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Author Topic: Security of Bitcoin network largely determined by $/%hashrate, not GH/s  (Read 1066 times)
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September 09, 2013, 04:59:03 AM

Just a weird misunderstanding I see around a lot - the idea that Bitcoin is secured against xx% attacks by having a high difficulty.

It may seem purely semantic, but what really creates security is the cost of obtaining that xx% of the network.

A high cost for mining on what's available to us also does not necessarily make Bitcoin secure.

While Bitcoin was operating only on CPUs, the Bitcoin network was extremely insecure. It didn't really matter how many more CPUs were put on the network, even if 2TH/s of CPUs were put on the network, because software to utilize GPUs could've been created and privately exploited to bring the network down for a few thousand dollars (even though all the CPUs collectively mining may've cost $200,000+).

While Bitcoin was operating with CPUs and GPUs, the Bitcoin network was insecure. It didn't really matter how many more GPUs were put on the network, because BTC-mining ASICs could've been privately manufactured and run to capture the majority of hashrate for maybe $200,000 (even though all the GPUs and CPUs collectively mining may've cost $20,000,000+). In this way, ASICs were absolutely essential to long-term sustainability of Bitcoin, and the market being over-saturated with them is probably a good thing for at least the next year or so. (down the road, it may lead to bad consequences, since ASIC manufacturers may well be in for a long dry spell if BTC price isn't soaring, which may lead to technological retardation [as in, BFL may be the only ASIC manufacturer standing in 2015 Tongue])

Is Bitcoin still in danger for that reason? Maybe, but relative to previous revolutionary advances (which were already thought possible to utilize well before release) in mining, probably much, much less.

What we really need to be looking at is decreasing the upfront and maintenance cost of hashing, and ensuring this cost-effective technology is publicly-accessible. Bitcoin can never again afford to be in a position where a few new ideas, a little know-how, and a few weeks of time by one or a few people can lead to a revolutionary advance which immediately obsoletes old mining hardware. The biggest help a non-miner could offer would probably be to subsidize mining with larger-than-necessary transaction fees, increasing incentive for Joe Miner to either grow or at least maintain his farm. (running obsolete hardware incidentally has the opposite effect)
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