27

The price of bitcoin is affected by demand and scarcity. Scarcity decreases as more bitcoin are mined (up until the 21 million bitcoin limit is reached---this is the maximum number that can ever be mined), which decreases the price. Scarcity increases as coins are lost (e.g. through the destruction of a wallet), or just held indefinitely (e.g. the ~1 ...


11

Assume for a second that we found a proof of work algorithm that had all of the good properties of sha256, but was also useful for SETI and maintaining world peace. Now suppose a group of miners collectively have more than 51% of the hashing power. In which of the following scenarios are they more likely to collude to double spend via a 51% attack: A) When ...


9

Most websites offering online wallets store your bitcoins against their own private key (giving them control over them), and provide you with tools to spend the bitcoins. While you don't have the private key, this means you don't really have bitcoins any more; instead, you have bitcoin-credits through the specific business you're dealing with. When such a ...


6

I appreciate the enthusiasm of those who have answered this question. Everyone here clearly wants bitcoin to succeed, and so everyone is enthusiastic. I am enthusiastic, too. I am afraid, however, that this enthusiasm is coloring respondents' logic. Literally every response on this page (especially the highest ranked one) is wrong. In order for a ...


5

Adding to my answer on What are some of the proposed ideas to why the Bitcoin dropped to sub $400 in the end of summer 2014?, which I think is still mostly accurate: Bitstamp loot There are about 19k bitcoins held by the hacker that raided Bitstamp. While, as far as I know, they haven't found their way back into the market, it is an amount that would ...


4

The Chinese are intense savers and frugal. Their interest in Bitcoin will involve relatively small price corrections. Do you want to say the will be resistent to price drops (in the bubbles for example)? Yes. Bubbles will still happen, but the correction would be less severe because Chinese investors tend to buy-and-hold through the ups and ...


4

Once upon a time someone used Bitcoin's ability to embed arbitrary text inside a transaction to put an ASCII Art Ben Bernanke into the blockchain. Referring to the fact that current blocks must still reference the Bernanke block as a "dependency" rounds out the joke.


4

The best way to derive the possible value is by looking at market cap of bitcoin as a whole. There is currently about 1.2 trillion in USDs in physical currency alone. There are many ways to count how much USD there is though. M1 represents all of the currency in the M0 money supply, plus all of the money held in checking accounts and other checkable ...


4

I like this question1 - we don't get many big picture questions. How could Bitcoin change the world? A mature digital cryptocurrency could reduce trade barriers and thus increase the rate of productivity dispersion throughout society. As money is a form of fungible authenticated information2, non-proprietary digital money gets to take advantage of the ...


3

1) I don't know anyone actively uses Bitcoin, or other altcoin, that is not mining it and/or trying to profit from it. 2) Bit coin price fluctuates, so as a business I would only use it to process a transaction and then convert it to cash ASAP. 3) Why is everyone losing Bitcoin in the news? True cash gets lost or stolen, but this make me fearful that my ...


3

This is a great question and it's something I spend a lot of time thinking about. In general, I'd say no one really knows at this point and it is difficult to make more than a few guesses. So let me have a try at that: Banks would lose much of their ability to control the monetary supply, interest rates and exchange rate. The financial sector would shrink ...


3

This is a highly speculative question. From a technical point of view there will eventually be 21 million (21e6) bitcoins in circulation, yes. But we are already witnessing a shift to using the millibitcoin (mBTC) when denominating prices. This use of ever smaller fractions may go on until we reach the satoshi (1e-8 bitcoins). We would effectively have ...


3

Lets tackle them one by one: 1) Is this definition true? Not entirely. Stable coin need not be pegged only to fiat currencies. We can also peg a stable coin to exchange traded commodities like precious metals whose price remain fairly stable. You can also have stable coins linked to cryptocurrencies via smart contracts. (2) And if yes, Is it possible to ...


2

If you made the computation "useful" in some other sense, then in principle you could just sell that "useful" output, and thereby decrease the net economic expenditure securing the blockchain, making it less secured. So bitcoin's "useless" computation is useful, whether or not it has another use. I recently answered this question on my blog, more details ...


2

Understanding bitcoin price behavior with the Quantity theory of money M · V = P · Q Money supply times the Velocity of money equals the Price level times the Quantity of goods. Several arguments against the success of Bitcoin are doing the round: Bitcoin is a bubble, the present $1000+ price level bears no relation to the small bitcoin economy. People ...


2

Here's one approach: Least action principle as an alternative proof of work system Succinct Computational Integrity and Privacy Research (SCIPR) is possibly another area.


2

Pretty much the same will happen as with a Halving now: The only thing that changes is how many bitcoins may be created with the Coinbase transaction; except this time it drops to Zero instead of halving. In particular, mining would have to continue in order to validate transactions, although it would then be completely funded by transaction fees. However, ...


2

The proceeds of mining are the 3,600 BTC daily (at current levels, which will drop to 1,800 BTC per-day in late 2016). All miners combined, no matter how many exist, are competing for these 3,600 BTC. This sets an upper limit to how much mining can occur at a profit. If someone wishes to expand by putting "billions" into mining going beyond the ...


2

The Bitcoin network automatically adjusts "difficulty" to produce a block every 10 minutes on average. As the difficulty rises it takes many more hashing attempts to find a block, so no matter how many exaflops in the network (we are already over 1) the number of coins will still be around 3600 daily (until the reward halves again.) The only advantage to ...


2

TL;DR: No idea, and your question's unanswerable in the first place :) Why does a national currency rise or sinks in value? Why do a company's shares do the same? You will never get definite answers for these or your original question unless you manage to get into all the participants' heads to know what they were thinking of. Meanwhile, you can listen to ...


2

Is Bitcoin still an experiment? I don't think so. There's no control, and nobody's made one of those three panel boards. In all seriousness, though, I think Satoshi probably wrote and published Bitcoin because he found it interesting. He may also have done so because it aligned with his political views. Of course, we're speculating on the motives of a guy ...


2

Many other crypto currencies are inspired by bitcoin, but have a goal that differentiates them from bitcoin. For example, litecoin was design to combat the development of ASICs, so that people with regular computer hardware can mine them. Namecoins provide secure key-value pair storage, and devcoins are somehow used to fund open source endeavors. Others just ...


2

Silk road wallet hold 144,000 Bitcoins. It had 1,2B USD in annual volume. This was 2014. Since then darknet markets have flourished. See Measuring the Longitudinal Evolution of the Online Anonymous Marketplace Ecosystem. This is mostly for illegal drug related and other purely criminal activity like payment fraud (stolen credit card). This does not include ...


2

The best I found so far is Wikipedia. It is actually quite up to date. https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country


2

The effect would be to make the remaining bitcoins worth more over time as the others remain unspent, as I understand it.


2

Why is there more than one fast-food service? Why is there more than one internet browser? The competitive altcoin economy encourages other coins to surge with better implementations. Bitcoin has very high transaction fees as of early 2018, this is why a fork came off as Bitcoin Cash a few months ago, but Bitcoin Cash is not the only coin fighting for low ...


2

Consumers have little need for vendor-specific coins I am not an economist, but a lot of vendor-specific crypto sounds like Trading Stamps, Coupons, or maybe even Company Scrip. These might be better called "vouchers" or "tokens" than "coins". There are financial incentives for a company to issue such a token: It aids the issuer as a barrier to ...


2

Inflation is increase in price without increase in utility. A car with similar features helps you get from point A to point B just like it did one year ago (same utility). However, the cost of the car increased by 2x one year later (higher price) indicating that the currency in which the price has been quoted has been reduced to 0.5x versus its value last ...


2

The "current Bitcoin price" from an exchange like Coinbase is simply the last price at which a buyer and seller agreed to trade Bitcoin at that exchange, also known as the "last price". Every time a new trade takes place on that exchange, the price is updated. The current price from sites that aren't exchanges themselves, like Robinhood ...


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