Slashdot Mirror
Get Ready For Most Cryptocurrencies to Hit Zero, Goldman Says (bloomberg.com)
An anonymous reader shares a report: The tumble in cryptocurrencies that erased nearly $500 billion of market value over the past month could get a lot worse, according to Goldman Sachs Group's global head of investment research. Most digital currencies are unlikely to survive in their current form, and investors should prepare for coins to lose all their value as they're replaced by a small set of future competitors, Goldman's Steve Strongin said in a report dated Feb. 5. While he didn't posit a timeframe for losses in existing coins, he said recent price swings indicated a bubble and that the tendency for different tokens to move in lockstep wasn't rational for a "few-winners-take-most" market. "The high correlation between the different cryptocurrencies worries me," Strongin said. "Because of the lack of intrinsic value, the currencies that don't survive will most likely trade to zero."
Once the miners stop buying, the prices should normalize
I don't respond to or upvote ACs
The technology is interesting and useful, but cryptocurrency value is just due to the Beanie Baby effect.
12:50 - press return.
Are manipulating both the virtual assets themselves, as well as the regulatory environment around them thanks to lobbying.
What most people haven't realized yet is all the big banks plus tech firms (such as IBM) have been building up patent warchests in blockchain related technology, meaning if they can kill the open source virtual currency markets (where direct monetization and forms of centralized market manipulation are more difficult without direct community involvement and scrutiny) then blockchain technology can be leveraged to ensure the barrier between the haves and the have nots while allowing datamining to provably ensure the financial limitations of the have nots, the gotta gets, and the haves according to the sorts of game theory going on in MMOs today. Anybody who has played free to play and done calculations on either getting rare loot drops, or mining lootbox unlocks (for those games that have it) without just buying keys/experience accelerators will have some idea of what the endgame plan is for real life wage grinding.
You should be VERY afraid of the future that is coming, because if you don't band together now to defeat it, economically, socially, and politically, you or your descendants won't be in a position to do it in the future, assuming they haven't automated away your life before then.
Since when did slashdot become msm?
When you see people without a ton of money eagerly running up debt to start buying an asset because they think it's going to double in value in a few months, your bubble is about to pop.
Goldman Sachs it its name.
This is what it does.
It is technically impossible for absolute zero
he said recent price swings indicated a bubble
wasn't rational for a "few-winners-take-most" market
"Trade to zero" means that trading stops as an asset becomes worthless, you moron.
But I'd prefer to pay with something real and tangible that can never hit zero, (that would be work or natural resources), because according to the news, the next economic "crash" inolving "real" currencies, is right around the corner, and that usually means a shitload of wealth is moving from the worth of our work to the purchase power of Goldman Sachs et al, using via inflation.
This is what happens when a bad idea meets an unfathomable lack of foresight. This was always coming, the notion of crypto was always rife with shallow and poorly thought out ideals. I hate to keep bagging on millennials, but there are good reasons to familiarize one's self with what has already transpired on this planet, and most of of them seem to live in accordance to the contrary. Seriously, this is just the same Theranos or Soylent on a different day. 'Change' implies something legitimately new and different, not a retread using different tools, and certainly not a retread wherein the only difference is generational vernacular.
...trade to [close to] zero means that there is no monetary reason to mine or process BC, so it very well could go all the the way to zero, or so close that it means nothing. if nobody is willing to spend the CPU cycles (and real world money for electricity) to confirm your BC transfers, did it really happen?
something that never existed in the first place?
I say about time.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
Notice that he said "most cryptocurrencies", not "all".
The situation is that it is important to come early in the game of cryptocurrencies. Also, Bitcoin doesn't look like the end game. As a result, a strategy is to invest in many emerging cryptocurrencies and hope that one of them will become the next Bitcoin. Most people probably expect that most of these will soon become worthless, but they hope they invested in the good one, or that they can sell before the crash.
Goldman is self-interested in eschewing a method of financial transactions where it does not have the ability to control or extract value out of. It got late to the party and is SOL as far as most cryptocurrencies go.
That said, most cryptocurrencies are substantially overvalued because the underlying value of any currency - crypto or otherwise - has to be backed up by some type of economy. The USD used to be on the gold standard, and only started inflating substantially after it was taken off even though a not-insubstantial portion of that value is in services and intellectual property rather than goods. The inflation of the value of the currency is a natural side-effect of a number of factors, but the ones that are most relevant in this discussion are disparate classes of valuable assets (physical and non-physical), the participants interacting with the currency, and speculation. Also remember that the value of cryptocurrencies is also being exchanges for other currencies, so there are also transaction costs and the actual value of those currencies relative to the cryptocurrency.
In any event, if we use those measures, the inherent value of any currency is the value of the actual goods and services tempered by these factors. That there has been speculation driving up the price is obvious. More importantly, we cannot state the value of all cryptocurrencies is zero strictly because of speculation, because cryptocurrency value is based on the fact that there are people are still willing to exchange goods, services and other valuables including paper currencies in exchange for cryptocurrency!
Goldman is wrong. Blockchain-based cryptocurrencies are here to stay. What isn't wrong is the analysis that states there is overinflated value in the cryptocurrency. We can, of course, also say that of the inflated value of today's normal paper currencies backed by central banks, including speculation with various instruments and the perception of their underlying value. It's the same reason I can purchase currency futures and forwards for common currencies versus requiring special instruments like letters of credit for currencies of little value or with little trade with the currency of question (e.g. try to find a forward for Turkish Lira versus Burundian Francs). The only real difference is how that transaction happens.
And since Goldman is cut out, you better believe that they and JP Morgan and all of the investment banks are doing anything they can to keep themselves relevant in this brave new world of cryptocurrency. Spread FUD, use existing political connections to regulate or shut down cryptocurrency use, whatever. It's just that this time it really may not work.
If I were Goldman Sachs or any big financial institution that were investing heavily in blockchain tech and I wanted to manipulate the market and buy cheap, this is what I would say too!
> Strongin said. "Because of the lack of intrinsic value, the currencies that don't survive will most likely trade to zero."
Like paper money, you mean?
Now that I look at that sentence, I suddenly have multiple issues with it. The last part, "the currencies that don't survive will most likely trade to zero" isn't hard to imagine. Isn't that the definition of "not surviving"?
I really thought the economists got past the "intrinsic value" thought. Amazing that Goldman Sachs says this.
Yes and they are also blocking all exchanges around the world, and credit cards.
"Because of the lack of intrinsic value, the currencies that don't survive will most likely trade to zero."
No shit Sherlock! If a currency have no intrinsic value, it is set to disappear ... that applies to all currencies, not only to crypt-currency
and anyone could see that the crypt-currency high prices was a bubble, specially with the transactions costs and technical problems in bitcoins.. and like all bubbles, only the strongest/healthiest survive
So basically this is useless, he not say anything important or new ... maybe it is just a warning for stupid bubble investors
Higuita
After all, if you can't trust Goldman Sachs, who can you trust?
Heh heh... uhhhhhhhng...
The point behind the currency was to be a way to transfer value without the regulations attached to fiat money. Somehow it turned into an investment strategy instead. People were buying them to take advantage of the price fluctuations. It kind of defeated the purpose behind them.
Couldn't a bank short crypto and make a statement like this? Wouldn't that be illegal?
I mean, at some point, you would think a cryptocurrency hits a value floor because of the investments in time/equipment/energy to mine, so those folks place a value on it above zero... And with a lower price, bitcoin has utility as a currency you can transact in. Seems like zero is the wrong number.
It will never happen, there is always somebody who will speculatively buy larger and larger amounts the lower the price goes.
No charge backs? Count me in!
There's probably a productive use of blockchain tech. Crypto isn't it.
Maybe Bitcoin was invented by a rival or spinoff from Goldman, and this is some payback.
... mining bitcoins and printing of notes?
Many people have already said: "Any attempt by any government or a central bank or any corporation to force the use of a crypto currency on anybody, will result in a military response on the companies, agencies, board members and officers."
We are going to try to take all this over so we control it and thus make the most from it.
So as things stand... If crypto-currencies had value besides their utility then they would be considered securities and would be subject to additional tax reporting requirements for every transaction and would have all the reporting overhead associated with running a mutual fund but with much higher numbers of transactions and ownership turnover.
Just as the dollar went off the gold standard... meaning there is no longer any specific amount of gold in a vault that you could cash in the dollar for. Cryptocurrencies are as good as whatever people want to exchange for them. Otherwise a gold backed cryptocurrency ... or more ideally a currency could be backed by a basket of ownership in things corresponding to the widest possible collection of assets representing a slice of the total economy.
It would be good to have the option to have a currency that could represent an actual slice of ownership in the economy rather than merely a utility for maintaining value during a transaction.
It would be a good option anyway. An option that is undermined in the US by tax and securities law which make a value backed currency impractical given that you would lose too much money to regulatory overhead well beyond simple taxation in every transaction and it would be considered a separate security with its own reporting requirements. Basically barter transactions between owners of a mutual fund.
Really the US could innovate in this space to make it practical to have asset based currencies where only redemption of that currency are taxable events beyond a transaction type sales tax and there are minimal requirements for reporting as long as all the assets are from publicly traded stocks and mutual funds. Basically currencies backed by mutual funds or ETFs.
The benefit of promoting this would be the US government... or any government that helps create such a currency through simple regulations could just build in some small tax into every transaction. Just high enough to cover costs and get some money while not pushing people into another currency, cash or the black market. Say 1%. And it wouldn't kill the dollar because ultimately the dollar is going to be the official currency for paying taxes and will reflect the value of the US economy.
Why would anyone pay attention to Goldman Sachs, really, on anything?
First, such a prediction is utterly self-serving: they have zero clue what to do with the cryptocurrency market, and wish that no one else did either. I expect they've had lots of inquiries from investment clients, asking questions they couldn't answer.
Second, they were an integral part of the 2008 crisis. In fact, Goldman Sachs admitted to having defrauded investors, and paid more than $5 billion as a settlement
I think I'd trust the bum down the road more...
Enjoy life! This is not a dress rehearsal.
The graphical card I cannot buy because it is insanely expensive due to miners.
Try that with paper.
Good. Great. Grand. Wonderful. Just let me know when my graphics card is going to be available and at close to retail price.
He who forgets will be destined to remember. - EV
There are a lot of complaints one can lob at cryptocurrencies but I want to address just one that at the moment I see as ultimately fatal to all proof of work systems. Since this fatality hasn't actually materialized yet I have to wonder if I'm wrong about it being unavoidable in the end. But I don't yet see how I am wrong so here goes:
The ENTIRE magic and near Genius solution that bitcoin and others perform is the avoid the "double spend" problem when there is no central authority to manage a secret signing key. Solving the double spend with distributed signing is the magical part.
The DOuble spend problem is that in an a normal distributed ledger that anyone can write to a bad actor could spend a coin, see it entered in the ledger as beloging to the seller, then after getting the benefit of the sale from the seller, re-write a newledger in which that spend never happened. The bad actor can then re-spend the same coin.
Block chain by itslef doesn't solve this. it's just a ledger format. But when you add the proof of work part then you have an escalating difficulty barrier. The seller waits to see the transaction is confirmed. If they are paranoid, they could even wait for several more epochs of chain extension. At that point if the bad actor wanted to re-write history they would have to create a new block chain that was longer than the currently accepted one. And that would be hard because of the multiple epochs of proof of work.
this is exactly why the fear in bitcoin is that if one person accumulated enough mining power they could execute a double spend. But since this is addative: it takes 3x more mining power to unwind 3 layers of the block history (and N-1 x more mining power than the world, to unwind N layers), it's hard.
Or rather it's hard, but only if the world has a lot of miners. If miners lose interest two things happen. First it becomes easier for the bad actor to accumulate enough CPU power to overwhelm the rest of the world's miners. Additionally, since Bitcoin in particular scales the difficulty to the transaction rate it also requires less and less CPU power to do this. (as miners lose interest and so the POW difficulty goes down)
Thus Cryptocurrencies only protect all that capitalized outstanding wealth only as long as their's an active pool of miners. If that goes away then the protection of the blockchain is gone and the double spend re-emerges. at that point it gets crazy.
SO why might this not have happened yet. I think maybe it's because the cost of mining a coin is so high that the cost of mining 2,3, or 4 coins to unwind 1,2, or 3 layers might not have been worth the gained value of the doublespend. But that' now. As the coin becomes increasingly capitalized then a lot of wealth will be transacted in each epoch (and the lightning network is amplifying this now). Thus the temptation for a fouble spend will eventually exceed the cost.
At that point there is a total heat death of the currency as no one can trust it.
Once the miners stop buying as you put it, things will normalize to zero
Some drink at the fountain of knowledge. Others just gargle.
Financial companies like JP Morgan and Goldman won't give a proper valuation until they can get into a position where they have some proper leverage into this. It's all about the bottom-line of how can they make money.
So they will do one of the textbook things; throwing shade at it in hopes it'll discredit enough for them to get some foothold in making a profit.
Does he have the same worry about stock markets? We just had a huge, highly correlated move, not just of stocks in a market, but also between markets.
"National Security is the chief cause of national insecurity." - Celine's First Law
Somebody rebut this or I'll need to dump my bitcoins fast!
The technology is interesting and useful, but cryptocurrency value is just due to the Beanie Baby effect.
That sentiment usually comes from those who have little experience in this new technology arena. Understandable, but wrong.
Your argument does not show the statement made is wrong, but addresses a different topic. (Technically, this is an ignoratio elenchi argument.
The original post says that crytocurrency value is due to "Beanie Baby effect". Your reply says that blockchain technology does have a value... but for things other than currency.
But the original post did not say that blockchain has no value. The statement was about cryptocurrency, not blockchain. Not only did you not show that this is wrong, but you even seemed to agree with that statement:
(...I can understand the nay-sayers who believe that Bitcoin may have little intrinsic value, because though it has some small utility I can agree it is not the "store of value" that some want it to be...)
Look, I'm no fan of currencies like BitCoin and I routinely make fun of those who think it's a sure bet as an investment, but claiming that most crypto currencies are heading to the great bit bucket in the sky is just as unsupportable. Some will, but I'm pretty sure most of the currently popular ones won't.
Crypto fulfills a need as a medium of exchange. I don't think this need will abate any time soon, in fact, I believe that it's use is being driven by economic conditions in various countries world wide. Countries like Venezuela where local currency inflation is out of sight have seen a boom in crypto for a reason, it's more stable than the local currency, even though the government is taking regulatory steps to curb it's use it's growing. I don't see this changing any time soon, despite what the big banks say.
Crypto is here to stay. I may not think it's a good investment medium, but I'm not stupid enough to think it's all heading to /dev/null any time soon because as a method of exchange it fills a need.
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
When you see people without a ton of money eagerly running up debt to start buying an asset because they think it's going to double in value in a few months, your bubble is about to pop.
It's definitely a bubble... but whether it's "about" to pop is another question. A bubble pops when the supply of gullible people buying into the bubble starts to saturate. And there are probably a lot of gullible people out there who still haven't invested in cryptocurrency.
Or, to misquote John Maynard Keynes about betting against an irrational market, "the market can remain irrational for far longer than you or I can remain solvent."
https://entethalliance.org/members/
is a list of companies that aren't afraid of crypto, which includes:
Accenture
BP
Cisco
Deloitte
ING
JP Morgan
Microsoft
et. al.
Goldman wants to short it now, and buy in at lower prices.
It will never happen, there is always somebody who will speculatively buy larger and larger amounts the lower the price goes.
I'll sell you an infinite amount of my new coin for $0 each, just pay $0.01 each for shipping!
You may be right that I focused my argument around the other use cases. Gold is less a currency and more an asset. Bitcoin, IMHO, is more a currency and less an asset, that's why I said I can agree it's not the "store of value" that some people want. That does not remove its utility as a currency, a medium for exchange with the added feature of built-in publicly-auditable accounting. I have personally used it as a currency numerous times this past year, paying invoices for various computer-related and travel services. Ethereum is another currency where the "banks", if you will (the distributed platform) provides additional code-enforced value-added services.
-IOVAR Web Dev Platform
The tumble in cryptocurrencies that erased nearly $500 billion of * IMAGINARY * market value over the past month could get a lot worse, according to Goldman Sachs Group's global head of investment research.
FTFY.
Our reign has gone on long enough. Indeed. Summon the meteors.
How might this come about?
well I see four scenarios as nearly certain to come along at some point There are probably many others I haven't considered.
1. Due to distorted economics like subsidized electrical power or cheap cooling, some countries accumulate a dominant share of the mining. Then for some reason the government of that country kills the market (e.g. remove power subsidies or siezes the machines) for mining. Suddenly there's void of miners that someone with a big cluster (amazon?) could step into.
2. due to geopolitical tensions (a war?) one country with a small number is cut off from the rest of the world's miners. Again now some small player witha lot of CPUs can dominate the ledger for that country. We see internet cut offs in Iran and Syria and other places now and then. And there's growing numbers of firewalls around countries. IMagine if China and the US came to blows in the south China sea or North korea executed a cyber blitz kreig on south koreas. Isolations of the internet would occur.
3. The reward system for bitcoin changes with time with fees replacing mining. What if the fees don't attract enough miners? that is say, as fees rise the number of transactions will fall. there is some equliubrium there. That equilibrium sets the POW difficulty and the number of miners who can make a profit. Do we know that equilibrium is sufficient to protect the transaction value of a double spend? I don' think there's anything built into the model to assure this.
4. What if some new crytpocurrency suddenly becomes more profitable for miners and they point all their ASIC's and GPUs at that leaving bitcoin a ghost town with just a few miners. Here's one such scenario. Someone, maybe etherium can, will figure out how to make the wasted effort of the POW actually valuable in itself. e.g. make the POW be the travelling salesman problem of delivery planning that UNited Parcel Service has to solve every day. Now you get paid for the POW by the currency holders and also get paid for the work you did for UPS. this will beat out coins where the POW is worthless as a calculation.
Some drink at the fountain of knowledge. Others just gargle.
... is because they feel the threat. And it's very real.
Bitcoin and other cryptocurrencies is a nightmare for the powers that be - especially Goldman Sachs who's used to being in control of your money for ages. Sure you can ridicule the cryptocurrencies for being a rollercoaster of the smart outsmarts the lesser, but at least those who are not in "power" stand a chance at the big bucks for a small time, if done right - and understood correctly.
Goldman is nervous as HELL about this, we're talking big bucks - and they want to be in control of it, and they're not.
This is completely wrong. They don't make money by controlling currencies. They make money in:
Trading and sales
Market making
Investment banking
Asset Management
Prime services
etc
Crypto is just one more product they can make money in, and they are going to make boatloads of it. But they are a regulated business and they have to be careful about their risk exposure and legality of the businesses they are in.
The cryptocurrencies are risky and volatile investment, they have however a value, which is: limited supply of secure, fast, decentralized and anonymous contract exchanges between entities. People are using them and even though it is trivial to create a new one the momentum of implementation will keep the old ones afloat, even if there is a breakthrough in technology (e.g. algorithms) there is no obstacle to implement it in an existing protocol, so a more likely scenario is that someone would modify code and used an existing blockchain (keeping old transactions history) - as it happens.
It is hard to predict their value. In my opinion the last year end was driven by the hipe and was overblown, but there is no reason it will not soar constantly - the cryptocoins are immune to inflation, which all fiat currencies are subjected to and the more they are used the bigger part of the economy they will be.
There is however a real thread to all cryptocoins - regulations, as we can see, the sudden drops are strongly correlated with one or another country either declaring to ban use of them or outright straight banning them (China, South Korea, India).
Personally I would welcome their implementation. In general the transactions are much faster and if the taxes are embedded into the protocol it would greatly simplified process of collecting them and most importantly of checking how our taxes are spent (e.g. requiring all government addresses be verifiable to which agency they belong).
And lastly cryptocurriencies are a rescue boat for all the people in failing economies with double digits inflation. As for investments, they should be treated as very volatile and risky one - no loans or mortgages to buy some.
Financial predictions are worthless without a stated timetable. As an example, i predict that my house will be worth $10 million. I am correct because someday inflation will make it so, however, i cant take any action on this prediction, since the time needed for this to happen is too ambiguous and too long .
Seriously concerned?
Sure you are.
Bullshit, you just want to stab your fork into the table.
Goldman doesn't know anything about crypto. They can't stick crypto into their nice little mold into which they shove everything else.
You cannot compare dot com companies that had a high payroll(but dumb products) sucking then dry, to crypto currencies that have finite coins and no payroll. CryptoCurrency is somewhat like a commodity but with bonus ability to send anywhere. It has two purposes - store value safely and protected transactions. This has some value and I believe this is why it cannot go to zero
Think about the big picture
In the current setup, the financial institutions pocket the transaction fee for moving money between two parties
In the bitcoin / blockchain / crypto world, the transaction fee no longer goes to the financial institutions. Instead, it gets split amongst those hundreds and thousands of common people who have their computers hooked up to the crypto network burning electricity, number crunching This is a distributed financial system. If it succeeds, the need for traditional banks will diminish .. something that worries many bankers.
Think about what Uber did. Uber transformed how buyers and sellers of a service interact, but bringing them closer to each other. And Uber profited a lot from this new market place. But bitcoin / blockchain goes a step further . it aims to replace the likes of Uber with hundreds and thousands of common people who are willing to maintain the service, and in return economically gain from it. This is wealth distribution and grass root capitalism.
If you want to get in on the cryptocurrency mining scene, you need a good motherboard that allows for multiple GPUs: ASRock H110 Pro BTC+, ASUS B250, Biostar TB350-BTC, and GIGABYTE GA-H110-D3A.
The way this is worded, it makes it sound like an unprecedented disaster for all of crypto-currency. It's all going to crash to ZERO!
If you think about it though, what he's really describing is exactly what all the alt-coin permutations have done since all of this got started. People keep spinning off new alt-coins from code used to create a previous one. Occasionally, one comes along with an entirely new methodology behind it, but it's all the same for the people doing the buying and selling.
After initial surges in value and popularity, many of them decline to zero value and fade away. Heck, many are created specifically FOR this purpose, because somebody's trying to do a big "pump and dump" scheme with them.
But most people who are really "into" trading crypto-coins are well aware that all of this happens. Part of the whole investment strategy involves selling off one and buying into a different one, as you think it's time to get out of a dying one and into a rising one.
I've solved the cost/benefit problem of mining more coins. Instead of connecting to the grid, or depending on transient sources like the sun, I'm going to set up ten thousand treadmill generators. Then I'm going to import slaves and run them to death, then replace them with more slaves. There's 7 billion people in the world, so the market glut demands a very low price on slaves.
https://app.box.com/WitthoftResume Code: https://github.com/cellocgw
Seriously, you say Goldman's short on Bitcoin? How?
you forgot to include haters being EDUCATED STUPID to the about the TRUTH of the 4 fold symmetrical HOSTSCUBE
I don't think the general crypto currencies are going to survive. Now the ones tied to something, such as Gridcoin, which uses the BOINC research software as the POW will survive as long as there is interest. I can see them basically as way to buy computing time for a project. Nerds provide the processing time and mine coins. The universities/donors can buy the coins to give as rewards for the POW for their projects and the cycle continues. Bare minimum most of use who do the mining were already running the BOINC software for years. The gridcoins just give us another way to keep score on who is crunching the most work.
consider the rational miners for the sake of argument and we can mop up the edge cases later.
You are right that there's no rational reason to chase 51% of the bitcoin hash rate just for the value of the coins/fees. But that actually is why it is profitable for the double spender to do just that. To see this realize that the mining coins or fees are going to be far less in value than the amount of value being transacted in the mining event. vastly so when it becomes fee based-- otherwise you would be paying more in fees to do a transaction than the transaction (and since the transaction includes the fee that becomes a tautology.) agreed?
From that Agreed logic we see that it would always be more profitable to double spend than to mine. e.g. if the bitcoin transaction included your purchase of a home for $1M and the fees on the entire bitcoin epoch including all ancilliary transactions was say $100,000 then double spending beats any fees by a longshot. (here doublespending means you get your $1M back but still own the house).
So... the number of miners is deternined by that $100,000 fee. getting 51% of that pool might not be worth the capital investment. So no rational reason to chase excessive mining capacity. But for the doublespender there's a huge payoff for getting 51% of the capacity regardless of the fees. It's not just $1M one time, but it's $1M on every transaction... forever.
I hope that clarifies the argument.
You can now see that logic dictates that the cost of achieving 51% needs be higher than the payoff (which will be as many of these $1M transactions as you can get away with). There is nothing in the bitcoin system that adjusts the cost of POW to the magnitude of the transaction. It does adjust to the fees which might indirectly reflect the transaction value but this is not a direct coupling as it will be clamped by competition from other fee based systems (like for example, writing a cashier's check or using a visa card).
If you take my made up numbers here at face value (not correct but makes the point) then if there's a 10 to 1 more profit in double spending, any irrational actors competing for that "1" will still not matter.
As I noted originally, I'd love it if you could prove me wrong, but I don't think the arguments you gave do this.
Some drink at the fountain of knowledge. Others just gargle.
There are a huge amount of garbage ico coins. There are a small amount of working coins.
The problem that all Proof Of Work systems have (well, I mean the electronic currencies, in theory "other" systems could leverage this) is this.
There is no fundamental value to the work being done. That's the central problem.
It's circular logic. Why does the work need to be done? Because the e-currency requires it. Why does the e-currency require the work? Because it's the only thing supporting the number of coins issued to the market.
Take the e-currency self-justifying logic out of the loop and there's no reason to be computing those hashes. It's a giant circle jerk lacking in any fundamental value.
Who could ever have predicted that tulips were just a pretty flower, and not worth $20,000 a bulb?
Next thing, you'll tell me my South Seas investments aren't worth the paper they're printed on!
-- Tigger warning: This post may contain tiggers! --
If they are really currency, why no company/store can use Bitcoin as currency anymore?
Because the price of Bitcoin proved to be extremely unstable to use as a currency?
Would the result be different, if Bitcoin replaced by any other "cryptocurrency"?
Or, they are not actually virtual currency but virtual investment?
But if they are actually investment, why we need/want them?
What would happen to world economy, if people invested in virtual investments, instead of real investments?
Or, all so-called cryptocurrencies are actually just a modified (made decentralized and paying variable interest) Ponzi Schemes?
especially about the future
The predictions of Goldman Sachs experts are worth about as much as everyone else's: nothing. The fact that someone would even make a prediction about the future of cryptocurrencies is evidence that you shouldn't listen to them. I'm constantly amazed by how delusional people are. They could go to zero or they could go to $1M. I don't know and you don't know either so shut the hell up.
There is a simple solution to this problem that has been used to recover from several cryptocurrency debacles: Forking.
The blockchain doesn't keep track of individual coins and there is no record that a particular coin belongs to you. It is a transaction log and your balance is calculated by adding up all the transactions to/from your address. You can't erase a confirmed transaction from existence because the other full nodes on the network will never update with it. The problem will be easily recognized and the good nodes will fork to get rid of the bad ones. The only things you can do are to reverse your own transactions that you make while you're in control and prevent new transactions from getting confirmed.
Since a lot, if not most, countries currencies are no longer backed by any actual material good(s), do any of them have any intrinsic value?
At one time our countries money, and most others, was backed by gold. For a time, some of it was backed by silver. If you ever see one of those dollar bills in someones collection of money that says "Silver Certificate", now you know what that was. However, our country ditched that and basically declared that it's money had value because we say it does, and not because there's some reserve of valuable goods to back it up.
So basically it's not a lot different from those cryptocurrencies, other than the scale of use when it comes to the aspect of intrinsic value.
People don't price random coin X in US dollars, they price it in bitcoin. When bitcoin goes up, all coins priced in bitcoin go up. When bitcoin goes down, all coins priced in bitcoin go up.
The fact that the free market is using bitcoin instead of US dollars to peg the value of the other currencies should be a clear indicator of how bitcoin is here to stay.
the barrier between the haves and have nots. Stuff like single payer health care, college for all, UBI are going to do that. Virtual currencies are always going to be prone to manipulation by folks with a ton of money. And Blockchain is just a distributed database/ledger that's really hard to fool. Bitcoin might make a few haves out of unlucky have nots (re: Greater Fool Economic theory) but that's about it.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
just how powerful Goldman Sachs is. They don't need guile and subterfuge to control the economy. They can crush bitcoin if it suits them or take it over if it doesn't. They were the last man standing after 2008. They've been central to our entire govenment since Clinton took office and maybe even Reagan.
This isn't big bad Goldman Sachs going after scrapy little bitcoin either. The dirty secret of Cryptocurrenices is they're underpinned mostly by illegal activity. Drugs, Money Laundering, Ransomware, etc, etc. Governments have a legitimate interest in stopping these things (though I'd rather like to see them do it by legalizing drugs, but I could do without the Money Laundering). Eventually they'll do just that and the bottom will drop out of the market. The speculators will skedaddle and the entire thing will collapse.
Bitcoin Et Al are not your ticket to a free world. If you want that then you need to focus on getting everybody enough economic security that you're not constantly watching your back, afraid they're gonna bash your skull in and take your stuff. Either that or build walls and set up robot gun platforms.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
He's taking about altcoins, not bitcoin itself. This is something everyone knows
Just look at the charts. Almost *all* coins head toward zero over time. There are only maybe 3 or 4 altcoins hanging on over time. Then bitcoin itself. Everything else is just a flag in the pan ripe for trading at huge profits of you time it right.
This is the same Goldman Sachs who reported that the Greek economy was strong and stable enough to join the Euro?
There are 1510 CCs currently tracked on Coin Market Cap. Most of them serve no purpose whatsoever, and many will never live up to their purported uses. The ones that survive will do so because they are useful in some way. Some because they are useful stores of monetary value, some because they are great for making global payments nearly instantly (or at least much faster than current methods), and some because their networks provide a novel function (contracts, copyright and copy protection, proof of ownership, etc). Much like DotCom era companies, some of these coins have investors dumping money into them and producing nothing in return. From a purely financial standpoint, I envision Bitcoin being used for large purchases and savings accounts. Litecoin will be used for everyday purchases. (Stellar) Lumens would be great for vending machines, music downloads, on demand movies and other small purchases. Lightning networks and atomic swaps will eventually make these currencies invisible to the user, much like internet protocols are to us today. Who cares what it is if it just works?
Don't they have a vested interest in seeing cryptocurrency fail? Since they don't manage a portfolio of crypto, they will do and say whatever to keep the money supply from shifting from their investments to crypto investments.
TV-MA - the Beginning: "Ward, don't you think you were a little hard on the Beaver last night?"
Cryptocurrencies are useful and will always have value. It's not guaranteed that Bitcoin in general or a particular variant of Bitcoin in particular is a long term future. But in general cryptocurrencies are not going anywhere any more than Internet is going anywhere. That's just wishful thinking on the part of threatened financial institutions that face being made redundant.