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Not exactly. The feedback operates to adjust the difficulty of mining. The way it works is that if blocks are mined faster than once every 10 minutes (on average), the difficulty is increased slightly. If it takes longer than 10 minutes, the difficulty is reduced slightly. As machines go offline due to poor profitability, the difficulty will likely have to decrease to keep the mining rate constant. This has pretty much worked as designed over the inception of bitcoin. Despite all the hash power people have thrown at bitcoin, the rate of new block creation has stayed consistent on average. The difficulty is not updated super often. Here is a chart of difficulty vs time.

https://bitinfocharts.com/comp...

How much bitcoin you get for mining a block (the reward) is pre-determined by the implementation. It goes down by half every so often. Currently, the reward is 12.5 bitcoin. The "reward" represents the creation of new bitcoin. Once all bitcoins are mined, the reward will be zero. In addition to the reward, miners also collect fees from all the transactions contained in the mined block. Eventually, the only incentive to mine bitcoin will be to collect the transaction fees.

If you haven't already read the whitepaper, I recommend it. It is not that long, and not that difficult to understand for people familiar with hashes and cryptography and whatnot. It is 9 pages.

In my opinion, most coverage of bitcoin, even in the technical press, is woefully uninformed. The ONLY reason bitcoin takes so much energy to maintain is because the price rose so high, and the difficulty therefore increased. Now, as some of the mania is dying off, things should be a lot more sane, and non-profitable miners will bow out.

https://bitcoin.org/bitcoin.pd...

That's essentially an argument for needing more competition in the online payments and credit card processing marketplace. It says nothing about BitCoin itself, only about what services currently work with it. There is nothing that intrinsically makes it any cheaper, either to transfer, or to convert to local currency (it's not like we actually ship physical bills around regularly either; the currency you use online is an e-currency too for all practical purposes); the fees are lower now, but they fluctuate wildly. See September of '17 through March of '18, where transaction fees were steadily above $2, peaking at $55/transaction in December, and that's before the cost of converting to and from local currency (you might say "But I can use BitCoin directly and never exchange to local currency", but of course, the same argument applies to U.S. dollars in theory, but it doesn't work out in practice in most countries).

Sure, if you're making $10K transactions, fixed per-transaction fees hardly matter if they avoid percentage fees. But when you're making small purchases in the $20 range (using it as an actual currency), which is the vast majority of what people use PayPal for, paying $2 on the transaction fee is roughly twice what any credit card processor or PayPal charges. You could reproduce the same advantages by shopping around for online payment services or just accepting payment by check, ACH, etc. You might say "but those are inconvenient and almost no one uses them!", and I'd respond "So, same as BitCoin then?"

• A dollar bill costs about 5 cents to make. and will last a bit more than 5 years (older bills would last less than 2 years). Higher denominations are about 10 cents to make (more anti-counterfeiting measures). If you average them across all denominations, it works out to about 1.5 cents per $1. So the cost of producing the bill amortized per transaction is on the order of hundredths or thousandths of a cent.
• A store owner carrying a bag of the store's receipts for the day to the bank, if he's carrying say $1000 in revenue to a bank 2.5 miles away, that's 5 miles at a IRS-estimated vehicle cost rate of 55 cents/mile, or $2.75 for the round trip. And the cost to carry the bag to the bank is then 0.275 cents per dollar. If that revenue is from 50 transactions ($20 per transaction), that works out to a cost of 5.5 cents per transaction. (I'm deliberately erring on the high side to favor bitcoin. Most businesses I know choose a bank which is much closer. And $1000 revenue per day is about as low as a small business gets.)

How does bitcoin compare?

• Production energy costs are very close to the value of the bitcoin generated. So call it 80 cents per dollar. Nearly two orders of magnitude higher than paper currency.
• Bitcoin deliberately imposes a high energy cost in each transaction. So high that many online stores have stopped accepting bitcoin because the costs have reached several dollars per transaction.

Basically, bitcoin's problem is that it replaced gold's natural scarcity with artificial scarcity produced by imposing a high energy cost to generation and transaction. Consequently, its production and transaction costs are roughly two orders of magnitude higher than traditional currencies. Mathematically, it (blockchain) is a brilliant concept. But it's obvious its developers had little practical knowledge of both monetary economics and day-to-day business economics.

> Because right now they won't be currencies, nothing I've seen suggests they can scale to the necessary number of transactions.

The top 5 currencies are processing about 3 million transactions per day: https://bitinfocharts.com/comp...

That is about 2% of VISA's network average, and Bitcoin Cash alone can scale up to ~11 million per day.

Those 5 currencies have the equivalent value of South Korea's M1 money supply.

So that's not as big a gap as I thought, but there's still the delay it takes for a transaction to go through, which in my understanding is restricted by the ability of the network to authenticate and agree on the transaction.

Is the assumption that retailers basically won't bother to wait and eat the fraud risk? Or that they'll still be using credit cards to do the transaction?

> Because right now they won't be currencies, nothing I've seen suggests they can scale to the necessary number of transactions.

The top 5 currencies are processing about 3 million transactions per day: https://bitinfocharts.com/comp...

That is about 2% of VISA's network average, and Bitcoin Cash alone can scale up to ~11 million per day.

Those 5 currencies have the equivalent value of South Korea's M1 money supply.

The recommended fee is 0.000339 BTC or about $4.41 at current values [1]. Fee are the same if you are transferring less than a US penny or more than a million dollars. For any transaction, you can use less fee and wait (much) longer or a larger fee have a shorter transaction time.

Fees have really been the driving force behind the recent Bitcoin forks. Some argue that bitcoin should be a store of value (not me) rather an a tool for transferring money. Independent of your opinion on the fork Bitcoin Cash, I believe they are doing it right with transaction fees [2], which currently is about $0.15 per transaction, again independent of transaction amount.

1. https://bitcoinfees.earn.com/
2. https://bitinfocharts.com/comp...

Transaction costs are NOT fixed. They grow as the system grows. Perhaps you're thinking of transaction fees? They grow too, but they don't cover all of the transaction costs.

The portion of the costs that the fees don't cover is borne by miners via their electric bills, since validating transactions is a large part of what they do when mining. They'recompensated for their efforts by receiving BTC. In practice, this is more or less a form of arbitrage as they exchange cheap electricity for valuable BTC, and it works fine when the value of BTC remains high against whatever currency they use to pay their electric bill. When the price of BTC slides against traditional currencies, however, those electric bills become outsized compared to the value gained, leaving them holding the bag with mining rigs that are significant sunk costs incapable of delivering a return on their value and that can only be sold at a fraction of what they cost.

In contrast, whether the dollar is strong or the dollar is weak, the cost to validate a cash transaction remains the same: within a rounding error of zero.

If you actually do the comparison, you see that bitcoin transaction costs (per $1,000 equivalent) is CHEAPER than dollar. It wouldn't work any other way.

Come again? I don't even understand what the unit of measure you're proposing means, but I can already tell you that if you want to understand the cost of transactions, we don't measure them "per $1,000 equivalent". We measure them per transaction.

According to these researchers, each Bitcoin transaction currently costs the equivalent of 9 days worth of energy for an average US household, with that number growing over time as more resources are added to the system. The average US household consumed 10,766 kWh annually in 2016, which we'll assume hasn't shifted much in the last year. The average residential price was 13.30 cents/kWh in September, which we'll assume is comparable to today. Taken together, they suggest that the average US household pays about $1431.878 annually for electricity, or about $3.92/day. As such, a single Bitcoin transaction currently costs the world $35.28 in electricity to process. Other places put the current cost closer to $72-77 per transaction.

In contrast, the cost to process a cash transaction is the amount of time it takes someone to recognize that the dollar bill is now in the seller's hand instead of mine. Or, put differently, effectively zero. That's why we can use cash to purchase everything from a stick of gum to an entire estate.

From those numbers, we can say a few things:
1) Bitcoin is (currently) unviable for small transactions. In fact, if you look at the average transaction value, you'll see that it correlates to the average transaction fee, suggesting that as fees go up, the system becomes unusable for day-to-day purchases, making it unsuitable as a cash replacement. A system only works as a cash replacement when it is capable of scaling from our smallest purchases to our largest purchases while maintaining a cost per transaction that is FAR less than the value of the transaction.

2) Transaction fees don't cover transaction costs. Note that the fees listed in that last chart are far lower than the costs listed in the earlier chart. This is an example of an externalized cost (and explains how the system can work contrary to your claim that it can't work any other way), where someone else is paying for something you're doing. In the case of Bitcoin, it's the miners who are paying the remainder of the costs for each transaction (i.e. their electric bills), but they're paying those electric bills in USD, EUR, GBP, and similar currencies, rather than BTC, which means that their electric bills don't track with fluctuations in the value of BTC. This isn't a problem when BTC valuations are high, since additional miners join in to take advantage of the imbalance (this is more or less a form of arbitrage, exchanging cheap electricity for more valuable BTC). Unfortunately, when BTC valuations slide against the other currencies this becomes a major problem for those miners. Their rigs become sunk costs that are incapable of producing a return on their value and can only be sold for a fraction of what they cost.

3) Transaction costs can exceed their benefits. If you want to buy $15 in groceries and are told every transaction has a $75 fee to confirm your purchase, you won't buy those groceries. You'll wait until you need a lot more before you make the purchase. That's both a good thing (the system discourages wasteful activity) and a bad thing (why are small transactions wasteful in the first place?). If, however, you're told that the cost to confirm the transaction is merely $7.50, you

If you actually do the comparison, you see that bitcoin transaction costs (per $1,000 equivalent) is CHEAPER than dollar. It wouldn't work any other way.

Come again? I don't even understand what the unit of measure you're proposing means, but I can already tell you that if you want to understand the cost of transactions, we don't measure them "per $1,000 equivalent". We measure them per transaction.

According to these researchers, each Bitcoin transaction currently costs the equivalent of 9 days worth of energy for an average US household, with that number growing over time as more resources are added to the system. The average US household consumed 10,766 kWh annually in 2016, which we'll assume hasn't shifted much in the last year. The average residential price was 13.30 cents/kWh in September, which we'll assume is comparable to today. Taken together, they suggest that the average US household pays about $1431.878 annually for electricity, or about $3.92/day. As such, a single Bitcoin transaction currently costs the world $35.28 in electricity to process. Other places put the current cost closer to $72-77 per transaction.

In contrast, the cost to process a cash transaction is the amount of time it takes someone to recognize that the dollar bill is now in the seller's hand instead of mine. Or, put differently, effectively zero. That's why we can use cash to purchase everything from a stick of gum to an entire estate.

From those numbers, we can say a few things:
1) Bitcoin is (currently) unviable for small transactions. In fact, if you look at the average transaction value, you'll see that it correlates to the average transaction fee, suggesting that as fees go up, the system becomes unusable for day-to-day purchases, making it unsuitable as a cash replacement. A system only works as a cash replacement when it is capable of scaling from our smallest purchases to our largest purchases while maintaining a cost per transaction that is FAR less than the value of the transaction.

2) Transaction fees don't cover transaction costs. Note that the fees listed in that last chart are far lower than the costs listed in the earlier chart. This is an example of an externalized cost (and explains how the system can work contrary to your claim that it can't work any other way), where someone else is paying for something you're doing. In the case of Bitcoin, it's the miners who are paying the remainder of the costs for each transaction (i.e. their electric bills), but they're paying those electric bills in USD, EUR, GBP, and similar currencies, rather than BTC, which means that their electric bills don't track with fluctuations in the value of BTC. This isn't a problem when BTC valuations are high, since additional miners join in to take advantage of the imbalance (this is more or less a form of arbitrage, exchanging cheap electricity for more valuable BTC). Unfortunately, when BTC valuations slide against the other currencies this becomes a major problem for those miners. Their rigs become sunk costs that are incapable of producing a return on their value and can only be sold for a fraction of what they cost.

3) Transaction costs can exceed their benefits. If you want to buy $15 in groceries and are told every transaction has a $75 fee to confirm your purchase, you won't buy those groceries. You'll wait until you need a lot more before you make the purchase. That's both a good thing (the system discourages wasteful activity) and a bad thing (why are small transactions wasteful in the first place?). If, however, you're told that the cost to confirm the transaction is merely $7.50, you

Average transaction fee for Bitcoin is currently around $6, but peaked at $19 just a month ago. If you compare that to the amount of electricity that you can buy for that money, it seems a pretty close match.

Why would you brute force your old key while it's the same difficulty to brute for some address with over 1 billion in them... https://bitinfocharts.com/top-... The law of number makes it impossible for now... even with computer billions time faster, would not solve the issue.

https://bitinfocharts.com/comp...

The fee are ALSO utterly volatile making it impracticable for small amount as the GP said. A week ago or so it was 8+$. Now it is in average 5+$. Again volatility at work, and making it utterly improper as currency use.

Currency isn't supposed to generate wealth.

Every currency on Earth generates wealth if it's deposited in a bank. Or if there's a deflation.

It supposed to store wealth and make transactions easier. And if it isn't good as a currency, what good is it for?

Bitcoin stores wealth just fine and transactions using bitcoin are a lot easier and faster than using the traditional banking system.

But my point is that as long as people are treating Bitcoin as an investment, it really isn't much good as a currency.

People are inclined to treat everything which is rare and perceived as valuable as an investment. Every limited crypto-currency will be treated the same way.

It has no intrinsic value.

Fiat money has zero intrinsic value. Different countries and governments regularly refuse to pay debts and default on bonds.

It's no good for currency since transaction times are too long and transaction costs are too high.

Transaction times are fine and costs are nowhere near what you pay for e.g. SWIFT or Western Union transfers.

Eventually, people will figure out that Bitcoin is worthless.

Gold and silver are in a similar position. Or shares. Or bonds. Or even currencies in certain countries of the world. Go by something using gold ... oh, wait, you cannot. All by themselves gold and silver are worthless.

The only value it generates is taken from the suckers at the bottom of the pyramid.

The whole financial system of this world is basically a pyramid.

If you want to design a crypto-currency that actually functions as currency, you gotta design something that isn't used as an investment.

Good luck with that. You may as well rewrite people's DNA for that.

Otherwise, speculators are going to ruin it.

You mean human beings? And also tell me how Bitcoin is being ruined.

Interesting... https://bitinfocharts.com/comp...

Although 2.6 minutes average is still impractical for shop use.

Some people, like the owner of this address https://bitinfocharts.com/bitc... got $43million richer overnight, if they could cash out all of their bitcoin cash holdings right now.

FTFY

Dogecoin has been "relatively stable" for about a year.

Price chart is here.
Judging by the drop since late October, when they were at $5.50 USD, they have other problems.
Guess we'll find out next week what's the impact of this theft.