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  1. #61
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    Yes
    If you talk to God, you are praying; If God talks to you, you have schizophrenia.

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    Quote Originally Posted by Sherlock View Post
    Yes
    Send me a private message, what is the reason for this reaction of yours, so as not to spoil this topic.

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  4. #63
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    Quote Originally Posted by Sherlock View Post
    That makes sense. The new HW purchases should lag more as price goes up. But in long term everything should level up.

    Still the 150K is too much incentive from 30K or 10K few months ago.
    Been thinking about this more. I do understand that eventually, it will level out. However, I don't understand why BTC price is "limited" by needed power supply.

    Since crypto ecosystem is very different, I can't find some relevant example (will think of something soon), but power demand is secondary (even third level) result of higher BTC price. BTC price higher -> miner profit margins rise -> more miners enter and thus due to network setting more power needed to maintain the network.

    But, it's still just result, not a must.

    I might be missing something but eventually BTC price is determined by demand. If the demand goes nuts and value goes to 500k it might take years for miners to adjust, but i don't see how it "limits" the price.
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    The price is always determined by supply + demand.

    There are models explaining BTC price depending on supply, but they just look at newly mined BTC (and not people deciding to sell their BTC, or people moving their funds out of exchange wallets).
    I find the stock to flow model pretty interesting where BTC price is compared to the price of gold and silver (stock to flow: how many years does it take to generate the current worldwide supply; the higher, the more precious an asset is), see here:

    https://digitalik.net/btc/
    https://medium.com/@100trillionUSD/m...y-91fa0fc03e25


    Problem is, this onyl looks at supply.

    Like MMM said, demand is the other factor to consider. Looking at the again increasing private plus the increasing institutional interest in BTC, even companies putting cash (or even raising cash) into BTC, I think the outlook is positive.
    "Semper paratus!"
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  6. #65
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    Quote Originally Posted by Strider1973 View Post
    There are models explaining BTC price depending on supply, but they just look at newly mined BTC (and not people deciding to sell their BTC, or people moving their funds out of exchange wallets).
    The concept of models are by common people taken in a wrong way. I used to make the same mistake. Lookingfor a perfect model. But the only perfect model is the reality itself. The closer the model is to reality, the more is complex and the harder is to comprehend it.

    The model based on supply and demand is IMHO totally awesome, because it shows at least something that is solid. It is much more than s2f for example. Not that s2f is a total bullshit. But s2f might and most likely is off by more than one order of magnitude and even worse: I have no idea in which way.

    Why. Because s2f is comparing btc to gold and other precious metals as SOV. Nothing wrong with that. Bitcoin indeed serves this way or at least it is the goal. Small mistake is to think that gold vs silver/Pt/Pd is equal. It is not Pt and Pd are more rare than gold, but have lower price than gold. They are much more rare industrial metals therefore. And silver is just another sh1tcoin. Now I am even more confident than before, because the price action during last days was real sh1tcoinshow. Also is impossible to store and carry silver in big amounts. It is a children toy. My banker told me a story how some idiot demanded physical silver, but the amount of silver was bigger than the whole vault. Also I laughed hard few months ago how a family at Liechtenstein borders was stopped, because their apparently overweight car was stuffed with silver worth of 800K USD. 800K in silver is almost 1000 kilograms and quite a volume. 800K in gold is something you can carry in a small bag or if you are trying in adjusted jacket. But that is not important that much because gold relative weight in s2f is high. It is important just because it shows how non-critical are people who created the s2f model.

    The problem with s2f model is that it relies on correct pricing of gold. In other words that what the price of gold now is accurate. For the record I am buying gold and I accelerate the buying, but it is just a bet. Because right now either gold it very underpriced, because is nearly flat even after the moneypriniting and even with all the future moneypriniting and very likely hyperinflation.

    Or the gold is actually very overpriced, because bitcoin already is the thing for SOV. And the world does not need 2 cryptocurrencies for SOV and the world for the same reason also does not need BTC & gold. Gold might be that way just a nice shiny metal used for jewelry and wires, just like copper.

    -------------------

    On the other hand I really like the model based on only newly mined coins. As much as it has exactly the limit that you mention. Why. Because at least this model gives us a one-sided floor unlike s2f and this is why this model should be considered first when we construct our imagination what is going on. Then other models (like s2f) are useful.

    What I mean by that is that the model based only on assumption that
    - miners need to sell everything they mine to cover electricity
    - the profit of miners long term tend to zero
    => (the value of electricity+cost of HW) determines the price of bitcoin

    The model says in fact that (the value of electricity+cost of HW) determines the maximal price of bitcoin, because the price can be anytime supressed by whale selling or in other words whale inducing a short time supply shock.

    ****

    The second impact of this model is that we know that price of BTC can not go too high, because we can not mine bitcoins with more power than world is producing.

    At BTC at 1M USD which is something that random shouters operate with the energy production would be incredible. BTC would spend as much energy as USA or 20% of the world. In Greta times, when peope are crazy about greenhouse effect and all those things? It is absolutely impossible. In fact even at 30KUSD/BTC bitcoin will have problem once politicians realize the ecological impact and once Corona destroys the world economy and people will be freezing and when 1 HW miner is using as much energy as whole condo.

    ---------------------------------

    It is possible to see 1M USD/BTC with just s2f model. And with POS coin I would really think about it. But not with POW coin. Maybe after all this is the limit of BTC and this is why POS ETH might take BTC over, but who knows. Maybe this is exactly why ETH will not take BTC over. There are other implications that are actually in favor of POW coin. I will not mention them here. I just wanted to react to the s2f model.
    If you talk to God, you are praying; If God talks to you, you have schizophrenia.

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  8. #66
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    Quote Originally Posted by MMM View Post
    Been thinking about this more. I do understand that eventually, it will level out. However, I don't understand why BTC price is "limited" by needed power supply.

    Since crypto ecosystem is very different, I can't find some relevant example (will think of something soon), but power demand is secondary (even third level) result of higher BTC price. BTC price higher -> miner profit margins rise -> more miners enter and thus due to network setting more power needed to maintain the network.

    But, it's still just result, not a must.

    I might be missing something but eventually BTC price is determined by demand. If the demand goes nuts and value goes to 500k it might take years for miners to adjust, but i don't see how it "limits" the price.
    In short the limit is natural resources. Then it implies political and social resources. At least now in 2021, when bitcoin is using the normal energy.

    People talk about green bitcoin and how even now BTC runs on energy from solar. It is a bullshit. Most of BTC is not green, and even when it is, how different for world is if BTC is "wasting" energy from batteries filled by solar when the same batter could be used for heating a house? How much different is BTC using the energy from some hydro in Iceland, that also looks like green, but it devastated the nature and because BTC is a safe buyer of that energy maybe no money is invested for storage that energy and selling that energy from Iceland for example to continental Europe? (Just an example I have no idea if it is possible to sell from Iceland to Europe).

    Simply now and in forseeable future maybe not the price, but the bitcoin itself is limited by natural sources. Maybe in fact the high price of btc will cause the demand for energy -> will cause the much higher price of energy -> Bitcoin hashrate will not have to go as high as my model that is calculating flat prices of energy is coming with (that implies that at 1M USD BTC BTC uses 20% of world energy or US equivalent) -> less energy will be needed to secure the network, because what matters is overal fiat spent for the energy.

    So far it is perfect right? Let's assume that bitcoin will cause trippling of prices of energy. It will need just 1/3 of energy then.

    The result of energy going to 300% will be maybe hundreds of millions death people (because energy is needed not just to run electricity, but also for fertilisers, water extraction; also wars for energy would blossom). Now that is not a problem for capitalism. Capitalism does not care for dead people. But it may be a political problem.

    But we can ho even further. We think this can be a political problem. But maybe also not necessarily. There is the deep ecology - something like Greta squared that is maybe our future. The theory that the planet is important not the people. Idea that we have to reduce greenhouse effect at all costs. 300% hike of energy prices would do just that. The demand for energy would plummet, because many people would not be able to afford it.

    The conclusion then is hilarious: bitcoin, as the biggest polluter and energy spender on planet can be the vehicle that will drive people to the desired green planet (at costs of many dead people who can be assigned to some other problems).

    Please take this with a grain of salt. I am just trying to show the paradoxes ahead. And that the future of bitcoin will be politics and social movements even when they will not be deciding aboyt BTC. Everything is connected.

    --------------------------

    Short term price is not limited by anything. But the more is price above equilibrium, the more is incentive to short it. Especially now when more and more people and funds have bitcoin and who will watch fundamentals. So this is why the shot to 150K or 500K I see unlikely (as much as I want it!). The price will be supressed not just profit taking. The price will be supressed also by this fundamentalism. Also it is a market, so it is a prisoner dilemma. If all participants know that price is well above the price determined by energy costs, they know if nobody chickens out, the price can stay. But since they all know that all others know that the price is above a strong fundamental equillibrium, they might have a tendency to sell first.

    This is really the Achilles heel of POW coin and something that does not have POS coin (so far). POS coin however can be based on credit, where the minters (by POS are minters not miners) must pay the interest. SO there can be some other and different fundamentals affecting the POS coin limits and price.
    If you talk to God, you are praying; If God talks to you, you have schizophrenia.

  9. #67
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    https://hackernoon.com/grayscales-gb...t-slow-0gu340l

    Wonder if this dude was right and that is the reason for current increase.
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    MMM
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    Quote Originally Posted by MMM
    Hey Sherlock.

    There is some basic axiome or conclusion on which your estimation is based which i am missing.

    As I understand:
    If BTC value goes higher - higher profit margins - more miners will join with time and eventually hash rate will go along. However from "my" explanation - the BTC price is in no way "limited" by the hash rate. For example if no HW is made for a year and yet BTC demand is high, BTC can keep going up.

    But your explanation is that if BTC value is much higher than the hash rate, there is some pressure which will increase the supply.

    Meaning not only that the hashrate aspires to follow the price due to profit margins, but BTC price also aspires to align to hashrate. Why?
    Quote Originally Posted by Sherlock
    Yes, I believe the other way around as well. I especially believe that higher hashrate serves as a floor for price. This is why I was very confident once price dropped under 4K and then started to rise slowly, and at the same time started to pick up hashrate, that the price will never go below 4K once it reached 5500. WHich normally would be just average drop for bitcoin.

    So hashrate is a function of price and price is also function of hashrate. In fact it would be surprising if it wuld be the other way around, it is economic simplification that there is independent demand and supply but normally it is good enough simplification.

    There are many factors why it serves like this, it is ******* 40 celsius here so i can think just about the major one: the supply elasticity varies a lot and depends on price and it depends whether miners are in profit or not in profit. Once miners are in profit they tend to sell and they tend to sell much more if they are making bigger profit. Conversely - and I read interview with one of them but I was thinking it even before - when miners do not make a profit they tend to hold and the more they are losing on selling coins the more they hold. This is even more seen when price of fiat money/interest is low. Miners work with funding. So they can allow this and not sell until the price goes again up. This is how the floor through hashrate works imho. It is a strong factor and maybe is broken once in 4 years where the drop of price is too high and miners bankrupt and the cycle goes on.

    Is it enough?

    That link you posted and how it lead to the jarvis AI is interesting I think. I am thinking to test it. Do you have some experience with it? I think the lifetime for 10K can be some day as valuable as the 1M for lifetime first class flights from AA if it makes sense.
    Yes, that indeed makes sense. Although it seems indeed more as elasticity. As it's not % of increase but actual numbers, not sure with big increase now for example, the miners will be able to keep that same ratio, just slow down the split.
    But maybe many big BTC holders see it this way and combined they will keep the price close to hashrate. That would work indeed. Although (and my understand here is definitely limited), somehow i am not sure that the future will "reflect" the past and that this ratio will break assuming higher numbers are reached.

    Didn't understand the last 10k sentence.
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  11. #69
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    I am also not sure how the future will reflect the past. In fact I believe we are now at some border, where things will break up (not just for crypto).

    In crypto part the systemic change will be on more fronts simultaneously, but the biggest change will and must be that once the hashrate will go up even a bit more it will affect the energetic sector (and it will be influenced by political sector).

    Now there is some energetic sector, it plans energy consumption for people. Then energy is produced at some price. Then, if price is favorable, miners jump in.

    But now it is different, there will be energy plants produced directly for mining.

    The system of energy and money will be somehow interdependent.

    So not just changes in energy outpit/price will affect hashrate and money supply as by now; but also changes of money supply (as BTC becomes bigger) will affect the energetic sector. Something like: dear people in Inner Mongolia, you know impact of corona wave nr 14 in 2027 is very severe, but bitcoin price is spiking from 750K to 2.5M USD. So we will use our energy to mine bitcoin. It is -40 Celsius outside, so it will be a bit cold because sadly you can not use heating, but we will make it. [This is just a joke ok, just to illustrate what I mean.]

    My point is that until certain point the energetic and political sector can be omited. At some point it can not be. Even if BTC price spikes as you say without high hashrate (but at the level where, the equillibrium hashrate is like USA consumption at 1M usd per coin or something like that), we will have a problem or at least a new paradigm. Even when the hashrate would not be rising that much, the miners revenue would go through the roof and they would want each Watt of world energy. Even the expensive energy. That means even the energy that someone really needs. How many bitcoin blackouts will be tolerated? Austria was very near to blackout even last month, because of the New Green Energy, energetic sector is stretched to the edge everywhere.

    ---------------------------

    The 10K sentence is about the Jarvis. If the AI trading is a thing the 10K per lifetime (TM) subscription is bargain. Just like was AA lifetime pass for 1st class (I thought it cost 1M usd, it was only 250K) https://thehustle.co/aairpass-americ...fetime-ticket/
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    I think there is a difference between how BTC has been used and how it will be used. The power used to mine and transfer BTC is based on retail use. But, there are no "real" blocks in futures contracts. No BTC has to be produced or exchanged for a BTC futures contract or short contract. Like many assets. The real price will be distorted by hedge funds and a negative interest rate environment.

  13. #71
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    I am not exactly sure how you mean that. Please elaborate with more sentences.

    Bitcoin is nearly not used, just a bit, but even the bit is big difference to other crypto, where the only use is for crypto speculation, sending to exchanges or defi etc. The tiny amount of bitcoins (in ratio of all bitcoins transacted) that are used in real world economy is not a typical retail. It is grey and black economy, like those millions each month in affiliate marketing and gambling offshore.

    But that is not determining the power that is used to mine. The power is simply rising, when miners make profit and going down when they do not. The value of bitcoin is not determined by real transactions for long. Most of value of bitcoin already comes from speculation on BTC as reserve asset or safe haven.

    I do not understand the mechanism described. BTC is not like classic asset in many ways. If price of gold goes up - more gold is produced. If price of BTC goes up - no more coins are produced (ok within 14 days window, until difficulty adjustment, actually more coins are being produced, but that is not the point here).

    I am just trying to exchange words here for the record, I simply do not understand what you write. But if someone else does, like MMM, I would be grateful to anyone.
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    To be honest does it matter how much it goes up to, if a simple tweet from Elon can bring it down by 10-15% in hours? After seeing what most reddits of alt coins look like, after have used the ETH network and paid stupidly high fees, after seeing many teenagers "invest" because of the name of the coin, I can confirm to what Sherlock said, that it's a total jungle and chaos in the crypto industry at the moment.

    I guess enjoy the discount prices while they last as the bull cycle is most likely not over.

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    An excessive money supply and pop culture driven investment advice on social media will lead to volatility.
    Don't complain about it. Just use it to make money.

    Buy and hold until some meglomaniac that the media anoints as a financial genius says buy buy buy.
    Then sell.
    A week later some other meglomaniac will say sell sell sell.
    Wait for the price to drop and then buy.

    I bought dogecoin last year as part of my diversification. I thought of it as a penny stock and it hit.
    Sold half for a fat profit. Hold and wait for Musk to pump it up again and then sell more.
    Do I think it is a good investment? Don't care. It makes me money.

    If you are expecting rational behavior in an irrational market then you will miss out on opportunities.

  16. #74
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    Elon did not bring the market up or down. It is simply the posthalving rally, when anything from certain range can do it. Last halving was here McAffee in the same position of manipulating the market (he is in prison now exactly for that).

    The markets did not go down because of Elon. They went down because of ETH network. I was paying many times over 1000 USD/transaction lately and it did not even go through (= thousands lost in one click). De-fi market collapsed because of fees. People switched gradually to BSC network, but it recently collapsed as well. People try to switch to some beta layer2 of ETH called Polygon/Matic, but even to switch there they need to use ETH bridge, which is out of reach for most. Defi is a ghost town now where only whales shoot after each other (it is like when pros meet at poker table, not much fun or reason to stay there I heard).

    My theory: Elon is not such an idiot and anyone watching markets closely during last days felt the implosion. So he came and said something just to act like a god, but it was merely a play. Market was waiting for any negative sentiment and he delivered it. Maybe he made some money on the top, but that is not important. He is an autistic attention ***** just like Greta.

    If Elon tweets something when price is flat in 2019 or 2023, market will barely make a move. Now is really the irrational times when anything happens. During last month I was selling HEX which was btw for free for all BTC holders one year ago (all you had to do was to claim it), just no one cared to pick it up. It was the most appreciating shtcoin during last year and I would not buy it even for 1 satoshi. Actually it cost 1 sat and I was thinking to sell it, but then it was part of my shtcoin ride.

    I also sold not only for BTC this time, but into fiat as well. I think I will buy the dip, but the dip might have 4 years, so I keep waiting. One thing is now nearly sure - soon the fiat will be a toilet paper, so that even worst shtcoins can do better.

    Elon's tweets (in crypto) will be soon ignored. Another clown is already being created by social networks.

    As I said before the 64K might be a top for this halving. This ETH run would be the same as Jan 2018 then. The run can go on ofc as well, but I absolutely do not take it as granted. The scenario that BTC will now lightly bleed during next months and altcoins will bleed heavily would be very good for BTC. The correction would be mild.

    Eyes on EIP of ETH now and taproot for BTC.

    The narrative that BTC is an energy waster and the enemy of New Green (Wo)Man - I am not sure whether I wrote it to this board, but I was sure someone will come with it - is now priced in. The price is not bad at all after that.
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    Default Bitcoin Killing the Planet?

    Elon is a bit misinformed:


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    Nothing makes sense anymore; not sure whether I should be depressed or make fun out of it.

    However, I'm pretty sure Musk is not at all "misinformed". I just don't understand his agenda.

    He is very well informed in stuff he cares about - he understands how payment systems work (cofounded Paypal and wanted to originally create something "similar" to e-cash, send money from one email address to another, no banks), he understands how batteries work and how they are produced (cobalt from slave child labor in Congo, lithium from salars in Latin America, nickel from mines polluting rivers in Siberia... stuff like that).

    Now tonight he tweets he is "concerned about the environment impact of Bitcoin" (ridiculous), he "can't support coal usage". And probably the most insane is his last post: "Working with Doge devs to improve system transaction efficiency. Potentially promising."

    This is not even ridiculous, this is something from another planet. Who is a Dogecoin developer? It is an abandonware copy of Litecoin from 2013, there were no "Doge devs". Of course transactions will be "more efficient" if noone actually uses that coin, same story as with Bitcoin Cash.

    A few possibilities come to mind.
    1) he simply enjoys tweeting lies and random stuff and seeing how it impacts the market (wouldn't be the first time)
    2) there is some hidden game being played, such that Tesla will get subsidies/carbon credits from California only if it isn't too much involved with crypto

    Bitcoin price today is pretty strange, probably a lot of margin traders and leveraged futures speculators got liquidated by Musk not just once but twice - first in March on the way up and then in May on the way down. If the bull market is over, it would be first of a kind - crypto bull markets ended with abrupt spikes followed by small volumes; not with a 3-4 month price consolidation with higher lows, tighter range and dip buying like today.

    Bitcoin still makes sense to me, I even understand the traders/gamblers. It is tempting if you can borrow USD fiat (1.9% p.a. from broker like IB, 10-20% p.a. from exchange like Binance, sometimes you actually get paid for borrowing fiat on futures like Deribit). It is the same trade that people do by getting mortgages instead of having savings. If you know how to deal with the volatility, there is nothing better than crypto. If you can't stand the volatility, you will first get destroyed by Musk crashing the markets 15% in a day and then because you're a retard you'll sell to some whale at the very bottom.

    I have a funny story, I know a guy who is extremely smart on the technical side (finished two tech universities incl. one PhD), he knew and popularized cryptocurrencies since like 2012. He doesn't understand economics much but his very simple approach he told me was "I collect all coins because you never know which one will explode". My guess is he had probably higher tens of millions of Dogecoin in 2013 because it was his go-to coin to popularize cryptocurrencies as it was technically easy to understand and the blocks were mostly empty so there were no problems with fees and confirmations. It also had low value, you could get it for free from faucets, some weird MMO games, illegal poker sites or buy a million or so for $100. He was randomly sending Dogecoin to everyone as a way to popularize crypto, 10k Dogecoins to this guy, 100k to another, if he has any left after his popularization-giveaway, he's probably still better off than 99% of technical analysis traders who got wiped on Bitmex or Binance by Musk.

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  21. #77
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    I am tired of Musk. I mean by people solving Musk. He certainly has his fun and hell on earth.

    I absolutely agree he is not misinformed. He has the smartest brain on this planet maybe (he can be childish as well at the same time, it is probable). His results speak for him. He even did not say anything harsh against bitcoin.

    Either way he said nonsense: that the transactions spend the energy. The transactions are just a byproduct of mining, the BTC spends the same amount of energy with 0 transactions. He knows it for sure.

    This carbon footprint logic is a total bullshit. It can be bend as anyone likes. How much CO2 is taking bitcoin/legacy financial systems/"green car" (electro car fed by "green" wind turbines, that are backed by coal or by some batteries, for which people are killed somewhere in central Africa (and rivers destroyed) - ok what is a carbon footprint of a human btw., maybe is good to kill humans, because the carbon footprint is smaller etc. Ad absurdum the best carbon footprint outcome is the Earth without humans, Earth without animals, Earth without all life (maybe the ancient form or life based on sulphur dioxide is allowed), Earth without atmosphere. You know, something like Mars...

    Everyone who is arguing now with anything green is deceiving others. Masses do this without conscience. Businesses do this with full conscience. When masses are hysterical and you do business, you must give them what they want. In nazi Germany you sell Cyklon B; today you sell green projects. If you do not do it, you end up as Cyklon B user.

    So Musk knows this all I am sure. His base and cash cow is now electric cars. What he cares about is just this: https://www.youtube.com/watch?v=3yzmJ6FHMg4 He does what he must. We also do not sell casino with the information that getting this nice bonus is going to destroy your life.

    So Musk must play this game of ecology. He must play it upfront as defense. He must be an opportunist. He is enlightened superhuman. He knows how we all are stupid. So he must upfront play the game of being green, so the green carbon footprint eco-terrorism that is just starting will not attack him. He knew it before others. Ok, living in California probably helped to see all this since 90s from what I heard.

    Green bullshit is a selling point of everything in future. We all have to accept that. It is like with shtcoins, we all know dogecoin/shiba/another shiny coin is sht, but now, maybe actually not everyone knows that. Maybe the majority already thinks the opposite. Maybe even those who know that it is a sht, have to pretend, it is good, because otherwise they are against themselves.

    Because this is how the ideology works. Musk is smart, he knows this all and I am sure, because he is smartest of all, he knows it unconsciously. He acts with reflexes. Every social network true-star has this ability.

    So it is well played for his purpose to shoot us to the Mars. He is just defending his business and his own purpose.

    Bitcoin will either survive all attacks or not. If BTC is good let it flourishes. If it breaks down under the green agenda, also good. Maybe it will force the POS BTC in the end. Maybe it is not that bad either. Whatever. I hodl.
    If you talk to God, you are praying; If God talks to you, you have schizophrenia.

  22. #78
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    Thinking of the energy costs part: theoretically, even if let's say btc goes to 500,000 in 2032, due to reward halving, the energy demand increase would be just 50% from now or something in that area (x12 in btc price / *8 in mining reward)

    probably a bit higher due to tech advance and lower costs of other expenses but something in that area.

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    100k this year.

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    Quote Originally Posted by Nenad View Post
    I don't believe that this year BTC will go up more than 50K, even this amount is questionable. In 2022, there could be different story, but it depends on wide range of factors. Anyway. those who were lucky or clever to buy it when it was cheaper nd sold when it was 40K, I just can say congrats!
    This aged well!

    Quote Originally Posted by Jambo View Post
    500k probably not. But 100-150k is possible. When 1 BTC was still worth 8 cents, nobody would have thought that it would be 40k at some point.
    This did not that much...

    Bitcoin is ded.
    If you talk to God, you are praying; If God talks to you, you have schizophrenia.

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