only the one with the most honest hashpower is safe.
We will focus the remainder of this paper elaborating point number 1, and leave 2 to another article.
The utility tokens created in the ICO hype, were predominately ERC 20 contracts executed on the ethereum network. Despite of their huge speculative value, these tokens do not have much intrinsic value right now. They simply represent the access right to a particular utility, which will be built (if ever) far into the future. The aggregate market value of all ERC 20 tokens, have never exceeded that of ethereum. Hence, the hashpower required to guarantee the safety of ethereum is automatically extended to the ERC 20 tokens running on the network.
We now consider a scenario with securities tokens produced from STO’s. A security token represent a share of a securitized asset. These could be company stocks, bonds, buildings, infrastructure etc, indeed everything in the world could be securitized and tokenized on a blockchain. The fundamental difference between securities token and utility token is that securities token have an intrinsic value attached to it. The intrinsic value of a securitized asset could be several times the market cap of the public chain it’s running on.
For example, as of Feb 2019, ethereum have a market share of about $8 - $10 billion dollars. About 7 million ETH is minable a year (before the Constantinople fork), the total value at current market price of $120/ETH is about $840 million. The total network hashpower is 140 TH/s. A Bitmain E3 miner has an advertised performance of 180 MH/s, so total network hashpower is equivalent to about 777777 E3 miners, which would cost roughly $800 million (though the exact cost could be quite volatile). This is how much one would have to invest to stage a 51% attack on ethereum network. If the network consists of only ETH and utility tokens, whose value would plummet if such an attack were to be successful, nobody is incentivized to do so. But (imagine sometime in the future), if the ethereum network has securities token contracts, whose underlying asset worth a total of a trillion dollars, then carrying out such an attack would seem quite profitable.
A new security economic model is clearly required for any public chain to run securities token. The biggest problem with ethereum, is that miners are not incentivized to contribute hashpower, as a function of total market cap of tokens running on ethereum. This is not a problem in the era of utility tokens, when they are worth significantly less than the main ethereum network. In the era of securities tokens however, this will become a significant risk, as securities tokens can easily worth several folds more than the public chain itself. We need to figure out a new economic model, where the public chain’s hashpower is a direct function of total token value running on the public chain.
submitted by True_Chain to ethereumnoobies [link] [comments]

On the Security Economics of Public Blockchains: Why using the Ethereum public chain for STO contracts is not a good idea

by Hendrik C
We coin the term “security economics” to mean the system of economic incentives designed to guarantee the security required for a public chain to operate. For example, with PoW (proof of work), honest miners are incentivized to contribute compute power for mining reward. The higher aggregate hash rate of a network, the more difficult it will be to perform a 51% attack. We will introduce a new framework to analyze this relationship, and study the limiting cases where the current security economic relationship might breakdown.
In a given period T, the blockchain network will release n coins according to its predetermined mining schedule. For example, bitcoin currently reward 12.5 coins per block. Its mining difficulty is adaptively set so it produces 144 blocks per day, with a very small margin of error. Whether total network hashpower is 50 ExH/s or 5 ExH/s, total reward per day is always 1800 bitcoins. Only difference is that the expected reward per hash diminishes when total network hash increases. But hashpower cost money, 50 ExH/s will cost 10 times as much as 5 ExH/s, assuming they’re running on the same kind of hardware. The economic equilibrium is arrived when reward per day (RPD) = cost per day (CPD).
We further breakdown CPD to its components: sunk cost (e.g. cost of the miner) and operating cost per day (OCPD). We make the following postulates about the mining process and miner’s behavior.
1, When price of a coin goes up, temporarily RPD > CPD, new hash power will be introduced as it will be profitable.
2, When price of a coin goes down, but RPD > OCPD, then nothing will happen.
3, When price of a coin goes down so much, that RPD < OCPD, some miners will stop mining, total network hash will fall, until RPD > OCPD again.
4, Mining hardware have a useful life of approximately 2 years, miners would only deploy new hardware if they can cover cost within 1 year of mining.
Assuming the above behavior of miners, in the equilibrium state, the total hash power (per second) of a network is bounded above by the market value of expected reward (per second). To stage a 51% attack on the network, the adversary will need to match all of the existing hashpower on the network. The required investment is approximately equal to the market value of minable coins in 1 year. Take bitcoin for example, a total of 52560 BTC are released to miners a year, which equate to about $189m, assuming $3600 / BTC. The total hashpower of the bitcoin network is about 42 ExH/s, which equates to about 3 million Antminer S9’s. This is what it takes to stage a 51% attack, the cost of staging such an attack is a good measure of how safe a network is.
Would anyone do it? Perhaps not, which is the ingenuity of Satoshi Nakamoto. Assume you did invest $189m, and compromised the bitcoin network. What returns will you get? Sure, you double spend bitcoins, but bitcoins will be worthless when people find out its security is being compromised. The delicate game theoretic equilibrium, which we shall call the Nakamoto equilibrium, is just as important as all the cryptographic wizardry in keeping a blockchain safe.
The Nakamoto equilibrium design has a number of drawbacks, although none of them were of interest for Nakamoto to consider, they do not apply to bitcoin.
1, Nakamoto equilibrium only guarantees the security of the public chain itself, and not the smart contract tokens which runs on it.
2, Out of all the blockchains that use the same hash algorithm, only the one with the most honest hashpower is safe.
We will focus the remainder of this paper elaborating point number 1, and leave 2 to another article.
The utility tokens created in the ICO hype, were predominately ERC 20 contracts executed on the ethereum network. Despite of their huge speculative value, these tokens do not have much intrinsic value right now. They simply represent the access right to a particular utility, which will be built (if ever) far into the future. The aggregate market value of all ERC 20 tokens, have never exceeded that of ethereum. Hence, the hashpower required to guarantee the safety of ethereum is automatically extended to the ERC 20 tokens running on the network.
We now consider a scenario with securities tokens produced from STO’s. A security token represent a share of a securitized asset. These could be company stocks, bonds, buildings, infrastructure etc, indeed everything in the world could be securitized and tokenized on a blockchain. The fundamental difference between securities token and utility token is that securities token have an intrinsic value attached to it. The intrinsic value of a securitized asset could be several times the market cap of the public chain it’s running on.
For example, as of Feb 2019, ethereum have a market share of about $8 - $10 billion dollars. About 7 million ETH is minable a year (before the Constantinople fork), the total value at current market price of $120/ETH is about $840 million. The total network hashpower is 140 TH/s. A Bitmain E3 miner has an advertised performance of 180 MH/s, so total network hashpower is equivalent to about 777777 E3 miners, which would cost roughly $800 million (though the exact cost could be quite volatile). This is how much one would have to invest to stage a 51% attack on ethereum network. If the network consists of only ETH and utility tokens, whose value would plummet if such an attack were to be successful, nobody is incentivized to do so. But (imagine sometime in the future), if the ethereum network has securities token contracts, whose underlying asset worth a total of a trillion dollars, then carrying out such an attack would seem quite profitable.
A new security economic model is clearly required for any public chain to run securities token. The biggest problem with ethereum, is that miners are not incentivized to contribute hashpower, as a function of total market cap of tokens running on ethereum. This is not a problem in the era of utility tokens, when they are worth significantly less than the main ethereum network. In the era of securities tokens however, this will become a significant risk, as securities tokens can easily worth several folds more than the public chain itself. We need to figure out a new economic model, where the public chain’s hashpower is a direct function of total token value running on the public chain.
submitted by True_Chain to EthereumProgramming [link] [comments]

How To Reduce Energy Consumption In The Midst Of Crypto Popularity

How To Reduce Energy Consumption In The Midst Of Crypto Popularity
Electrical energy has become an integral part of everyday modern life. It’s used to power our bulbs and home appliances, trains, and even charge electric vehicles. Globally, its use is rising rapidly as different economies across the globe develop. Therefore, there is a growing need for energy which in turn continually drives the demand for electricity generation. For years now, most of the electricity consumed on a global scale has been generated from three energy sources: fossil fuel, nuclear, and hydro. Renewable energy sources such as photovoltaic (solar power), offer an alternative, albeit small, a share of the world’s electricity. However, our energy sources can have significant environmental impacts.


Cryptocurrency Mining, Then Versus Now
Back in the day, 2009 to be precise, Bitcoin mining was nothing more than a lucrative hobby for several crypto enthusiasts. Miners could leverage their CPUs to mine Bitcoin as they were enough. It was possible because the only hardware needed for mining was a simple computer and the number of miners was significantly low. In fact, in the early stages, Hal Finney and Satoshi were the only ones mining BTC through the use of several computers simultaneously. Satoshi mined 1,000,000 Bitcoins in the first week of the project, courtesy of several computers.
At that time, the difficulty of mining was extremely low. However, over time, the problem has shot up drastically courtesy of Bitcoin’s rules and a change in new and advanced mining hardware. At the start, individuals would use CPUs (Central Processing Units) to mine BTC. CPUs represent the electronic circuitry within a computer.

Back in 2009, a miner would generate bitcoins at a rate of 50 per block. Gradually, people made the shift to GPU mining which was comfortable and lucrative to use. Due to this, GPU mining became extremely popular, and in 2011, people started using them. Soon after, the mining difficulty increased, and by June 2011, people began using FPGAs (Field Programmable Gate Arrays). Shortly after that, in 2013, FPGAs gave way to ASICs (Application Specific Integrated Circuits) that have made BTC mining industrious.
Currently, the Bitcoin mining process requires about 73.04 TWh of computational power to solve complex mathematical equations per year. This equates to about 0.33% of the total global electricity consumption. One Bitcoin transaction on average consumes about 916 KWh of electricity that could power about 31 US households. Mining is no longer lucrative for individual miners as setting up needs specialized mining rigs that are expensive to buy and operate.

For instance, it would set a single Bitcoin miner back around $15,861 to mine one bitcoin in the Cook Islands near New Zealand. The cost rises to about $16,209 in the Solomon Islands located near Papua New Guinea. The prices of mining one Bitcoin further rise in Bahrain, Niue, and South Korea with amounts of $16,773, $17,566, and $26,170 respectively.

Mining creates enormous electricity bills through energy consumption and cooling (and that’s on top of the cost of mining equipment and, nowadays, a facility to house your rows and towers of machines). The current BTC network is estimated to be consuming about 2.55 gigawatts (GW) of electricity annually which is enough to power a whole country. For context, the entire state of Ireland consumes an average of 3.1 GW of electricity.

Potential Consequence of High Non-Renewable Energy Usage
Greenhouse Gas Emissions
The most well-known impact of increased non-renewable sources usage is the production of greenhouse gases mainly CO2 that is believed by many to contribute to climate change (though much of this is politicized hype). Different types of non-renewable energies produce different levels of greenhouse gases. For example, coal provides the highest amount of CO2 emission. It’s important to note that CO2 is plant food (and plants produce oxygen), is what every breathing creature emits when exhaling, and climate change (formerly Global Cooling, formerly Global Warming) is not agreed upon by scientists to be caused by human activity, as there are a myriad of other, likely much more influential factors, such as solar cycles. It’s also worth noting that climate change has always happened, with warmer and colder periods, and what has been hyped up in the last decade is a tiny percentage of what humanity has witnessed, without industry. Predictions of the world ending disastrously in a few short years if we don’t do something politically have fallen flat.
It is worth noting that the above factor will also depend upon how efficient the engines using these fuels are, and filtering systems to reduce emissions. Modern technology can produce very efficient, low emission engines which use fossil fuels.

Token Creation (PoW/PoS/DPoS)
Proof-of-Work (PoW) is a term that’s usually used to denote the kind of concept that the Bitcoin network uses to validate and add transactions to the blockchain. It involves the use of ASICs in mining to solve complex mathematical algorithms otherwise known as PoW problems. Although PoW is excellent against cyber-attacks, it has a major limitation of high electricity consumption. Furthermore, mining rigs require top computing hardware that’s expensive to attain. Some of the projects using the PoW consensus algorithm include Bitcoin, Monero, Ethereum, Ethereum Classic, Bitcoin Cash, Zcash, Litecoin, and DogeCoin. Ethereum is intended to make the change from PoW to PoS via the Casper protocol.

Proof-of-Stake (PoS), on the other hand, is an alternative way of validating transactions or blocks. It was engineered as an alternative to the PoW process that consumes an immense amount of energy. Unlike Proof-of-Work, coins are no longer mined but are forged or minted. Block validation is done by a select group of individuals known as validators. They are chosen depending on the age and amount of stake they hold within the blockchain network. Some of the projects using the PoS algorithm include Dash, QTUM, NEO, NavCoin, Stellar Lumen, Zcoin, and Stratis.

Benefits of the PoS system include:
Less expensive hardware is required.

Transaction times are much faster.

It is energy efficient as it doesn’t consume a lot of energy.

Delegated Proof-of-Stake, otherwise known as DPoS, is a new and alternative protocol to both the PoW and PoS consensus algorithms. It’s mostly considered to be the most decentralized consensus model in existence today. This is mostly because every token holder has a degree of influence about what happens in the network. DPoS uses the power of stakeholder approval voting to promote consensus in a fair and democratic manner. Projects using DPoS include Lisk, Ark, Rise, Tezos, OxyCoin, Shift, Lightning BTC, and EOS, among others.

Conclusion
Blockchain projects around the world can help reduce energy consumption by taking alternative routes in the cryptocurrency mining process. First, blockchain projects can make the switch from the PoW system to the PoS system which is much cheaper and consumes less energy. Secondly, cryptocurrency miners can make the switch to cleaner and friendly renewable sources of energy such as solar energy. Lastly, blockchain networks can incentivize miners to use renewable energy resources by offering additional rewards for those that utilize them.
submitted by JustPowerIT to JustPowerIT [link] [comments]

BitCoin to Benefit the Wealthy Only? Industrialized Mining?

BitCoin prices in 2013 have varied from below $100 to around $1100. Note that I am using BTC-e prices in USD as I find this to be the best indicator of value at for this period and still and more than likely will continue for quite some time.
Some have begun worrying that the increasing prices of mining hardware that's required to stay competitive with the ever growing difficulty that mining may move towards a more industrialized type operation. Examples of this are CEX.io (gHash.io) and CloudHashing.com. Please do not use these services; they are unnecessary if you want to get into the game and are more than likely at any given time among the worst bang for the buck investment. Perhaps more importantly, contributing to to possibility of a 51% attack is just morally wrong to many.
Why is it unnecessary to purchase shares in mining? It appears to not be profitable with other miners? That's not true. AltCoin mining is valid. I would explain, but that's a different discussion. Mining with lesser hardware is still possible in BitCoin, but the market will dictate.
The market is evolving as it grew from nothing essentially and there are many unknowns, but economics says profitability dictates the market.
BitCoin is designed to be released at a certain rate, and if mining accelerates due to bettemore miners, etc, difficulty will adjust higher. If the number of mining investors, or individuals mining, increases scarcity of coins ensues driving price of mining hardware down. This is true as in relation that evolving technology renders older hardware less profitable, or conversely speaking decreasing profitability drives technology evolution.
The Achilles's heel to this equation for the "wealthy" or "industrialized" mining operations is that if Average Joe cannot contribute to the decentralized currency, then they have no stake in investing fiat as well to aid in driving value for companies to profit. BitCoin, like all commodities, loses value if demand decreases. A few companies controlling BitCoin does not equate to a decentralized currency, exactly what BitCoin was meant to eliminate. The educated populous investing time and money into the market will ensure the 51% attack is not possible, and if it does become that way, faith will be lost with the security. To retain value, those industrialized operations will be wise to limit their growth.
The main limiting factors are:
BitCoin Fiat Mining Hardware BitCoin
Alternate Factors
BitCoin AltCoin BitCoin
Like all systems, a state of equilibrium is maintained, albeit short periods of instability, thus the market value stays in a state of homeostasis between the circle of BitCoin > Fiat > Hardware > BitCoin.
12b2UFoNysohKpx1DxaHNUCJowTDm7wesx
submitted by 7x5x3x2x2 to Bitcoin [link] [comments]

Suggestion for correcting Bitcoin's centralization problem

Argument of Bitcoin centralization: Bitcoin is a fascinating story; its mysterious origins combined with an open source, revolutionary method of distributing and securing information make it a really unique and promising technology the entire world can benefit from. When Satoshi began the first blockchain in January 2009 they envisaged a truly decentralized, secure network protected not by steel and concrete but by mathematics, combined with geographic diversity, so that anyone could use, contribute and be rewarded for securing the global decentralized fledgling blockchain.
As time went on industrious miners sought ever more efficient and powerful methods of cracking blocks. The financial reward for the development and implementation of; at first specialized software for GPUs, and later specialized hardware, massively increased the difficulty of finding new blocks. The average home user could no longer compete with their peers, turning instead to pool mining in an attempt to maintain profits and keep the Bitcoin flowing. It was at this point, where miners started pooling resources, centralizing mining efforts and entrusting their precious profits to pool operators that Bitcoin in its original concept began to fail.
The days in which anyone could download the wallet, contribute to network security and be rewarded for their efforts were over. As mining pools grew so did their total hash rate, bringing with it the threat of 51% attacks and chain forking; today the peace kept by pools artificially keeping their hashing power below 51% - a far cry from the mathematically secured, globally distributed system Satoshi envisaged at Bitcoin's inception. In recent months there has been an ongoing argument over block size. Back in the days when Bitcoin mining was highly distributed the community would vote as to which version they would run by running the code of their choice. As centralization wormed its way into the core of Bitcoin the large pools were given more power to decide over the direction development should take - leading to the impasse Bitcoin now faces broadly between miners and users.
All of the above has led to the inescapable conclusion that Proof of Work (PoW) no longer provides the highly distributed, ubiquitously inclusive security model that technology such as Bitcoin requires. This is not a failure of the technology behind PoW, but a failure of the humans (myself included) that employ it to turn a profit and drive the blockchain forward.
Proposal for change: One of the key benefits of Bitcoin in comparison to traditional monetary systems is decentralization. By removing a central issuing authority and placing the generation of new money and processing of transactions in the hands of the majority consensus, Bitcoin has provided hope to those seeking a fair monetary system that isn’t gamed by a controlling minority.
Due to some unforeseeable developments occurring after the launch of Bitcoin, the ugly head of centralization has made an appearance and some changes are necessary if we care to correct it. No longer can an individual run the Bitcoin software on their PC and participate in the Bitcoin network in an influential manner. Mining pools and farms have taken the average individual out of the equation and allowed big players to become the owners of blockchain transaction confirmation and the generation of new coins. Again we encounter control in the hands of the minority with all others forced to follow along, left without a voice. Sound familiar?
To fix this problem, I would like to propose an alternative to PoW for discussion as a solution, Proof of Stake (PoS). Not the traditional PoS you find in Peercoin and its clones, but an evolved and improved version that also addresses and corrects the problems found in traditional PoS. Proof of Stake Participation (PoSP) which is not just and idea, but is a tested and proven product currently employed in an alt coin, Crypto Bullion (CBX). The PoSP white paper can be found here http://cryptobullion.io/white-pape for further details.
Traditional PoS as employed in Peercoin (white paper can be found here https://peercoin.net/whitepaper) was created as an attempt to address some of the issues in PoW, primarily the vulnerability to attack, or manipulation that can occur resultant to centralized majority control. (Peercoin actually employs a hybrid system, which uses both PoW and PoS, but I am just going to discuss PoS.) Additional to this, PoS offers a far more energy efficient solution than PoW for generating new coins and confirming transaction.
Where PoW requires a high hashrate for security, PoS instead requires a high volume of coins being held online in the network to confirm and enforce honest transactions. The idea being that those with larger investment into the network, reflective by their ownership of coins, are most inclined to act honestly as nefarious activity hurts the value of the network and therefore their investment.
The problem however in the traditional implementation of PoS is that it rewards for behavior detrimental to network security. Coin owners are rewarded by interest that is paid on the coins that are held stationary in their wallet for a minimum of 30 days or a maximum of 90 days. Basically, if implemented in Bitcoin, you would have to hold your Bitcoin in your wallet for at least 30 days at which point you could connect to the network and compete to claim interest on the coins you own. A slightly higher interest rate reward would be paid to those who held their Bitcoin stationary for 90 days before connecting and claiming their interest. So instead of mining as we find in PoW, the creation of new coins in PoS occurs via interest payments used as an incentive to encourage coin owners to bring their coins online to the network to validate honest transactions. However since security is dependent on coins being held online at all times, the reward structure of traditional PoS is actually detrimental because it rewards for coins being held off-line.
In contrast, PoSP encourages and rewards for coins for being held online. In fact, only coins held online are eligible for earning the reward and those that are held offline forfeit their share to coins active on the network. This is accomplished first by changing the reward structure to a fixed amount per block instead of a variable based on percent of coins staked. PoSP takes a set annual rate of growth in money supply, divides it by the number of blocks set to be generated in a year and establishes that value as the block reward that is doled out to network participants at the generation of each block. So in order to compete and earn a block reward, one must a) own coins, b) have their coins online and c) accumulate 1-hour of coin age (time their coin is held stationary in their wallet – the 1-hour time requirement helps smaller wallets to compete with larger wallets). The reward encourages people to keep their coins online, and since all coin owners will not do this, it allows for an interest earnings rate that surpasses the annual inflation rate further benefiting those who secure the network and confirm transactions and encouraging more people to participate in the network and further enhance security. As an example, PoSP implementation in CBX averages payouts of about 8-10% per year to network participants while the overall inflation rate remains at 2%.
If employed in Bitcoin, this would allow everyone who owns Bitcoin and an Internet connection the opportunity to participate in the Bitcoin network confirming transactions and generating new coins – reviving the realization of decentralization.
The reward structure could be matched to Bitcoin’s current schedule for growth in money supply and once the 21 million-coin cap is reached, the block reward would transition to be composed solely of transaction fees. Therefore no change is necessary in Bitcoin’s scheduled money supply.
Regrettably, since centralization has already occurred to a certain extent, making this change now means it would have to be agreed upon by those who currently control the blockchain. These are unfortunately the beneficiaries of the centralization that has occurred so they of course will be hesitant to make this change. However, the push for a fair decentralized system is one of the keys that spurred the growth of Bitcoin to begin with, so to ensure longevity of Bitcoin through loyalty of the majority, centralization has to be dealt with and corrected.
edit: added argument to outline Bitcoin centralization claim, courtesy of FiniteRed
submitted by elambert_cb to Bitcoin [link] [comments]

My experience with Eobot, free\paid cloud mining with faucet. Active and paying since 2013

Hi all, I thought I would quickly and briefly share my experience with Eobot so far.
 
I have a GTX 1080ti in my gaming PC and always wondered if it would be worthwhile putting it to work mining whilst I was at work, so I started experimenting with different coins to see if it would be profitable.
 
As the prices and difficulty of mining coins change so rapidly, you never quite get the £ you expect to at setup. After electricity I reckon I was making about £5 a day. That may seem not too bad considering, but I was always worried my GPU would pack in after hearing some horror stories, so gave it up rather quickly.
 
At this point I started looking at cloud mining, there were the obvious big players like Genesis and Hashflare, but Eobot for some reason appealed to me more. You can literally start mining for free using their faucet to get drip fed a small amount of coin or GHS per day. The trick is not to mine coin straight away, but to reinvest your current GHS for more 5 year GHS, this causes exponential growth over time. You have the option to deposit coin and convert them to more GHS as well as using your own hardware to mine their pools, which adds to your hashing power. I added my GTX 1080ti and wasn’t getting great figures so stopped after 3 hours, didn’t spend much time on it so could have possibly improved with some effort.
 
I’ve invested around £55 and currently have 60 GHS this equates to £10.80 a year in terms of what I can gain from the miner. At first glance that seems rubbish, but as I’m currently mining my GHS and not coin, the £10.80 increases daily. As it’s a 5 year contract, I have 5 years of exponential growth, that excites me.
 
Another thing I liked was the “Get out quick” option in the way of a 24 hour SHA-256 4.0 contract, this basically involves using your current SHA-256 5 Year GHS contract and converting it all in to a 24 hour contract. Just pump it all on to doge, wait 24 hours and leave with your coins. At the time of writing this, there are currently 20 coins to choose from, including the biggies like Bitcoin, Ethereum, Ripple & Doge 😊
 
TIP1: it took me a day to realise that Eobot mines bitcoin by default. You need to select the dropdown at the top left of your account screen to select the currency to mine. But as mentioned you really want to choose GHS 4.0 to bump up your hashing power to start with.
TIP2: Use free faucets from other providers to maximise your GHS. I use 2 on a daily basis, these are MoonDoge , FreeDoge
TIP3: If you decide to put cash in to it, keep your eye on the GHS rate, it fluctuates so buy when low.
TIP4: Use referrals to gain small bonuses every so often, every little helps 😊
I’m only scratching the surface and haven’t covered everything, but if you have any questions, I’m glad to help where I can.
Cheers, Kelv.
Note: Eobot wrote - December 19, 2017 -Unfortunately, we have had to remove new sales of GHS cloud mining for USA based customers. This is a result of outside circumstances and there is no plan to add it back in the near future. Your existing GHS will continue functioning like normal.
submitted by KelvClark to dogecoin [link] [comments]

My experience with Eobot, free\paid cloud mining with faucet. Active and paying since 2013

Hi all, I thought I would quickly and briefly share my experience with Eobot so far.
 
I have a GTX 1080ti in my gaming PC and always wondered if it would be worthwhile putting it to work mining whilst I was at work, so I started experimenting with different coins to see if it would be profitable.
 
As the prices and difficulty of mining coins change so rapidly, you never quite get the £ you expect to at setup. After electricity I reckon I was making about £5 a day. That may seem not too bad considering, but I was always worried my GPU would pack in after hearing some horror stories, so gave it up rather quickly.
 
At this point I started looking at cloud mining, there were the obvious big players like Genesis and Hashflare, but Eobot for some reason appealed to me more. You can literally start mining for free using their faucet to get drip fed a small amount of coin or GHS per day. The trick is not to mine coin straight away, but to reinvest your current GHS for more 5 year GHS, this causes exponential growth over time. You have the option to deposit coin and convert them to more GHS as well as using your own hardware to mine their pools, which adds to your hashing power. I added my GTX 1080ti and wasn’t getting great figures so stopped after 3 hours, didn’t spend much time on it so could have possibly improved with some effort.
 
I’ve invested around £55 and currently have 60 GHS this equates to £10.80 a year in terms of what I can gain from the miner. At first glance that seems rubbish, but as I’m currently mining my GHS and not coin, the £10.80 increases daily. As it’s a 5 year contract, I have 5 years of exponential growth, that excites me.
 
Another thing I liked was the “Get out quick” option in the way of a 24 hour SHA-256 4.0 contract, this basically involves using your current SHA-256 5 Year GHS contract and converting it all in to a 24 hour contract. Just pump it all on to doge, wait 24 hours and leave with your coins. At the time of writing this, there are currently 20 coins to choose from, including the biggies like Bitcoin, Ethereum, Ripple & Doge 😊
 
TIP1: it took me a day to realise that Eobot mines bitcoin by default. You need to select the dropdown at the top left of your account screen to select the currency to mine. But as mentioned you really want to choose GHS 4.0 to bump up your hashing power to start with.
TIP2: Use free faucets from other providers to maximise your GHS. I use 2 on a daily basis, these are MoonDoge FreeDoge
TIP3: If you decide to put cash in to it, keep your eye on the GHS rate, it fluctuates so buy when low.
TIP4: Use referrals to gain small bonuses every so often, every little helps 😊 If you would like to give Eobot
I’m only scratching the surface and haven’t covered everything, but if you have any questions, I’m glad to help where I can.
Cheers, Kelv.
Note: Eobot wrote - December 19, 2017 -Unfortunately, we have had to remove new sales of GHS cloud mining for USA based customers. This is a result of outside circumstances and there is no plan to add it back in the near future. Your existing GHS will continue functioning like normal.
submitted by KelvClark to cexio [link] [comments]

My experience with Eobot, free\paid cloud mining with faucet. Active and paying since 2013

Hi all, I thought I would quickly and briefly share my experience with Eobot so far.
 
I have a GTX 1080ti in my gaming PC and always wondered if it would be worthwhile putting it to work mining whilst I was at work, so I started experimenting with different coins to see if it would be profitable.
 
As the prices and difficulty of mining coins change so rapidly, you never quite get the £ you expect to at setup. After electricity I reckon I was making about £5 a day. That may seem not too bad considering, but I was always worried my GPU would pack in after hearing some horror stories, so gave it up rather quickly.
 
At this point I started looking at cloud mining, there were the obvious big players like Genesis and Hashflare, but Eobot for some reason appealed to me more. You can literally start mining for free using their faucet to get drip fed a small amount of coin or GHS per day. The trick is not to mine coin straight away, but to reinvest your current GHS for more 5 year GHS, this causes exponential growth over time. You have the option to deposit coin and convert them to more GHS as well as using your own hardware to mine their pools, which adds to your hashing power. I added my GTX 1080ti and wasn’t getting great figures so stopped after 3 hours, didn’t spend much time on it so could have possibly improved with some effort.
 
I’ve invested around £55 and currently have 60 GHS this equates to £10.80 a year in terms of what I can gain from the miner. At first glance that seems rubbish, but as I’m currently mining my GHS and not coin, the £10.80 increases daily. As it’s a 5 year contract, I have 5 years of exponential growth, that excites me.
 
Another thing I liked was the “Get out quick” option in the way of a 24 hour SHA-256 4.0 contract, this basically involves using your current SHA-256 5 Year GHS contract and converting it all in to a 24 hour contract. Just pump it all on to doge, wait 24 hours and leave with your coins. At the time of writing this, there are currently 20 coins to choose from, including the biggies like Bitcoin, Ethereum, Ripple & Doge 😊
 
TIP1: it took me a day to realise that Eobot mines bitcoin by default. You need to select the dropdown at the top left of your account screen to select the currency to mine. But as mentioned you really want to choose GHS 4.0 to bump up your hashing power to start with.
TIP2: Use free faucets from other providers to maximise your GHS. I use 2 on a daily basis, these are MoonDoge FreeDoge
TIP3: If you decide to put cash in to it, keep your eye on the GHS rate, it fluctuates so buy when low.
TIP4: Use referrals to gain small bonuses every so often, every little helps 😊 If you would like to give Eobot
I’m only scratching the surface and haven’t covered everything, but if you have any questions, I’m glad to help where I can.
Cheers, Kelv.
submitted by KelvClark to CryptoCurrencyTrading [link] [comments]

Peercoin Is The Backbone Of The Cryptocurrencies

Source: http://cointrader.org/peercoin-proof-of-stake-and-bitcoin/
Peercoin Isn’t Just Another Bitcoin Clone..
Regardless of your opinion of Peercoin, if you have one at all, it definitely sets it’s self apart from Bitcoin by incorporating key changes into the protocol.
In reality, most crypto-coins are an imitation of Bitcoin in a fundamental fashion, but once you take the time to understand precisely how Peercoin has differentiated itself to be positioned within the crypto market – You’ll realize just how dramatically different it is, and that it very much stands on it’s own in terms of innovation contributed to this digital currency evolution.
It seems obvious by now that there will be far more than one single crytpocurrency around for quite some time. As the market matures, they’ll all mold to coexist with each other – This, of course, remains to be seen, but either way, Peercoin is designed to play a specific role in a developed future ecosystem of cryptocurrency, and if it succeeds in that role it could become better than Bitcoin at one important function – a long term store of value.
And this is where many confuse Peercoin’s future and potential, as it’s often cited that Peercoin doesn’t function well for day-to-day transactions – and therefore isn’t of much use a cryptocurrency. Or that’s how the narrative goes, assuming a “one crypto take all” scenario. While it’s true that purchasing a new laptop computer on Overstock.com isn’t what Peercoin is best suited for, and that’s intentional in the design, it’s because it is intended to be used in tandem with other coins that’s fee structure and transaction times are far better suited to smaller, more frequent transactions.
In designing Peercoin, SunnyKing assumes that the crypto landscape will indeed resemble current financial markets. In that multiple financial instrument will differentiate themselves enough through various mechanisms such as interest rates and fees, among other things, in order to provide enough value on their own merit to justify a place in the markets for themselves.
If this indeed turns out to be the case, then Sunny King’s foresight could prove ingenious and Peercoin could very well adapt to become the “backbone” of cryptocurrency. In effect, Peercoin or “PPC” looks to be the bonds and treasuries market of the crypto world.
At this point, we’ll remind you that Peercoin’s poor suitability for frequent transactions was intentional, and could potentially provide some much needed stability to the cryptocurrency markets. It is truly intended for use as a long term store of value. Admittedly, it does seem somewhat puzzling at first that transaction fees are set to operate in the manner that they do.. but after seeing the bigger picture, and how the fee works in cooperation with interest that incurs simply for holding your Peercoins, it all starts to make a bit more sense.
For one, the fee mechanism could potentially calm much of the volatility seen in Bitcoin. This is huge, and one of the main reasons Bitcoin hasn’t been as widely accepted as should be at this point. Market volatility has been an ongoing trait of the crypto markets and Peercoin looks to be the solution that’s needed. The transaction fee combined with the slightly inflationary nature of PPC could simultaneously provide deterrent of transactions, and incentive for holding, providing the stable, less volatile currency that could actually serve as the “backbone” of the market.
In short, the transaction fees only seem out of place before you realize exactly what Peercoin is attempting to become. A mechanism that increases the currencies stability is rather desirable once you understand that PPC is meant to serve as a type of “buffer” for the entire crypto ecosystem – and that’s exactly what the “high” fee does.
It also means that if PPC ever soars to $10,000 (only exploring hypotheticals, here..) then buying $100 worth of PPC would do nothing more than cover your transaction fee. This creates an interesting dynamic and fairly high barrier to entry that even further demonstrates Peercoin’s intent to serve as a long-term store of value, rather than a transfer of value.
We’re not arguing that Peercoin’s slightly inflationary nature is either a positive or negative feature for a cryptocurrency. Only that inflation isn’t inherently a bad thing as many may assume. It’s centralization that enables the abuse and manipulation of inflation that is inherently a problem. The bottom line is PPC’s inflation rate is purely a function of the holder of the coins receiving that 1% interest for securing the network. This is good inflation, and one of Peercoin’s many strong suits. So while the money supply grows.. just like dollars, the main difference is the fact that your stake in said money supply grows, as well. So there is inflation in the money supply, but no purchasing power whatsoever is lost by the coin holders.
To start, something that many don’t realize is that Peercoin is very literally an evolution of Bitcoin. Proof of stake was born out of concerns that a full proof of work system, such as the one Bitcoin utilizes, could be fundamentally flawed in that miners won’t have sufficient incentive to keep the network secure when block rewards inevitably diminish. This unknown hypothetical has become known in Bitcoin circles as “The Tragedy of the Commons”, and is one of the major long-term problems with Bitcoin.
That said, a fully proof of stake system has it’s potential detriments, as well. Mainly, the initial distribution of the coin supply is rather difficult if you take mining out of the equation. There are full proof of stake coins such as Nxtcoin that have attempted to accomplish the difficulty of initial distribution of a full proof of stake coin by simply selling the initial coins in an ad hock ipo of sorts. We’ll talk more about this, and Nxt, in general, in an upcoming article, but for now..
Peercoin takes the approach of combining the “best of both worlds”, and holds the distinction of being the first hybrid PoS/PoW crypto coin. Peercoin started off being mined just like Bitcoin, then will gradually transition to a mostly proof of stake platform. This allows PPC the considerable benefits of PoS while still maintaining an initial distribution that’s widely considered fair and acceptable for a decentralized digital currency.
Does energy consumption matter?
We certainly can’t definitively answer that, as it seems to be a matter of perspective more than anything else. But it does seem rather inevitable that it will eventually become a heated issue. Whether it should be or not is up for debate and entirely irrelevant to those will most likely use it as a talking point to grab ratings, or page views. It would only seem to align with the current political climate, that Peercoin’s ability to claim itself to be the “green” and “sustainable” coin will indeed turn out to be a considerable asset.
Recently, Forbes reported that the Bitcoin network currently costs north of 15 million dollars a day, and stories like this are likely to become more and more prevalent as the mining network gets larger, and thus consumes vastly more electricity and resources. The movement against Bitcoin energy consumption is only just getting started, and since Peercoin effectively alleviates the energy problem all together – things could get interesting.
While, due to it’s hybrid proof of work and proof of stake design, Peercoin currently does require mining and electricity, but it’s designed to transition away from PoW (requires mining) completely, as soon as there are enough stake holders to secure the network with a fully PoS system. That means that the electricty bill for PPC will gradually decrease, while BTC’s bill will only continue to climb to potentially absurd levels.
ASIC mining end result is Bitcoin centralization.
Sad but true. When Satoshi Nakamoto created Bitcoin, it’s likely he didn’t anticipate the arrival of ASIC computers designed specifically for mining. ASICS have simply changed the game, and now BTC mining is prohibitively expensive and is becoming more centralized everyday.
Mining pools have started to garner so much of the hashing power that they could potentially pose a threat to the network. This is no empty, down the road threat either. A quick check of Reddit will produce multiple current accounts of concerns of the largest BTC mining pools coming dangerously close to controlling 51% of the hashing power.
If you’re not familiar, if any one entity gains 51% of the BTC network hashing power, then it can attack the network and cause unknown damage. Whether one of these attacks will ever actually occur or not is unsure, but the fact that the mining aspect of Bitcoin puts control of the value of the network into the hands of a few pools, and makes it susceptible to centralization, is a real cause for concern. Because if history is to serve as an example, then if it can be centralized, then it will be.
Sunny King, the Peercoin designer, has stated that the Fee amount is not fixed. If the value of Peercoin goes higher he will consider lowering the Fee. He states that the Fee should be high enough to prohibit spam dust but low enough to not inhibit legitimate use.
Some initial inflation is necessary to create Peercoin in the beginning, but in the long term inflation is not necessary.
Peercoin is not inflationary or deflationary. Peercoin is balanced. It is true that there is a 1% reward for minting Proof-of-Stake blocks but this gain is balanced by the .01 PPC Transaction Fee loss per 1K of transactions. The Transaction Fee is destroyed. So, Peercoin is created and destroyed; there is a balance of creation and destruction in the long run.
Thus, the cost to the Peercoin network per Transaction is near zero. This will allow Peercoin network security to remain strong indefinitely into the future.
submitted by crypto_coiner to peercoin [link] [comments]

[uncensored-r/Bitcoin] Power consumption might be the death of BTC

The following post by nowonmai is being replicated because some comments within the post(but not the post itself) have been silently removed.
The original post can be found(in censored form) at this link:
np.reddit.com/ Bitcoin/comments/7gc8fq
The original post's content was as follows:
With all the exuberance over the continual stream of ATH never-ending meme-fest that goes along with it, it seems that the citizens of /bitcoin only focus on good news. There is a pretty dark shadow hanging over the future of BTC, and any other proof-of-work crypto, and that is power consumption. Any time this topic comes up, there are maybe 10 semi-serious replies and the topic rarely gets above double-figure upvotes... seems like nobody wants to have their happy place invaded by reality.
So... some facts... today, the energy expenditure per transaction block is 275kWh (Source: https://digiconomist.net/bitcoin-energy-consumption) which is apparently the daily energy consumption of 9.3 US households... which in itself is a pretty high level of consumption. This is for one block. So the 0.05 BTC I sent my brother a couple of days ago cost (using my local energy costs) anything up to €38.50, which is (a) much more than the current TX fee, and much much more than the cost of the energy in whatever country the block was actually mined. The energy consumption, and more importantly, the CO2 output is, however, the same, being ~ 0.205 metric tonnes. (Source: https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator)
Yes, there is a renewable component to this energy consumption, but by and large, mining concentrates in areas of low energy cost, and that generally equates with fossil-fuel burning. This may change in the future, but it will be slow... possibly too slow.
Based on current transaction rate increase, current difficulty increase and current world energy production, there is an intersection point somewhere in the future where the energy demands of BTC transaction verification exceeds available energy resources. Add to this the fact that mining is a wholly consumptive process. It produces nothing except heat. Yes, it produces valid blocks, but only one block is valid... all other computation during that block cycle is completely wasted
People get hung up on various hard-forks, fake news and propaganda campaigns, attempts at regulation and control by state and other entities, but the real threat is sustainability. If this isn't addressed, that will be the death of BTC.
submitted by censorship_notifier to noncensored_bitcoin [link] [comments]

Valuing Bitcoin: this got no love when I posted a year ago, but just re-read and I still think it provides a useful framework that I've not seen elsewhere (which is odd because it seems obvious)

Background: A lot of the discussion on bitcoin value is IMO lacking in a proper analytical grounding. People throw out random numbers, or say you should look at the market cap of visa etc, without providing any rationale. I'm not an academic, but I studied economics and spend my day valuing companies so I have a degree of expertise. I also did a bit of research to understand better the dynamics of other currencies to which I compare certain attributes, e.g., velocity. Note that this is over a year old so the numbers are a bit out of date but that shouldn't make much difference to the basic analysis. The link to the article on scribd is here...
http://www.scribd.com/doc/217902157/Valuing-Bitcoin
... and I've inserted the full text here (I guess the formatting will not be great)..
Valuing Bitcoin
Summary: I use a very simple model of transaction value, bitcoin velocity and the number of bitcoins in use to derive a fair value for a bitcoin today. Rather than trying to analyse in detail the likelihood of and means by which bitcoin may become more widely adopted, I use a scenario analysis that allows us to take a ‘finger in the air’ approach to estimating the likelihood of Bitcoin’s success or failure. Taking this approach we can back-calculate to work out what is implied in the current valuation of bitcoins in terms of likelihood of adoption, or other key variables.
This is primarily a simplified framework to help elucidate the fundamentals that drive the value of bitcoins. The assumptions herein are very ‘back of the envelope’ and are principally for exposition.
  1. First principles
The value of a single bitcoin is related to the value and velocity of transactions made using bitcoin, and the volume of bitcoins in use.
The value of transactions made with bitcoin. Let’s say we assume that bitcoin will succeed in becoming the payment choice for US$100bn of transactions per year. Let’s also first assume that this US$100bn takes the form of one single transaction – say to buy all of the outstanding stock of Facebook. In order for this to be possible, the entire market value of Bitcoin would need to be at least US$100bn. For argument’s sake, let’s say someone managed to accumulate all of the bitcoins in existence (ca.12.5 million today) and used them to make this transaction, then we can infer that the value of a single bitcoin, when this transaction happens, is $8,000.
The velocity of transactions made with bitcoin. Let’s take the same example above, but this time let’s assume that rather than one transaction, it takes the form of two transactions – let’s say to buy ‘whataspp’ and ‘wechat’, for the equivalent of US$50bn each. Let’s further assume that the seller of whatsapp, uses the US$50bn of bitcoins he has received, to buy wechat. How much does Bitcoin need to be worth to facilitate this series of transactions? Hopefully one can see that at the very least, it needs to be worth $4,000, half of the example above, because the same bitcoins could be used twice. Therefore, the same ‘value’ of transactions has been facilitated, US$100bn, but depending on the number of times the same bitcoin can be used the implied value of bitcoin can differ.
The volume of bitcoins in use. The previous two examples have assumed that the whole outstanding stock of bitcoins is being used to facilitate the transactions. This is unlikely to be true. It is very likely that a good number of bitcoins have been ‘lost’ – ie., stuck on hard drives thrown into landfills, etc. Let’s assume there are 2.5 million lost bitcoins – the value in our first example would then have to be US$10,000. Moreover, clearly a lot of people today hold bitcoins as a store of value, or perhaps more accurately, as a speculative investment. The number of bitcoins genuinely in circulation, therefore falls still further.
  1. Arriving at a formula to determine the value of a bitcoin
Using the basic principles outlined above, we can generate a simple formula to describe the value of a bitcoin as such:
1 btc = T/V/U
Where T = transaction value V = velocity U = no. of bitcoins in use
This is obviously a simplification, so we need to explore each aspect in greater detail to understand how to use it properly.
2.1 Transaction value (T)
How do we determine transaction value in the real economy? The obvious place to look is GDP, the most widely used measure of economic activity. It measures the value of all final goods and services consumed in an economy. Does this equate to the value of transactions in the economy? No – because before a good is finally consumed there are typically many other transactions going on to facilitate its transformation from raw material, to intermediate good, to finished good, to consumption by end consumer. The advantage of GDP, however, is that it is relatively easy to measure. Estimating the value of all transactions, on the other hand, is very hard and is a problem economist have recognized for a long time. That is not to say there aren’t estimates: a September 2013 white paper by Mastercard estimated the total value of transactions globally in 2011 as $592 trillion, compared to global consumer payments / GDP of $63 trillion. This may well be a good ballpark figure, however for our purposes we can probably just stick to measures of GDP. Why? Because, faced with this measurement issue, economists have worked around it to base their analyses on GDP, and therefore as we try to compare bitcoin value versus, say, the USD, it makes sense to use the framework most commonly used.
It is important to understand, however, that because of this framework only bitcoin transactions that are used in the final consumption of goods and services count towards our measure of ‘T’. Trading of bitcoins, or international remittances, for instance, do not count.
2.2 Velocity (V)
Given the difficulty in measuring the value and volume of transactions in an economy, it is quite difficult to measure velocity directly, in an accurate or meaningful way. To get round this problem economists take a different approach, which is quite useful for our purposes. Rather than measure velocity (V), we measure the ratio (k) of all cash balances in the economy (coins, notes, bank deposits – M1 money) to a measure of transaction volume, in this case GDP. By means of illustration, this ratio for the US today is about 14%. This means that to support the USA’s GDP of $16 trillion, roughly $2.3 trillion needs, at any one time, to be sat in bank accounts, in people’s wallets or under the mattress. Put simply this measures how much people and businesses like to keep on hand for everyday consumption. The rest of their savings can go into non-cash savings vehicles, like a house, or the stock market.
The velocity of money V can be seen as the inverse of k – i.e, each dollar of that $2.3 trillion would need to be spent around 7 times in the year to generate the $16 trillion in GDP. This in reality is a simplification, but we can work with it to come up with comparable assumptions for bitcoin.
2.3 Bitcoins in Use / Money supply (U)
In order to work out the velocity of money in the US economy, economists need to know the money supply. Figuring out the money supply in fiat currencies is more complex than for bitcoin – this is because there are different types of fiat money – it can be in the form of coins and notes, or in basic bank current accounts, savings accounts, fixed deposits, etc. In the example above we calculated the velocity of M1 money – that is coins, notes and demand deposit bank accounts.
Bitcoin is just bitcoin, and we know there have been ca. 12.5m bitcoins mined. That being said, it is not so straightforward to determine bitcoins ‘in use’. For one, there are all the lost coins. In the analysis herein I have assumed 2.5m have been lost (or, more accurately, private keys lost). There is also the question of how to treat those bitcoins that are being held for investment purposes. M1 is sort of a measure of ‘ready cash’ – a description that does not really apply to most bitcoins. In reality, most bitcoin holders probably treat some portion of their stockpile as ‘ready cash’, and the rest as investment. It is this ‘ready cash’ proportion that is of interest in calculating U.
  1. Estimating a value for bitcoin
With the above analysis in place, it is easy to start understanding the implications for the value of bitcoin. For example, if the US were to switch to a pure bitcoin economy today, and the velocity of bitcoin was the same as for the dollar, then we can say the value of a single bitcoin would need to be:
Btc = T/V/U = 16 trillion / 7 / 12.5 million = $183,000
3.1 The value of bitcoin based on today’s usage
Estimating T, V and U:
T. It is quite hard to estimate what T is today. We know the total transaction value from the blockchain, but most of this is exchanging bitcoin for other currencies or transfers between accounts. This doesn’t count in our estimate of bitcoin ‘GDP’. We do know it must be quite low – the most well known retailer accepting bitcoin, Overstock.com, takes in about $1m in bitcoin sales per month, so $12m per year. Let’s estimate, finger in the air, that total real world goods and services transactions in bitcoin are $1bn per year – this may well still be high.
V. It is very difficult to estimate velocity for those bitcoins that are in use as ‘currency’. It seems a fair assumption, however, that the velocity is slower than for USD, since there are simply not many bitcoiners out there buying and selling stuff. Again, with a finger in the air, let’s assume velocity of bitcoin today is 1 (compared to around 7 for the USD).
U. we know there have been around 12.5 million bitcoins ever mined – but are they in use? Certainly, some have been lost, so we should definitely remove them from our calculation of U. What about coins that are being used for speculative investment? Are they in use, but just very slow moving? We could choose to look at it that way, but I would rather assume that people using bitcoin see some of their stockpile as being ‘for investment’, and some as for everyday spending. Those that are for investment are really more like houses or stocks and bonds, and therefore not really part of U. Over time, as bitcoin approaches its long term price we would expect that people would hold bitcoin less as an investment, and therefore bitcoins in use would rise. For now though it seems clear that most bitcoins are being held for investment. Again, it is impossible to say what proportion, but I think it is high – say at least 80%. If we assume that 2.5 million bitcoins are lost, and that 80% are for investment, that means that only 2 million are ‘in use’.
These finger in the air assumptions give us the following as a minimum value required to support the value of btc transactions in the economy today:
Btc = T/V/U = 1bn / 1/ 2mn = $500.
Of course, we know the value of bitcoin today (ca $422 as of 12 April 2014), so we could back calculate the value of an individual variable. Since the average value of bitcoin over the last year or so is in the $500 range, these assumptions look plausible.
The true, fair, value of bitcoin today, however, given that most people are holding it as an investment, is clearly based on future expectations of its adoption and usage. Below, therefore, I build up some basic assumptions about what that could look like, to derive a very rough, back of the envelope type calculation for the real value of one bitcoin.
3.2 Estimating a fair value for bitcoin
Obviously, it is very unlikely that bitcoin will replace the US dollar, so we need to arrive at some sort of reasonable assumptions for what might happen.
For the purposes of this exposition, I will focus on where bitcoin could be in 5 years time. This is a close enough time frame to feel comfortable making some sort of prediction. Of course, the full potential of bitcoin may not be realized for 10 or 20 years or more, however in order to be conservative and to keep the assumptions at a level where people can have a good gut feel for whether they are realistic or not, let’s stick to 5 years.
I’m going to use three scenarios: 1. Crash and burn – where bitcoin is dead in 5 years – no one is using it at all – it just didn’t live up to the hype, there are a couple more gox like scandals and the original evangelists have moved onto new things 2. Nice but boring – bitcoin continues its slow but steady rise, but there is no exponential take off and usage remains confined to online payments by the relatively tech-savvy and libertarian 3. To the moon – bitcoin reaches critical mass, usage becomes easy, widely accepted and the wider population starts to understand it better. In developed markets it takes meaningful market share in online transactions and is beginning to make meaningful inroads in offline payments. In some emerging markets it is trusted more than the local currency, and adoption rates are soaring.
Basic considerations on U
I don’t know the answer to this, someone probably does, but let’s assume that in 2019 there have now been 15 million bitcoins mined. Let’s assume 2.5 million are still lost, so there are 12.5 million bitcoins, either being used as an investment or as currency.
Scenario 1 – Crash and burn
In our equation T = 0 (or very close to 0) therefore:
1 btc = 0/V/U = $0
Scenario 2 – Nice but boring
Let’s say that bitcoin takes 1% of online spending, and basically zero offline spending. E-commerce in 2019 is expected to be valued at around $3 trillion. Therefore we assume T = $30bn. Remember we estimated that T today is around $1bn.
Since there is a material amount of spending happening now, let’s assume that V has doubled to equal 2.
In this scenario it is likely that most people are still holding bitcoin as an investment, hopeful of future price increases, however it has been almost 10 years since bitcoin was founded, bitcoin are a lot easier to spend and after holding for so long people are now more willing to spend them. There are probably a decent number of second stage adopters using bitcoin just as an online payment vehicle, not for investment. So let’s assume that just 70% of bitcoins are held as an investment, and therefore there are 3.75m being used for transactions. Therefore:
1btc = 30bn/2/3.75m = $4,000
Scenario 3 – To the moon!
In this scenario bitcoin has really taken hold, particularly online, where 20% of transactions now use bitcoin. Offline uptake is slower, but gaining traction. Let’s say 1% of offline transactions in developed markets use bitcoin. In emerging markets, where currencies are volatile, and where a lot of people have been receiving remittances in bitcoin from relatives abroad, offline uptake is greater, let’s say 2%.
Online transactions – 20% x $3 trn = $600bn Developed world offline – 1% x $45trn = $450bn Developing world offline – 2% x $30trn = $600bn
T = $1,450bn
In this scenario spending has really taken off, so let’s assume velocity (V) has now reached 5.
Of the 12.5 million coins in existence now, a good chunk are actually being used for real world transactions, so let’s say only 50% now are being held for investment – i.e., U = 6.25m.
1 btc = $1450bn / 5 / 6.25m = $46,400
Probability of occurrence
To estimate our bitcoin value, we take a weighted average of the values produced by each scenario, based on an assumption about the likelihood of each coming to pass.
Scenario Btc value Likelihood Weighted value 1. Crash and burn $0 50% $0 2. Nice but boring $4,000 45% $1,800 3. To the moon $46,400 5% $2,320 100% $4,120
Therefore, if you accept the assumptions above, and the probability attributed to each scenario, the probability weighted value of a single bitcoin in 5 years time will need to be $4,120.
Time value of money
To reach a valuation for a bitcoin today, we need to discount backwards from the value in 5 years time. This is very simple, since we do not need to discount heavily as we have already considered the ‘risk’ within our scenario analysis. The only discounting we need to do is therefore at the risk free rate, which is usually taken to be the yield you would get if you held a US Treasury bond of similar duration. Let’s say this is 3%. Discounting $4,120 back to today we therefore arrive at our final ‘finger in the air’ value for one bitcoin today:
1 bitcoin = $3,554
  1. Implications of the current btc value
As of April 12 2014, the value of one bitcoin is around $420. We can take this value and, holding other assumptions as they are, solve for a single variable to see what might be happening.
For instance, perhaps I am being unfair in treating some bitcoins as out of use. If we solve for U, taking $422 as the value of one bitcoin, the implied number of bitcoins in use is 43 million – an impossible number. Let’s assume that in 2019 all 15 million bitcoins ever mined are ‘in use’, and that the velocity of transactions stays the same. If so, the value of 1 bitcoin today ought to be $1,222.
If we solve for the probability of scenario 1 happening (keeping the ratio of the likelihood of scenario 2 and 3 the same), we discover that today’s $422 valuation implies a likelihood of bitcoin ‘crashing and burning’ of 94.06%.
submitted by yingguoreninchina to Bitcoin [link] [comments]

Bitcoin basics: What is the difficulty target and how does it adjust itself? How to earn more than $ 1000 per month. Cloud Bitcoins High Security Mining Following Bitcoin’s Hash Rate Network Difficulty Is About to Set a New Bitcoin Mining Profits - YouTube Why Bitcoin Mining

Before we even begin to understand what bitcoin mining difficulty means, we need to know how mining works. We have covered this topic in detail before, so we will just give you a little overview before getting into the different nuances of difficulty. Following that, we will look at how mining difficulty is calculated and how it changes to suit the network’s needs. The hash rate increase was largely helped by the fact that the bitcoin mining difficulty adjusted to make it easier for miners to mine blocks at a rate of 10 minutes per block. The difficulty adjusts every 2 weeks and it changes the difficulty of mining according to the hash rate level to make it so that miners are mining blocks every 10 minutes. Bitcoin Network Difficulty over the past 180 days. Many other coins have implemented more frequent difficulty adjustments. A common DAA for Equihash coins like ZEC and ZEN is DigiShield v3 which ... The increase in mining difficulty warrants an increase in the network’s hash rate, which in turn improves security and makes Bitcoin more appealing to the big players. These big players bring in money and cause a rise in demand, and what follows is a corresponding increase in the crypto’s market value. Difficulty increase prediction [ % ]-3.8%: Next retarget [ in days ] #DIV/0! Network hash rate [ tera hashes / s ] 6,354,669: Last update [ UTC ] 10/26/2020 9:59:33: bitcoin difficulty chart. What is bitcoin difficulty? Bitcoin difficulty is an estimate about how difficult it is to mine (find) a new bitcoin block. Bitcoin mining has two main purposes. One is adding transactions to the bitcoin ...

[index] [31985] [33553] [50137] [49242] [45263] [7731] [1804] [48425] [18650] [4968]

Bitcoin basics: What is the difficulty target and how does it adjust itself?

Q: What is no Difficulty Increase? A: We can guaranteed profit (fixed rate 0.0009USDT/1GHS/day) and increase 5% for 15 years, Q: Why you can guaranteed profit ? 01:18 Market Update 02:18 BTC Difficulty and Hash Rate Drop 05:01 Satoshi Nakomoto Won't Sell Bitcoin 07:28 eToro Market Analysis 10:59 Paxful in India 13:36 IOST NFT Collectibles and Mystery Box ... Take a look inside of my Lifestyle Galaxy dashboard to check my profits from my bitcoin mining contract. Monthly updates. Want to start mining your own bitco... Hash rate is used as the speed indicator of a machine that mines Bitcoin on the Blockchain. The higher the hashrate number on a machine, the faster it will solve complex equations and find blocks ... This video is unavailable. Watch Queue Queue. Watch Queue

#