@ Inaba, please may I appeal that you refrain from mockery and vitriolic outbursts.  I understand you are not officially representing BFL with this identity and understand also how some (particularly Frizz) may be driving you up the wall.

However, your day-job role as the face of BFL means your conduct is part of how people form their opinion of the company.

Before deciding to place my order with BFL I took quite some time reading the various threads and in the end decided the potential positives slightly outweighed the negatives.  Of course the negative risk, especially on the integrity of the company, is simply a judgement and one of the factors was, and continues to be, the way you talk to customers and critics.  It plays a part in how professional an outfit BFL comes over as and though it would be in my long-term interest if you continued (if BFL delivers to me whilst your outbursts put off other potential purchasers) I would rather you learned not to.

One trick I have learned with emails (and it wasn't a quick, cheap lesson either!) is to recognise when I'm typing angrily, to keep typing and let rip - then resist the temptation to press send, instead simply saving in drafts and coming back to it in the morning.  By doing this a lot I have learned not only do I end up not writing so disrespectfully (even when I am certain that the intended recipient had thoroughly earned my disrespect) but the essential points I want to make invariably come across clearer to an order of magnitude.

Of course this is a forum where quick banter back and forth is the order of the day and people shouldn't be too sensitive but it's also always worth bearing in mind there are a lot more readers seeing what you've written than your intended target.  And even if it's right that some get a verbal slap now and again why not leave it to the others and simply and calmly point out errors with clarifications for the record?

Sorry if this comes over as patronising but I wanted to express it.

Thank you for using 'ROI' in its correct meaning.  It's probably not the first time I've read it here but it's the first time I've noticed. It's been bugging me more than it should that the majority here talk of ROI as break even point, i.e. the point at which your returns on your investment has paid for the investment.

What's more, lo and behold a couple of posts later we have another example of 'ROI' being used correctly:
As I understand it the ROI is the percentage return, not the date - which is 100% ROI or break even point.

I like that one, thanks

I don't think we have an essential disagreement here. I just wanted to draw attention to my opinion that things like belief in the longer-term rise of BTC v. USD and desire to support the project mean there are more factors at play in the decision whether or not to switch off a mining rig than there are in the vast majority of trades going on in the comparatively ultra-liquid trades of the professional trading game where nothing but profit counts.

I don't think you've understood what I intended to say - or I'm not reading you right...

I was talking of a classic pyramid or MLM model where there is a direct benefit to be gained from people who are sold to or 'recruited' by those who recruited them and by those who recruited them etc.

The difference in my eyes between a marketing scheme that is doomed to fail and one that I'd count as constructive commerce is whether the which the vast majority of participants (including and especially the 'bottom layer') have derived value from the initial transaction irrespective of any further profits.

Where this is the case, say if I bought a plastic sandwich box and was happy that the combination of quality/price meant I got good value then it makes no odds whether it was bought from a shop or from an MLM scheme.  The only difference is how the profits are split - and that's only of interest if the buyer, in additional to being content with initial purchase value, is interested in further participation by marketing him/herself.

I'm afraid I don't understand what you're saying about what I said that is like 'every company that is running today'.  I'd be happy to elaborate or does my further explanation clear it up for you?

Note I've not yet brought Bitcoin into the equation.  I wanted to try and separate out detrimental and positive aspects of schemes generally classified as 'ponzi' first.  Mushing up concepts like greed and fraud and bound-to-fail and profiteering and small numbers making massive money etc. in one emotive word then jumping in on the 'Oh yes it is, Oh no it isn't' pantomime virtually guarantees the discussion can not move forward.

I don't understand this sorry.  Are you talking about a normal business, a marketing scheme of some sort or something to do with Bitcoin?  I don't know of the 'hostess and the executive' example you gave nor what it is meant to illustrate.

I love the potential of Bitcoin to circumnavigate governments' restrictions on what you can and can't do with your money.  However, right now in instances such as the Palestinian situation I'm far from convinced it's a good idea.

I'm not telling anybody not to do it but I think the following considerations should be taken very seriously:

i) The history of militant/terrorist/liberation movements tells us corruption is likely to be the modus operandi in such circumstances.  I can't comment about the particular Gaza situation but tools such as protection rackets and the commandeering of private property and assets are the kind of things I would expect to see.  There is more than a small chance that any Bitcoin contributed would end in the hands of those who would use it for arms etc. If that's  your intention that's one thing.  But unless you're really confident in the person/organisation to which you're contributing (i.e. have verified their integrity by trusted third parties) I'd be very wary of the likelihood of your contribution not serving the well-meaning purpose you'd intended.

ii) Israel and its powerful allies, not least the US, aren't particularly fond of people attempting to circumnavigate the decisions they have made - such as the embago - which they believe to be in the best interest of their people.  To do this is I believe painting a massive target on Bitcoin WAAAY too early.  Bitcoin may well be much more distributed, used and secure than it was this time last year but on the big scale of things it's tiny and still in my opinion vulnerable to having much of its life blood squished out of it should the powers that be decide it's not in their interest to let the experiment continue.  

Whether and when an attempt is made to criminalise Bitcoin or to put such obstacles in place to make widespread use very unlikely one thing that will count for a lot is how it is viewed in the public eye.  The WordPress thing helps enormously as would things like seeing its use in bringing communities out of poverty by facilitating trading (see my charity proposal thread).  A lot of this is just going to keep happening with time with Bitcoin getting more resilient to a large attack the whole while.

But for now my preference, despite the plight of those currently suffering in situations such as Gaza, is that we each of us hold back from using Bitcoin for such controversial uses unless we absolutely feel it would be wrong to withhold our assistance and we have a realistic idea of its chances of getting to its intended beneficiaries.

More coverage on this story from American Banker and IEEE's Spectrum.  I particularly like Spectrum's analogy of the lonely school kid whose now hanging out with in crowd!

Sorry, I didn't spot you'd already mentioned Pingit in your OP - but it is £250 max (£500 weekly?), not £100 as you stated - and personally I really like the combination of gadgetry and security features that it utilises.

Did you try Bitinstant's UseMyFunds service?  I'd be interested to know if it's up and running.  It's an interesting concept as they seem to access funds by logging onto our on-line banking through an API and transferring funds that way.  If I remember correctly UseMyFunds only works with NatWest or Barclays.

Whilst it is good that you are not minding paying a bit more to get the service you want (because it drives new innovation in service provision) you need to remember banks are not making it easy.  Until Barclays stopped taking money for MtGox you would have been able to make a simple transfer that way.  Intersango also used to offer a means of depositing pounds but I don't know what happened there. 

There are a good few people putting quite a lot into trying to make Bitcoin more easily accessible in order to facilitate growth and reduce the odds of the project going belly up.  In the meantime you're getting a few pointers here so a little thanks wouldn't go amiss before you complain the suggested solutions are not good enough for you.

I set up a Barclays Pingit account on my Android phone on Friday, linked my LloydsTSB current account to it (you don't need a Barclays account - any UK bank account will do), 'charged up' my Pingit account at a Barclays ATM and within minutes I had Bitcoin in a blockchain.info wallet I'd also just set up.  Rate's OK but it still works out pretty expensive with commission at almost 6%.

Tempted to try Pteppic next time.  Wire transfer to MtGox takes long at the best of times but feels like forever when the market's on the move!  Bitinstant had a service that links to your bank account but as helpful as they were in terms of comms after a few days of failing to get it to work the service was taken down and I haven't tried it since.  I'll be wanting to use localbitcoins.com too in the future.

My overall policy is to use MtGox for large transfers and for 'trading' but to try using other means, preferably dealing with individuals for day-to-day use.  This is because I see the dominance of MtGox as a weak point in  the bigger of the Bitcoin project at the moment.

OK, so I know this may be a little premature given nobody knows for certain whether they actually exist yet but...

This is a question for miners for whom part of your reason for mining is to secure the Bitcoin network and to play your part in reducing the odds of the project failing.

When the time comes that you're replacing your 1st generation ASICs, rather than trading in or selling them on would you consider contributing them (at the cost of slower ROI on your new gear) to seed Bitcoin economies in developing countries?

If there's enough interest the idea is that I would set up a charity and raise money to purchase solar PV units sufficient to power the donated units by the time I receive them.

In the meantime, if it's looking like it's going to happen I/we could search out budding entrepreneurs who are looking for investment in communities where smartphones have hit but Mastercard/Visa/e-currencies haven't yet got a foothold¹ and send them a rig and the means to power it with no charge².  My guess is that these folks would be less likely to just hoard and more likely first to find a means of exchanging to their own currency then when they can point their suppliers to an exchanger, to pay their supplier and so forth.

I have two reasons for liking this idea:  First I just love the idea of open-source money combined with mobile comms lubricating commerce and giving these people the chance like never before to climb out of the situation they're in.  Second, as much as a coup the WordPress announcement is for us in terms of making it less politically attractive for the powers that be to attack Bitcoin, having Bitcoin spreading like wildfire enabling the poverty-stricken to better their own lives would make it politically suicidal - thus decreasing the odds of the Bitcoin project coming under attack and making it more secure and valuable in the long term.

Thoughts?


¹ That may rule out places like South Africa where though they may be paying through the nose for them, electronic payments are already prevalent - see here

² How to ascertain who best to empower with one is not something I'm entirely comfortable with (too much like playing god) so this would require proper research and leaning on the experience of NGOs to try ensure they don't land in the wrong hands (no point giving it to someone who will abuse it or to someone who will just have it taken from them by gangs, militia or governments).

I think the simple reason people think of Bitcoin as a ponzi scheme is it is that for people who are either against Bitcoin or, who out of concern for we brainwashed want to warn us against Bitcoin, 'ponzi' is a great FUD term and repeating it, using it in headlines etc. perpetuates its association with Bitcoin.

I never participated in pyramid/ponzi/mlm schemes but have been attracted to them and not believing the legal/illegal differentiation is what counts, wanted to get to the bottom of the difference between such a scheme that is beneficial and one that is detrimental to its participants.

My reasoning went like this:  If the benefit to participants is solely profits from those further down the chain it will sooner or later collapse - and when it does, by necessity the vast vast majority of participants will lose.

If there is a product or service being sold along with the promise of profits from those further down the chain and the product or service is one that is not (without the potential profits) worth the money paid then it will sooner or later collapse - and when it does, by necessity the vast majority of participants will lose - although they will at least have something to show for it!

However, if there is a product or service being sold (with or without a promise) and it is a product or service that would be of value at the asking price regardless of potential profits from marketing then every buyer as well as every seller, regardless of where in the chain, have gained.  So why would it collapse?

Granted there are many who hate the idea of those towards the top of MLM schemes making so much more money from doing basically the same thing as what the last-in-chain seller is doing.  Many people also still believe if someone has made a heap of money by necessity there is someone else who has suffered as a consequence.  This can't be helped.  But I think it is helpful to tease apart the elements making up the varied interpretation of what makes a ponzi because it then gives us the conceptual tools to see which aspects may be relevant to Bitcoin and which aren't.

It is understandable that we for whom smartphones are the culmination of centuries of commerce, technology, political freedom and affluence think it strange that poverty-stricken countries (and I'm not necessarily referring to SA here) are not following the same sequence in their own progress.

I find it really exciting that a rapidly growing number of people who may still need to walk for dirty water and live in impoverished conditions have access to communications technology - and now Bitcoin too.  I can't find a link a the moment but there's some amazing figures regarding growth of trade when mobiles hit poverty-stricken districts - and that's before Bitcoin is added to the mix!  This combination may not provide the whole answer but maybe along with some means of alleviating the negative impact of land speculation such as Land Value Tax (an interesting Blog about LVT's potential in India) it may end up that we Westerners wake up to the biggest changes ahead by example of the developing world.

Surely not?  If difficulty goes up such that mining is not profitable at current prices it the 'only sensible thing to do is to switch off' applies i) if one needs to sell mined coin immediately to cover electricity costs; ii) if one believes price:difficulty ration is not going to get better; iii) if profit is more highly valued than the joy of knowing the contribution to the bitcoin economy that is being made.

Of course, on average price is likely to reflect people taking the 'sensible' choice but it doesn't necessarily mean each individual is programmed to follow what market rules tell them they should do moment-by-moment.

I love this discussion process.  I just went to do a little research to get my facts straight before criticising those who were saying plants metabolise CO₂ only to find my idea of metabolism was erroneous    I had been assuming the releasing of energy through the breakdown of sugars with Oxygen was metabolism whereas photosynthesis, being the creation of sugars from energy and CO₂ was not metabloism.  I discover instead both are metabolic processes, the former being catabolic (desctructive) metabolism and the latter anabolic (creative) metabolism.  Awesome

Many people assume plants only use CO₂ and through photosynthesis turn it into Oxygen whilst we animals respire turning Oxygen back into CO₂.  The point I wanted to make is that plants also respire, that they use the energy of the sun to provide them with the sugars and oxygen they need to respire.  The Oxygen released is that which is surplus to the plant's own requirements.

But reading the comments I'd intended to correct I find there was no such misconception evident there.  That 'plants metabolize CO₂' is, I now understand, correct   Thank you!

+1

I think that would make interesting reading and would be useful to see trends within the current¹ model.

I don't see this as being a dead horse.  The reason I started the thread was because it's one of those topics for which people seem to have opposing opinions which also didn't, at least in the threads I was coming across, have links referring back to earlier..


Had I been able to follow the trail, not only to a consensus but to the reasoned debate that lead to that consensus I would not have started the thread².  Many who have been around some time may well have heard enough to come to and to be happy with their own conclusions.  I was not confident enough by what I could garner that I wasn't missing something obvious so I asked - and have consequently learned thanks to the discussion that ensued.  And if this thread facilitated my getting to a better understanding it may also for others.

¹ If we're talking trends rather than apparently random jumps then although it would be interesting to see figures from the cpu/gpu/fpga eras I guess the trends from when the ASIC landscape can first be ascertained is what will potentially have the most predictive value.

² An example of a topic where I was able, by following the trail of links, find what I needed to without having to ask was whether difficulty follows price, price follows difficulty, whether they both follow something else, whether there's an interdependency and what circumstances may lead to exceptional behaviours that throw the patterns out.

Not meaning to pick on you this morning bobitza but with the impression there may be too much agreement going on here I'll stick my oar in...

I disagree with the idea that GPU miners 'can't be screwed' by ASIC investment.  I'm guessing you mean GPU miners who already broke-even and are re-investing profit.  But by no means does this apply to all GPU miners - i) because they may have been late to come on board and are yet to break even; ii) because they may be investing way more than they've profited, out of overconfidence arising out of profitability to date, out of fear of being left behind or simply because they conclude it's a good time to be risking more.

More to the point I would venture to suggest those who look at losing money earned by one means differently to the way they look at losing money earned by another means are seeing things from a hobbyist perspective.  Serious business folk who want to remain in business, once the money is earned, look at it simply as money.  How it was earned does not affect the risk involved.  Of course there is a difference between money already designated to risk for further gain and money 'borrowed' from safer projects it might originally been intended for (such as retirement funds etc.).  But it matters not whether the money came from a nice severance deal, from speculation in other fields such as shares or property or from GPU mining.  For those who have money designated to risky ventures, just as for everyone else, the risk is of losing it.  Losing it just has a much lesser potential impact than it does for those risking money they maybe shouldn't be (regardless of whether or not they have a history of GPU mining).

Maybe the distinction between who is potentially screwed or not could more helpfully looked at as those who are risking what they can afford to lose versus those who are risking more (maybe way more) than they can afford to lose.  I would suggest it is the latter who have, depending on which of the various predictions put forward in this thread come to be, a reasonable chance of being screwed.

First if you don't mind I'll group your loss-leader scenario with the idea of mining equipment manufacturers large-scale mining themselves and call them 'party spoilers'.  I am more persuaded having discussed the latter with bcpokey and others further up the thread that it is not entirely unfeasible that this should occur.  I can also see circumstances much further down the line being such that the loss-leader scenario comes to be.  There are probably other 'party spoilers' to add to these two too that could come along and change the  dynamics that have been driving the market to date and will do so again after the introduction of ASICs¹

I think there is some value though in looking at what is likely to happen in the absence of the rulebook being thrown out of the window by game-changers.  Is the trend more likely to drive towards smaller numbers of large mining operations or larger numbers of small mining operations?


I'm not finding it hard to accept, given the discussions I've read and participated in so far, that Bitcoin mining is pretty much a 'perfectly competitive market' - even though I acknowledge this is by no means accepted comprehensively across the boards.  But as you say, the 'perfect market' thing is about profit margins heading close to and staying at near zero.  It may be historically (in the history of economics, not in the history of Bitcoin) that where this is the case the number of players almost always diminishes seriously too but nobody proclaiming this as a probable outcome has yet given me a reason to believe this is a likely fate for Bitcoin mining.

The key difference I see is the lack of economies of scale.  Mining gear manufacturers have a serious disincentive to be selling at volume discounts because of the peculiar aspect of mining that each unit sold diminishes potential sales value of future sales indefinitely.  We don't have to imagine this because it is evident today in the price of pre-order ASICs.  I'd like someone to give me another example of a 'production line tool'  where someone spending $60,000 is paying virtually the same 'per output unit capacity' as someone paying $600.  Where is the advantage of the big player here?  There's also a level playing field in sales price of Bitcoin; there's no potential for 'exclusive deals' with customers to prevent them from buying from the competition.  On top of that, any discounts in electricity prices that may be enjoyed by massive operations is counterbalanced by the lack of other overheads for the hobbyist or 'homesteader' miner.  Please tell me what force you foresee playing the role of pushing the little man out of the game?  I still can't see it.  The 'perfect market' pushes out the less efficient but if breakeven point and longer-term ROI are virtually the same regardless of scale what has size got to do with who wins?

bcpokey gives an example of someone earning so little from their small rig that they can't be bothered to leave it switched on.  But if ROI is the same, isn't it just as likely that someone with half a millinon's worth of gear will also take their attention and money to something more attractive?  But due to the 'perfect market' ever driving towards efficiency, for every person making what is in the pure sense an 'illogical' decision (though personal circumstances may make it a good decision for them) there'll be someone else taking advantage of it and driving margins back to near zero.

Unless a 'party spoiler' comes along which would make both biggest and smallest miners also-rans, the current  circumstance is likely to be around for at least some time.  This leaves me still lacking reason to believe that there's something within the model that is going to drive out the small guy - just for being small - nor that there's something that's going to make success easier for the big guy - by virtue of being big.

Thoughts?

¹ Right now we are sort-of in limbo in that whilst ASICs are being invested in they're not (directly) affecting difficulty and indicators such as difficulty following price are out of the window for the time being.

May I suggest your distaste for the concept of 'community' might be colouring your impression of what was being said here?  From what I can see repentance is saying that we should not assume people-who-use-Bitcoin-and-hang-out-here act primarily in the best interests of the project.  As far as I can see there is no suggestion in repentence's post that people-who-use-Bitcoin-and-hang-out-here should form some sort of collective responsibility for one another.  I'm not saying there aren't people-who-use-Bitcoin-and-hang-out-here who believe in the wider implications of the word 'community' - those nuances that are more noble in some eyes whilst more abhorrent in others' (notice I'm not nailing my own colours to the mast here).

I would tend to agree with your assertion that the term 'Bitcoin community' is meaningless if the vast majority of Bitcoin users had very little of interest in common (including Bitcoin), did not regularly participate in a forum (in the wider sense) of people discussing it and related issues and instead simply used it on a day-to-day basis for their own gain (again I'm not intending to imply a value judgement here) as is the case with the examples you gave.  But what makes me smile a little at your rant (if I may call it that) is the reason you have an audience at all is that there are people-who-use-Bitcoin-and-hang-out-here.

What I'm saying is that sometimes people-who-use-Bitcoin-and-hang-out-here might want to refer to people-who-use-Bitcoin-and-hang-out-here without using so many letters and hyphens - and 'community' seems to be a word that fits the bill.

Sorry but to me an 'exclusive club' is one that I either can't get into without membership which is difficult and expensive to obtain or one that has deliberately high price on-the-door to keep the riff-raff out, not one that has a reasonable charge, affordable to most, on-the-door regardless of who you are!

I agree with lophie.  The option to use your GPU (or even CPU) to experiment with and get the principles is still open.  The only difference is one has to decide to buy some equipment specifically for mining.  It is all but exclusive when you think the cheapest ASICs are within the price range of even most students and that the breakeven point for the student with one Jalapeno is not far off the same as for the biggest 'farmers' with their massive stups - especially if you think a good proportion of students live in accommodation where their rent is inclusive of electricity bills.

I know this wasn't addressed to me but I'll chip in anyway:

The weakness I see with this argument is that by the time we're at point #4) the difficulty has got so high that even with a much discounted sale price there's little profit per unit to be made from them for the buyer.

Now I know it is difficult to imagine it now with the difference in power consumption between ASICs and GPUs being so massive but by the time we get to this stage the cost of purchase of the equipment is less relevant to whether mining is profitable as the price of electricity to power them.  If the ASIC seller kept selling them and lowering the price till it was not worth selling them then the profit margin on them would be so low that he doesn't really have that much advantage over his customers anymore.

Of course it could be argued they would stop selling and switch to mining before reducing the price too much.  But if that's the case, if the plan was to make most money from mining they could have done that from day 1?  As far as we know they haven't and won't (though I know some argue they will before shipping the first sales but that's another argument).  

But my main point is even if they did go into large-scale mining when you fear they will, with so much identical kit already out there mining, with at least some of it having already reached its breakeven point what is the mechanism by which you see them taking over their competitors or putting them out of business?  Unless they also locate themselves in cheap/renewable power areas I don't see them being able to gain any significant share of the market.

On this different opinion we have of the mindset of the typical VC:  I did not mean to imply they are afraid to lose money.  Of course they expect to lose out for a significant number of their ventures and maybe I did go too far in the other direction.  My point is that risk v. potential gain is what drives it.  When I'm talking about VCs I'm not talking about anyone with money to invest.  I'm talking about serial investors whose profession it is to decide what to go for and what not to.  They need to be able have a reasonable means of quantifying both the risk and potential return.  What's more, they need to be in a situation where the venture can have increasing control over both factors with time.  It is my opinion on this that a Bitcoin mining venture offers none of the above.  I believe as I said in the OP that serious investors (those who are investing more than they can afford easily afford to lose or who are investing with others' money) are in one of a number of positions:  i) they know stuff I believe is unknowable at this point; ii) they are blinded by hope or iii) they acknowledge the high risk involved, see that there is a chance even a small one to make some money quickly and 'take a punt'.

Again, it is these unknown and unknowable factors which will cut out any interest from serious investors, whether individuals, or institutions looking for ventures to add to their portfolios.  They'll just take a quick look at the risk to potential gain combined with the total lack of control and will walk away - as I guess they have since this first hit the news.  I'm not saying individuals didn't find friends/family to back them, nor that others managed to sell shares within the Bitcoin community.  But I don't think it's because mining 'isn't big enough' that's the reason they stay away.

So from this we can guess the likelihood is a higher proportion of the ASIC hashing power will come from a smaller number of miners which as you say concentrates a higher percentage in the hands of fewer.  But essentially everybody who is investing anything up to the maximum they can realistically afford (no matter how big) is in the same boat as you illustrate below:


I only disagree with your conclusion.  Because at the end of the day, relative to the amount of their investment according to these sums both the big investor and the small are exactly in the same situation.  One has no more incentive or disincentive to switch off providing they own their own equipment/business.  If anything it's the bigger one who may be in trouble if he's borrowed or has shareholders who are now looking at what they're earning on the amount they invested.  Overall they've done OK but they're better off cashing out and finding something lucrative counting themselves lucky their equipment arrived in time to make something before profitability more-or-less disappeared.

Again, thanks for throwing these ideas around with me.  tf