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This Is How Satoshi Nakamoto Defended Bitcoin Mining & Converted A Skeptic

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Reddit users have been looking back with no small amount of nostalgia at a forum post by the Bitcoin (BTC) founder Satoshi Nakomoto that dates back to August 7, 2010 – and sees the network architect change a skeptic’s mind about the energy efficiency of mining BTC.

The post comes from the Bitcoin Talk forum, in a thread created by a user named Gridecoin.

In their original post, Gridecoin opined that while they considered BTC to be a worthy project, energy issues would likely plague it.

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They wrote,

“I believe that the amount of energy input required to the bitcoin economy represents a serious obstacle to its growth. I think in the long-term, transactions may be even more serious than minting in this regard, but I will for the moment discuss minting because it is more precisely bounded and defined. The idea that the value of bitcoins is in some way related to the value of the electricity required, on average, to mint a winning block is generally accepted, but the precise nature of this relationship is contentious.”

And after some back and forth with other site contributors, Nakomoto made a rare appearance in the chat to explain that the “situation” was not unlike gold and its relation with gold mining.

Nakomoto wrote,

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“The marginal cost of gold mining tends to stay near the price of gold. Gold mining is a waste, but that waste is far less than the utility of having gold available as a medium of exchange. I think the case will be the same for Bitcoin. The utility of the exchanges made possible by Bitcoin will far exceed the cost of electricity used. Therefore, not having Bitcoin would be the net waste.”

And Nakomoto went on to defend Bitcoin’s proof-of-work model. However, Gridecoin disagreed with the idea that the very high computational burden of coin generation is in fact a necessity of the current system:

“As I understand it, currency creation is fundamentally metered by time – and if that is the fundamental controlling variable, what is the need for everyone to ‘roll as many dice as possible’ within that given time period? The ‘chain of proof’ for coin ownership and transactions doesn’t depend on the method for spawning coins.”

But the BTC founder responded that “Proof-of-work has the nice property that it can be relayed through untrusted middlemen. We don’t have to worry about a chain of custody of communication. It doesn’t matter who tells you a longest chain, the proof-of-work speaks for itself.”

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And that drew a positive response from Gridecoin, who wrote,

“I agree with your analysis, and this thread has actually changed my mind as to my initial criticism. After more careful study of the design of the Bitcoin network and trying to understand the exact manner in which Bitcoin attempts to create value from the computational work invested, […] thinking now is that bitcoin does not, in fact ‘waste’ computational work at all – instead it works hard to deliver the most value possible from that computational work.”

And Gridecoin went a step further, asserting that while “government-issued fiat currency may not have any obvious energy burden beyond its printing,” the “energy cost of hiring police officers to enforce economic honesty” far outweighed the energy costs involved with mining tokens on the Bitcoin network.

Modern-day Redditors appear enchanted by the exchange.

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One mused: “I love how smart Satoshi sounds.”

Some returned to the key points made in the 2010 discussion, with one remarking that “everything has a price” and bemoaning “carbon clowns trying to make trouble.”

But another pined for days gone by on the internet, and times of more civil exchanges, writing,

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“I love that proper conversation and change of opinion was still possible in 2010. Discussions were not motivated by political bias and ultimately ending in ad hominems, but by the actual will to learn and understand things. It is so refreshing to look back at.”

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Elon Musk warns of ‘strong inflationary pressure’ as Tesla mulls Bitcoin payments

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The world faces “strong inflationary pressure” in the short term, and it may persist, warns the world’s richest man.

In a debate about inflation, some of the best-known names in Bitcoin (BTC) voiced unanimous doubts about the state of global monetary policy.

Future of inflation great unknown, says Musk

As even the United States Federal Reserve admits that inflation may be here to stay, the topic has become especially pertinent for Bitcoiners, given the cryptocurrency’s intrinsically deflationary characteristics.

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For Elon Musk, who remains cool when it comes to Bitcoin as a “magic pill” for fiat currency’s ills, inflation is no less of an issue. With over $250 billion in net assets as of this week, potential exposure to devaluating currencies is more of a potential problem than ever.

“I don’t know about long-term, but short-term we are seeing strong inflationary pressure,” he said in a Twitter debate with Ark Invest CEO Cathie Wood and MicroStrategy CEO Michael Saylor.

All were commenting on a previous tweet from Twitter CEO Jack Dorsey, who described inflation as “happening” and apt to “change everything.”

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Wood, also a firm BTC supporter, noted that monetary velocity, on the contrary, had been slowing since the 2008 global financial crisis, disguising some of the devaluation impact.

Regardless, when all types of products are taken into account, the true cost of dollar printing far outstrips government claims about how inconsequential inflation really is.

“Inflation is a vector, and it is clearly evident in an array of products, services, & assets not currently measured by CPI or PCE,” Saylor wrote

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“Bitcoin is the most practical solution for a consumer, investor, or corporation seeking inflation protection over the long term.”

Federal Reserve balance sheet chart. Source: Federal Reserve

Bitcoin may yet return to Tesla

Musk’s Tesla passed $1,000 per share for the first time this week, helping spur a dramatic increase in his net worth.

Related: Tesla hints it may soon resume support for crypto payments

In a filing with the U.S. Securities and Exchange Commission, meanwhile, the company left the door open to accepting Bitcoin for its products in the future.

“During the nine months ended September 30, 2021, we purchased an aggregate of $1.50 billion in bitcoin. In addition, during the three months ended March 31, 2021, we accepted bitcoin as a payment for sales of certain of our products in specified regions, subject to applicable laws, and suspended this practice in May 2021,” the 10-Q document reads.

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“We may in the future restart the practice of transacting in cryptocurrencies (‘digital assets’) for our products and services.”

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Bitcoin bull market ‘2nd leg has started,’ says BTC price model creator

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Bitcoin (BTC) marking a new high of $67,000 last week has opened the possibility of hitting $100,000 by the end of this year.

PlanB, creator of the popular Bitcoin Stock-to-Flow (S2F) model, called Bitcoin’s price retracement from the $60,000-level the “2nd leg” of what appeared like a long-term bull market.

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In doing so, the pseudonymous analyst cited S2F, which anticipates Bitcoin to continue its leg higher and reach $100,000 to $135,000 by the end of the year.

The price projection model insists that Bitcoin’s value will keep on growing until at least $288,000 per token due to the “halving,” an event that takes place every four years and reduces BTC’s issuance rate by half against its 21 million supply cap. 

Bitcoin after the 2012, 2016 and 2020 halving. Source: PlanB

Notably, Bitcoin has undergone three halvings so far: in 2012, 2016 and 2020.

Each event decreased the cryptocurrency’s new supply rate by 50%, which was followed by notable increases in BTC price. For instance, the first two halvings prompted BTC price to rise by over 10,000% and 2,960%, respectively.

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The third halving caused the price to jump from $8,787 to as high as $66,999, a 667.50% increase. So far, S2F has been largely accurate in predicting Bitcoin’s price trajectory, as shown in the chart below, leaving bulls with higher hopes that Bitcoin’s post-halving rally will have its price cross the $100,000 mark.

Bitcoin S2F as of Oct. 26. Source: PlanB

PlanB noted earlier this year that Bitcoin will reach $98,000 by November and $135,000 by December, adding that the only thing that would stop the cryptocurrency from hitting a six-digit value is “a black swan event” that the market has not seen in the last decade.

An 80% crash later

Despite the high price projections, Bitcoin can still see big corrections in the future. PlanB thinks the next crash could wipe at least 80% off Bitcoin’s market capitalization, based on the same S2F model.

Related: COVID-19 vaccine will spark Bitcoin ‘crash’ — Rich Dad Poor Dad author

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“Everybody hopes for the supercycle or the ‘hyperbitcoinization’ to start right now and that we do not have a big crash after next all-time highs,” the analyst told the Unchained podcast, adding.

“As much as I would hope that were true, that we don’t see that crash anymore, I think we will. […] I think we’ll be managed by greed right now and fear later on and see another minus 80% after we top out at a couple hundred thousand dollars.”

BTC/USD daily price chart. Source: TradingView

But not everyone thinks the next correction will be as dramatic as the previous ones. Dan Morehead, CEO of Pantera Capital, said in mid-October that the next Bitcoin price drop will be less than 80%, citing a consistent drop in selling sentiment after each halving cycle.

Last week, Bitcoin established a new record high at around $67,000 following a 53% rally in October so far. But the new highs prompted profit-taking among traders, resulting in retests of the $60,000 support level.

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BTC price dips below $62K on VanEck Bitcoin ETF launch day

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Bitcoin (BTC) fell below $62,000 on Oct. 26 as the launch of the third United States regulated exchange-traded fund (ETF) failed to budge the sideways price action.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

$61,600 support target for BTC

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting daily lows as U.S. markets opened on Oct. 26.

The latest ETF, the VanEck Bitcoin Strategy ETF (XBTF), was met with a decidedly different mood on the day as Bitcoin seemed unmoved by the prospect of fresh institutional involvement.

Last week’s ProShares Bitcoin Strategy ETF saw a surge, which ended in new all-time highs for BTC/USD, these still unmatched as a correction challenged $60,000 support.

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At the time of writing, $62,000 formed a shaky focus, which is still in line with the latest price forecasts from popular analysts.

“It would be natural price progression for BTC to dip into ~$61600 (orange level),” Rekt Capital commented alongside a fresh price chart.

“Holding there would be a sign of strength on the side of buyers.” 

BTC/USD summary. Source: Rekt Capital/ Twitter

Expectations have remained high for all-time highs to see a retest on the back of recent movements, while research has argued that a dip as low as $50,000 would still preserve the overall bullish trajectory.

As Cointelegraph reported, even the October close is predicted to be around $63,000, giving Bitcoin room to track sideways longer before pressure increases.

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PlanB, the analyst who called $63,000 the “worst-case scenario” for the monthly close, proclaimed the second leg of the 2021 bull officially in progress this week.

Altcoins due a “copy paste” of earlier bull run

Major altcoins were similarly tentative in their behavior on the day, with Ether (ETH) unmoved at $4,150.

The top ten cryptocurrencies by market cap were likewise flat over the past 24 hours — a rare episode of communal calm for an asset group that has been characterized by volatility this month.

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“We know this structure from earlier on in which we’ve also had retests happening before we’ve started to continue moving,” Cointelegraph contributor Michaël van de Poppe said in his latest YouTube update.

He predicted a “copy paste” scenario of the gains from the start of 2021 at a later date, with the timeframe for this nonetheless unpredictable.

“Upside is generally higher than what you expect to be happening,” he added.

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ETH/USD 1-hour candle chart (Bitstamp). Source: TradingView

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