Gold collapsing. Bitcoin UP.

[cypherdoc]

grinding higher

 

[Inca]

Stabbing higher I'd say.

Though a big long multi-month pennant followed by a giant up move would be OK by me!

 

[Aquent]

 

[cypherdoc]

i don't think you have much time...

 

[priestc]

• A miner with 20% of the global hashrate only needs to propagate to 80% of the network. Therefore the orphan risk cost would be around 80% x cost.

• A miner with 0.1% of the global hashrate needs to propagate to 99.9% of the network. Therefore the orphan risk cost would be around 99.9% x cost.

• 99.9% x cost >> 80% x cost. Since we have already assumed the cost is significant in relation to fee revenue, this ensures we have a significant problem.*

This is wrong. Orphan rate is completely a function of bandwidth. Hashrate has nothing to do with it.

 

[Aquent]

Yeah, it's pretty tight, but very interesting F2Pool came out against it, showing their hand for no reason since almost everyone else supports the fork. Providing a bit more evidence to show that it's not actually blockstream or devs, but miners who are keeping btc at 1mb, for whatever reason, and then just play public games, but when it goes down to the wire show their clear cards...

It just illustrates miners and holders interests are not aligned and, prob a heresy to say this, but, prob true, that PoS may be superior.

 

[cypherdoc]

don't underestimate @jonny1000's ability to produce endless loads of bullshit.

 

[Erdogan]

F2Pool 11/1000 classic blocks.

 

[Inca]

http://www.zerohedge.com/news/2016-07-16/global-central-banks-are-collective-suicide-mission

In late April, a Bloomberg study found that the Bank of Japan (BOJ), through its purchases of ETFs, had become a top 10 shareholder in about 90 percent of companies that comprise the Nikkei 225. At the time, based on “estimates gleaned from publicly available central bank records, regulatory filings by companies and ETF managers, and statistics from the Investment Trusts Association of Japan,” Bloomberg assumed the BOJ was buying about 3 trillion yen ($27.2 billion) of ETFs every year. The rate of buying has likely accelerated since then.

Sometimes it is worth keeping an eye on the macro economics driving the rest of the world. Really the whole financial world outside bitcoin is a massive lie. Central banks printing money globally and using that to fight deflationary forces and openly buying up markets. The biggest change since 2008 is the rampant buying of Western national bonds by the big central banks to keep rates low. One question I always wonder is how much do central banks buy each others national debts in this merry go round? Where do they expect this buying run to end?

In the context of this global fiat lie, bitcoin makes an awful lot of sense, regardless of the maniacal cretins who are trying to bend it to their will. One thing they can never change is the 21 million cap and the algorithmic planned issuance of the remaining coins. And that as we all know, is bitcoin's greatest strength over every other asset class, scarcity of the underlying token of value.

Another thing that annoys me with Maxwell et al. trying to restrict access to on chain transactions is that the disaffected youth of the world would be more drawn to bitcoin if it were easier to use IMO. In the UK it is now more difficult, slower to use and more expensive to transact than my local bank. Still, it has those magic sound monetary properties that we all recognise

 

[Zarathustra]

don't underestimate @jonny1000's ability to produce endless loads of bullshit.

I don't.
Peace = war
5 = 95

 

[Norway]

LOL:

 

[Zarathustra]

http://www.zerohedge.com/news/2016-07-16/global-central-banks-are-collective-suicide-mission



Sometimes it is worth keeping an eye on the macro economics driving the rest of the world. Really the whole financial world outside bitcoin is a massive lie. Central banks printing money globally and using that to fight deflationary forces and openly buying up markets. The biggest change since 2008 is the rampant buying of Western national bonds by the big central banks to keep rates low. One question I always wonder is how much do central banks buy each others national debts in this merry go round? Where do they expect this buying run to end?

In the context of this global fiat lie, bitcoin makes an awful lot of sense, regardless of the maniacal cretins who are trying to bend it to their will. One thing they can never change is the 21 million cap and the algorithmic planned issuance of the remaining coins. And that as we all know, is bitcoin's greatest strength over every other asset class, scarcity of the underlying token of value.

Another thing that annoys me with Maxwell et al. trying to restrict access to on chain transactions is that the disaffected youth of the world would be more drawn to bitcoin if it were easier to use IMO. In the UK it is now more difficult, slower to use and more expensive to transact than my local bank. Still, it has those magic sound monetary properties that we all recognise

Such is the market. Those banks and central banks that enjoy credit/trust within the society are able to create money. Those without credit/trust aren't.

 

[Zarathustra]

 

[jonny1000]

No, market price is marginal cost + amortized fixed cost. Unless miners have free hardware and free electricity, fixed costs will never be zero.

I said "in a competitive market" price equals the marginal cost.

Such markets are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC = MR). But perfectly competitive markets are not necessarily productively efficient as output will not always occur where marginal cost is equal to average cost (MC = AC).

Source: https://en.wikipedia.org/wiki/Perfect_competition

I do not think the mining industry is currently in a perfectly competitive structure, nor do I think it necessarily will be. Therefore in most circumstances I agree with you, average mining costs are likely to also matter.

However the level of competition in the industry may change over time and we should aim to make the system as robust as possible. A high level of competition is clearly also desirable, lets be optimistic.


I could not agree more with Coinbase on this optimism point, "lets plan for success" and assume a high level of competition in the mining industry.

This is wrong. Orphan rate is completely a function of bandwidth. Hashrate has nothing to do with it.

My point is based on the idea that a miner does not need to propagate to themselves. A miner with 50% of the global hashrate only needs to propagate to the remaining 50% of the network. This should half the orphan risk costs.

don't underestimate @jonny1000's ability to produce endless loads of bullshit.

Please try to be respectful and challenge the content of my argument or technical grounds. Merely dismissing it as "bullshit" may be considered as intellectually lazy and an indication you are not approaching this highly complex issue with an open mind.

 

[cypherdoc]

almost done watching all the videos from the Onchain Scaling Conference. only have Meni left to go. great job guys! thanks for the detailed explanations and data!

 

[cypherdoc]

 

[priestc]

My point is based on the idea that a miner does not need to propagate to themselves. A miner with 50% of the global hashrate only needs to propagate to the remaining 50% of the network. This should half the orphan risk costs.

A miner never has to propagate only to himself, as long as there are more than 1 nodes on the network. All nodes need to see every block. The only way this will ever be true is if there is one only one mining node. We're talking Liberty Reserve levels of centralization. This will never happen.

The advantage of a zero percent orphan rate is not as beneficial as you may be thinking. Its hardly what I would call "centralizing", maybe calling it an "advantage" would be more fair. The faster bandwidth you have, the more of an advantage you get over other miners. The worst case scenario is slow bandwidth that results in 5% orphan. 5% is a tiny penalty that plays a very small role in mining dynamics. There are other factors that affect mining profitability much more than orphan rates.

 

[jonny1000]

A miner never has to propagate only to himself, as long as there are more than 1 nodes on the network. All nodes need to see every block. The only way this will ever be true is if there is one only one mining node. We're talking Liberty Reserve levels of centralization. This will never happen.

It doesn't need to be a single node, this just centralize miners by geography, they could end up in clusters around a few or even one location.

There are other factors that affect mining profitability much more than orphan rates.

Yes exactly. I want to keep it this way. This is exactly why we need to keep:

Total orphan risk cost / total mining revenue << small number

We should not implement an inappropriate economic model that guarantees this ratio is large. If mining fees (and therefore mining revenue) are driven by orphan risk cost, which is what some large blockers are advocating, this guarantees this ratio is large and guarantees the impact of orphan rates on mining profitability is large.

I argue that the ratio under this dangerous economic model is likely to be over 50%. Advanced wallets will lower fees to just over the marginal orphan risk cost for each transaction.

 

[cypherdoc]

@jonny1000

no, miners will set their minfees high enough to ensure profitability. they will also keep block sizes near the average so as to minimize orphaning and emphasize block rewards.

 

[yrral86]

@jonny1000

I'm a computer scientists, not an economist, but I don't understand how you can possibly claim that in a perfectly competitive market you can ignore fixed costs. If that were true, every miner would be operating at a loss. The hardware and the electricity and the connectivity and the cooling and the staff and the building all have to be paid for regardless of how many transactions are put into the block.

Perhaps your definition of "marginal cost" already includes amortized fixed costs. If that is the case, my point holds and fees will never go to zero. If that is not the case, can you please try to explain in simple terms how a competitive market magically forces producers to operate at a loss. If it does somehow force producers to operate at a loss, then I see your point.