It's cool to watch the money flowing in real time, but also to note the sobering fact that the Bitcoin network is currently consuming 1.7 gigawatts of power...
Bit of an aside, but this just popped up on Hacker News (basically the premier geek news aggregator site):
Forgive me for my ignorance . I try to understand the best I can, but it's hard since I have never traded myself. But, in the end, if you use a digital or a paper wallet, don't you need a "password" or a "key" to be able to make a transaction? Doesn't matter, if this password will generate another password. You have to write it down somewhere, yes or no?
It depends for whom they are useful. Inflation is a tax. If the goverment says they need to raise the inflation to stimulate growth, they are taking wealth from the ones who have money. I would say an ideal currency is one with zero inflation. But measuring inflation is tricky. The price of beef goes up, people switch to cheaper chicken, the statistics bureau adjusts the CPI basket to reflect new "customer preferences". But with a fixed-supply currency we would not see a zero inflation, we would see long term deflation, due to technological advancement and infrastructural improvements. With a fixed supply currency, you would not need to invest anywhere to be getting wealthier.
Yes. Just pop this in google: ( 1708 MW * 1 year) * (0.20 USD / kWh) and you get 3 billion dollars annually, which is like 10% of total bitcoin value right now. I know that power costs in some places are cheaper, though.
(Passwords): You either have to write the password down or remember it (or store it in a password manager but you still have to know the manager's password). But it's a password (or passphrase) and so easier to remember than a random-looking string (e.g. raw private key).
(Inflation): Economies were nearly destroyed in the 20th century from deflation caused by adherence to a gold standard. The economic boom of the past 50 years or so is the result of breaking that standard and allowing monetary inflation. Sure, it can go bad the other way (also lessons from the 20C), but I think the benefits are worth it.
(Power): Most of the mining is done in China using cheap, subsidized electricity (often hydro).
If you use a password manager, and someone takes your laptop, then you lose your bitcoin. Yes or no? That's the only thing I was trying to say...
Do you have any proof of that? I read a different interpretation. Have you heard about Executive Order 11110? JFK decided to back the dollar by silver. Soon after, he was assasinated and his decision has not been upheld. Fiat dollar gives Fed the power to print money as they please.
I checked, in china power costs 0.08 USD / kWh. So 1 billion dollars per year of electricity cost. And hardware, maintenance? Still, a lot of money wasted.
(Passwords redux): If you use a password manager and you lose your laptop, then you would just restore the backup that you sensibly do regularly onto your new laptop. If you don't do backups, then you will lose them. If you don't do backups, then don't play with bitcoins. (Plenty of people have discovered this the hard way.)
(Deflation): Probably best to check out the historical examples in the wiki page . (Saying economies were destroyed was a bit of hyperbole on my part, but they were nasty periods for a lot of people).
(Power redux): They probably get it a lot cheaper than that since the Chinese government likes to encourage this sort of IT infrastructure. And it's not money wasted: it's the cost to run a very useful network which is essentially a global bank. There is still a great desire, though, to move away from this sort of high power consumption for cryptos (in the end, it's not sustainable - if bitcoin was the 'global currency' it would need to use a significant fraction of the world's power to be secure). Ethereum (back on topic again) is moving in about a year to a form of verification called 'proof of stake' which has much lower power consumption.
Also from Hacker News, great article about some of the social implications of storing data forever on blockchains: Blockchains Never Forget .
It's quite a long read but worth it for the great quote:
history is simply everything that has been forgiven so far
After the slump of last week, ETH has recovered and is once again hitting all time highs (over 200 USD and moving towards 0.1 BTC). Its market cap is now over 50% of bitcoin's (19.6 billion USD compared to 37.2 billion USD).
Bitcoin is still about 20% down from last weeks highs, but is looking fairly stable.
Fred Wilson at USV expects Ethereum's market cap to be higher than Bitcoin's by the end of this year, so essentially it doubles from where it is right now or Bitcoin drops significantly.
Some technical realtime ETH stats can be found here https://ethstats.net/
Same here, therefore I recommend the following video ("how bitcoin works under the hood"):
Wondering which exchange / markets people are using for cryptos? I was checking out Bitfinex and Coinbase.....any tips?
The biggest one for ETH and other alts is poloniex.com (I use this a lot), but it doesn't use fiat, so you need bitcoins to start trading there. Coinbase is fine for going between fiat and BTC and works with Swiss customers. I would avoid Bitfinex since they've had fiat withdrawal issues over the past few months.
Kraken.com and Xapo for a credit card backed by BTC.
Is there something like a list of options somewhere? Maybe sorted into categories?
Pure Crypto exchange (eg poloniex) Fiat / Crypto exchange (eg coinbase) Other Crypto related offers (credit card, eg xapo) I guess I ́m not inventing the wheel here, this should already exist. I ́m just not finding a comprehensive list.
This is probably the closest to what you want (but's that just from a quick google, so you may be able to do better):
Where can we buy this in CH? I tried bitcoin Suisse but they only allow transactions over 10000 chf.
Thanks
Coinbase works from Switzerland. You have to transfer EUR to them rather than CHF, but you can do that from a Swiss bank.
You can't take such a simplistic view on money supply. You can see inflation as a tax, but it's not on wealth. It is on idle money. Allow me to explain below:
You actually provide the strongest counterargument in your post: "With a fixed supply currency, you would not need to invest anywhere to be getting wealthier." That's a terrible idea! You should absolutely be incentivised to invest your wealth instead of holding it in cash. In a fixed money supply:
- The rich get richer automatically (assuming the economy didn't grind to a halt and society didn't collapse). If people complain about the lack of trickle down effect, imagine a world where hoarders don't even have to invest their wealth to grow it. They can just hold on to it.
- Innovation, business and productivity gets strangled by the lack of funds. If people don't need to invest their wealth, there is much less incentive to fund businesses.
Money isn't (and shouldn't be) an investment asset. An investment asset should be something that actually produces value, money doesn't. Money is just a means of optimizing trade in the economy. It shouldn't worry you that cash could lose it's value in case governments overdo the printing, because you are not supposed to hold your wealth in cash. Invest it! Buy real estate, or even better: buy land! Land is a scarce resource, it will always grow in value. Land can be used to produce value, or it can be lent out to others so they can produce value. Invest into businesses. If you don't fancy being an angel investor or VC, buy a wide ETF that invests into hundreds (or thousands) of businesses on your behalf.
What advocates of backed currencies very often miss is this decoupling of money and investment. In a modern economy, money is used merely as a means to optimize trading, not as a store in value. In the past, one could hoard gold and use it at the same time as a currency. This was somewhat convenient for hoarders because they didn't need to invest their wealth, but this notion needs to go. By all means, put your cash in gold if you want a relatively liquid asset that has almost currency like properties. Do not however mistake cash as an investment asset, that's not what it is for.
Ninja edit:
Yes, you got me. Of course you're right that inflation only affects the portion of wealth stored in money.
Real estate and land are tempting, because they are physical and, as you wrote, can be productive. However, I'm not sure if this is the most effective way to invest money. After all, the largest companies in the world are not real estate companies. I decided to put my savings into an S&P500 ETF.
Anyway, I do have a degree in economics and after all these years the concept of money is still not always clear to me, and cryptocurrencies, by extension, are even harder to understand.
There's your problem, right there. (I'm just kidding with you! )
This thread needs an interlude. Here's a sublime acoustic version of probably the best song from a band that I could be persuaded is maybe the third greatest band of all time:
Hot news coming in on the wire is the first web shop in Switzerland to accept ETH.
canbuy.ch is a headshop, so now you can buy low-THC ditchweed with that ETH you had to jump through all those hoops to obtain[*].
[*] I wouldn't bother since (a) it's low-THC ditchweed and (b) still nothing beats the convenience of PayPal for online purchases.