But just one attack?! Btcex.com was attacked earlier in May. Mining pools are permanently doing tiny pilfering, while distributing BTC per workers. Mining is unprofitable at time interval = 3 months! Just 1 month ago.. it was VERY VERY profitable.

In a perfect design,
- any attack is impossible
- exchange-to-trade relations are formalized to work under condition of total distrust
- miners are normalized to be profitable single, without pools, for years
- transactions are designed to pass in soft real time guarantee
- clients are designed to invite a third party to make dealings under condition of total distrust each other

IT IS POSSIBLE, although difficult.

Jun 20, 2011

http://bitcoincharts.com/markets/

Difficulty   877227
Estimated   1138980 in 985 blks

"MtGox": text not found

***Exchange #1 in bitcoin world has been attacked***

http://bitcoinx.com/profit/index.php

Net profit first time frame: -32.15 USD (time frame = 3 months),

***mining has reached totally unprofitable***

-------------------------------

If not to mine & not to trade @ exchanges, what to do with bitcoins?!

I PREDICTED IT a month ago. Nobody listened to me.

BITCOIN has SEVERE CONCEPT & DESIGN ERRORS.

Let's wait for next difficulty change & see:

http://bitcoincharts.com/markets/
----------------------------------
Difficulty   567358
Estimated   847588 in 286 blks
----------------------------------

As I predicted earlier, bitcoin society has already started to freeze.

Not because built-in deflation mechanism,

but because of THE WRONG PARAMETERS of such a mechanism. THE WRONG PARAMETERS does normalize bitcoin society to be frozen @ equilibrium point ~ 10 000 people world-wide.

If you were selected ANOTHER TRUE PARAMETERS with the same built-in deflation, bitcoin society might grow & reach 1 000 000 peple w-w online daily.

BTC exchange races are most profitable business today, excepts drug sale

Due to bitcoin's software architecture does deperess miners by exponential manner, by design, total number of miners are reaching the saturation point these days. At this point, only electricity pilferers & large corporations will survive.

Even now, miners should group in mining pools, because individual miner with typical hardware should wait for block generation & 50 BTC reward some months, due to probability manner of mining.

Relationship & communication protocol between pools and individual miners are not formalized and guarantied, that miner will receive his profit. Pool admins, being FEW anonymous persons, have TOTAL control on mining, even today.

Mining pools are the same large goverment corporations, bitcoin system 'fights' against, esxcepting they are completely illegal & unguarantied.

It is true but nothing to do with. Difficulty is normalized BY DESIGN for number of miners with current hardware to be constant and small FOREVER.

So that various new goods, services, technologies, etc, that people sell/buy for $, in real world, -> become just NEW ATI GPU cards in bitcoin world. Because in deflation scenario with constant number of society members, $/BTC exchange playing is always more profitable than ANY business, including even mining.

Bitcoin's deflation has been starteed 2 months ago. And nearly constant number of bitcoin users DOES maintain bitcoin currency 'on the fly'.
Bitcoin IS already stable, but very tiny economics. With no change to grow.

So I agree,  Bitcoin is just modern deflation experiment in one tiny Bitcoin society.

Deflation in bitcoin society starts when mining difficulty starts to be too high for profitable mining to average miner. It has already started!

Dollar-based economy is growing (between crisises) inflationarily, because people around a world DO mine gold-equvivalent in NEW goods, services, technologies, etc., in rate at least constant (but actually exponential). For this new THINGS, US goverment DO print new 'paper' dollars.

In bitcoin, mining difficulty DOES exponentially DEPRESS the profit for sell/buy NEW goods, services, technologies, etc., for BTC.

Just keep, accumulate bitcoins & play on BTC exchanges - it simply MORE profitable than ANY business that uses bitcoin as currency, including even mining itself.

Why don't you all guys understand it?

Read my post

http://forum.bitcoin.org/index.php?topic=11245.msg160266#msg160266

again.

I've measured all the volumes. In assumption the bitcoin society is growing exponetially in number of users, it is sufficient to observe average daily volume in BTC: if it remains const, society will die, on time interval, roughly the same, as time interval of rate ($/BTC) growing.

Because BTC volume is const for 2 months, april & may 2011, if we suppose, number of users is growing according number of bitcoin client downloads, or according rate ($/BTC) growing, society should be dead already. We observe - No. => number of users is NOT growing exponetially, as fast, as number of downloads, or rate ($/BTC), or mining difficulty (all these have roughly the same parameter t0 in exp (t/t0)).

The entire picture is obvious: there are some 1000-10000 total bitcoin users world-wide including all miners, exchange players, sellers & buyers, and the are some 100000-300000 newbies who just 'play the fool' with bitcoins.

Newbies DO just 'play the fool', because if they will start seriously, bitcoin society will die almost immediately.

No problem. In this case the only parameter we should monitor - total daily volume in BTC, being circuited upon all BTC exchanges. I proof, if this volume is const, bitcoin society will freeze or collapse much before the saturation point you mentioned. I proof, time interval for such a freeze/collapse is controlled by exponential parameter: exp (t/t0), where t0 is the time, for bitcoin society to grow in e=2.71828.. times.

So, the faster is society growing, while average daily exchange volume = const, the faster society will freeze/collapse.

We observe: average daily exchange volume = const for 2 months..

You misunderstand me. I want to know just number of bitcoin users as function of time. Because bitcoin society is too small, compared with typical large country, and bitcoin is the currency, not a telescope or vynil disc, etc, business field for the bitcoin MUST be comparable with typical large country, or even with the total world.

So actually, exchange volume, difficulty algorithm, etc. are just INSTRUMENTS for me to measure (estimate) number of bitcoin users as function of time.

SHORTLY: is bitcoin society << total world? Yes. is bitcoin society growing exp (+t)? No. => It will fail @ 100% probability.
Will professional gamblers win? Yes, even if bitcoin society will fail.

You are absolutely right, but you think in terms of financial pyramid game! What you say about, is cheat, crime, but not the business. Difference is of quantitative nature - bitcoin IS the currency, and business field for the currency MUST include number of people, comparable with a typical large country.

Bitcoin is in its childhood? No problem! Just give a change to it to grow exponentially. Mining difficulty algorithm does not give such a chance. Bitcoin design is severe and totally damaged, I wrote how to fix it:

http://forum.bitcoin.org/index.php?topic=9487.msg155288#msg155288

nobody cares. anybody plays in MtGox races..

I has downloaded bitcoin client too. I do NOTHING with it, just try & forget. Download counter does signify nothing, but PR-popularity-blob around bitcoin. I apparently see a correlation between two functions, download_counter (t) and ($/BTC) (t), both ~ exp (+t). LOL))

So, 95% people are dull-witted, 5% are professional gamblers.

Any profitable business itself is when large amount of people are cheated by unapparent volume. Any major crime itself is when small amount of people are cheated by very apparent volume.

For bitcoin society to be a business, not the crime, number of society members must grow exponentially till full world will be bitcoin society.

I proof, we don't observe such a grow, neither amoung number of exchange players, nor among number of miners:
http://forum.bitcoin.org/index.php?topic=9487.msg152755#msg152755

Next step I will proof, also NOR kind & volume of goods, being traded via BTC directly, is growing exponentially. Stand by..

Now, we can not proof that bitcoin economy is growing exponetially in its number of members attracted to. Some actual data leads to suppose, there is no growing, last 2 months.

You may analize averaged BTC volume on top BTC exchanges, such as MtGox, etc:

http://bitcoincharts.com/charts/

See,

v (1) ~ const, t <- [Apr 1 2011, Jun 1 2011]
if m(t) ~ exp (t) then v_p_m (t) ~ const/exp(t) ~ exp (-t),
whrere
- v (t) - total BTC volume in work, of all BTC exchanges, per day, averaged by two-week window
- m (t) - total number of people (members) who playing on all BTC exchanges, per day
- v_p_m (t) - average BTC volume per member per day, the member plays with on all BTC exchanges

So, v_p_m (t) ~ exp (-t), in BTC, or v_p_m_$ (t) ~ exp (-t) * ($/BTC) (t), in $,
where
- $/BTC is BTC average rate, currently ~ $9.5/1BTC

For  v_p_m_$ (t) to be slightly growing, or at least const (indicates whether BTC economics is really growing),
we need ($/BTC) (t) ~ exp (+t).

Inflation? No. Deflation. Because we remember, v_p_m (t) ~ exp (-t).

Exchange members & all other bitcoin society members will keep BTC rather than sell/buy for BTC. Because keeping is simply EASY and is profitable *exponentially*, due to ($/BTC) (t) ~ exp (+t).

So, while ($/BTC) (t) ~ exp (+t), bitcoin ecomonics IS FROZEN,
furthermore, if we will see ($/BTC) (t) ~ const, in near future, it leads to
v_p_m_$ (t) ~ exp (-t). if ($/BTC) (t) ~ exp (-t), then v_p_m_$ (t) ~ exp (-2*t) => bitcoin ecomonics WILL COLLAPSE.

------------

So, THE THEOREM:

If we assume number of BTC exchange's players (members) is growing ~ exp (+t), and if we observe average BTC volume per day ~ const, bitcoin ecomonics WILL FREEZE OR COLLAPSE.

Now, average BTC volume per day on all exchanges ~ const for TWO MONTHS.

BUT APPARENTLY, averaged ($/BTC) (t) ~ exp (+t).

And also has strong correlation with mining network's difficulty.. Why?

http://en.wikipedia.org/wiki/Ultimatum_game

So, in this case,

I reject all proposals, where I get (50% - x), if x > 10% of total sum, i.e. if can't call a proposal to be roughly honest (50x50).

Note, if you select another strategy, it simply designates that you are in need of money, i.e. you feel some kind of poverty.
If you live in sufficiency, you will focus upon justice only.

Ask Kjj, he did understand me. Selling does differ in numbers - how fast, how easy, how many goods available.
If you compare dollars, bitcoin & seashells in such view, you see THE HUGE DIFFERENCE. As for now, bitcoins are much more like seashells. And you give no way for bitcoin society to grow: you can not say 'bitcoin is just in it childhood'.

Concept of the dynamic equilibrium works on large ensembles only, and also, on large time intervals, compared with single interaction's time. For now, to input/output BTC/$/goods from the bitcoin market, one may spend many hours or even days. Even if one sell/buy a small thing like T-shirt or coffee-cup or $ equivalent of that.

From physical point of view, Bitcoin society is like a highly rarefied gas, with some thousands of atoms, @ time intervals of some microseconds. It is apparently NOT an equilibrium system.

Unfortunately, bitcoin has other severe design damages. It's code should be completely rewritten from scratch, preferably in Haskell programming language. Because bitcoin algorithms has business with huge amount of money, they must be formally verified, like seL4 microkernel.

So, that is HUGE amount of work, I can not do it myself alone. I may just write 'boundary' design conditions:

- mining amount of BTC, per unit time, should be proportional to CPU/GPU power, but in degree LESS than 1, till 90% BTC will be mined, algorithm must prohibit any parallelisation like ATI GPU does with current bitcoin algorithm

- distributed system should reject any possibility to group miners or peers in pools by design: they should be completely independent forever

- mining difficulty should be normalized to attract at least 1 000 000 miners world-wide, being on-line each day, on average

- transaction propagation should work in 'soft' real time conditions: we must guaranty that ANY transaction should be completed in 10 minutes, without paying fee, and if fee is 1% of transaction volume, we must guaranty that ANY transaction should be completed in 10 seconds

- if client wish, he could able to get possibility to de-anonymize, and to attract third-party that can roll back a transaction, if second-party is unhonest

"The truth stings your eyes".

SETI @ home society was growing exponetially up to Guiness Records Book, ONLY because
- SETI @ home 'difficulty algorithm' is of small constant CPU power consumption and
- fundamental psychological idea - 'to find brothers by intellingence'.