Price Volatility vs. System Volatility

I perhaps over-reacted by labelling your comment as a falsehood, I retract that comment. I do think it more a case of crossed-wires.

Fair enough, appreciated.

1. Nobody is getting excited about bitcoin as a stable IT system per se. Instead, the excitement is (if any) its stability as an IT system acting as a currency relative to the price stability of fiat currencies operating within global financial systems that are unstable.
Its this relativity that you appear not to have addressed, thus somewhat taking the topic of course.

Yep, my point all along was that anyone familiar with Bitcoin shouldn't regard that article as presenting anything they didn't already know. I did point out earlier that in my opinion the article fell short of a meaningful assessment in that while it mentions systemic instability of FIAT, it doesn't spend any time discussing what they are, their impact, or how Bitcoin or other cryptos could prove to be of benefit. So to me, the title promised a comparison on price versus systemic stability of Bitcoin, Libra, and the Dollar, but it focused almost entirely on Bitcoin, with a little on Libra and didn't go into any detail on the issues with FIAT that might justify investment in cryptos, and so I think it was a missed opportunity.

3. As for value, stable systems - IT, Financial, Mechanical, Ecological, Biological, etc...etc...all hold value. Asking me to put a mathematical calculation on that value is futile, anymore than putting a mathematical calculation on the value of river systems on the environment./QUOTE]

In IT, engineering, etc., stability is a cost play, not a value one. When we assess investment in IT systems, we evaluate income versus total cost of ownership. Stability is factored in through high availability design models and multiple layers of redundancy, and a cost is associated with that. Against that, we know what a partial or complete system outage is likely to cost in terms of lost business. The greater the potential loss, the more we invest in stability. That stability however doesn't affect the value of the products and services we sell.

My propensity to buy more bitcoin derives from that understanding that bitcoin is robust and offers me space outside of the unstable global financial system.

That's fair enough, that's a valid reason to want to buy crypto. One of the aims of AAM is to help consumers make informed decisions, s owe'd hope people understand that stability aspect of any potential investment before putting any money on the line.
 
Or parliament or anywhere grown ups try to engage in debate with someone who refuses to answer a question.
That's all dependent on the question(s) centering on the actual topic at hand, not pedantic peripherals.
 
That's all dependent on the question(s) centering on the actual topic at hand, not pedantic peripherals.

I'll adopt your approach so and assume that means you now acknowledge that the article did not state that price volatility was an issue for Bitcoin.
 
I'll adopt your approach so and assume that means you now acknowledge that the article did not state that price volatility was an issue for Bitcoin.
As stated a couple of times already, people who know little (if anything) about Bitcoin know of its price volatility - as its the item that gets reported about it consistently in the media. Go out onto the street right now and ask someone what's the relevance of stability volatility to Bitcoin and most likely, they won't have a notion of what you're talking about. It's in that respect, Caitlin Long's excellent Forbes write-up is relevant. You don't agree and you're perfectly entitled not to agree.

However, that was and remains my point, Leo. You can be pedantic about it as much as you wish.
 
However, that was and remains my point, Leo. You can be pedantic about it as much as you wish.

I don't think anyone here argued that point! I disagreed with an assertion you made and you refuse to address that.
 
I don't think anyone here argued that point! I disagreed with an assertion you made and you refuse to address that.
What I want to do Leo is stick with the core discussion and not take the discussion down a cul de sac. That's why I respectfully suggested we reset and park it up. However, I guess we all see things from different perspectives.
 
What I want to do Leo is stick with the core discussion and not take the discussion down a cul de sac.

Fair enough, we'll leave it there. I'd request however that you don't presuppose my position on this or other topics, and I'll happily engage and answer any questions posed as openly and honestly as I can.
 
Fair enough, we'll leave it there. I'd request however that you don't presuppose my position on this or other topics, and I'll happily engage and answer any questions posed as openly and honestly as I can.
Well, I'd sooner come at it from the other direction, Leo. I respect completely that you're a detail oriented person. However, if it's something peripheral to the discussion and you feel that I've misquoted you, maybe that just gets pointed out and we move on.
 
This is an excellent discussion of the topic by Caitlin Long via Forbes. If anyone is still on the fence as regards the utility of Bitcoin, this should go some way towards clearing things up.



I have found myself sucked back into this space in recent days. Good fun, if not quite as good as watching simultaneously a tie break in the cricket World Cup after a 241 draw and a tie break in Wimbledon after 2 sets all and 12 games all.
Anyway, I digress, as I say I find myself wandering in AAM btc space yet again. And I find this absolute corker. What an utter rubbish article from the boul' Caitlin Long.
We are treated to a completely irrelevant discourse on hash power. We are told more hash power means more security, and bitcoin holders can sleep more soundly at night. As a bitcoin skeptic let me assure all that I have absolutely no doubts on the security of btc. It is a security that could be achieved at a miniscule fraction of the hash power now being applied. The reason for the mega hash power is not a self adjusting security mechanism but an unfortunate consequence of Satoshi's desire to limit the release of blocks to 1 every 10 minutes. As btc reaches prices which I am sure Satoshi never wildly anticipated the pursuit of btc riches has made mining an enormously over resourced activity compared to what is required to maintain the security of the blockchain.
I freely admit that I would love to see crypto crash and burn. But reading this piece Caitlin reveals a very thinly veiled desire to see the mainstream financial system crash and burn. The Donald would likely ask Caitlin to go back where she came from.
 
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But reading this piece Caitlin reveals a very thinly veiled desire to see the mainstream financial system crash and burn.

There is no such "thinly veiled desire" in this article to see the mainstream financial system crash and burn. What the article is pointing out, correctly so, is that central banks interfere in markets to maintain price stability. In doing so, it can cause investors to misallocate capital, in turn fomenting the conditions for systemic volatility further down the road.
 
What an utter rubbish article from the boul' Caitlin Long.
How utterly embarrassing for you to even say that. She's one of the most credible people in the space.

We are treated to a completely irrelevant discourse on hash power. We are told more hash power means more security, and bitcoin holders can sleep more soundly at night.
If you don't appreciate what increased hash power for the network means, then you lack a basic understanding as to how the bitcoin network works.

As a bitcoin skeptic let me assure all that I have absolutely no doubts on the security of btc. It is a security that could be achieved at a miniscule fraction of the hash power now being applied.
It could be Duke - but for networks that have taken a different approach - they don't match the Bitcoin network in terms of security. In your precious conventional banking system, there is no such system that matches the robustness of the Bitcoin blockchain network.

The reason for the mega hash power is not a self adjusting security mechanism but an unfortunate consequence of Satoshi's desire to limit the release of blocks to 1 every 10 minutes.
You really have such a hang up about the mechanism of the proof of stake algorithm. Again, it belies the fact that you don't understand it.

As btc reaches prices which I am sure Satoshi never wildly anticipated the pursuit of btc riches has made mining an enormously over resourced activity compared to what is required to maintain the security of the blockchain.
He designed in scarcity - there's no doubt that he would have expected an ever increasing price.

I freely admit that I would love to see crypto crash and burn.
At least you're honest about it - as there are others. Whatever about the price speculation, you're going to be sadly wrong on the notion that it will disappear.

But reading this piece Caitlin reveals a very thinly veiled desire to see the mainstream financial system crash and burn. The Donald would likely ask Caitlin to go back where she came from.
22 years on Wall Street? Is that where the Donald would send her? She worked your precious conventional system. Other than that, I don't see any such 'thinly veiled desire' - please quote the sections of text that belie that claim. She has identified flaws in the conventional system in that article. I know that's an inconvenient truth for you but so be it.
 
If you don't appreciate what increased hash power for the network means, then you lack a basic understanding as to how the bitcoin network works.
I see that later on you change this assessment.

You really have such a hang up about the mechanism of the proof of stake algorithm. Again, it belies the fact that you don't understand it.
The double negative states that I do understand the mechanism of mining. Though I must humbly admit to not being a nerd and that I am relying on my interpretation of what fpalb said in these parts and she certainly seemed to know her onions. I also suspect that moderator Leo is a nerd (he also has demonstrated impressive knowledge of all things blockchain) and I am encouraged by his "like".


He designed in scarcity - there's no doubt that he would have expected an ever increasing price.
I will ignore the sexist presumption. Central Banks target a low but steady inflation of fiat values. This is based on the vast bulk of economic thought in this space as to what serves society best. Money after all is there to serve society's economic needs. If Satoshi was targeting persistent deflation she certainly did not have the best economic interests of society at the forefront.


22 years on Wall Street? Is that where the Donald would send her? She worked your precious conventional system. Other than that, I don't see any such 'thinly veiled desire' - please quote the sections of text that belie that claim. She has identified flaws in the conventional system in that article. I know that's an inconvenient truth for you but so be it.
the boul Caitlin said:
Yet, clear signs of underlying systemic instability are again showing up—because central bank actions not only interfere with price signals in markets, thereby causing investors to misallocate capital unintentionally, but they also gut balance sheets. We can see signs of systemic instability brewing yet again in esoteric but critical corners of money markets, which is usually where the next round of systemic instability shows up first.
Don't tell me she wouldn't be delighted to see the next round of systemic instability so that she can say "I told you so"
 
I see that later on you change this assessment.

The double negative states that I do understand the mechanism of mining. Though I must humbly admit to not being a nerd and that I am relying on my interpretation of what fpalb said in these parts and she certainly seemed to know her onions. I also suspect that moderator Leo is a nerd (he also has demonstrated impressive knowledge of all things blockchain) and I am encouraged by his "like".
I'm not sure that I do change the assessment. Taking the hash rate in isolation, I don't think you appreciate the feature/benefit that belies that. As regards the Proof of Stake based mechanism generally, you've continually come back to this and referenced it as if its a bad thing. I can't see how you're reaching that conclusion.

Otherwise, I'm glad Leo's 'Like' has served you up with a dopamine hit :)


I will ignore the sexist presumption.
That's quite sporting of you. I have on other occasions used "he/she/they" but it gets a bit longwinded. Happy to use an abbreviated term if you have one? I guess I can use "it" if that is sufficiently politically neutral for you?

Central Banks target a low but steady inflation of fiat values. This is based on the vast bulk of economic thought in this space as to what serves society best. Money after all is there to serve society's economic needs. If Satoshi was targeting persistent deflation she certainly did not have the best economic interests of society at the forefront.
I will ignore the sexist presumption. And yet central bank decisions are make by people. They can often be politically motivated or have come about due to political pressures. To err is human and so at some stage or other, mistakes can and will be made.

As regards a deflationary system, I'm no economist but I can't see why we have to stick with these boom and bust economic cycles. I can't see why its necessary to rob every citizen by devaluing the economic worth of the FIAT they hold year in, year out. There is a smattering of you here that it seems are soo much against BOHA - yet we have those very cycles in economies based on conventional centralised economic models.

Don't tell me she wouldn't be delighted to see the next round of systemic instability so that she can say "I told you so"
And what is that based on, your dukeness? Other than that, I don't think its in any way likely that she would feel any need to gloat (not that I think that's her mindset anyway) given that it's hardly rocket science. Everyone accepts with centralised systems, there will be systemic instability from time to time - it's inevitable.

I think you've misunderstood the background she comes from also. She's not an anti establishment cypherpunk (you love those, right?). She's a wall street veteran of some 22 years standing.
 
Otherwise, I'm glad Leo's 'Like' has served you up with a dopamine hit :)
Had to look that one up:)
Leaving the banter aside for a moment I really was gobsmacked by Caitlin's discourse on the interplay between hash power and security. The idea that the security of the system is heavily reliant on the mining resources applied would make me very insecure. She argues some virtuous mechanism whereby as prices go up the btc become more secure and vice versa. Presumably this is a function of the incentive to mine btc. So when the halvings come along will the security see a significant drop? And what about the security levels when the only incentives are the transaction fees? From what I understood from fpalb, she is way, way overplaying this reliance of security on the hash power and thus on the incentive to mine.

Of course, I understand that a level of hash power is needed to secure the system. But at these levels btc has gone way past the point of diminishing returns in that front. I am in fact more bullish than Caitlin on the future security of btc, I think it will be maintained through halvings and the ultimate phasing out of btc incentives altogether.
 
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I really was gobsmacked by Caitlin's discourse on the interplay between hash power and security. The idea that the security of the system is heavily reliant on the mining resources applied would make me very insecure. She argues some virtuous mechanism whereby as prices go up the btc become more secure and vice versa. Presumably this is a function of the incentive to mine btc. So when the halvings come along will the security see a significant drop? And what about the security levels when the only incentives are the transaction fees? From what I understood from fpalb, she is way, way overplaying this reliance of security on the hash power and thus on the incentive to mine.
Sure - the incentive gets handed off to the transaction fees. I don't share your concern here. I know that on a 'consumer' level, you may feel that there are no transactions being carried out but overall there are plenty. Furthermore, Bitcoin has scarcity built in. It's logical that there will be some upward pressure on the price with less BTC in circulation. Therefore, the miners receive less reward but it's more valuable.


Of course, I understand that a level of hash power is needed to secure the system. But at these levels btc has gone way past the point of diminishing returns in that front. I am in fact more bullish than Caitlin on the future security of btc, I think it will be maintained through halvings and the ultimate phasing out of btc incentives altogether.
Additional hashrate makes it more and more robust. Other networks have not been road tested to the extent that BTC has. That said, there's no need for complacency so more hashrate is always welcome.
 
Sure - the incentive gets handed off to the transaction fees. I don't share your concern here.
Read my post. I am arguing that it is Caitlin who, by her obsessing on the virtuous effect of rewards on hash power and therefore on security, should be concerned when the rewards get halved and halved again until eventually it is only transaction fees. I specifically said that I don't share that implied concern as the hash power is currently well in excess of what is needed for security purposes.
 
Read my post. I am arguing that it is Caitlin who, by her obsessing on the virtuous effect of rewards on hash power and therefore on security, should be concerned when the rewards get halved and halved again until eventually it is only transaction fees. I specifically said that I don't share that implied concern as the hash power is currently well in excess of what is needed for security purposes.
Obsessing? Where's the obsession? Either way, why should she be concerned? As per my post above, there will be sufficient 'reward' in the system to maintain a functioning network. Not sure where you're going with that.
 
by her obsessing on the virtuous effect of rewards on hash power and therefore on security

The current demands for hash power are also having the effect of centralising control to a small number of players producing mining ASICs. North Korea have been putting significant effort into going after BitCoin. A small number of producers of mining rigs weakens the overall security posture. There's a mining ROI calculator here, interesting to see how low you need to get your electricity costs to make it profitable. Is there a point where the halvings mean it's no longer profitable to run anywhere?
 
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