Bitcoinย is a decentralizedย digital currencyย that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority:ย transaction managementย andย money issuanceย are carried out collectively by the network.
The original Bitcoin software byย Satoshi Nakamotoย was released under the MIT license. Most client software, derived or “from scratch”, also use open source licensing.
The currency began use in 2009ย when its implementation was released asย open-source software.
Bitcoins are created as a reward for a process known asย mining. They can be exchanged for other currencies, products, and services, but the real-world value of the coins is extremely volatile.
Bitcoin is the first successful implementation of aย distributed crypto-currency, described in part in 1998 byย Wei Daiย on the cypherpunks mailing list. Building upon the notion that money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context, Bitcoin is designed around the idea of using cryptography to control the creation and transfer of money, rather than relying on central authorities.
Bitcoins have all the desirable properties of a money-like good. They are portable, durable, divisible, recognizable, fungible, scarce and difficult to counterfeit.
Bitcoin has been criticized for its use in illegal transactions, the large amount of electricity (and thusย carbon footprint) used by mining,ย price volatility, and thefts from exchanges.
Some economists and commentators have characterized it as aย speculative bubbleย at various times.
Bitcoin has also been used as an investment, although several regulatory agencies have issued investor alerts about bitcoin.
Research produced by theย University of Cambridgeย estimated that in 2017, there were 2.9 to 5.8 million unique users using aย cryptocurrency wallet, most of them using bitcoin.
Why?
bitcoin facts
Bitcoin is P2P electronic cash that is valuable over legacy systems because of the monetary autonomy it brings to its users.
Bitcoin seeks to address the root problem with conventional currency: all the trust that’s required to make it work — Not that justified trust is a bad thing, but trust makes systems brittle, opaque, and costly to operate.
Trust failures result in systemic collapses, trust curation creates inequality and monopoly lock-in, and naturally arising trust choke-points can be abused to deny access to due process.
Through the use of cryptographic proof, decentralized networks and open source software Bitcoin minimizes and replaces these trust costs.
Permissionlessย andย borderless. The software can be installed by anybody worldwide.
Anonymous. Bitcoin does not require any ID to use making it suitable for the unbanked, the privacy-conscious, computers or people in areas with underdeveloped financial infrastructure.
No counterparty risk. If you keep theย private keyย of a bitcoin secret and the transaction has enough confirmations, then nobody can take them from you no matter for what reason, no matter how good the excuse, no matter what.
Can be underย divided possessionย withย Multisignature. For example with a 2-of-3 multisig scheme there would beย threeย private keys, of whichย any twoย is enough to spend the money. Those three keys can be spread anywhere, perhaps in multiple locations or known by multiple people. No other asset does this, for example you cannot hold gold coins under multisig.
What is Bitcoin?
People’s Currency
A. Bitcoin is a peer-to-peer currency. Peer-to-peer means that no central authority issues new money or tracks transactions. These tasks are managed collectively by theย network.
What is Bitcoin
How does Bitcoin work?
Bitcoin Genesis BlockAsics Mining Farm
A. Bitcoin usesย public-key cryptography, peer-to-peer networking, andย proof-of-workย to process and verify payments. Bitcoins are sent (or signed over) from one address to another with each user potentially having many, many addresses. Each payment transaction is broadcast to the network and included in the blockchain so that the included bitcoins cannot be spent twice. After an hour or two, each transaction is locked in time by the massive amount of processing power that continues to extend the blockchain. Using these techniques, Bitcoin provides a fast and extremely reliable payment network that anyone can use.
In a first, Bitcoin developers have done something amazing amid the criticism over the lightning network and issues associated with it. A team of developers has made an international payment using the radio … Continue reading International payment using the radio waves→
My inspiration for this page was given to me by my new aquired friend, a fellow Truth Seeker – Joris and to whom I dedicate this page… Wish you… as well as to … Continue reading Discipline Quotes→
Bitcoin white paper turns 15 and the Legacy of Satoshi Nakamoto lives on. โIโve been working on a new electronic cash system thatโs fully peer-to-peer, with no trusted third party,โ Satoshi Oct. 31, … Continue reading Bitcoin White Paper turn 15→
A drop of Wisdom in an ocean of Ignorance, Stupidity, Mediocrity and Madness, that this world has become lately copฤcel… Sad…
May these quotes from bright minds all over the planet guide you and bring a ray of light on Your path !
From Papi with ๐งก Love ๐งก
Napoleon Hill
Napoleon Hill was an American author in the area of the new thought movement who was one of the earliest producers of the modern genre of personal-success literature.
He is widely considered to be one of the great writers on success.
His most famous work, Think and Grow Rich (1937), is one of the best-selling books of all time (at the time of Hill’s death in 1970, Think and Grow Rich had sold 20 million copies).
Hill’s works examined the power of personal beliefs, and the role they play in personal success.
He became an advisor to President Franklin D. Roosevelt from 1933 to 1936. “What the mind of man can conceive and believe, it can achieve” is one of Hill’s hallmark expressions.
How achievement actually occurs, and a formula for it that puts success in reach of the average person, were the focal points of Hill’s books.
” The starting point of all achievement is DESIRE.
Keep this constantly in mind.
Weak desire brings weak results, just as a small fire makes a small amount of heat. “
Napoleon Hill – “Think and Grow Rich”
Desire
Whatever the mind can conceive and believe, it can achieve. “
Napoleon Hill – “Think and Grow Rich”
The Mind
” You are the master of your destiny.
You can influence, direct and control your own environment.
You can make your life what you want it to be. “
Napoleon Hill – “Think and Grow Rich”
The Master of your destiny
” When defeat comes, accept it as a signal that your plans are not sound, rebuild those plans, and set sail once more toward your coveted goal. “
Napoleon Hill – “Think and Grow Rich”
Defeat
” Do not wait: the time will never be ‘just right’.
Start where you stand, and work whatever tools you may have at your command and better tools will be found as you go along. “
Napoleon Hill
Time will never be just right’
” When your desires are strong enough, you will appear to possess superhuman powers to achieve. “
Napoleon Hill
Desires and superhuman powers
” A quitter never wins and a winner never quits. “
Napoleon Hill
Quitter vs. Winner
” The man who does more than he is paid for will soon be paid for more than he does. “
Napoleon Hill
More than you’re paid
” Our only limitations are those we set up in our own minds. “
Napoleon Hill
Limitations
” Happiness is found in doing, not merely possessing. “
Napoleon Hill – “Think and Grow Rich”
Happiness
” An educated man is not, necessarily, one who has an abundance of general or specialized knowledge.
An educated man is one who has so developed the faculties of his mind that he may acquire anything he wants, or its equivalent, without violating the rights of others. “
Napoleon Hill – “Think and Grow Rich”
An educated man
” Every adversity, every failure, every heartbreak, carries with it the seed of an equal or greater benefit. “
Napoleon Hill – “Think and Grow Rich”
The Seed
” More gold had been mined from the mind of men than the earth it self. “
Napoleon Hill – “Think and Grow Rich”
Mind gold
” A goal is a dream with a deadline. “
Napoleon Hill
Goal
” Opinions are the cheapest commodities on earth.
Everyone has a flock of opinions ready to be wished upon anyone who will accept them.
If you are influenced by “opinions” when you reach DECISIONS, you will not succeed in any undertaking. “
Napoleon Hill – “Think and Grow Rich”
Opinions…cheapest commodities on earth !
” We refuse to believe that which we don’t understand. “
Napoleon Hill – “Think and Grow Rich”
Refuse to believe…
” You are entitled to know that two entities occupy your body.
One of these entities is motivated by and responds to the impulse of fear.
The other is motivated by and responds to the impulse of faith.
Will you be guided by faith or will you allow fear to overtake you? “
Napoleon Hill – “Outwitting the Devil: The Secret to Freedom and Success”
Fear
” Remember that your dominating thoughts attract, through a definite law of nature, by the shortest and most convenient route, their physical counterpart.
Be careful what your thoughts
dwell upon. “
Napoleon Hill – “Outwitting the Devil: The Secret to Freedom and Success”
Law of Nature
” IF – and this is the greatest of them all – I had the courage to see myself as I really am, I would find out what is wrong with me, and correct it, then I might have a chance to profit by my mistakes and learn something from the experience of others,for I know that there is something WRONG with me, or I would now be where I WOULD HAVE BEEN IF I had spent more time analyzing my weaknesses, and less time building alibis to cover them. “
Napoleon Hill – “Think and Grow Rich”
Courage to see thyself
” First comes thought; then organization of that thought, into ideas and plans; then transformation of those plans into reality.
The beginning, as you will observe, is in your imagination. “
Napoleon Hill
Imagination
” The strongest oak of the forest is not the one that is protected from the storm and hidden from the sun.
Itโs the one that stands in the open where it is compelled to struggle for its existence against the winds and rains and the scorching sun. “
Napoleon Hill
Strongest oak
” Weak desires bring weak results, just as a small amount of fire brings a small amount of heat. “
Napoleon Hill
Weak desires
” In parting, I would remind you that โLife is a checkerboard, and the player opposite you is time.
If you hesitate before moving, or neglect to move promptly, your men will be wiped off the board by time.
You are playing against a partner who will not tolerate decisions! “
Napoleon Hill – “Think and Grow Rich”
Life is a checkboard
” Persistence is to the character of man as carbon is to steel. “
Napoleon Hill
Persistance
” A genius is simply one who has taken full possession of his own mind and directed it toward objectives of his own choosing, without permitting outside influences to discourage or mislead him. “
Napoleon Hill
Genius
” Neglecting to broaden their view has kept some people doing one thing all their
lives.”
Napoleon Hill – “Think and Grow Rich”
Broaden your view
” If you are not learning while youโre earning, you are cheating yourself out of the better portion of your compensation. “
Napoleon Hill
Learning while you’re earning
” Wise men, when in doubt whether to speak or to keep quiet, give themselves the benefit of the doubt, and remain silent. “
Napoleon Hill
Silence
” One who has loved truly, can never lose entirely.
Love is whimsical and temperamental. Its nature is ephemeral, and transitory.
It comes when it pleases,and goes away without warning.
Accept and enjoy it while it remains, but spend no time worrying about its departure.
Worry will never bring it back. “
Napoleon Hill – “Think and Grow Rich”
Love
” TELL THE WORLD WHAT YOU INTEND TO DO, BUT FIRST SHOW IT.
This is the equivalent of saying “deeds, and not words, are what count most. “
Napoleon Hill – “Think and Grow Rich”
” Remember,too,that all who succeed in life get off to a bad start,and pass through many heartbreaking struggles before they “arrive”.
The turning point in the lives of those who succeed usually comes at some moment of crisis,through which they are introduced to their “other selves”. “
Napoleon Hill – “Think and Grow Rich”
The turning point
“Most great people have attained their greatest success just one step beyond their greatest failure.”
Napoleon Hill
One step beyond your greatest failure
” Awake, arise,and assert yourself,
you dreamers of the world.
Your star is now in ascendancy. “
Napoleon Hill – “Think and Grow Rich”
Dreamers of the world
” Most so called FAILURES are only temporary defeats. “
Napoleon Hill – “Law of Success”
Temporary defeats
” Effort only fully releases its reward after a person refuses to quit. “
Napoleon Hill
Effort and reward
” Fears are nothing more than
a state of mind. “
Napoleon Hill – “Law of Success”
Fears
” Whatever the mind can conceive and believe, the mind can achieve regardless of how many times you may have failed in the past or how lofty your aims and hopes may be. “
Napoleon Hill
The mind
” You are entitled to know that two entities occupy your body.
One of these entities is motivated by and responds to the impulse of fear.
The other is motivated by and responds to the impulse of faith.
Will you be guided by faith or will you allow fear to overtake you? “
Napoleon Hill – “Outwitting the Devil: The Secret to Freedom and Success”
Faith vs Fear
” The only limitation is that which one sets up in one’s own mind. “
Napoleon Hill – “Think and Grow Rich”
Limitation
” Every man is what he is, because of the dominating thoughts which he permits to occupy his mind. “
Napoleon Hill – “Think and Grow Rich”
Dominating thoughts
” There is no substitute for persistence.
The person who makes persistence his watch-word, discovers that โOld Man Failureโ finally becomes tired, and makes his departure.
Failure cannot cope with persistence. “
Napoleon Hill – “Think and Grow Rich”
Persistance
” The most practical of all methods for controlling the mind is the habit of keeping it busy with a definite purpose, backed by a definite plan.”
And
“A man whose mind is filled with fear not only destroys his own chances of intelligent action, but he transmits these destructive vibrations to the minds of all who come in contact with him, and destroys, also, their chances.”
Napoleon Hill – “Think and Grow Rich”
Mind busy with definite purpose
” Patience, persistence and perspiration make an unbeatable combination for success. “
Napoleon Hill
3 P’s
“Success requires no explanations.
Failure permits no alibis.”
Napoleon Hill – “Think and Grow Rich”
Success
” He had nothing to start with, except the capacity to know what he wanted, and the determination to stand by that desire until he realized it. “
Napoleon Hill, Think and Grow Rich
Determination and Desire
” Nature will not tolerate idleness or vacuums of any sort.
All space must be and is filled with something . . .
When the individual does not use the brain for the expression of positive, creative thoughts, nature fills the vacuum by forcing the brain to act upon negative thoughts.
Napoleon Hill – “Outwitting the Devil: The Secret to Freedom and Success”
Nature
” Close friends and relatives, while not meaning to do so, often handicap one through โopinionsโ and sometimes through ridicule, which is meant to be humorous.
Thousands of men and women carry inferiority complexes with them all through life, because some well-meaning, but ignorant person destroyed their confidence through โopinionsโ or ridicule. “
Napoleon Hill – “Think and Grow Rich”
Opinions
” If you must be careless with your possessions, let it be in connection with material things.
Your mind is your spiritual estate!
Protect and use it with the care to which Divine Royalty is entitled.
You were given a WILL-POWER for this purpose. “
Napoleon Hill – “Think and Grow Rich”
Your mind is your spiritual estate
” Deliberately seek the company of people who influence you to think and act for yourself. “
Napoleon Hill – “Think and Grow Rich”
Company of people who influence you
” Remember, the thoughts that you think and the statements you make regarding yourself determine your mental attitude.
If you have a worthwhile objective, find the one reason why you can achieve it rather than hundreds of reasons why you canโt. “
Napoleon Hill
Worthwhile objective
” Failure always is a blessing when it forces one to acquire knowledge or to build habits that lead to the achievement of oneโs major purpose in life. “
Napoleon Hill – “Outwitting the Devil: The Secret to Freedom and Success”
Failure
” All the breaks you need in life wait within your imagination.
Imagination is the workshop of your mind, capable of turning mind energy into accomplishment and wealth. “
Napoleon Hill
Imagination – the workshop of your mind
“Knowledge has no value except that which can be gained from its application towards some worthy end.”
Napoleon Hill, Think and Grow Rich
Knowledge
” The ladder of success is never crowded at the top. “
Napoleon Hill – “Think and Grow Rich”
Ladder of success
” There is one weakness in people for which there is no remedy.
It is the universal weakness of LACK OF AMBITION! “
Napoleon Hill – “Think and Grow Rich”
Lack of Ambition
“One of the most common causes of failure is the habit of quitting when one is overtaken by temporary defeat.”
Napoleon Hill – “Think and Grow Rich”
Temporary defeat
” Love is essential for happiness, but the person who loves so deeply that his or her happiness is placed entirely in the hands of another, resembles the little lamb who crept into the den of the nice, gentle little wolf and begged to be permitted to lie down and go to sleep, or the canary. “
Napoleon Hill – “The Law of Success in Sixteen Lessons”
Love
” The leaders in every walk of life decide quickly, and firmly.
That is the major reason why they are leaders.
The world has the habit of making room for the man whose words and actions show that he knows where he is going. “
Napoleon Hill – “Think and Grow Rich”
Know where you’re going
” ASK any wise man what he most desires and he will, more than likely, say “more wisdom. “
Napoleon Hill – “The Law of Success in Sixteen Lessons”
More Wisdom
” You have a brain and mind of your own.
Use it, and reach your own decisions. “
Napoleon Hill – “Think and Grow Rich”
You have a brain…Use it!
Thoughts are things,” and powerful things at that, when they are mixed with definiteness of purpose, persistence, and a burning desire…
Napoleon Hill
Thoughts are things
” Every person who wins in any undertaking must be willing to burn his ships and cut all sources of retreat.”
Napoleon Hill – “Think and Grow Rich”
No retreat
” The mind has a definite way of clothing one’s thoughts in appropriate physical equivalents.
Think in terms of poverty and you will live in poverty.
Think in terms of opulence and you will attract opulence.
Through the eternal law of harmonious attraction, one’s thoughts always clothe themselves in material things appropriate unto their nature. “
Napoleon Hill – “You Can Work Your Own Miracles”
The Mind
” No man is your enemy, no man is your friend, every man is your teacher. “
Napoleon Hill – “The Prosperity Bible: The Greatest Writings of All Time on the Secrets to Wealth and Prosperity”
Every man is your teacher
” INSUFFICIENT EDUCATION.
This is a handicap that may be overcome with comparative ease.
Experience has proven that the best-educated people are often those who are known as โself-madeโ or self-educated.
It takes more than a university degree to make one a person of education.
Any person who is educated has learned to get whatever they want in life without violating the rights of others.
Education consists not so much of knowledge, but of knowledge effectively and persistently applied.
People are paid not merely for what they know, but more particularly for what they do with what they know. “
Napoleon Hill – “Think and Grow Rich”
Self-Education
” Then accumulated knowledge is not wisdom?
A Great heavens, no!
If knowledge were wisdom, the achievements of science would not have been converted into implements of destruction. “
Napoleon Hill – “Outwitting the Devil: The Secret to Freedom and Success”
Knowledge vs Wisdom
” The entire world is made up of only two things, energy and matter.
In elementary physics we learn that neither matter nor energy (the only two realities known to man) can be created nor destroyed.
Both matter and energy can be transformed, but neither can be destroyed.
Life is energy, if it is anything.
If neither energy nor matter can be destroyed, of course life cannot be destroyed.
Life, like other forms of energy, may be passed through various processes of transition, or change, but it cannot be destroyed.
Death is mere transition.
If death is not mere change, or transition, then nothing comes after death except a long, eternal, peaceful sleep, and sleep is nothing to be feared.
Thus you may wipe out, forever, the fear of Death. “
Napoleon Hill – “Think and Grow Rich”
Fear of Death
” ‘Master Mind’, meaning a mind that is developed through the harmonious co-operation of two or more people who ally themselves for the purpose of accomplishing any given task. “
Napoleon Hill – “The Law of Success”
“Master Mind”
” KNOWLEDGE will not attract money, unless it is organized, and intelligently directed, through practical PLANS OF ACTION, to the DEFINITE END of accumulation of money.
Lack of understanding of this fact has been the source of confusion to millions of people who falsely believe that “knowledge is power.”
It is nothing of the sort!
Knowledge is only potential power.
It becomes power only when, and if, it is organized into definite plans of action, and directed to a definite end. “
In a first, Bitcoin developers have done something amazing amid the criticism over the lightning network and issues associated with it. A team of developers has made an international payment using the radio … Continue reading International payment using the radio waves→
My inspiration for this page was given to me by my new aquired friend, a fellow Truth Seeker – Joris and to whom I dedicate this page… Wish you… as well as to … Continue reading Discipline Quotes→
Bitcoin white paper turns 15 and the Legacy of Satoshi Nakamoto lives on. โIโve been working on a new electronic cash system thatโs fully peer-to-peer, with no trusted third party,โ Satoshi Oct. 31, … Continue reading Bitcoin White Paper turn 15→
The Times 03/Jan/2009WikileaksLost coinsTransaction feesAnonymous vs. Pseudonymousbitcoin’s convenience against credit cardsScarce assetGenerate new bitcoin addressNot having bitcoin would be the net wasteInflation vs. Deflation in bitcoinPotential for a positive feedback loop…gain a new territory of freedom…E-currency based on cryptographic proofAttractive to the libertarian viewpointRoot problem with conventional currency
” It isnโt obvious that the world had to work this way.
But somehow the universe smiles on encryption.โ
Julian Assange
Nobody yet knows for sure if the universeโs smile is genuine or not.
It is possible that our assumption of mathematical asymmetries is wrong and we find that P actually equals NP, or we find surprisingly quick solutions to specific problems which we currently assume to be hard.
If that should be the case, cryptography as we know it will cease to exist, and the implications would most likely change the world beyond recognition.
โVires in Numerisโ
=
โStrength in Numbersโ
epii
Vires in numeris is not only a catchy motto used by bitcoiners.
The realization that there is an unfathomable strength to be found in numbers is a profound one.
Understanding this, and the inversion of existing power balances which it enables changed my view of the world and the future which lies ahead of us.
One direct result of this is the fact that you donโt have to ask anyone for permission to participate in Bitcoin.
There is no page to sign up, no company in charge, no government agency to send application forms to.
Simply generate a large number and you are pretty much good to go.
The central authority of account creation is mathematics.
Bitcoin is built upon our best understanding of reality.
While there are still many open problems in physics, computer science, and mathematics, we are pretty sure about some things.
That there is an asymmetry between finding solutions and validating the correctness of these solutions is one such thing.
That computation needs energy is another one.
In other words: finding a needle in a haystack is harder than checking if the pointy thing in your hand is indeed a needle or not.
And finding the needle takes work.
The vastness of Bitcoinโs address space is truly mind-boggling.
The number of private keys even more so. It is fascinating how much of our modern world boils down to the improbability of finding a needle in an unfathomably large haystack.
I am now more aware of this fact than ever.
Bitcoin taught me that there is strength in numbers.
Bitcoin naysayers1 wring their hands over how Bitcoin can’t go mainstream. They gleefully worry that Bitcoin will not make it across the innovation chasm:
Existing and upcoming fiat payment systems are or will be superior
It’s too volatile
The government will ban it
It won’t scale
The response from the Bitcoin community is to either endlessly argue over the above points3 or to find their inner Bitcoin Jonah4 with platitudes like:
Bitcoin the currency doesn’t matter, it’s the block chain technology that matters
It would be better if the block chain technology were used by banks and governments
Bitcoin should continue to be a niche system for the bit-curious, it’s just an experiment
Fiat and Bitcoin will live side-by-side, happily ever after
Bitcoin is the Myspace of ‘virtual currency’
The above sophisms are each worth their own article, if just to analyze the psycho-social archetypes of the relevant parrots.
A few of the criticisms mentioned earlier are correct, yet they are complete non sequiturs. Bitcoin will not be eagerly adopted by the mainstream, it will be forced upon them. Forced, as in “compelled by economic reality“.
People will be forced to pay with bitcoins, not because of ‘the technology’, but because no one will accept their worthless fiat for payments.
Contrary to popular belief, good money drives out bad. This “driving out” has started as a small fiat bleed.
It will rapidly escalate into Class IV hemorrhaging due to speculative attacks on weak fiat currencies. The end result will be hyperbitcoinization, i.e. “your money is no good here”.
Thiers’ Law: Good Money Drives Out Bad
Historically, it has been good, strong currencies that have driven out bad, weak currencies.
Over the span of several millennia, strong currencies have dominated and driven out weak in international competition.
The florins, ducats and sequins of the Italian city-states did not become the “dollars of the Middle Ages” because they were bad coins; they were among the best coins ever made.
The pound sterling in the 19th century and the dollar in the 20th century did not become the dominant currencies of their time because they were weak.
Consistency, stability and high quality have been the attributes of great currencies that have won the competition for use as international money.
Bitcoins are not just good money, they are the best money.5
The Bitcoin network has the best monetary policy6 and the best brand.7
We should therefore expect that bitcoins will drive out bad, weak currencies.8
By what process will bitcoins become the dominant currency? Which fiat currencies will be the first to disappear?
These are the interesting questions of the day, as the necessary premises for these questions are already established truths.9
1. Fiat Bleed
Bitcoin’s current trend is to increase in value on an exponential trend line as new users arrive in waves.
The good money is “slowly” driving out the bad.
Two factors drive this:
Reduction in information asymmetry โ people are learning about Bitcoin and coming to the realization that bitcoins are indeed the best money. Possible overlapping motives:
FOMO โ fear of missing out, see Regret Theory and ingroups, aka avarice and status-seeking
PISD โ post-internet stress disorder, aka “disruption”, “next big thing”, “internet of money”
Increasing liquidity โ buying bitcoins is more convenient and has fewer fees attached today than a year ago. One can reasonably predict that this will also be the case a year from now. Why? Because selling bitcoins is a profitable and competitive business. Why? Because people want bitcoins, see above.
The waves have a destabilizing effect on the exchange rate: speculators are unsure of the amplitude or wavelength of adoption, and amateurish punters let their excitement as well as subsequent fear overwhelm them.
Regardless, once the tide has pulled back and the weak hands have folded, the price is a few times higher than before the wave.
This ‘slow’ bleed is the current adoption model, and commentators generally assume one of the following:
Slow bleed never occurred, it’s a fiction based on misleading data
Slow bleed has stopped, the above motives only affect lolbertarians and angry teens
The process will taper off now, as all the super tech-savvy people are already getting on board
My own prediction is that slow bleed has been accelerating and is only the first step.
The second step will be speculative attacks that use bitcoins as a platform.
The third and final step will be hyperbitcoinization.
2. Currency Crises
It might make sense just to get some in case it catches on.
If enough people think the same way, that becomes a self fulfilling prophecy.
” Once it gets bootstrapped, there are so many applications if you could effortlessly pay a few cents to a website as easily as dropping coins in a vending machine. “
Slow bleed leads to currency crisis as the expected value of bitcoins solidifies in people’s minds.
At first they are conservative, they invest “what they can afford to lose”.
After 12-18 months, their small stash of bitcoins has dramatically increased in value.
They see no reason why this long term trend should reverse: the fundamentals have improved and yet adoption remains low.
Their confidence increases. They buy more bitcoins. They rationalize: “well, it’s only [1-5%] of my investments”. They see the price crash a few times, due to bubbles bursting or just garden-variety panic sales โ it entices them to buy more, “a bargain”. Bitcoin grows on the asset side of their balance sheet.
On the liability side of the Bitcoiner’s balance sheet there are mortgages, student loans, car loans, credit cards, etc.
Everyone admonishes people to not borrow in order to buy bitcoins.
The reality is that money is fungible: if you buy bitcoins instead of paying down your mortgage’s principal, you are a leveraged bitcoin investor.
Almost everyone is a leveraged bitcoin investor, because it makes economic sense (within reason).
The cost of borrowing (annualized interest rates ranging from 0% to 25%) is lower than the expected return of owning bitcoins.
How leveraged someone’s balance sheet is depends on the ratio between assets and liabilities.
The appeal of leveraging up increases if people believe that fiat-denominated liabilities are going to decrease in real terms, i.e. if they expect inflation to be greater than the interest rate they pay.
At that point it becomes a no-brainer to borrow the weak local currency using whatever collateral a bank will accept, invest in a strong foreign currency, and pay back the loan later with realized gains.
In this process, banks create more weak currency, amplifying the problem.
The effect of people, businesses, or financial institutions borrowing their local currency to buy bitcoins is that the bitcoin price in that currency would go up relative to other currencies.
To illustrate, let’s say that middle-class Indians trickle into bitcoin. Thousands of buyers turns into hundreds of thousands of buyers.
They borrow Indian Rupees using whatever unencumbered collateral they have โ homes, businesses, gold jewelry, etc.
They use these Rupees to buy bitcoins. The price of bitcoins in Indian Rupees goes up, a premium develops relative to other currency pairs.
A bitcoin in India might be worth $600, while in the U.S. it trades at $500. Traders would buy bitcoins in the U.S. and sell them in India to net a $100 gain. They would then sell their Indian Rupees for dollars. This would weaken the Indian Rupee, causing import inflation and losses for foreign investors.
The Indian central bank would have to either increase interest rates to break the cycle, impose capital controls, or spend their foreign currency reserves trying to prop up the Rupee’s exchange rate.
Only raising interest rates would be a sustainable solution, though it would throw the country into a recession.
There’s a huge problem with the Indian central bank raising interest rates: bitcoin’s historical return is ~500% per year.
Even if investors expected future return is 1/10th of that, the central bank would have to increase interest rates to unconscionable levels to break the attack.
The result is evident: everyone would flee the Rupee and adopt bitcoins, due to economic duress rather than technological enlightenment.
This example is purely illustrative, it could happen in a small country at first, or it could happen simultaneously around the world.
Who leverages their balance sheet and how is impossible to predict, and it will be impossible to stop when the dam cracks.
Which countries are most vulnerable to a currency crisis?
Bitcoins will have to reach certain threshold of liquidity, indicated by a solid exchange in every financial center and a real money supply โ i.e. market cap โ of at least $50 billion, before they can be used as an instrument in a speculative attack. This will either coincide with or cause a currency crisis.
3. Hyperbitcoinization
A speculative attack that seems isolated to one or a few weak currencies, but causes the purchasing power of bitcoins to go up dramatically, will rapidly turn into a contagion.
For example, the Swiss will see the price of bitcoins go up ten fold, and then a hundred fold.
At the margin they will buy bitcoins simply because they want to speculate on their value, not due to an inherent problem with the Swiss Franc.
The reflexivity here entails that the reduction in demand for Swiss Francs would actually cause higher than expected inflation and thus an inherent problem with the Swiss Franc.
The feedback loop between fiat inflation and bitcoin deflation will throw the world into full hyperbitcoinization, explained by Daniel here.
Conclusion
Bitcoin will become mainstream.
The Bitcoin skeptics don’t understand this due to their biases and lack of financial knowledge.
First, they are in as strong an echo chamber as Bitcoin skeptics.10
They rabidly search for evidence that confirms their view of Bitcoin.
Second, they misunderstand how strong currencies like bitcoin overtake weak currencies like the dollar: it is through speculative attacks and currency crises caused by investors, not through the careful evaluation of tech journalists and ‘mainstream consumers’.
No, seriously, there are people on the Internet spending a non-trivial amount of time writing about a currency they think is going to fail yet continues to succeed beyond anyone’s expectations. I get schadenfreude from their lack of schadenfreude. Granted, a few of them are being paid to write controversial click bait and/or just concern trolling โ both activities that I respect and understand.
This is generally stated by people who are in the ‘out-group’ and fantasize about being in the ‘in-group’ through politics/pedigree rather than economic/meritocratic processes. Demographically, they probably overlap with fans of The Secret. Economically, they are without exception bezzlers.
Bitcoin has entered its Eternal September, where every person new to Bitcoin thinks they have a unique understanding of Bitcoin and everyone ought to hear about it. There’s an endless flood of newbies ‘concerned’ about such and such ‘problem’ with Bitcoin. The Bitcoin community does these arrivistes a real disservice by taking them seriously instead of just telling them ‘read more’.
The opposite of Bitcoin Jesus. Bitcoin Jonah is a defeatist, self-sabotaging, and timid ‘man’ who is on a permanent quest to confirm Bitcoin’s weakness.
If you disagree then either you have not been learning or you have not been engaging in the debate, go back to square one.
‘I live in a rather special world. I only know one person who voted for Nixon. Where they are I don’t know. They’re outside my ken. But sometimes when I’m in a theater I can feel them.’ – Pauline Kael
A successful attack on Bitcoin means attacking Bitcoinโs value.
There might well be a bug that could be exploited to put the network out of commission temporarily, but would soon be fixed and then the network would be up and running shortly thereafter.
To destroy Bitcoin permanently means to end the profit opportunities available with it, and that means either a malicious hashing attack on the network that makes mining impossible or such a malevolent policy against Bitcoin trade that even the black market abandons it.
Both of these require spending resources in proportion to the profits that Bitcoin enables.
In this article, I will discuss three reasons why such an attack is unlikely to succeed: antifragility, subtlety, and attacker defection.
The interplay of these three defenses makes Bitcoin into a kind of wave that rewards those who ride it and drowns those who resist it.
The first of these, antifragility, is exemplified in the fact that malicious hashing is impossible up to a certain fraction of the network.
Below the point that selfish mining becomes possible1ย additional hashes per second are almost certainly beneficial because they increase the security of the network.
Any potential attacker, therefore, must weigh in the possibility that he may end up benefiting the network instead of destroying it.
A similar risk accompanies a legal attack on Bitcoin. Bitcoin can adapt to half-hearted attacks. It would move deeper into the black market where it would become permanently strengthened.
Furthermore, a legal attack could be easily corrupted into one that brings as many bitcoins as possible to the government agents instead of one that destroys it (seeย below).
Bitcoinโs Subtlety
Bitcoin adoption happens one person at a time, and this is true for potential attackers as well as the rest of us.
It takes an entrepreneurial mindset to be able to imagine what Bitcoin could become, given how comparatively small it is now.
It takes time and meditation for people to take Bitcoin seriously because most of its value is in the future.
By the time this happens, Bitcoin has become much more expensive than when they first learned of it.
Thus, Bitcoin is protected from attackers by being initially beyond their understanding.
When Bitcoin was very small, it was very stealthy and was completely unknown to the establishment.
Now they laugh at it, just as it has begun to grow bold.
Of course, we donโt know who really dismisses it and who is deliberately trying to draw attention away from it.
Bitcoinโs Allure
Furthermore, potential attackers are at a disadvantage for another reason.
Bitcoin tends to oppose organizations rather than people.
Even someone who stands to lose from Bitcoin by not reacting to it, such as a banker or government agent, stands to gain a great deal by buying now.
Only the very wealthiest people might reasonably expect to be worse off attempting to buy up as much as possible now than if it were gone. (This could happen if their attempt to buy caused the price to rise too fast relative to their ability to acquire additional bitcoins, to the point that they ultimately had less influence over the future Bitcoin economy than they have over the economy of today.)
Thus, the agency problem with Bitcoin affects bitcoin competitors as well as Bitcoin holders.
Nearly any government agent who begins to see bitcoin as a potential threat must also simultaneously see it as an opportunity.
He, too, can invest in Bitcoin. And why shouldnโt he?
Bitcoin may be a threat to his livelihood, but it may well be making him an offer he canโt refuse.
How can an organization that stands to lose by the adoption of Bitcoin provide its members with a better opportunity for staying loyal than Bitcoin provides for defection?
Even those who might resist the temptation to defect would have to think about the defection of his fellows.
How quickly is adoption happening? Is there time to mount an attack before Bitcoin becomes too powerful? How easily could the resources for such an attack be amassed, given both the ignorance and treachery of the other agents.
If such an attack would be unlikely to succeed, then buying now would be the only intelligent action.
Regardless of whether he liked Bitcoin, it would be futile to continue pursuing a doomed cause.
In the same way that the people cannot easily rebel against the king owing to a lack of coordination on their part, governments cannot rebel against Bitcoin for the same reason.
The government puts the people in a Prisonerโs Dilemma against one another, and Bitcoin does the same to government agents.
Bitcoin is likeย Invasion of the Body Snatchers.
Bitcoin attracts inside men to act as covert saboteurs. There have long been predictions from both bitcoiners and naysayers of impending government attacks, but I think there is a possibility that Bitcoin could win without suffering much resistance.
Moreover, although I said above only that any legal bitcoin attackย couldย be perverted, the considerations discussed in this section tend to make such diffusion very likely.
Bitcoin defends itself by being obscure, but once it has attracted someoneโs attention, its best interest is for that person to understand the logic presented here. For then he will also understand that his best course is to deny Bitcoinโs threat to his superiors and quietly to become its willing slave.
Right now Bitcoin Core does not follow the proper strategy to protect against selfish mining even at very low hashing rates, but the fix would be extremely easy to implement and would make selfish mining impossible up to 25% of the hash rate. โฉ
Hashrate (Hash per second, h/s) is an SI-derived unit representing the number of double SHA-256 computations performed in one second in the bitcoin network for cryptocurrency mining.
Hashrate is also called as hashing power. It is usually symbolized as h/s (with an appropriate SI prefix).
What is hashing power or hash rate?
The hash rate is the primary measure of a Bitcoin miner‘s performance.
In 2014, a miner’s performance was generally measured in Ghash/s, or billions of hashes per second.
The hash/second unit is also part of a common measure of a Bitcoin miner’s electric efficiency in the term watts /Ghash/s, denoted as W/Ghash/s. As 1 watt is equal to 1 joule/s, this measure can also be expressed as J/Ghash, or joules per 1 billion hashes.
Bitcoin network hash rate
The hash/s is also used in calculations of the Bitcoin network’s overall hash rate. Because each miner or mining pool only relays a solved block to the network, the overall hash rate of the network is calculated based on the time between blocks.
While not an accurate measure of network hash rate at any given instance in time, measurements over longer periods can be considered indicative and similar calculations are used in Bitcoin’s difficulty adjustment.
In January 2015, the network hash rate was around 300 Phash/s, or 300 quadrillion hashes per second.
If you compare a bitcoin mining device to one that is designed to mine, for example, Ethereum, you will notice a very large apparent difference in hash rates.
This is because there are many different algorithms that cryptocurrencies use. They all require different amounts of memory and computing power in order to be mined.
To put it simply, bitcoin and its SHA256 algorithm is considered by today standards to be relatively easy to compute. As a result, a mining device that is still relevant today would need to produce hashes in the terahash range and up.
If we were to compare this to Ethereum, youโll find that most modern Ethereum mining devices (typically GPUโs) operate in the megahash range.
At first glance, you may think that the bitcoin mining device is significantly more powerful or more productive.
While itโs true that it produces more hashes (of the SHA256 variety), this is because bitcoin hashes are easier to produce computationally.
As a consequence, the network difficulty is significantly higher for bitcoin.
To make things even more confusing, some cryptocurrencies intentionally chose algorithms that can only be mined using a basic CPU.
As a result, mining devices for this network that can produce hundreds of hashes per second are considered to be high and very competitive.
So what does all this mean?
Basically, it means that looking at the hash rate alone doesnโt necessarily tell you the effectiveness of the miner.
You also need to understand the network difficulty, and what the norm is for most mining devices for that particular cryptocurrency.
How can I calculate how many hashes I generate per second?
Your problem breaks down nicely into 3 separate tasks:
Sharing a single count variable across threads
Benchmarking thread completion time
Calculating hashes p/sec
Sharing a single count variable across threads
Now that we know that not all hashes are the same we need to know how to calculate the estimated profitability of a miner based on its hash rate.
For this, will need to use a mining profitability calculators, they are available in the Internet.
public static class GlobalCounter
{ public static int Value { get; private set; }
public static void Increment() { Value = GetNextValue(Value); }
private static int GetNextValue(int curValue) { return Interlocked.Increment(ref curValue); }
public static void Reset() { Value = 0; } }
Before you spin off the threads call GlobalCounter.
Reset and then in each thread (after each successful hash) you would call GlobalCounter.
Increment – using Interlocked.X performs atomic operations of Value in a thread-safe manner, it’s also much faster than lock.
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