Bitcoin Forum

“It’s accelerated out of the garage and the homes, to the small businesses, to the large data centers, and now you’ve got to have a mega data center for it to be profitable.”

http://www.bloomberg.com/news/2014-10-21/bitcoin-miner-ditches-clients-to-chase-2-billion-coding-prize.html

KNC bitcoin central issuing authority.. great job guys creating the same shit sytem we already have. 

What happens to the btc community if their infrastructure fails in a few years? What effect would that have?

Not really.

Let's assume there is one entity with 99% of the hashing power and there are a million entities owning the remaining 1% of the hashing power.
The remaining 1% could always decide to ignore the big 99% entity and fork the chain. The 1% would end up owning 100% of the hashing power again.
Until the 99% entity joins the club again of course.
Now I think of it, could it be possible for the 1% to block the 99% entity?

I dont think it will take years. One effect is the network will get much smaller and therefore less secure.

Easily. With Bitcoin, 1 person can block the decisions of all the other users. It is called forking the code. The power of mining pools and asic farms is grossly exaggerated.

Additionally, the Asic miners are beholden to the will of the users because all their electricity and hardware means diddly squat if there are no users sending transactions to them and buying their coins.

It must have been several years ago that I suggested we think about how to back off the 'decentralized' bullshit while there was still a modicum of truth to it.  It was not well received :)

I also proposed to resolve the 'majority of hashing cheats' (aka, 51% attack) scenario by simply consulting with a random verification authority.  That would be someone who analyzes block and blacklists those blocks which are bogus.

The theory would be that relative to mining it would be fairly low-overhead to do such validation, and would be very low overhead to transmit info on a per-block basis (meaning that such services could hide almost anywhere.)  What I believe would happen is that a handful of trusted verifies who provide consistently good results would emerge.  They would lose confidence immediately if they themselves cheated.

In this way the blockchain would likely continue on good blocks even if bad actors controlled a large majority of the hashing power.  Use of these (probably numerous) self-elected authorities by honest miners would be optional and abstract, but I believe that it would probably result in enough strength against a 51% attack to be effective (meaning especially that the 51% would not even be attempted because it would have a high chance of failing.)

This theory is predicated on the assumption that the number of honest miners are significantly in excess of the dishonest ones but they are outgunned in straight hashing power.  Also, of course, the original assumption of Satoshi(s) that miners do not want to destroy the system or allow it to be destroyed because of a net loss.

At the time I first described this mechanism transfer agents (full nodes) were more of a factor.  I was thinking of these also consulting verification bodies and interfering with block propagation enough to damage a 51% attack effort.  Since transfer nodes are not rewarded they are not nearly as well represented at this time.  OTOH, centralized services which serve end-users are more highly used.  They themselves may gain credibility by advertising the various verification authorities they leverage.  The chief danger would be clients that don't allow the user a choice in what blocks they accept information from and from whom.  Whether Multibit contains this 'defect' I don't know since I don't use it.  My bet is that it does.

edit:  Actually, miners do verify blocks themselves as do old-school full clients which act(ed) as transfer nodes so they need not rely on independent verifies.  Making my description above not sensible.  Thinking back, my idea was to make sure that a somehow even if a bad longest-chain did develop (due to excess hashing power) it would still not really work due to rejection provoked by independent versifiers, and that would be more to thwart legal but unethical activities.  Like Hearn's famous 'can't spend for 20 years' scenerio which is tenable if/when there are only a small number of coordinated entities monopolizing hashing power.

translation of article

stop selling machines to cry babies and sell to large whale investors

KNC measured their wealth in dollars not bitcoin hoards, thus they only care about FIAT (failed bitcoin business model long term)

20% of hashpower is not 20% of the community, thus not "centralising" bitcoin. after all coins will end up in other peoples hands, not KNC.

estimating to own 20% of hashpower in the future, is an estimate that can get destroyed instantly, because other manufacturers will now ramp up their production now that they know the competitions plan.

$50million is only 1% of the market cap. and we all know that bitcoins are selling at basically 'cost'. meaning that there is about 4billion plus worth of mining equipments in the world right now. which will grow. thus KNC's investment target is not really going to make them reach 20% overnight

in short. alot of hype to sound good, purely to get some advertising propaganda to help them grab potential investors.. resulting affect on community.. 1%

This is not true. One person cannot fork the code. If one person creates a fork of Bitcoin that is not accepted by the other miners and the network then the newly forked code will be worthless as will the coins that any miner mines using the unaccepted code.

Bitcoin is decentralized because no one entity controls the network. In order for anything to be changed, there will need to be an agreement with the majority of the network to even have the possibility that the changes will be accepted. 

Obviously, the value of Bitcoin to a single user alone on a forked blockchain is very small.

The value of any bitcoin fork is equal to the combined value all participants place upon the fork.  The result would typically mean that the value and security of the forked "original" bitcoin version would be greatly diminished and some changes to the algorithm would have to be implemented to prevent attacks from the miners that didn't come along. There are many solutions to this as have been discussed and tested.

Your statement is provably untrue because all the PoW alts represent forks of Bitcoin which started with very small userbases and grew.

In fact, it is trivial to fork Bitcoin as you don't even need to be a developer as some companies will even help you do so for 28 bucks.

You are correct to say that altcoins that use PoW are essentially forks of Bitcoin. You should also notice that the value of the vast majority of altcoins have decreased over time, especially as of late.

You are incorrect to say that the value of a Bitcoin fork is the value of the combined value of the bitcoin of the participants of the fork. If the market does not give any value to this bitcoin then it will not have any value, and the bitcoin on the unforked network will still retain it's value.

This is why it is risky to mine when the network is about to hard-fork as if a miner does not start to mine on the new fork (and the new fork is accepted) then the miner will be mining a worthless coin that will never have any demand and will be on a network that has zero security/ability to have transactions get confirmed.

PoW alts are not bitcoin forks..

a bitcoin fork contains the last 4.5 years of bitcoin transaction history, that then takes a different path compared to another.

the other PoW alts DO NOT contain bitcoins history, thus they are not forks. but simply mutated code .. they have nothing to do with bitcoins blockchain and again have nothing to do with 'forks'

you could call them spoons.. meaning the handles look similar and the purpose is similar but they are not the same thing. they were made separately

You are referring to forking the blockchain and I was referring to forking the source code in that sentence.  Fork is a commonly used term in open source projects and it is the blockchain which borrows that term. Those can be done independently or simultaneously. If a blockchain snapshot is taken and forked as well than the net effect is people would double their coins but the usability and value of each of their coins would drop significantly. In certain cases the value of both coins compared to a fiat pair would be higher and in some cases lower.


Why are you assuming the new users that follow the new blockchain/fork aren't considered a "market" into themselves that can trade value , services and goods. This market may revert more to a speculative market as many vendors could drop off but it would still be a market which attributes value to these tokens. Additionally, there are possible case examples where a majority of the merchants, vendors and users leave the asic farms behind and make one blockchain heavily secured but worthless (thus rapidly becoming unsustainable) and the other blockchain being initially less secure but heavily valued and thus rapidly regrowing security.

They would be considered to be a market amongst themselves, however it would be much smaller then the "real" market for bitcoin and what is traded in exchange for bitcoin. The value of each additional participant in a marketplace is exponentially more valuable to the marketplace then the last additional participant; thus when a very large percentage of the "market" is using the "other" version of Bitcoin the total value of the market will be much less (in terms of proportion) then the other bitcoin market. This will cause participants to go "back" to the "real" bitcoin which will cause the other market to continue to decline in value until it goes to (near) zero

It might create another price drop but bitcoin's reputation will not be affected.

Bitcoin drops from 7,000 / coin to 5,500 per coin.

A thousand trolls / noobs cry out, "OMG BITCOIN IS DOOMED, I TOLD YOU THIS WOULD HAPPEN!"

This is the first I've heard of alt-coins being referred to as a Bitcoin spoons. :D

All these Bitcoin farms are built with stolen pre-order money and should be raised and the executives culled IMO.

This is one scenario. I have already detailed another scenario, and there are more hypothetical scenarios we could discuss as well with different expected outcomes. The point is in none of these scenarios the value will be worthless. Additionally, while you are correct that the network participant size is a crucial factor into determining the value of a currency it isn't the only factor. Bitcoin could have properties , even without a large userbase, that make it very valuable to internal and external users.  

I.E... If it became the de-facto dark market coin and maintained that lead because initial branding
or if some group of vendors had products or services for they only accepted in Bitcoin currency.


The flaw in this statement lies in the fact that as long as someone values a token that attributes value to that data and thus it is no longer worthless. All alts, even failed ones have values above nothing as long as 1 user assigns such value. Before bitcoin was being traded for fiat, goods, or services it still had value as people wasted time, electricity, and hard drive space to maintain that data. Value doesn't come into existence by decree of some regulator or the fact that it needs to be traded with fiat currencies.

I think the whole argument some claim that bitcoin will either go to nothing or be worth a lot is silly. If you lose faith in Bitcoin as originally principled by Satoshi there will be plenty of ideologues that buy your coins for cheap even for sentimental reasons , but more likely to be used on the black and grey markets.  Confederate currency is still worth money and it isn't being accepted anywhere for payment - http://www.ebay.com/sch/Confederate-Currency-/3414/i.html

KNC bitcoin central issuing authority ? So how many blocks KNC mined everyday ? 

You're wrong. http://learncryptography.com/51-attack/. It has nothing to with the the # of "entities", but the percentage of hash controlled. If one entity owned 99% of the hashing power, then they would be able to do a 51% attack at will, and the 1% will have no say. Same for if someone owned 51% of the hashpower, those that own the other 49% will have no say.

"What is often considered a very large flaw in the design of Bitcoin is that hypothetically, if a single entity contributed the majority of the network’s mining hashrate, they would have full control of the network and would be able to manipulate the public ledger (blockchain) at will."

Lol.. so you are a firm believer that bitcoin will never fall huh?

PoW is doomed in the long run, but many bitcoiners are in denial.

What harm can people really do, when they have 51+% of the hashing power?
They can redirect the hashing power to build an alternative blockchain, which will overtake the "real" blockchain and lose a lot of BTC reward in the progress
How long can someone keep this power?
We are talking about a pool. they do not really have the hashing power. If they harm the network, people can easily decide to go to another pool.
Can they even decide, that all the people in their pool use their hashing power for harmful use?

I am not really familiar with how this whole technology works exactly. Maybe some more techie person can give me some answers.

PoW means fairest distribution. If the block rewards will become problem in future, Bitcoin can be modified if there is consenzus. I just dont like the idea of central authority to issue coins (first coins or later as well) so others can buy these, which is basically PoS.

Mining is becoming profitable only for few largest mining farms, don't you see a contradiction with your 'fairest distribution' argument here?

People who invest will become a bagholder. Pretty much same as anyone foolish enough to buy their miners.

Right on spot.

But this is only true if fabrication technology remain expensive. May be one day everyone can own a small lab and use 3d printer to print their own low cost asic.

FIAT: let's add something like 100000000000 USD... OK, type that number there.
BTC: hmmmm... not that easy.

Don't talk shit here. Bitcoin is far far better than fiat in that sense.

I think it will have to be changed in the future. I just wish the mining would be fairer for all and anyone could still mine bitcoins. I think in the future it could become unsustainable if it becomes more and more expensive to mine etc.

Speak in superlatives, deceive people who don't know that ,I hope that we won't see these in future.

With all the ongoing discussion, there is only one thing clear for me. As long as mining is controlled only by the big miners, there is no such thing as what you refer to as decentralization.

Cheap chinese miners will take much more market share, currently the discuss fish pool is already the No. 1 in hash power

Miners with free electricity will ultimately win against large mining farms, large mining farms can only stand a while with newer chip design, but their cost is significantly higher when difficulty eventually rise and electricity becomes more than half of the cost of each coin

But the biggest worry is that large banks will eventually build huge mining farms through funding, they could loan out 1 billion (out of nothing) to build and run a cluster of large mining farms thus control more than 70% of the network hash power easily and destroy the credibility of bitcoin transaction. I think knc is on this route to become their puppet, since they think in terms of fiat money

it can't fail .we should trust the BTC, and  the btc community!

So decentralization was just a lie to attract the world towards bitcoin for traders's gain?

It wasn't a lie in the beginning when everybody could mine bitcoins with their low end hardware, but it's turning more and more into a lie now.

Welcome to bitcoin. Bitcoin is an open source project where these issues have been discussed openly and honestly for years. Centralization of mining isn't unexpected:


Many people are confused to the risks of this consolidation and exaggerate the concerns. Please do a little more research into the incentives structure which discourages attacking the network even if there are only 100 mining farms and what a 51% attack actually does and how quickly it would be identified and prevented if it ever did happen.  

I don't think this would be a serious threat. First of all an attacker (the "big bad banks" in your case) would need to spend actual money in order to launch such an attack, money they would end up loosing in an attack, when they could earn more money by acting honestly.

If a bank were to lend out money they would need to put some amount of money aside to account for the possibility that the loan will not be repaid, and it would certainly not be repaid as any attacker would not make any money from such an attack

"the btc community"  <------ bwaahahahaha  :D

Keep trying to push down the price guys so it's easier for me to get more, I appreciate it.

lol same here. :) loving the low bitcoin price right now.

Well you will find out that there always happens that you can buy cheaper

Mining costs reflects the Bitcoin price. Go figure how much the gold would cost if anyone could grab it from the ground without any effort...

This works in a Proof of Stake System where you can lock up or track the other coins within your fork.. with proof of work though, just move your miner to a new wallet address, and how can you possibly prove whether 'new' miners are valid or invalid?

Yet another positive for Proof of Stake

You are kidding right? In this example the '99%' would not hold all 99% in one wallet/address, but would be spread out. When an entity would be buying up all this "mining" power on a PoS shitcoin they would certainly not transfer all of their coins to one address.