If generation were not profitable, the miner would stop mining, making the difficuly lower and hence the profit per block higher. Job done. The miners will always be exactly the right number.
Of course I know it. The market will take care of mining profitability. The problem is that the difficulty required for profitable mining will be low enough for cheap >50% network attack. Bitcoin will either be always vulnerable to attack by competition or expensive. Again, pick your poison. P.S. After rereading one of the the previous threads I think I make the same argument as here: http://forum.bitcoin.org/index.php?topic=8126.0And I think that these points were too easily dismissed by the posters. |
|
|
|
|
I get your points. I know that the network is supposed to grow and that the number of transactions will grow, too. But I think it does not scale. This system is too expensive to run to be competitive to the mainstream banking which has economies of scale.
Currently for protecting 35 mln USD Bitcoin "economy", roughly 0.75 mln USD is used a year in electricity costs. A few million USD of equipment is used constantly (or more periodically) for block generations. The equipment which depreciates rapidly. It's a very large percentage of the total Bitcoin money supply. Guarding gold is cheaper and scales much better. If everything grows (Bitcoin value, number of transaction, etc.), it's still going to cost the same percentwise. The whole network happily bears this cost because the Bitcoin money supply grows and the mining reward is much larger than the cost (at the current generation and exchange rate, the money supply grows by 20 mln USD a year). When this inflation is gone, the fees is all the miners would get. And it would be not enough to keep such a large mining network compared to the Bitcoin economy size. It means that either we will have an expensive system (large difficulty and a lot of miners) which is well guarded against an attack or a cheap system with not that many miners that will be attack prone.
I don't assume anything. The problem of cost is going to be the same regardless of what will happen.
I think it shows that if Bictoin by any chance grew to VISA size, it would have been either poorly guarded against adversaries or more expensive to use than VISA. Pick your poison.
|
|
|
|
what is the 4x rule?
Difficulty can rise maximum 4 times or drop to 1/4 of the previous value during difficulty retarget. |
|
|
|
|
I'm very impressed by the current Bitcoin hashrate, overtaking the fastest supercomputer Tianhe-1A and probably also Folding@Home. For safety, even larger network would be necessary.
However, at current 2700 GH/s, taking most efficient GPUs at roughly 0.5W per 1MH/s, the whole network needs 1.35 MW of electric power (FPGAs or ASICs that are used by some are more energy efficient but are more expensive and carry larger depreciation cost). With 8-9 blocks/hour, one blocks needs about 150 kWh. This is probably about $15 on average. So if there were currently no block rewards and miners were supported only by fees, a block would have to carry at least $15 in fees if you count only electricity costs or the miners will stop mining. With hardware depreciation that the miners would want to recover and some profit the fees would have to be even larger. With about 15-20 transactions per block (which are mostly free so there would be less of them if there were fees required), one transaction would need to carry at least $1 of fees. This is quite expensive. I claim that the current network size could not be supported by fees only.
More efficient miners would not help much (if at all). More efficient miners would be available not only for the Bitcoin network but also for the potential attacker. The Bitcoin network would have to be always ahead of the attacker. Maintaining such a network will be quite costly. Worse yet, there will have to be constant mining performed while the attacker could just rent the compute time for a few hours to do a >50% attack. Can we really afford it?
Unless the number of fee carrying transactions grows a lot before the mining reward is reduced, we are going to end up with not large enough and prone to attack Bitcoin network. Or with fees that are hardly better than in mainstream banking.
|
|
|
|
I think, this could be also useful also estimating - how blocks to wait for considering transaction fixed in block chain.
Ex. if statistics shows, that one block is orphaned with 1% probability, 2 blocks with 0.01%, 3 blocks with 0.0001%, so it does not require to wait 4th block if you are not afraid of <0.0001% probability.
No, it won't. Currently orphaned blocks are accidental due to (almost) simultaneous finding a new block by two miners. Waiting for confirmations is to make sure there are no intentional chain splits. Intentional chain splits are possible with small probability even for an attacker that have <50% of hashspeed. And you won't know it until it's tried. If you have 10% of hashspeed, you will get two blocks in a row with 1% probability. So you can reverse 1-confirmation transactions once in 100 blocks if you try. Current orphanage rate shown that nobody tried it yet but does not tell you how probable is that someone will try it. |
|
|
|
How can I GPU generate solo? Just want to test my GPU hash rate before I decide to join a pool. What am I missing?
You did not configure your bitcoin to accept RPC commands. Follow these instructions for creating bitcoin.conf https://en.bitcoin.it/wiki/Running_Bitcoin |
|
|
|
People forget that there needs to be a reason for a bubble to pop.
It's not true. Markets can fall without any direct cause "under their own weight". The only thing needed is fall in demand. |
|
|
|
Seeing a longer chain is different from seeing a long block reorganization. The lenght that matters in the second case is the backward length, the number of blocks who had to be discarded. Network outages won't cause you this.
What if you have an outage when there is a short accidental block reorganization. There is one every day or two. I've looked at reorganizations in my debug.log and had one during network outage and it resulted in 5 block reorganization. True, but still that could be suspicious. Suddenly, the block chain changes to another one with lots of transactions which have never been seen by anyone? And then that happens again, and again, and again? People will quickly figure out somebody's messing around, particularly if the network is already rejecting "too long" block reorganizations. And once honest miners see the network is under this kind or political attack, they might figure out ways of blocking it.
And what you plan to do? Whitelist honest nodes? Shutdown the network and hope the attacker goes away?  Who's talking about anything remotely closed to a central bank here? All I've said is that it's probably possible to prove with probability calculations that an honest block chain split will not be longer than a certain constant or that it would take several thousands of years for that to happen, so you could easily classify such kind of splits as dishonest. If you start to discriminate the chains, you need to have authority. Once again, I claim there is no way to decide which chain is good and which evil if both are valid chains. What if the evil one starts to write on the Forum (with a lot of puppets) that we are under attack and we have to kill the other chain? Moreover, anything (except the rule: longer chain wins) is going to get the Bitcoin network fragmented sooner or later because there will be accidental chain splits. And then how are you going to mend this mess? Both chains will claim to be "the ones". Today, deepbit had 5 blocks in a row. If something (accidental) prevented it to broadcast the first one to the network and made it broadcast the last one, you would have a large block reorganization. There are only two possible successful outcomes for Bitcoin: one is that Bitcoin hashing power is so large, no single organization can match it or that it is so niche nobody will care about killing it. |
|
|
|
What? I didn't get it... if I'm an honest miner, the attacker has no gain in "inviting" me.... I'll add honest blocks to his attempt of rewriting, basically I'll undermine his plans.
Have you heard about "mining cartel attack"? All kind of attacks can be performed with innocent participants. An overtake attempt must be done entirely in secret by those trying the attack, and then suddenly released, overwriting honest blocks. If this overwrite is too long, it's clear not an honest split but an attempt of exploit the >50% vulnerability.
What if you had a network outage and now you see a longer chain. You drop it and your Bitcoin client no longer works. What about a "stepping stone attack"? The attacker only injects chains slightly longer but frequently thus denying all confirmations. You don't need to accept any particular authority, that can easily be a consensus, particularly if backed by good probability demonstrations. It's as much authority as the inflation control for example.
Consensus based on what? One person, one vote? Currently Bitcoin operates on consensus: "1 hash/s = one vote". It is extremely difficult to gain from any >50% network attack. It is much more profitable to be honest. That's why I don't expect we will ever see "criminal double spending" because effort required to play this trick will be larger than any potential short-term gain. But Bitcoin is completely vulnerable to DoS by a >50% participant. It's in its core. It is the basis of all Bitcoin operations and it is clearly described in the original Satoshi paper. Bitcoin can work only if >50% of the network hashrate is cooperating. |
|
|
|
Bitcoin is a system with rules, but no rulers. If it sounds like a contradiction, I'd say you need to think about those words more.
Tell me such a rule in case of chain split that does not require authority. OK, caveden says "drop anything that is longer than the current chain by N blocks". Apart from creating a whole lot of problems in normal operation (you will have the very same situation every time you had a network outage and now you client sees much longer chains), there is no guarantee you have the right chain. And what about "stepping stone attack"? Attacker inject longer chains by one block one at the time denying all transaction confirmations? Also, regarding "the end of Bitcoin", extraordinary claims require extraordinary evidence.
The core idea of Bitcoin is that it is completely decentralized. If you create a "Bitcoin central bank" that decides which blockchain is right and which is wrong, it's going to be not Bitcoin but something else. With the overflow bug, it was obviously a bug so it was fixed. In case of 50% network attack, there is no way to decide what is right and what is wrong. |
|
|
|
A how do you know which one is honest and which one is "evil"? An evil bit set?
There is no way to differentiate an honest and a bad one.
By the length. Honest block splits cannot, probabilistic speaking, last too long. And how do you know which one is honest? Maybe the attacker "invited" you to his chain and you were being fed the evil one. And now you see another chain? How do you know which one is honest? Ask bitcoin developers? Look at blockexplorer? As Zibbo wrote above, the longest chain is the authority. If you start to decide which chain is right based on some other criteria, you need to accept some external authority. And this is the end of Bitcoin as a decentralized system. |
|
|
|
An easy way to mitigate the risk: reject any "too long" block reorganization. The "too long" constant should be determined mathematically, in order to be sure that there is no reasonable chance that such block reorganization is an honest chain split.
I can't do the math on my own, but I really doubt that an honest split could last as long as a week for example.
A how do you know which one is honest and which one is "evil"? An evil bit set? There is no way to differentiate an honest and a bad one. |
|
|
|
Price increases faster than difficulty => profit!
Difficulty increases faster than price => ruin.
Not really. With constant BTC prices, it is hard to get ruined. Difficulty increases faster than price =>small profit/no profit BTC price crash =>moderate loss It's hardly a ruin because the most you can lose is electricity cost + hardware depreciation. Buying BTC instead of mining could well bring more profit but is much more risky in case of price crash. By the way, scenario "price increases faster than difficulty" is impossible long term. Mining is already quite profitable, more price increases would lead only to even more mining activity, hence more difficulty. |
|
|
|
"Findings indicate that pregnant women with deliveries paid by Medicaid are more than twice as likely to smoke as privately insured women..."
Satisfied?
Correlation is not causation. Medicaid women are poorer and less educated which correlated with smoking. |
|
|
|
|
Assuming 40% increase in this round and another, then 30% then 25% and then 15% afterwards per each round (which is realistically optimistic I would say), you will mine 1000 BTC after 233 days). At day 233, difficulty of 4.07994e+06 results in 0.739591 BTC per day.
If the BTC exchange rate keeps rising, the difficulties will increase so rapidly that probably you will never mine 1000 BTC.
|
|
|
|
It also sets the relay limit, so if this is set to 0.0005, txes with fee<0.0005 won't be relayed and probably won't end up in a block period (unless they use -addnode to get hooked up to luke-jr's pool).
Transactions with a fee below the minimum fee set by the relay node are treated in the same way as free transactions so they will be relayed if they meet the free transaction criteria. |
|
|
|
|
With 0.0005 BTC fee per 1KB, a 1MB block is going to bring just 0.5 BTC. What about the idea that the fees were going to replace the generation bonus when it will be smaller?
Another problem with the fees is that they govern not only inclusion in the block by also relaying of the transactions. The miners are free to set the fee rules but most of the cost of processing the transactions is borne by relay nodes that get nothing.
|
|
|
|
If he's asking for a program that to show all orphaned blocks on the network, will a program be able to see all orphaned block behavior on the network or only the behavior of the local node that it's pulling data from?
Only local. But any "evil forks" has to be distributed in order to make sense. Any node that has a "good" chain will detect injection of longer "evil" chain because it will trigger reorganization. The only thing that cannot be easily detected are dying forks. A fork that is growing independently but is outrun by the main chain because such fork may never reach your node. It sounds like a supernode could accomplish this without too much trouble since it has multiple connections to have the most up to date block chain info and can listen to all transactions like bitcoinmonitor does. Someone would just have to develop the code to identify the forks?
It is possible. I remember theymos (owner of blockexplorer) stated he had plans to incorporate blocks forks. The only problem is that because it is so rare, it is quite difficult to debug the code. You can create forks on testnet but it is also quite troublesome. |
|
|
|
Is orphaned block information even broadcast on the network, or is it something that is just dropped when nodes receive new block chain information?
This type of forks is easy to detect. Every time it happens, bitcoin deamon prints "REORGANIZE" is debug.log. There is one every a few thousand blocks due to coincidental finding two blocks at roughly the same time. After that miners try to add to the chain they received first. If the one that won the race is not the one you have stored as the longest in memory, the chain reorganizes. For those who has the other chain, nothing will be printed in debug.log because no reorganization takes place. The double spend part I have no clue how to detect.
You need to look if the forked chain contains the transactions that are inconsistent with the previous chain. Since the client requires 5 confirmations, any shorter than 5 fork cannot reverse any confirmed transactions. So detecting large forks is the very first step in finding potential problems. I have never seen a fork longer than 1 on mainnet (I have seen some on testnet) and it is very rare by accident. I remember that on IRC someone claimed that after the very first slashdoting in July last year, the blocks were generated so quickly (and the network was smaller), there were quite a few longer than 1 accidental chain splits. |
|
|
|
I haven't seen such a graph, yet. So I made one myself: http://bitcoin.atspace.com/fees.htmlThe fees are still fairly insignificant (only about 0.04 BTC or 0.08% of the 50 BTC) but has gone up from zero. The first jump in fees was related to the start of fee inclusion by the Faucet. The Faucet has recently started to group the transactions to minimize the fees but there is a pickup of fees probably paid by 0.3.21 clients (low priority transactions). I wonder how large will the fees be at block 200,000 when the payout drops to 25 BTC. |
|
|
|
|
Show Posts
