The public will perceive bitcoin miners as bitcoin validators, and it will prevent the framing effect.
This opinion editorial is by Doc Sharp, a Bitcoin product designer who has been funded by Spiral in order to support various bitcoin FOSS projects.
Anyone who has been in the digital asset space for a while knows that almost all projects, with the exception of bitcoin, are able to create effective public relations to promote their decentralized only-in-name (DINO). project. It's not surprising that the tens and billions of dollars raised over the years had to go somewhere. And it certainly did not go towards building new technology.
The public relations aspect of bitcoin is lacking in one area: the way blocks are validated. This is colloquially known as proof-of-work (PoW), or mining.
First, how does mining work?
Bitcoin miners use PoW (which uses energy) to locate a needle in the haystack. They use the needle to create and add new blocks to Bitcoin's blockchain. The miner is rewarded with newly-minted bitcoin when the new block has been added. This is the best way to reach network consensus and create valid blocks. You can read more about bitcoin mining here.
Bitcoin mining is like looking for a needle in the haystack.
Bitcoin Mining and The Framing Effect
Green narratives are increasingly important in an age where capital is directed by criteria such as environmental, social, and governance (ESG) scores.
This is why the perceived high energy cost of mining bitcoins and the term mining, which are associated with environmental destruction, have become barriers to bitcoin adoption. DINO projects use this red herring to discredit bitcoin and to pump their cash.
Bitcoin mining is relatively low in energy consumption and is mostly green. These realities are often overlooked by people due to cognitive bias called the framing effect.
"The framing effect" is a cognitive bias that allows people to decide whether options have positive or negative connotations.
The term mining has many negative connotations. See image below. Because of the framing effect, there are many digital assets that offer similar solutions to bitcoin. They have a smaller environmental footprint and can be preferred by naive users.
This is what people think about when they hear the word mining.
Although I won't go into details, the "greener" solution of proof-of-stake is not viable and will eventually lead to centralization. It's not surprising that people choose to make decisions based on superficial reasons such as their views about energy.
The prospect theory is a psychological theory that explains why the framing effect exists.
The prospect theory states that people are more affected by the prospect of losing money than they are by the prospect of earning the same.
The gain of PoW (More energy usage, but decentralized) is more than the loss PoS (Lesser energy use but centralized). It's not difficult to see the loss from an environmental perspective.
This is made worse by sensationalist pieces like "Bitcoin uses more electricity than many countries" that claim climate change is a major societal problem. What is the best way to do that? It is important to circulate frequently. This is how the framing effect manifests, as people are only shown one frame (the environment one).
What can we do to get people to see that bitcoin mining doesn't boil the oceans, but is a smart use of energy? We could learn from the DINO handbook and use narratives with less negative connotations to our advantage.
This could be used to mine bitcoins. It's simple.
Let's call Bitcoin miners, Bitcoin validators
The Ethereum 2.0 merger has seen Ethereum move from mining with PoW to validators with PoS. Ethereum 2.0 merge will eliminate mining and miners as we know, with claims of up 99.5% energy savings.
These energy savings come at the expense of decentralization, which is a red herring. Without decentralization, cryptocurrencies are useless. Even if the energy consumption of a centralized public cryptocurrency is small, it's still 100% wasted because the network has failed. This is what Bitcoiners know and why they will never alter the code.
We are back to the framing impact. Due to the marketing efforts of DINOs, validators has a much higher positive connotation than mining. People will see the term with a lower number of negative connotations. People will be able to see the benefit of PoW (More energy consumption, but decentralized) better than the loss from PoS (More energy usage, but centralized).
DINO has done the hard work by changing the narrative to PoS > POW. We can leverage this effort to our advantage, just as DINO has done it time and again by using the bitcoins name to justify their Rube goldberg machine.
By calling bitcoin miners bitcoin validators, you can stop the framing effect and shift the narrative to PoS POW. The use of the same term for Bitcoin and Ethereum makes it easier to understand the differences. It is also technically more precise and explicit because validators (miners) produce valid blocks.
Here are some mining terms that we need to change.
Bitcoin mining pools = Bitcoin validater pools
Bitcoin miners = Bitcoin validators
Bitcoin mining = Bitcoin validating
Re-framing PoW mining as PoW validating will help bitcoin in the long-term. This is because it will prevent the framing effect, which is a cognitive bias that causes people to make decisions based on the connotations of options.
Mining = negative connotations.
Validating = Positive Connotations (thanks Ethereum).
Doc Sharp contributed this guest post. These opinions are not necessarily those of BTC Inc.
Frequently Asked Questions
How is gold taxed by Roth IRA?
An investment account's tax is calculated based on the current value of the account, and not on what you paid originally. All gains, even if you have invested $1,000 in a mutual funds stock, are subject to tax.
If you place the money in a traditional IRA, 401(k), or other retirement plan, there is no tax when you take it out. Capital gains and dividends earn you no tax. This applies only to investments made for longer than one-year.
The rules that govern these accounts differ from one state to the next. Maryland is an example of this. You must withdraw your funds within 60 calendar days of turning 59 1/2. Massachusetts allows you up to April 1st. New York is open until 70 1/2. To avoid penalty fees, it is important to plan and take distributions in time to pay all your retirement savings.
How is gold taxed within an IRA?
The fair market value at the time of sale is what determines how much tax you pay on gold sales. Gold is not subject to tax when it's purchased. It's not considered income. If you sell it later, you'll have a taxable gain if the price goes up.
Loans can be secured with gold. Lenders seek to get the best return when you borrow against your assets. Selling gold is usually the best option. There's no guarantee that the lender will do this. They may just keep it. Or they might decide to resell it themselves. Either way, you lose potential profit.
To avoid losing money, only lend against gold if you intend to use it for collateral. You should leave it alone if you don't intend to lend against it.
What precious metals can you invest in for retirement?
These precious metals are among the most attractive investments. They are both easy to trade and have been around for years. They are a great way to diversify your portfolio.
Gold: Gold is one of man's oldest forms of currency. It is very stable and secure. It's a great way to protect wealth in times of uncertainty.
Silver: Investors have always loved silver. This is a great choice for people who want to avoid volatility. Unlike gold, silver tends to go up instead of down.
Platinium: Another form of precious metal is platinum, which is becoming more popular. It's like silver or gold in that it is durable and resistant to corrosion. It's also more expensive than the other two.
Rhodium. Rhodium is used as a catalyst. It is also used for jewelry making. It's also relatively inexpensive compared to other precious metals.
Palladium: Palladium has a similarity to platinum but is more rare. It's also more affordable. Investors looking to add precious and rare metals to their portfolios love it for these reasons.
How does gold perform as an investment?
The price of gold fluctuates based on supply and demand. Interest rates also have an impact on the price of gold.
Due to limited supplies, gold prices are subject to volatility. Physical gold is not always in stock.
What is the cost of gold IRA fees
Six dollars per month is the fee for an Individual Retirement Account (IRA). This includes the account maintenance fees and any investment costs associated with your chosen investments.
To diversify your portfolio you might need to pay additional charges. These fees can vary depending on which type of IRA account you choose. For example, some companies offer free checking accounts but charge monthly fees for IRA accounts.
Most providers also charge an annual management fee. These fees vary from 0% to 11%. The average rate per year is.25%. These rates can be waived if the broker is TD Ameritrade.
What proportion of your portfolio should you have in precious metals
To answer this question we need to first define precious metals. Precious Metals are elements that have a very high relative value to other commodities. This makes them valuable in investment and trading. Gold is currently the most widely traded precious metal.
There are also many other precious metals such as platinum and silver. The price for gold is subject to fluctuations, but stays relatively stable in times of economic turmoil. It also remains relatively unaffected by inflation and deflation.
The general trend is for precious metals to increase in price with the overall market. They do not always move in the same direction. When the economy is in trouble, for example, gold prices tend to rise while other precious metals fall. Investors expect lower interest rates which makes bonds less appealing investments.
In contrast, when the economy is strong, the opposite effect occurs. Investors are more inclined to invest in safe assets, such as Treasury Bonds, and they will not demand precious metals. These precious metals are rare and become more costly.
Diversifying across precious metals is a great way to maximize your investment returns. Furthermore, because the price of precious Metals fluctuates, it is best not to focus on just one type of precious Metals.
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- Saddam Hussein's Invasion Helped Uncage a Bear In 1990 – WSJ
- Do you want to keep your IRA gold at home? It's Not Exactly Lawful – WSJ
Online buying gold and silver is the best way to purchase it.
Before you can buy gold, it is important to understand its workings. Gold is a precious metal similar to platinum. Because of its resistance to corrosion and durability, it is very rare. It is very difficult to use and most people prefer to purchase jewelry made of it over actual bars of Gold.
There are two types today of gold coins. One is legal tender while the other is bullion. Legal tender coins are those that are intended for circulation in a country. They typically have denominations of $1, $5 or $10.
Bullion coins are minted for investment purposes only, and their values increase over time due to inflation.
They can't be exchanged in currency exchange systems. One example is that if someone buys $100 worth gold, they get 100 grams with a $100 value. Every dollar spent on gold purchases, the buyer receives one gram of gold.
Next, you need to find out where to buy gold. There are several options available if your goal is to purchase gold from a dealer. First, go to your local coin shop. You might also consider going through a reputable online seller like eBay. You might also consider buying gold from an online private seller.
Private sellers are individuals that offer gold at wholesale or retail prices. When selling gold through private sellers, you pay a commission fee of 10% to 15% per transaction. Private sellers will typically get you less than a coin shop, eBay or other online retailers. However, this option is often a great choice when investing in gold since it gives you more control over the item's price.
The other option is to purchase physical gold. Physical gold is much easier to store than paper certificates, but you still have to worry about storing it safely. You need to make sure that your physical gold is safe by storing it in an impenetrable container like a vault or safety depositbox.
When buying gold on your own, you can visit a bank or a pawnshop. A bank will provide you with a loan that allows you to purchase the amount of gold you desire. The pawnshop is a small business that allows customers to borrow money to buy items. Banks often charge higher interest rates then pawnshops.
Another way to purchase gold is to ask another person to do it. Selling gold is also easy. A company such as GoldMoney.com can help you set up a simple bank account and get paid immediately.
By: Doc Sharp
Title: Bitcoin Miners Don’t Exist — But Bitcoin Validators Do
Sourced From: bitcoinmagazine.com/culture/bitcoin-miners-dont-exist-validators-do
Published Date: Sat, 24 Sep 2022 00:05:00 GMT