[Cryptography] Satoshi's PGP key.

Ray Dillinger bear at sonic.net
Fri Dec 18 21:15:09 EST 2015

On 12/17/2015 04:05 AM, Jerry Leichter wrote:
> Ah.  So you think owning Bitcoins is a bad idea, then?

At the moment, yes.  I made some money on them, but I sold out.

Satoshi has enough that s/he has a huge target painted on his/her
butt, but even if you don't own enough for that to be an issue,
it's still a bad idea.

According to my math the protocol promotes mining consolidation,
and the winning tactic for a consolidated miner amounts to a
partial DDoS.

Once anyone has more than 1 - 1/Phi of the mining power, and
there is enough *actual* demand to fill more than half of each
block on average, then even if everybody else behaves optimally
(which they don't) that miner gets rich faster than all other
miners (at a higher rate of return on expense) by keeping the
blocks, on average, half full of transactions in order to force
up the fees other people pay.  It will cost the consolidating
miner fees, of course, to prevent other miners from accepting
tx below that fee level - but he'll get whatever share of them
back that he's getting of the blocks, and he (and all other
miners too) makes more money on all the other tx.

In practice the tactic (durst call it an attack?) works even
better than that, for two reasons: first because doing it even
occasionally makes people reset their fees to "enough", and
then those settings stay high even when the miner isn't
inflating block chain traffic.  Second because the consolidating
miner has a cost advantage in being set-up where expenses are
lower than average competition.  Both factors dramatically
reduce the amount of mining power required to reach the
inflection point for consolidation and eventual monopoly.

In China bitcoin mining is essentially a way to launder stolen
tax money, (subsidized electricity is profligately used,
courtesy of the taxpayers, and then re-emerges as bitcoins
which the profligate users get to spend) so this stronger
centralization dynamic is definitely in effect.

Anyway, with the vast majority of bitcoin mining already being
done in China, and the entity whom I suspect is or soon will be
the consolidated miner present in that country masquerading as
multiple pools in order to prevent a panic, I think the Chinese
government is already in a position to allow or disallow pretty
much any transaction they care to.  When the masqerade fails,
or when China exercises the coercion option, I expect bitcoin
values to drop precipitously.

Until then, it has become a sham.  What Satoshi and Hal worked
so hard to bring about, has already failed, and it makes me sad.

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