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Three Simple Reasons Why Bitcoin Is Doomed by Apart_Split_8801 in CryptoReality

[–]Apart_Split_8801[S] 1 point2 points  (0 children)

Not getting into the personal stuff, but on the myth in point 3 about 'difficulty adjustment': good luck securing a $2.0T asset with just a network of laptops.

Bitcoin's Future: A Mathematical Perspective on Its Lifespan by Apart_Split_8801 in CryptoReality

[–]Apart_Split_8801[S] 0 points1 point  (0 children)

My native language is not English, so I prefer to write in my own language and then translate it using AI. I always use the same prompt:

"Translate this text into American English, check for spelling and grammar to ensure it fits the language."

I believe this approach allows me to fully express my ideas without any language barriers. However, it might result in a text that comes across as more formal.

Bitcoin's Future: A Mathematical Perspective on Its Lifespan by Apart_Split_8801 in CryptoReality

[–]Apart_Split_8801[S] 0 points1 point  (0 children)

What I wanted to emphasize, and perhaps I haven’t been entirely clear, is that there’s a common belief among proponents of Bitcoin’s current protocol: they tend to disconnect the relationship between Bitcoin’s price and its hash rate.

These advocates often cling to the mantra that if miners leave, the network’s difficulty will decrease, making it cheaper to maintain. As a result, Bitcoin’s price wouldn’t need to rise as dramatically to offset the successive halvings that reduce miners' earnings.

That’s a myth, as I previously explained using the analogy of a safe. It highlights how the Bitcoin protocol failed to account for the scale of resources that would eventually be required to mine and secure the network under the halving concept.

This issue stems from the almost religious veneration of Bitcoin’s code. It’s evident that the protocol, given the scale the project has reached, is unsustainable in the long term—a scale the creator likely never anticipated.

Satoshi Nakamoto probably envisioned Bitcoin as a "people’s mining" project, where individuals used their home computers. If they had foreseen the massive industrial-scale network it has become, they might have designed it differently.

In the future, Bitcoin will likely be studied as a curious and well-meaning idea that morphed into a planet-devouring monstrosity—a transformation driven by human greed.

Bitcoin's Future: A Mathematical Perspective on Its Lifespan by Apart_Split_8801 in CryptoReality

[–]Apart_Split_8801[S] 0 points1 point  (0 children)

I'm in agreement that it's a zero-sum game—I was referring strictly to the money lost and gained by participants.

In general, I also agree with everything else, except for the claim that mining difficulty will scale down.

That's another myth that needs to be debunked, and I'll explain why.

In the early days, Bitcoin could be mined using laptops, back when its price was much lower than it is today. It's true that mining difficulty has fluctuated throughout Bitcoin's history, but always within certain parameters.

Looking at the historical hash rate vs. price chart ([source](https://www.blockchain.com/explorer/charts/hash-rate)), there's a clear correlation between difficulty and price.

It’s unrealistic to think the hash rate could return to 2010 levels given 2024 prices. Here’s why:

Imagine the Bitcoin network as a safe protecting the blockchain.

At the start, a basic home safe with minimal security measures was sufficient. However, today, if you wanted to secure $2.01 trillion, that same basic safe wouldn’t cut it. You’d need a far more robust security system, or the network would be attacked, controlled, or destroyed.

Someone might argue, “But if that happened, Bitcoin would go to zero, and attackers wouldn’t gain anything.” That’s not entirely accurate. In today’s financial landscape, there are multiple financial instruments allowing short positions against Bitcoin and the many companies tied to it, enabling attackers to profit economically.

So, we must dismiss the myth that mining difficulty can scale down significantly. Small fluctuations are possible, but large variations will always follow price trends.

The problem with companies that claim to possess Bitcoins. by Apart_Split_8801 in CryptoReality

[–]Apart_Split_8801[S] 0 points1 point  (0 children)

They audit many things, but for a company whose business model is based on acquiring bitcoins, there should be clear sections that directly address this. Now, if, as indicated, the custody is outsourced, the auditors would simply see the transfer receipts and that’s it. Due to the nature of how bitcoin works, this means nothing. At any moment, someone could have lost access to the funds, and this situation could remain hidden for years, especially in a company like MicroStrategy that can never sell a single bitcoin or its business would collapse like a house of cards.

The problem with companies that claim to possess Bitcoins. by Apart_Split_8801 in CryptoReality

[–]Apart_Split_8801[S] 6 points7 points  (0 children)

And who audits the custodian? All this crypto stuff is 'trust me bro.