It would be wonderful, yet dangerous, if this happened to the Bitcoin system. Why?

Objectively:

• Participation declines
• Difficulty falls
• Exchange rate falls
• Blockchain maintenance becomes less intensive
• Major changes to protocol have less resistance

Subjectively positive:

• Bitcoin falls off established institutional threat scale
• Necessary protocol changes can be more readily implemented
• Excess irrational speculation is culled

Subjectively negative:

• System domination by concentrated interests becomes a strong possibility
• Reduced external capital flows could hamper resurgence for a long time

This is being approached from the perspective that 2009-2012 was a practical, live proof-of-concept run for Bitcoin. Now that the system has proven itself resilient and viable, being suppressed would allow development, refinement, and implementation of vital features. The end result being that Bitcoin's 'second-coming' would be even more potent than the first.

As the path being pursued by current regimes strangles their own economies, national populations will finally recognize the dangers that have beset them. By then it will be too late to escape, and the search for alternatives commences. Bitcoin remains an ideal system to counter the dying paradigms, so it should make an explosive return; a dark horse to all except those with true understanding of the system and follow the developments.

None of this suggests that the USD/BTC rate will go to zero, or that the present blockchain will fall into obscurity, only that the relative shrinking of Bitcoin from today's marginal public awareness could be a boon rather than a death knell.

Excellent explanation. The way it looks is that multiple & sub-pools would be a natural result from the dynamic approach, so long as it incorporates the ability to communicate laterally, vertically, and internally.

Until then, you're right - manually bootstrapping sub-pools does offer the best path for small miners. This is very similar to multicellular development in biology

Jon Matonis Tweeted a document from 2009 by the Swiss bank Wegelin that perfectly explains the reasoning for the Paxum & TradeHill closures as well as many international banks' refusal to accept American citizens as clients.

Essentially, anything even touching US assets in any manner is considered by America to be legally liable for taxation purposes. This can mean that a Guyanese person buying stock in a Mongolian business that just happens to be listed on an exchange that performs transactions in the US could technically be liable for taxation by the American IRS. With its military might and apparent willingness to use that power, it would be foolish for small havens like Cook Islands or St. Kitts & Nevis to hold out under threat of invasion. All to maintain the hegemony of the US dollar?

The biggest bully in the global playground has upped the ante. Bitcoin may be forced underground before it returns to help shatter the destructive illusion of American dominance.

At first glance, this may appear a negative for Bitcoin - interest charged for holding a long Bitcoin position?


Yes, more interest is returned by shorting BTC.



Some of the recent drop from the mid-$5/BTC range to the high-$4/BTC level can certainly be attributed to this. How much is uncertain, but it definitely isn't propping up the rate.

Correct me if anything is mistaken...

One of the issues here is that there has recently been insufficient net capital flow from other sources to provide a major push in either direction. In order for capital to flow into the Bitcoin system, awareness and adoption need to occur. With Bitcoinica offering interest payments for long USD trading positions at a ridiculously high rate, it will catch on sooner rather than later.

Since direct naked shorting is impossible with Bitcoin and would eventually bankrupt the operator offering it, BTC must first be purchased with that newly-deposited USD capital. With some BTC now in the account, it is then possible to open a short BTC/USD position and gain that significant interest spread.

No matter what, some capital will flow into Bitcoin for every USD deposit. This can result in an initial dip, but long-term residual flows will accrue and bolster the exchange rate in Bitcoin's favor. Even if there were a stampede to the exits from Bitcoin, there will be some who can't get out and end up taking sizeable losses, that wealth then remaining within the Bitcoin system.

Most new participants don't take the time to study a market, so it's likely they will lose in the price movements. It's also very possible that some may be drawn into the trading and stay, creating a building momentum for general Bitcoin exposure.

Bitcoinica can only pay interest on balances so long as it can be maintained without bankrupting the outfit, so the high USD payment rate will decline as the exchange rate falls. That's good, because I've been waiting for the $3-4 region to be entered again so I can load up.

Clever work - thanks, Zhou!

Note: the problem is that any KYC compliance negates much of the very purpose for Bitcoin, partially because of relative anonymity and mostly because of American abuse of power.

The current git pull is:
aa520c1

No problems here, both the pool and site work.

Seconded. I have some locked 1GB 6950s as well.

Linux 2.6.38 (Ubuntu 11.04 x64)
cgminer 2.2.3 (git build)
Catalyst 11.11 64
APPSDK 2.5 (793.1)

I've gotten all of them to run stably at 920/300, also with I9, by flashing the BIOS to underclock memory.

U averages 5.20 +/- 0.10 for each card with GPUMAX. Some other pools run a bit faster, with the cards approaching 5.50 shares/minute average. The ~5% difference isn't worth giving up the gains from GPUMAX. The cards are being stressed a bit less here, meaning slightly reduced energy costs and potentially increased lifespan - all while the returns are greater.

Failover worked very well during the downtime, and picked right back up when the pool resumed. Maybe it's Linux, or cgminer's preference for the platform, but I've had none of the issues with keeping the cards fed with work. Keep in mind that it could also be related to your price per share setting being too high.

This was part of my rationale for looking into switching over to Arch, the main one being rolling updates as opposed to major point releases. That alone makes it easier to keep current. Now all I need is the time to handle the first run.

And nice Accepted/Rejected ratio

The split would likely occur on a connection speed basis, so highly geographically-oriented. If you want to keep stales low, you'll select the closest "child" p2pool(s), similar to colocation - many financial firms handling forex and algo trading already buy locations as close as possible to major trunks just to gain a few ms in response time.

If long-range quantum tunnelling becomes economically viable, the rules change again and all bets are off.

Good points about mesh nets, and I agree with the current assessment. I think that could change pretty quickly, though.

I haven't had a chance to read through your page yet; I'd be glad to discuss further - might be good to start a different thread.

I couldn't have said it better myself!

There's still plenty of room for various financial systems to interoperate on a global basis, just as there is a range of political systems that work to varying degrees of success depending on an indigenous society's biases (i.e. there is no one-size-fits all in the same way teenagers can't be managed the same way as older adults). I especially think a Bitcoin/gold hybrid as reserve platform may offer the best possible foundation for most of the world.


Your opinion is understandable. I'm curious as to what the reasoning is, though.

As an exchange currency, theoretically unlimited divisibility supports that, either directly or indirectly as highlighted by FreeMoney:


Functioning as a reserve currency relies upon the existence of modern telecommunications infrastructure, again offering a base from which derivative currencies can operate in the off-chain method suggested above. By operating in a hybrid manner alongside gold, wherein gold acts as the physical link to the abstract reserve crypto-currency, gold can be held locally or distributed as seen fit by respective owners while Bitcoin is used for large-scale balance-of-payment transfers.

Gold would only need to be physically moved when the owner decides a threshold has been met; gold stores would follow Bitcoin flows. Also, the potential of infrastructure collapse is largely mitigated, since the independent wealth store can provide a fall-back until the crypto-currency system is restored.

Decentralized operation of the system precludes complete elimination of Bitcoin by any known, conventional methods of attack by established institutions. As for physical infrastructure reliance, the move is already aimed toward mesh networks that cannot be shut down by central authorities. Adoption of such a distributed hardware environment to match decentralized software platforms is likely to occur much more rapidly than the shift from wired to wireless networking. This will remove the "kill-switch" that centralized institutions currently hold over the telecommunications infrastructure.

I think the key to all three of your points being met is the physical hardware paradigm.

If you have links to prior discussion/explanation on your position, I'd be glad to check them out.

A&M?

I suggest these tables. He should see the key significance.

	Fiat	Gold	Bitcoin	Ideal Unit
Decimal Shift:	<	>	>	Gold/Bitcoin
Divisibility:	Unlimited	Physical Limits	Unlimited	Fiat/Bitcoin
LT Price Stability:	Yes	No	Yes	Fiat/Bitcoin
Needs Infrastructure:	Yes	No	Yes	Gold
Supply Mgmt:	Central Banks	Producers	Participants	Bitcoin?

Clarification on the decimal and divisibility.

[Item Supply]	[Fiat Units]	[Fiat Price]	[Bitcoins]	[Bitcoin Price]
100	100	1.00	100	1.00
1,000	1,000	1.00	100	0.10
10,000,000	10,000,000	1.00	100	0.00001

[Item Supply]	[Bitcoins]	[Bitcoin Price]	[Decimal Shift]	[Resulting Price]
100	100	1.00	N/A	1.00
1,000	100	0.10	->x1	1.00
10,000,000	100	0.00001	->x5	1.00

• With fiat, the money supply expands indefinitely as per the issuer.
• With gold, the money supply expands according to producer capacity and can be divided to about the gram level.
• With Bitcoin, the money supply can be subdivided indefinitely as market forces demand.

If fiat were to be reversed in its decimal movement, it would preserve purchasing power. However, the problem of management would remain.

Gold's greatest benefit now is that it might be all that's left in the event of infrastructure collapse.

Bitcoin offers price stability and a stable purchasing power all in one, effectively satisfying the Triffin dilemma.

This could be useful, particularly in reserving some power for solo mining without it being evenly split among others.

On another note, is there a record for lowest Rejected/Accepted ratio? I'm at 0.12% with A:>5k. I have to say, pool choice can make a big difference.

I should've said 5/01 for both, so I'd win by default if either hit within the next three months. Does this mean I should be rooting for QE3 & WWIII?

No worries, trial & error is a learning process - personally, I'd rather fail and learn than succeed without understanding why. Try going through this thread and experiment with different methods, then choose the one that works best for you.

Nor is there a spoon.

Read & debate (PDF); from Martin Armstrong.

Yes, thank you for clarifying - solution nonce/private key is what I should've said

From our perspectives here and now, 2^256 does seem incalculably enormous. So did multiple gigabytes of memory when 640k was supposed to be Moore than anyone would need. Consider the breakthroughs occurring on a regular basis with graphene as a potential successor to silicon for ICs and rapid advances in quantum computing.

Even if the Bitcoin protocol eventually shifts to another algorithm old coins that have been lost will still remain in the system, so long as there is some form of backward compatibility. Should there be widespread adoption, a single full BTC could be worth an enormous amount of relative wealth. For familiarity and simplicity, let's hypothetically assume a 1x10^15 USD size global economy (1 quadrillion dollars) that has fully transformed to a Bitcoin economy (pick any date, let's say 2020).

1,000,000,000,000,000 / 21,000,000 = ~47.6mm USD/BTC

Assuming 0.5% loss at that point means there will be:

21,000,000 * 0.005 = 105,000 lost BTC

That's a good number of Bitcoins that would be worth a lot of money in the above scenario.

1x10^15 * 0.005 = $5,000,000,000,000 equivalent

For a potential bounty of $5 trillion today, you can bet there'd be dozens of contestants vying for the prize(s). Even at 100th the reward ($10 trillion), the pot would still be worth $50 billion, and System D is estimated to be a $10 trillion USD market that could conceivably adopt Bitcoin very readily. It would only be a matter of time before some enterprising mathematician(s) decided to tackle the conundrum; after all, people have worked on far more difficult solutions for free.

You could call it a lottery for people who can do math. There may even be countdowns as the last 'lost coins' are reclaimed, allowing the protocol to sever the backward compatible cruft and forge ahead with renewed freedom.

An alternative would be that a parallel, more advanced system is developed, letting the existing Bitcoin platform languish to a point where it becomes susceptible to other attacks. The residual wealth could then be extracted before it collapses entirely. Hypothetically.

Kurzweil offers an analysis of the powerful returns from aggregate advances in technology. Everything has held quite accurately so far, and it certainly does seem that the pace has accelerated even from the Internet's rise during the 1990s.

We just have to keep the curve in mind...


Getting way out there, I've also speculated on the possibility that generalized Bitcoin systems could lay the foundation for a super-intelligence which we may need to merge with or face extinction, so maybe this monetary stuff won't even hold that much importance. All that, and I have a normal haircut

Thanks for the compliments; there are a lot of strong thinkers in the Bitcoin community. Much of what I've put together is based on prior ideas from the likes of Martin Armstrong, Jim Sinclair, FOFOA, Ray Kurzweil, et al.


Lost coins are a short-term factor, but long-term they shouldn't be an issue. As hashing power rises, it should become progressively easier to find a particular hash sequence to allow lost coins to be used. This would be akin to recycling or exploring sunken shipwrecks for treasure: it isn't economically practical today, but very likely will be in a not-too-distant future.


Yes, that's what I was moving toward with this (aside from lost units):


So you're right - in general we don't use the term deflation in isolation, but in relation to other asset classes (including population). Sometimes the uses get conflated, so it can help to separate them. Of course, Bitcoin's asymptotic limit is much more rigid than that of gold and closer to being truly deflationary in all senses.


Yes, and it says a lot when the adoption rate in external capital inflows have been able to push the exchange rate up regardless of the hyperinflation.


Good observation - businesses can't project for future orders without a stable financial platform. This is why fiat works so well for price stability by matching economic growth.

I consider gold's history to be the most relevant proxy for Bitcoin's development. Gold wasn't always used as savings - it started out as a transactional currency or conduit for transfer of other assets, just as Bitcoin is performing now. Since gold wasn't immediately useful as food or for tools, it served best as a means of acquiring things that would make life easier. Mostly very high net-worth individuals held it for wealth storage until relatively recently.

There's some further technical analysis comparison in addition to this chart:




It's just a shame many Austrian economists consider Bitcoin to be little more than a curiosity doomed to failure, generally because of anachronistically arbitrary assumptions based on the commodity origins of money. Maybe that's because of so much time spent applying mathematics practically while being wary of the purely abstract?


That's key - and it's been attempted before with earlier e-currencies, but Bitcoin finally hit on the magic formula.

e-gold:Myspace as Bitcoin:Facebook

CPU->GPU->FPGA->ASIC->?

Fixed

Ah, yes - the delayed reaction. Have to agree there as well. I still see external capital inflows amplifying those processes until Bitcoin has gone mainstream, so things will probably be more pronounced and volatile than anyone would expect for quite a while no matter what. Lots of factors to consider.

"The greatest shortcoming of the human race is our inability to understand the exponential function."
Albert A. Bartlett, Ph.D
Professor of Physics at the University of Colorado at Boulder

I agree with you that a decline in mining would affect the exchange rate in Bitcoin's favor, but there are other factors as well - capital flows from larger economies' currencies could very easily cause another spike in demand for Bitcoins which would result in an equally large rise in the exchange rates.

CPU->GPU->FPGA->ASIC certainly looks to be a natural progression for Bitcoin's future.