[CyberDildonics]

Everyone who invests in bitcoin is breaking the cardinal rule of investing: don't invest in something you don't understand.

If people realized that bitcoin's -average- transaction fee is around $25 USD because it is restricted (for no technical reason) to a few transactions per second (less throughput than 240p youtube videos) they would at least move on to other cryptocurrencies.

If people realized that a sudden drop in price will mean a sudden drop in mining power, which will mean a sudden drop in blocks being generated, which will mean a sudden drop in throughput, they might be even more eager to get out of it. Since transactions are already so extremely limited purely by choice of the people that took it over, sudden drops in price mean less utility while in practice sudden rises in price lead to lots of transactions for speculation, which also prices out any utility.

One transaction is now 4x the hard drive cost to store the entire chain (and users don't even need to store the chain at all).

[brendanmc6]

Totally false. Reduced mining power doesn't reduce the number of blocks being generated. Block mining PoW difficulty increases or decreases based on a running average of past block times[1]. This, given the block size limit, is the very mechanism that caps transaction throughput.

Lower prices have always led to less transaction volume which has always made it cheaper and easier to get your own transaction confirmed.

"don't invest in something you don't understand", can I ask that you don't spread FUD about something you don't understand?

[1] https://bitcoin.org/bitcoin.pdf

[CyberDildonics]

What I said is true, sudden drops in mining power mean the immediate effect is slower block creation:

> a sudden drop in price will mean a sudden drop in mining power, which will mean a sudden drop in blocks being generated, which will mean a sudden drop in throughput

Over time (and blocks) the proof of work difficulty adjusts, but that isn't what I was talking about, which is why I said "sudden" over and over.

It takes the generation of blocks to adjust the proof of work difficulty and if the price goes down, miners shut off and the blocks needed to adjust the proof of work will get generated more slowly. Less blocks on average means the adjustment skews into the future as the throughput goes down.

Two factors that go _against_ a death spiral is that transactions typically go down when the price goes down, and when the transaction throughput is low, people with actual balances on the chain can't get their btc off of it.

When the price goes up and mining power increases (sooner or later) this isn't a problem, because faster blocks aren't a problem - they just make calibrating back down to a 10 minute happen quicker.

> "don't invest in something you don't understand", can I ask that you don't spread FUD about something you don't understand?

Easy there, you can always ask questions instead of making bold assumptions like this.

[HourglassFR]

> If people realized that a sudden drop in price will mean a sudden drop in mining power, which will mean a sudden drop in blocks being generated, which will mean a sudden drop in throughput, they might be even more eager to get out of it.

I agree with your overall argument but as I understand it, this is false. If the mining power of the whole network drops, the proof of work will become simpler so as to have a roughly constant block throughput. Or am I missing something here ?

[saalweachter]

At one point this was approximately true; I'm honestly not sure if it still is.

The problem was how the difficulty was decided -- it looked at the last N blocks that were successfully mined to decide whether it needed to up or down the difficulty. If you suddenly lost 90% of your mining capacity, it would only adjust the difficulty after several more blocks were mined, each of which would take ~100 minutes instead of the usual ~10. The system would eventually right itself, but it wasn't fast.

I can't recall if this ever became a problem in practice, or whether there was a code change to make it resolve faster.

[Mc_Big_G]

The value of Bitcoin doesn't lie in how many transactions it can do per second, nor the cost per transaction.

[CyberDildonics]

I actually said utility, you said value.

It is also telling that you didn't say what the value actually is. If you do explain that, make sure to mention it relative to other cryptocurrencies that have all the same properties (except for name recognition) but don't have throughput problems because they did what everyone saw coming 8 years ago and allowed larger blocks, faster blocks, or both.

[Mc_Big_G]

Ok, I'll bite. Bitcoin has a large, distributed network of miners and exchanges who support it, has extremely low inflation approaching zero, has a supply cap of 21 million, is infinitely divisible, has been in the wild for 10 years with zero hacks, can transfer unlimited value (billions/trillions) anywhere in the world for relatively low costs in relatively low time compared to traditional system, and does not require any third-party middle man to approve the transaction, is accessible to anyone in the world regardless of regional laws, and cannot be printed or inflated artificially. I'm sure there's more.

In regards to value relative to other crypto, this is a valid point but ultimately doesn't matter at all. Why does Craigslist still make 100s of millions of dollars every year when it is clearly an inferior product?

[lalaland1125]

The actual cost per transaction in Bitcoin is ~$150 now once you include both the direct transaction fee and the miner reward (inflation cost). It's an incredibly inefficient technology.

[gruez]

>and the inflation costs

compared to the endless money printing done by the fed that still seems like a bargain.

https://www.federalreserve.gov/monetarypolicy/bst_recenttren...

[throwaway1777]

Strawman argument since there are other ways to hedge inflation.

[gruez]

How is it a strawman argument? The point is that you're factoring in the inflation cost for BTC, but not the alternatives such as USD or even gold.