Loading ...Bitcoin – Flash Crash
Point 1) Who might do such a stupid sale, leaving millions on the table? Maybe the same entity that does this to gold and silver on the Comex when they need to “tamp down” prices in front of a runaway train.
Point 2) Any objective thoughts from someone not heavily invested in bitcoin on what Arthur Hayes says about the ETF’s cornering the market to the point of the miners ending operations because it isn’t worth it vs their costs.
While I can understand at some point you can’t afford to operate because of the diminishing number of new Bitcoins to spread your costs out on but why would the fact that the ETF’s are sucking them all up have anything to do with those economics?
What might I be missing about the concentration by ETF’s vs the miners? Aren’t those two separate issues? https://www.zerohedge.com/crypto/bitcoin-flash-crashes-below-9000-bitmex-amid-tether-turbulence
From the article: “Without the miners, the network dies, and Bitcoin vanishes.”
So once BTC 21 million are all issued, there is no miners needed. Correct?
In which case network dies …. and BTC vanishes.
I understand that the miners will eventually die because the rate of new bitcoin creation will slow down to the point of the power needed not being spread out over enough coins to make it profitable. However, why should no new bitcoin being created cause it’s death? If gold mining stopped tomorrow the demand would be even greater for the amount already in existence, the same should be true for bitcoin. If people want it and no new ones are created the value goes up. The connection to the network doesn’t make sense to me. If the ETF’s gobble up all the available bitcoin the etf’s will go up in price if that is the only way people can get exposure. I am either missing something or his premise is incorrect?
The Bitcoin block chain network is a ledger. Each transaction has to be verified using “proof of work”.
The miners do all the “proof of work” and in return get rewarded by earning BTC.
If there is no BTC left to issue (all 21 million issued) or the miners costs are prohibitive, there is no proof or work being done.
So the network becomes dysfunctional, as transactions on the network are not verified.
OK I can understand that. Thanks for the explanation. However, as I asked above in your post, before I saw this response, didn’t everyone know from the beginning that mining had to cease at some point once 21 million was reached? Is there no other way that the blockchain verification of future transactions was accounted for once that occurred?
Yes, Proof of Stake (POS) which is consensus verification on a block chain ledger. Does no require mining (proof of work) to validate transactions.
For example, Ethereum network is proof of stake.
Could Bitcoin network change to proof of stake? Only by doing a hard fork, which means its no longer Bitcoin. Bitcoin Cash was a hard fork some years ago, and it never really took off.
So either way, BTC is fooked.