Crypto Crashes

[RafPinto]

1 hour ago, RafPinto said:

That's my Shell

 

Doing extremely well.

Last purchase was around 6 months ago at 16,15£

Now at 24,08

[ThailandRyan]

The Nasdaq (^IXIC) and bitcoin have been trading in lockstep with the highest correlation on record. This suggests that for bitcoin to rally, it would need either to decouple from stocks or the two would need to trade higher together.

And amid extreme negative sentiment and price action in stocks, we're beginning to see some bullish calls from Wall Street.

[RafPinto]

If BTC closes below 29k, it doesn't look good.

[lkn]

3 hours ago, ozimoron said:

You're confusing bitcoin mining with bitcoin transactions

Mining is adding transactions to the blockchain, and with a proof-of-work blockchain this must be expensive, as the security relies on it.

 

I would even say that to have a secure proof-of-work blockchain, it must be more expensive to add blocks to the chain, than the value being protected (i.e. the transactions in the block added).

 

This is not just theoretical, “smaller” blockchains (like Bitcoin Gold) have suffered majority attacks. In practice what happens is that I transfer $10M worth of crypto to an exchange, convert it to another coin, and when I have moved these coins away from the exchange, I revert the transaction to the exchange, which I can do, if I can produce blocks faster than the other miners, which comes down to how much energy does it take, to produce these blocks.

 

The reason that making it more expensive to add transactions, than the value of these transactions, is currently working, is because new bitcoins are issued to the miners, so in theory all holders of bitcoin pay for these transactions (via inflation), and so far, this has not been a problem, since despite issuing 27,000 new bitcoins per month (paid to the miners to run the network), price was (until 6 months ago) still going up.

Edited May 18, 2022 by lkn

[fdsa]

4 hours ago, GrandPapillon said:

yep, new regulation from SWIFT, a PITA

Is it official? Could you share any announcements or documents from SWIFT regarding this?

Do I understand correctly that p2p SWIFT transfers are over now?

 

4 hours ago, GrandPapillon said:

but using crypto to replace a broken system with another insecure broken system like cryptos is not an option either

no, it IS an option. After I have cryptos in my wallet _I_ decide what to do with them, not some clerk in the bank.

 

4 hours ago, Walker88 said:

Oh if you put it THAT way, then I guess it's worth burning more energy in one transaction than the typical US house uses in 28 days, or mining btc, which uses more energy that many major corporations use in all of their activities. I mean, if that isn't worth it to save fifty bucks, what is?

please get a bit less ignorant and learn about different cryptocurrencies other than Bitcoin.

Edited May 18, 2022 by fdsa

[GrandPapillon]

1 hour ago, fdsa said:

Is it official? Could you share any announcements or documents from SWIFT regarding this?

Do I understand correctly that p2p SWIFT transfers are over now?

it's a US Treasury change for ALL transactions in USD, even for broker accounts, they have increased regulatory scrunity.

 

I had one of my Futures (CFTC) account shutdown because they wanted all kind of stupid new documents I never had, and yet I had run that same Futures trading account since 2010 without a problem. 

 

1 hour ago, fdsa said:

After I have cryptos in my wallet _I_ decide what to do with them, not some clerk in the bank.

in absolute terms, you never own currency or money, they belong to a nation, not to you. You are always the temporary holder, not the owner. Legally, all the USD notes all belong to the Federal Reserve.

[ozimoron]

7 hours ago, lkn said:

Mining is adding transactions to the blockchain, and with a proof-of-work blockchain this must be expensive, as the security relies on it.

 

I would even say that to have a secure proof-of-work blockchain, it must be more expensive to add blocks to the chain, than the value being protected (i.e. the transactions in the block added).

 

This is not just theoretical, “smaller” blockchains (like Bitcoin Gold) have suffered majority attacks. In practice what happens is that I transfer $10M worth of crypto to an exchange, convert it to another coin, and when I have moved these coins away from the exchange, I revert the transaction to the exchange, which I can do, if I can produce blocks faster than the other miners, which comes down to how much energy does it take, to produce these blocks.

 

The reason that making it more expensive to add transactions, than the value of these transactions, is currently working, is because new bitcoins are issued to the miners, so in theory all holders of bitcoin pay for these transactions (via inflation), and so far, this has not been a problem, since despite issuing 27,000 new bitcoins per month (paid to the miners to run the network), price was (until 6 months ago) still going up.

This is totally incorrect. New bitcoins are not issued to miners, they mine them by a proof of work algorithm. You could mine your own bitcoin without interaction from anybody. Nobody controls bitcoin. This algorithm is essentially a random chance and is very expensive for energy. Once a bitcoin is mined, that's it.

Transfers of the coins (transactions) do not require much energy).  If the energy is generated by hydroelectric or thermal as much of it is then the cost to the environment is minimal. China banned mining bitcoin in a province that used mainly coal for this reason.

Edited May 18, 2022 by ozimoron

[FritsSikkink]

14 hours ago, Lemsta69 said:

no it's a little bit more subtle then that but as I said to another member who called me stupid (hate speech), I CBF explaining the nuances. 

Calling somebody stupid isn't necessary hate speech, it might be a good assessment. 

[FritsSikkink]

15 hours ago, Lemsta69 said:

we're currently in a state of flux. despite Satoshi's vision being only 13 or so years old it's a nascent technology and the benefits are not clear to the average punter. IMHO the value of a decentralised, trustless proof-of-work blockchain network will become realised in the not too distant future. in the meantime...

 

????????????????

Blockchain will be not important anymore when quantum computers become the norm.

[FritsSikkink]

15 hours ago, Lemsta69 said:

you seem to be hung up on the cost of BTC transfers. that ship sailed a long time ago. there are plenty of other blockchains that process transactions for pennies. 

You are clueless, blockchain is a sort of database. Databases don't charge money for transactions, companies do.

[atpeace]

20 minutes ago, FritsSikkink said:

Calling somebody stupid isn't necessary hate speech, it might be a good assessment. 

Good to start the day with a  laugh and hope Lemsta69 doesn't take it as a jab.

[atpeace]

12 hours ago, ozimoron said:

You're confusing bitcoin mining with bitcoin transactions

 

https://hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume

I think he is including the total upstream/downstream energy cost which includes mining and other factors.  A very hard number to nail down and I think he vastly overstated the energy cost. 

 

Also, the mining is a fixed cost and therefore becomes less of an issue when spread out over countless transactions.  I may be wrong but would it not be reduced to practically zero as more transactions use the same bitcoins?  Not sure - just thinking...  Hmmm, maybe these bitcoin things are not all that bad but still think they will be close to useless 10 years from now.

Edited May 19, 2022 by atpeace
spelling

[atpeace]

4 minutes ago, atpeace said:

delete - double post 

 

Edited May 19, 2022 by atpeace
double post

[lkn]

4 hours ago, ozimoron said:

This is totally incorrect. New bitcoins are not issued to miners, they mine them by a proof of work algorithm. You could mine your own bitcoin without interaction from anybody […]

The blockchain is a Merkle tree, That is, a linked list of blocks with each block containing a reference to the previous block and a checksum (SHA-256 hash). The block contains new transactions and the proof of work is to calculate the checksum so that it has a certain number of leading zeroes, which can only be done by brute-force, e.g. calculate checksum, if it doesn’t have enough leading zeroes, modify the block, and try again. All miners compete about being the first to find a valid block, and on average it should take 10 minutes to produce a new block, if blocks are produced too fast or too slow, the number of leading zeroes required in the checksum is adjusted, i.e. the difficulty of the work is adjusted.

 

A miner who adds this block will include a transaction to themselves, where they are given the current mining reward.

 

I am curious, how do you think it actually works? And from where do you get your information? The bitcoin white paper is an easy read and probably the best source for how it works ????

Edited May 19, 2022 by lkn

[ozimoron]

2 minutes ago, lkn said:

The blockchain is a Merkle tree, That is, a linked list of blocks with each block containing a reference to the previous block and a checksum (SHA-256 hash). The block contains new transactions and the proof of work is to calculate the checksum so that it has a certain number of leading zeroes, which can only be done by brute-force, e.g. calculate checksum, if it doesn’t have enough leading zeroes, modify the block, and try again. All miners compete about being the first to find a valid block, and on average it should take 10 minutes to produce a new block, if blocks are produced too fast or too slow, the number of leading zeroes required in the checksum is adjusted, i.e. the difficulty of the work is adjusted.

 

A miner who adds this block will include a transaction to themselves, where they are given the current mining reward.

 

I am curious, how do you think it actually works? And from where do you get your information? The bitcoin white paper is an easy read and probably the best source for how it works ????

But that's a once off process when a new bitcoin is mined, right? Not every time it is sold.

[lkn]

2 hours ago, atpeace said:

I think he is including the total upstream/downstream energy cost which includes mining and other factors

In a previous comment I referenced two North American blockchain mining companies. Based on their public finances for Q1 2022 they had expenses of at least $50 per transaction. With the average kWh price in the U.S. being something like 13 cents, and energy probably being the main expense, we should assume that 500 kWh per transaction is not an unreasonable estimate.

 

For comparison, during January I spent 1,715 kWh total to heat up my condo (134 sq.m.), this was with an outside temperature around freezing, and before I bought energy saving thermostats, but was still less than just four bitcoin transactions. This is absolutely ridiculous!

 

As for the article’s argument about having to look at energy mix: This is a bad argument, because if someone uses clean energy to mine bitcoins, it often just means that someone else will lack that energy, and instead get theirs from fossil fuels.

 

2 hours ago, atpeace said:

the mining is a fixed cost and therefore becomes less of an issue when spread out over countless transactions

We can only do transactions by adding blocks to the chain, and adding blocks to the chain is mining (see my previous comment for more details).

 

A block is fixed in size, this is intentional because otherwise the size of the blockchain (ledger) may grow too quickly, and every single bitcoin wallet (and miner) has to repeatedly sync with the entire chain (as you need a full copy of the blockchain to validate a transaction).

 

In an efficient market, energy consumption should somewhat follow price of bitcoin, i.e. if you can get 6.25 bitcoins to mine a block (with ~1,800 transactions) and one coin is $30,000 then you would be willing to spend just short of 6.25 × $30,000 on getting this reward = $104 per transaction or about 1,000 kWh (ignoring cost of hardware).

Edited May 19, 2022 by lkn

[lkn]

37 minutes ago, ozimoron said:

But that's a once off process when a new bitcoin is mined, right? Not every time it is sold.

If you mean sold on a central exchange: That does not use any significant energy, because here we only update the central exchange’s database and not the blockchain.

 

But if you withdraw from the exchange, transfer to the exchange, or transfer directly to me, then that is a transaction that must be added to the blockchain, and thus will probably use around 500 kWh.

[fdsa]

11 hours ago, GrandPapillon said:

in absolute terms, you never own currency or money, they belong to a nation, not to you. You are always the temporary holder, not the owner. Legally, all the USD notes all belong to the Federal Reserve.

great, you've got the point of the cryptocurrencies, at last!

When you own crypto they belong to _you_ not to some "nation" or "FRS"

[GrandPapillon]

1 hour ago, fdsa said:

great, you've got the point of the cryptocurrencies, at last!

When you own crypto they belong to _you_ not to some "nation" or "FRS"

but money needs to be "universal" to be exchanged, if everyone was to issue their own "currency" like the cryptos guys, it would be impossible to conduct exchange and commerce, there would be no trust, no "common" value to agree on. That's the basic principle of money you guys keep missing. In the middle ages, some small War Lords tried that and it failed. Exactly like cryptos.

 

You being Russian and born under a communist system with no formal education on financial matters, I can understand why would you miss that, but for all the western millennials out there, they have no excuse except poor education.

[tubby johnson]

On 5/18/2022 at 10:05 AM, Neeranam said:

Here is a rocket scientist explaining Bitcoin's use and value.

 

 

A rocket scientist  Ooh, he knows a bit about rockets, .... must be an expert on investing and economics. Let's go ask him! 

[GrandPapillon]

4 minutes ago, tubby johnson said:

 

A rocket scientist  Ooh, he knows a bit about rockets, .... must be an expert on investing and economics. Let's go ask him! 

????

 

priceless bias

[lkn]

Let me just remind people that Michael Saylor’s company paid a $11 million fine to S.E.C. to settle fraud charges back in 2000 and that his 4 billion dollar debt financed bitcoin investments is in the negative.

 

So yeah, definitely go listen to this guy! ????

Edited May 19, 2022 by lkn

[atpeace]

1 hour ago, lkn said:

In a previous comment I referenced two North American blockchain mining companies. Based on their public finances for Q1 2022 they had expenses of at least $50 per transaction. With the average kWh price in the U.S. being something like 13 cents, and energy probably being the main expense, we should assume that 500 kWh per transaction is not an unreasonable estimate.

 

For comparison, during January I spent 1,715 kWh total to heat up my condo (134 sq.m.), this was with an outside temperature around freezing, and before I bought energy saving thermostats, but was still less than just four bitcoin transactions. This is absolutely ridiculous!

 

As for the article’s argument about having to look at energy mix: This is a bad argument, because if someone uses clean energy to mine bitcoins, it often just means that someone else will lack that energy, and instead get theirs from fossil fuels.

 

We can only do transactions by adding blocks to the chain, and adding blocks to the chain is mining (see my previous comment for more details).

 

A block is fixed in size, this is intentional because otherwise the size of the blockchain (ledger) may grow too quickly, and every single bitcoin wallet (and miner) has to repeatedly sync with the entire chain (as you need a full copy of the blockchain to validate a transaction).

 

In an efficient market, energy consumption should somewhat follow price of bitcoin, i.e. if you can get 6.25 bitcoins to mine a block (with ~1,800 transactions) and one coin is $30,000 then you would be willing to spend just short of 6.25 × $30,000 on getting this reward = $104 per transaction or about 1,000 kWh (ignoring cost of hardware).

I think I agree????.  As for the energy mix, completely agree and also saw the flaws in logic.  It is hard to wrap my head around the energy costs you detailed but they are probably correct or at a minimum you are trying to in good faith make an estimate.  Seem outrageously high to me.

 

The transaction cost will be reduced drastically after the last bit coin is created.  At that point there will just be transaction fees but that is decades in the future and I might be wrong in my assumption. This sht is confusing and that is just one of many reason I feel it is doomed.

[GrandPapillon]

3 hours ago, lkn said:

Let me just remind people that Michael Saylor’s company paid a $11 million fine to S.E.C. to settle fraud charges back in 2000 and that his 4 billion dollar debt financed bitcoin investments is in the negative.

 

So yeah, definitely go listen to this guy! ????

people are fools, guys like Michael Saylor is the perfect predator for the world of digital retards ????

 

Think of him as the T-REX in Jurassic Park ????

 

Edited May 19, 2022 by GrandPapillon

[ozimoron]

7 minutes ago, GrandPapillon said:

people are fools, guys like Michael Saylor is the perfect predator for the world of digital retards ????

 

Think of him as the T-REX in Jurassic Park ????

 

He might well be wrong, I think he is but he hasn't been accused of any crimes.

[GroveHillWanderer]

16 minutes ago, ozimoron said:

He might well be wrong, I think he is but he hasn't been accused of any crimes.

Perhaps not, but as mentioned in an earlier post he has been found guilty of civil accounting fraud and had to personally pay his part of an $11 million fine, along with two other of his company's top executives.

[atpeace]

20 hours ago, lkn said:

If you mean sold on a central exchange: That does not use any significant energy, because here we only update the central exchange’s database and not the blockchain.

 

But if you withdraw from the exchange, transfer to the exchange, or transfer directly to me, then that is a transaction that must be added to the blockchain, and thus will probably use around 500 kWh.

After re-reading your posts, I think I'm starting to figure this out.  Always have intended to get around to it but any alternative activity, even a dental visit, seemed more appealing.  

 

One more question? Why 500 kWh in the above post and 1000 kwh in the previous post as the estimated energy cost?  

 

Just thought of something else from your above post.  The block chain security strength is that it includes all transactions in the data base yet if the transaction is done at an exchange the block chain is not updated hence losing the block chain security elements.  The errors or misdeeds of a broker could theoretically impact the value of your investment.  Sorry if the above makes no sense ????

[lkn]

10 hours ago, atpeace said:

One more question? Why 500 kWh in the above post and 1000 kwh in the previous post as the estimated energy cost?  

The 1,000 kWh is the upper limit (with the current bitcoin price) of what a miner can spend, before they start losing money mining bitcoins. If price doubles (to $60k per BTC), it would mean they can waste 2,000 kWh per transaction, and still be profitable.

 

The actual energy required depends on how many other miners you are competing with, and in an efficient market, excess profit should be eliminated, so by that theory, energy consumption should move toward the 1,000 kWh per transaction — but this ignores capital expenditure on setting up the mining rig, and also that energy prices vary around the world.

 

The 500 kWh per transaction is what I estimate is currently being used by the two North American mining companies.

 

10 hours ago, atpeace said:

[…] the transaction is done at an exchange the block chain is not updated hence losing the block chain security elements.  The errors or misdeeds of a broker could theoretically impact the value of your investment

Definitely, you are effectively giving your coins to a third party that you have to trust, both to be solvent, but also to not do front-running, wash-trading, etc.

 

And there are countless examples of exchanges being insolvent, like QuadrigaCX, which went bankrupt with liabilities of over 200 million CAD, Mt.Gox which was just a total mess (stolen coins kept secret and then owner seemingly trying to recover the loss via wash trading), Bitfinex which was also hacked but then comingled/borrowed funds from Tether, AfriCrypt where the founders claimed to have been hacked, but seems to just have run with the money, etc.

 

That is why many in crypto say “not your keys, not your money”, basically meaning that if you have your coins on an exchange, you effectively do not have these coins.

 

Looking at Coinbase’s financial report though, it seems something like 12% of all mined bitcoins are actually kept with this exchange (quoting from memory, so I might be a little off).

 

This just goes to show that nobody cares about decentralized or trustless finance, it’s only about “number goes up”.

Edited May 20, 2022 by lkn

[atpeace]

7 minutes ago, lkn said:

The 1,000 kWh is the upper limit (with the current bitcoin price) of what a miner can spend, before they start losing money mining bitcoins. If price doubles (to $60k per BTC), it would mean they can waste 2,000 kWh per transaction, and still be profitable.

 

The actual energy required depends on how many other miners you are competing with, and in an efficient market, excess profit should be eliminated, so by that theory, energy consumption should move toward the 1,000 kWh per transaction — but this ignores capital expenditure on setting up the mining rig, and also that energy prices vary around the world.

 

The 500 kWh per transaction is what I estimate is currently being used by the two North American mining companies.

 

Definitely, you are effectively giving your coins to a third party that you have to trust, both to be solvent, but also to not do front-running, wash-trading, etc.

 

And there are countless examples of exchanges being insolvent, like QuadrigaCX, which went bankrupt with liabilities of over 200 million CAD, Mt.Gox which was just a total mess (stolen coins kept secret and then owner seemingly trying to recover the loss via wash trading), Bitfinex which was also hacked but then comingled/borrowed funds from Tether, AfriCrypt where the founders claimed to have been hacked, but seems to just have run with the money, etc.

 

That is why many in crypto say “not your keys, not your money”, basically meaning that if you have your coins on an exchange, you effectively do not have these coins.

 

Looking at Coinbase’s financial report though, it seems something like 12% of all mined bitcoins are actually kept with this exchange (quoting from memory, so I might be a little off).

 

This just goes to show that nobody cares about decentralized or trustless finance, it’s only about “number goes up”.

Thanks for taking the time to help!

[FritsSikkink]

On 5/19/2022 at 8:24 PM, ozimoron said:

He might well be wrong, I think he is but he hasn't been accused of any crimes.

If you have a fraud charge, you are accused of a crime. Because he settled, he hasn't been convicted of a crime.