Bitcoin - we have a problem.

[rovchris]

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.

Agreed.  It is probably -the- issue.

I can only hope you're wrong.

As I'm sure you know, the client was also (with a single click) a miner.  Obviously things got out of hand somewhere along the line

Single click and it was a miner - those were the days

The trouble is dude we need more than hope here we need some concrete facts.

Unless someone can come up with some phenomenal explanation of why this will not happen it makes the BTC game a very high risk venture.

I will be honest I am very close just to throwing the towel in even though I really enjoy the whole BTC arena. But its long term prospects are not good.

I have a feeling many other small miners are in the same boat and not because of the long term prospects because of the ridiculous difficulty level and the inability to get their hands on ASIC's as they are such an exclusive technology and will be for the foreseeable future.

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[Stephen Gornick]

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.

Statistically, even if hashing is at the target rate then once every 48 hours there will be at least one block that took an hour to solve.  Can you remember even one time that this was a significant problem for you?

And if one pool suffers technical issues those miners will just switch to another pool.

As far as this being a problem if hashing capacity drops below target and that persists for a couple weeks ... there is little difference between six confirmations taking an hour versus six confirmations taking two hours.

With most of the costs for ASIC mining being fixed (i.e., for the purchase of the equipment), there is little reason why hashing capacity would suddenly drop dramatically.  

[rovchris]

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.

Statistically, even if hashing is at the target rate then once every 48 hours there will be at least one block that took an hour to solve.  

And if your pool suffers technical issues those miners will switch to another pool.

As far as this being a problem if hashing capacity drops below target and that persists for a couple weeks ... there is little difference between six confirmations taking an hour versus six confirmations taking two hours.

With most of the costs for ASIC mining being fixed (i.e., for the purchase of the equipment), there is little reason why hashing capacity would drop dramatically.  

Man if 50btc goes down how many other mining pools could cope with that surge of users - It is quite likely the other pools would be knocked out from the sudden increase in traffic further compounding the problem.

Plus with all the DDOS protection they now run - it is quite likely it would kick in as it would see the sudden increase as an attack.

So at 10 min intervals it can take 1 hour every 48 - OK was not aware of that. Using the same argument if the interval jumped to 30 mins then every 48 hours it could take over 3 hours?

[niko]

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?

Pooled mining has been going on for almost three years now, and the problem you are describing has never happened.  Therefore, it is not really a problem worth worrying about.

[rovchris]

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?

Pooled mining has been going on for almost three years now, and the problem you are describing has never happened.  Therefore, it is not really a problem worth worrying about.

Dude come on ? Just because it has not happened yet it will not happen. That is insane.

To give you an analogy - because my house has never burnt to the ground it is therefore not a problem and will never burn down?

The potential is always there.

Give me some real facts why it could not happen.

[atariguy]

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...

It only opens it up to a wider group of people that can't do math well enough to realize they'll never even break even.

[salvani]

If one or even few of the biggest pools goes down, miners will switch to another pools. They will survive, don't worry, rovchris. In addition, there is p2pool.
Increasing of transactions time is also not a big problem - if it be perceptible, users will begin to add more fee to their transactions which would entail increasing of miners profit. This mean more hashing power in the network. So the problem will be solved.

[rovchris]

If one or even few of the biggest pools goes down, miners will switch to another pools. They will survive, don't worry, rovchris. In addition, there is p2pool.
Increasing of transactions time is also not a big problem - if it be perceptible, users will begin to add more fee to their transactions which would entail increasing of miners profit. This mean more hashing power in the network. So the problem will be solved.

Mate I do worry - Prove that the other pools can cope with that sudden influx of load. The most likely scenario is they will head for the next biggest pool (BTCGuild?) and then that will go down like a house of cards and as you go down the chain each pool can cope with less load. Its quite feasible that the miners themselves will accidentally knock the pools off line as their fail overs are handled automatically by the mining software.

Also prove that the smaller pools are not going to die off further as the difficulty increases and their hashing capacity does not grow accordingly .

BTCMine.com is a perfect example - I will be amazed if that is still around in a few weeks. Currently its at 10 days and still has not found a block and could possibly go to 30 days based on 90 million shares which is what one round was on Slush's pool. Those miners will leave because they can not go that length of time without a payment. They will almost certainly move to Slush's pool as it is the only other score based pool. Ill be honest I already have.

Any large company that would like to involve themselves with Bitcoins will be looking at these factors. I can tell you categorically that they will not touch BTC with issues as big as these.

The other issue is - with a few big pools it is much easier to compromise the network.

You may only have to DDOS 5 sites and then everything stops. Where as if it was highly decentralised by solo miners it is impossible to DDOS.

Bitcoins have morphed into something never envisaged by Satoshi and that is quite clear if you read the whitepaper. One of the founding features was decentralisation.

None of you guys have made it clear why the network is not going to get more centralised!

Is it not the pool operator that dictates the transaction fee and not the miner?

[zamazama]

It's foolishness to rubbish this point of view. Yes the OP is probably talking with a very pessimistic view but everything he has said is plausible, although highly unlikely.

[salvani]

Mate I do worry - Prove that the other pools can cope with that sudden influx of load. The most likely scenario is they will head for the next biggest pool (BTCGuild?) and then that will go down like a house of cards and as you go down the chain each pool can cope with less load. Its quite feasible that the miners themselves will accidentally knock the pools off line as their fail overs are handled automatically by the mining software.

Prove is the money. If one of the biggest pools goes down, other, in fact, will be delighted (not for public). This mean a significant increase of their profits. They will make decent investments in infrastructure and will be vying with each other to offer their services to freed miners. Big pools holders isn't poor people, they have some money for business expanding in suitable moment.
In addition, there is p2pool.

[rovchris]

Mate I do worry - Prove that the other pools can cope with that sudden influx of load. The most likely scenario is they will head for the next biggest pool (BTCGuild?) and then that will go down like a house of cards and as you go down the chain each pool can cope with less load. Its quite feasible that the miners themselves will accidentally knock the pools off line as their fail overs are handled automatically by the mining software.

Prove is the money. If one of the biggest pools goes down, other, in fact, will be delighted (not for public). This mean a significant increase of their profits. They will make decent investments in infrastructure and will be vying with each other to offer their services to freed miners. Big pools holders isn't poor people, they have some money for business expanding in suitable moment.
In addition, there is p2pool.

Man what you have just said reinforces the fact that pools will become more centralised. If the cost of setting up a pool increases to the point where you need that level of redundancy - the barrier to entry is raised even higher further pushing out the little guys and consolidating the power in even fewer hands.

Guys you are not convincing me.

[niko]

Dude come on ? Just because it has not happened yet it will not happen. That is insane.

To give you an analogy - because my house has never burnt to the ground it is therefore not a problem and will never burn down?

The potential is always there.

Give me some real facts why it could not happen.

No. It's more like you are saying that every building is doomed because you just realized that it might happen that firefighter crews are busy at two other building which are on fire at the same time, and it happens that the remaining crew gets stuck because of a mechanical breakdown of the truck en route to the site. That is insane. My argument was not insane.

Why it could not happen: for the same reasons it hasn't happened up to this point, even though pools were hacked, DDoSed to death, huge farms of GPU and FPGA and now ASIC miners came online. It hasn't happened because in reality bitcoin mining is much more resilient, and network does not come down "like a house of cards" when a major miner goes offline.
Sure, if Bitcoin continues to grow, mining will inevitably become a specialized (but not necessarily centralized) industry. There will be no more hobby miners, much like most of radio today is a regulated big business. But we are not there yet. There will be proprietary, closed-source ASIC miners competing with each others, there will be large co-operative companies where you or I can join, there will be Bitcoin businesses who also mine simply because they have vested interest in securing the network, there will be a rush to cheap electricity once technological bottlenecks are reached, there will be technological breakthroughs, there will be ASIC heaters in cold regions...

It's good that you are worrying, but man you are worrying about the wrong things.

[ScaryHash]

The amount of whining around here is just amazing.

People bitch about hash rate going up causing the difficulty to go up. (That was last week).

Now that the hash rate has gone down, they bitch about the time between blocks going up. (That's apparently this week's bitch).

Then people complain about the price going up, the price going down, the percent of the network of this or some other pool.

Not to mention delays of X company shipping Y vaporware ASIC crap.

You guys are worse than the hormonal induced fertility forums my wife used to visit.

And let me tell you, when you have women stimulated by 10 times the normal level of hormones, they bitch a lot.

You guys take the cake, however.

Sheesh...

[rovchris]

The amount of whining around here is just amazing.

People bitch about hash rate going up causing the difficulty to go up. (That was last week).

Now that the hash rate has gone down, they bitch about the time between blocks going up. (That's apparently this week's bitch).

Then people complain about the price going up, the price going down, the percent of the network of this or some other pool.

Not to mention delays of X company shipping Y vaporware ASIC crap.

You guys are worse than the hormonal induced fertility forums my wife used to visit.

And let me tell you, when you have women stimulated by 10 times the normal level of hormones, they bitch a lot.

You guys take the cake, however.

Sheesh...

Who is whining?

[rovchris]

Dude come on ? Just because it has not happened yet it will not happen. That is insane.

To give you an analogy - because my house has never burnt to the ground it is therefore not a problem and will never burn down?

The potential is always there.

Give me some real facts why it could not happen.

No. It's more like you are saying that every building is doomed because you just realized that it might happen that firefighter crews are busy at two other building which are on fire at the same time, and it happens that the remaining crew gets stuck because of a mechanical breakdown of the truck en route to the site. That is insane. My argument was not insane.

Why it could not happen: for the same reasons it hasn't happened up to this point, even though pools were hacked, DDoSed to death, huge farms of GPU and FPGA and now ASIC miners came online. It hasn't happened because in reality bitcoin mining is much more resilient, and network does not come down "like a house of cards" when a major miner goes offline.
Sure, if Bitcoin continues to grow, mining will inevitably become a specialized (but not necessarily centralized) industry. There will be no more hobby miners, much like most of radio today is a regulated big business. But we are not there yet. There will be proprietary, closed-source ASIC miners competing with each others, there will be large co-operative companies where you or I can join, there will be Bitcoin businesses who also mine simply because they have vested interest in securing the network, there will be a rush to cheap electricity once technological bottlenecks are reached, there will be technological breakthroughs, there will be ASIC heaters in cold regions...

It's good that you are worrying, but man you are worrying about the wrong things.

That was a good response man - but do you not feel that making it specialised goes against why it was created in the first place? The more specialised it becomes the fewer people can get involved and then we end up with a situation similar to the current banking model where a select few are in control?



                                                                   

[niko]

That was a good response man - but do you not feel that making it specialised goes against why it was created in the first place? The more specialised it becomes the fewer people can get involved and then we end up with a situation similar to the current banking model where a select few are in control?

I used to feel that way, but then I grew to realize that Bitcoin, much like any other technology, is ideologically neutral. Anyone is free to use it however they see fit, and boy is it versatile! While a majority of us in this forum likes to see it as a tool to more freedom from central powers, it can very well be used by central powers to achive level of financial control impossible today. It's not a popular thing to point out around here. In Bitcoin's defense, the public nature of the ledger does enable tracking, but it enables it for everyone. But I digress. The point is, Bitcoin can be useful in many ways, and you might not like all of them.

Think radio, or printing press, or the Internet. These are similarly enabling, revolutionary technologies, that throughout history went through different phases, from freedom-enabling, to propaganda, to education, to surveilance, to central control, to revivals, back-and-forth... Ideas that Bitcoin is based on are no different. It will be whatever people make it to be, and you and I have only so much influence in the big scheme. Ultimately, do what you think is right, and don't worry. Mining included.

[halfawake]

If this is really a crippling problem, it seems like there would be a relatively easy solution to it: release an update that makes the difficulty adjustment happen more frequently.  Thus with this flood of ASICs come on the market, maybe it'll adjust in a day or two rather than two weeks.  Wouldn't that just totally solve the problem?

[DoomDumas]

There are several asic manufactors entering the market like knc , bitfury, avalon b3 ... no need to worry imo

BitFury !  As I read on their web pages :

110 Gh/s overall performance
10 kW power consumed
Under $100'000 estimated cost to build

Wow, as power hungry as a furnace, priced like a small house, for less Gh/s than 2 Avalon

Is it serious ?

[DoomDumas]

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

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

Greedy bastard by our culture, not nature.. a change in our personal value must occur.. 

[Adano]

There are several asic manufactors entering the market like knc , bitfury, avalon b3 ... no need to worry imo

BitFury !  As I read on their web pages :

110 Gh/s overall performance
10 kW power consumed
Under $100'000 estimated cost to build

Wow, as power hungry as a furnace, priced like a small house, for less Gh/s than 2 Avalon

Is it serious ?

Thats an FPGA. Bitfury ASIC chip is being tested and seems to be much more efficient than any other chip available. First batch device shipment is planned for August. 120Gh/s at about 100 Watt