Bitcoin is Dead

[yvv]

I agree with some points of OP, but would like to make some clarifications.

Many people think that mining is about printing money (BTC). But actually, mining is about serving the network. And it is absolutely fair if p2p network is served by every peer in the network, not just by few monopolies. This is evidently not happening with bitcoin.

Did anybody think about altcoin, where transaction fees are paid with hashes cracked (or flops, or other pov), instead of coins? I mean, before being able to make a transaction a peer needs to provide some amount of computing power to serve the network. Initial distribution could be made by splitting X coins equally to each peer currently online, regardless of their hash rates, every minute or other time interval.

This way, early adopters would benefit by getting more coins, while there are few peers online. Guys with a lot of computing power would benefit by being able to make transactions faster. And nobody would be put out of business.

[DeathAndTaxes]

The potential for ASICs have always existed.  If no Bitcoin companies produced Bitcoin ASICs the threat would still exist.

Imagine if the network was protected by $100M worth of GPUs. No FPGA, no ASIC just "fair" GPU power.  Yay it is fair AND we are safe right?  It would be cost prohibitive not to mention the massive amount of space and energy for someone to attack the network using $100M worth of GPUs.  I mean we are talking about warehouses worth of GPU farms, and Megawatts of electrical load.

The problem is that an attacker wouldn't use GPUs.  They would spend $2M, build a custom line of ASICs and wipe put the network with a token amount of effort.  So really the power/security of the network (which is based not of hashpower but on the economic cost of that hashpower) is just an illusion.  It only appears strong because the defenders are foolishly using inefficient technology.  

Now if/when the network is protected by $100M in ASICs there is no "cheat card".  An attacker could still try to outspend the network but they can't do it for cheap.  It would take a $100M investment not a $2M one.  Hopefully someday it will be a billion dollars of deployed hardware protecting the network putting an attack out of reach for almost all entities.  We aren't going to get to that level of security until the ASIC transistion is complete though.

Pretending away the threat of ASICs is like going to war today using a massive army equipped with flintlock rifles.  It will become painfully obvious how bad of an idea that is when the enemy advances using body armor, automatic weapons, grenade launchers, and attack helicopters.  Oops our 1 million man flinklock army got routed by a tiny force using superior tech at a fraction of the cost.

[lxdr1f7]

dead sexy

[darkbox]

I don't think ASIC chips are a good thing really. If anyone would want to take out the bitcoin network (governments, rich people etc.) they'll just buy or manufacture their own ASIC chips and until they get 51% hashing power of the network. So the most good thing that people keep talking about in regards to ASIC mining and how it's gonna help "secure the network" seems flawed to me.

Only the rich will get richer with ASIC while the average person won't be able to get into mining if they'd want to.

[DeathAndTaxes]

I don't think ASIC chips are a good thing really. If anyone would want to take out the bitcoin network (governments, rich people etc.) they'll just buy or manufacture their own ASIC chips and until they get 51% hashing power of the network. So the most good thing that people keep talking about in regards to ASIC mining and how it's gonna help "secure the network" seems flawed to me.

Only the rich will get richer with ASIC while the average person won't be able to get into mining if they'd want to.

You can get into ASIC mining with $90 to $100.

[darkbox]

I don't think ASIC chips are a good thing really. If anyone would want to take out the bitcoin network (governments, rich people etc.) they'll just buy or manufacture their own ASIC chips and until they get 51% hashing power of the network. So the most good thing that people keep talking about in regards to ASIC mining and how it's gonna help "secure the network" seems flawed to me.

Only the rich will get richer with ASIC while the average person won't be able to get into mining if they'd want to.

You can get into ASIC mining with $90 to $100.

For now and for small gains. It's gonna be different in the future in my opinion.

[DeathAndTaxes]

For now and for small gains. It's gonna be different in the future in my opinion.

What are the gains on a $100 GPU?  Mining was never intended to be a high profit, free moniez for everyone system.  The purpose of mining is to protect the network and miners are paid a fee for that service.  Mining is an almost perfect commodity and as such overtime the margins are going to be very low, especially as the risk premium declines.

Still the reality is you CAN get into ASIC mining. Maybe you don't like the return but that doesn't change the fact that you can get into it.

The eruptor uses 2.5W of power so once bought while your revenue may decline it is unlikely it will ever be unprofitable.  Difficulty will be constrained by electrical efficiency and that will ensure those eruptors will be able to trickle in some revenue for a long time.

[darkbox]

For now and for small gains. It's gonna be different in the future in my opinion.

What are the gains on a $100 GPU?  Mining was never intended to be a high profit, free moniez for everyone system.  The purpose of mining is to protect the network and miners are paid a fee for that service.  Mining is an almost perfect commodity and as such overtime the margins are going to be very low, especially as the risk premium declines.

Still the reality is you CAN get into ASIC mining. Maybe you don't like the return but that doesn't change the fact that you can get into it.

The eruptor uses 2.5W of power so once bought while your revenue may decline it is unlikely it will ever be unprofitable.  Difficulty will be constrained by electrical efficiency and that will ensure those eruptors will be able to trickle in some revenue for a long time.

Didn't say mining is a get rich quick sheme, I see it more like an investement.

But the guy who'll pay 50000$ for 1000gh/s for example will not be comparable to a guy who'll put 100$ for a lot less hashing power and wait a long time to even break even on the hardware. When bitcoin gets taken even more seriously then now and more and more people start to mine a lot of rich people will invest into mining and be able to buy the most gh/s.

The reality is most people mine for the money/bitcoins not to help keep the network secure, that's just a side thing. But I'm really just trying to say that ASIC is not a significant improvement for bitcoins in my opinion. People will have to pay more and more for them to be able to mine with a gain and the network won't be significantly more secure by that.

[truf56]

"Only the future knows what the future holds"

Such as the migration from cpu mining to gpu mining, ASIC is just another link in the chain, and history repeats itself again. the rich get richer because it takes money to make money.

[spartanmorning]

I'm sorry but I'm failing to understand the principle concept the OP is espousing. Let me see if this is approximately correct: because regular people can't mine bitcoins trust will be undermined and the whole network will die.

Why? How is this a scam? Some people have resources to mine and some don't (as is the natural order of everything). The P2P nature of the payment system itself, the rate at which coin is produced, the security of the network and your coins are still fine. You just can't profitably mine them yourself. So most of the coins will be mined in China...and? How does that affect me as a saver/spender of bitcoin? It doesn't as far as I can see. I can't print USD or mine gold or anything similar now and it doesn't affect my use of currency at all. I still receive and spend as I like.

If the argument is that 2-3 players will control the market? really? why? what about competition? if I see my neighbor making a fortune with his ASIC factory, won't I build one too? And as the market floods with ASIC devices, so what? the rate of production will remain constant as is algorithmically determined.

If however the OP is right that only a couple of makers will stranglehold bleeding edge technology and hoard it, then truly all the eggs are in one scary basket.

My point is not that. Mining got peoples interests, and that will be lost. Not the coin itself, what will be lost is the P2P system.

First you lose miners, then you lose the P2P advantage.

What you say about factories, may be in a normal unlimited market. Bitcoins are not unlimited, and it could go under before that ever happens, or it would be to late to make profitable devices in your factory.

Losing the P2P advantage of being a distributed network is a huge drawback.

Also, you assume everyone will get an ASIC device like going to a store. This was not true last year, its not true this year and probably will not be true next year.

The only ones making a profit with ASIC devices will the ones having at least XX devices ready to be hooked as soon as they can.

Who controls the ASIC chips, will control the supply chain and bitcoin mining.

You assume things in the future, while I assume things that are happening as we speak.

I hear you, but I guess I'm less worried about this monopolistic fragile state (despite the logical incentives you've laid out). Do we have any numbers on ASIC distribution/concentration?

[MooC Tals]

82 dollar bitcoin is now a reality.

[Mutated btc]

hmmm, something new to hear.

[bitbybit2]

Crytonibb, first of all miners are transaction auditors and they are being paid 25 Bitcoin to solve or audit a block of transactions using a computer. 2500 dollars. Think. ASIC miners are useless if we are going to uninstall our bitcoin clients. Stupid.

[jackjack]

tl;dr

[Keldel]

ASIC technology does not hurt bitcoin. It will make the network more secure in the long run.

[esenminer]

I dont think I would argue that case on here, you can literally go back and forth with dozens of pages filling up on reasons from both parties why some countries are better than others. Home is where the heart is, everyone has their own preference.

 There is no "best country in the world" because the best country in the world is the country that individual is happiest in. 

İ agree.

My issue is with the statement that the US is one of the least free countries in the world. İt's provided as is without a definition of freedom or evidence supporting it - ıf the poster really does believe that then i am curious how he / she reached this conclusion.

[bitcats]

...  because the best country in the world is the country that individual is happiest in. 

You mean Denmark, right?

[b4ldur]

Regarding the fond idea of the winkelvoss twins.

Right now it seesm just a way to polster(?) their own portfolio to the point where they can turn their bitcoins into ready cash. They get laughed at by serious investors and i wouldnt trust them with anything. The little buzz it will create will dissipate rather soon

[Arnald]

Just wondering why would they spent so much money to develop something that will kill the reason they spent the money to. Makes no sense. They want profit, not killing the coin. Perhaps mining as a hobby will be dead but not bitcoin. If something kills bitcoin will be the users trust gone.

[Gabi]

The reality is most people mine for the money/bitcoins not to help keep the network secure, that's just a side thing.

Actually EVERYONE mine for the money/bitcoins.

That is why ASIC exists.

And that is why bitcoin system is epic: greed improve the security