+1 sc8nt4u.

I bought fans thanks to this Marketplace post
http://bitcointalk.org/index.php?topic=4336.0

Am I the only who thinks that if you think it's not worth mining solo, it's not worth mining at all?  50 BTC is not a fortune and if you cannot get it in reasonable time, it's probably not worth bothering anyway. Pools are great if you want to get some initial small amount of bitcoins fast but in long term, it's too boring. Start with a pool, get some bitcoins and then mine solo. You can at least have some thrills like in lottery (which Bitcoin mining is).

There are many definitions of fiat. The very same Wikipedia article has one of the definitions as:
    * money without intrinsic value.

Bitcoin fills into this definition.

Is it called differently? The forum section is called "mining". The programs are miners, etc.

But anyway, bitcoin is very far from gold. A lump of gold conducts electricity very well, does not corrode, is a good catalyst and you can make w nice shiny ring out of it. Bitcoin is neither. Bitcoin is absolutely non-physical. Face it: bitcoin is fiat. But Bitcoin is not an ordinary fiat. Bitcoin is decentralized. This is the only truly novel feature of Bitcoin because finite supply is non-novel, there are a lot of finite supply tokens (e.g, collectors coins).

Be aware that the sendmany transactions will take a very long time to get accepted at the current stage of the Bitcoin network.  I sent a sendmany transaction yesterday morning and it still has not reached any 0.3.21 version mined block. Since the old bitcoind versions do not even relay such transactions, unless you mine with 0.3.21 or are connected to a node that accepts such transactions, you are not going to get it confirmed.

They can invalidate all their transactions and allow anybody else to double spend. I'm pretty sure there will be quite a few of "regular bitcoiners" who will take advantage of this opportunity.

edit: And of course they will invalidate all the mined coins from the reversed blocks and all transactions originating from the mined blocks. Quite a mess.

He transferred all the bitcoins into a single address.

Whoever it was, it controlled a single wallet. It could have been a distributed network but under one command.

True. But it is equivalent of death of Bitcoin as a currency. A small attack, reversing a few blocks would probably not be fatal for Bitcoin. But a large one? I doubt it. Who would trust it?  Building the bitcoin chain in parallel and reversing all transactions from, say, last week would, for instance, cripple bitcoin exchanges if they would be required to refund the reversed purchases. And it can be done in a stealth way so the community cannot do any countermeasures until after it happens.

I'm not saying "easily". But it's doable.


It is more profitable just to mine than to double spend but we are discussing destroying Bitcoin, not profiting from that. 


We are discussing in a thread which starts with "Though experiment".  I'm just saying with 50% of network hash, one can destroy Bitcoin. Period. It's in the principles and it is described in the Satoshi's technical paper. One does not need to go into some elaborate "difficulty hiking" to destroy Bitcoin. 500 GH/s of network power is not peanuts but there are a few dozen entities that can pull that.

Tianhe-1A has 7168 Teslas and with 80 MH/s each, the supercomputer can get 573 GH/s from the GPUs alone. Then, it has 14,336 Xeon X5670 processors, each capable of 19 MH/s=272 GH/s. Total 845 GH/s equivalent to difficulty 140,000.

The quoted 2.5 PFLOPs for Tianhe is with the loss on interconnections. For bitcoin mining, the network is irrelevant and better figure is the peak 4.7 PFLOPs.

Anyway, supercomputers sound sexy and all but you don't need a supercomputer for Bitcoin hashing. The biggest trouble with a supercomputer is to get so much computing power in one place, with fast connections. But you can attack Bitcoin with 10 smaller supercomputers or with a botnet. Mystery Miner achieved 400 GH/s at his peak, and could have reversed transactions.

Currently, the strongest Bitcoin defense is irrelevancy. Nobody cares about destroying Bitcoin, yet. And if Bitcoin becomes relevant, the attack will be more difficult.

It doesn't matter because it will have almost the same impact. The recent version has hardcoded block 105000 so anything from block 105000 can be voided. It would make a lot of wallets thinner and kill all the trust in the system.

Why initiate such a lame attack? Anybody who can generate 2106 quickly can generate an alternative blockchain and inject it into the bitcoin network. Since all the nodes rely on the longest chain, they will accept it as the current one. It will render all the transactions (and hence all the bitcoins owned) from the current blockchain void. Alternatively, it can more slowly, continue with the current blockchain but generate so many blocks that enables the attacker to reverse  transactions at will and make any trust in Bitcoin disappear.

Well, yes.


I'm not claiming it is insignificant but the profitability is still much larger. And you are neglecting quite a lot of market with only electricity costs (and there are also miners with no electricity costs). Take compute4cash participants. They bought equipment for gaming and are just using it for mining when idle. There is no capital cost involved.



You don't have to invest in new equipment. As long as BTCs that trickle are worth more than electricity and the expected payoff is larger than the resale value of the equipment, the miners will stay online. And this is sufficient for keeping the difficulty high.

I agree.


I disagree. You analyzed only a short period of time, a time far from equilibrium. Long-term price/difficulty ratios are trending down:
http://bitcoin.atspace.com/income.html

and there is still a lot of going on and the equilibrium is not yet achieved.

The trend was down due to increases of efficiency in CPU mining and introducing of GPU mining. But until recently, mining was oligopolistic. Only tech-savvy people were able to mine with GPUs but it has become more "democratic". Pools which are a recent invention also changed the dynamic quite a bit. These processes are not over. Moreover, mining is still too profitable for anybody to drop out. Mining income for ATI cards is still a few times the electricity prices. Including equipment depreciation does not change it. And there is still a possible a dynamic of concentration of mining in countries with cheap electricity. $/BTC/difficulty ratios that are unprofitable for countries with expensive electricity will still be fairly profitable for those with cheap electricity. 

And there is still possibility of botnets or others with "free" electricity and the recent "mystery miner" that changed current difficulty substantially might have been such an example.

I think the difficulty/BTC price ratio will be still trending up (except for the current round where the "mystery miner" artificially pumped the difficulty). Much more slowly than during recent mining gold rush but still respectable 10%+ per 2016 blocks until probably around 150,000-200,000, where it will slow further.

The best way for the merchant is to specify a different address for each transaction known to one person only.

VAT is applicable if you sell goods and services for bitcoin and it will never be a problem for Bitcoin adpotion.  But if bitcoin itself were declared VAT-taxable like silver bullion, you would have to pay VAT on bitcoin exchange. You want to buy 150 BTC for 100 EUR, you will have to pay 100 EUR + VAT from any EU-based VAT-registered entity. Read about the VAT on silver bullion for example here: http://www.silverpetition.com/

Of course bitcoins are non-physical so you have a much better chance of "smuggling" it cross border but it may put off a lot of people just like with the silver bullion market which is very weak in EU.

Adding to Gokhan post, a practical way of killing bitcoin in Europe would be to introduce VAT on bitcoin sales, i.e. selling bitcoins for fiat.   VAT on silver effectively killed silver bullion market in Europe.

And anti-money laundering laws are already there and it's just a matter of enforcing them.

You can also look at the problem as mining income per, say, 100Mhash/s of hashing power:
http://bitcoin.atspace.com/income.html

Of course the mining income drives difficulty. The fast rise in difficulty in late February and March was due to rise in profitability and many people jumping (or expanding) the mining bandwagon.

Since the currently mining income per hash is lowest ever, we should see significant slowing in difficulty rises (if the BTC price stays the same), except maybe for the current round which might result is slight lowering of the difficulty. In theory, the mining income should converge towards the cost of electricity plus depreciation of the capital and with for the best GPU cards and we are still above this level.

"Utimately superior"? What about being non-physical? Difficult to understand how it works for non-geeks? Prone to attack by any large entity? Non-official (possibility of being delegalized)? That payments aren't and never will be instant (so for instant payments you will need a Paypal-like entity with fees and bullshit)?

Don't get me wrong. I wish Bitcoin success and I think it is a very good project but there is so much bubble mentality going on here that I'm much less optimistic about its future that when I first learned about Bitcoin.

I'm pretty sure that  shareholders of pets.com in the 1990s had similar attitudes to yours that there is no other future than a bright one.