Why not, exactly? It wouldn't be very hard to change the protocol rules to allow the difficulty to remain low enough to generate blocks on a 5-minute average (or 8 or whatever) instead of 10.

I mean, I understand completely the whole "don't make blocks too fast or they'll be a bunch of orphans as competing blocks overlap" issue, but I don't know if there's any compelling evidence that it takes 5 entire minutes for a majority of nodes to verify a new block. (could be wrong, but I haven't seen any real world data to indicate there is.)

the rate of block solving could change... 5 minute block solving times instead of 10 minute, for instance. (After all the bitcoins are mined, anyway, or else the reward would have to change as well)

Assuming by "users" you mean end users and not miners, Electrum has already started working on that, actually. Users creating a wallet do not need to download the blockchain to use their wallet. (Android support is super clunky so far, but it's a pretty neat solution to that issue.) Pruning resolved blocks is also a good suggestion, but the optimal solution is still going to be enforced minimum transaction fees.

http://electrum.org/

This summary just decided the issue for me, and I am now opposed to this method of battling bloat. Thanks for the extremely elegant explanation

(assuming you're talking about the "ASIC Hardware business" from the AM point of view, not from the miner's point of view)

It's not a suicidal endeavor, really - as long as you can continually build better versions of the same shovel later on, people will have to come buy the newer shovels just to keep up with the Joneses. AM has indicated that they're in it for the long haul, and have already announced the design of the AM 2.0 chip.

lol, yup... was reading two threads simultaneously, got them mixed up during the reply. Oh, well.

couldn't have put it any better. If they don't all sell, the price will drop. If they all sell (and, I have a hunch that they will,) then the price was, in fact, right. It's not worth friedcat's time to worry about individually shipping these things out, or about making sure he hits the market pricing exactly right at all times. Bulk orders will move money, and that's all that matters at this point.

I was wondering if he meant the USSR or something, but that was CCCP.

http://www.cccb.edu/ ?

Argentina? (The Moon?)

Precisely, emphatically, and wholeheartedly this ^^^.

So, Vaporware, then. Got it.

Free as in the BTC99 that you want to get paid? That's an interesting definition of free.

I think we should be careful not to fall into the fallacy that all profits are shareholders' unless something comes up... in reality, all profits are retained by the company unless a dividend is declared. The difference here is that there's no minimum dividend to speak of, so instead of being pleasantly surprised from time to time by the appearance of more than the minimum dividend, we're all left trying to calculate all of the dividends without knowing what the actual business costs are. Solving a single equation with two unknowns is quite a trick, after all.

The system isn't the complex part - the complex part is the maintenance of the list of trusted entities, which happens on a per transaction basis, and is purely an abstract relational system that has value that differs for each and every person using the system. Every person is responsible for figuring out the level of trust they place in each and every token generated. (Think MtGox codes, BTC-E codes, etc.)

Inherent in the actual transaction of fiat for BTC is trust that the person or entity you're using for the exchange is going to do what you agree to do (perform the transaction at the agreed rate.) That's easy enough in person because you're meeting someone face to face for the transaction. It's almost as easy with a service as big as Gox because they have a history of performing as promised and they have a well understood business model. The proposed system introduces a trust token that can be traded easily, but anyone can generate their own token - meaning the list of entities CLAIMING trustworthiness is going to get very very big very very fast. The real life problem created by the system, then, is that the complexity to the average person trying to figure out who is trustworthy and who is not just got a lot more difficult. Their path of least resistance is to continue dealing with entities they already know and have a reasonable expectation of trusting, so this system will not benefit them at all; they will continue as they already do, preferring face to face transactions or transactions with large well-known commercial entities.

So if there is no practical benefit to end users, the only other benefit I can imagine would necessarily be between exchanges. The same system of trust must still be established between exchanges as the example above. No exchange will automatically trust any other exchange's trust tokens without the establishment of a trust relationship. There is, in practical terms, no difference between the trust an end user places in an emerging exchange and the trust an established exchange places in that same emerging exchange. The new exchange must still prove their trustworthiness, and each trusting entity must still make their own determination of whether or not to trust the new guy, independent of the decisions of others to trust them. Again, the path of least resistance is to continue using already established relationships with large well-known commercial entities. There are already mechanisms that provide this service, like the aforementioned MtGox codes and BTC-E codes; they are not often used because it's easier to just deal with the exchange directly in most cases, or in Bitcoin in others. Sure, they have a small place in the market, and their use is already established without the need for a separate system of trust tokens. I would not be surprised at all if the exchanges didn't already have some sort of agreements between them that stipulates transfers between them get settled at certain thresholds or at regular intervals, and they trust each other to pay as promised when called. But they don't have a need to transfer those agreements (if they exist) out to third parties - they should already have BTC/USD/whatever to be able to do those other transactions as promised.

This system is, in essence, a lot like introducing to Bitcoin the idea of floating checks made out to CASH. Someone creating a trust token is essentially saying to you "this is redeemable for Bitcoin, I promise." If you trust them, that's a perfectly valid transaction if you want to delay the receipt of BTC, but when you try to give the "check" to someone else who may not know who wrote the "check", and ask them to trust that YOU trust the person who gave you the "check", and then they spend it asking the next person to trust them to trust you to trust the person who wrote the "check", and so on until it's ultimately redeemed. All that comes back to each individual person maintaining a list of entities each person trusts. The "check", in the end, is only as good as the entity's word that it is ultimately redeemable, despite how much trust the Nth person has in the Nth-1's trustworthiness, and so we're back to large, well-known commercial entities being the best source of these trust tokens. A Cashier's check from Bank of America is going to be much more easily passable than a post-dated personal check written in a shaky hand with grease stains and a torn corner. Cash, (actual Bitcoin), is still much better, because there's no actual need for trust that it's redeemable for Bitcoin... it *is* Bitcoin.

Like I said, there may be a small niche need for this, such as the relationship between large, well-known commercial exchanges; but it's not really any benefit to the end user or to anyone wishing to become an exchange, as the trust relationships must be established just as it would need to be without this system.

honestly, I don't see the market need for this... everyone agrees that exchanges are needed, and the market clearly isn't satisfied with MtGox being the single biggest player by such a wide margin. But the easiest answer to the problem of one massive exchange isn't a complex P2P implementation of real-world transactions, it's simply giving the big exchange better competition. And we have that now in the form of competing exchanges with arguably better uptime and more features, albeit with varying degrees of success... but there are a few very strong competitors already.

I mean, more power to you guys, really - but I don't think this project is going to revolutionize anything. At best, you'll make a semi-anonymous exchange with a requirement for decentralized trust of distributed individuals for the actual, real-world exchange of fiat. And management of that trust of individuals is a VERY difficult thing to do. So difficult, in fact, that I don't see how "the masses" will flock to this system.

The more I read on this, the more I think it's a solution looking for a problem. If it works, great - I'm sure it'll fill a niche need, and there's nothing wrong with that; godspeed, really. But I'd keep the expectations on adoption of this idea reasonable if I were you.

just an update on my return of funds: what had been a "processed" ACH withdrawal is now listed as "on hold". Given what they've publicly announced for a timeframe for delivery of their "check from the bank", I don't anticipate a refund until AT MINIMUM 5/1 (again... if ever)

I think I might not have been clear in part - the exchange rate affects what people are willing to pay (in fiat) for the rig. We know this to be true watching BFL orders, which (presumably, based on order numbers) spiked considerably when the value of BTC went over $200. That's because they were buying based on current promised hashrate vs. expected difficulty vs. (then) current exchange rate. But you're correct in that it shouldn't matter at all when looking purely at BTC values... it's just that it's demonstrably NOT restricted to miners paying with BTC. Everything else I think we can agree on... just different pages from the same book

Well, my point is that there's sure to be a perfect ratio that would generate maximum profit at any given point in time, and I'm pretty sure that, until all other ASIC manufacturers get up to speed, mining in the short term at much higher than 10% of global hashrate is better since difficulty is lower now than it will be in the future, and we seem to have a definitive leg up on the other manufacturers... but I have no idea what the optimal ratio actually is today, let alone in the future. It is, after all, a moving target... you're absolutely right that it depends entirely on total global hashrate (i.e. difficulty) and cost for devices per TH/s in the open market versus the going exchange rate for fiat. If BTC goes either up or down in value versus fiat, that will affect the optimal ratio of mining to selling by AM, as the prices people are willing to pay for devices, even in BTC, is affected by how valuable the BTC being generated are against their preferred fiat. If exchange rates are flat and hardware is not due for a generational update (as in changing the die size to a smaller process width), then it makes more sense to sell shovels. But, if we have a leg up in technology, it makes sense to keep that new technology (the "new shovels", so to speak) to ourselves until someone else comes out with a good competing product, while unloading the old shovels to the market. Only when there's a balance of power should we primarily focus on selling shovels, since the effect of our own addition to the hashrate would be balanced by the other manufacturers. Whenever we have the advantage, we displace our own in-house shovels with the new ones until it makes more sense to sell them, since our addition would have a greater effect on the difficulty levels and we would be the only ones able to take advantage. You are also very much correct when it comes to physical capacity, since we can't mine if there's no juice/space/cooling to run the machines. But I see that as an exception to the formula given the amount of space contracted recently.

I think this is mostly a time-to-market problem, really. The faster we can get the new shovels to market compared to the other ASIC manufacturers, the more we should hold back sales to be able to use them ourselves and to encourage the highest prices possible for the new shovels that we *do* sell. And, to circle around to my original point, if we commit to a certain percentage of the global hashrate, we have an advantage against the other manufacturers (on the basis of hardware sales) on two fronts: establishing market trust in the ability to deliver quality goods (we mine with our own shovels, after all) and stability in supply because everyone knows we're not only transparent about how many we're keeping for ourselves, but we're also depending on our development of new technology for our own mining efforts, meaning that we are going to push the envelope for our own good (which translates to the good of the buyers as well.) This is in the same general spirit as the Ferrari model, where if global demand for a car is 10,000 per year, they make 9,999 of them and command top dollar.

I think a good way to get the best of both worlds is to commit to attempt to maintain a set percentage of the global hashrate, and sell the excess. (Say, 20%... I'm not really a fan of the 10% idea, that seems pretty low given the very small number of ASIC players that are publicly known, and by the end of the year, ASICs will control over 90% of the hashrate, if not sooner.) That way, shareholders have a predictable income stream from hashing, and purchasers of devices would know that their devices aren't going to be undercut by AM in any unknown way... pricing of devices would be stabilized (good for purchasers, which should increase demand for devices with better known values of return versus the competition with unknown levels of self-mining), and the only real cause of an individual miner's profit rate decline would then be the global hashrate growth, same as it has been historically.

If the AM share of global hashrate approaches 25%, priority shifts to sales to get it down to 20% for the benefit of device sales... if it goes to 15%, it shifts more to mining. (20% is just a number in my head, I'm sure there's a statistical sweet spot that someone can calculate... perhaps it really is 10%, I dunno.)

you beat me to it - no new investors are being courted, and original investors are already made whole. Best thing for everyone involved is to find the best balance between mining and hardware sales, and treat existing shareholders as nothing but the target for dividends that they are. (Personally, I think it would be best to mine as much as possible with this hardware while developing the next gen, and then start selling the current hardware right as nextgen is rolled out for our own mining process... basically, mine with cutting edge while selling the stuff we just finished mining with. Of course, I don't have enough info to do the actual math to see if that's really the best way to go, but that's my perspective from way over here)