[Speculate] When ASICs hit the bitcoin mining scene

[live627]

When the ASIC mining units find their way to the bitcoin worker bees, what will happen to Litecoin?

One possibility is that those miners who are stuck with GPUs because they either are too poor to upgrade, or haven't broke even yet, would switch to other cryptocurranciees, such as Litecoin, because they still want to profit for whatever reason, and are enticed by the low difficulty of Litecoin and the notion that their miners, while being rendered useless for Bitcoin, still have a use.

Having more and more flock to Litecoin because of this will have mixed consequences, some good, some bad. It'll result in a higher hash rate, strengthening the network against a 51% attack, which is always good. But it'll increase the difficulty also, making CPU miners take a hit, and possibly even drop out.

But then, what happens to the price? Will it go up? Or down? Now, I'm by no means an expert on economics. I didn't even take any curses (I think ECON 101 is the entry level class). Therefore, it's hard for  me to say. But I think supply jumps, while demand does not increase as much. This probably means that price, as low as it is, goes lower.

Discuss!

[1713966779]

1713966779

[happycamper]

I think it will follow the same path as Namecoin after merged mining

Hash rate skyrockets -> people with coin of little use -> dump it like ugly prom date

[tacotime]

I think it'll go something like this

Mass dumps of BTC because everyone wants to earn as high a ROI as possible and ASIC miners are useless for anything other than SHA256 hashing.  Falling BTC price will facilitate more mass dumping.
People GPU mining all move to LTC because BTC hash rate is too high.
LTC hash rate skyrockets, LTC goes up in value massively.

Right now I hold 50% BTC and 50% LTC.  It's clear that the value of LTC is stable, as people (like me) are constantly dumping BTC mined into buying more LTC.

I think it will follow the same path as Namecoin after merged mining

Hash rate skyrockets -> people with coin of little use -> dump it like ugly prom date

All merged mine coins will fall into this trap because people acquire them for no extra cost and so just dump them.  LTC will never be able to be merge mined with BTC, so it doesn't have that problem.

[live627]

LTC hash rate skyrockets, LTC goes up in value massively

But do the two really coincide? I mean, wouldn't the mass influx of miners only serve to increase the supply? What will happen to the demand, then?

[tacotime]

LTC hash rate skyrockets, LTC goes up in value massively

But do the two really coincide? I mean, wouldn't the mass influx of miners only serve to increase the supply? What will happen to the demand, then?

Supply doesn't change, LTC output remains constant (more or less) due to the rapid difficulty change algorithm.  However, if there are more independent, small miners moving from BTC to LTC who have already paid for their rigs in full or part from mining BTC, they will be more likely to hoard their LTC than people who have immediately invested large amounts of money into the technology (ASIC miners for BTC).  It's clear with these digital currencies that as soon as you get a rise in value sparked, it tends to snowball until reaching a peak because when the value rises people tend to hoard instead of sell.  I think this will be the case again with LTC.

I would hope that coblee takes steps to modify the algorithm to make it more ASIC-unfriendly over time as I specified in LIP0001; I think as long as LTC stays GPU mined predominately it will rise as the "people's coin" that anyone who can afford a computer can get into, whereas bitcoin is very quickly going to move to specialized hardware, large mining companies, and profitability closer to 3-5% per year amortized like other commodity assets eg gold.  The tradeoff is probably that LTC will always be a magnitude more volatile than BTC in the near future.

[Endgame]

I wonder how long it will be before somebody makes another coin designed to be cpu mined (as litecoin initially was), which will then challenge litecoin's place as "the people's coin"

[Etlase2]

I wonder how long it will be before somebody makes another coin designed to be cpu mined (as litecoin initially was), which will then challenge litecoin's place as "the people's coin"

Perhaps it's time that mining not be the focus of the currency for a currency to be considered "the people's coin." If you want to make it so that ASICs cannot take over, make sure it is never profitable to create or use ASICs. hint: see sig

[happycamper]

I think it'll go something like this

Mass dumps of BTC because everyone wants to earn as high a ROI as possible and ASIC miners are useless for anything other than SHA256 hashing.  Falling BTC price will facilitate more mass dumping.
People GPU mining all move to LTC because BTC hash rate is too high.
LTC hash rate skyrockets, LTC goes up in value massively.

Right now I hold 50% BTC and 50% LTC.  It's clear that the value of LTC is stable, as people (like me) are constantly dumping BTC mined into buying more LTC.

I think it will follow the same path as Namecoin after merged mining

Hash rate skyrockets -> people with coin of little use -> dump it like ugly prom date

All merged mine coins will fall into this trap because people acquire them for no extra cost and so just dump them.  LTC will never be able to be merge mined with BTC, so it doesn't have that problem.

Even if there is cost to mine a coin doesn't mean people won't sell them, even at below cost.  This all boils down to supply/demand, and the only demand i see is speculation.

Also hash rate usually lags price, not the other way around.

[markm]

As BTC difficulty skyrockets and profit margins get tighter maybe the marginal little extra one can make by merging more chains will start to look more worth while to miners, resulting in more and more of the merge-able chains getting picked up by miners so those chains that went into hiding can start to think about coming out in the open again as blockchains like they originally were and merged mining can start to do what it was designed to do: allow more chains to be deployed economically.

-MarkM-

[wndrbr3d]

I struggle with what will happen when the ASIC's go online for BitCoin. Yes, it'll cause difficulty to increase thus making non-ASIC mining profitable. Or will it? If you have a large number of people taking their GPU hashing power away from Bitcoin to an alt (Litecoin in this case), then you'd assume difficulty will go up, but not nearly as high as some would think.

An example being that you might have a 40Ghash miner spin up and that same person might take their 10Ghash GPU farm off Bitcoin (or offline completely).

All THAT being said, I think you're going to see casual miners probably come over to LTC. The benefit that LTC has going for it compares to most other alt chains in the past is that it's an alt chain that uses different technology from BTC AND it has a widely accepted support. I saw the mention of NMC earlier and I think that's comparing Apples to Oranges since NMC was essentially a clone of BTC with an added twist of serving a technological purpose (if not a very important one).

LTC has stood the test of time and has a decent hashrate behind it (all things considered). I mean, my ballpark is that BTC is 100x faster to mine on my 6870 (300kash/sec vs. 300mhash/sec) so the LTC network (currently at 271mhash) means that it has the BTC equivalent of ~27Ghash/sec behind it. 1% of BTC's total hashing power, but still, impressive none the less!

[luffy]

well, all those coins are here to stay. like every system that goes to equilibrium i expect other coins to become
more popular. also i wouldn't be suprised if BTC goes to 3-digit figure (>100$) since diff will increase dramatically!
lets hope so

[coretechs]

LTC isn't really very different from BTC other than the mining algorithm, 4x the number of coins 1/4 the targeted block solve rate.  IMHO that is a good thing, as it may very well serve as it's original intended purpose - a
"silver" cryptocurrency to bitcoin's gold.  There are plenty of speculative criticisms about the use of scrypt and potential weaknesses (botnets, etc), but I believe it is much more likely to have a longer run of decentralized transaction processing than bitcoin.  The mining algo in bitcoin has also had plenty of speculation regarding potential weaknesses, but in the end the market will determine the ultimate success or failure as long as SHA256 isn't compromised.  I believe pure proof-of-work coins have the right balance to utilize market forces effectively, and for that reason I consider LTC to be a good hedge because it is similar enough to bitcoin but has such a different mining algorithm.

From an investment standpoint it makes perfect sense to me to hold some LTC and diversify.  The exchange of LTC and BTC is very easy and very fast so it is technically just as useful as BTC because you can convert and spend as needed.  Time seems to be the biggest factor in gaining credibility.  If LTC is still around in a year and the hash rate of the network continues to increase, trust in LTC will increase as well and the exchange price should begin to reflect that.

My main concern with LTC is the scalability.  The same problems with bitcoin scalability exist but will be significantly more pronounced in LTC if the transactions ramp up.  Rather than implementing other POS or POA changes, I hope to see some experimental development of the scalability ideas (such as the "rolling balance chain" proposal) implemented in LTC.

Personally, I plan on scaling up my bitcoin mining efforts to ASIC as soon as possible and at that time I will be switching my GPU farm over to LTC mining.

[Litecoin]

I struggle with what will happen when the ASIC's go online for BitCoin. Yes, it'll cause difficulty to increase thus making non-ASIC mining profitable. Or will it? If you have a large number of people taking their GPU hashing power away from Bitcoin to an alt (Litecoin in this case), then you'd assume difficulty will go up, but not nearly as high as some would think.

An example being that you might have a 40Ghash miner spin up and that same person might take their 10Ghash GPU farm off Bitcoin (or offline completely).

All THAT being said, I think you're going to see casual miners probably come over to LTC. The benefit that LTC has going for it compares to most other alt chains in the past is that it's an alt chain that uses different technology from BTC AND it has a widely accepted support. I saw the mention of NMC earlier and I think that's comparing Apples to Oranges since NMC was essentially a clone of BTC with an added twist of serving a technological purpose (if not a very important one).

LTC has stood the test of time and has a decent hashrate behind it (all things considered). I mean, my ballpark is that BTC is 100x faster to mine on my 6870 (300kash/sec vs. 300mhash/sec) so the LTC network (currently at 271mhash) means that it has the BTC equivalent of ~27Ghash/sec behind it. 1% of BTC's total hashing power, but still, impressive none the less!

Your math is a bit messed up and not correct.
BTC is not 100x faster to mine. Your GPU is hashing 800-1000 times faster.

300Kh/s = 0.3Mh/s  
3000KH/s = 3Mh/s
30,000Kh/s = 30Mh/s
300,000Kh/s = 300Mh/s

Let's say one good GPU is pulling 400Mh/s
That means BTC network is as strong as 50,000 GPU's (each pulling 400MH/s.)

Same GPU's used for LTC mining would pull ~450KH/s each.
300,000KH/s network is as strong as 650 GPU's
BTC network is 75x times bigger/stronger.

[Etlase2]

I'm pretty sure 75x and 100x (1%) are pretty close numbers when he was just guestimating based on his own hardware.

[bitcool]

I'm pretty sure 75x and 100x (1%) are pretty close numbers when he was just guestimating based on his own hardware.

Dude, it's 1,000 times using his own numbers: 300K vs. 300M

[Etlase2]

so he forgot a zero, his comparison was still accurate

[Litecoin]

I'm pretty sure 75x and 100x (1%) are pretty close numbers when he was just guestimating based on his own hardware.

Dude, it's 1,000 times using his own numbers: 300K vs. 300M

Your own hardware or not, the difference is x1000.
And its not about missing a zero.
He said: "271mhash means that it has the BTC equivalent of ~27Ghash/sec behind it. 1% of BTC's total hashing power."

27Gh/s is NOT 1% of BTC's total hashing power.
27Gh/s is only 0.135% of BTC's total.

Etlase2, that comparison was not accurate at all.
Two mistakes, 27Gh/s is not 1% and the difference is not x100.

However, that 1% was not far off. :-)

[Litecoin]

LTC isn't really very different from BTC other than the mining algorithm, 4x the number of coins 1/4 the targeted block solve rate.  IMHO that is a good thing, as it may very well serve as it's original intended purpose - a
"silver" cryptocurrency to bitcoin's gold.  There are plenty of speculative criticisms about the use of scrypt and potential weaknesses (botnets, etc), but I believe it is much more likely to have a longer run of decentralized transaction processing than bitcoin.  The mining algo in bitcoin has also had plenty of speculation regarding potential weaknesses, but in the end the market will determine the ultimate success or failure as long as SHA256 isn't compromised.  I believe pure proof-of-work coins have the right balance to utilize market forces effectively, and for that reason I consider LTC to be a good hedge because it is similar enough to bitcoin but has such a different mining algorithm.

From an investment standpoint it makes perfect sense to me to hold some LTC and diversify.  The exchange of LTC and BTC is very easy and very fast so it is technically just as useful as BTC because you can convert and spend as needed.  Time seems to be the biggest factor in gaining credibility.  If LTC is still around in a year and the hash rate of the network continues to increase, trust in LTC will increase as well and the exchange price should begin to reflect that.

My main concern with LTC is the scalability.  The same problems with bitcoin scalability exist but will be significantly more pronounced in LTC if the transactions ramp up.  Rather than implementing other POS or POA changes, I hope to see some experimental development of the scalability ideas (such as the "rolling balance chain" proposal) implemented in LTC.

Personally, I plan on scaling up my bitcoin mining efforts to ASIC as soon as possible and at that time I will be switching my GPU farm over to LTC mining.

+1
+1
+1

[Etlase2]

Your own hardware or not, the difference is x1000.
And its not about missing a zero.
He said: "271mhash means that it has the BTC equivalent of ~27Ghash/sec behind it. 1% of BTC's total hashing power."

27Gh/s is NOT 1% of BTC's total hashing power.
27Gh/s is only 0.135% of BTC's total.

Etlase2, that comparison was not accurate at all.
Two mistakes, 27Gh/s is not 1% and the difference is not x100.

However, that 1% was not far off. :-)

proof that two wrongs do make a right