[Cryptography] What has Bitcoin achieved?

grarpamp grarpamp at gmail.com
Sun Jul 20 02:21:21 EDT 2014


On Thu, Jul 17, 2014 at 4:02 PM, John Levine <johnl at iecc.com> wrote:
>>But none of them will have the property that their currency is not
>>under their control. Other than the obvious head start bitcoin has
>>in the digital currency game, that is what bitcoin offers
>>philosophically... freedom from control.
>
> I realize that's the theory, but in reality, there is a mining pool
> that could easily grow to be more than half of all the miners, at
> which point it could start ignoring blocks from outside the pool,
> which would be to the benefit of people inside the pool.  So long as
> the cost of joining the pool remained small, e.g., if you join you
> still get 98% of the coins you mine, this looks to me like it would be
> a stable situation, no matter how much outsiders complained about how
> awful it was.

Thing is, having seen the possibilities, people actually *want*
this freedom from central control, in a bad way, and they're willing
to act to get it. They also realize that if they, and the entire
community, don't act together to maintain the decentralization they
have... then it's over. That's why ghash.io (the largest pool) just
announced that they will not exceed 40%. Down from 55% to 32% now...

http://www.coindesk.com/ghash-commits-40-hashrate-cap-bitcoin-mining-summit/
http://www.coindesk.com/bitcoin-mining-detente-ghash-io-51-issue/
http://blockchain.info/pools

And why BTC isn't exactly rushing to support regulation...
http://www.reddit.com/r/IAmA/comments/1ygcil/as_requested_im_ben_lawsky_superintendent_of_the/
http://www.reddit.com/r/Bitcoin/comments/2aycxs/hi_this_is_ben_lawsky_at_nydfs_here_are_the/
http://www.reddit.com/r/Bitcoin/comments/2b1jpl/dear_ben_lawsky_thank_you_for_the_totalitarian/

Further, again, since people want decentral, if some large entity
does manage a BTC takeover, no problem... all users ok with that
will stay with the now central coin, and the free decentral people
will just exchange their coin (or fork) into whatever is the current
decentral coin. Repeat as needed.

So far BTC has a good history of actively cooperating to avoiding
central. Excepting mining companies (ie: the 10% corps, who have
made similar self limiting statements), the VC money seems to stay
out of the coin itself and is being placed in surrounding service
ventures... exchanges, banking, processors, wallets, retail.

In the end years from now, maybe only three coin will remain...
- A World central
- A State central
- A World decentral/anon/etc

With all of them being roughly similar in acceptance, volatility, etc.

> There also remain long term questions about the technical viability of
> Bitcoin, most notably whether people will still find it interesting
> after the transaction cost rises.  (If a transaction costs a dollar,
> there's a lot of other options with much less price volatility.)

People spend more than a dollar to post mail, or drive to the store.
It will be a long time before the ASIC and electric cost to clear
a transaction (at whatever network transaction demand rate) exceeds
palatability, if ever. Pick a projected compute power, node count,
required tx rate (at 100% utilization) and then basically figure
gigawatt and gigahash dollars per tx.

http://www.coinometrics.com/bitcoin/btix
https://bitmaintech.com/productDetail.htm?pid=00020140704023505485N5SxDMkW0693
https://medium.com/@interdome/how-much-electricity-does-bitcoin-use-c350bd84c64e
http://organofcorti.blogspot.nl/

A guesstimate with current state and data?

- Installing double current hashrate to take 50+% costs about $130M
  in retail hardware alone. Less for a real deployment.
- About $10k/hr to power it. More for cooling, support, bandwidth.
- About $0.40/tx-current spread over a year. Much less if running
  at 100% tx rate capacity. Up to twice more due to doubling current
  hashrate.

Right now that amount is being covered by coin mining profit.

The future taper of coin production vs then current market value
of coin vs tx fees will be interesting. And ASIC platforms have yet
to reach performance plateau. The base tx cost is cost of the coin
algorithm to support a given required tx rate. That seems quite
low. The race (difficulty) to claim the tx fee profit drives it up.
Yet the hardware market is open, yielding a level playing field.
So as long as the required tx rate can be met affordably within the
algorithm, this is unlikely to be an issue.

Cost of tx rates also naturally moderate the proportion of users
amongst each payment system. It remains to be seen, once all the
various BTC costs are fully optimized, if BTC can handle tx rates
approaching the credit cards. Even if not, that doesn't keep it
from utility at its own natural rate limit.

Some seriously big players don't seem to have any problem with BTC...
http://www.coindesk.com/computer-giant-dell-now-accepts-bitcoin/

> To me Bitcoin is very interesting as an experiment.  It shows that
> within certain parameters, the distributed proof of work model is
> viable.  I doubt that anyone anticipated the grotesque amount of
> computing resources that people would throw at it, or that there would
> be mining pools.
>
> The model is likely useful for applications like distributed notary,
> particularly if there are several mutually suspicious groups
> participating which makes it less likely that any one of them could
> take over.
>
> It's also impressive to see the number of economically ignorant
> enthusiasts who imagine there is something innovative or disruptive
> about a commodity bubble, which is what Bitcoin is.


Well, since BTC is nothing but experimental scrap metal, please be
sure to send yours (and that of all your central fiat loving friends)
off for proper recycling to my recycle bin here...
btc:1C96B6DszNqnX4KRzveu6BKRuznmmdFhdm

Liked or learned something from the links, etc? Tips go here, I'll
buy a miner / tx processor, or do something generally useful...
btc:1D6rPeQUETfGpSp2JB2oojJUC8GiURyhp7


More information about the cryptography mailing list