I see.  I don't consider this a real problem, even though it is relatively cheap at present.  The big reason is that the network is very young, and the whole value of the currency relatively small; so the primary motivation of such an attacker would be the outright destruction of Bitcoin.  The only group with such a motive would be powerful western central banks and their governments.  No small group, but the rest of the world's governments then have a vested interest in anything that stands to weaken western central banks, which includes relative heavyweights such as Brazil and China.  Also, this attack would have to continue for a significant period of time to actually destroy Bitcoin, and has nearly zero chance of altering any significant portion of the blockchain history.  Savy users are going to suspend their transactions if such an attack were underway, and less savy users are likely to learn about the attack in the media, also suspending transactions.  Suspensionof activities is not the same as abandonment of the currency, and any such attack, even now, is going to require the comitment of sustantial resources.  This would be something that would be hard for government agents to be able to justify to their budget aware leadership for very long, considering that there are much bigger thinkgs in this world for spooks to be throwing processing power at.  In the future, if Bitcoin grows to become a real threat to the status quo, it would also be too big to break.

Thank you for clearing this up.

Are you refering to the attack vector that requires over 50% of the hashing power of the network, with the intent of overwriting recent blocks?  The forced double spending attack?

random entrophy data for a cryptographic stream cypher?

If major corporate mining of bitcoins were to develop in Iceland, something that I consider likely if Bitcoin ever hits anything close to mainstream, as well as something that is likely already happening; this would be economicly equivalent to importing energy from Iceland.

What am I missing then?  An incorrect mining reward invalidates the block.  Presently, full clients do check for this, and violators are ignored.  The net effect being that it doesn't matter how much power the colluding violators throw at the problem, the honest network simply ignores anything that they come up with.  The violators can, presently, either mine honestly or attempt to rewrite the recent blocks of the blockchain, but that's a different attack vector.  The claim that I saw basicly says that the collusion problem is because future clients will be dominated by lightweight clients, which presumedly wouldn't pay any attention to the actual blockchain reward; and this would permit a small cabal of well heeled miners to collude into changing the rules and segmenting the other honest miners into a minory blockchian because the majority of clients would blindly accept blocks produced that were invalid due to an overly high block reward, but reject the minority chain being produced by the honest miners that remained because they would have a shorter proof-of-work chain.
Yet, if the lightweight clients even occasionally check the validity of the block reward, or even only a fraction of smartphone clients did this; the attack is undermined.

How am I wrong?

No, because each client would only have to download however many hashes in the tree to lead to that transaction, and then that transaction itself.  In a huge block, we might be talking about three or four dozen 256 bit long hashes and one very small transaction. (no inputs, one output, nothing special to take up space).  Yes, that would be much more bandwidth than just the headers; but still much less than downloading a full block with 3000+ variable sized transactions in it.  Once it was downloaded and checked, the light client could simply throw it all away except the 80 byte header.


Interesting idea, but this could be a breaking change.  Better to make certain that such a thing were actually required, and if so, simply alter the headers to include the special transaction.

Unknowable.

No.  At best, they would have the power to steal bitcoins from individual accounts.  Both the merkle tree inside of the blocks, and the blockchain itself, uses secure hashing, not public/private keypair encryption.  So if SHA256 (the hash that Bitcoin presently uses) were broken in the future, this would not expose the individual account balances of all users, but only those of the most recent blocks in the blockchain.  Likewise, if the public/private keypair encryption that Bitcoin presently uses was broken, this would expose the accounts of individual users that the attacker was willing to commit resources to break open; but would not expose the blockchain itself to attack, nor the whole of the Bitcoin user base.  If both are broken at the same time, we would be in trouble.  However, if either is broken (or even appears to be subject to breaking in the near future) then each is modular and can be replaced with another method within the same class of encryption.  Bitcoin is not 'married' to elliptical curve encryption, per se.

Also, the hashing methods used for the blockchain can be different than those used for the merkle tree, or even two different secure hashing methods used for each block; because the blockchain is currently secured using a SHA256 hash of a SHA256 hash of the block's header.  Which would further seperate sections of Bitcoin from the risk of any one part of the system being broken.

Amen to that.

Sure it would.  The first transaction in every block is the special transaction that gives the miner his 50 bitcoin reward.  If every light client were checking that transaction to keep the miners honest, there wouldn't be any way to collude, as the lightweight clients would reject the blocks themselves and keep searching the Bitcoin network for blocks that used the proper reward amount.

Those questions are irrelevent.  None of us have control over how the power is produced or it's effects are mitigated, regardless of the system we are talking about. 
It's also a bold-faced lie.  Solar tech would have to be less than free to compete with coal at the present time, because solar requires vast expanses of real estate to produce on any scale.  I would wager that less than 0.01% of the population has the real estate to produce their own power consumption in this manner even if the tech were 100% efficient.  Currently an efficiency rate of 20% is great.
Don't forget to include the energy costs and environmental impact of the manufacturing of those panels before you decide that solar is a good environmental choice.

This should scream "profit opprotunity" to just about anyone.

I think that this premise is wrong.  I don't believe that individual miners will ever cease to exist no matter how corporate or consolidated professional mining becomes.  For a couple of notable reasons.

First, and foremost, because mining does not have to be profitable to be rational.  I use the example of the lone gaming geek in a cool climate, who lives in a small flat that is heated entirely by electro-resistive heating.  This geek doesn't have to live in a cold climate, just one that has a fairly long heating season.  He is going to own a high-end gaming rig regardless of the existance or success of Bitcoin, and has to pay the electric bill to heat his tiny apartment anyway.  So why not mine while away?  The capital costs are covered by other endeavors already, any bitcoins said lone geek were to get from mining are effectively free.  This doesn't consider the wear that heavy usage imposes upon a GPU, but odds are high that his GPU is going to get upgraded before it dies anyway.

Second, in a successful Bitcoin future, financial institutions are not all going to be into mining for the profits of mining, but also for the digital equivalent of a bank spending half a million on a bank vault.  For the security this contributes for their own membership.  Nor will all these institutions be banks, as credit unions and non-profit institutions exist now and therefore it's reasonable to expect them to exist in the future.  These institutions will participate in the Bitcoin infrastructure for their clients' comfort and benefit moreso than the possibility of (direct) profits.  And these same institutions are likely to develop interlinking agreements to process the transactions of each other's clients for free even if they were to refuse to process free transactions in general.

I contest this premise as well.  The only requirements a mining operation for profit will be reliable and relatively cheap Internet access and electric service.  Both conditions favor developed nations presently, but I can foresee no reason that such operations couldn't cluster in developing nations if the economies of scale would permit said mining operations to bring
these things with them.

Not if you consider the amount of energy it takes to run other monetary systems.  Just because your cash doesn't require energy to use, doesn't mean that it didn't take energy to create.  It took quite a bit, and considering the network of banks and institutions that exist to support the electronic flow of those same notes, the energy costs of the US FRN are astronomical compared to Bitcoin.

In some ways it's comparable to the energy required to dry your hands in a public bathroom.  Which takes more energy, the paper towel or the hot air blowdryer?  The answer is counter-intuitive, because we see the energy that the dryer uses; but we tend to overlook the energy required to 1) grow the trees, 2) harvest the trees, 3) produce the paper, 4) ship the rolls of paper towels, 5) and repeatedly replace the rolls as they empty.

The hot air blowdryer is orders of magnitude more energy efficient than a paper towel dispensory, as long as the dryer itself is reliable.

Good plan

Probably not so good of a plan; unless you live in a desert or otherwise want the solar panels for some other reason.  I've looked into this for my own home, and the panels never make their own cost of production back within their life expectancy.  And only make sense in remote conditions. or if you expect that the power grid will fail sometime within your lifetime.


Please add, "Bitcoin mining is not energy intensive compared to alternatives" to your poll, please.

For that matter, how easy is it to aquire US FRNs?  Sure, they are common enough, but you still have to have a job and work hours for the few that you get, do you not?

I don't see how all miners suffer from lower transaction fees, since it's presently provable that free transaction fees are possible with a working Bitcoin economy.


They are already zero, but you are overlooking time preferences.  Space in a block is effectively of zero value, since there is presently plenty that a zero fee transaction can get into the next block.  However, if Bitcoin ever reaches mainstream acceptance comparable to PayPal; the space inside a block (which is limited by convention) will start to command a premium.  As such, users who have a need/want to see their transaction included in the next block will be motivated to provide a fee towards that end.  And forcing all transactions that pay a fee less than them to wait until the next block or longer.  Such traders will be relatively rare, such as buying/selling a car from a dealer or stranger, or other high value transaction wherein confirmations are the only acceptable risk limiting mechanism.  Even relatively rare, such transactions are likely to justify enough of a transaction fee to motivate miners to incude as many of them as they can find.  Perhaps even motivating miners with marginal profits to jump into and out of mining based upon the collection of fees in the transactions in their queue.  This would create a short term "flexability" in the processing of transactions, as blocks would come faster than six an hour under high demand and slower than 6 per hour during off peak times; still averageing out to 6 per hour over the two week adjustment period.
Then we are back to where we were about four months ago, when transaction fees were rare.

I'm not even sure how you get to this conclusion.

A transaction is only valid to the network if it's inputs are transactions already in the blockchain.  I think that it is actually impossible to referrence an input transaction without it's permanent block number.  (transaction hash + block number, I believe,  Someone correct me if I'm wrong)  So any other transactions sent after the first one, fee or no fee, would be rejected by the sender's peers as invalid and never even forwarded to a miner.

For now, the block reward is enough of an economic incentive for miners.  In the future, as the reward goes down, it is expected that the transaction fees that some people choose to contribute will add up into a block to a respectable amount and take over as the primary incentive.

As it is, there is no advantage to mining an empty block, because the hashing is done against the 80 byte header only; and thus adding more transactions to the block is trivial.  So miners add free transactions out of kindness.  It's a form of charity that will become less common in the future.  There will likely always be miners who are doing it for more reasons than simply the profit from mining itself, and these people are unlikely to reject free transactions.  So in a successful Bitcoin future, traders who have a high value transaction are likely to be contributing a transaction fee in order to have their transaction processed in a timely manner; whereas small transactions, transactions involving external trust (i.e. from friend to friend), and basic donations are likely to have to wait to a lull in the network.  Furthermore, free transactions are prioritized based on how long the (youngest?) input have been in the blockchain, oldest being of the highest priority so that spamming of the network can't significantly delay an honest transaction lacking a fee.

I was just having a conversation with a friend about death notices, as he had two of his other friends die in the past three days.  He discovered them both in the traditional way, by reading a print newspaper obit section.

(insert classic joke, any day that you can wake up and not find your own obit in the newspaper is a good day)

And then it immediately occurred to me that legal notices are an Internet oversight.  Governments and other entities must pay a newspaper to print legal notices because a legal notice must not only be widely distributed, which is trivial on the Internet; but provablely dated.

Any developers have my permission to take this idea and run with it.

Online legal notices, via a parrallel blockchain, paid for by bitcoin wherein the payee's transaction incorporating into the Bitcoin becomes the legal proof of timestamp.

Or something like that.

This is actually likely to happen in the long term, if the public/private keypair system Bitcoin uses is to ever show signs that it might be cracked.  Bitcoin can move to another, more secure, version of the same thing without skipping a beat; and users would be pretty much forced to go back and claim all of their old transactions in order to move them to the new system in situ.  However, lost coins would be obvious shortly after such a changeover were complete, and easily recovered by the first person willing to write the crack program using the new exploit.  It'd be like treasure hunters racing to claim a Spanish Gallion, first to get the address cracked and moved to his own new address wins.

It might be decades before anything like this occurs, however.