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Author Topic: Bitcoin - we have a problem.  (Read 6460 times)
rovchris
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June 19, 2013, 05:01:59 PM
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The ethos behind bitcoin is fantastic but their is a fatal flaw that is being highlighted at the moment and that is the difficulty. It only leads to one logical conclusion the centralisation of mining and transaction processing as that will be the only way you will be able to generate any coins.

ASICMiner has some problem at the moment and because they are so large it has impacted the entire network. If another big mining pool goes down we may be looking at 40 mins between blocks maybe even longer - transactions are not processed if no blocks are solved.

The whole resilience of the network is being brought into question here - If these guys go offline for what ever reason with the difficulty where it is now everything is going to grind to a halt. A couple of business should NOT have this impact on the network.

What are your thoughts on this?

Watch out - The ASIC's are coming
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botsofbitcoin
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June 19, 2013, 05:08:58 PM
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I'm no expert but I thought that if there are fewer mining rigs the difficulty rate automatically adjusts downwards?

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rovchris
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June 19, 2013, 05:12:29 PM
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I'm no expert but I thought that if there are fewer mining rigs the difficulty rate automatically adjusts downwards?

Only after a period of time - quite a large period of time at that. Transaction processing is the issue here - Bitcoins can not be used if you can not process the transaction. If that is the case people will loose confidence and then it is a death spiral.

If you were trying to pay for something and ASICMiner decides they have to power down for what ever reason  it almost doubles the transaction processing time. You can not have that much control in the hands of a few people - otherwise we are back to Central Banks.

Watch out - The ASIC's are coming
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June 19, 2013, 05:20:53 PM
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I see. Like when a nuclear power station goes offline rather than a couple of wind turbines.

How long does it take to adjust then?

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June 19, 2013, 05:29:29 PM
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I see. Like when a nuclear power station goes offline rather than a couple of wind turbines.

How long does it take to adjust then?
2 weeks at 10 min per block, so it takes 30 min for each block difficulty wont be adjusted downwards for 6 weeks. It's an issue at the mo because we're in the transition from off the shelf hardware to dedicated hardware and ASICminer happens to be leading that transition. When more ASIC manufacturers have products ready for immediate sale and difficulty levels out its unlikely to be a major issue but it will be a rough ride upto that point as hardware prices will need to establish a predictable ROI time.

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rovchris
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June 19, 2013, 06:01:46 PM
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The thing is this - regardless of the technology once everyone has ASICS we will still be in the same boat. The difficulty will have just increased accordingly but that would not change market share and if ASICMiner are still 1/4 of the network - the problem still exists.

If you check the Network hashrate you will see there has been an unprecedented drop and that is due to ASICMiner loosing only 1/2 their capacity for whatever reason.

If 50BTC goes down as well then what we would be looking at months between an adjustment.

I can not see a solution to stop centralisation as difficulty keeps increasing.

This is a very serious issue - once it is centralised to that degree it is a single point of failure.

Watch out - The ASIC's are coming
salvani
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June 19, 2013, 06:55:53 PM
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Use Litecoin.

There is no ASICs at all, furthermore transaction is four time faster in ordinary state.
247saver
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June 19, 2013, 06:59:20 PM
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Everyone who can should run a USB ASIC miner (or more) that would help a little with decentralising.   It's a shame they're priced a bit high though.
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June 19, 2013, 07:00:31 PM
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There are several asic manufactors entering the market like knc , bitfury, avalon b3 ... no need to worry imo

rovchris
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June 19, 2013, 07:02:39 PM
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The USB Miners would not help man - You would more than likely point it a mining pool as you could never solo mine with it. At this difficulty it might take 10 years or never to solve a block and that is if the difficulty does not increase.

Watch out - The ASIC's are coming
atariguy
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June 19, 2013, 07:03:06 PM
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Everyone who can should run a USB ASIC miner (or more) that would help a little with decentralising.   It's a shame they're priced a bit high though.


Just because it's an ASIC doesn't mean it's more efficient than a GPU. Those will have to be a lot cheaper before they really make any difference.
rovchris
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June 19, 2013, 07:03:39 PM
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There are several asic manufactors entering the market like knc , bitfury, avalon b3 ... no need to worry imo


Dude this does not change the market share - and people will still point them at mining pools.

Bitcoins by their very nature cause centralisation because of the difficulty.

Put it like this - if you could mine solo and still receive the same reward that you do from a mining pool you would not use the mining pool.

Watch out - The ASIC's are coming
247saver
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June 19, 2013, 07:10:30 PM
 #13

Everyone who can should run a USB ASIC miner (or more) that would help a little with decentralising.   It's a shame they're priced a bit high though.


Just because it's an ASIC doesn't mean it's more efficient than a GPU. Those will have to be a lot cheaper before they really make any difference.

Agreed, but it does open it up mining to a wider group of people with, e.g. a notebook, or a MAC, etc. that aren't running GPUs.

I know it's not brilliant, but it's a step in the right direction.  And I see a new pool being setup which is also needed - diversity in equipment and pools.

I'd love to get a 28nm ASIC setup but realistically can't expect a large percentage of users to buy these.  So the centralization looks set to continue...
rovchris
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June 19, 2013, 07:13:21 PM
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Everyone who can should run a USB ASIC miner (or more) that would help a little with decentralising.   It's a shame they're priced a bit high though.


Just because it's an ASIC doesn't mean it's more efficient than a GPU. Those will have to be a lot cheaper before they really make any difference.

Agreed, but it does open it up mining to a wider group of people with, e.g. a notebook, or a MAC, etc. that aren't running GPUs.

I know it's not brilliant, but it's a step in the right direction.  And I see a new pool being setup which is also needed - diversity in equipment and pools.

I'd love to get a 28nm ASIC setup but realistically can't expect a large percentage of users to buy these.  So the centralization looks set to continue...

And that is the problem man - nothing will stop centralisation at this rate. When the difficulty reaches 1 billion there will only be a few pools with enough hashing power to solve anything.

It will be so far out of reach of the ordinary man they might as well be a central bank

Watch out - The ASIC's are coming
247saver
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June 19, 2013, 07:15:55 PM
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Perhaps we should target, e.g. 10 or 20 pools, each with no more than 10% or 5%.  Heck 50 or 100 pools with 2% or 1% share.

Surely that's would help and is achievable.
rovchris
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June 19, 2013, 07:23:01 PM
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Perhaps we should target, e.g. 10 or 20 pools, each with no more than 10% or 5%.

Surely that's achievable.

It is impossible to enforce - pool operators want as many users as possible so they can collect more fees. Even if most agree - some will not and lots of users will end up on them because the payouts are more consistent.

The trouble is we are greedy bastards by our very nature Smiley

Watch out - The ASIC's are coming
deadweasel
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June 19, 2013, 07:28:01 PM
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Perhaps we should target, e.g. 10 or 20 pools, each with no more than 10% or 5%.

Surely that's achievable.

It is impossible to enforce - pool operators want as many users as possible so they can collect more fees. Even if most agree - some will not and lots of users will end up on them because the payouts are more consistent.

The trouble is we are greedy bastards by our very nature Smiley

^ I don't see a way around this hurdle. 

rovchris
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June 19, 2013, 07:32:01 PM
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Perhaps we should target, e.g. 10 or 20 pools, each with no more than 10% or 5%.

Surely that's achievable.

It is impossible to enforce - pool operators want as many users as possible so they can collect more fees. Even if most agree - some will not and lots of users will end up on them because the payouts are more consistent.

The trouble is we are greedy bastards by our very nature Smiley

^ I don't see a way around this hurdle. 

So we agree this is quite a big issue.

I am going to put my neck on the line hear and state this is going to cause the downfall of bitcoins.

I don't understand when they developed it why they did not make the difficulty fixed and vary the reward to maintain the steady creation of coins. This way you can mine solo.

Watch out - The ASIC's are coming
247saver
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June 19, 2013, 07:32:15 PM
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Perhaps we should target, e.g. 10 or 20 pools, each with no more than 10% or 5%.

Surely that's achievable.

It is impossible to enforce - pool operators want as many users as possible so they can collect more fees. Even if most agree - some will not and lots of users will end up on them because the payouts are more consistent.

The trouble is we are greedy bastards by our very nature Smiley


This is indeed true.  

But do not users with a healthy balance of coins owe it to themselves (for the long term value of their coins) to help in this goal, by

1) running a full node  
2) mining  
3) supporting the new/smaller pools

..?
rovchris
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June 19, 2013, 07:37:05 PM
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Perhaps we should target, e.g. 10 or 20 pools, each with no more than 10% or 5%.

Surely that's achievable.

It is impossible to enforce - pool operators want as many users as possible so they can collect more fees. Even if most agree - some will not and lots of users will end up on them because the payouts are more consistent.

The trouble is we are greedy bastards by our very nature Smiley


This is indeed true.  

But do not users with a healthy balance of coins owe it to themselves (for the long term value of their coins) to help in this goal, by

1) running a full node  
2) mining  
3) supporting the new/smaller pools

..?


Man that is a very tall order and we both know that they will not do that.

For example on another thread about "regulating bitcoins" the biggest argument for regulating them is they will increase massively in value - even though it would destroy everything they stand for.

https://bitcointalk.org/index.php?topic=192924.msg2522678#msg2522678

I suggest reading through and then you will realise the gravity of the situation.

This is what you are up against - personal gain first and to hell with everyone else. With attitudes like that there is really no hope.

Watch out - The ASIC's are coming
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