On Thu, Jul 17, 2014 at 4:02 PM, John Levine <johnl@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_supe... http://www.reddit.com/r/Bitcoin/comments/2aycxs/hi_this_is_ben_lawsky_at_nyd... http://www.reddit.com/r/Bitcoin/comments/2b1jpl/dear_ben_lawsky_thank_you_fo... 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=00020140704023505485N5SxDMkW06... https://medium.com/@interdome/how-much-electricity-does-bitcoin-use-c350bd84... 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