Posts Tagged ‘speculation’

25
Jan

The 7 Network Effects of Bitcoin

by adminadam in articles

Trace Mayer, J.D., a long-time Bitcoin Guru and Investor in Bitcoin companies such as Armory and Kraken, explains the network effects that will lead to Bitcoin’s continued success.

From his talk hosted by CRYPSA at LaGuardia Community College – June 29, 2015.
Listen to the audio: http://www.bitcoin.kn/2015/06/crypsa-event-with-trace-mayer/

The 7 network effects of Bitcoin are as follows:

  1. Speculation — As a novel, cryptographically-backed asset class with the potential for appreciation and high volatility, Bitcoin is perfect for speculators with a high tolerance for risk.
  2. Merchant Adoption — Merchants will increasingly accept Bitcoin because they can increase their profit margins by avoiding credit card fees and chargebacks.
  3. Consumer Adoption — Consumers can use Bitcoin to save money at certain vendors. For example, getting a 20% discount on Amazon by spending Bitcoin through Purse. Additionally, consumers can buy things with Bitcoin that they cannot buy (easily) in any other way. Consider: An American can buy Persian rugs or Cuban cigars online despite trade embargoes. Bitcoin increases the efficiency of the economy, particularly in niche areas such as these.
  4. Security — Merchant, consumer, and speculator adoption lead to a higher price and thus incentivize more miners to participate and secure the system. The decentralized, immutable transaction ledger also serves as a form of Triple Entry Bookkeeping, wherein Debits plus Credits plus the Network Confirmations of transactions increase trust and accountability across the system.
  5. Developer Mindshare — Bitcoin is a “dumb”, predictable network with simple rules and a publicly-auditable codebase. It is fertile ground for the development of complicated algorithms, machine-to-machine payment protocols, smart contracts, and other tools. Its decentralized nature allows for innovation without permission. Altcoins (such as Litecoin and Ethereum) pose little threat as Bitcoin is already dominant as a store of value and as a medium of exchange in the cryptocurrency space. If you harbor doubts about the importance of this currency network effect — or worry about altcoins overtaking Bitcoin in some other way — I would point you to Daniel Krawisz’ insightful and though-provoking article on the subject: “The Coming Demise of Altcoins“. Ultimately, developers will continue to flock to Bitcoin.
  6. Financialization — Bitcoin will eat up progressively more of the market share of legacy banking institutions in areas such as remittances, micropayments, peer-to-peer lending, and the exchange of stocks and securities. This process has already begun (consider NASDAQ’s support of Open Assets/Colored Coins for the transfer of securities, NYSE’s investment in Coinbase, etc.). Old money risks dying out lest it embrace new protocols such as Bitcoin.
  7. Adoption as a World Reserve Currency — Eventually all transactions will be settled on the blockchain, including house titles, stock purchases, car titles, and other monetary instruments and currencies. Network effects one through six culminate in this final network effect. Any newcomer in the realm of cryptocurrency — or traditional currency, for that matter — would need to beat Bitcoin in all seven of these areas. This is unlikely considering the pace of development in Bitcoin Core, the level of investment in Bitcoin companies around the world, the growth in Bitcoin’s user base, and on and on… Further price increases will only accelerate the process. Finally, a speculative attack could dramatically boost the value of Bitcoin almost overnight.

Bitcoin is a strong currency: it thrives on the internet; it frees its users from 3rd parties; it saves merchants money; it is deflationary; its code can be audited by all; its developers work tirelessly to improve upon it; the list goes on. The above-listed network effects can only serve to strengthen it. Competitors beware.


READ THIS NEXT: Speculative Attack, by Pierre Rochard

An excerpt from the introduction of “Speculative Attack”:

Bitcoin will not be eagerly adopted by the mainstream, it will be forced upon them. Forced, as in “compelled by economic reality”. People will be forced to pay with bitcoins, not because of ‘the technology’, but because no one will accept their worthless fiat for payments. Contrary to popular belief, good money drives out bad. This “driving out” has started as a small fiat bleed. It will rapidly escalate into Class IV hemorrhaging due to speculative attacks on weak fiat currencies. The end result will be hyperbitcoinization, i.e. “your money is no good here”.

27
Jul

Extropy +11: When Civilizations Meet

by adminadam in articles

Monday, July 26, 2010

(FROM THE PHYSICS ARXIV BLOG –> here.)

The Fermi Paradox, Phase Changes and Intergalactic Colonisation

A new model shows how the spread of ET civilisations can undergo phase changes, providing deeper insights into the Fermi Paradox

In 1950, the Italian physicist Enrico Fermi raised the question that now bears his name. If there are intelligent civilisations elsewhere in the Universe with technologies that far surpass our own, why do we see no sign of them?

Since then, the so-called Fermi Paradox has puzzled astronomers and science fiction writers alike. And although there are no shortage of ways to approach the problem, nobody has come up with a convincing explanation.

Now there is another take on the problem thanks to a new approach by Igor Bezsudnov and Andrey Snarskii at the National Technical University of Ukraine.

Their approach is to imagine that civilisations form at a certain rate, grow to fill a certain volume of space and then collapse and die. They even go as far as to suggest that civilisations have a characteristic life time, which limits how big they can become.

In certain circumstances, however, when civilisations are close enough together in time and space, they can come into contact and when this happens the cross-fertilisation of ideas and cultures allows them both to flourish in a way that increases their combined lifespan.

Bezsudnov and Snarskii point out that this process of spreading into space can be easily modelled using a cellular automaton. And they’ve gone ahead and created their own universe using a 10,000 x 10,000 cell automaton running over 320,000 steps.

Continue Reading __ here.