[HN Gopher] Betting Against Bitcoin
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Betting Against Bitcoin
Author : JoachimS
Score : 68 points
Date : 2021-11-02 07:18 UTC (15 hours ago)
(HTM) web link (paulbutler.org)
(TXT) w3m dump (paulbutler.org)
| luciusdomitius wrote:
| Yet another bunch of arguments that had been made many times over
| the last years. Sad to watch, frankly.
| lolsal wrote:
| Do you have any constructive criticisms or feedback about the
| article or the article's position?
| protoax wrote:
| Note the ironic reflection of one of the article's points: A
| cringey us-versus-them mentality in the clearly condescending
| quote "Sad to watch, frankly."
| [deleted]
| Ecstatify wrote:
| Is betting against crypto a smart move? How much could you earn
| potentially going with the whole crypto movement instead of
| betting against it. Some people love being right other people
| like making money.
| nuerow wrote:
| > _How much could you earn potentially going with the whole
| crypto movement instead of betting against it._
|
| Not far ago, bitcoin's market price tanked down to around half
| it's value in a matter of days, and it stayed down for a long
| time. That would have been a nice payday for a shorter with
| good timing.
| jmole wrote:
| The article is thinking about mining in the wrong way. Mining is
| the reason that the price of bitcoin didn't collapse over the
| last few bear cycles. The raw energy cost to mine bitcoin
| (coupled with investor FOMO & buy-the-dip mentality) sets a price
| floor that's hard to overcome because it's tied to physical
| assets and production.
|
| Once you have a mining farm, it takes nothing but electricity to
| keep it going, & electricity is cheap.
| Tenoke wrote:
| I don't see how it creates a price floor. The profits from
| mining are tied to the price but not vice versa. If the price
| drops there's no mining-related mechanism to increase it and
| buyers and sellers have no reason to care or be affected by how
| profitable mining is or what the hashrate is.
| bdcravens wrote:
| There is a price floor, but it's much, much lower than most
| people realize. They need only turn a profit to keep their
| miners on.
|
| Over the long term the mining difficulty does shift, which
| presumably would attract more miners (and vice versa) that
| would affect the elasticity. However, that's not the creation
| of a price floor that Bitcoin advocates claim.
| ALittleLight wrote:
| That's not a price floor though. A price floor would be
| some reason Bitcoin wouldn't go below a specific price. If
| Bitcoin falls below the price you can profitably mine it
| that means people will stop mining it, it doesn't mean that
| anyone will buy more Bitcoin and support the price.
| megameter wrote:
| The actual supply coming into the market remains the same
| while the mining difficulty shifts according to network
| hashrate(determined by the time between new blocks),
| hence assuming demand for Bitcoin is static, there is an
| equilibration mechanism creating a _break-even_ price
| floor. Bitcoin 's price appreciation has demonstrated
| that demand can be sustained through multiple market
| cycles, and nothing in particular has changed that
| assessment.
|
| Bigger worries for Bitcoiners stem from centralization of
| hash power, and whether transaction fees alone will
| sustain the network as it exits the inflationary period.
| bob229 wrote:
| Cryptos are for idiots
| bko wrote:
| I have to hand it to the author that at least he stands by his
| convictions through a short position. And betting against miners
| is probably the cleanest short Bitcoin position you can get.
|
| A lot of his arguments against Bitcoin are based on the idea that
| proof of work and mining in general are unnecessary and don't
| serve any purpose. He also talks about how mining fees are
| basically a tax. But the miners are securing the network. The
| larger the network grows in value (ie Bitcoin price), the more
| important the function of securing the network is. Proof of stake
| is talked about as a plug in alternative, but what that really
| means is that the people with the most money have the most amount
| of control over the protocol (sound familiar?). With proof of
| work on the other hand, anyone can start participating and its
| much more democratic than proof of stak.
|
| > It's all wealth redistribution, not value creation.
|
| The argument that digital gold has no value outside of
| speculation usually comes from people in rich developed countries
| with a strong financial system. They can't imagine anyone lives
| in a country where it's illegal to hold certain currencies or
| assets. Where they see their wealth shrink double digit amount
| every year. Where they have to go through great lengths to spend
| their money as soon as they get it due to inflation. Bitcoin is
| obviously too volatile to be used in transactions or a safe store
| of value, but theres a lot of work to be done in expanding
| financialization to the developing world
| RNCTX wrote:
| > The argument that digital gold has no value outside of
| speculation usually comes from people in rich developed
| countries with a strong financial system. They can't imagine
| anyone lives in a country where it's illegal to hold certain
| currencies or assets.
|
| Whereas they could simply buy 10 million dollars worth of video
| cards, and thus solve their economic problems, lol.
| GDC7 wrote:
| How much money do these developing countries have to pump the
| price of Bitcoin from 0 to 65k??
|
| This is New York and San Francisco buying , don't kid
| yourself.
|
| For sure it ain't Lagos and and Caracas pumping the price to
| 65k
| elwell wrote:
| > proof of work on the other hand
|
| Doesn't that have the same fault? People with the most money
| can prove the most work.
| bko wrote:
| I can enter at any time and its marginal. So I don't need to
| control a large share of tokens. For instance, Ethereum's
| proposed proof of stake requires a minimum of 32 ETH to
| participate or $144k at today's valuation. This is required
| since you need to have something at stake in case you're
| dishonest. And this minimum will grow as the network grows.
|
| There's already been decisions made with this in mind. For
| instance, during the DAO hack, a big consideration when
| considering a hard fork was that the hacker got a sizable
| portion of all ETH. Knowing that Ethereum would move over to
| proof of stake in the near future, that was simply
| unacceptable so they decided for a hard fork invalidating the
| stolen funds.
|
| Ether already suffers from concentrated ownership and has
| practically no defined monetary policy. So it's very
| centralized. Switching to proof of stake will further
| centralize control.
|
| Proof of work however anyone can start / stop mining at any
| time with no resistance, making it more decentralized.
|
| [0] https://www.gemini.com/cryptopedia/the-dao-hack-makerdao
| chrisco255 wrote:
| There's already pooling solutions for staking and more
| coming online such as https://rocketpool.net that do not
| have minimums.
|
| Ethereum doesn't have a monetary policy, it has a security
| policy: the minimum issuance necessary to secure the
| network.
|
| You can't simply start mining to any significant degree on
| Bitcoin without setting up a data center filled with
| customized ASIC chips that are useless for anything else
| but mining Bitcoin.
|
| At least Ether's current proof of work mining is GPU based.
| And at least the GPUs will be valuable for AI and graphics
| rendering after the network migrates fully to proof of
| stake.
|
| Ethereum has more than 200K validators on the proof of
| stake Beacon chain right now and is expected to rise
| dramatically as the Merge gets closer. It is highly
| decentralized.
| pkulak wrote:
| > With proof of work on the other hand, anyone can start
| participating and its much more democratic than proof of stake.
|
| Wait, how is that? Anyone can mine Bitcoin by buying 100s of
| dollars of purpose-built mining hardware. Anyone can stake
| Algorand by... buying hundreds of dollars of Algorand. Anyone
| can control a huge portion of either network by spending
| millions. I'm not sure what the difference is here, except for
| the e-waste and electricity, of course.
| notimrelakatos wrote:
| > The argument that digital gold has no value outside of
| speculation usually comes from people in rich developed
| countries with a strong financial system
|
| Some developing countries even have shitcoins as their official
| currency, like the Brazilian Real. So for us crypto comes
| almost naturally.
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(page generated 2021-11-02 23:02 UTC)