For quick consumption watch at 1.25x speed.
BBT Carter has recently returned from attending CES2018 and The North American Bitcoin Conference 2018. In those visits, he has talked with Industry Leaders, Directors of Products, CEO's, COO, CTO's of many companies, contributors to cryptocurrency development, ICOs and Investors. Given Carter's unique background as a Principal Solution Architect, responsible for building many successful solutions for large fortune 500 companies, civ and government, the articulation of the current state of cryptocurrency seems in order. While Carter is NOT a accredited investor, nor a financial adviser, a duty seems in order to bring an information scoped state of the union around the cryptocurrency space, including mining. This livestream will be in the form of a speech and delivered as such. Currently it is sitting at 2940 words and runtime is roughly 24 minutes. This was written and prepared by BBT Carter. Q&A / AMA will be in another livestream later this week.
Agenda
Opening Background
Cryptocurrency Function
State of Cryptocurrency in 2018
Infrastructure - Investments (CES2018/TNABC)
Mining Background
Mining ASIC
Mining GPU
Mining Forecast 2018
Closing
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Raw Transcript:
For quick consumption watch at 1.25x speed.
For the lazy at watching youtube. My transcript: (written' by and large to read from, not as a report) so grammar freaks i hear ya:
BBT's 2018 Cryptocurrency State of the Union
Given my unique background and perspective on Mining, approach on teaching iteratively along with live problem solving, years in the space (since 2011) and the personal drive to help build the best grassroots mining community in the world, I feel a "Cryptocurrency" state of the union is in order.
Now, I would encourage fellow Crypto Mining/Channels to do their own version as diverse perspective helps everyone. My intention in 2013 with BitsBeTrippin was to be an educational source on informing the community through a grassroots approach of mining centric episodes, tutorials, livestreams and how-to’s with an audience intended to be worldwide. While some do not like that approach as it has a genuine net effect of increasing mining difficulty as more get into the space, there is a very interesting macroeconomics effect created from having more people contributing.
Now what do I mean by that exactly? By the very action of you participating and providing your portion of service, not only are you awarded a proportion share of the mining rewards, you build a one to many connections with friends, family and people that find out your mining and ask questions, building their confidence in the very cryptocurrency chains you are making your contribution to. Those blockchains and their associated features and utilities then get many counterparties that may very well make a purchase vs. mine, in addition offer a new gateway of understanding how things could be in a point to point transaction paradigm. This can also invoke the creativity of your friend, a developer, that too starts their own research, inspired by your mining, and decides to take their javascript skills and began to learn how to apply and augment those skills into something like a Ethereum dApp (Developing a Decentralized application), thus providing future features and apps to the ecosystem, which become utilities using the very cryptos you are mining.
Additionally, low friction transactions, such as Dash and Litecoin, that are very quick transfers of value, and give confidence to the receiver as they do not have to worry about chargebacks, creating an extremely trustworthy method of exchange. Lastly given the basics of supply, demand and deflationary properties of a published schedule, limiting supply coins, such as Bitcoin, and many others the concept of store of value is augmented due to the very nature of private key cryptography where you own your coins and nobody can take them from you as long as you have your private keys stored in a safe place or on a hardware wallet.
Now … many factors augment the speculative value of cryptocurrencies; functionality, utility, rarity, finite and finality are all contributing factors… Functionality and utility are easy to see, if I want to right now transfer without question any particular amount from one human to another on this planet, nearly in real time, with hardly any friction I can. Before cryptocurrency we would have to use a trusted third party to do this activity or take risk of transporting physical cash point to point. No question of utility. Rarity is kind of tied to the finiteness, however, rarity also is avail supply for sale on the exchanges at any given time, avail limited supply vs. total potential buyers makes most cryptocurrency ‘rare’ vs. other traditional assurance which roles into the finite supply discussion. Total avail supply is a fact, its mathematically verifiable by the open source code and auditing the blockchain explorer. To change this requires significant consensus across all nodes/miners. And lastly the finality, meaning once a transaction is created and broadcast to the network and confirmed, its done, no takebacksi’s. If there is an intention to revert the immutable transactions and not consensus you have a split, see Ethereum and Ethereum Classic history for deeper reference on playing with the blockchain history.
Now I know you did not tune into this to hear about basic background on how things tick... So, what is the outlook, where things are going this year in 2018 and beyond? So from my perspective, here we go:
First around cryptocurrency in general and ecosystem stability.
This year, like last year, extensive infrastructure is underway, both physically and virtually in supporting the purchasing, selling, transacting and scaling of cryptocurrencies and associated tokens of utility and securities. Make no mistake, cryptocurrency and tokization of nearly everything is full scale underway. The one glaring observation at our most recent trips to CES2018 and TNABC was the fact there is extensive amount of resources and large companies under full scale development, implementation and notional planning around this entire sector.
- But, where is the proof? Notional plans have been presented around the transfer of bitcoin mining power moving/distributing worldwide (US, Canada, Russian) underway with extensive expansion. Bitfury investing significantly in infrastructure. Cargo Container transportable mining farms. Mobile farms. Just watch the Hut 8 presentation from TNABC, plan, forecast and outlook.
- In addition, extensive branding campaigns, outreach, co-branding further establish currency names, as crypto is now part of the normal daily news cycle on many financial channels now; some could see that as a bad thing, however awareness is typically a good thing that gets enables less resistance when good news is presented later
- Another instituational acceptance caring on in 2018 is the continuance of CFTC financial mechanisms in place to buy (future contracts)
- which one party guarantees to buy a product for a given price on a given date. Now in an unregulated market this allows for manipulation, incentivized short activity, but overall builds liquidity in the ecosystem and a guaranteed third party purchasing mined coins
- Another key point, Significant development of financial instruments underway
- key indicator at CES2018, many financial companies building infrastructure to trade/option/buy etc as highlighted in our coverage, large payment processors beta testing token for good exchanges at retail level for rapid exchange/utility. Majority of the strongest assets are backed by working POW/POS Hybrid models.
Why does this matter, it builds confidence in deployment of capital, the very notion of the R&D dollars, research, building agility, like the movement of containers to cheaper areas shows forward planning and commitment, in additional a hedge of risk in other assets, assets being leveraged to hold up network,
non-correlated assets, but still assets.
- key indicator at CES2018, many financial companies building infrastructure to trade/option/buy etc as highlighted in our coverage, large payment processors beta testing token for good exchanges at retail level for rapid exchange/utility. Majority of the strongest assets are backed by working POW/POS Hybrid models.
- Awareness, Innovation, Global acceptance, Regulation and Consumer Safegaurds in constant development and lastly global foundation on the liquidity side getting further developed. Many people want to purchase, use and hold cryptocurrencies; however the current options are extremely limited when compared to traditional methods of purchasing (of anything really); Limitations of taking fiat to crypto is one of the largest factors holding back growth.
- 2018 prediction is this will become easier, much easier as there are many companies wanting to get part of that transaction.
- Additionally, as more banks, regulation and taxes around cryptocurrency get situated the future state will provide more foundation around trade activity and participating in cryptocurrency through many ways than just holding the currencies directly. Now this is very centered on the how and the what of things, not the why you should participate in that way or not. The roots of this technology evolution were born out of individuality, freedom and that you can control personally, your own cryptocurrency without any third party being able to take your funds. An expansion of that infrastructure too is a 2018 prediction, where the hardware wallet will get continued innovation and more options being avail for individuals to store their various cryptocurrency keys personally. There is a huge market potential there as the count of individuals buying cryptocurrency will continue to grow exponentially throughout 2018.
Now let’s talk about price, this is something I normally steer very clear of for many reasons, including and not limited to I am not a financial advisor nor an accredited trader, however, my education, experience and understanding of economics have explained very well the way supply and demand works. As previously stated just before switching to the subject of price the presented plans at both CES2018 and TNABC was the industry declaring the growth in blockchain technology and the cryptocurrency supporting infrastructure, which would allow more individuals the ability to convert their cryptocurrencies for goods and services along with the infrastructure and regulated KYC approved exchange of fiat to cryptocurrency. If we take the basic concepts on how people will have an improved experience buying into cryptocurrency, against tokens that have limited supply, the dynamics speak for themselves. Now does that give a notional price target for any one particular cryptocurrency, no. But ones with the most infrastructure, name recognition and consisted roadmap of improvement including features, and transparent execution traditionally builds confidence for the people wanting to purchase. Current pullbacks in price can be caused by many factors, lack of confidence in pending regulation, people taking some profit (remember, the price of bitcoin at 10k is still more than triple since the aug 2017 hardfork), and there is a great interest and facilities in place to take advantage of consumer fear and pickup bitcoin and other alt currencies for nearly half its ATH. This experiment has been running for the past 9 years, its had its hiccups with debates on scaling but still to this day is running and operating. Its next halving is in just less than 870 days, on or around Jun of 2020, this like all other halving’s have had a substantial impact to price. In 2018, I will make another prediction that more coins will follow in this astute observation and may take the option of reducing the inflation rate, much in the way that Ethereum did in November with the Byzantine release, dropping the block reward from 5 tokens to 3 tokens, effectively reducing POW reward assurance by 40%. This activity while not solely responsible for Ethereum’s significant price increase from low 300's at the time to a ATH of over 1400, the confidence in the project coupled with the lack of inflation caused a typical activity when you are getting less of anything, you tend to hold vs sell. That activity can cause a reduced order book in addition to other confidence factors that cause buy activities, thus thinning out the book, drive up price. Bottom line, confidence in the space, growth in global interest and reduction of inflation influence price over the course of the year. Given these factors, my position personal position on this makes it my outlook as bullish over 2018 on most all of the minable POW tokens.
Now I would be remised if I do not cover the subject of Mining, including GPU mining. This has been a very hot topic over the last few months heating up even more over the last few weeks due to the huge run-up in graphics card prices. Now for the sake of newer viewers; cryptocurrencies that are mineable, are done so with one of a view types of hardware, depending the underlining algorithm. For coins such as Bitcoin, Litecoin, Dash, Doge and soon to be Decred and Siacoin, these are mined with ASIC chip based machines, which are specialized chips that are focused on performing the Proof of Work and transaction validation activity for the associated blockchain. For their effort, the machines are compensated for their service as long as the pool they are pointed to is awarded a block, i.e. the pool wins the proverbial lottery for the rights to mint the transactions that occur just after the last block is created. This happens most of the time during the notional blocktime of the rules within the code making up the blockchain. I.E for Bitcoin, every 10minutes, the transactions that have occured are posted to the blockchain by a miner that solves a proof of work solution, the rest of the mining network agrees this solution was solved thus a consensus is formed around the transactions within that latest block. Now for that effort, they are compensated in the respective coin. Now in most pools, the contributing members of that particular winning pool shares periportally their particular shares of effort vs. the total of the pool. Now why I am explaining this to you? Because ASIC mining and GPU mining do essentially the exact same thing, however algorithms such as SHA256, which is what bitcoin is based on and soon Blake256, decreds algorithm, are solved by these specifically designed mining machines that are exponentially computationally faster than a traditional GPU mining rig. It’s a simple math problem, a modern GPU rig can put out 6.5 Gigahash SHA256 for 6GPUs these days at a cost of 3500+ USD, yet a ASIC can put out up to 14.2T/H for the same cost. So 6.5 billion vs 14.2 trillion hash at the same hardware cost and roughly same amount of power usage. The striking thing this year with ASICs is not focused on the innovation that maybe coming from that space more than staying centered on the concept brought forth at TNABC regarding mobile hash Containers and potentially large entities entering the mining scene to getting staged to participate in the potentially trillion dollar market caps projected by some. This isn’t BBT telling you this market is going to be worth trillions, I am relaying what we have seen at both of these latest conferences, where company’s like Hut8, that recently partnered with Bitfury with the intention to containerized large amounts of hashpower and at a moment’s notice be able to force project these 7+ Petahash mobile farms anywhere in the world; where they can get an ink a deal for good regulatory structure, tax, network connection and cheap power. Additionally, having other blockchains now entering the ASIC scene a whole new breed of ASIC solutions are coming out around Decred and Siacoin show further investment in the industry around that custom chip solutions.
So, now let’s address the proverbial elephant in the room, GPU Mining. If you are a follower of our channel you would know GPU Mining is our position when educating the common gamer and crypto enthusiast on getting into cryptocurrency mining, build approach, how to guides and livestreams giving you the cradle to grave builds. Our concept is simple, anyone on this planet can participate, right now, with the computer you have. You can exchange some cycles of your computer to participate on one of many cryptocurrency blockchains and for that service provided, you are compensated in cryptocurrency. With that earned cryptocurrency you can then exchange for other cryptocurrencies, hodl or 'spend' like traditional fiat at places that except cryptocurrency. The barrier of entry for anyone is a little time, learn the basics, get a wallet of the currency you want to mine, download the mining software, repoint to your wallet and go. Now again, if you watch our channel, its filled with hours of trying to help you mitigate issues you may run into, but the point I am trying to make is there is a huge network effect that occurs when potentially millions of individuals can contribute to a network, be compensated in a token. Given the nature of trade you can exchange your earned token, at any given time between fellow individuals without the need of a third party. This puts you at the ground level, at the mint of the token allowing you direct compensation for the work effort on the equipment and encourages the concept of exchange for other things you feel are more valuable to you. GPU mining allows anyone to do that as most folks with a computer have a GPU or CPU capable of mining during idle times. There are many GPU / CPU minable currencies, the largest being Ethereum, Zcash, Monero, Ethereum Classic and many others. That diversity and feature sets both from a platform, utility (i.e. gas based coins like ether/or ubiq) and transactional security and obfuscation such as Monero, continue to provide innovation through planned roadmaps and new utilities for individuals wanting to leverage the feature sets provided. Now part of the rub with GPU mining is the fact mining these tokens, in the most efficient and substantive way, requires using the top tier of GPU types, both from nVidia and AMD. As the popularity continues in the cryptocurrency space and prices reached near all time highs at the end of 2017, much of the world supply of available medium to high end GPUs were bought up. This creates a unique pricing situation around retail and wholesale GPU prices. Current, at the time of this speech, prices have hit nearly all-time highs in prices for modern GPUs. This has negative consumer effects to the general core consumer of these products, such as Gamers and content creators. As part of this state of the union and given our holistic look at the industry in general the outlook on GPU mining is not going to settle down anytime soon. From my vantage point I see one of a few things happening in the next 6 months through the rest of this year. First, even with the recent downturn in pricing, given what I have just covered on the bullish outlook in the space, a recovery of interest, price and bull rush market will happen and happen quick coming out of the second quarter. Price creates a frenzy on these products and from my observation over the past 6 years is not very correlated with mining short of the situations where assurance levels are reduced. Slow transaction speeds, arguments by core developers, miners swapping hashpower between coins, nothing really effects the price in a correlated way. Seemingly, even news sometimes has no effect, some of the strongest impact has been from mass media attention more than actual network effect related items. That being said, any rapid price increase and/or bursting through current recorded all time high’s is going to lift the entire industry, thus putting increased pressure on the mining scene to acquire GPUs and ASICs accordingly. The risk not to have companies like nVidia and AMD not to react at least with a declared strategy will be detrimental to the entire space.
From a forecast, my predictions are as follows:
- The biggest potential disruption to GPU Mining will come from Ethereum’s move to Casper, but given its notional plan on Proof of Stake, the first release is hybrid. PoW will mine 99 blocks to 1 PoS block checkpoint. This will introduce a slow roll switchover to PoS over an unknown schedule. The only thing we do know is POS is coming and its notional target is 2018 (sometime). The effects will be more phycological than a real ‘felt’ effect with the hybrid model, but time will tell how stable the transition is and how the effects of IceAge will be once kicked off.
• So, the big question is, will the other POW coins be able to handle the hash transfer? Coins such as Monero, Ethereum Classic, Ubiq, Pasc, Feathercoin, Library Credits, Vertcoin and others will pickup a lot of network POW security once Ethereum goes full POS
• I believe one of the biggest counterbalances to this will be the advent of a Proof of Effort based token, also known as distributed computing platform, first coming in the form of a hybrid POW/PoE variant. The potentially has the potential to be the biggest game changer GPU mining scene as a distributed hash/compute power model would effectively be a global supercomputer deployed to the participating mining nodes. Bottom line, that are potentially millions of cuda cores out there just waiting to be leveraged in a parallel fashion. With AI. Blockchains and Machine Deep Learning starting to pair up with Blockchain technology, its just a matter of time that the demand for compute power will outweigh current cloud compute providers and/or be cost prohibitive for indy developers working on machine deep learning optimizations and would like to leverage a distributed, decentralized blockchain enabled token that provided access to potentially tens of thousands of mining rigs simultaneously. 2018 will be the year of at least the initial coins coming out leveraging a PoW/PoE hybrid solution
Lastly and in closing, 2017 was a banner year for the cryptocurrency and blockchain space. Institutional integration, SEC stepping up enforcement on ICOs, Crypto’s being covered by the 24hour news cycle, Billions funding over hundreds of projects, 1 blockchain developer to 14 open positions per Blockchain Academy statistics and financial institutions succumbing to the pressure of evolving and learning what they can about crypto and the space. 2018 will be not only more of the same, but the fruits of a lot of the last 6 months in 2017 will be coming to bear in the coming months. The one thing I notice a lot of people miss when talking about current events is the fact that progress is always delayed by at least a quarter, meaning while your talking negatively about a current event, the next day the progress report by a company working in the space for the past 6 months on a project gets an update and can overnight change the tone. Getting a glimpse at CES2018 and TNABC at some of these projects, many forecasted initial deliveries over the next few months which will undoubtedly bring a surge of confidence this industry, which will, yet again, shock the opponents of the innovation blockchain technology and supporting cryptocurrencies bring to humanity. The worlds brightest minds are actively involved at enhancing, expanding and deploying new features on these prescribed blockchain public platforms, that’s a tough one to not get behind.