The bitcoin pyramid scheme How is that working out, where are the Lambos?

[Ichinisan]

WTF. The US dollar is very much not based on nothing!

Explain.

Other than faith, what is it based on?

 

[Ichinisan]

Except cryptocurrency doesn't really have an economy to reflect.

It's still emerging. If it happens at all, it won't be overnight.

 

[Kaido]

I mean, technically, the U.S. dollar is based on nothing:

https://buygoldandsilversafely.com/gold/what-really-backs-the-us-dollar/

U.S. dollars are backed by the “full faith and credit” of the U.S. Government.

Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything. Redeemable notes into gold ended in 1933 and silver in 1968. The notes have no value for themselves

Money is weird because it's just an idea. Plus, most money is digital these days (banks & credit & whatnot), which pretty much just exists in cyberspace on hard drives; the last I read, only 8% of the world's currency exists as cash. So those "notes" - which have no value, no backing, and can't be redeemed for any commodities - aren't even 1/10th of the money that actually exists & is in-use in the world.

We all just kind of agree that this system works, so it keeps working lol.

 

[Charmonium]

Government wouldn't really have any say in the emergence of an independent economy from crypto.

Yes and no. Look at China. They nearly stifled the growth of btc when they imposed restrictions on which banks could accept deposits in yuan for trading in btc. If someone can't trade their fiat currency for cryptos (and vice versa), then the latter go to zero.

Govts can also just flat out outlaw cryptos. Sure, you can always send your money to some trading company in Belize or Lichtenstein and buy cryptos, but what are you going to do with them after that?

In the context of cryptos, an "economy" is really a use case. Just like when BTC became the currency of the dark web. Or when Chinese nationals use it to skirt capital controls.

Cryptos will only have any value long term if there is an identifiable use case for them and only if they are optimized for that use case.

 

[Ichinisan]

Yes and no. Look at China. They nearly stifled the growth of btc when they imposed restrictions on which banks could accept deposits in yuan for trading in btc. If someone can't trade their fiat currency for cryptos (and vice versa), then the latter go to zero.

Govts can also just flat out outlaw cryptos. Sure, you can always send your money to some trading company in Belize or Lichtenstein and buy cryptos, but what are you going to do with them after that?

In the context of cryptos, an "economy" is really a use case. Just like when BTC became the currency of the dark web. Or when Chinese nationals use it to skirt capital controls.

Cryptos will only have any value long term if there is an identifiable use case for them and only if they are optimized for that use case.

Kinda pointless for a government to block crypto conversions to the government's own currency when you could just convert your crypto to another currency first, then convert to your government's preferred currency. I'm sure some international middleman entity would stand to benefit, which might not be in the government's best interest (money that could have stayed in the country, but got paid to an outsider instead).

 

[ultimatebob]

Don't forget that Coolcoin is pegged to the value of a Space Kitty T-Shirt, which makes it surprisingly stable in value.

I wish that you guys would post more cool stuff here, so I could actually hand out a t-shirt someday.

 

[BurnItDwn]

I put about $20 of electricity to coin generation a bunch of years ago, had like 3.1 bitcoins, eventually, got $350 for them, and then later, around $200 or so gyft cards I sent to a friend.

 

[whm1974]

I put about $20 of electricity to coin generation a bunch of years ago, had like 3.1 bitcoins, eventually, got $350 for them, and then later, around $200 or so gyft cards I sent to a friend.

Yeah but how much did the hardware cost you?

 

[BurnItDwn]

Yeah but how much did the hardware cost you?

Umm, my Radeon 4870 that I already had sitting in my gaming box .... I think it was like $200 or so when I bought it new.....

I didn't buy hardware for mining, I just left my gaming rig on to mine when wasn't using the PC.

 

[ultimatebob]

Take a look at that 1 year chart for Bitcoin:

https://www.coinbase.com/charts

That's just painful to look at right now.

 

[njdevilsfan87]

To answer OPs question:
https://www.reddit.com/r/Bitcoin/comments/a4q9ye/sold_my_portfolio_today_and_got_myself_a_lambo/

 

[[DHT]Osiris]

No lambos, but I netted a few grand mining. Would have been a lot more had I just bought BTC, but hindsight and all.

Was fun.

 

[zinfamous]

I mean, technically, the U.S. dollar is based on nothing:

https://buygoldandsilversafely.com/gold/what-really-backs-the-us-dollar/



Money is weird because it's just an idea. Plus, most money is digital these days (banks & credit & whatnot), which pretty much just exists in cyberspace on hard drives; the last I read, only 8% of the world's currency exists as cash. So those "notes" - which have no value, no backing, and can't be redeemed for any commodities - aren't even 1/10th of the money that actually exists & is in-use in the world.

We all just kind of agree that this system works, so it keeps working lol.

This. To me, paper currencies or crypto currencies are both based on nothing, or certainly based on something, depending on how you define either term. They have an intrinsic value, pegged to their own model--US Dollar is "faith in government and the economy that relies on it." The value of bitcoin is essentially tied to its point-to-point traceability and the fact that every single bitcoin or satoshi unit (or whatever the 1/100ths are called) that have ever and will ever be created represent a direct contract, forever traceable and confirmable, between two parties. Paper currency can never offer that level of security.

I think the idea is elegant, but I have no idea if it will ever pan out. The goal is to remove these many tiers of middle-man value manipulation that paper currencies endure from bank to bank to bank, fluctuating interest rates, comparisons to other currencies.

 

[JEDI]

I mean, technically, the U.S. dollar is based on nothing:

https://buygoldandsilversafely.com/gold/what-really-backs-the-us-dollar/



Money is weird because it's just an idea. Plus, most money is digital these days (banks & credit & whatnot), which pretty much just exists in cyberspace on hard drives; the last I read, only 8% of the world's currency exists as cash. So those "notes" - which have no value, no backing, and can't be redeemed for any commodities - aren't even 1/10th of the money that actually exists & is in-use in the world.

We all just kind of agree that this system works, so it keeps working lol.

the federal reserve is evil.
the founding fathers of the US never wanted a central banking system.

and hence why it lead to the collapse of the American dream:
https://www.youtube.com/watch?v=mII9NZ8MMVM (animated explanation)
starts at 6:00 min mark

 

[OCGuy]

I sold almost everything I had at ~$17k/BTC That looks like pretty good timing, as of now. Was mining in 2011, won about $40k in online casino payouts this year, and sold those coins as well.

Had to hire a specialized crypto-attorney/CPA to make sure the IRS stays happy.

 

[pete6032]

Aside from that and the use of cryptos for speculation, what use cases exist or can exist for them?

Microtransactions. Right now it's too expensive to charge someone a few cents or a couple dollars for something using a credit card or bank transfer, but if the network was "free" (less than a penny worth of electricity per transaction), then it is possible to send small sums of money at virtually no cost. Look into Iota, they are doing a lot of innovative work with their tangle concept.

 

[ponyo]

I sold almost everything I had at ~$17k/BTC That looks like pretty good timing, as of now. Was mining in 2011, won about $40k in online casino payouts this year, and sold those coins as well.

Had to hire a specialized crypto-attorney/CPA to make sure the IRS stays happy.View attachment 1489

Damn man. Congrats! Is that about $1.3 mil in bitcoin at $17k BTC? I'm glad someone here made a killing. This being tech site I figured handful of people must got in at the ground floor or very close to it and made crazy money. Better to be lucky than smart!

 

[OCGuy]

Damn man. Congrats! Is that about $1.3 mil in bitcoin at $17k BTC? I'm glad someone here made a killing. This being tech site I figured handful of people must got in at the ground floor or very close to it and made crazy money. Better to be lucky than smart!

You're in the ballpark.....but still 15% long-term capital gains tax is hard to swallow

 

[Red Squirrel]

I had to get rid of my lambos to make room for more mining rigs. When new ASICs come out you have to jump on that. I was never driving them anyway since my chaufeur just picks me up and drops me off everywhere and the limo is always already warmed up. I'm debating on buying Hydro One soon. They won't build more dams and I need more power. Easier to just buy them out than to deal with customer service.

 

[VirtualLarry]

I'm debating on buying Hydro One soon. They won't build more dams and I need more power. Easier to just buy them out than to deal with customer service.

Spoken like a true miner...

 

[ultimatebob]

Yeah, this hasn't exactly been a stellar year for Bitcoin:

 

[JEDI]

Yeah, this hasn't exactly been a stellar year for Bitcoin:

bitcoin is down to $3k?!

lol.. it costs more than $3k to mine a bitcoin nowadays.
i can see all those bitcoin farms going bankrupt

 

[Red Squirrel]

ASICs still make it worthwhile but you have to have been in the game since the earlier days to be able to even justify paying to buy the ASICs. I also wonder if a lot of the mining is going on by companies MAKING the ASICs. I mean, if you can make something that can make you more money it seems to me it makes more sense to just keep it to yourself.

 

[DrMrLordX]

bitcoin is down to $3k?!

lol.. it costs more than $3k to mine a bitcoin nowadays.
i can see all those bitcoin farms going bankrupt

They are. Many farms in China shut down when the price went below $4k. Older ASIC miners are being sold by weight.

ASICs still make it worthwhile but you have to have been in the game since the earlier days to be able to even justify paying to buy the ASICs. I also wonder if a lot of the mining is going on by companies MAKING the ASICs. I mean, if you can make something that can make you more money it seems to me it makes more sense to just keep it to yourself.

Some ASICs yes, some no. Older ones are now chewing up too much power to be profitable unless you are on a renewable energy source and have already paid the installation cost.

 

[Red Squirrel]

That's the thing with ASICS you need to keep upgrading them. That's why it's probably not worth getting into them now because by the time they ship they are already obsolete. They are only good for like a few months. It's a huge waste imo, I wonder where all these old ASICs are ending up, I picture huge landfills just filled with them sadly.

The only way it would be viable is if you are running them off solar power. But even then as the difficulty keeps going up at an exponential rate even if you have a 100kw farm it might simply not make enough profit to be worthwhile so yous till end up upgrading them often.