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Searching for the Unicorn Cryptocurrency

Searching for the Unicorn Cryptocurrency
For someone first starting out as a cryptocurrency investor, finding a trustworthy manual for screening a cryptocurrency’s merits is nonexistent as we are still in the early, Wild West days of the cryptocurrency market. One would need to become deeply familiar with the inner workings of blockchain to be able to perform the bare minimum due diligence.
One might believe, over time, that finding the perfect cryptocurrency may be nothing short of futile. If a cryptocurrency purports infinite scalability, then it is probably either lightweight with limited features or it is highly centralized among a limited number of nodes that perform consensus services especially Proof of Stake or Delegated Proof of Stake. Similarly, a cryptocurrency that purports comprehensive privacy may have technical obstacles to overcome if it aims to expand its applications such as in smart contracts. The bottom line is that it is extremely difficult for a cryptocurrency to have all important features jam-packed into itself.
The cryptocurrency space is stuck in the era of the “dial-up internet” in a manner of speaking. Currently blockchain can’t scale – not without certain tradeoffs – and it hasn’t fully resolved certain intractable issues such as user-unfriendly long addresses and how the blockchain size is forever increasing to name two.
In other words, we haven’t found the ultimate cryptocurrency. That is, we haven’t found the mystical unicorn cryptocurrency that ushers the era of decentralization while eschewing all the limitations of traditional blockchain systems.
“But wait – what about Ethereum once it implements sharding?”
“Wouldn’t IOTA be able to scale infinitely with smart contracts through its Qubic offering?”
“Isn’t Dash capable of having privacy, smart contracts, and instantaneous transactions?”
Those thoughts and comments may come from cryptocurrency investors who have done their research. It is natural for the informed investors to invest in projects that are believed to bring cutting edge technological transformation to blockchain. Sooner or later, the sinking realization will hit that any variation of the current blockchain technology will always likely have certain limitations.
Let us pretend that there indeed exists a unicorn cryptocurrency somewhere that may or may not be here yet. What would it look like, exactly? Let us set the 5 criteria of the unicorn cryptocurrency:
Unicorn Criteria
(1) Perfectly solves the blockchain trilemma:
o Infinite scalability
o Full security
o Full decentralization
(2) Zero or minimal transaction fee
(3) Full privacy
(4) Full smart contract capabilities
(5) Fair distribution and fair governance
For each of the above 5 criteria, there would not be any middle ground. For example, a cryptocurrency with just an in-protocol mixer would not be considered as having full privacy. As another example, an Initial Coin Offering (ICO) may possibly violate criterion (5) since with an ICO the distribution and governance are often heavily favored towards an oligarchy – this in turn would defy the spirit of decentralization that Bitcoin was found on.
There is no cryptocurrency currently that fits the above profile of the unicorn cryptocurrency. Let us examine an arbitrary list of highly hyped cryptocurrencies that meet the above list at least partially. The following list is by no means comprehensive but may be a sufficient sampling of various blockchain implementations:
Bitcoin (BTC)
Bitcoin is the very first and the best known cryptocurrency that started it all. While Bitcoin is generally considered extremely secure, it suffers from mining centralization to a degree. Bitcoin is not anonymous, lacks smart contracts, and most worrisomely, can only do about 7 transactions per seconds (TPS). Bitcoin is not the unicorn notwithstanding all the Bitcoin maximalists.
Ethereum (ETH)
Ethereum is widely considered the gold standard of smart contracts aside from its scalability problem. Sharding as part of Casper’s release is generally considered to be the solution to Ethereum’s scalability problem.
The goal of sharding is to split up validating responsibilities among various groups or shards. Ethereum’s sharding comes down to duplicating the existing blockchain architecture and sharing a token. This does not solve the core issue and simply kicks the can further down the road. After all, full nodes still need to exist one way or another.
Ethereum’s blockchain size problem is also an issue as will be explained more later in this article.
As a result, Ethereum is not the unicorn due to its incomplete approach to scalability and, to a degree, security.
Dash
Dash’s masternodes are widely considered to be centralized due to their high funding requirements, and there are accounts of a pre-mine in the beginning. Dash is not the unicorn due to its questionable decentralization.
Nano
Nano boasts rightfully for its instant, free transactions. But it lacks smart contracts and privacy, and it may be exposed to well orchestrated DDOS attacks. Therefore, it goes without saying that Nano is not the unicorn.
EOS
While EOS claims to execute millions of transactions per seconds, a quick glance reveals centralized parameters with 21 nodes and a questionable governance system. Therefore, EOS fails to achieve the unicorn status.
Monero (XMR)
One of the best known and respected privacy coins, Monero lacks smart contracts and may fall short of infinite scalability due to CryptoNote’s design. The unicorn rank is out of Monero’s reach.
IOTA
IOTA’s scalability is based on the number of transactions the network processes, and so its supposedly infinite scalability would fluctuate and is subject to the whims of the underlying transactions. While IOTA’s scalability approach is innovative and may work in the long term, it should be reminded that the unicorn cryptocurrency has no middle ground. The unicorn cryptocurrency would be expected to scale infinitely on a consistent basis from the beginning.
In addition, IOTA’s Masked Authenticated Messaging (MAM) feature does not bring privacy to the masses in a highly convenient manner. Consequently, the unicorn is not found with IOTA.

PascalCoin as a Candidate for the Unicorn Cryptocurrency
Please allow me to present a candidate for the cryptocurrency unicorn: PascalCoin.
According to the website, PascalCoin claims the following:
“PascalCoin is an instant, zero-fee, infinitely scalable, and decentralized cryptocurrency with advanced privacy and smart contract capabilities. Enabled by the SafeBox technology to become the world’s first blockchain independent of historical operations, PascalCoin possesses unlimited potential.”
The above summary is a mouthful to be sure, but let’s take a deep dive on how PascalCoin innovates with the SafeBox and more. Before we do this, I encourage you to first become acquainted with PascalCoin by watching the following video introduction:
https://www.youtube.com/watch?time_continue=4&v=F25UU-0W9Dk
The rest of this section will be split into 10 parts in order to illustrate most of the notable features of PascalCoin. Naturally, let’s start off with the SafeBox.
Part #1: The SafeBox
Unlike traditional UTXO-based cryptocurrencies in which the blockchain records the specifics of each transaction (address, sender address, amount of funds transferred, etc.), the blockchain in PascalCoin is only used to mutate the SafeBox. The SafeBox is a separate but equivalent cryptographic data structure that snapshots account balances. PascalCoin’s blockchain is comparable to a machine that feeds the most important data – namely, the state of an account – into the SafeBox. Any node can still independently compute and verify the cumulative Proof-of-Work required to construct the SafeBox.
The PascalCoin whitepaper elegantly highlights the unique historical independence that the SafeBox possesses:
“While there are approaches that cryptocurrencies could use such as pruning, warp-sync, "finality checkpoints", UTXO-snapshotting, etc, there is a fundamental difference with PascalCoin. Their new nodes can only prove they are on most-work-chain using the infinite history whereas in PascalCoin, new nodes can prove they are on the most-work chain without the infinite history.”
Some cryptocurrency old-timers might instinctively balk at the idea of full nodes eschewing the entire history for security, but such a reaction would showcase a lack of understanding on what the SafeBox really does.
A concrete example would go a long way to best illustrate what the SafeBox does. Let’s say I input the following operations in my calculator:
5 * 5 – 10 / 2 + 5
It does not take a genius to calculate the answer, 25. Now, the expression “5 \ 5 – 10 / 2 + 5”* would be forever imbued on a traditional blockchain’s history. But the SafeBox begs to differ. It says that the expression “5 \ 5 – 10 / 2 + 5”* should instead be simply “25” so as preserve simplicity, time, and space. In other words, the SafeBox simply preserves the account balance.
But some might still be unsatisfied and claim that if one cannot trace the series of operations (transactions) that lead to the final number (balance) of 25, the blockchain is inherently insecure.
Here are four important security aspects of the SafeBox that some people fail to realize:
(1) SafeBox Follows the Longest Chain of Proof-of-Work
The SafeBox mutates itself per 100 blocks. Each new SafeBox mutation must reference both to the previous SafeBox mutation and the preceding 100 blocks in order to be valid, and the resultant hash of the new mutated SafeBox must then be referenced by each of the new subsequent blocks, and the process repeats itself forever.
The fact that each new SafeBox mutation must reference to the previous SafeBox mutation is comparable to relying on the entire history. This is because the previous SafeBox mutation encapsulates the result of cumulative entire history except for the 100 blocks which is why each new SafeBox mutation requires both the previous SafeBox mutation and the preceding 100 blocks.
So in a sense, there is a single interconnected chain of inflows and outflows, supported by Byzantine Proof-of-Work consensus, instead of the entire history of transactions.
More concretely, the SafeBox follows the path of the longest chain of Proof-of-Work simply by design, and is thus cryptographically equivalent to the entire history even without tracing specific operations in the past. If the chain is rolled back with a 51% attack, only the attacker’s own account(s) in the SafeBox can be manipulated as is explained in the next part.
(2) A 51% Attack on PascalCoin Functions the Same as Others
A 51% attack on PascalCoin would work in a similar way as with other Proof-of-Work cryptocurrencies. An attacker cannot modify a transaction in the past without affecting the current SafeBox hash which is accepted by all honest nodes.
Someone might claim that if you roll back all the current blocks plus the 100 blocks prior to the SafeBox’s mutation, one could create a forged SafeBox with different balances for all accounts. This would be incorrect as one would be able to manipulate only his or her own account(s) in the SafeBox with a 51% attack – just as is the case with other UTXO cryptocurrencies. The SafeBox stores the balances of all accounts which are in turn irreversibly linked only to their respective owners’ private keys.
(3) One Could Preserve the Entire History of the PascalCoin Blockchain
No blockchain data in PascalCoin is ever deleted even in the presence of the SafeBox. Since the SafeBox is cryptographically equivalent to a full node with the entire history as explained above, PascalCoin full nodes are not expected to contain infinite history. But for whatever reason(s) one may have, one could still keep all the PascalCoin blockchain history as well along with the SafeBox as an option even though it would be redundant.
Without storing the entire history of the PascalCoin blockchain, you can still trace the specific operations of the 100 blocks prior to when the SafeBox absorbs and reflects the net result (a single balance for each account) from those 100 blocks. But if you’re interested in tracing operations over a longer period in the past – as redundant as that may be – you’d have the option to do so by storing the entire history of the PascalCoin blockchain.
(4) The SafeBox is Equivalent to the Entire Blockchain History
Some skeptics may ask this question: “What if the SafeBox is forever lost? How would you be able to verify your accounts?” Asking this question is tantamount to asking to what would happen to Bitcoin if all of its entire history was erased. The result would be chaos, of course, but the SafeBox is still in line with the general security model of a traditional blockchain with respect to black swans.
Now that we know the security of the SafeBox is not compromised, what are the implications of this new blockchain paradigm? A colorful illustration as follows still wouldn’t do justice to the subtle revolution that the SafeBox ushers. The automobiles we see on the street are the cookie-and-butter representation of traditional blockchain systems. The SafeBox, on the other hand, supercharges those traditional cars to become the Transformers from Michael Bay’s films.
The SafeBox is an entirely different blockchain architecture that is impressive in its simplicity and ingenuity. The SafeBox’s design is only the opening act for PascalCoin’s vast nuclear arsenal. If the above was all that PascalCoin offers, it still wouldn’t come close to achieving the unicorn status but luckily, we have just scratched the surface. Please keep on reading on if you want to learn how PascalCoin is going to shatter the cryptocurrency industry into pieces. Buckle down as this is going to be a long read as we explore further about the SafeBox’s implications.
Part #2: 0-Confirmation Transactions
To begin, 0-confirmation transactions are secure in PascalCoin thanks to the SafeBox.
The following paraphrases an explanation of PascalCoin’s 0-confirmations from the whitepaper:
“Since PascalCoin is not a UTXO-based currency but rather a State-based currency thanks to the SafeBox, the security guarantee of 0-confirmation transactions are much stronger than in UTXO-based currencies. For example, in Bitcoin if a merchant accepts a 0-confirmation transaction for a coffee, the buyer can simply roll that transaction back after receiving the coffee but before the transaction is confirmed in a block. The way the buyer does this is by re-spending those UTXOs to himself in a new transaction (with a higher fee) thus invalidating them for the merchant. In PascalCoin, this is virtually impossible since the buyer's transaction to the merchant is simply a delta-operation to debit/credit a quantity from/to accounts respectively. The buyer is unable to erase or pre-empt this two-sided, debit/credit-based transaction from the network’s pending pool until it either enters a block for confirmation or is discarded with respect to both sender and receiver ends. If the buyer tries to double-spend the coffee funds after receiving the coffee but before they clear, the double-spend transaction will not propagate the network since nodes cannot propagate a double-spending transaction thanks to the debit/credit nature of the transaction. A UTXO-based transaction is initially one-sided before confirmation and therefore is more exposed to one-sided malicious schemes of double spending.”
Phew, that explanation was technical but it had to be done. In summary, PascalCoin possesses the only secure 0-confirmation transactions in the cryptocurrency industry, and it goes without saying that this means PascalCoin is extremely fast. In fact, PascalCoin is capable of 72,000 TPS even prior to any additional extensive optimizations down the road. In other words, PascalCoin is as instant as it gets and gives Nano a run for its money.
Part #3: Zero Fee
Let’s circle back to our discussion of PascalCoin’s 0-confirmation capability. Here’s a little fun magical twist to PascalCoin’s 0-confirmation magic: 0-confirmation transactions are zero-fee. As in you don’t pay a single cent in fee for each 0-confirmation! There is just a tiny downside: if you create a second transaction in a 5-minute block window then you’d need to pay a minimal fee. Imagine using Nano but with a significantly stronger anti-DDOS protection for spam! But there shouldn’t be any complaint as this fee would amount to 0.0001 Pascal or $0.00002 based on the current price of a Pascal at the time of this writing.
So, how come the fee for blazingly fast transactions is nonexistent? This is where the magic of the SafeBox arises in three ways:
(1) PascalCoin possesses the secure 0-confirmation feature as discussed above that enables this speed.
(2) There is no fee bidding competition of transaction priority typical in UTXO cryptocurrencies since, once again, PascalCoin operates on secure 0-confirmations.
(3) There is no fee incentive needed to run full nodes on behalf of the network’s security beyond the consensus rewards.
Part #4: Blockchain Size
Let’s expand more on the third point above, using Ethereum as an example. Since Ethereum’s launch in 2015, its full blockchain size is currently around 2 TB, give or take, but let’s just say its blockchain size is 100 GB for now to avoid offending the Ethereum elitists who insist there are different types of full nodes that are lighter. Whoever runs Ethereum’s full nodes would expect storage fees on top of the typical consensus fees as it takes significant resources to shoulder Ethereum’s full blockchain size and in turn secure the network. What if I told you that PascalCoin’s full blockchain size will never exceed few GBs after thousands of years? That is just what the SafeBox enables PascalCoin to do so. It is estimated that by 2072, PascalCoin’s full nodes will only be 6 GB which is low enough not to warrant any fee incentives for hosting full nodes. Remember, the SafeBox is an ultra-light cryptographic data structure that is cryptographically equivalent to a blockchain with the entire transaction history. In other words, the SafeBox is a compact spreadsheet of all account balances that functions as PascalCoin’s full node!
Not only does the SafeBox’s infinitesimal memory size helps to reduce transaction fees by phasing out any storage fees, but it also paves the way for true decentralization. It would be trivial for every PascalCoin user to opt a full node in the form of a wallet. This is extreme decentralization at its finest since the majority of users of other cryptocurrencies ditch full nodes due to their burdensome sizes. It is naïve to believe that storage costs would reduce enough to the point where hosting full nodes are trivial. Take a look at the following chart outlining the trend of storage cost.

* https://www.backblaze.com/blog/hard-drive-cost-per-gigabyte/
As we can see, storage costs continue to decrease but the descent is slowing down as is the norm with technological improvements. In the meantime, blockchain sizes of other cryptocurrencies are increasing linearly or, in the case of smart contract engines like Ethereum, parabolically. Imagine a cryptocurrency smart contract engine like Ethereum garnering worldwide adoption; how do you think Ethereum’s size would look like in the far future based on the following chart?


https://i.redd.it/k57nimdjmo621.png

Ethereum’s future blockchain size is not looking pretty in terms of sustainable security. Sharding is not a fix for this issue since there still needs to be full nodes but that is a different topic for another time.
It is astonishing that the cryptocurrency community as a whole has passively accepted this forever-expanding-blockchain-size problem as an inescapable fate.
PascalCoin is the only cryptocurrency that has fully escaped the death vortex of forever expanding blockchain size. Its blockchain size wouldn’t exceed 10 GB even after many hundreds of years of worldwide adoption. Ethereum’s blockchain size after hundreds of years of worldwide adoption would make fine comedy.
Part #5: Simple, Short, and Ordinal Addresses
Remember how the SafeBox works by snapshotting all account balances? As it turns out, the account address system is almost as cool as the SafeBox itself.
Imagine yourself in this situation: on a very hot and sunny day, you’re wandering down the street across from your house and ran into a lemonade stand – the old-fashioned kind without any QR code or credit card terminal. The kid across you is selling a lemonade cup for 1 Pascal with a poster outlining the payment address as 5471-55. You flip out your phone and click “Send” with 1 Pascal to the address 5471-55; viola, exactly one second later you’re drinking your lemonade without paying a cent for the transaction fee!
The last thing one wants to do is to figure out how to copy/paste to, say, the following address 1BoatSLRHtKNngkdXEeobR76b53LETtpyT on the spot wouldn’t it? Gone are the obnoxiously long addresses that plague all cryptocurrencies. The days of those unreadable addresses will be long gone – it has to be if blockchain is to innovate itself for the general public. EOS has a similar feature for readable addresses but in a very limited manner in comparison, and nicknames attached to addresses in GUIs don’t count since blockchain-wide compatibility wouldn’t hold.
Not only does PascalCoin has the neat feature of having addresses (called PASAs) that amount to up to 6 or 7 digits, but PascalCoin can also incorporate in-protocol address naming as opposed to GUI address nicknames. Suppose I want to order something from Amazon using Pascal; I simply search the word “Amazon” then the corresponding account number shows up. Pretty neat, right?
The astute reader may gather that PascalCoin’s address system makes it necessary to commoditize addresses, and he/she would be correct. Some view this as a weakness; part #10 later in this segment addresses this incorrect perception.
Part #6: Privacy
As if the above wasn’t enough, here’s another secret that PascalCoin has: it is a full-blown privacy coin. It uses two separate foundations to achieve comprehensive anonymity: in-protocol mixer for transfer amounts and zn-SNARKs for private balances. The former has been implemented and the latter is on the roadmap. Both the 0-confirmation transaction and the negligible transaction fee would make PascalCoin the most scalable privacy coin of any other cryptocurrencies pending the zk-SNARKs implementation.
Part #7: Smart Contracts
Next, PascalCoin will take smart contracts to the next level with a layer-2 overlay consensus system that pioneers sidechains and other smart contract implementations.
In formal terms, this layer-2 architecture will facilitate the transfer of data between PASAs which in turn allows clean enveloping of layer-2 protocols inside layer-1 much in the same way that HTTP lives inside TCP.
To summarize:
· The layer-2 consensus method is separate from the layer-1 Proof-of-Work. This layer-2 consensus method is independent and flexible. A sidechain – based on a single encompassing PASA – could apply Proof-of-Stake (POS), Delegated Proof-of-Stake (DPOS), or Directed Acyclic Graph (DAG) as the consensus system of its choice.
· Such a layer-2 smart contract platform can be written in any languages.
· Layer-2 sidechains will also provide very strong anonymity since funds are all pooled and keys are not used to unlock them.
· This layer-2 architecture is ingenious in which the computation is separate from layer-2 consensus, in effect removing any bottleneck.
· Horizontal scaling exists in this paradigm as there is no interdependence between smart contracts and states are not managed by slow sidechains.
· Speed and scalability are fully independent of PascalCoin.
One would be able to run the entire global financial system on PascalCoin’s infinitely scalable smart contract platform and it would still scale infinitely. In fact, this layer-2 architecture would be exponentially faster than Ethereum even after its sharding is implemented.
All this is the main focus of PascalCoin’s upcoming version 5 in 2019. A whitepaper add-on for this major upgrade will be released in early 2019.
Part #8: RandomHash Algorithm
Surely there must be some tradeoffs to PascalCoin’s impressive capabilities, you might be asking yourself. One might bring up the fact that PascalCoin’s layer-1 is based on Proof-of-Work and is thus susceptible to mining centralization. This would be a fallacy as PascalCoin has pioneered the very first true ASIC, GPU, and dual-mining resistant algorithm known as RandomHash that obliterates anything that is not CPU based and gives all the power back to solo miners.
Here is the official description of RandomHash:
“RandomHash is a high-level cryptographic hash algorithm that combines other well-known hash primitives in a highly serial manner. The distinguishing feature is that calculations for a nonce are dependent on partial calculations of other nonces, selected at random. This allows a serial hasher (CPU) to re-use these partial calculations in subsequent mining saving 50% or more of the work-load. Parallel hashers (GPU) cannot benefit from this optimization since the optimal nonce-set cannot be pre-calculated as it is determined on-the-fly. As a result, parallel hashers (GPU) are required to perform the full workload for every nonce. Also, the algorithm results in 10x memory bloat for a parallel implementation. In addition to its serial nature, it is branch-heavy and recursive making in optimal for CPU-only mining.”
One might be understandably skeptical of any Proof-of-Work algorithm that solves ASIC and GPU centralization once for all because there have been countless proposals being thrown around for various algorithms since the dawn of Bitcoin. Is RandomHash truly the ASIC & GPU killer that it claims to be?
Herman Schoenfeld, the inventor behind RandomHash, described his algorithm in the following:
“RandomHash offers endless ASIC-design breaking surface due to its use of recursion, hash algo selection, memory hardness and random number generation.
For example, changing how round hash selection is made and/or random number generator algo and/or checksum algo and/or their sequencing will totally break an ASIC design. Conceptually if you can significantly change the structure of the output assembly whilst keeping the high-level algorithm as invariant as possible, the ASIC design will necessarily require proportional restructuring. This results from the fact that ASIC designs mirror the ASM of the algorithm rather than the algorithm itself.”
Polyminer1 (pseudonym), one of the members of the PascalCoin core team who developed RHMiner (official software for mining RandomHash), claimed as follows:
“The design of RandomHash is, to my experience, a genuine innovation. I’ve been 30 years in the field. I’ve rarely been surprised by anything. RandomHash was one of my rare surprises. It’s elegant, simple, and achieves resistance in all fronts.”
PascalCoin may have been the first party to achieve the race of what could possibly be described as the “God algorithm” for Proof-of-Work cryptocurrencies. Look no further than one of Monero’s core developers since 2015, Howard Chu. In September 2018, Howard declared that he has found a solution, called RandomJS, to permanently keep ASICs off the network without repetitive algorithm changes. This solution actually closely mirrors RandomHash’s algorithm. Discussing about his algorithm, Howard asserted that “RandomJS is coming at the problem from a direction that nobody else is.”
Link to Howard Chu’s article on RandomJS:
https://www.coindesk.com/one-musicians-creative-solution-to-drive-asics-off-monero
Yet when Herman was asked about Howard’s approach, he responded:
“Yes, looks like it may work although using Javascript was a bit much. They should’ve just used an assembly subset and generated random ASM programs. In a way, RandomHash does this with its repeated use of random mem-transforms during expansion phase.”
In the end, PascalCoin may have successfully implemented the most revolutionary Proof-of-Work algorithm, one that eclipses Howard’s burgeoning vision, to date that almost nobody knows about. To learn more about RandomHash, refer to the following resources:
RandomHash whitepaper:
https://www.pascalcoin.org/storage/whitepapers/RandomHash_Whitepaper.pdf
Technical proposal for RandomHash:
https://github.com/PascalCoin/PascalCoin/blob/mastePIP/PIP-0009.md
Someone might claim that PascalCoin still suffers from mining centralization after RandomHash, and this is somewhat misleading as will be explained in part #10.
Part #9: Fair Distribution and Governance
Not only does PascalCoin rest on superior technology, but it also has its roots in the correct philosophy of decentralized distribution and governance. There was no ICO or pre-mine, and the developer fund exists as a percentage of mining rewards as voted by the community. This developer fund is 100% governed by a decentralized autonomous organization – currently facilitated by the PascalCoin Foundation – that will eventually be transformed into an autonomous smart contract platform. Not only is the developer fund voted upon by the community, but PascalCoin’s development roadmap is also voted upon the community via the Protocol Improvement Proposals (PIPs).
This decentralized governance also serves an important benefit as a powerful deterrent to unseemly fork wars that befall many cryptocurrencies.
Part #10: Common Misconceptions of PascalCoin
“The branding is terrible”
PascalCoin is currently working very hard on its image and is preparing for several branding and marketing initiatives in the short term. For example, two of the core developers of the PascalCoin recently interviewed with the Fox Business Network. A YouTube replay of this interview will be heavily promoted.
Some people object to the name PascalCoin. First, it’s worth noting that PascalCoin is the name of the project while Pascal is the name of the underlying currency. Secondly, Google and YouTube received excessive criticisms back then in the beginning with their name choices. Look at where those companies are nowadays – surely a somewhat similar situation faces PascalCoin until the name’s familiarity percolates into the public.
“The wallet GUI is terrible”
As the team is run by a small yet extremely dedicated developers, multiple priorities can be challenging to juggle. The lack of funding through an ICO or a pre-mine also makes it challenging to accelerate development. The top priority of the core developers is to continue developing full-time on the groundbreaking technology that PascalCoin offers. In the meantime, an updated and user-friendly wallet GUI has been worked upon for some time and will be released in due time. Rome wasn’t built in one day.
“One would need to purchase a PASA in the first place”
This is a complicated topic since PASAs need to be commoditized by the SafeBox’s design, meaning that PASAs cannot be obtained at no charge to prevent systematic abuse. This raises two seemingly valid concerns:
· As a chicken and egg problem, how would one purchase a PASA using Pascal in the first place if one cannot obtain Pascal without a PASA?
· How would the price of PASAs stay low and affordable in the face of significant demand?
With regards to the chicken and egg problem, there are many ways – some finished and some unfinished – to obtain your first PASA as explained on the “Get Started” page on the PascalCoin website:
https://www.pascalcoin.org/get_started
More importantly, however, is the fact that there are few methods that can get your first PASA for free. The team will also release another method soon in which you could obtain your first PASA for free via a single SMS message. This would probably become by far the simplest and the easiest way to obtain your first PASA for free. There will be more new ways to easily obtain your first PASA for free down the road.
What about ensuring the PASA market at large remains inexpensive and affordable following your first (and probably free) PASA acquisition? This would be achieved in two ways:
· Decentralized governance of the PASA economics per the explanation in the FAQ section on the bottom of the PascalCoin website (https://www.pascalcoin.org/)
· Unlimited and free pseudo-PASAs based on layer-2 in the next version release.
“PascalCoin is still centralized after the release of RandomHash”
Did the implementation of RandomHash from version 4 live up to its promise?
The official goals of RandomHash were as follow:
(1) Implement a GPU & ASIC resistant hash algorithm
(2) Eliminate dual mining
The two goals above were achieved by every possible measure.
Yet a mining pool, Nanopool, was able to regain its hash majority after a significant but a temporary dip.
The official conclusion is that, from a probabilistic viewpoint, solo miners are more profitable than pool miners. However, pool mining is enticing for solo miners who 1) have limited hardware as it ensures a steady income instead of highly profitable but probabilistic income via solo mining, and 2) who prefer convenient software and/or GUI.
What is the next step, then? While the barrier of entry for solo miners has successfully been put down, additional work needs to be done. The PascalCoin team and the community are earnestly investigating additional steps to improve mining decentralization with respect to pool mining specifically to add on top of RandomHash’s successful elimination of GPU, ASIC, and dual-mining dominance.
It is likely that the PascalCoin community will promote the following two initiatives in the near future:
(1) Establish a community-driven, nonprofit mining pool with attractive incentives.
(2) Optimize RHMiner, PascalCoin’s official solo mining software, for performance upgrades.
A single pool dominance is likely short lived once more options emerge for individual CPU miners who want to avoid solo mining for whatever reason(s).
Let us use Bitcoin as an example. Bitcoin mining is dominated by ASICs and mining pools but no single pool is – at the time of this writing – even close on obtaining the hash majority. With CPU solo mining being a feasible option in conjunction with ASIC and GPU mining eradication with RandomHash, the future hash rate distribution of PascalCoin would be far more promising than Bitcoin’s hash rate distribution.
PascalCoin is the Unicorn Cryptocurrency
If you’ve read this far, let’s cut straight to the point: PascalCoin IS the unicorn cryptocurrency.
It is worth noting that PascalCoin is still a young cryptocurrency as it was launched at the end of 2016. This means that many features are still work in progress such as zn-SNARKs, smart contracts, and pool decentralization to name few. However, it appears that all of the unicorn criteria are within PascalCoin’s reach once PascalCoin’s technical roadmap is mostly completed.
Based on this expository on PascalCoin’s technology, there is every reason to believe that PascalCoin is the unicorn cryptocurrency. PascalCoin also solves two fundamental blockchain problems beyond the unicorn criteria that were previously considered unsolvable: blockchain size and simple address system. The SafeBox pushes PascalCoin to the forefront of cryptocurrency zeitgeist since it is a superior solution compared to UTXO, Directed Acyclic Graph (DAG), Block Lattice, Tangle, and any other blockchain innovations.


THE UNICORN

Author: Tyler Swob
submitted by Kosass to CryptoCurrency [link] [comments]

Staking — The New Way to Earn Crypto for Free

Staking — The New Way to Earn Crypto for Free

https://preview.redd.it/jpadsinyz3c41.png?width=616&format=png&auto=webp&s=c0dc410484430b863b0488727f92135f218edff2
Airdrops are so 2017, free money was fun while it lasted but now when someone says free money in crypto, the first thoughts are scams and ponzi schemes. But in 2020, there is a way to earn free money, in a legitimate, common practice, and logical manner — staking.
Staking is the core concept behind the Proof-of-Stake (PoS) consensus protocol that is quickly becoming an industry standard throughout blockchain projects. PoS allows blockchains to scale effectively without compromising on security and resource efficiency. Projects that incorporate staking include aelf, Dash, EOS, Cosmos, Cardano, Dfinity and many others.

https://preview.redd.it/luczupo004c41.png?width=616&format=png&auto=webp&s=2a2aba11c35c9962e42d1ea56b9e4f33532750ef

PoW — Why change

First, let’s look at some of the issues facing Proof-of-Work (PoW) consensus that led to the development of PoS.
  1. Excessive energy consumption — In 2017, many concerns were raised over the amount of electricity used by the bitcoin network (Largest PoW blockchain). Since then the energy consumption has increased by over 400%, to the point where 1 single transaction on this network has the same carbon footprint of 736,722 Visa transactions or consumes the same amount of electricity as over 20 U.S. households.
  2. Varying Electricity Costs — The profit of any miner on the network is tied to two costs, the initial startup cost to obtain the hardware and infrastructure, and more critically, the running cost of said equipment in relation to electricity usage. Electricity costs can vary from fractions of a cent per kWh to over 50 cents (USD) and in some cases it is free. When a user may only be earning $0.40 USD per hour then this will clearly rule out certain demographics based purely on electricity costs, reducing the potential for complete decentralization.
  3. Reduced decentralization — Due to the high cost of the mining equipment, those with large financial bases setup mining farms, either for others to rent out individual miners or entirely for personal gains. This results in large demographic hotspots on the network reducing the decentralized aspect to a point where it no longer accomplishes this aspect.
  4. Conflicted interests — The requirements of running miners on the network are purely based on having possession of the hardware, electricity and internet connection. There are no limits to the amount a miner can earn, nor do they need to hold any stake in the network, and thus there is very little incentive for them to vote on upgrades that may benefit the network but reduce their rewards.
I want to take this moment to mention a potential benefit to PoW that I have not seen anyone mention previously. It is a very loose argument so don’t take this to heart too strongly.
Consistent Fiat Injection — The majority of miners will be paying for their electricity in fiat currency. At a conservative rate of $0.1 USD per kWh, the network currently uses 73.12 TWh per year. This equates to an average daily cost of over $20 million USD. This means every day around $20 million of fiat currency is effectively being injected into the bitcoin network. Although this concept is somewhat flawed in the sense that the same amount of bitcoin will be released each day regardless of how much is spent on electricity, I’m looking at this from the eyes of the miners, they are reducing their fiat bags and increasing their bitcoin bags. This change of bags is the essence of this point which will inevitably encourage crypto spending. If the bitcoin bags were increased but fiat bags did not decrease, then there would be less incentive to spend the bitcoin, as would see in a staking ecosystem.

https://preview.redd.it/8dtqt6e204c41.png?width=631&format=png&auto=webp&s=065aedde87b55f0768968307e59e62a35eac949d

PoS Variations

Different approaches have been taken to tackle different issues the PoS protocol faces. Will Little has an excellent article explaining this and more in PoS, but let me take an excerpt from his piece to go through them:
  • Coin-age selection — Blockchains like Peercoin (the first PoS chain), start out with PoW to distribute the coins, use coin age to help prevent monopolization and 51% attacks (by setting a time range when the probability of being selected as a node is greatest), and implement checkpoints initially to prevent NoS problems.
  • Randomized block selection — Chains like NXT and Blackcoin also use checkpoints, but believe that coin-age discourages staking. After an initial distribution period (either via PoW or otherwise), these chains use algorithms to randomly select nodes that can create blocks.
  • Ethereum’s Casper protocol(s) — Being already widely distributed, Ethereum doesn’t have to worry about the initial distribution problem when/if it switches to PoS. Casper takes a more Byzantine Fault Tolerant (BFT) approach and will punish nodes by taking away (“slashing”) their stake if they do devious things. In addition, consensus is formed by a multi-round process where every randomly assigned node votes for a specific block during a round.
  • Delegated Proof-of-Stake (DPoS) — Invented by Dan Larimer and first used in Bitshares (and then in [aelf,] Steem, EOS, and many others), DPoS tackles potential PoS problems by having the community “elect” delegates that will run nodes to create and validate blocks. Bad behavior is then punished by the community simply out-voting the delegated nodes.
  • Delegated Byzantine Fault Tolerance (DBFT) — Similar to DPoS, the NEO community votes for (delegates) nodes, but instead of each node producing blocks and agreeing on consensus, only 2 out of 3 nodes need to agree on what goes in every block (acting more like bookkeepers than validators).
  • Tendermint — As a more sophisticated form of DBFT and a precursor to Casper, Jae Kwon introduced tendermint in 2014, which leverages dynamic validator sets, rotating leader elections, and voting power (i.e. weight) that is proportional to the self-funding and community allocation of tokens to a node (i.e. a “validator”).
  • Masternodes — First introduced by DASH, a masternode PoS system requires nodes to stake a minimum threshold of coins in order to qualify as a node. Often this comes with requirements to provide “service” to a network in the form of governance, special payment protocols, etc…
  • Proof of Importance (POI)NEM takes a slightly different approach by granting an “importance calculation” to masternodes staking at least 10,000 XEM. This POI system then rewards active nodes that act in a positive way over time to impact the community.
  • “Proof-of-X” — And finally, there is no lack of activity in the PoS world to come up with clever approaches and variants of staking (some are more elaborate than others). In addition to BFT protocols such as Honeybadger, Ouroboros, and Tezos, for further reading, also check out “Proof-of-”: Stake Anonymous, Storage, Stake Time, Stake Velocity, Activity, Burn, and Capacity.
https://preview.redd.it/n28a8n5404c41.png?width=604&format=png&auto=webp&s=0ea8827fd0458e768d4eb3a0a1fa88c984ba0a82

Earning Your Stake

In order to understand how one can earn money from these networks, I’ll break them down into 3 categories: Simple staking, Running nodes, and Voting.
Simple Staking - This is the simplest of the 3 methods and requires almost no action by the user. Certain networks will reward users by simply holding tokens in a specified wallet. These rewards are generally minimal but are the easiest way to earn.
Running a node - This method provides the greatest rewards but also requires the greatest action by the user and most likely will require ongoing maintenance. Generally speaking, networks will require nodes to stake a certain amount of tokens often amounting to thousands of dollars. In DPoS systems, these nodes must be voted in by other users on the network and must continue to provide confidence to their supporters. Some companies will setup nodes and allow users to participate by contributing to the minimum staking amount, with a similar concept to PoW mining pools.
Voting - This mechanism works hand in hand with running nodes in relation to DPoS networks. Users are encouraged to vote for their preferred nodes by staking tokens as votes. Each vote will unlock a small amount of rewards for each voter, the nodes are normally the ones to provide these rewards as a portion of their own reward for running a node.

Aelf’s DPoS system

The aelf consensus protocol utilizes a form of DPoS. There are two versions of nodes on the network, active nodes & backup nodes (official names yet to be announced). Active nodes run the network and produce the blocks, while the backup nodes complete minor tasks and are on standby should any active nodes go offline or act maliciously. These nodes are selected based upon their number of votes received. Initially the top 17 nodes will be selected as active nodes, while the next 100 will stand as the backup ones, each voting period each node may change position should they receive more or less votes than the previous period. In order to be considered as a node, one must stake a minimum amount of ELF tokens (yet to be announced).

https://preview.redd.it/47d3wqe604c41.png?width=618&format=png&auto=webp&s=062a6aa6186b826d400a0015d4c91fd1a4ed0b65
In order to participate as a voter, there is no minimum amount of tokens to be staked. When one stakes, their tokens will be locked for a designated amount of time, selected by the voter from the preset periods. If users pull their tokens out before this locked period has expired no rewards are received, but if they leave them locked for the entire time frame they will receive the set reward, and the tokens will be automatically rolled over into the next locked period. As a result, should a voter decide, once their votes are cast, they can continue to receive rewards without any further action needed.
Many projects have tackled with node rewards in order to make them fair, well incentivized but sustainable for everyone involved. Aelf has come up with a reward structure based on multiple variables with a basic income guaranteed for every node. Variables may include the number of re-elections, number of votes received, or other elements.
As the system matures, the number of active nodes will be increased, resulting in a more diverse and secure network.
Staking as a solution is a win-win-win for network creators, users and investors. It is a much more resource efficient and scalable protocol to secure blockchain networks while reducing the entry point for users to earn from the system.
submitted by Floris-Jan to aelfofficial [link] [comments]

Understanding Crypto Mining | And perhaps a way to mitigate its impact on the PC gaming ecosystem

EDIT: Per the moderation staff, I'm adding in to the header what I'm using to make it easier for prospective miners.
  1. Go to https://www.nicehash.com/
  2. Create a login
  3. Download their software and run it (this used to be "????")
  4. Profit
Once you reach 0.002 BTC (about 7-10 days on my GTX 1060 + i7-7700k), you can transfer your earnings to Coinbase for free, and cash out. CB does have fees for conversion to Fiat (cash) and your percentage goes down with higher amounts. So don't cash out just because you can. Cash out when you have enough to buy something.
Also a note on taxes. I'm going to keep this simple.
Hi folks. I just want to thank those of you in advance who trudge through this post. It's going to be long. I will try to have a TLDR at the end, so just scroll down for the bolded text if you want Cliff's Notes.
Disclaimer: I'm a miner, sort of. I casually mine when I sleep/work, using my existing PC. It doesn't make much. I don't buy hardware for mining. But, I still wanted to post this disclaimer in the interest of fairness.
As we all know, cryptocurrency mining has had a devastating impact on the PC gaming ecosystem. The demand for GPUs for mining has lead to scarce availability and sky high prices for relevant hardware. But even hardware that is less desirable for mining relative to their peers (GTX 1050ti, 1080) has been impacted. Why? Because when gamers can't get the 1060 or 1070 that they desire, they gravitate en masse towards something that their finances will allow them to settle for.
But for all that we know about mining, there's still a LOT of myth and misinformation out there. And I blame this on the bigger miners themselves. They have a few tactics they're using to discourage competition. Now, why would they do this? Simply put, the more coins are mined, the harder the algorithms get. That means the same hardware mines a lower rate of cryptocurrency over time. If the mining rates were to get too low before new hardware (Volta/Navi) could be released, it would cause a massive depression in the cryptocurrency market. Most hardware would become unprofitable, and used GPUs would flood the market. Miners want to retain profitability on current hardware until the next generation hardware is out.
So, what tactics are they engaging in? Silence and manipulation. On the former, the bigger miners don't usually participate and contribute to the community (there are exceptions, and they are greatly appreciated). They're sponges, taking whatever the community provides without returning much to the community. On the latter, they post here, in this very sub occasionally. And they continue to push certain types of myth/misinformation to discourage other users from mining.
And why, of all people, would you discourage gamers from mining? It's because of the competition point mentioned above. If a massive number of gamers entered the cryptocurrency mining market, it could trigger a mining apocalypse. There's an estimated 3-4 million current-gen GPUs being used in 24/7 mining operations by dedicated miners. Now, how many current-gen GPUs are used by gamers? I'd bet at least an equal amount. But what about Maxwell and Kepler? Or all those GCN-based GPUs up through Fiji? Bottom line is that when you factor in all available profitable GPUs, gamers drastically outnumber dedicated miners (yes, Kepler and GCN 1.0 are still profitable, barely). And if a large number of those users started casually mining as I am, the following would occur:
  • difficulty would increase, lower output (profitability) for everyone involved
  • Coin creation would initially accelerate, and with no massive change to the market cap, that means per-coin value drops
  • when you factor in slower coin generation for individual miners, coupled with lower coin value, you get...
  • ROI length increase on GPUs, depressing their values, which would lead to lower prices and higher availability
Oh dear, someone just spilled the beans...
So naturally, misinformation needs to be spread. If dedicated miners can keep the uninformed, well, uninformed, they're less likely to join in. And I've seen variations of the following misinformation spread. Here's the common tropes, and my rebuttal.
Mining on your GPU will cause it to die prematurely.
I really wish we had a Blackblaze-equivalent for GPUs used in data centers. NOTHING punishes a GPU like full-time use in a data center. Not mining, not gaming, and not prosumer usage. And these companies pay thousands per GPU. Clearly, they're getting solid ROI for their use.
But let's talk about mining specifically. For my GTX 1060, I limit power to 80% (96W). Fan speed is at a constant 40% (that's in the same ballpark as your blower-style GPU in desktop usage). Temperature is a constant 75°C. That's gentle. Gaming hurts it more (start/stop on the fan, varying temps, quick rise at the start and fall at the end, varying loads, etc.).
And if GPUs did prematurely die from mining? One miner insisted that I'd never see an ROI on my 1060 (which cost me $240) because it would die before I could earn that amount. Yea, GPUs routinely die before hitting their ROI. That's why miners are buying $200 GPUs today for $500, or $400 GPUs today for $900. Because they don't generate enough to cover their MSRP, let alone their current gouged prices. /s
Common sense would dictate that miners are profitable, or they wouldn't mine. Therefore, GPUs are not dying prematurely. So, don't fall for this one. And yes, I've seen those photos of the 20-card Sapphire RMA. Mining data centers have THOUSANDS of cards. Just do an image search for a GPU mining farm. This is well within typical acceptable defect rates.
Power costs are too high for mining to be profitable.
Warning! Danger Will Robinson! Math ahead!
Where I live, electricity ranges from 9.5 cents per kilowatt hour (kw/hr), to 10.1 cents per kw/hr. Let's round to 10 cents. Power measured at the wall from my surge protector, while mining, shows just under 200W. (That's includes my tower, monitor, speakers, a dedicated NAS, a router, and PSU inefficiency). That also includes mining on both CPU and GPU.
At 200W per hour, that's 5 hours to hit 1kw/hr. That's 5kw/hr per 25 hours, so let's call it 5kw/hr per day. That is $0.50 per day total from that outlet (and most of this stuff would be running anyway). That's not even "over my existing costs," that's just out the door.
Bottom line is that electricity is cheap in many areas. The USA national average is currently ~12 cents per kw/hr (RIP Hawaii, at 33 cents). For most of the developed world, power costs are not prohibitive. Don't fall for this. If unsure, check your rates on your bill, and ask someone who can do math if you can't.
Casually mining isn't profitable
There's a big difference between "profit" and "getting rich." I have no expectations of the latter happening from what I'm doing. But "profit" is very much real. It's not power costs that derail profitability. It's all of the hidden fees. Many mining programs take a cut of your output. And then a cut to transfer to a wallet. And then there's a fee to transfer to an exchange. Oh, did you want to then convert to cash? We can...for a fee!
The trick is in finding outlets that allow you to minimize fees. I give up 2% of my output, transfer to my wallet for free, can transfer to an exchange for free, and don't plan to cash out every time I meet the minimum threshold (higher fees!). I instead plan to cash out at extended set intervals to minimize those fees.
NOTE: I am deliberately not listing the provider(s) that I use, because I don't want to be accused of being associated with them and/or driving business to them. I want this post to be about the big picture. But I will answer questions in the comments, provided the moderation staff here has no objections.
Bottom line is that with a mid-range GPU like mine, and without the benefit of CPU mining (it's just not worth it without a modern Core i7, or Ryzen 5/7), my GPU alone could make me ~$60-$75/mo in profit at current rates. Think of how many months/years you go between upgrades. Now, do the math. Needless to say, I'm now regretting not going bigger up front :)
It's too complicated for a casual miner, so don't bother
The old "go big or go home" saying, and it sort of piggy backs off the last one. And there is some truth in this. If you're going to be a big-time miner, you need mining programs (often dedicated to each algorithm and/or currency), multiple wallets, access to multiple exchanges, etc. It's daunting.
But for the casual, you don't need that. There are multiple providers who offer you a one-stop-shop. I have one login right now. That login gives me my mining software, which switches between multiple algorithms/coins, gives me a wallet, and lets me transfer to an outside wallet/exchange. My second login will be the exchange (something that lets me convert my currency to local cash) when my balance justifies it. Given the recent Robin Hood announcement, I'm biding my time to see what happens. This space is getting competitive (lower fees).
Bottom line, it's easier now than it ever was before. As I told someone else, "Once I finally started, I wanted to kick my own ass for waiting so long."
New GPUs are expensive, but if you just wait, there will be a buttload of cheap, used GPUs for you!
Miners learned from the last crash. There were two types of miners in that crash: those who sold their GPUs at a loss, and those who kept mining and made out like bandits on the upswing. Turns out, cryptocurrency really does mimic the stock market (for now).
We're going to look at Bitcoin (BTC) to explain this. No, miners don't mine BTC. But, BTC is commonly what most coins are exchanged for (it makes up roughly one third of the entire cryptocurrency market). And it's the easiest currency to convert to cash. So, when BTC rises or falls in price, the rest of the market goes with it. That includes all of the coins that GPU miners are actually mining.
In January 2017, when the current mining push started, BTC was worth roughly $900 per coin. It's now worth roughly (as of this post) $12,000 per coin, down from a December high of over $20,000 per coin. So yea, the market "crashed." It's also more than 12x the value it was a year ago, when miners dove in. You think they're going to bail at 12x the value? Son, I've got news for you. This market needs to truly crash and burn for them to bail (and that's where you come in!).
So, there's not going to be a flood of used GPUs from a sudden market crash. Again, they've learned from that mistake. Used GPUs will enter the market when they are no longer profitable for mining, and not before. Dedicated miners have lots of room for expansion. When Volta comes out, they're not selling their Pascal GPUs. They're building new Volta mining rigs alongside the Pascal ones, making money off each of them.
Conclusion/TLDR:
  • Mining is subject to diminishing returns. It gets harder over time on the same hardware.
  • PC gamers joining the market en masse could trigger an apocalypse in terms of difficulty
  • Due to this, it benefits pro miners to spread misinformation to discourage gamers from entering the mining game
  • Casually mining on your existing system is safe, easy, could help you pay for your next upgrade(s), and could also hurt the mining market in general (better availability/pricing on GPUs)
  • No, there's no flood of used Pascal/Polaris/Vega GPUs around the corner, as those are HIGHLY profitable even in a depressed market
Second Conclusion - Why do I (jaykresge) personally care?
Simply put, I'm disgusted by this. I was excited about flipping a few friends from consoles to PC gaming. I'm now seeing a reverse trend. One friend is gaming on an RX 560 waiting for prices to hit sanity. He's running out of patience. Others have bailed.
I view our dormant GPUs as the best weapon against cryptocurrency mining. Destroy it from the inside. It's win-win for most of us. Either we earn enough for more upgrades, or we depress pricing. Something's got to give.
In other words, y'all f*ckers better start mining, because I want Volta to be reasonably priced when it launches so I can get an EVGA x80 Hybrid to go with a G-Sync monitor. And if this doesn't happen, I'm going to be cranky!
Seriously though, thanks for reading. Bear with me as I go over this a few more times for typing/grammar. And I look forward to your comments.
submitted by jaykresge to hardware [link] [comments]

Understanding Crypto Mining | And perhaps a way to mitigate its impact on the PC gaming ecosystem

This is a crosspost from /hardware, but I will be editing this independently based on community feedback and guidelines. Prior to posting here, I reached out to your local mod staff to ensure that I wasn't stepping on any toes, given the nature of its content. I hope you find this useful.
Hi folks. I just want to thank those of you in advance who trudge through this post. It's going to be long. I will try to have a TLDR at the end, so just scroll down for the bolded text if you want Cliff's Notes.
Disclaimer: I'm a miner, sort of. I casually mine when I sleep/work, using my existing PC. It doesn't make much. I don't buy hardware for mining. But, I still wanted to post this disclaimer in the interest of fairness.
As we all know, cryptocurrency mining has had a devastating impact on the PC gaming ecosystem. The demand for GPUs for mining has lead to scarce availability and sky high prices for relevant hardware. But even hardware that is less desirable for mining relative to their peers (GTX 1050ti, 1080) has been impacted. Why? Because when gamers can't get the 1060 or 1070 that they desire, they gravitate en masse towards something that their finances will allow them to settle for.
But for all that we know about mining, there's still a LOT of myth and misinformation out there. And I blame this on the bigger miners themselves. They have a few tactics they're using to discourage competition. Now, why would they do this? Simply put, the more coins are mined, the harder the algorithms get. That means the same hardware mines a lower rate of cryptocurrency over time. If the mining rates were to get too low before new hardware (Volta/Navi) could be released, it would cause a massive depression in the cryptocurrency market. Most hardware would become unprofitable, and used GPUs would flood the market. Miners want to retain profitability on current hardware until the next generation hardware is out.
So, what tactics are they engaging in? Silence and manipulation. On the former, the bigger miners don't usually participate and contribute to the community (there are exceptions, and they are greatly appreciated). They're sponges, taking whatever the community provides without returning much to the community. On the latter, they post here, in this very sub occasionally. And they continue to push certain types of myth/misinformation to discourage other users from mining.
And why, of all people, would you discourage gamers from mining? It's because of the competition point mentioned above. If a massive number of gamers entered the cryptocurrency mining market, it could trigger a mining apocalypse. There's an estimated 3-4 million current-gen GPUs being used in 24/7 mining operations by dedicated miners. Now, how many current-gen GPUs are used by gamers? I'd bet at least an equal amount. But what about Maxwell and Kepler? Or all those GCN-based GPUs up through Fiji? Bottom line is that when you factor in all available profitable GPUs, gamers drastically outnumber dedicated miners (yes, Kepler and GCN 1.0 are still profitable, barely). And if a large number of those users started casually mining as I am, the following would occur:
  • difficulty would increase, lower output (profitability) for everyone involved
  • Coin creation would initially accelerate, and with no massive change to the market cap, that means per-coin value drops
  • when you factor in slower coin generation for individual miners, coupled with lower coin value, you get...
  • ROI length increase on GPUs, depressing their values, which would lead to lower prices and higher availability
Oh dear, someone just spilled the beans...
So naturally, misinformation needs to be spread. If dedicated miners can keep the uninformed, well, uninformed, they're less likely to join in. And I've seen variations of the following misinformation spread. Here's the common tropes, and my rebuttal.
Mining on your GPU will cause it to die prematurely.
I really wish we had a Blackblaze-equivalent for GPUs used in data centers. NOTHING punishes a GPU like full-time use in a data center. Not mining, not gaming, and not prosumer usage. And these companies pay thousands per GPU. Clearly, they're getting solid ROI for their use.
But let's talk about mining specifically. For my GTX 1060, I limit power to 80% (96W). Fan speed is at a constant 40% (that's in the same ballpark as your blower-style GPU in desktop usage). Temperature is a constant 75°C. That's gentle. Gaming hurts it more (start/stop on the fan, varying temps, quick rise at the start and fall at the end, varying loads, etc.).
And if GPUs did prematurely die from mining? One miner insisted that I'd never see an ROI on my 1060 (which cost me $240) because it would die before I could earn that amount. Yea, GPUs routinely die before hitting their ROI. That's why miners are buying $200 GPUs today for $500, or $400 GPUs today for $900. Because they don't generate enough to cover their MSRP, let alone their current gouged prices. /s
Common sense would dictate that miners are profitable, or they wouldn't mine. Therefore, GPUs are not dying prematurely. So, don't fall for this one. And yes, I've seen those photos of the 20-card Sapphire RMA. Mining data centers have THOUSANDS of cards. Just do an image search for a GPU mining farm. This is well within typical acceptable defect rates.
Power costs are too high for mining to be profitable.
Warning! Danger Will Robinson! Math ahead!
Where I live, electricity ranges from 9.5 cents per kilowatt hour (kw/hr), to 10.1 cents per kw/hr. Let's round to 10 cents. Power measured at the wall from my surge protector, while mining, shows just under 200W. (That's includes my tower, monitor, speakers, a dedicated NAS, a router, and PSU inefficiency). That also includes mining on both CPU and GPU.
At 200W per hour, that's 5 hours to hit 1kw/hr. That's 5kw/hr per 25 hours, so let's call it 5kw/hr per day. That is $0.50 per day total from that outlet (and most of this stuff would be running anyway). That's not even "over my existing costs," that's just out the door.
Bottom line is that electricity is cheap in many areas. The USA national average is currently ~12 cents per kw/hr (RIP Hawaii, at 33 cents). For most of the developed world, power costs are not prohibitive. Don't fall for this. If unsure, check your rates on your bill, and ask someone who can do math if you can't.
Casually mining isn't profitable
There's a big difference between "profit" and "getting rich." I have no expectations of the latter happening from what I'm doing. But "profit" is very much real. It's not power costs that derail profitability. It's all of the hidden fees. Many mining programs take a cut of your output. And then a cut to transfer to a wallet. And then there's a fee to transfer to an exchange. Oh, did you want to then convert to cash? We can...for a fee!
The trick is in finding outlets that allow you to minimize fees. I give up 2% of my output, transfer to my wallet for free, can transfer to an exchange for free, and don't plan to cash out every time I meet the minimum threshold (higher fees!). I instead plan to cash out at extended set intervals to minimize those fees.
NOTE: I am deliberately not listing the provider(s) that I use, because I don't want to be accused of being associated with them and/or driving business to them. I want this post to be about the big picture. But I will answer questions in the comments, provided the moderation staff here has no objections.
Bottom line is that with a mid-range GPU like mine, and without the benefit of CPU mining (it's just not worth it without a modern Core i7, or Ryzen 5/7), my GPU alone could make me ~$60-$75/mo in profit at current rates. Think of how many months/years you go between upgrades. Now, do the math. Needless to say, I'm now regretting not going bigger up front :)
It's too complicated for a casual miner, so don't bother
The old "go big or go home" saying, and it sort of piggy backs off the last one. And there is some truth in this. If you're going to be a big-time miner, you need mining programs (often dedicated to each algorithm and/or currency), multiple wallets, access to multiple exchanges, etc. It's daunting.
But for the casual, you don't need that. There are multiple providers who offer you a one-stop-shop. I have one login right now. That login gives me my mining software, which switches between multiple algorithms/coins, gives me a wallet, and lets me transfer to an outside wallet/exchange. My second login will be the exchange (something that lets me convert my currency to local cash) when my balance justifies it. Given the recent Robin Hood announcement, I'm biding my time to see what happens. This space is getting competitive (lower fees).
Bottom line, it's easier now than it ever was before. As I told someone else, "Once I finally started, I wanted to kick my own ass for waiting so long."
New GPUs are expensive, but if you just wait, there will be a buttload of cheap, used GPUs for you!
Miners learned from the last crash. There were two types of miners in that crash: those who sold their GPUs at a loss, and those who kept mining and made out like bandits on the upswing. Turns out, cryptocurrency really does mimic the stock market (for now).
We're going to look at Bitcoin (BTC) to explain this. No, miners don't mine BTC. But, BTC is commonly what most coins are exchanged for (it makes up roughly one third of the entire cryptocurrency market). And it's the easiest currency to convert to cash. So, when BTC rises or falls in price, the rest of the market goes with it. That includes all of the coins that GPU miners are actually mining.
In January 2017, when the current mining push started, BTC was worth roughly $900 per coin. It's now worth roughly (as of this post) $12,000 per coin, down from a December high of over $20,000 per coin. So yea, the market "crashed." It's also more than 12x the value it was a year ago, when miners dove in. You think they're going to bail at 12x the value? Son, I've got news for you. This market needs to truly crash and burn for them to bail (and that's where you come in!).
So, there's not going to be a flood of used GPUs from a sudden market crash. Again, they've learned from that mistake. Used GPUs will enter the market when they are no longer profitable for mining, and not before. Dedicated miners have lots of room for expansion. When Volta comes out, they're not selling their Pascal GPUs. They're building new Volta mining rigs alongside the Pascal ones, making money off each of them.
Conclusion/TLDR:
  • Mining is subject to diminishing returns. It gets harder over time on the same hardware.
  • PC gamers joining the market en masse could trigger an apocalypse in terms of difficulty
  • Due to this, it benefits pro miners to spread misinformation to discourage gamers from entering the mining game
  • Casually mining on your existing system is safe, easy, could help you pay for your next upgrade(s), and could also hurt the mining market in general (better availability/pricing on GPUs)
  • No, there's no flood of used Pascal/Polaris/Vega GPUs around the corner, as those are HIGHLY profitable even in a depressed market
Second Conclusion - Why do I (jaykresge) personally care?
Simply put, I'm disgusted by this. I was excited about flipping a few friends from consoles to PC gaming. I'm now seeing a reverse trend. One friend is gaming on an RX 560 waiting for prices to hit sanity. He's running out of patience. Others have bailed.
I view our dormant GPUs as the best weapon against cryptocurrency mining. Destroy it from the inside. It's win-win for most of us. Either we earn enough for more upgrades, or we depress pricing. Something's got to give.
In other words, y'all f*ckers better start mining, because I want Volta to be reasonably priced when it launches so I can get an EVGA x80 Hybrid to go with a G-Sync monitor. And if this doesn't happen, I'm going to be cranky!
Seriously though, thanks for reading.
submitted by jaykresge to pcgaming [link] [comments]

u/guysir was getting downvoted in this thread for constantly asking "Can you explain why someone would have the desire for Bitcoin to die?" So I put together a couple of pointers to help him (and others like him) to wake up and smell the coffee.

TL;DR:
If you just want a 3-minute (NSFW) video which explains why certain rich assholes don't want you to have nice things, here goes:
George Carlin - The big club (NSFW!!!)
https://www.youtube.com/watch?v=cKUaqFzZLxU
Reference:
u/guysir has been asking a lot of questions like this:
Can you explain why [they] would have the desire for Bitcoin to die?
Edit: I like how I'm being downvoted for simply asking a question.
~ u/guysir
https://np.reddit.com/btc/comments/6qjw0o/small_blockers_want_even_smaller_blocks_o_o/dkxz7t3/?context=2
etc etc etc...
Below are some introductory lessons to help u/guysir grow up and face the reality of how the world actually works.
Lesson 1: Money doesn't grow on trees. Nor does it get mined from the ground very much anymore, as gold and silver. (Correction because I was half-asleep when I wrote that: Gold and silver still do get mined quite a bit of course - but most people don't use them day-to-day as money.) And gold and silver prices are probably heavily manipulated (suppressed) these days anyways - in order to prevent the value of fiat currencies (such as the USD, EUR, GBP, YEN) from collapsing.
So, where does money come from, in the modern world?
Bankers print unlimited supplies of money out of thin air (which they then give to their buddies).
That may sound somewhat surprising to someone who hasn't ever sat down and examined how the world actually works - but basically, it's the reality we do live in.
Exercise 1: Put on your thinking cap now for 30 seconds and try to imagine what your life would be like if you could "print money out of thin air" (and give it to your buddies).
OK, your 30 seconds are up.
Hopefully you realized that being able to "print money out of thin air" (and give it to your buddies) would give you immense power - correct?
This was just a simple exercise, and of course the politics and economics of the world as a whole are much more complicated - but hopefully at this point you have managed to finally grasp one basic concept:
The ability to print money (and give it to your buddies) confers great power.
So, as the saying goes: "Money makes the world go around."
And some lucky people (bankers) have arrogated to themselves the right to print money (which they then give to their buddies).
These buddies of theirs constitute a kind of exclusive club of mega-rich people who control all the essentials which you need to survive: mainly housing, education, healthcare.
Notice how the prices of these essentials are always going through the roof - while your salary stays pretty much stagnant.
And notice how you never have enough cash to buy these things outright using the little bit of cash money that you actually have.
So these people also control one other thing you need in life - credit.
Credit is actually just "money that you have to buy" (at a gigantic markup, called "interest") from those same mega-rich people in that "club", who happen to be lucky enough to be buddies with the bankers who "print up money out of thin air".
It's a very exclusive club, which runs the world - and you ain't in it.
Extracurricular Activity 1: Watch this short video by George Carlin for a vivid explanation of this "club" which you ain't in:
George Carlin - The big club (NSFW!!!)
https://www.youtube.com/watch?v=cKUaqFzZLxU
Lesson 2: Bitcoin is "peer-to-peer electronic cash". One of the most important aspects of it is that there will only be 21 million bitcoins (or 21 trillion "bits" - where there are a million "bits" in 1 bitcoin).
Many people believe that one of the main reasons Satoshi designed Bitcoin this way (with a cap of 21 million bitcoins) was to take away the power of the bankers and their buddies to keep running the world by printing up money.
Exercise 2: Read as much as you can of the Bitcoin whitepaper, and the Bitcoin wiki. Since this is about economics, you can skip over the technical stuff about how this whole thing was programmed in C++ - and just focus on how it works at the level of economics.
https://en.bitcoin.it/wiki/Main_Page
https://www.bitcoin.com/bitcoin.pdf
Another good site to read about the economic aspects of Bitcoin is Nakamoto Institute:
http://nakamotoinstitute.org/
Again, you can skip the articles about C++ programming - and just focus on articles dealing with the economic (and social, and political) aspects of having a form of money which an exclusive club of rich bankers and their buddies can't simply print up and use to control your life.
Extracurricular Activity 2: Read (or watch a video) about The Creature from Jekyll Island or about the Federal Reserve - which explains how the current banking system in a powerful country (the USA) really works:
https://duckduckgo.com/?q=creature+jekyll+island&t=hb&ia=web
https://www.youtube.com/results?search_query=crature+from+jekyll+island
https://www.youtube.com/results?search_query=federal+reserve+conspiracy
Or, alternatively, read up on topics like the petrodollar, quantitative easing, fractional reserve, ZIRP and NIRP, the Austrian school of economics - to start understanding some of the more advanced topics of how a certain exclusive club of bankers arrogate to themselves the right to print money out of thin air (which they then hand out to their buddies, who then use this power to control your access to all the expensive essentials in life).
Yes, there's a lot of tinfoil or Illuminati stuff in there which could be just delusional paranoia - but there's also a lot of cold hard facts about where money comes from. And it doesn't come from trees - or out of the ground - instead, it just comes from bankers typing in numbers on a keyboard, and then handing out this freshly-printed money to their friends - who then use this "fiat" to control you.
Lesson 3: Do a search on this subreddit for "AXA" to learn more about this one particular company.
https://np.reddit.com/btc/search?q=axa&restrict_sr=on&sort=relevance&t=all
You will see that AXA isn't just any old insurance company or financial firm - it actually happens to be the second-most-connected financial company in the world.
Who owns the world? (1) Barclays, (2) AXA, (3) State Street Bank. (Infographic in German - but you can understand it without knowing much German: "Wem gehört die Welt?" = "Who owns the world?") AXA is the #2 company with the most economic poweconnections in the world. And AXA owns Blockstream.
https://np.reddit.com/btc/comments/5btu02/who_owns_the_world_1_barclays_2_axa_3_state/
In addition, AXA is heavily involved in derivatives - in fact, it is the insurance company most heavily involved with derivatives:
If Bitcoin becomes a major currency, then tens of trillions of dollars on the "legacy ledger of fantasy fiat" will evaporate, destroying AXA, whose CEO is head of the Bilderbergers. This is the real reason why AXA bought Blockstream: to artificially suppress Bitcoin volume and price with 1MB blocks.
https://np.reddit.com/btc/comments/4r2pw5/if_bitcoin_becomes_a_major_currency_then_tens_of/?ref=search_posts
Lesson 4: How do debt-based fiat currencies (and derivatives) work? And how could companies that depend on such "assets" (such as AXA) be negatively affected by Bitcoin?
Derivatives are basically the total opposite of Bitcoin, when it comes to something called "counterparty risk" .
Counterparty risk is the possibility that you might not get what's owed to you - because "your money" isn't actually in your hands, it's in someone else's hands, and all you have is a "claim" on what they're holding in their hands: in other words, they have a debt to you (a promise to pay you) - and you only get "your" money if that other "counterparty" actually pays their debt to you, or makes good on their promise to pay you.
Compare that to Bitcoin - which is basically one of the only "counterparty-free" assets in the world. If you have a bitcoin (ie, if you control your own private key), then you're not dependent on anybody to pay you. You already are holding your own "cash".
You've probably seen company balance sheets, with Assets (including Receivables) and Liabilities (including Payables) and Income and Expenses and Equity. To calculate how much the company "has", you just add up all the positive stuff (Assets and Receivables), then subtract all the negative stuff (Liabilities and Payables), and the difference is what the company "has": its Equity. (The Income and Expense accounts are just temporary accounts used for incoming and outgoing cash flows.) But a lot of what the company "has" also could involve "counterparties" - other entities who (in the future) will (hopefully) come through and pay what they promised to pay.
So there is risk here. Risk of not getting paid. Risk of breach of contract. Risk of credit default. Because most of these "assets" are not "counterparty-free". Your "net worth" on paper might be just that: on paper. In reality (if the people who promised to pay you end up never paying you), then your "net worth" could actually turn out to be much less than what it says "on paper".
Derivatives are just another layer built on top of that: they're basically "bets" about whether someone is actually going to get paid or not. (In fact, one of the most important types of derivatives are Credit Default Swaps - or CDOs - which are used to place "bets" on whether someone is going to default on their debts.)
So, a company like AXA (which is heavily involved in derivativs) is technically "rich" - but only "on paper". In reality, like most major financial firms, if you just looked at what they actually have "on hand", they'd probably literally be bankrupt.
This may sound shocking, but many economic experts have stated that a majority of the major financial firms around the world (including most major banks, and most major insurance firms such as AXA) are actually bankrupt - if you just look at the reality of what they actually have "on hand" (and not the "fantasy" of what they have "on paper").
So, in addition to the ability to print money out of thin air, there is this other strange aspect to the world's current financial system: many companies (mainly finance companies) would be considered bankrupt if viewed strictly in terms of what they have "on hand" ... but they're are able to parade around acting like they're mega-rich, based on what they have "on paper" (most of which is debt-based or derivatives-based).
Bitcoin coin is a major threat to the existing power system based on debt and dervatives - which AXA is at the absolute center of
So, the people who are supposedly "powerful", who run our world - their power comes from two sources:
  • Their ability to print up money out of thin air;
  • Debt-based and derivatives-based numbers on paper.
Bitcoin threatens the first item above.
And the global financial crisis which started in 2008 threatens the second item above.
In fact, Bitcoin itself also probably threatens the second item above too.
This is because as Bitcoin becomes worth more and more, those debt-based and derivatives-based numbers on paper become worth less and less, in relative terms.
And if the current financial crisis becomes acute again (like it did when another "systemically important" insurance company / derivatives "playa" went under: AIG)...
...then a lot of those numbers on balance sheets will get wiped out, written off - because people aren't paying up
...and so companies (including companies like AXA - in fact especially companies like AXA) might go belly up
...because they don't actually have any real money "on hand" - all they have is debt-based and derivatives-based numbers on paper.
So nearly all of the world's major banks and insurance companies - especially AXA - are on a mad, mad merry-go-round of debt and derivatives.
They're like someone with no cash, living on an almost-maxxed-out credit card - desperately hoping that the banks will lend give them more money (a/k/a "credit" - a/k/a debt), and terrified that the counterparties who owe them money will actually turn out to be in the same boat that they are: ie, bankrupt, deadbeats.
It's actually less like a merry-go-round, and more like a game of musical chairs: and nearly all the major banks and financial companies are terrified of what will happen if/when the music stops, and they're not able to scramble to find a chair - especially AXA.
AXA is the "second-most-connected" financial company in the world
AXA also has more derivatives than any other insurance company in the world - which means they're basically flat-broke, totally dependent on their "counterparties" in this "web of debt".
And derivatives aren't just some minor part of the world financial system. Actually, there is currently around 1.2 quadrillion dollars in derivatives - so derivatives are by far the biggest part of the world financial system.
Here's an infographic to give you an idea:
http://money.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization/
You'll notice that Bitcoin is also included on that infographic.
Maybe you look at it and think: Well, Bitcoin is so small, why would they be worried about it?
But size isn't everything.
Remember that (unlike nearly every other asset on that infographic) - bitcoin is "counterparty-free". (Also gold and silver are "counterparty-free".)
So gold, silver and bitcoin are a lot more "independent" than all the other so-called "assets" on that infographic. In fact, it wouldn't be much of a stretch to say that gold, silver and bitcoin are the only totally real assets on that infographic - and the rest of those assets are to some degree fake (since they could evaporate at any minute - unlike gold, silver and bitcoin, where your ownership is totally guaranteed).
Also, due to the "law of reversion to mean", something small on that infographic basically has only one direction it can go: towards getting bigger. We say that Bitcoin has a lot of "upside" for growth.
And something gigantic on that infographic also has one direction it can go: towards getting smaller. We say that derivatives have a lot of downside - derivatives might be in a bubble, or due for a crash.
And one way that could easily happen would be for billions of dollars (or trillions of dollars) to flow into Bitcoin - while flowing out of the other asset classes on that infographic.
Of course, in order for trillions of dollars to flow into Bitcoin...
We're gonna need a bigger blocksize.
And that's actually basically all we'd probably need - the software already runs fine, and (despite the propaganda from Blockstream and r\bitcoin), the network / hardware / infrastructure / bandwidth can already handle blocksizes of 4MB-8MB - so with things like Moore's law working in tandem with Metcalfe's law, it is quite reaonable to assume that in 8-10 years (after the next two Bitcoin "halvings") it is quite possible for 1 bitcoin to be worth 1 million US Dollars.
I did some rough growth projections here showing how feasible this actually is:
Bitcoin Original: Reinstate Satoshi's original 32MB max blocksize. If actual blocks grow 54% per year (and price grows 1.542 = 2.37x per year - Metcalfe's Law), then in 8 years we'd have 32MB blocks, 100 txns/sec, 1 BTC = 1 million USD - 100% on-chain P2P cash, without SegWit/Lightning or Unlimited
https://np.reddit.com/btc/comments/5uljaf/bitcoin_original_reinstate_satoshis_original_32mb/
So Bitcoin (with bigger blocks - not under the control of Blockstream or AXA) could be a serious competitor - or a threat - or a safe haven - or an "inversely correlated" asset class - versus all the other asset classes on that infographic.
Bitcoin is an alternative
Bitcoin is an alternative - an option people might turn to, if they decide to abandon the other options on that infographic.
So AXA - whose wealth and power depends on heavily on the derivatives shown in that infographic - might want to either see Bitcoin fail, or suppress Bitcoin, or eliminate it as an alternative, or simply control it somehow - just to make sure it doesn't "eat their lunch".
Remember that one of the tactics used by oppressors is to spread propaganda to brainwash you into giving up hope and believing that "There Is No Alternative".
Bitcoin is an alternative to the current messed-up financial system (which helps prop up bankrupt companies like AXA) - so for that reason alone it's enough for a company like AXA to want to eliminate or suppress or at least control Bitcoin. Not just by buying up some bitcoins - but by paying the devs who write the code that determines the blocksize which ultimately affects the price.
"Bitcoin users unaffected."
If/when the music stops in the game of debt- and derivatives-backed musical chairs that makes the world go 'round, some of the "systemically important" financial firms will be exposed as being bankrupt - and it is very, very likely that one of those firms could be AXA (just like AIG in 2008).
In all honesty, I have to admit that it's still not totally clear to me (or maybe to anyone) precisely how Bitcoin will ultimately impact this whole "web of debt". After all, this is the first time the world has ever had a digital, counterparty-free asset like Bitcoin. (Gold and silver are also counterparty-free - but they're not digital, so it's harder to store them and move them around.)
But one basic fact is certain: Bitcoin is really not a part of this whole "web of debt". Bitcoin stands quite outside this whole "web of debt". Bitcoin is "inversely correlated" to this whole "web of debt".
Bitcoin is an alternative.
Voice and Exit
If you feel like you don't have a voice / vote in the system, it's good to know that you can exit the system.
https://en.wikipedia.org/wiki/Exit,_Voice,_and_Loyalty
Balaji Srinivasan (founder of 21.co) on Voice and Exit
https://www.youtube.com/watch?v=cOubCHLXT6A
Can we ever really know what AXA might be up to with Bitcoin?
Probably not - because it is unlikely that they would ever tell us.
But, we can make some rational guesses.
On some level, a lot of people whose wealth and power come from this whole "web of debt" are probably just reasoning as follows:
  • If/when this whole "web of debt" goes down, Bitcoin goes up. (This is already pretty much an established fact: money flees to "safe havens" like gold, silver and bitcoin when "traditional" investments go down.)
  • If/when Bitcoin goes up, then the importance and power (and credibility) of this whole "web of debt" goes down. (This makes sense: being counterparty-free, bitcoin is obviously a safer investment - and so it's worth more - and so all those other debt-based and derivatives-based investments become worth less, as bitcoin becomes worth more.)
  • If Bitcoin goes down (or totally goes away), then this whole "web of debt" will probably be able to hang on for a while longer. (This also be more of just just a conjecture - but it seems quite reasonable.)
Maybe they just want to keep you trapped in their system - by destroying (or suppressing) the alternative (Bitcoin) which gives you a chance to exit their system.
Some more posts about AXA and what they might be up to:
Anyways, there's a bunch of articles on btc about AXA and what they might be up to with Bitcoin:
https://np.reddit.com/btc/search?q=axa&restrict_sr=on
Finally, if you need some extra help dispelling the quaint notion that the people who run the world are honest and transparent and helpful, then the following two (admittedly highly conjectural) posts might help spell things out a bit more explicitly for you:
Blockstream may be just another Embrace-Extend-Extinguish strategy.
https://np.reddit.com/btc/comments/3y8o9c/is_the_real_power_behind_blockstream_straussian/
The owners of Blockstream are spending $75 million to do a "controlled demolition" of Bitcoin by manipulating the Core devs & the Chinese miners. This is cheap compared to the $ trillions spent on the wars on Iraq & Libya - who also defied the Fed / PetroDollar / BIS private central banking cartel.
https://np.reddit.com/btc/comments/48vhn0/the_owners_of_blockstream_are_spending_75_million/
Sorry I don't have any more time right now to "school" you further on this subject.
Ideally, learning should be a self-driven process anyways - once someone helps you get started.
Some advice
Finally, if I may give you some parting advice.
If you want to be truly respected on these forums, you're probably going to have to stop going around acting like such a doe-eyed innocent little pollyanna.
It is assumed that most people here already pretty much know the harsh reality of how the world works, and are trying to use Bitcoin as a way to not get screwed over by this harsh reality.
So some of the more informed people around here might not have much patience with you (or trust in you) if you don't even understand the basic principles outlined above, namely:
  1. Our planet is being run by an exclusive club of rich assholes who have immense power, because we "allow" them to print out money (which they then hand out to their buddies, not to us - basically enslaving us).
  2. Bitcoin was designed (many believe) to help fix this dire situation.
  3. The ancien régime (those people who up till now who have been running the world, due to their ability to print money) might not like Bitcoin for this reason, and might try to do something to stop it - and they might not tell you why they're doing it - and they might not even tell you that they are doing it in the first place!
Sorry to be such a curmudgeon, but pollyannas like you tend to get on my nerves after a while - not least because it seems to me that one of the factors which allows those rich assholes to continue to stay in power and run the world is because so many uninformed credulous people like you either can't or won't just wake up and open your goddamn eyes and see how you're getting fucked over by this whole "web of debt" based around that exclusive "club" of rich assholes who get free money which the bankers are simply printing up out of thin air.
So, 99% of people in the world are living lives of quiet desperation and oppression, becoming poorer and poorer - while the rich keep getting richer and richer (with all that money they keep printing out of thin air - which by the way, if you do the math, ends up making your money worth less) - and now there are finally some serious attempts at revolution or change afoot, to try to fix some of this mess - and you've just wandered in to a meeting where some of these people struggling for change are making plans, and you basically keep going around asking "What are you guys so worked up about?"
Maybe if you also realized that you are saying the exact same thing that the oppressors are always saying (basically some variation of "Nothing to see here, move on!") - then maybe that will provide another hint to you as to why some people have been less-than-totally-welcoming of your non-stop naïve-sounding questions.
Every subreddit has a topic - plus certain assumptions
For comparison: Would you wander around on a subreddit about fitness or weightlifting constantly asking: "Why do you want to get in shape?"? (Or maybe here's an even better comparison: Would you wander around on a subreddit for some oppressed group, and keep asking "Why would anyone be oppressing you?"?)
There are certain "givens" which are assumed on a subreddit - and one of the "givens" for a lot of people on this subreddit is that the current monetary regime running the world is not working for most people (or: it is oppressing most people), and so we need something better. (Also another one of the "givens" is that r\bitcoin is censoring everyone's posts - and that Blockstream is damaging Bitcoin.)
Nobody is forcing you to get into fitness or weightlifting - and nobody is forcing you to get into Bitcoin. Maybe you think your physique is already fine the way it is, so you don't see the point of fitness or bodybuilding - and maybe you think that VISA and PayPal and JPMorganChase and Wells Fargo and the Fed and the ECB or whatever are fine for you, so you don't see the point of Bitcoin. (Or maybe you were born a millionaire so you don't feel financially oppressed.) You're free to get involved or not get involved. Most people who are here are involved for some particular reason. And whatever that reason may be, it usually tends to involve using Bitcoin as it was designed in the whitepaper - in order to improve their lives. And part of this also means actually using Bitcoin as it was designed in the whitepaper - free of any interference from companies like Blockstream - or their financial backers AXA - who might not really want us to be able to use Bitcoin the way it was designed in the whitepaper.
In particular, it has been quite obvious for years to people on btc that the actions of r\bitcoin and Blockstream have been damaging to Bitcoin (whatever their actual motives may be - which we may ultimately never even be able to find out since they're probably never going to actually tell us) - but meanwhile we've had to fight tooth and nail to get a vast brainwashed army of pollyannas - a lot of whom quite frankly sound a lot like you - to understand that Satoshi did not design Bitcoin to work like this:
Every Core supporter wants to run their own node. Apparently to help banks settle transactions, instead of their own transactions.
https://np.reddit.com/btc/comments/6qgy7s/every_core_supporter_wants_to_run_their_own_node/
Satoshi designed Bitcoin to work like this:
Bitcoin Original: Reinstate Satoshi's original 32MB max blocksize. If actual blocks grow 54% per year (and price grows 1.542 = 2.37x per year - Metcalfe's Law), then in 8 years we'd have 32MB blocks, 100 txns/sec, 1 BTC = 1 million USD - 100% on-chain P2P cash, without SegWit/Lightning or Unlimited
https://np.reddit.com/btc/comments/5uljaf/bitcoin_original_reinstate_satoshis_original_32mb/
We all have our own reasons for being here.
So hopefully that gives you some background regarding why many people are here on this subreddit in the first place, and what some of our goals and desires are.
We want to use Bitcoin - and we don't want the bankers funding Blockstream or the censors silencing r\bitcoin to get in our way.
We understand that Bitcoin is a disruptive technology which could be liberating and empowering for many of us in various ways.
We are realistic about the fact (ie, we take it as a "given") that certain powerful individuals or institutions might not want us to be empowered and liberated like this (maybe because their power depends on our enslavement).
And so we allow for the possibility that certain powerful individuals or institutions might be trying to stop us - and that they might not even have the courtesy to inform us that they are trying to stop us.
I should of course clarify that these are ultimately really only my reasons for being on this forum.
Other people may have their own reasons - some the same as me, and some different from me - and so I can only speak for myself.
It is important for all of us - me, you and everyone else - to have a clear understanding of why we are here.
In particular, if you - u/guysir - ever felt like giving people a brief explanation of why you are here - then that might help people understand why you keep asking the kind of questions you keep asking.
Why people are rejecting Blockstream's heavily modified version of Bitcoin - and sticking with Satoshi's original version of Bitcoin (now called Bitcoin Cash or BCC)
The above reasons are why many of us will not use AXA-owned Blockstream's Bitcoin.
We want to continue using Satoshi's original Bitcoin, now being renamed Bitcoin Cash (ticker: BCC, or BCH) - because we want to continue to enjoy the benefits of:
submitted by ydtm to btc [link] [comments]

ASIC-resistance discussion

I would like to propose that the current model of ASIC resistance (social contract to fork on ASIC suspicion) may not be scalable as VTC gains purchasing power. However, there may be models which are.
First concern
Suppose I want to develop an ASIC and, using this post as a guideline, it costs around 1M USD to do so. I would want to make substantially more than 1M USD in profit to offset the risk of a PoW change ruining my plan. In other words, I need to mine significantly more than 1M/(50*p(t)) VTC, where p(t) is the price of 1 VTC. I also need to mine them without being detected. The network hashrate can maybe be roughly approximated by h(t) ~= p(t) * gpu_efficiency(t), where gpu_efficiency(t) is a slowly-increasing, roughly exponential function reflecting the decreasing cost of mining as hardware improves both in power efficiency and in processing power per USD. If I am to get away with ASIC mining, I need to not show up unexpectedly in the graph of h(t)/p(t), so that it still looks like natural GPU progress. Let's say I gradually activate them in batches until I control 10% hashpower. Additionally, I program my ASIC controller to throttle my own hashrate corresponding to fluctuations in network hashrate. For example, if all the GPUs switch to mining the ethereum fork of the day, I don't really need to know why the hashrate dropped, but my ASICs could act as though they did exactly the same.
At this point, the only evidence of my operation is that GPU mining is around 10% less profitable than might be expected (even assuming no GPU miners leave because of it), all other things being equal. I am sure there are many other ways to explain this - ideological, confused, or lazy miners mining at a loss, more highly efficient industrial GPU mining setups where electricity is cheap, etc.
According to the current price of approximately 5 USD, after spending 1M USD, I need to mine 4k blocks and then make up the cost of risk, electricity, and manufacturing. At 10% HP, this means 40k block times, or 69.4 days, plus whatever else. I claim that if the purchasing power of the block reward increases faster than advances in GPU technology, every factor in this calculation becomes easier. In particular, the following observations can be made:
Therefore, I suspect that covert ASIC development becomes more and more profitable over time, until one day, it happens.
Second concern
As mentioned above, in the case of covert ASIC development and GPUs switching chains, a large enough ASIC miner is incentivized to hide some of its hashpower some of the time. Unlike overt ASIC coins, this also means there is still extra hidden hashpower which could be used for attacking the network in periods of low difficulty.
Third concern
ASIC usage is currently discouraged by the developers' social contract to change PoW whenever ASIC usage is suspected. However, this is an attack surface. If the only factor blocking the ASIC operation from running smoothly is paying off a few volunteer developers, then that possibility must be considered. I don't mean to question the dev team's character at all, and I have no reason to believe they are compromised. Instead, I am trying to point out that trusting a small number of individuals to act against their own financial interest is fundamentally contrary to the idea of cryptocurrency.
If the ASIC usage is blatant, refusing to change PoW might kill the coin, or cause someone else to successfully fork the coin and gain economic majority, so it is not a total disaster. However, this is highly complicated by the fact that covert ASIC mining is possible. Is "suspecting" ASICs with inconclusive evidence enough of a reason to convince the economic majority to fork, even if the devs do not support the fork? As in Bitcoin's and Ethereum's example, it would seem there is a sentiment against contentious forks in much of the cryptocurrency community. I am not here to discuss whether this is right or wrong, but it exists, and it would make this particular situation difficult.
Fourth concern
Since there is, to my knowledge, no public specification on what exactly PoW would change to in the event of a fork, another incentive exists to try to discover or influence the choice of PoW function while preparing an ASIC for the PoW change. In this way, a covert ASIC developer could obtain a monopoly by compromising the dev team and having the coin fork to a predetermined "new" PoW function every so often (but not before ROI) to deter competitors.
Conclusions
I hope these will be considered as serious security concerns, or alternatively the errors of my logic will be pointed out. However, these concerns aren't necessarily impossible to address. I don't know an inherent reason why PoW cannot be made sufficiently general that a GPU is already fairly close to optimized at solving it.
Perhaps a PoW function which changes unpredictably after every N blocks, based on a seed generated from hashing the block header M blocks ago, would be a significant improvement in deterring ASIC development. VTC already has fast difficulty adjustment, so maybe even significant variation in the PoW function's computational difficulty could be tolerated. In this example, which is not fully thought out, M is chosen large enough to minimize the risk of a chain split producing one chain with a significantly easier PoW function than the other, but small enough to make ASIC development impractical.
Regularly scheduled but unpredictable PoW changes would make covert ASIC development less rewarding. Additionally, provably random parameters based on hashing block headers would decrease the amount of trust in the developers required.
Is this an awful idea? Are my concerns legitimate? Why or why not?
submitted by yamaha20 to vertcoin [link] [comments]

Why Peter Rs Fee Market Wont Work

Hi, I wanted to share my blog about why I believe Peter Rs fee market ideas can not work.
http://danielwilczynski.com/2015/11/30/why-peter-rs-fee-market-wont-work/
At the first Scaling Bitcoin conference Peter R presented his ideas on why a fee market would exist without a block size limit. You can see his presentation here: https://www.youtube.com/watch?v=ad0Pjj_ms2k.
He is wrong and I will explain why.
Peter says that a non-zero supply curve exists because increasing block size increases cost to miners due to higher orphan rate. I have also heard a variation of this argument with increasing block size being constrained by hardware resources, internet bandwidth etc.
Theoretically these arguments are correct, practically they are not.
The effect of block size on these costs is almost negligible.
The supply curve is not exactly flat but very close to it. It is practically (if not theoretically) flat and at zero. In reality a fee market will not form.
As an example, we have a supply and demand curve for oxygen but there is no real market for it because its impractical for something so cheap with such a flat and low curve. Yes, Oxygen does have a supply curve because humans are capable of increasing its supply at an increasing cost.
When curves meet at extremes the market breaks down.
No block size limit would simply result in huge blocks and a much more centralised node network, that can be easier influenced by governments.
But lets ignore all of the above for a second.
Peter also says we need at least 2 mining pools, for a market to form based on the orphan rate cost. Of course you hardly have much of a market with 2 pools, or 5-10 pools. That is what we have now. You can not have a real efficient market for orphan rates with only a few participants at one end.
Furthermore, orphan rate is a result of block propagation and can be decreased by moving pools closer together geographically. That is obviously very negative if we are trying to prevent mining centralisation.
To quote Gregory Maxwell:
"How could you have written at such length and complexity but ignoring the simple expident miners have of simply centeralizing their operation around larger pools to lower their costs– an activity they previously performed, in practice, not just theory (which was walked back by handing them more efficient relay mechenisms) and which is simple, easy, and which reduces those marginal costs to 0 at the limit (e.g. all miners served off a particular host) — after I specifically called you out on this previously? Doubly so when your analysis gives provides a framework for analyizing the profitibility of moving from one point on that income tradeoff graph to another (e.g. the lost income from failing to centeralize)…."
You might ask, why can a fee market form with fixed block-size supply then? After-all we still have only a small number of pools? The reason is, that in Peter’s model the cost variable is due to the differing orphan rate between pools. That is not true for fixed block size. There is no variable for the supply curve. Thats why the supply curve is a straight vertical line.
Finally Peter refers to the block size limit as some ‘artificial centrally controlled limit’.
He does raise a good and important point here. In the situation of a fee-market based on limited block size, what would be the mechanism for changing the block-size limit and who would have control? The solutions from Peter R or others did not satisfy me personally. It is a valid question though. Are we to have a hard-fork each time we decide the fees are getting too high or low? Do we implement code to allow a semi-centralised authority to decide? These do not seem like good solutions.
To say it is a centrally controlled limit is wrong however. To change the limit needs the consensus of the network i.e. nodes. Core developers have some limited ability to influence people, but ultimately they can not force through any change by themselves, they need the networks tacit agreement. Nobody and everybody controls the limit. Its control is decentralised (and therefore hard to change).
Finally there is nothing exceptionally artificial about the limit. Bitcoin itself is artificial, the 21 million limit is also an arbitrary artificial limit. Humans set the parameters of Bitcoin, its supply and its block size limit. The problem and difference is the 21 million limit does not have to change. Block size limit might have to, how will that be decided?
submitted by DanielWilc to Bitcoin [link] [comments]

Gamers Mine Dogecoin

Nikolas Gauvreau has his fingers crossed this month. The founder of Universal Projects is halfway through his Kickstarter campaign, although he has only raised a little over 5% of his $275,000 target. Gauvreau is developing a game that will let players ‘mine’ dogecoin, without a hardware mining rig in sight. He has been working on his brainchild for 17 years. Called VoidSpace, it is a massively multiplayer online role-playing game (MMORPG), set in a massive space universe, that is almost entirely empty when the user first arrives. Players proceed to jet around the universe, mining raw natural resources. They can use the natural resources they collect to build manufacturing facilities and create more sophisticated items. They can also trade goods and raw materials with each other. They can also club together in alliances, and take on other groups of players. It’s a little like the online space role-playing game Eve Online, but there are many differences. The game is ‘organic’, with many variations on different objects. The universe also scales in size, getting larger as more players enter it. Other online games generally use their own in-game currencies. Eve Online has the ISK, while World Of Warcraft has gold (virtual, not physical). But the Ottawa, Canada-based programmer said he is adopting dogecoin as his in-game currency. “We want to allow people to use it for real money transactions too. So players can create their own in-game currencies, but they will always be able to use dogecoins for transactions between players.” Mining dogecoin in-game Gauvreau is experimenting with a couple of options for dogecoin in the game. The first involves ‘mining’ dogecoins as a natural resource, scattered throughout the universe. Players are allowed to use the coins as a method of payment to enter the game. He explained: “The coins will then be distributed among the world as a mineable resource. So you can collect dogecoins via the mining process, or trade other players and kill them and loot what they have already mined.” The second option involves using doge for financial transactions, where players can trade goods with each other. We have seen online gaming companies flirt with cryptocurrencies before. Casual gaming firm Zynga, for example, flirted with bitcoin as a means of taking in-app payments. But there haven’t been many games that have integrated cryptocurrencies intimately. One such game is more or less simply a mining client for the cryptocurrency. In huntercoin, the cryptocurrency and the game are effectively one and the same. A 2-D map, displayed in the client, enables people to compete with each other, traversing the landscape with their characters, to find coins that spawn randomly. Players can race with and destroy other players to collect coins. Their successes and failures are recorded in the huntercoin block chain, and the coins are traded.
submitted by metekuku to dogecoin [link] [comments]

Why Peter Rs Fee Market Wont Work

Hi guys, I have some differing views and wanted to discuss them here. Please don't down-vote this into oblivion, as that is itself a form of censorship that will prevent discussion.

At the first Scaling Bitcoin conference Peter R presented his ideas on why a fee market would exist without a block size limit. You can see his presentation here: https://www.youtube.com/watch?v=ad0Pjj_ms2k.
He is wrong and I will explain why.
Peter says that a non-zero supply curve exists because increasing block size increases cost to miners due to higher orphan rate. I have also heard a variation of this argument with increasing block size being constrained by hardware resources, internet bandwidth etc.
Theoretically these arguments are correct, practically they are not.
The effect of block size on these costs is almost negligible.
The supply curve is not exactly flat but very close to it. It is practically (if not theoretically) flat and at zero. In reality a fee market will not form.
As an example, we have a supply and demand curve for oxygen but there is no real market for it because its impractical for something so cheap with such a flat and low curve. Yes, Oxygen does have a supply curve because humans are capable of increasing its supply at an increasing cost.
When curves meet at extremes the market breaks down.
No block size limit would simply result in huge blocks and a much more centralised node network, that can be easier influenced by governments.
But lets ignore all of the above for a second.
Peter also says we need at least 2 mining pools, for a market to form based on the orphan rate cost. Of course you hardly have much of a market with 2 pools, or 5-10 pools. That is what we have now. You can not have a real efficient market for orphan rates with only a few participants at one end.
Furthermore, orphan rate is a result of block propagation and can be decreased by moving pools closer together geographically. That is obviously very negative if we are trying to prevent mining centralisation.
To quote Gregory Maxwell:
"How could you have written at such length and complexity but ignoring the simple expident miners have of simply centeralizing their operation around larger pools to lower their costs– an activity they previously performed, in practice, not just theory (which was walked back by handing them more efficient relay mechenisms) and which is simple, easy, and which reduces those marginal costs to 0 at the limit (e.g. all miners served off a particular host) — after I specifically called you out on this previously? Doubly so when your analysis gives provides a framework for analyizing the profitibility of moving from one point on that income tradeoff graph to another (e.g. the lost income from failing to centeralize)…."
You might ask, why can a fee market form with fixed block-size supply then? After-all we still have only a small number of pools? The reason is, that in Peter’s model the cost variable is due to the differing orphan rate between pools. That is not true for fixed block size. There is no variable for the supply curve. Thats why the supply curve is a straight vertical line.
Finally Peter refers to the block size limit as some ‘artificial centrally controlled limit’.
He does raise a good and important point here. In the situation of a fee-market based on limited block size, what would be the mechanism for changing the block-size limit and who would have control? The solutions from Peter R or others did not satisfy me personally. It is a valid question though. Are we to have a hard-fork each time we decide the fees are getting too high or low? Do we implement code to allow a semi-centralised authority to decide? These do not seem like good solutions.
To say it is a centrally controlled limit is wrong however. To change the limit needs the consensus of the network i.e. nodes. Core developers have some limited ability to influence people, but ultimately they can not force through any change by themselves, they need the networks tacit agreement. Nobody and everybody controls the limit. Its control is decentralised (and therefore hard to change).
Finally there is nothing exceptionally artificial about the limit. Bitcoin itself is artificial, the 21 million limit is also an arbitrary artificial limit. Humans set the parameters of Bitcoin, its supply and its block size limit. The problem and difference is the 21 million limit does not have to change. Block size limit might have to, how will that be decided?
http://danielwilczynski.com/2015/11/30/why-peter-rs-fee-market-wont-work/
submitted by DanielWilc to bitcoinxt [link] [comments]

Gamers Mine Dogecoin

Nikolas Gauvreau has his fingers crossed this month. The founder of Universal Projects is halfway through his Kickstarter campaign, although he has only raised a little over 5% of his $275,000 target. Gauvreau is developing a game that will let players ‘mine’ dogecoin, without a hardware mining rig in sight.
He has been working on his brainchild for 17 years. Called VoidSpace, it is a massively multiplayer online role-playing game (MMORPG), set in a massive space universe, that is almost entirely empty when the user first arrives. Players proceed to jet around the universe, mining raw natural resources.
They can use the natural resources they collect to build manufacturing facilities and create more sophisticated items. They can also trade goods and raw materials with each other.
They can also club together in alliances, and take on other groups of players.
It’s a little like the online space role-playing game Eve Online, but there are many differences. The game is ‘organic’, with many variations on different objects. The universe also scales in size, getting larger as more players enter it.
Other online games generally use their own in-game currencies. Eve Online has the ISK, while World Of Warcraft has gold (virtual, not physical). But the Ottawa, Canada-based programmer said he is adopting dogecoin as his in-game currency.
“We want to allow people to use it for real money transactions too. So players can create their own in-game currencies, but they will always be able to use dogecoins for transactions between players.”
Mining dogecoin in-game
Gauvreau is experimenting with a couple of options for dogecoin in the game. The first involves ‘mining’ dogecoins as a natural resource, scattered throughout the universe.
Players are allowed to use the coins as a method of payment to enter the game. He explained:
“The coins will then be distributed among the world as a mineable resource. So you can collect dogecoins via the mining process, or trade other players and kill them and loot what they have already mined.”
The second option involves using doge for financial transactions, where players can trade goods with each other.
We have seen online gaming companies flirt with cryptocurrencies before. Casual gaming firm Zynga, for example, flirted with bitcoin as a means of taking in-app payments. But there haven’t been many games that have integrated cryptocurrencies intimately.
One such game is more or less simply a mining client for the cryptocurrency. In huntercoin, the cryptocurrency and the game are effectively one and the same. A 2-D map, displayed in the client, enables people to compete with each other, traversing the landscape with their characters, to find coins that spawn randomly.
Players can race with and destroy other players to collect coins. Their successes and failures are recorded in the huntercoin block chain, and the coins are traded.
submitted by eneyardi to dogecoin [link] [comments]

[Shibe Market Analysis] An Introduction to Fundamentals-based Valuation

Browsing /dogecoin and the community at large, you may have noticed that typically people "value", or form an estimate of the prices they'd be willing to buy and sell dogecoin at, through a number of methods, most common of which are a buy and hold-style (which at its core is saying dogecoin will be undervalued til we reach the proverbial moon) and technical analysis based, akin to saying "dogecoin hasn't gone below 150 in a while, so buying at 150 is probably a good idea".
While both of these techniques have their merits, there is a 3rd methodology of valuation that may interest the more mathematically-oriented shibes, and is helpful for all shibes to be familiar with, namely fundamentals-based valuation.
What are fundamentals?
Fundamentals are the underlying characteristics of the doge economy; metrics like the average transaction value, network difficulty, block reward and rate of dogecoin production are all ways of "measuring" these characteristics and play a role in fundamentals-based valuation. It is worth noting that only fundamentals-based valuation can answer the question of "why", because it is the only methodology that incorporates the underlying economy beneath the price of doge. For example, if i ask why dogecoin doesn't go below 150, a trader may answer that whales have a buy wall at 150, or there is strong support at 150, but can never really explain why these phenomenon choose the price of 150 to assert themselves.
A Fundamentals-based Valuation
This spreadsheet shows the process of arriving at a target price for DOGE/BTC based on the underlying network difficulty and the cost of building a mining rig.
Modeling the rig
Mining rigs are a core component in the production of dogecoin, and while there are vast differences in their appearance and features, all mining rigs can be boiled down into two key metrics - the capital cost per kilohash per second, and the electrical consumption per kilohash per second. Capital cost per KH/s measures how much it costs to build the rig, and typically hovers around $1 per KH/s. Using quality parts and higher margins of safety pushes this value up, while skimping on quality and operating with smaller safety margins can push this value closer to $0.75 or lower. A lower value of capital cost per KH/s means your rig is more efficient with your capital (the money you use to build it). Electrical consumption per KH/s is much more standard, as the predominant AMD gpus essentially share the same chips, and so even though some cards generate higher KH/s, they also use more electricity. This number combined with the electrical cost per kWh in your region essentially determine your "operating cost", or the cost you pay to keep your rig running. I've used the typical electicity cost in my region, 15 cents per kWh.
As a side note, the primary feature of scrypt asics is not the fundamental revolution it was in bitcoins - scrypt asics simply offer much lower electrical consumption per KH/s in exchange for a much higher capital cost per KH/s. It remains to be seen whether the hardware manufacturing industry will reduce the cost of scrypt asics enough to make them competitive with GPUs on a capital cost per KH/s basis. If this happens, then they will indeed become the dominant form of mining hardware, otherwise there will always be room for GPU rigs.
Modeling the Macro Economy of Doge
The network difficulty parameter you've probably heard of before, and essentially controls how many doges you receive per KH/s over a period of time. Since the total number of doges given out per block must average out to a fixed rate, but the global hash rate changes, the network difficulty adjusts to distribute the doges proportionately.
Finally, the Daily Growth Rate is one of the most important parameters, and one of the hardest to estimate. Essentially it's the growth rate of the dogecoin economy, and different ways of estimating it will dramatically change the result. Historically over the last 2 months, the doge economy has grown at an average pace of 5.04% per day, measured by market cap.
Putting it together
Using the network difficulty, its possible to estimate the daily doge production per KH/s, which using a network difficulty of 1418 works out to be approximately 7.09 doges/day. The electricity used to produce this is a flat $0.000000625 worth of kWh per day. The capital cost, on the other hand, varies according to the interest rate you use. Since we're assuming 1 KH/s costs $1 of capital, the required interest you need to earn on your capital is the effective daily cost of capital. Summing the two costs gives you an estimated total cost per day in USD of producing the 7.09 doge, and from this we can derive an implied exchange rate.
As you can see, the primary driver of changes in this exchange rate is the interest/growth rate on capital - much like how in fiat markets, the interest rate on government bonds determines exchange rates (if I can earn 2.5% on bonds in India but can borrow at 0.25% in the USA, I will borrow USD to exchange into Indian rupees to buy their bonds and earn a 2.25% spread, and in doing so create demand for rupees and supply of dollars in exchange markets, pushing the value of the rupee up).
In the case of doge, you can think of it as you can borrow on your credit card for 35% annually, or approximately 0.082% daily, and then use the money you get to buy a rig, which earns you 1.65% per day, and pocket the difference of 1.56% (please do not max out your credit card doing this). Should the value of doge fall below the level corresponding to 0.082%, new miners no longer will want to take debt to build mining rigs. I haven't done the calculations here, but you can actually use litecoin in a similar manner - litecoin is a safer, more established crypto than doge with less price variation, and so at the same rate of return on capital, a miner will probably choose to mine litecoin. Implicitly this also means that mining doge must earn a higher return than mining litecoin, and so the rate of return on capital mining litecoin sets a floor for the rate of return of mining doge, and thus the price of doge. Should the price of doge hit this floor, rather than the price continuing to fall the global hash rate and difficulty would begin going down instead, and those miners continuing to mine doge would receive the required return on capital because they collect more doges per KH/s.
Takeaways
Examining the selected interest rates, you can see that at the historical average growth rate of 5.04%, doge should be worth 1024 satoshis, more than 5 times the current price. It's clear the market doesn't believe we will continue growing at 5.04% per day. Working backwards from the current exchange rate, we can actually see that the market currently estimates the doge economy to grow at .86% per day going forward. When the block reward halves, if the network difficulty doesn't fall substantially, dogecoin will need to become substantially more valuable in order to justify the capital used to mine it. In practice, it will probably be a combination of the network difficulty decreasing and the price of dogecoin increasing that re-equilibriates the market, but this process may go on for a few weeks during which time the price of dogecoin and the network difficulty may be highly volatile. Notably, the hash rate that leaves dogecoin will probably migrate to other cryptos, and so it may be worthwhile for daytraders and speculators to begin looking for those alt-coins likely to attract the displaced hashrate from dogecoin once the block reward halves, and buy those coins before their network difficulty rises in anticipation of the prices rising.
While this article isn't meant to be a definitive guide on fundamentals-based valuation, it is meant to introduce the concept and light the path for shibes more interested in investing for the long run and display some of the techniques and the frame of mind behind valuations based on the underlying economy, rather than the lines on a chart.
Happy trading shibes!
Disclaimer: I am not psychic and do not actually know where the market is going; I'm pretty sure the market doesn't know where its going either (except TO THE MOON!). Please do not base your trading decisions solely on the above analysis, and never trade more than you're comfortable losing. Finally, please do not hate/sue me if trades don't go your way, but if they do go your way, it was totally because you read this article :)
If you're looking to learn how to trade or just want a quick refresher, check out my ongoing series, or if you just want to subscribe to these market analyses check out DogeTrader.
submitted by kwickymartkidd to dogecoin [link] [comments]

What is Bitcoin Mining? - YouTube What is Bitcoin Mining for Beginners - Short and Simple ... Noob's Guide To Bitcoin Mining - Super Easy & Simple - YouTube What is Bitcoin Mining? (In Plain English) - YouTube Bitcoin Mining Explained - YouTube

Obtaining as much mining hardware to receive a 51% share is very unlikely due to delivery constraints especially when hashrate is increasing (Saifedean, Bitcoin Mining: Energy and Security, 2018 ... Mining hardware manufacturers only sell one generation of miners at any given time. Usually it is a result of producing and selling small batches one by one, as Bitmain and Canaan have done. But it is also a result of aggressive competition: when a company launches a new ASIC significantly outperforming the efficiency of the competition, their sales come to a stop until a more efficient ... When mining bitcoin, the hashcash algorithm repeatedly hashes the block header while incrementing the counter & extraNonce fields. Incrementing the extraNonce field entails recomputing the merkle tree, as the coinbase transaction is the left most leaf node. The block is also occasionally updated as you are working on it. Bitcoin Mining: How does Bitcoin Mining Work. Coinmama May 11, 2020. Coinmama has all the information you need to get informed about Bitcoin mining. Discover how Bitcoin mining works, what Bitcoin pools and Bitcoin mining hardware are, and more. Visit Coinmama to learn more today! Additionally, variation in the actual average costs of mining may occur due to price behavior. When the price of Bitcoin falls mining revenues are squeezed while the associated costs remain the same, causing their average costs to go up. Likewise, a (strongly) increasing price might lead to mining requiring some time to “catch up”. It, however, doesn’t change the fact that the calculate ...

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What is Bitcoin Mining? - YouTube

Start trading Bitcoin and cryptocurrency here: http://bit.ly/2Vptr2X Bitcoin mining is the process of updating the ledger of Bitcoin transactions known as th... Start trading Bitcoin and cryptocurrency here: http://bit.ly/2Vptr2X This is a simplified non technical explanation about Bitcoin mining. For more informatio... Some Helpful Links: • Buy Parts for a Mining Rig: http://amzn.to/2jSSsCz • Download NiceHash Miner: https://www.nicehash.com/?p=nhmintro • Choose a Wallet: h... basic mining hardware guide -https://youtu.be/fAsc3134kog #Itechnicalsupport software drive --https://drive.google.com/drive/folders/12lKO5gOIgNRd85CHy8viqwG... We are miners from 2013 looking to create community and help train and learn together as blockchain tech changes so quickly. Leave your thoughts in the comme...

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