Zcashs Proof of Work: does it affect Market Value?


#21

Wow… your numbers are a little off
all percentages = down from July 2018 levels
Sometimes I think you post bad information to get people to do the work for you!

BTG 64%
ZEC 78%
BitCoin 53%
Sia Coin 89%
Nitro (NOX) 97%
ChainCoin (CHC) 99%
Experience Points (XP) 93%

and BTG IMO will soon go the way of SiaCoin NOX CHC and XP…

and as long as you keep saying things that are not true I will keep posting the truth


#22

After 9 months of ASICs, ZCash has lost 70% to 80% of its value compared to July 2018. Our Forums member @nec (regardless of the fact that every other coin from July 2018 is down 50% to 99% of its value from that time) humbly propose to discuss the benefits of asic mining.

What are the pros?

Is there anything positive that asics give to ZCASH?


#23

july BTG ~0.0040btc, now ~0.0031.
july ZEC ~0.027btc, now ~0.012.

still can not see it?


#24

See that Zcash and every coin is down, yes I can see it, no denying it.

But that it is ASIC’s that have caused it… nope

Monero is trying to be ASIC resistant is down USD 65% from 07/18
July 2018 0.0197 and 03/11/19 0.0128

BTW my % is based on USD

Out of curiosity, what do you think the value of Zcash would be right now if it had stayed GPU; and justify it.


#25

I don’t think anyone could give you an exact measurement, however, ASICs definitely affect the price of a coin when they first start up.

Since I don’t have time to attempt to put together a bunch of research, think of it this way.

It’s the gold rush, and everyone is mining wish shovels. All of a sudden, someone has a backhoe. Since they are orders of magnitude more efficient, they will begin flooding the market with more gold than all of those with shovels. At this point, it’s a simple supply and demand equation. Those with the early equipment want to ensure they hit ROI, which in theory should cause a race to the bottom by those bringing in the most ZEC (those with Backhoes in the analogy, or those with newly created ASICs). This will stop once that bottom is hit, and then the market will continue back on its trajectory, and those mining are it for ZEC, ROI, and Securing the network.

I would argue a lot of the GPU miners were mining for coins to own, while those with the first ASICs were primiary worried about fiat currency.

This is speculation, but what I truly believe is happening. I did it myself with the L3+'s, and saw tons of others doing the same, so I know it would also be occuring for ZEC.

That all said, it’s a one time shot from GPU to ASIC, and then smaller impacts and ASICs improve their hash rate. But the jump from GPU to ASIC is a big one, and there was lots of short term money to be made.


#26

Actually you miss an important point. The amount of daily mined ZEC is the same, no matter if it’s 1 GPU, 1,000,000 Asics, or 100,000,000 CPU’s. The daily mined ZEC amount is just the same.

The only difference that might occur (and nobody can proof) is that asic miners might dump the mined coin faster or immediatly. We don’t have digits and numbers to backup this theory and it could be or could not be like that. To be fair, it would make especially with ZEC sense to dump them immediatly with a currently ~45% inflation rate. I sold all my ZEC which i mined than back and had from bevor due exactly this.


#27

Seems this topic again went Asics vs. GPU.

As the topic is POW, does it affect market value here some thoughts, arguments why POW does affect market value in a negative way, especially nowadays.

  • With POW there are only 2 winners, hardware producers and electricity companies. Both get the major pie out of POW mining.

  • It’s a useless arms race today, more at asics but as well with gpu’s versus fpga’s. It’s all about the better, more efficient, more hashrate hardware which at current prices never will ROI, absolutly never ever.

  • All the money invested into hardware and daily electricity costs is drawing out crypto money, creating more supply and sell pressure than demand, lowering value, forcing value out of crypto space as hardware and electricity is paid with FIAT.

  • POW today doesn’t create any incentive to hold coins as an affect of the above. Miners must pay for electricity, new hardware, repairs, maintance and others stuff. Additionally most coins have medium to high inflation wich again is not an incentive to hold coins. Additionally more and more projects go POS or POS like, creating again more competition on the remaining coins, no matter if asic or gpu, leading again to less profitability in mining. Less profitability => less money left in crypto space.

  • Additonally adding here the security concerns with POW as these of course have an impact into market value as well. The more possible attack vectors and weaknesses, the less value of the network, at least imo. Most of these possible attack vectors even can’t be fixed and are just a product of the flawed POW design.

  • Not sure of how much mining centralization has an impact into a coin market value, but i’am pretty sure, just following common sense, it could have some major impact at some time. Just as an example. Let’s say 90% of a given coin are mined in china and a sudden for whatever reason mining or the coin are influenced somehow with restrictions or whatever. This would have a major impact for sure.

  • And last but not least, it’s a myth that POW mining is mass adoption. Actually it’s one of the biggest burdens to mass adoption. Only financial backuped people with enough technical skill can participate in mining. Neither my monther, nor my father, nor my daughter are able to mine. Sure, there might be families where everybody from granddad to the little 5 year old borther can mine, but that’s an expection. POW mining was a dream of get rich fast thinking and is, for some unclear reason, still just that.

None of the points mentioned above creates a single advantage with POW, not a single incentive to hold a coin, even not a single economical reason why it would be more profitable to mine than to buy a given coin, expect you are settled in a really low electricity region.

Without any advantage with mining and 0 incentive on holding POW mined coins i’am convienced that that POW mining has a very negative impact on market value nowadays. Designed to fail.


#28

The technical reasons above… probably all true, but psychology drives price more than anything, and PoW decisions profoundly affected psychology.


#29

I didn’t miss that point, It’s that one guy shows up with a backhoe and basically can outwork 100 people. Said person will start to flood the market before others get backhoes as well, since they will lose their competitive advantage. I probably didn’t explain it well enough - we all know that crypto has set emission rates, so obviously there isn’t more Zcash, it’s just cheaper to get with early ASICs. I can tell you could see where I was going with that.


#30

Fair enough. But how many even care about POW decisions? A handfull asic miners?
In the last AMA in was mentioned that a lot of big investors would like to see POS for example. There is a reason behind that.

However, i doubt that the POW mining psychology affect will counter our ultra high inflation and as said, no incentive to hold something that will the next ~2 years will continously lose value.


#31

How long can we discuss the same thing?

Do not try to compare Monero and Zсash. They are absolutely at different stages of development and emission. Who is ready to say that everything is OK on the monero network? Endless forks, with hashrate falling to critically low levels.

In a falling market, such as now, the presence of ASICs in the network is a critical level of protection for POW-coins, as they continue to dig even in spite of price cuts. Because, owners of ASIC-miners have no other options than to continue mining.

As for the POS and the supposed incentive to hold coins:
POS - it’s net inflation.
POS - it’s a reward with no added value.
POS - i’ts when makes no sense to spend coins and pass them on.
POS - it’s worse than fiat.

Be patient and after 8 years you will see that Zcash power network will where today is the Bitcoin network. This is a natural economic reasonable evolutionary process.

If you want to change something, just do it. 11118… fork. Don’t touch Zcash.


#32

That’s simply wrong and applies only to the top coin of a given asic algorithm and does in NO way apply to all other tokens/coins on it.
To back up the argument 2 recent examples: BTG wasn’t the top coin on equihash and ETC wasn’t the top coin on ethash when 51% attacked.
Leave alone the fact that falling markets increase the incentive not to honest mine IF the given hardware isn’t anymore profitable anyway.

There is always the option to shut down the mining operation and/or to use it for an attack in worst case.

Seems you mess up POS with Airdrops. The above is simply not true.

Either you have an incentive to spend a coin or not. It doesn’t actually mean how it is mined to decide to spend it or not, to use it or not. There are other factors that drive the incentive of usage of a given coin.
Only thing that give some incentive not to spend the coin is by supporting the network and staking and getting some reward in exchange. That’s all about fair in my opinion, but this does not mean you can not spend that coin as you simply can whenever someone decides.
Now the counter argument of having a coin mined by POW that got dumped continously lowering it’s price weekly. Leave alone high inflation rates in our case.

This one doesn’t make any sense. We are talking about consensus types. But ok, let’s make a counter argument: POW is way more unfair distributed as FIAT and POS, POW is (will be) way more centralized as POS, POW adds nothing to mass adoption and so on …

POW was a good unique idea than back, in theory, but designed to fail soon or late.


#33

You’re always right to cite high inflation as a huge influence on price (I’d say mostly due to psychology!)

Maybe I’d make my point more clearly if I asked this question first: Was this community ever active? I assume it was, before my time, but now the forum is a ghost town and 60% of discussions devolve into tribal PoW bickering. Think about how that affects outside onlookers. This forum is the face of the zcash community, and it looks to a newcomer like the people who didn’t pack up and leave are just fighting each other over minutia, not doing much interesting building or even brainstorming

(I don’t want to offend anyone reading this. I think both sides of the ASIC debate have a point and I am not interested in getting into it. I think you’re smart. No flame plz)