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Author Topic: Is there such a thing as an overly secure bitcoin network?  (Read 792 times)
notig
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February 24, 2013, 11:01:28 PM
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Just curious........ what if the amount of money funneled into mining is so much greater than other endeavors (such as businesses that accept or deal with bitcoins) that it somehow drives up the cost of transactions from miners seeking to recoup their costs from their investments? Is it possible to have this transaction cost increase without a corresponding increase in the value of a bitcoin? Will mining simply decline at a point when it becomes counterproductive to do so naturally?
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Sukrim
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February 24, 2013, 11:23:51 PM
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I personally really believe that mining does FOLLOW the bitcoin price, meaning a miner will switch off some hardware if it doesn't pay any more. I do not think that people will start to pay more USD for a BTC just because somebody brought online a few more ASICs.

Looking at difficulty data + MtGox prices so far seems to support this.

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February 24, 2013, 11:31:36 PM
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that it somehow drives up the cost of transactions from miners seeking to recoup their costs from their investments?

If they could they would.  Miner's are competing against each other.   If one passes up a transaction because the fee wasn't too high, another more hungry miner might include it. 

But yes, currently Bitcoin appears to have an amount of protection (hashing capacity on the non-evil side) that is incredibly greater than is truly needed for today's levels.


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Nagato
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February 25, 2013, 01:30:32 AM
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that it somehow drives up the cost of transactions from miners seeking to recoup their costs from their investments?

If they could they would.  Miner's are competing against each other.   If one passes up a transaction because the fee wasn't too high, another more hungry miner might include it. 

But yes, currently Bitcoin appears to have an amount of protection (hashing capacity on the non-evil side) that is incredibly greater than is truly needed for today's levels.

We don't know what our "enemies" are capable of.

On the plus side, the market cap for Bitcoin is still so low that it's probably not threatening enough for them to do something about it. By the time Bitcoin is big enough, it may be too costly for them. With each step that Bitcoin grows, the existing financial system grows weaker as more and more people realise they need to rely less on it, ie Bitcoin grows stronger and the financial system grows weaker. There is probably a pivot point somewhere in the middle where the banks are too weak to mount an attack on a stronger Bitcoin.

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February 25, 2013, 06:59:46 AM
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that it somehow drives up the cost of transactions from miners seeking to recoup their costs from their investments?

If they could they would.  Miner's are competing against each other.   If one passes up a transaction because the fee wasn't too high, another more hungry miner might include it. 

But yes, currently Bitcoin appears to have an amount of protection (hashing capacity on the non-evil side) that is incredibly greater than is truly needed for today's levels.

We don't know what our "enemies" are capable of.

On the plus side, the market cap for Bitcoin is still so low that it's probably not threatening enough for them to do something about it. By the time Bitcoin is big enough, it may be too costly for them. With each step that Bitcoin grows, the existing financial system grows weaker as more and more people realise they need to rely less on it, ie Bitcoin grows stronger and the financial system grows weaker. There is probably a pivot point somewhere in the middle where the banks are too weak to mount an attack on a stronger Bitcoin.

Bitcoin doesn't have any 'enemies', stop spreading FUD
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