Why would they want to make a mining pool?
Operating a mining pool is hard work done by people involved in Bitcoin with the technical know-how to sort out all the resulting headaches (just ask slush). It is not something a medical research company who have not heard of Bitcoin can do on a whim.

That's a common expression among educated people, you don't need to be a comm engineer.

Exactly, designing the GPU for ATI 5970 cost millions of dollars but ATI still sells them to me at $650 because they return their investment many times over by selling to millions of consumers. Similarly, someone will find it profitable to design a mining ASIC and sell it. Also, in the same way that some manufacturers allow their products to be rebranded and sold by other companies, I don't find it at all unlikely that a mining company who designed an ASIC for their own use would eventually sell it as a product to diversify their revenue sources and reduce risk.

So you hold out for 2 minutes. With a pool which is 25% of the total network that's all you need to be effective. It also depends on the scoring method used.

I disagree, pooled mining is an important aspect of Bitcoin and the limitations of the protocol that hinder it should be fixed.

I don't know much about ASICs, but I can't think of any reason they can't be put on a PCI-e card and sold to consumers to add to their home computer, allowing them to mine with a pool.

Being one of the people who agrees with him, I'd say it's this:

If the limit on block size is lifted (or relaxed too much), the equilibrium reached with respect to transaction fees, and consequentially the incentive to mine, will be such that the total hashing capacity of the network, and thus its resistance to being undermined by rewriting the block chain, will be too low.

Currently, when a participant in a mining pool finds a share, he knows whether this share is winning for the true difficulty. This knowledge can be used for at least two kinds of attack:

• Sabotage - Miner never submits winning shares. This doesn't increase the miner's own profits, but it decreases the total rewards of the pool and thus the payouts of participants. For Pay per Share, this can do heavy damage to the operator.
• Lie in wait - When miner finds a winning share, he doesn't submit it right away. Instead he pulls all his mining capacity (assuming he has extra capacity used elsewhere, perhaps specifically in preparation for this cheat) into this pool, using his "inside knowledge" that a winning share is imminent to increase his expected payout.

I suppose there are ways to mitigate these problems, but I think the only way to be truly immune to them is to change the Bitcoin protocol to make pooled miners oblivious to whether their shares are winning. I have an idea what this change would be and I may suggest it in a different thread (and argue for its cost/effectiveness), but first I would like to inquire - do we want shares to be oblivious? It could be argued that oblivious shares make it easier for the operator to cheat, but I'm not sure that's true.

You can't converge to the limit in a finite amount of time unless you're rounding, in either Bitcoin or Freicoin. I think it will take 128 years for the Bitcoin block reward to be rounded to 0.

If y'=52560 exp(-0.03x) (how accurate this is depends on your exact specification) then
y = 1752000 (1 - exp(-0.03x))
x is indeed the time in years since the beginning.

If B is the coins per block, Y is the number of blocks per year (which is closer to 52595 on average), and the demurrage per block is r/Y, then the total number of coins in convergence is C = B*Y/r. This is easy to see; at convergence, the coins demurred each block, which is C*r/Y, must equal the coins generated in the new block, which is B, so C*r/Y=B and C=B*Y/r.

For this amount I'd just buy them at CoinPal.

mndrix is the one you want. He has developed not only his own CoinPal/CoinCard, but also the website for jjgames.com and in particular their bitcoin payment option (reachable via promo code "Bitcoin"). You may also be interested in MyBitcoin's shopping cart integration toolkit.

Cool. Just a heads-up that convincing people to accept bitcoins is hard.

I think TheKid is right, I forgot how cheap CoinCard is and I don't think I will be able to compete. I'm making this offer instead.

I would like to buy Mtgox USD and will pay with MoneyGram 1:1. I will cover MoneyGram fees.

Since I'm making a currency conversion for this anyway, I can pay with either USD or most any other currency.

I can also buy instead BTC at the mtgox lowest ask. I'm buying up to 1500 USD, small amounts are ok too but I'll have to consider whether the fixed fee is worth it.

You'll need some reputation unless you're willing to send at least some of the payment first.

Post here or PM me if you're interested.

Edit: Sorry, the MoneyGram fees are much more outrageous than I thought. I'm canceling this offer.

I suppose you haven't heard about AWS and similar cloud services? That was rhetorical, of course you have and of course now they're a terrible way to mine, but I don't think that will necessarily remain the case.

I think I understand your argument now and my disagreement with it is off topic for this thread, so I'll leave it at that.

I would like to buy BTC and will pay with PayPal $1.56 per BTC. This will be the amount I send, fees are on you.

Post here or PM me if you're interested.

@creighto - If the block size limit is maintained there's no problem. The premise of this thread is that there will be a problem if this limit is lifted.

Also, currently there are no fees because what could be gained by them is negligible compared to generation reward. In the future that will change.

You still haven't explained what stops someone from renting capacity for a short time. It doesn't have to be cutting-edge mining-specific efficiency, the bulk of low-fee floating transactions can make up for the inefficiency.

If you are right and this will be impossible, it means Bitcoin has failed its role as a decentralized currency.

I saw it in a poster session once, and a quick search revealed this as likely to be the relevant paper.

As was already explained, those analogies have few players and high barriers of entry so it's not even a remotely valid comparison. Also, your model is wrong for several reasons as I've explained above.

What casascius said, AFAIK you can't reference a transaction if it's not in a block. The block chain establishes a timeline of transactions and each transaction builds on those in previous blocks.
That's not a problem though, it just means the sender will need to include the fees after all.

You can't find a block on a CPU in reasonable time, fees have nothing to do with this.

The time to find a block follows the exponential distribution, which is memoryless. If it's profitable for me to try to solve a block now, it will still be exactly as profitable after 1000 seconds of trying. Nobody will suddenly stop mining after some arbitrary time, unless there's a mining police that monitors when someone tries to mine beyond the quota.

Also (a moot point in light of the above), if 10 miners each spend 1 BTC to try find this block, the total spent is 10 BTC which isn't covered by the fee.

And why would the miner want to work on a new block that has no fees? He's more likely to just say "I kept mining and didn't find any blocks. Honest."
And who does he report to anyway? The mining cartel police, or the sender who paid the fee? Does everyone who sends a transaction need to know the miner that collected his fee? Does the miner send difficulty-1 shares to the police to prove he's done his due work?

Also, someone who wants multiple blocks wants it in reasonable time, not the 100 minutes it takes to 1 miner out of 10 to find it, or the week it takes 1 miner out of 1000.

I have no idea what your model is for multiple transactions per block. There are supposed to be thousands of them.

Miners spend computing power to try solve a block, and choose which transactions to include in it. If they succeed, they collect all the fees for transactions they included. More included transactions = more fees = more revenue per hash = profit. The only way they would reject transactions out of fear of encouraging free-riders in the long term, is if they both expect their individual actions to significantly affect the market (which is suspect, given its size and complex dynamics) and intend to stay in the market long-term (which is even more suspect, given the low barrier of entry). See also Prisoner's dilemma.

And what if the mining cartel uses FUD, vendor lock-in, lobbying and bullying to prevent people from forming an efficient market? Well, I thought that was one of the things Bitcoin was supposed to be against.

I'm not an expert on this, but I think secure electronic voting is a solved problem. There is a cryptographic scheme that allows you to verify that your vote was counted without anyone being able to know what you voted. Whether the industry has caught up with academia is of course a different matter.