NFTs: I don't get it.

[Agema]

You can functionally make an infinite amount and render the entire thing useless.

Also why does mining for bitcoins require extra electricity? Computers do have a hard cap on how much juice they use, you can't just shove lightning bolts into one and make Vision.

In order to "mine" bitcoins, you basically have to find numbers. Think about primes: 2, 3, 5, 7, 11 etc. Finding primes starts becoming harder to do the bigger the number gets, so requires a lot more processing power. That's the basic concept behind bitcoin. The more have been discovered the harder it is. Part of the mathematical process to discover them also means there's an effective limit to bitcoin, too: somewhere around 20 million if my memory serves me. I think one new bitcoin is discovered every 10 minutes, this will be about every 20 minutes in a few years time, and get worse. The limit will be effectively reached in a couple of decades. This prevents rampant inflation.

After that it's a numbers game: the more computers you have working on it, the more processing power and the more you can discover bitcoin. You can of course also link computers to increase processing power: and here's the trick with viruses that if people take over processing power on other people's computers to do it, they don't even need to be the people paying for the hardware and electricity. In fact, it's probably going to become the only viable way unless bitcoin goes up in value a lot, because it will cost more in electricity than it will gain in bitcoin.

As said, I think currently the amount of computer power finding bitcoin is estimated to be higher than the entire electricity generation of Argentina: !!. And there's another similar amount mining the other big digital currency etherium, plus whatever other cryptocurrencies are out there. This is extraordinarily energy inefficient and, via fossil fuel electricity generation, a significant environmental burden.

 

[Agema]

Technically (According to the BBC video I linked above) Crypto is less harmful than out present currency systems. The issues being really it's another system being built while the existing ones still operate.

That's not true. Let's say there are currently 10 million bitcoins, and bitcoins are $40,000, that's $400 billion: less than the economy of Belgium. This is obviously going to cost less than it costs to run all the world's currencies (economy approaching $100 trillion). If you wanted to calculate it as energy per transaction or unit value, bitcoin is awful.

 

[Baffle]

Also why does mining for bitcoins require extra electricity? Computers do have a hard cap on how much juice they use, you can't just shove lightning bolts into one and make Vision.

It's not just some guy running it in the background while he's playing Tetris. The biggest one I could find with a quick search is in China and uses more than a million dollars of electricity a month. There's some pictures of large rigs here: https://spectrum.ieee.org/computing/networks/why-the-biggest-bitcoin-mines-are-in-china

 

[SilentPony]

It's not just some guy running it in the background while he's playing Tetris. The biggest one I could find with a quick search is in China and uses more than a million dollars of electricity a month. There's some pictures of large rigs here: https://spectrum.ieee.org/computing/networks/why-the-biggest-bitcoin-mines-are-in-china

Okay so these are big productions, on the scale of NASA super computers but instead of calculating Terra-Mars orbital insertions, they're...mining. And again I'm not trying to be obtuse here, I genuinely don't understand. What does mining mean? What are these computers calculating? Why can't I just buy a bitcoin, and select it and hit /copy /paste and now I have 2 bitcoins? Why the huge digital production facilities to create something digital?

SNIP

What do you mean by 'discovered' when it comes to bitcoins? They're human made digital files, they're not dinosaur bones or ruins on Mars. And if bitcoins are similar in vein to prime numbers in that higher up ones are hard to calculate, sure, but there still are an infinite number of prime numbers because there's an infinite number of well numbers. Is each individual bitcoin tied to a prime number? Someone out there has 2, someone else has 5, someone else has 7, etc...?

 

[Agema]

What do you mean by 'discovered' when it comes to bitcoins? They're human made digital files, they're not dinosaur bones or ruins on Mars. And if bitcoins are similar in vein to prime numbers in that higher up ones are hard to calculate, sure, but there still are an infinite number of prime numbers because there's an infinite number of well numbers. Is each individual bitcoin tied to a prime number? Someone out there has 2, someone else has 5, someone else has 7, etc...?

They're not prime numbers as far as I'm aware: I just used the idea of finding prime numbers as an analogy to illustrate a task that becomes progressively harder as it goes along.

There is essentially an algorithm in the bitcoin software that creates new calculations, and bitcoins are discovered by solving the calculations that are released, hence the processing power required. I think, no guarantees I'm right, it may be based on the bitcoin transactions that are made, as that's also on recorded on the same software. So as the number of transactions increase, so does the complexity of the calculation.

In terms of the limit, there apparently is one such that when about 20 million bitcoins have been discovered, no more can - whether that's an absolute hard limit or a de facto one because it just becomes too difficult to solve the calculations, I don't know.

 

[SilentPony]

They're not prime numbers as far as I'm aware: I just used the idea of finding prime numbers as an analogy to illustrate a task that becomes progressively harder as it goes along.

There is essentially an algorithm in the bitcoin software that creates new calculations, and bitcoins are discovered by solving the calculations that are released, hence the processing power required. I think, no guarantees I'm right, it may be based on the bitcoin transactions that are made, as that's also on recorded on the same software. So as the number of transactions increase, so does the complexity of the calculation.

In terms of the limit, there apparently is one such that when about 20 million bitcoins have been discovered, no more can - whether that's an absolute hard limit or a de facto one because it just becomes too difficult to solve the calculations, I don't know.

Okay if bitcoins are basically open sourced, anyone can technically attempt to mine them, what's to stop a bunch of people getting together and just changing the algorithm to allow more than 20 million? Just saying "yeah that's no longer what a bitcoin is, THIS is a real bitcoin" and just undercutting the entire currency?

 

[Agema]

Okay if bitcoins are basically open sourced, anyone can technically attempt to mine them, what's to stop a bunch of people getting together and just changing the algorithm to allow more than 20 million? Just saying "yeah that's no longer what a bitcoin is, THIS is a real bitcoin" and just undercutting the entire currency?

I think because it's a blockchain, and blockchains are either impossible or at least extraordinarily hard to hack so the algorithm is unidentifiable and secure. Maybe the creator still has the "keys". The other problem is that the utility in doing so is limited, because it potentially damages the value of the bitcoin.

There is also no need to make new bitcoins: it's easy enough to start a new digital currency, such as etherium. Facebook, of course, announced it was going to introduce its own blockchain currency. Unsurprisingly, perhaps, this went down like a lead balloon, and as far as I am aware it's start has been heavily postponed whilst they amend it into a form that's not going to mightily piss off important organisations that already have FB on their shitlist, such as the US government.

 

[Agema]

There is also no need to make new bitcoins: it's easy enough to start a new digital currency, such as etherium. Facebook, of course, announced it was going to introduce its own blockchain currency. Unsurprisingly, perhaps, this went down like a lead balloon, and as far as I am aware it's start has been heavily postponed whilst they amend it into a form that's not going to mightily piss off important organisations that already have FB on their shitlist, such as the US government.

And sorry to quote myself, but this is the sort of reason I hate the tech industry.

They're a bunch of fucking nitwits drunk on their own power, money, risk-taking, stupid ideologies and utopian visions. It's Uber setting up in places where they knowingly break the law and dragging out the court cases whilst they earn $$$, it's silicon valley CEOs who think the entirety of scientific / medical practice should be tossed in a pandemic because they're the guys who know how to get things done, and if they promote a load of bullshit useless medicines, it's all for our benefit. It's Facebook causing global havoc with rampant algorithms, and looking on in incomprehension and near-powerlessness as they fuel cyberbullying, racism and even genocide.

It's rampant pursuit of money and "progress" unmitigated by common sense and good risk evaulation, making a shit-ton of money and expecting the rest of society to pick up the pieces when they screw up. Fuck the lot of them. Something that selfishly grows at an astonishing rate, paining and imperilling the organism hosting it, is pretty much literally a cancer.

 

[SilentPony]

And sorry to quote myself, but this is the sort of reason I hate the tech industry.

They're a bunch of fucking nitwits drunk on their own power, money, risk-taking, stupid ideologies and utopian visions. It's Uber setting up in places where they knowingly break the law and dragging out the court cases whilst they earn $$$, it's silicon valley CEOs who think the entirety of scientific / medical practice should be tossed in a pandemic because they're the guys who know how to get things done, and if they promote a load of bullshit useless medicines, it's all for our benefit. It's Facebook causing global havoc with rampant algorithms, and looking on in incomprehension and near-powerlessness as they fuel cyberbullying, racism and even genocide.

It's rampant pursuit of money and "progress" unmitigated by common sense and good risk evaulation, making a shit-ton of money and expecting the rest of society to pick up the pieces when they screw up. Fuck the lot of them. Something that selfishly grows at an astonishing rate, paining and imperilling the organism hosting it, is pretty much literally a cancer.

So if/when bitcoin crashes and IRL companies and businesses refuse to accept it as currency, people are just shit out of luck? Its not guaranteed by any government or organization outside of the people who own it, so there's no recourse or bailout. They just threw money away on a digital fire and...and that's it.

 

[Agema]

So if/when bitcoin crashes and IRL companies and businesses refuse to accept it as currency, people are just shit out of luck? Its not guaranteed by any government or organization outside of the people who own it, so there's no recourse or bailout. They just threw money away on a digital fire and...and that's it.

Basically, yeah.

Gergar12 mentioned art. Art is another weird form of speculative bollocks. Look at the top art trades (Picassos, etc.), there are only a handful of dudes busy buying and selling. They're not buying art because they like and want to have art: it's speculation. Buy art, wait ten years as the circus drives the price up, sell it.

I think that's part of what's going with bitcoin. People are busy convincing other people bitcoin is ace, drive the price up, cash out. I suspect a lot of the people evangelising are bitcoin miners. And NFTs as well. Value must be upheld by convincing people there is value. For all that fiat currency has the same theoretical basis, it's so heavily grounded in real stuff that it pretty much cannot be broken.

But the thing is, bitcoin is now a massive, hundreds of billions dollar industry, with attached credibility. There's so much investment in it, that also creates a huge amount of pressure to protect it: does a government really want to destroy billions of its own citizens' wealth at the stroke of legislative pen?

 

[SilentPony]

Basically, yeah.

Gergar12 mentioned art. Art is another weird form of speculative bollocks. Look at the top art trades (Picassos, etc.), there are only a handful of dudes busy buying and selling. They're not buying art because they like and want to have art: it's speculation. Buy art, wait ten years as the circus drives the price up, sell it.

I think that's part of what's going with bitcoin. People are busy convincing other people bitcoin is ace, drive the price up, cash out. I suspect a lot of the people evangelising are bitcoin miners. And NFTs as well. Value must be upheld by convincing people there is value. For all that fiat currency has the same theoretical basis, it's so heavily grounded in real stuff that it pretty much cannot be broken.

But the thing is, bitcoin is now a massive, hundreds of billions dollar industry, with attached credibility. There's so much investment in it, that also creates a huge amount of pressure to protect it: does a government really want to destroy billions of its own citizens' wealth at the stroke of legislative pen?

I supposed the counter argument a government can make is that these people never had any wealth to begin with. What they have is something they claim is wealth, in the same way I can start a rock collection and claim its a currency. I mean do bitcoin people pay taxes on bitcoin? Does their tax bracket increase/decrease alongside the bitcoin wealth? If bitcoin is a real currency and can be mined, isn't that counterfeiting?
I imagine as far as a government is concerned someone with $400,000 worth of bitcoin and ten dollars has ten dollars. If citizens want to spend real money on imaginary money that's all well and good, but that doesn't mean monopoly money is legal tender.
I mean if I'm understanding it correctly bitcoin has theoretical value, and in theory could be worth something. But there is no way to actually pay for something with it, I can't get gas or buy a pizza or get medical insurance with bitcoin. I'd have to cash it out for real money, and that cash value is only as valuable as I can convince people it is.

 

[Agema]

I supposed the counter argument a government can make is that these people never had any wealth to begin with. What they have is something they claim is wealth, in the same way I can start a rock collection and claim its a currency.

True, but there is still a loss when the value dives - like with a house, or stocks and shares. Or art, as mentioned. I daub some paint on a canvass, I'd be lucky to get £10. Picasso, £100 million. If they find that thing they thought was a Picasso was actually a really good impersonation by me, back down to £10.

I mean do bitcoin people pay taxes on bitcoin? Does their tax bracket increase/decrease alongside the bitcoin wealth? If bitcoin is a real currency and can be mined, isn't that counterfeiting?
I imagine as far as a government is concerned someone with $400,000 worth of bitcoin and ten dollars has ten dollars. If citizens want to spend real money on imaginary money that's all well and good, but that doesn't mean monopoly money is legal tender.
]I mean if I'm understanding it correctly bitcoin has theoretical value, and in theory could be worth something. But there is no way to actually pay for something with it, I can't get gas or buy a pizza or get medical insurance with bitcoin. I'd have to cash it out for real money, and that cash value is only as valuable as I can convince people it is.

I'm spectulating here, but's say that bitcoin were viewed as a sort of asset: in theory if you "cash out" and make a profit, you are subject to capital gains. However, if the government has no way of recording/registering your bitcoin ownership and transactions, it can't tax you.

And herein, I suspect, some of its attraction: especially to libertarians who don't think the government should tax them.[/QUOTE]

 

[SilentPony]

And herein, I suspect, some of its attraction: especially to libertarians who don't think the government should tax them.

See this makes the most sense of all of it. That its basically prepper survival money, but for libertarians who don't like paying taxes and think they're millionaires.

 

[Dwarvenhobble]

That's not true. Let's say there are currently 10 million bitcoins, and bitcoins are $40,000, that's $400 billion: less than the economy of Belgium. This is obviously going to cost less than it costs to run all the world's currencies (economy approaching $100 trillion). If you wanted to calculate it as energy per transaction or unit value, bitcoin is awful.

Thing being how much energy is used to make coins and notes, how much energy to produce new ones and dispose of old ones. Mining resources, transporting them etc etc.

Okay so these are big productions, on the scale of NASA super computers but instead of calculating Terra-Mars orbital insertions, they're...mining. And again I'm not trying to be obtuse here, I genuinely don't understand. What does mining mean? What are these computers calculating? Why can't I just buy a bitcoin, and select it and hit /copy /paste and now I have 2 bitcoins? Why the huge digital production facilities to create something digital?

Check the video I linked the
TLDR version is this everyone gets sent a list of the most recent transaction on the chain but it's behind a locked door. Your machine has a bag of keys it pulls from at random to open the door. If you are the one who opens the door you get paid. As it's a random process as such any key could open the door thus anyone could win. More powerful computers / mining rigs can try more keys on the door per second.

A bitcoin isn't a bit of code itself it's part of a public "ledger" system that everyone owns a copy of


To put it in real world terms
Your bank account will say it has I dunno $10,000 in it but the bank doesn't have a vault area for you with 10,000 $1 coins in that you can access

What do you mean by 'discovered' when it comes to bitcoins? They're human made digital files, they're not dinosaur bones or ruins on Mars. And if bitcoins are similar in vein to prime numbers in that higher up ones are hard to calculate, sure, but there still are an infinite number of prime numbers because there's an infinite number of well numbers. Is each individual bitcoin tied to a prime number? Someone out there has 2, someone else has 5, someone else has 7, etc...?

Technically they're machine encoded currencies.

 

[Dwarvenhobble]

They're not prime numbers as far as I'm aware: I just used the idea of finding prime numbers as an analogy to illustrate a task that becomes progressively harder as it goes along.

There is essentially an algorithm in the bitcoin software that creates new calculations, and bitcoins are discovered by solving the calculations that are released, hence the processing power required. I think, no guarantees I'm right, it may be based on the bitcoin transactions that are made, as that's also on recorded on the same software. So as the number of transactions increase, so does the complexity of the calculation.

In terms of the limit, there apparently is one such that when about 20 million bitcoins have been discovered, no more can - whether that's an absolute hard limit or a de facto one because it just becomes too difficult to solve the calculations, I don't know.

It's more that the Bitcoin system is designed so it will make it so each calculation "block" will take 10 minutes to solve. The more people trying to crack the calculation the more complex it will be made so it will always take 10 minutes.

As for Transactions etc. That's more going to relate to the number of blocks being produced than complexity of a block. Thing is you can pay a tip in essence to get your transaction processing bumped forward in the queue.

Okay if bitcoins are basically open sourced, anyone can technically attempt to mine them, what's to stop a bunch of people getting together and just changing the algorithm to allow more than 20 million? Just saying "yeah that's no longer what a bitcoin is, THIS is a real bitcoin" and just undercutting the entire currency?

To do that you'd need to control more than 50% of the total processing power of the entire network to create consensus in the changes even then Bitcoin itself has a limit as such to how many there can be due to the complexity of the functions that can be produced as such.

So if/when bitcoin crashes and IRL companies and businesses refuse to accept it as currency, people are just shit out of luck? Its not guaranteed by any government or organization outside of the people who own it, so there's no recourse or bailout. They just threw money away on a digital fire and...and that's it.

I mean they can do that with real currencies already.

 

[crimson5pheonix]

 

[Agema]

Thing being how much energy is used to make coins and notes, how much energy to produce new ones and dispose of old ones. Mining resources, transporting them etc etc.

Bitcoin is reckoned to eat up ~40 TWh electricity annually. Assuming a cost of £50 per MWh, that's £2 billion a year.

The UK mints about 1 billion coins and 4 billion banknotes a year. The estimated cost is 5p per coin and 10p per banknote, so that's about £450 million: that should include all production costs (labour, equipment, energy, raw materials and their transportation, etc.) Let's assume energy is 20% of total cost: bear in mind the cost to get copper and nickel includes their mining and transportation costs, so including energy use. I've picked 20% semi-randomly, on the assumption at least half of production cost is paying workers, and there will be other costs. So, call it £110 million in energy. The UK has ~1% of global population, so expand that to £11 billion for the world. That's just over five times the energy expenditure of Bitcoin, despite supporting currency with a total value something like 50 times greater. And Bitcoin energy use is getting worse, and worse and worse. Normal currency energy usage is not.

I'm aware this is totally a back-of-a-beermat calculation, but it perhaps gives us a ballpark to work with.

I know there are also arguments about the use of energy to run financial systems. Aside from ATMs, however, I think this is potentially unfair, because bitcoin piggy-backs off the wider global financial system as much as anything does.

 

[BrawlMan]

​

 

[Baffle]

I think that's part of what's going with bitcoin. People are busy convincing other people bitcoin is ace, drive the price up, cash out. I suspect a lot of the people evangelising are bitcoin miners.

Yep, and the US government are going to be increasingly keen to pick people up on it. Already charged McAfee on it.

Cryptocurrencies like Ripple are particularly keen not to come under the purview of the SEC by the looks.

I'm spectulating here, but's say that bitcoin were viewed as a sort of asset: in theory if you "cash out" and make a profit, you are subject to capital gains. However, if the government has no way of recording/registering your bitcoin ownership and transactions, it can't tax you.

The exchanges that you need to use to cash out in the UK feed data to HMRC's Connect system (as do the banks when it comes to suspect transactions), so if you do it on a big enough scale in the UK, you're going to get picked up.

 

[Worgen]