Very likely it is industrial mining.

There about 3600 new  bitcoins created daily by miners. Industrial miners must pay for electricity and constant upgrades. The electric utilities do not accept bitcoin yet, and I would guess same applies for parts required by mining equipment manufacturers who are often industrial miners too. Chinese miners most likely dump bitcoins on a domestic exchange for Yuan. That narrows the field to a European or USA based industrial mine.

I will be briefly speaking on a panel discussion about mining algorithms at the Hashers United Conference in Las Vegas this October. The audience will be miners and those wanting to learn more about cryptocurrency mining. A good question for the folks I meet there is "What percent of your mined coins are sold to pay expenses?".

Here is the Blockchain.info chart for the number of daily unique addresses appearing in transactions, smoothed with a 7-day moving average. It also suggests, given that recent numbers are similar to those in March, that the bottom is behind us. I do not watch this data series as much, as perhaps gambling transactions are not filtered out.

Here is the adjusted number of daily transactions, smoothed with a 7-day moving average as calculated by Blockchain.info. Note that recent volume is above March levels, which suggests the bottom is behind us. I am closely watching this data series.

Here is a close up view of a three-day resolution chart using Bitstamp prices. The top resistance line goes back to the November 2013 peak. The bottom support line touches only two candles in that same period. I am watching this pattern unfold. I hope that prices reverse and break through the resistance, e.g. a price above $560 now, or a price above $500 at the end of October. I am buying bitcoin only once a month now, conserving petty cash for infrastructure when I launch my coin.

Here are the current cyptocurrency market capitalizations are reported by coinmarketcap.com. Note that Monero has fallen a place from 11th to 12th. Some of these coins are quite unlike Satoshi's Bitcoin, having more or less anonymous cryptographic tokens as the common feature. Supply marked with an asterisk cannot be proof-of-work mined.

Here is the three-day resolution chart for Dogecoin vs CNY on Bter as presented by BitcoinWisdom. Note what appears to be an upwards breakout of the resistance trendline that I drew from the early 2014 peak.

I have a silly favorite too, but exactly why does mine seem more convincing? It is because the logic of induction in this context has a sound connection to fundamental principles, and there is a reasonable upper bound on the scope, i.e. 100% dead, not 200% dead.

Thanks for the search tip. You are awesome CIYAM!

I spent the last 50 minutes watching an informative video on certificate man-in-the-middle attacks that linked in the OP. Fortunately, I can use SSLSniff to attack the network and trace the certificate validation through the Bouncy Castle source code to ensure that this particular attack vector is closed. I already set the X.509 Basic Constraints properly for the root, intermediate and end-user certificates. An additional hurdle for an attacker is that my system has client as well as server certificates, which I will test with the SSLSniff tool. I searched the Docker registry for a container with this already built, but it should be easy given these instructions.

SSLSniff works on a LAN, e.g. public WiFi network. This design somewhat protected by virtue of white-listed IP addresses for known full nodes.

I suppose the best defense against man-in-the-middle attacks is to use the same techniques as does the bitcoin protocol in which transaction messages are signed by the sender with their private key. I can modify the expected node heartbeat messages to include a signed hash of the inbound and outbound traffic which a network operations agent can check for omitted or extraneous messages performed by a man-in-the-middle attacker.

A goal now is to accumulate a suite of attack tools such as SSLSniff, Metasploit, etc., and record TexaiCoin responses to those attacks to back up my claim that a cooperative coin network is as secure , if not more secure, than Satoshi's Bitcoin.

Might I beg some more clarification on the X.509 attack surface given the details I provided?


Thanks for your clarification. I will amend my claim accordingly to "double-spending fraud attacks, e.g. BitUndo".

Double-spending

Here is the well known example of the Finney attack which is based upon double spending. To be clear, what I mean by double spending is the issuance of two or more bitcoin transactions such that at the time of issuance each receiver believes the transaction to be good, yet because the longest blockchain will only contain one copy of the transaction, there is the opportunity for fraud. The appearance of this service caused a great deal of consternation on the Bitcoin core developers mail list ...

BitUndo

Respectfully, I ask you to elaborate a bit on both your points.

I use the X.509 v3 certificate generation facilities provided by the well known Bouncy Castle Java library. I use the optional high encryption strength encryption policy settings provided by Oracle java. I use a self-signed root certificate that each node receives, and do not check for revocation when verifying certificate paths because in my system the certificate serves to digitally sign messages, to encrypt traffic, and to identify the full node. The subject item in the certificate is a UUID, not a real name to preserve the anonymity of the node's owner yet retain identity to preclude Sybil attacks.

Bitcoin Core already includes X.509 infrastructure for remote procedure calls, therefore that technology has been vetted by them and run in production.


Regarding double spending, I use a single nomadic mint agent that timestamps each accepted transaction and broadcasts it back into the network for archival and verification. That is a so-called single-writer to the canonical blockchain, which prevents double spending. Right?

Regrading the peer review of my May 2013, whitepaper, the Bitcoin developers that I have contacted prefer to see working code and the test suite. All are skeptical that my cooperative ideas solve the distributed consensus problem.

Regardless of what AnonyMint actually suggests, I wonder if you have a point with Ecuador.  Suppose, in some possible world differing greatly from reported plans, that Ecuador's Central Bank clones Bitcoin Core and modifies it slightly so that the Central Bank is the sole mint which can mine the digital currency. Furthermore, in this possible world, Ecuador retires its dependence on the US dollar and mandates the new digital currency as legal tender.

In this purely hypothetical scenario, this particular crypto-currency becomes 6x the market capitalization of bitcoin given Ecuador's M2 at $36 billion. All financial institutions performing transactions with Ecuador, e.g. payment card processors, bank wire processors, foreign exchange traders, etc., would all have to modify their respective software systems to accommodate Bitcoin protocol transactions and settlement procedures.

I suggest that in this scenario, Bitcoin is surpassed.

But it is likely according to reports that Ecuador will squander the opportunity as did Canada a while ago. Satoshi created Bitcoin partly because sovereign governments are not trustworthy with respect to debasing their currencies. They effectively keep a portion of M2 growth for themselves or to prop up failing banks.

Peer agents perform remote attestation of each other's behavior. Tamper-evident logs record context, inputs, actions, and outputs, which when replayed by a validating peer, confirm good behavior or detect bad behavior, e.g. a byzantine fault. The research that I referenced in the May whitepaper for this technique gives the math proving overall good behavior with up to 50% of the nodes faulty. In contrast, Satoshi's Bitcoin can be corrupted by a single mining node with 51% of the network hashing power.

In addition to remote attestation of peer behavior, TexaiCoin will include a distributed network operations center equipped with a suite of open source information security tools that will detect intrusion and unauthorized changes to the host operating system and the Docker containers in which TexaiCoin full nodes execute. As funding from block reward permits, TexaiCoin network portals, that connect to wallets and external processors, will be protected against DDoS attacks by a traffic filtering service.

Agreed. I keep a column in my data series for daily mining reward and currently it is $1.7 million at Bitstamp prices. Miners are likely selling most of this to pay for the upgrades Moore's Law provides.

I will be speaking on a mining algorithm panel at the Hasher's United Conference in Las Vegas in October, where I will briefly explain to an audience of proof-of-work miners my alternative in development. Vitalik Buterin and Charles Lee will also be there to explain Ethereum and Litecoin algorithms respectively.

Suppose that your idea gets adopted by certain countries which are the recipients of remittances, then bitcoin sent home from say the USA, could be used for another transaction before needing to be exchanged. As more and more vendors accept bitcoin, then perhaps a tipping point will be reached beyond which the need to exchange into fiat will diminish.

Here is the nine month chart of Litecoin mining difficulty as presented by Bitcoin Wisdom. Note the more rapid increase from May through July as Scrypt (fixed) ASICs displaced GPU mining rigs for that altcoin. Hash rate increased almost 8x during this period in which litecoin prices fell 6x. Interesting that the hash rate has leveled off in the past month as litecoin prices capitulated in August.

To a greater extent even than bitcoin, it appears that mining difficulty has no positive correlation with litecoin price.

Here is a graph of Bitcoin Hash Rate growth for the last couple of months as presented by Bitcoin Wisdom. I believe from news announcements that mining is not only now industrialized, but becoming more vertically integrated as manufactures operate their own miners during that crucial period where return on capital investment is possible.

There appears to be little correlation this year between bitcoin price and the mining difficulty.

I find the Christian Bible enlightening by way of analogy. I hope that altcoins are not the False Gods ...

Deuteronomy 13


Emphasis mine. Lots of good stuff in the Bible.

I do not mean that the world's total wealth cannot continue to increase exponentially, because I believe it will. Rather I am referring to the 10x average annual growth of bitcoin prices. That enormous rate of growth must end. How? Logistic models of population growth have been applied to the adoption of technology, and this is my attempt to put values into the variables of the formula. Upon full adoption, bitcoin price would move up or down in relationship to the overall economy.


On this forum, trading advice is often handed out on the basis of the author's trading position. "To the moon" Bitcoiners are presumed to hold bitcoin, and sceptics are presumed to be short or perhaps just waiting for lower prices. I hold bitcoin, and attempt to post my interpretation of facts - most of my posts are charts with some lines drawn on them.

If the logistic model is a good fit to the situation, eventually the curve will flatten out. Indeed a case could be made that is what is happening now, with the price at full adoption say  between $1000 - $3000. But the arguments in favor a higher price were made years ago by Rick Falkvinge, which I linked to on my logistic model thread ...


Regarding altcoins, I accept the widely held view that they will become valueless unless they offer some innovation that makes some people believe that they have value, in particular transaction value. When and if bitcoin rallies again to another bubble, it will probably lift all speculative altcoins as did the November 2013 bubble.

Perhaps the logistic model is better applied to the sum of all cryptocurrency market caps rather than to bitcoin alone, to account for the issues you have raised. But I will leave the model as is for at least another year on the belief that bitcoin will merely incorporate into itself, any particular innovation that would otherwise surpass it.

I suppose that one can examine the smartphone industry and observe that the first movers are not today's champions.

Regarding cryptocurrencies, I think that they have value primarily because some people consider them valuable, in particular valuable for transactions. In the collapse from the bubble peak of November 2013, blockchain altcoins available back then, e.g. Litecoin, Dogecoin, Peercoin, Namecoin, etc. have collapsed to a greater extent than bitcoin.

What is interesting is the change in the relative market capitalization of altcoins in the last few months as various innovations are put on the market in the midst of a flood of me-too altcoins. Suppose, in some possible world, that Ecuador mandates its digital currency by making an altcoin. Its M2 is about $36 billion right now, much greater than bitcoin at $6 billion.

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My own coin under development is meant to demonstrate a technology that I hope will one day be incorporated into Bitcoin to replace mining proof-of-work.

Indeed.

As I said above, I plan to refit the model next year or sooner if we get another bubble peak before the end of this year. The logistic assumption anchors the origin of the graph at the first reported bitcoin price on the left. The right hand side, namely the most current prices, is most important when hand fitting the function.

The important idea that this model brings to the analysis of bitcoin price data is that exponential growth of bitcoin prices will end.

Here is a logistic model applied to the adoption of smartphones ...



Considering, how small the relative number of bitcoin transactions is compared to the number of credit card transactions, I suppose that we are currently in the Innovators stage, or at the beginning of the Early Adopters stage.