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 ...


18

NooShare is an idea for: a decentralised ledger similar to Bitcoin with the novel feature that its proofs of work are iterations of essentially arbitrary Markov-Chain Monte-Carlo (MCMC) chains, the scheduling of which can be purchased using the currency itself. It is a novel economic basis for sharing fallow computational resources. I don't know ...


16

Here are a few ways Bitcoin can be affected by the decisions of a wealthy investor: Value manipulation: A wealthy investor can sell coins or purchase coins in such a rapid pace that the market sinks or rises to an unrecoverable level. In real exchanges, the SEC protects investors from these hostile trades. There is no SEC protection with Bitcoin. Update: ...


10

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 ...


8

Some discussions around how to make it more useful https://en.bitcoin.it/wiki/Intrinsic_worth_brainstorming https://bitcointalk.org/index.php?topic=11834.0


7

Idealists might argue that Bitcoin was developed to forever change the financial landscape, and would be affronted at the suggestion that Satoshi was out for profit. Skeptics might call the whole thing the most elaborate Ponzi scheme ever envisioned. Realists might suggest that Satoshi, emotionally traumatized by the recent unceremonious departure of his ...


7

In terms of thwarting P2P currencies, in addition to those mentioned in makerofthings7's answer, I will add: Delaying transactions with only minority Proof-of-work share. Forking the protocol with majority Proof-of-work share. Employing black budgets outside of public view. Selling put options to gain the money to attack with. Using the law to keep the ...


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

There is no way to determine (that I can imagine) the number of lost private keys, you would have to make a guess that after x years without movement the private key is lost but that would just be a guess.


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

You could easily create a bitcoin2, bitcoin3, ... you could create an infinite number of bitcoin currencies having different parametric spaces. These would live in separate mathematical spaces however, so you wouldn't for example be able to create bitcoins in bitcoin2 that affect bitcoins in the original bitcoin: it would be a completely separate system. ...


4

I really think Bitcoin's biggest vulnerability is the 51% attack that can be performed by entities with large amounts of money, not any regulatory issue. Last I heard, it would cost $16 million to carry out a 51% attack. While this is a lot of money to most people, it's chump change to the federal government or Visa / Mastercard / Large banks. I saw a ...


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 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

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 ...


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 ...


3

There are a few currently operating Bitcoin security exchanges with non-negligible volumes: Cryptostocks https://cryptostocks.com/ Opened at the end of June 2012. Run by the owners of Vircurex, a fairly popular alt-currency exchange. Bitfunder https://bitfunder.com/ Launched mid-December 2012. Run by the owners of Hashpower, a mining intermediary of ...


3

I found this link the other day that shows where you can use bitcoins https://www.spendbitcoins.com/places/?place_type=service mostly for hosting companies, some poker sites/online casinos & many computer co's that i'm sure most people would never use right now. Saw an article that a restaurant in NY wanted to accept them soon but probably its a ...


3

As I explained in another answer, we can not meaningfully use measures of dormancy from P2P currencies in Quantity Theory of Money comparisons relative to GDP (or in Visa's case total Q over the period). I also explained in that linked answer why it is unlikely that Bitcoin would obtain the same velocity multiple of 8 per quarter as with fiat. Expounding, in ...


3

Being decentralised, it appears Bitcoin is less susceptible to regulation. But the weak point may be where you attempt to bring your Bitcoins back into the real economy - and this appears to be where the USG is striking first: "US Begins Regulating BitCoin, Will Apply 'Money Laundering' Rules To Virtual Transactions" (Zero Hedge, 21 Mar. 2013)


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

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

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

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

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

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

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

If they were wise, they would have mined a lot of them in the early times, and could easily sell now some for hard currencies. Currently there is the Bitcoin Foundation who pays Gavin, who is the head developer.


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