Alright, thanks for the response.

I agree - I don't really care if BFL mines with them on main net, I just want them to be open and admit it if they are.

Yes, but a deflationary currency biases the users' choices.

Let's take it to the extreme.  Say that bitcoin deflates at a rate of 50%/year.  Now say that someone wants a loan.  Who is going to loan to them?  Anyone?  What would the interest rate of said loan be?  Why?

Similarly, say that USD inflates at a rate of 100%/year.  Now answer the same questions above.

Does that help you understand my position on this?  I completely agree, the correct level of investment is the level which people choose in the absence of coercion.  But currency inflation/deflation is also a form of coercion, in that it biases the users' decisions.

Right, I agree.

I think where many people disagree is what the appropriate amount of investment is.  Obviously, investment based on inflation (at least the rate of inflation in the US) is bad, as it encourages too much debt.  When that debt-based bubble pops, it wrecks all kinds of havoc.  But I think investment based on deflation is bad as well - too few investments will be made, and not enough innovation or production to "keep up" in a global economy.  Sure, we'd still survive, but we wouldn't be as productive or innovative as we could be, and the economy would not be optimized because of it.  Lower monetary velocity and lower paychecks for, well, everyone would ultimately be the end result.

That said, I think Bitcoin (and thus, a deflationary currency) could still be the lesser of the two evils.  And since a perfectly stable currency is still impossible to create, perhaps the best solution to be found for now.

Josh, why do you keep skirting this question?  You know you WILL mine on the main net with the ASICs (if you weren't, you would have denied it by now).  We all know it too, which is why it is being brought up.  No one thinks you are mining on main net now with ASICs, but that's not the question that is presented.  We just want to hear you say it.

Will you be testing the ASIC miners for 24 hours each on main net?

Why is allowing people to bet on the outcome of lotteries illegal?  Because the government said so?  Do you also consider it morally wrong?  Why?

I wouldn't expect such an outcry from people who are actively making use of similar illegal services (betsofbitco.in).  This is fascinating.

Where's the picture?  I must've missed it.

In a way, yes. But you're missing out on what that investment could have been making had you just held on to the money.  I'll do some maths.

I have 200 BTC to invest.  I have the option of holding on to it and gaining 3% in value each year, or the option of investing in another company and making 2% per year.

So, first year:
Holding: 200 BTC = 206 BTC (effective purchasing power compared to initial investment)
Investing: 4 BTC dividend

Second year:
Holding: 206 BTC = 212.18 BTC
Investing: 4 BTC dividend + 0.12 BTC effective purchasing power increase on prior balance + 4 BTC prior balance = 8.12 BTC

Third year:
Holding: 218.55 BTC
Investing: 4 BTC dividend + 0.24 BTC effective purchasing power increase on prior balance + 8.12 BTC prior balance = 12.36 BTC

So, you see how it never "catches up" compared to just holding the money?  Or, maybe it eventually will LONG into the future, as long as the dividends are saved and you let the purchasing power continuously compound on itself.

Now, if you don't like seeing the purchasing power increase in BTC (because your BTC balance doesn't increase, just the purchasing power of your BTC balance increases), then I'll format it differently to what would actually happen:

First year:
Holding: 200 BTC
Investing: 3.88 BTC

Second year:
Holding: 200 BTC
Investing: 3.88 BTC prior balance + 3.77 BTC new dividend = 7.65 BTC

Third year:
Holding: 200 BTC
Investing: 7.65 BTC prior balance + 3.66 BTC new dividend = 11.31 BTC

And the investment dividends would keep decreasing (the investment wouldn't make more money just because the purchasing power of the currency used increases), making it a LONG time before that 200 BTC was ever recovered.  Actually, doing a quick calculation, you'd never recover more than 133.33 BTC, making it a bad investment vs the 3%.  Which, I suppose that makes sense, given that 200 BTC * 2% / 3% = 133.33 BTC.

It'd be bad even for this site though.  What do you think the percentage of people who come here are brand new to Bitcoin, and haven't even figured out how to buy any yet?  Even if it's a token amount, it would still keep a vast majority of the currently-registering newbies away from the forum.

Now, if that's the goal of the forum, then sure, I can understand it.  Otherwise.... no.

That would be a terrible idea, unless it's a very Bitcoin-specific site.

Well, the font is a lot smaller, so there's more content on each page.

Alright, yes, that makes sense.  If 25% of hashing power is controlled by a single entity in China, and the Red Party shuts it down, and happens to already have 75% of the hashing power necessary to stage a 51% attack, then it could be a concern, and maybe the Bitcoin community would help bail out the ultra-miner.  I will agree with you on that potential.

I still fail to understand your idea of a bail out.  What exactly happens in a bailout?  Is the mining "corporation" given money?  Are they given miners to rebuilt their hash rate?  I don't understand what a bailout is or how it would work in the Bitcoin context.

Yes, I agree that 25% lower hashrate would be (generally speaking) a 25% lower barrier to entry.  I guess I just don't see how an attacker could easily get that 25% lower hashrate, and whether those resources spent taking down those mining pools (or mining corporations, as you call them) might be better spent on simply adding more hashing power to their own attack.

Why are you not considering a malicious entity developing their own ASIC?  That's by far the cheaper route to do a 51% attack (currently).

A 51% attack via GPUs would require around 50,000 of them (20TH/s at 400MH/s per GPU).  Assuming you could find 50,000 video cards for sale that do 400MH/s for $200, it would cost $10M.  And that's not including the costs for the basic systems to host them (say, 5 per rig, so 10,000 rigs would need to be built), the cost to rent out a datacenter to house them, the costs to set them up and keep them running, electrical costs, etc.  I'd say you're easily looking at $15M, maybe $20M.

Now, a 51% attack via ASICs, with the attacker developing his own, would cost, say $2M in R&D, plus the costs of the chips themselves.  People here have speculated that the Jalepeno might use a single chip, and that the cost of the chip would be around $10 in bulk.  So, we'll go with that.  3.5GH/s for $10, plus, say, another $40 per chip for the board and other electronics, so $50/3.5GH/s.  To get to the requisite 20TH/s, you'd need 5,715 of these chips.  At $50 each, that'd be another $0.3M in costs.

So, you can see now why it is important we introduce ASICs into Bitcoin mining.  It is to protect against other ASICs mining.

I agree with you that changing from GPU's to ASICs does not help prevent an attack using the same devices though.

Ok, I was unaware of the specifics of encrypted traffic.  Someone had mentioned it would be possible to continue using Bitcoin via encryption, so I was merely passing that statement along.  Apparently, that statement was wrong.

I was just using the 90% as an example.  You could change it to 50% and redo the maths if you like.  I agree that spending money on ASICs to attack the network would be much cheaper and easier than spending money on GPU's to do the same, which is why I believe it is imperative that the Bitcoin network start using ASICs.

But you WILL test ASICs on the live network?  Why has the information surrounding this testing only been disclosed to select persons at the Bitcoin conference?  Why will you not disclose that information to everyone else?

It's not an immaterial argument just because you haven't done it in the past, when you are obviously going to do it in the future.  And the fact that you refuse to give out the details of this to the community as a whole has me concerned now.  What can be so bad that you cannot reveal it until it happens?

All the pirate holders finally admitting to themselves that they aren't getting their coins back.   

I have to agree that it looks bad.  At least they're being upfront about it (finally).  I still won't be cancelling my order over this though.

I'm not sure what you mean by a "bailout" (and I have a great distaste for that word to begin with), and also uncertain why you think this is a thread.  The attacker could certainly work to take down as many pools as he wanted, but it wouldn't stop individuals from mining.  And people whose connection was just severed from all of the mining pools would most certainly take steps to start solo-mining instead of on a pool, partially negating the attackers efforts.

Now, if you're talking about the attacker targeting miners themselves, I don't think any one miner holds a significant percentage of overall hashing power.   Maybe the top miners of the world have 1 TH/s or thereabouts.  Certainly, an attacker could work to take those top miners down, but it wouldn't make a large difference in the overall network hashrate - they'd still have to have quite the node themselves to actually exceed the total network hashrate.

Right now, someone could develop their own ASIC and EASILY have and hold 90% of the hashrate with a small number of devices (say, 200 devices @ 1 TH/s each).  Once ASICs are in the wild, and the hashrate is pumped up to 500 TH/s (my estimate of where it will be after BFL finishes its current preorders), it would take 5,000 of those same devices @ 1TH/s each to gain the same 90% advantage over the Bitcoin network.

So yes, it would make it more difficult and expensive for an attacker to stage a disruption using ASICs.

You mean if Bitcoin activity in general was blocked?

This sort of case has been discussed, but more in the context of forced governmental restrictions.  However, the data could still be encrypted to bypass such restrictions, and unless the restricting government planned to block all encrypted data, they would have no way of knowing what is Bitcoin traffic vs what is other traffic - encrypted traffic all looks very much the same.

Yes it does.  It makes it more difficult and expensive for an attacker to stage an attack.

You're forgetting about the capital costs upfront.  If ASICs are used, then the malicious entity must first spend the capital on developing an ASIC (or somehow purchase as much as the rest of the Bitcoin network combined without being noticed), and have a place to put them all (perhaps a small portion of a datacenter).

If GPU's are used, then the malicious entity must build or rent out a data center to put them all.  The current network hashing power of about 20 TH/s would require around 50,000 video cards to even equal it.  Those 50,000 video cards would draw around 200 watts each, requiring 10 megawatts of power.

Now, I'm not saying it's impossible for someone with lots of money to do this, just that the costs would far exceed the ASIC electric cost equivalent of 7200 BTC/day.

So?  The miners can still move to a different mining pool that is unaffected.  And many of the larger pools have quite the DDOS protection, due to attackers DDOSing them and asking for money in exchange.