So... This is how you kill bitcoin.

[ralree]

- ASICs. Instead of the general public mining, it will be a few hundred(?) miners buying huge ASIC racks. They have the power to kill off competing cryptocurrencies (TRC anyone?) and control the blockchain.

It's easy to build a "competing" cryptocurrency that uses a different mining algo. It would be unaffected by your ASICs.

Like LTC for instance?

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[warpio]

ASIC mining is a bit of an obstacle, true. Once everyone starts mining on ASICs, it will require a higher difficulty to remain secure. Then as bitcoin's value crashes, and difficulty goes back to pre-ASIC levels because mining isn't worth it anymore, that will make it vulnerable to a 51% attack.

In other words, a crash in BTC's value right now could mean a complete failure of the system... if my logic is correct at least

[blacksmithtm]

Gotta admit, pretty smart - Didn't see that coming, did we?

If you're a central bank, or a government feeling threatened by the rise of a paradigm such as bitcoin, how do you kill it?

Make it illegal? Make it difficult to use? Ostracize the theory's proponents?

Or just simply remove the underlying utility of the invention in question - in this case, bitcoin's use as either a transactional currency, or a useful store of value.

Other than the speculators, who in their right mind would store their worth in something that has no steady, definite value?

Forget the people hurrying to buy bitcoin today (because tomorrow it'll be 25% more!) - Who would dare use bitcoin to purchase a good or service from someone in another country, or at a retail counter?

If you're a central bank, or a government, with massive resources at your disposal, you don't care if you make a few people wealthy in the beginning (or destroy a few fortunes in the end) you've accomplished what you set out to do: "Bitcoin? That was a crazy ride. Who'd ever trust that thing again?"

It's a shame, really - there was so much potential, and yet it's proven so easy to destroy.

The destruction was just not conducted the way that any of us thought it would be done.

the government couldnt even prevent us from buying and selling drugs, or alchohol for that matter. the government is not really as powerful as people think it is. if there is sufficient demand, the thing will exist. doesent matter wether its bitcoin, cannabis or whatever... so GOOD LUCK GOVERNMENT if you want to fight bitcoin

[Korbman]

If you're a central bank, or a government feeling threatened by the rise of a paradigm such as bitcoin, how do you kill it?

Easy, but temporary.

Spend $1 billion to build a datacenter filled with custom built ASIC chips. Crank through 1 PH/s on your own and control nearly the entire network. Double spend like crazy and watch as the value plummets into nothing. Everyone leaves Bitcoin and you're stuck with $1 billion worth in equipment that is suddenly worthless.

However, that's only for this rendition of Bitcoin. If the developers work to change the code (or we switch to Litecoin, or whatnot), it would make the currently deployed ASICs obsolete since they wouldn't be able to work properly anymore.

Bitcoin is an idea based on the principles of mathematics. That's not something you can permanently rid the world of. Destroying Bitcoin would only bring about another coin [or version] to replace it.

[SomeWhere]

ASIC mining is a bit of an obstacle, true. Once everyone starts mining on ASICs, it will require a higher difficulty to remain secure. Then as bitcoin's value crashes, and difficulty goes back to pre-ASIC levels because mining isn't worth it anymore, that will make it vulnerable to a 51% attack.

In other words, a crash in BTC's value right now could mean a complete failure of the system... if my logic is correct at least

Wait, what? You been smokin' son?

The only purpose of those ASICs is to mine Bitcoins. They are more power-efficient than GPUs & PFGAs.

Why would anyone ever stop the mining with them? How would the difficulty ever go back to pre-ASIC level?

[freequant]

Cool story bro.

[MeatPopsicle]

If Bitcoins crash, I’m going to buy. Seriously, the so call “real” economy has tangible benefits in using Bitcoins. Bitcoins are here to stay…

Regards, Inge

They said the exact same thing about

myspace
livejournal
greenbucks
egold
stormpay
etc
etc
etc

[Klestin]

The defense of bitcoin from a 51% attack has never been that it's impossible/impractical to do.  It's that, once a person is in a position capable of spoofing the blockchain, there is absolutely more money in supporting the network rather than attacking it.

[gogxmagog]

Gotta admit, pretty smart - Didn't see that coming, did we?

I'm sorry - too much Jethro Tull, I guess.  I must be thick as a brick...

Didn't see what coming?

Sitting on a park bench
eyeing little girls with bad intent.

can't never have too much tull bro

[evoorhees]

Forget the people hurrying to buy bitcoin today (because tomorrow it'll be 25% more!) - Who would dare use bitcoin to purchase a good or service from someone in another country, or at a retail counter?

Who would dare? Me. I've bought lots of stuff with Bitcoin, though I believe it'll be worth far more in the future.

Does the appreciation make people more careful about what they spend BTC on? Yes. And this is a good thing. Does it stop all purchases entirely? Not a chance.

In fact, let's look at this anecdote. I recently sold a few coins to buy a new LCD TV. I know (or think I know) two things:  1) the BTC will be worth far more in the future and 2) the TV will be worth far less in the future (or I could get far better one for the same amount if I wait).

Even though BOTH parts of the transaction are encouraging me to not spend, I still spend. This utterly disproves the argument that deflation causes all spending to stop. It's a ludicrous theory. Appreciating currency simply makes people more careful with their money. They will still eat. They will still buy televisions.

[dacoinminster]

OP is both absolutely right and absolutely wrong.

Absolutely right in that price fluctuations will make bitcoin difficult to use for normal commerce for the foreseeable future. Absolutely wrong in that he assumes this problem will kill bitcoin.

Additional protocol layers will be built on top of bitcoin which will provide stable currencies pegged to dollars, gold, oil, or anything else your heart desires. Think about how HTTP is built on top of TCP/IP. That is how we will build new, stable currencies on top of bitcoin.

I wrote a paper about it, and if you are going to the bitcoin conference in San Jose in May, you can come to the "Bitcoin in the Future" panel and hear me talk about it and ask questions.

The take-away is that buying bitcoins now is the best way to bet on the success of those "child currencies"

[xcsler]

Forget the people hurrying to buy bitcoin today (because tomorrow it'll be 25% more!) - Who would dare use bitcoin to purchase a good or service from someone in another country, or at a retail counter?

Who would dare? Me. I've bought lots of stuff with Bitcoin, though I believe it'll be worth far more in the future.

Does the appreciation make people more careful about what they spend BTC on? Yes. And this is a good thing. Does it stop all purchases entirely? Not a chance.

In fact, let's look at this anecdote. I recently sold a few coins to buy a new LCD TV. I know (or think I know) two things:  1) the BTC will be worth far more in the future and 2) the TV will be worth far less in the future (or I could get far better one for the same amount if I wait).

Even though BOTH parts of the transaction are encouraging me to not spend, I still spend. This utterly disproves the argument that deflation causes all spending to stop. It's a ludicrous theory. Appreciating currency simply makes people more careful with their money. They will still eat. They will still buy televisions.

Voorhees,
What the hell are you talking about! According to Bloomberg, only like one of the most important and legitimate finance sources on the planet, an appreciating currency will cause the economy to grind to a halt secondary to massive hoarding. People will be starving in the streets, dying, as they cling to their Bitcoin laden USB drives while the exchange rate moves from $500 to $1000. A true hyper-deflationary death spiral! People will never spend again. The end is nigh!

/sarc

[yona]

funny, i had the same thought as LoweryCBS this morning.
at the current bitcoin value, the central bank can theoretically buy and hold on to the majority of bitcoins existing.
then by trading them fluctuate the market price, make the market jump between 200 and zero or better yet simulate a crush every time the coin starts to rise over a certain price in the foreseeable future.
would that kill bitcoin?
probably not, bitcoin is an idea.
but look at what happened to socialism...

[samurai1200]

In fact, let's look at this anecdote.

Anecdotal evidence is a scientific oxymoron.

[benjamindees]

The destruction was just not conducted the way that any of us thought it would be done.

Speak for yourself.

[Elwar]

I have not bought a computer since 1995 when I paid $3,000 for a 66MHz speed machine.

I will wait until the price of computers gets more stable so I do not kick myself for not waiting to buy a faster machine at a lower price.

[Wilikon]

funny, i had the same thought as LoweryCBS this morning.
at the current bitcoin value, the central bank can theoretically buy and hold on to the majority of bitcoins existing.
then by trading them fluctuate the market price, make the market jump between 200 and zero or better yet simulate a crush every time the coin starts to rise over a certain price in the foreseeable future.
would that kill bitcoin?
probably not, bitcoin is an idea.
but look at what happened to socialism...

Somebody bought up the idea of Socialism and ended up bankrupt. Every time. Bitcoin is the nemesis of Socialism.

[porcupine87]

How much money do I need to get 50% of the hash rate power? Hardware + a few nerds who implement a harm to the network.

[samurai1200]

How much money do I need to get 50% of the hash rate power? Hardware + a few nerds who implement a harm to the network.

Spend 5 minutes and do the calculation for yourself. At current hashrate/difficulty, those costs are astronomical to everyone but the traditional multi-/national financial systems (governments, banks, large corporations, etc).

[No_2]

Forget the people hurrying to buy bitcoin today (because tomorrow it'll be 25% more!) - Who would dare use bitcoin to purchase a good or service from someone in another country, or at a retail counter?

Who would dare? Me. I've bought lots of stuff with Bitcoin, though I believe it'll be worth far more in the future.

Does the appreciation make people more careful about what they spend BTC on? Yes. And this is a good thing. Does it stop all purchases entirely? Not a chance.

In fact, let's look at this anecdote. I recently sold a few coins to buy a new LCD TV. I know (or think I know) two things:  1) the BTC will be worth far more in the future and 2) the TV will be worth far less in the future (or I could get far better one for the same amount if I wait).

Even though BOTH parts of the transaction are encouraging me to not spend, I still spend. This utterly disproves the argument that deflation causes all spending to stop. It's a ludicrous theory. Appreciating currency simply makes people more careful with their money. They will still eat. They will still buy televisions.

+1 - I think this is maybe right too. Many people site deflation as a bad thing but I've not seen any evidence to back this up, but we do have evidence of the problems of inflationary currencies.