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Unlimited Cloud Mining Contracts Bitcoin Value Over Time

At the start of the contract, you pick what you forecast the price of Bitcoin will be over time, the duration of the mining contract, and the total hash power from your mining, based on how much you want to spend. The site will then estimate a profit, but the actual results will depend on the price of Bitcoin as you mine.

Unlimited Cloud Mining Contracts Bitcoin Value Over Time

The second problem is easy to alleviate; one simply creates a mining algorithm that forces every mining node to store the entire blockchain. The first problem, that of mining centralization, is much harder. There is the possibility that the problem will solve itself over time, and as the Bitcoin mining industry grows it will naturally become more decentralized as room emerges for more firms to participate. However, that is an empirical claim that may or may not come to pass, and we need to be prepared for the eventuality that it does not. Furthermore, the wasted energy and computation costs of proof of work as they stand today may prove to be entirely avoidable, and it is worth looking to see if that aspect of consensus algorithms can be alleviated.

One of the main problems with Bitcoin is the issue of price volatility. The value of a bitcoin often experiences very large fluctuations, rising or falling by as much as 25% in a single day and 3x in a month. The main economic reason behind this is that the supply of bitcoins is fixed, so its price is directly proportional to demand (and therefore, by efficient market hypothesis, the expected discounted future demand), and demand is very unpredictable. It is not known if Bitcoin will be simply a niche payment method for transactions requiring a high degree of privacy, a replacement for Western Union, a mainstream consumer payment system or the reserve currency of the world, and the expected value of a bitcoin differs over a thousandfold between these various levels of adoption. Furthermore, the utility of the Bitcoin protocol is heavily dependent on the movements of the Bitcoin price (ie. people are interested in Bitcoin more if the price is going up), creating a positive feedback loop, which has arguably been responsible for both Bitcoin's great meteoric rises and its many-month-long periods of rapid decline.


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