The Unreasonable Fundamental Incertitudes Behind Bitcoin Mining

[OldGeek]

The Unreasonable Fundamental Incertitudes Behind Bitcoin Mining

22 October 2013

http://cryptome.org/2013/10/bitcoin-incertitudes.pdf

Or for the tl;dr crowd go here:
http://arxiv-web3.library.cornell.edu/abs/1310.7935

In this paper we study bitcoin with particular attention paid to the process of bicoin mining, which is the specialist term given to the process by which new bitcoins are created. We are going study this question from many different angles. It is a cryptographic puzzle, but also a disruptive technology in monetary history. It also is method to make money for miners, a method to own and control the bitcoin currency, a method to police the bitcoin network and enforce the compliance with a certain version of the bitcoin specication, etc. Later in Part II we are going to to study in a lot of detail one particular technical question in symmetric cryptography to see if there exists an improved method which allows one to mine bitcoins faster.

There's more:

It is generally believed that there is no other method to achieve success than trial and error; hashing at random as depicted on Fig. 2 until a result with a sufficient number of leading zeros is found. However this is unlikely to be true, there is always a better way, at least slightly, see Section 12.

YMMV

init_pedant:: There are many typos and irregular language uses that should have been caught, and corrected, prior to release of this paper.

Full disclosure:  I have no relations with any of the authors nor with the website where this was listed.

/Frank

[austonst]

That was painful to read through. It's written like a decently formed forum post, but I would expect more from an academic paper. A well formed forum post makes claims and tries to back them up, but often fails to do so in a consistent way. An academic paper presents results from properly formed studies or experiments. A forum post argues that components of Bitcoin which go against the author's political ideas must be flawed because their ideology says so, while an academic paper should present data without arguing philosophy.

As an example of some cringe-worthy writing, we've got:

It is possible to see that the correction which followed an earlier crash has finished at this precise moment. Even though the press and media have actually debated and criticized bitcoin a lot. It is like bitcoin has achieved maturity and become a mainstream financial asset on that very day.

What's up with this grammar? Why does it matter that it's "like" bitcoin matured at some particular point in time? Are they trying to make readers understand the struggles Bitcoin has been through over the years? If so, why are they doing that in a scholarly article about mining software optimizations?

While I found their section on mining optimizations interesting and potentially actually useful, I don't know why they bundled it together with their poorly argued idea that Bitcoin is not a currency because the block reward halving is too large of a step down each time. Really?

The key point is that at fixed moments in time it suddenly becomes twice more costly to mine bitcoins. These sudden jumps have very serious financial consequences. It suddenly makes miners stop mining and switch their devices off. Overnight. This must lead to serious perturbations in the market.

While they admit that "apparently only very small percentage of active mining devices were switched off on 29 November 2012", they make a completely unfounded claim that next time, things will be different. Oh, and of course, this means that there will be fluctuations in value, which no currency should ever have. Real currencies have a price fixed by a government with armies, and Bitcoin needs to emulate that or it will never succeed...

This should really just be split into two papers: one for the mining optimizations and one for the "block halving is bad" whining.

[OldGeek]

I agree that the paper is a bad mix of ideas.  The sections on mining optimization were interesting indeed.  A 38% increase in hashing efficiency would be handy for a miner.  These optimizations may already be in the works.

The general tone of the paper was confusing.  I suppose that it to be expected though.  It is difficult for some to present only the science and not include their personal prejudices and biases.  Logic is easily swayed by emotions.

/Frank