I get that anything is worth whatever someone is willing to pay for it. That’s besides the point. My point is, beyond speculation, what do crypto coins represent?
I also understand that the value of the US dollar is being questioned almost as much without the backing of gold.
But what I really want to know is what is at the foundation level of Bitcoin that people are buying into?
I have a basic understanding of the blockchain, etc. I sold 1BTC in 2017 for $1200 when I thought that was as high as it would go. At this point, at over $100kUSD and rising steadily, what is the $ limit and what is that limit based upon? I thought it was based on the value of mining to check transactions but this seems… not worth $100k to me.
I’ve been thinking, the only tangible value I personally see in Bitcoin, because it’s not really being used as legitimate currency, is for criminals. By now, there must be trillions of dollars in BTC acquired by criminals holding corporations hostage. When you’ve got people like Trump involved (either explicitly or by way of manipulation) with an executive order to establish a crypto czar, this suggests to me that he’s creating pathways for bad actors to more effectively gain more wealth. These are the people who are most excited in Bitcoin, beyond speculation.
I mean, there’s little to nothing on the up and up with crypto, right? It’s a scam. Right?
Please, factual answers only. I’m looking for someone to dispel my speculation with genuine economics of the matter.
The cost to produce new bitcoin doubles every 4 years ( a bit more because new hardware is added). This drags up the price of all the dormant bitcoin.
There have been no new Bitcoins for a long time. Everything that miners mine is just a transaction tax. In fact, to describe the reason for bitcoin’s growth, you need to understand what money is all about. Not just crypto money, but in general. In short, the price is rising because many (including miners) believe that it will rise and do not spend bitcoins. In a normal economy (except Japan), you could just print more money and the price would drop because the currency unit would depreciate. But bitcoin is a mathematical model, and it has a limit. You will not be able to create more Bitcoins than you have already created in any way. Therefore, the belief in the growth and retention of the currency reduces turnover and the price increases. If any of the whales withdraw their entire stock in one day, the market will fall for many years.
UPD: Excuse me, I really made a mistake. You can still mine 3 bitcoins per block… but to be honest, 3 bitcoins for a whole pool is only an eighth of the original 25 bitcoins per person. In general, mining has not compensated for mining for a long time.
UPD: I checked just in case. The average commission payment is now 1.5 bitcoins. almost half of the reward
UPD: I will reveal my thought even more. An ASIC at 1160 Th/s costs 33k dollars and consumes 11 kW. Even in my region with a low-cost light (only 5 cents per kW), such an asic will be able to bring only 58 dollars per day. And it will pay off only in 1.7 years. This is the moment when the miner will FINALLY stop working at a loss. And this is in ideal conditions without increasing the complexity of the network and other things. So all the miners who don’t buy huge amounts in bulk barely pay for their business.
Fees are less than 2%
I think you have the wrong units. The average fee is 1.5 USD.
This is quite quick. Last time I looked the it was around 3 years. Most of the cost comes from buying the hardware.
https://bitinfocharts.com/ru/comparison/bitcoin-fee_to_reward.html#3m
Percents you can calculate self. That’s not for all blocks, but in a day.
UPD: This is not for every block, of course, but for the whole day. I was wrong about that. Maybe really 2%
Ballpark calculations
Winning a block gets you 3.125 BTC + approx. 0.06BTC in fees (2%). $6000 in transactions fees with 4000 transactions per block = $1.50 per transaction.
my calculations were made without taking into account the growth of the network’s complexity. So, when I tried it last time, the network’s complexity had increased so much in a year and a half that the equipment was not bringing in much, and it was not worth the risk of investing. However, things may be different now, and I may be mistaken.
UPD: Now I just buy Bitcoin on exchanges, and it brings me the same % of income as mining. But I don’t have to deal with equipment, follow ridiculous laws, or waste electricity. =) That’s why I say that many peole just tkabe bitclin to cold wallets. Less bitcloin exists on exchage then grow price.
When I first looked at Bitcoin it was around $10/BTC and electricity to mine (on a cpu) was about the same.
The people who make money mining bitcoin have a combination of very cheap electricity and/or next generation asic hardware.
Part of my last minig farm, if you interesting.
and yes, I also mined bitcoins on the CPU. back when you could get near 200 bitcoins per hour of work. After that I mined altcoins on video cards, mined through nicehash. what I have not mined. and I can say - it’s all thrown money. much, much more profitable just to buy cryptocurrency and hold on cold wallet.
if you don’t want to tell me that people are setting up mining farms in Somalia (because it’s pointless from a risk perspective), I don’t think electricity rates are particularly lower anywhere else.
In any case, you can make money from anything. It’s just that the risks associated with mining don’t justify the investment. That’s all.