BITCOIN – THE TWO GREAT UNKNOWNS A SHORT TALK BY MEHER ROY
Alternatively: Why don’t I invest more than a percent of my savings in Bitcoin?
Background Bitcoin is probably the greatest intellectual breakthrough of the last decade. - “The HTTP of Finance” - Cliché - “ We believe that embedded mining will ultimately establish bitcoin as a fundamental system resource on par with CPU, bandwidth, hard drive space, and RAM .” : Balaji Srinivasan, CEO 21co. - “Per sonal computer s in 1975, the Internet in 1993, and – I believe – Bitcoin in 2014.” : Marc Andreessen, Andreessen Horowitz
A great invention does not necessarily a great market make!
A Balancing Act M i n e r r e v e n u e i n fo r m o f t r a n s a c t i o n f e e s . C u r r e n t l y ~ 5 0 0 0 U S D p e r d ay, ~4 cents per transaction.
M i n e r r e v e n u e i n fo r m o f n e w l y generated bitcoins. Currently ~1 m i l l i o n p e r d ay.
I n c e n t i v e fo r m i n e r s f o r s e c u r i n g t h e n e t wo r k . L a r g e r i t i s , m o r e s e c u r e t h e n e t wo r k . ~ $ 1 m i l l i o n p e r d ay currently
Hardcoded Network Parameters A nd i d e al worl d b e h av ior
Excerpt from paper by Kerem Kaskaloglu at http://sdiwc.net/digital-library/near-zero-bitcoin-transaction-fees-cannot-last-forever.html
But! Miner earnings from transaction fees M e as ured i n USD p e r d ay
And! Bitcoin network deficit M e as ured i n USD p e r d ay
A proclivity towards being Digital Gold A ne c d otes - I
http://www.coindesk.com/xapo-switzerland-privacy-concerns/ http://www.coindesk.com/is-bitcoins-merchant-appeal-fading/
A proclivity towards being Digital Gold A ne c d otes - I I
http://uk.businessinsider.com/30-million-bitcoin-startup-bitpays-backup-plan-sell-tech-to-the-banks-2015-6?IR=T
A proclivity towards being Digital Gold Dat a - I
Source: John Ratcliff
A proclivity towards being Digital Gold Dat a - I I
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BitPay processed about 1000-1500 “retail� payments per day, averaging less than 1 BTC each.
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The number of retail transactions processed by BitPay has grown 3x since mid-2013, and has been flat through most of 2014.
Source: Jorge Stolfi, http://www.reddit.com/r/Buttcoin/comments/2pp6r5/always_one_to_pump_a_scam_the_ever_honest_roger/cmz1v0r
The question Can transaction volume on the blockchain scale 200x in order that BTC miners develop a viable business model? How does the possibility of of f -chain payments like Lightning networks, federated sidechains etc. impact revenues of miners? Without a viable long term business model for miners, is the cap of 21 million BTC viable? Or will a future hard fork raise the limit?
Backed by people’s beliefs not mathematics! It is a commonly held belief that “Bitcoin is backed by mathematics”. This is a bogus assertion. Bitcoin is essentially lots of dif ferent entities agreeing to treat entries on one database, the blockchain, as “value”. But what happens when half these entities want the database to operate by one ruleset, and the other half by another ruleset?
This situation is called an “unresolved hard fork”, and the first of them could occur in 2016.
When a person is confronted by 2 choices..
Bitcoin confronted by 2 choices could..
B o t h B l u e c o i n a n d Re d c o in c l a i m to b e t h e “ Re a l B i t c o i n ” D e r i d e t h e o t h e r a s t h e “ Fa ke B i t c o i n ”
Number of transactions per day
Estimated USD transaction volume per day