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Malaphax

Cryptocurrency

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Malaphax   

I will attempt to post all my cryptocurrency nonsense in this thread from now on, instead of dumping constantly in the financial thread.


Nvidia's Maxwell cards are seeing better hashrates than kepler, and substantially better hashrates per watt over AMD cards.

 

http://www.forbes.com/sites/jasonevangelho/2014/02/20/nvidia-is-about-to-steal-the-cryptocurrency-mining-crown-from-amd/

 

Historically, Nvidia's cards came up short against competing Radeons, which is why you see R9 290X boards selling for $700 and up. But the Maxwell architecture's improvements allow the 60 W GeForce GTX 750 Ti to outperform the 140 W GeForce GTX 660 and approach AMD's 150 W Radeon R7 265, which just launched, still isn't available yet, but is expected to sell for the same $150. On a scale of performance (in kH/s) per watt, that puts Nvidia way out ahead of AMD. Today, four GM107-based cards in a mining rig should be able to outperform a Radeon R9 290X for less money, using less power.

http://www.tomshardware.com/reviews/geforce-gtx-750-ti-review,3750-17.html

 

The bad news is this. We may begin to see price inflation on the Nvidia side now if more miners start buying up the cards. The saving grace might be the fact that since it's still 28nm production there shouldn't be issues with yield/supply.

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Jedi2155   

Why would they buy these versus a ASIC? Unless you're talking about up and coming crytos than the already saturated markets.

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Malaphax   

This would be for mining alt-coins such as litecoin, dogecoin and other smaller cryptocurrencies. You are absolutely correct with regards to bitcoin mining though, anyone even remotely serious about that will buy ASIC miners. Keep in mind that while bitcoin is still the biggest, the other cryptocurrencies can still be mined effectively with standard gpu mining. Until your difficulty levels become quite large, standard gpu mining makes much more sense and you can still make quite a bit of money, depending on electricity costs.

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Malaphax   

MtGox is dead: https://www.mtgox.com/

 

Rumors of a relaunch as Gox, since the company is begining to go through bankruptcy proceedings. Sounds like this is a massive cock up on all levels.

 

http://www.engadget.com/2014/02/25/mt-gox-bitcoin-exchange-offline/

 

Hopefully the other exchanges will be alright and anyone who was serious has managed to pull their money out before they shutdown transactions. I also hope that the people who ran MtGox never engage in the cryptocurrency market again. Especially in light of their posts regarding bugs/exploits in the bitcoin protocol.

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Malaphax   

It's cool that you know someone who's into mining. I am still considering trying out some dogecoin mining, mostly for fun/educational purposes. I would not put any serious money into the market as it stands currently.

 

Cryptocurrencies are incredibly volatile, which is why I don't consider them proper currencies, more like commodities. As far as how the news is playing out, the market is down. Here's what happened to MtGox before they shut themselves down:

https://www.tradingview.com/e/?symbol=MTGOX%3ABTCUSD

 

Here's some of the other exchanges:

https://www.tradingview.com/e/?symbol=BTCE%3ABTCUSD

https://www.tradingview.com/e/?symbol=BITSTAMP%3ABTCUSD

 

I hope that this doesn't scare off too many people and that the crypto market recovers, building stronger exchanges. Any emerging market is going to have growing pains, and while I certainly believe the cryptos are here to stay, events like this don't help with public opinion.

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Malaphax   

Here is a rather detailed summary of the issues that caused MtGox to shut down. Basically their bitcoins were being leeched away slowly over time. They only realized how screwed they were when they had lost 99.7% of their coins.

 

http://www.dailytech.com/The+Death+of+Bitcoins+Mt+Gox/article34390.htm

 

There are really two possible explanations. Either the people running MtGox are so wholly incompetent that they failed to notice they were slowly robbed of all their bitcions. Or the people running MtGox decided to steal from everyone using their site and blame it on an exploit in their system. Neither is a pretty scenario, both hurt the cryptocurrency market in immeasurable ways.

 

Also MtGox is based in Japan, and Japanese monetary authorities have already stated they will not provide the same insurance as they would a standard bank. So all of the people who had bitcoins on the MtGox exchange just got completely fucked.

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kuhla   

If it's following certain classic models like that would it be fair to say it's maturing? .....that it does seem to have a future?

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Malaphax   

Uhhh, I'm not sure how to respond to that. It followed a classic bubble trend. Ideally businesses follow something closer to this trend:

dffc0-productlifecycle.gif

But that trend is over years/decades of time. It's also incredibly hard to accurately plot which stage you're in (works best historically). Frankly I don't know if it's still considered in "growth" or if bitcoin is now sitting in maturity. Also since it likes to consider itself a currency, it shouldn't follow any securities/business trends, it should have substantially lower volatility and look nearly flat. Here's an example of the Dollar:Euro exchange rate over 14 years: http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=Linear&chdeh=0&chfdeh=0&chdet=1423162356110&chddm=7451876&q=CURRENCY:USDEUR&ntsp=0&ei=1LvTVOnQO8fhiwL5zoDACg

It looks a bit spiky until you realize that the graph is only moving from .6 to 1.2 and even then I wouldn't expect a cryptocurrency to be nearly that stable.

 

It's not going to have appreciation anywhere near the levels it once had, and because of the issues with exchanges (mt gox) and the fact that it's becoming more heavily regulated, I'm not really sure where it will go. I personally would like to see cryptocurrencies as a whole continue to evolve and become better until we have a nice anonymous currency option that's tied directly to rented processing power (so it remains relevant) but so far I've seen nothing but concepts and no real world applications for cryptocurrency besides as an alternative to fiat currencies. It needs to be more than a simple alternative before it really takes off, but then again I gave my initial presentation on bitcoin when it was sitting around $70, and since then it's gone through quite a bit.

 

tl;dr Future murky check back later.

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kuhla   

Only tangentially related to this thread but...

 

source - http://www.engadget.com/2015/05/05/bitgold-bitcoin-but-for-gold/

 

 

....

 

BitGold (yup) is the brainchild of Toronto-based Roy Sebag, who has cooked up a digital payments platform that connects real-world vaults with online customers. Once you've sunk your cash into the system, you'll be allocated the equivalent weight of gold in one of ten vaults around the world. Then, when it comes time for you to buy something, you can do so from the BitGold site, your mobile device or with a BitGold Mastercard. The pitch here is that the service isn't a bank, so it won't lose your deposit, it's not a cryptocurrency and there's no securitized assets.

.....

 

Engadget doesn't really pull any punches on this one (from the same source farther down):

 

....

 

Of course, as we keep saying, students of history, economics and both will have already worked out the key flaw with this system. Like any commodity-based system of exchange, the temptation will be to sit on your stockpile of wealth in the hope that scarcity causes it to increase in value. This, in turn, creates a recession that sends the value through the floor -- and unlike fiat currencies, can't be fixed by creating more liquidity since you can't make more gold. This is how the US came to wind up in the great depression of the 1930s, which was only solved when the gold standard was abandoned.

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Malaphax   

Any deflationary currency is going to have this problem. There needs to be some incentive to spend the currency itself rather than sit on it in the hopes it increases in value. No one has solved this problem yet.

One of the few systems with an idea to combat this is Freicoin: http://freico.in/

 

That's because of the concept of Demurrage.

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Malaphax   

The big news comes first. Bitcoin is now officially a commodity:

http://www.bloomberg.com/news/articles/2015-09-17/bitcoin-is-officially-a-commodity-according-to-u-s-regulator

 

While the idea of trading futures/derivatives of an already highly volatile cryptocurrency sounds absolutely batshit bonkers, it will at least be "regulated."

 

The second bit of news.

 

The shitlord who ran Mt. Gox is being prosecuted rather heavily. He will most likely end up in a Japanese prison for stealing from various accounts hosting on Mt. Gox. Right now he's so totally incompetent his defense amounts to "I stole for the company I ran, not myself. I planned on paying it back."

http://www.reuters.com/article/2015/09/12/us-tech-bitcoin-mtgox-idUSKCN0RC04620150912

 

I hope that asshole rots in prison for the rest of his miserable life. He did irreparable harm to the entire cryptocurrency market.

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Malaphax   

http://www.wired.com/2015/12/sec-approves-plan-to-issue-company-stock-via-the-bitcoin-blockchain/

 

More and more agencies/companies are looking to make use of the Bitcoin blockchain to handle various transactions. In this case the SEC wants the blockchain to help track stock issuance and ownership.

 

I firmly believe the blockchain concept is going to outlive any cryptocurrency. In the case of something that you want on public record this makes perfect sense, every transaction can be followed from the initial issuance all the way to the most recent purchases of the stock. The only potential downside I can see is that small investors might have semi-public information regarding their purchase and sales of stocks published by the blockchain. The also helps eliminate the need of stock certificate holding companies: companies that specifically hold the paper stock certificates (don't ask it gets messy).

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Malaphax   

I mentioned this to Kuhla previously.

 

Cryptocurrencies haven't quite caught on at the rate some people would like. They're doing a "measly" $4Bn in transactions on an annual basis. That isn't stopping other companies/institutions from getting in on all the blockchain goodness. In this case the following article talks about Bank of England creating their own coin the "RSCoin"

http://www.telegraph.co.uk/business/2016/03/13/central-banks-beat-bitcoin-at-own-game-with-rival-supercurrency/

And counterpoint:

http://www.forbes.com/sites/timworstall/2016/03/14/the-bank-of-englands-rscoin-would-be-useful-for-payments-but-not-banking/

 

The idea that banking, short term lending, clearing houses, brokerages etc. could make use of the blockchain concept is not new. In fact it's only been picking up steam as some of the smart people in the finance industry get enough interest in making use of it. Many different middle-men make contact with your money when it moves around, with a blockchain you have a guaranteed chain of custody for that transaction and you cut the need for various intermediaries.

 

I've been doing some industry level research on banks, and let's take a look at some of the points showing up across the industry as a whole:

The banking industry is going to look a lot different in 10 years time. Many traditional players now face the choice of either being disintermediated or proactively disrupting their own business models to thrive in the future. Beyond the rhetoric surrounding the topic of disruption in banking, some very fundamental questions face the industry today:
How will past innovations (such as marketplace lending or blockchain), and the breakthroughs likely to come in the future, transform banking?

http://www2.deloitte.com/us/en/pages/financial-services/articles/banking-industry-outlook.html

 

One major theme we're seeing across nearly every industry, is a "race to the bottom" in terms of transaction costs and overhead. You can look at the improving online offerings from banks/credit cards as well as the recent slide of American Express. While I don't think this will happen in the near term, I think eventually you'll have more substantial crowd funding and distributed lending.

 

I still don't think bitcoins are a reasonable currency substitute, but they have brought some pretty interesting technology to light.

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Malaphax   

This is a whitepaper from Morgan Stanley about their thoughts on the Blockchain technology and it's ability to disrupt financial institutions and serve as the underlying component of Financial Technology companies.

The parts that caught my eye is that they believe this won't see the light of day for another 5-10 years and that we might get some proof of concepts in 2017-2018.

They also believe that some people miss the point of the blockchain and believe that this is the only solution to T+0 transactions (stocks are T+3, when you buy something it takes 3 day to settle). As well as people suggesting that a blockchain by default must be an open system (it does not have to be and no serious financial firm is suggesting that).

 

PDF WARNING:

http://news-cdn.efinancialcareers.com/wp-content/uploads/Morgan-Stanley-blockchain-report.pdf

 

As I mentioned previously I think this technology will be most disruptive to middle-men financial firms. To give an example, even large financial institutions (like Fidelity or Schwab) often use an intermediary clearinghouse/bank to handle certain transactions - like check deposits for example. These intermediaries often serve a very limited purpose (do the checks meet all of the regulatory criteria) before simply taking their cut and passing along the funds. These institutions will be the hardest hit when we can simply verify the transaction with a blockchain from a client bank account to the receiving bank/institution. This eliminates anther set of fingers in the pie and passes on cost savings to both the financial firms and the clients. It also will most likely kill off some jobs as well.

Ecosystem_machine1.jpg

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Malaphax   

Luckily most of us on the forum work in fields which won't suffer too much from the wave of automation sweeping across industry, but I do feel slightly bad for people who get automated out of a job.

 

It's not pretty when a script can do the job of a man, it's fucking beautiful.

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Malaphax   

Jamie Dimon (JP Morgan Chase CEO) said that Bitcoin is bullshit [paraphrasing].  I can certainly understand why he thinks that. 

What I find incredibly funny about his comments is that JP Morgan Chase is currently a member of the Enterprise Ethereum Alliance

I won't go into too much detail about my bias regarding ethereum vs bitcoin, but it seems like several major banking institutions believe in the blockchain technology and what ethereum's doing with it far more than bitcoin. 

Here's what the current bitcoin rollercoaster looks like.  Dimon's comments have certainly had an impact. 

ZUOzePv.png

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