Bitcoin, Cryptocurrency and Blockchain Discussion Thread

[dhanson865]

Is it correct to assume that, the higher Bitcoin goes, the weaker the dollar will get? Because you could see Bitcoin as a vacuumcleaner that sucks up all the dollars that the printing presses are spitting out? Hence undoing the quantitative easing? Inflation as a result?

US Money's take Here's a comparison of bitcoin and all of the world's money (old data adjust the bitcoin ball from 41 to 287 and all crypto from 100 to about 320)

I'll say

$287,106,082,039 Bitcoin market cap
$1,590,000,000,000 US Dollar The Fed - FAQs
$85,000,000,000,000 total money/stocks in the world?

97.48% of the USD is in Federal Reserve notes not dollar bills but still most bitcoin is digital not physical so it fair to include. With that in mind there is 5.5 times as much USD as Bitcoin USD value. And since USD themselves are only 2% of the world money/stocks I'd guess that the amount of BTC vs USD isn't that big a deal.

It could be that BTC market cap exceeds USD in circulation but since people don't pump dollars into bitcoin as much as it is inflated, mined, or used to buy goods I'd say it isn't pulling dollars out of the money supply. Besides, whoever you give USD to when buying a Bitcoin or a portion of one, that person will still have USD that they will then spend.

 

[bkp_duke]

Is it correct to assume that, the higher Bitcoin goes, the weaker the dollar will get? Because you could see Bitcoin as a vacuumcleaner that sucks up all the dollars that the printing presses are spitting out? Hence undoing the quantitative easing? Inflation as a result?

No, that is an incorrect assumption.

All bitcoin, in existence, are less than 0.001% of all USD in circulation.

 

[jasonb]

Met a friend in April, he told me to buy BTC, I told him to buy TSLA, I guess he's winning now, but we'll see.

your friend is genius. i had a friend say this to me too at same time. its been pretty wild since april. i just wish i had bought more initially and didnt touch it. that was right answer. who knew.

 

[rxlawdude]

Bitcoin is a speculative play that is fraught with risk. Anyone arguing otherwise has a vested interest.

Amway, anyone?

 

[jasonb]

Bitcoin is a speculative play that is fraught with risk. Anyone arguing otherwise has a vested interest.

Amway, anyone?

i disagree with amway comment. agree with risk. sovereign gov and central banks will fight back. we are at 500b market cap now. i would expect some response before 1t. it might just be in form of cryptoruble, who knows.

 

[jasonb]

Holy Schmoly, this is getting crazy. Will be interesting to see how this all plays out and if the bubble pops. I figure if Bitfinex goes down due to their general shadiness with the whole Tether thing, that might be what kicks off the fall.

oh boy. yeah tether is a ticking time bomb. a $800m time bomb i think...

 

[dhanson865]

No, that is an incorrect assumption.

All bitcoin, in existence, are less than 0.001% of all USD in circulation.

more like 18%

$287,106,082,039 Bitcoin market cap Coin Market Capitalizations | CoinMarketCap
$1,590,000,000,000 US Dollar The Fed - FAQs

BTC market cap/USD in circulation 18.05698667924528%


But if you change that from all USD in circulation to all currencies/stocks in the world valued in USD you'd be close with your 1%.

 

[bkp_duke]

more like 18%

$287,106,082,039 Bitcoin market cap Coin Market Capitalizations | CoinMarketCap
$1,590,000,000,000 US Dollar The Fed - FAQs

BTC market cap/USD in circulation 18.05698667924528%

Your assumptions, and therefore your math, are incorrect.

MOST BTC is not available for circulation. I.e. once someone loses their BTC private wallet key, etc. they have lost that BTC forever. It's like taking money and incinerating it. Once you factor OUT the BTC that is presumed to be lost/inaccessible then the market cap for real BTC drops like a STONE.

And unlike BTC, the Fed can just keep on printing USD to replace those that are lost.

 

[dhanson865]

Your assumptions, and therefore your math, are incorrect.

MOST BTC is not available for circulation. I.e. once someone loses their BTC private wallet key, etc. they have lost that BTC forever. It's like taking money and incinerating it. Once you factor OUT the BTC that is presumed to be lost/inaccessible then the market cap for real BTC drops like a STONE.

And unlike BTC, the Fed can just keep on printing USD to replace those that are lost.

1. lost BTC private key isn't guaranteed to be gone forever, but it sure does lock it away for the foreseeable future.

But as a what if and you assumed Moore's law didn't hit a brick wall, in about 60 years you'd be able to crack it. Not by starting now, but by just waiting 60 years for better computers and then trying to crack it.

If we get something faster like a quantum computing breakthrough someone could crack it sooner or later depending on when the breakthrough occured.

If we hit the wall on not being able to double our processing power years down the road and can't get past it that private key is good for infinity. Totally possible we never make a computer that can do it.

2. and just like the Fed, crytpo can spin another coin type out of thin air and replace those that are lost. Or even easier bitcoin itself can just increase in value and be subdivided instead of creating more coins.

A bitcoin can be divided down to 8 decimal places. Therefore, 0.00000001 BTC is the smallest amount that can be handled in a transaction.

All it'd take is a fork and that division could be even smaller and it'd be just like printing more coins if the price increase had already happened.

If you don't see how inflation can replace lost coins then go on and imagine only the US Fed can create money.

 

[neroden]

I started doing my cryptocurrency research, with a focus on the transaction cost issues. Looks like Litecoin has inherent advantages over Bitcoin; Ripple has major advantages over both; and the banks are designing blockchain ledgers which have all the advantages of Ripple without being a currency.

:sigh:

 

[bkp_duke]

1. lost BTC private key isn't guaranteed to be gone forever, but it sure does lock it away for the foreseeable future.




2. and just like the Fed, crytpo can spin another coin type out of thin air and replace those that are lost. Or even easier bitcoin itself can just increase in value and be subdivided instead of creating more coins.

A bitcoin can be divided down to 8 decimal places. Therefore, 0.00000001 BTC is the smallest amount that can be handled in a transaction.

All it'd take is a fork and that division could be even smaller and it'd but just like printing more coins if the price increase had already happened.

If you don't see how inflation can replace lost coins then go on and imagine only the US Fed can create money.

The topic was BTC, which has a HARD LIMIT. Not other cryptos.

This is the best, most recent article on how much is truly gone. My business partner had 6000 BTC mined back on 2010-2011 on a USB drive. Needless to say he's searched high and low for that drive. Situations like that, it's gone and not to be recovered.

Exclusive: Nearly 4 Million Bitcoins Lost Forever, New Study Says

 

[neroden]

Is it correct to assume that, the higher Bitcoin goes, the weaker the dollar will get? Because you could see Bitcoin as a vacuumcleaner that sucks up all the dollars that the printing presses are spitting out? Hence undoing the quantitative easing? Inflation as a result?

This is not how money works. Every time someone spends dollars on a Bitcoin... someone else ends up with those dollars and probably spends them. Money circulates.

The interesting concept for inflation or deflation purposes is whether the money is being traded for real goods and services , or whether it is being hoarded instead.

Whenever a transaction of Bitcoin-for-real-goods is effectuated, Bitcoin is acting as a currency and effectively increasing the money supply (or the velocity of money, I don't care which, they're interchangable for this purpose). When Bitcoin is only being traded in and out of dollars, however, it's not acting as money and is effectively like gold. The effect on the circulating money supply is related to how much actual Bitcoin-for-real-goods activity there is.

In this regard, the fact that Steam stopped accepting Bitcoin can be seen as a partial demonetization event, reducing the "moneyness" of Bitcoin -- a deflationary action.

 

[dhanson865]

The topic was BTC, which has a HARD LIMIT. Not other cryptos.

This is the best, most recent article on how much is truly gone. My business partner had 6000 BTC mined back on 2010-2011 on a USB drive. Needless to say he's searched high and low for that drive. Situations like that, it's gone and not to be recovered.

Exclusive: Nearly 4 Million Bitcoins Lost Forever, New Study Says

Doesn't matter that the physical drive is lost or destroyed. The private key and all those BTC exist in the chain. Someone, someday, can try to recover them even if it isn't the person that owned them. You can say it won't happen, but that doesn't mean it won't. I might be dead before it happens, but I think long term.

And previously you said most BTC were out of circulation as in >50.0000%. Just under 4 million as in 3.x Million is less than 5% of the existing BTC.

 

[bkp_duke]

Doesn't matter that the physical drive is lost or destroyed. The private key and all those BTC exist in the chain. Someone, someday, can try to recover them even if it isn't the person that owned them. You can say it won't happen, but that doesn't mean it won't. I might be dead before it happens, but I think long term.

And previously you said most BTC were out of circulation as in >50.0000%. Just under 4 million as in 3.x Million is less than 5% of the existing BTC.

I stand by that. Bitcoin is EXTREMELY non-liquid. Most people, like with Gold, buy and hold, and use it as an asset store. It's not used for transactions nearly to the extent that a true currency like the USD is.

So again, MOST BTC is out of circulation. I would estimate FAR greater than 50%. If someone has to pull their BTC out of a cold storage wallet to make a transaction, and that transaction is more fairly categorized as an INVESTMENT transaction, then BTC is not being used as a currency.

 

[Reciprocity]

Bitcoin is mostly traded/owned outside the US and not related to the dollar at all. Bitcoin is more like a dollar based commodity like Oil or Gold then it is like a currency. Really, its Digital Gold and a store of wealth. Why is gold valuable? Because people believe its valuable. Its scares, which makes it a good store of wealth. Bitcoin is finite, meaning there will never be more then 21 million of them while they can mine gold until the end of time. Bitcoin and much easier to transport and actual use as you can break it into 1 penny pieces. Gold will probably be going to zero before bitcoin because bitcoin is actually useful as a financial tool where as gold is only good for jewelry and some industrial uses. Not an advice.

 

[ggr]

Doesn't matter that the physical drive is lost or destroyed. The private key and all those BTC exist in the chain. Someone, someday, can try to recover them even if it isn't the person that owned them. You can say it won't happen, but that doesn't mean it won't. I might be dead before it happens, but I think long term.

Cryptographically speaking, you are wrong. The private keys are all kept in wallets, and failing some breach of security, are never disclosed. They certainly don't appear in the blockchain. The public keys appear in the blockchain, and it is theoretically possible for the private key to be recovered based on the known system parameters and the corresponding public key. Using classical computers this is thought to be intractable, requiring on the order of 2^128 complicated operations. However, a single quantum computer of large enough size and high reliability could not only recover one secret key from one public key, but in doing so would have done most of the work to recover all secret keys (so long, bitcoin...). "Post-Quantum Cryptography" is a very active research field, looking for algorithms that will be safe even in the face of working quantum computers.

I do classical (that is, non-quantum) crypto, and mostly symmetric not public key, but people I know and respect greatly think that we will have very little warning when quantum computers become practical. Basically it's a matter of passing a limiting threshold of quantum error correction working. Below that threshold, they don't really work, above that threshold it's just a matter of cost and scale. The higher bitcoin goes, the more money it's worth throwing at the problem.

 

[dhanson865]

Cryptographically speaking, you are wrong. The private keys are all kept in wallets, and failing some breach of security, are never disclosed. They certainly don't appear in the blockchain. The public keys appear in the blockchain, and it is theoretically possible for the private key to be recovered based on the known system parameters and the corresponding public key.

pa tay toh pa ta toh. You are correct I got sloppy with my answer. The point is you don't need the original wallet file. The coins are still in the chain if you can produce the correct private key.

Some wallet software uses recovery phrases so you can shred, burn, lose the wallet and still grab the same software and recover all your stuff with no "backup".

Yep, you have to keep the recovery phrase and it is essentially your backup, but on it's own it isn't. You need both the recovery phrase and the compatible software that will generate the proper private key from that phrase.

My wallet software does not do phrases so I still do old school backups. If my dat file is gone and I don't find a copy of it I don't expect to ever gain access to those funds in my lifetime.

 

[ggr]

pa tay toh pa ta toh.

Are you mocking my Australian accent?!

 

[EinSV]

The topic was BTC, which has a HARD LIMIT. Not other cryptos.

This is the best, most recent article on how much is truly gone. My business partner had 6000 BTC mined back on 2010-2011 on a USB drive. Needless to say he's searched high and low for that drive. Situations like that, it's gone and not to be recovered.

Exclusive: Nearly 4 Million Bitcoins Lost Forever, New Study Says

So your partner lost a USB drive that is now worth about $100,000,000? Ouch.

 

[rxlawdude]

As soon as I saw the Russians are "mining" bitcoins, it further militated the assertion it's an unwise investment.