Nenolod, the guy that wants to prove Bitcoin doesn't work.

[lachesis]

Here's my response to his blog post:

cause an effective denial of service through taking control of the proof-of-work difficulty by ensuring that there was an artificial inflation in available compute resources

This is an attack in that you can play with the block generation rate, but the most you can influence it is 4x per 2016 blocks. If you bring 3x the network power in, you can make the difficulty go up 4x in roughly 4 days. You could then leave, forcing the block generation rate back down from a block every 2.5 minutes (at the height of your noding) to a block every 40 minutes. You would also get ~ 75,600 BTC in the process. If, however, you wanted to raise the difficulty *another* 4x, you would need to bring in another 3x the *current* network power, so you would account for 15/16 of the network. This would obviously cost more, and would net you the same reward in both increased difficulty (so called denial of service) and in bitcoins. The "solution" to this, in my opinion, is to shorten the difficulty adjust time from ~2000 blocks to ~100 blocks, but even if this attack isn't solved, there's nothing wrong with you controlling a large part of the network as long as your nodes are honest.

cause speculation in the bitcoin economy, especially the exchanges (e.g. a ‘bank rush’)

What do you mean by this? All you can do is sell your bitcoins for a very low price, giving whoever was around to buy them a decent chunk of coins and netting you less than ideal profit. This wouldn't cause bitcoin to "fail" - it would just lower the market price. The price would recover eventually. You'd be better off selling the coins at some value that made you profit considering all the computer time you spent to get them.

Nenolod, don't spend your time worrying about those attacks. Anyone who has more than 1/2 of the network's computer power can execute the much more dangerous "double spending" attack, which has the potential to damage Bitcoin's reputation as well as get a lot of coins stolen.

I cross-posted this there too.

In addition, if Nenolod had stopped generating when the difficulty spiked so much, wouldn't we expect to see the rate of generation drop below one block every ten minutes? On the contrary: we're currently doing better around 9/10 blocks per hour, or a block roughly every six minutes. (http://nullvoid.org/bitcoin/statistix.php)

[Red]

an MMO service needs a stable exchange for the microcurrency.

I think you have a pretty sweet idea there nenolod. I have been entertaining a similar idea that involves exchanging pure digital property potentially using bitcoin as a medium to facilitate exchange.

Good luck to you!

P.S. Would you care to share how many coins your were able to capture during your testing?

[knightmb]

my speculation is that he is going to use them to buy linden dollars, since that is something he mentioned that can currently be done.

i have approximately zero interest in buying L$.  you will see what i will do with the BTC i generated when I have something to demonstrate.

i stopped generating btc when difficulty hit 181.5, as i had enough BTC for what i needed.

Wow, you came to the Lion's den? 

Here's why I don't believe your story. You tweet how many BTC you are generating. We know that each block generates 50 BTC, we know the history of when blocks were generated, it's easy to go back and lookup their history.

So, I don't believe for a second that you've generated an amount that's nearly 85K BTC due how many possible blocks were generated since you started, the amount of cores you claim to have generating (if you had that many cores, they must all be 200 MHz cores).

So the only way to get that amount would be to buy them. That's more plausible to me, but I know your setup wouldn't generate the amount that people here believed you generated in such a short time.

[nenolod]

Frankly, you may believe whatever you want.  I have better things to do than argue.

[knightmb]

Frankly, you may believe whatever you want.  I have better things to do than argue.

Just like I have betters things to do than entertain people's ego. 

[SEN-5241]

I suspect the point Mr. Nenolod would like to demonstrate is that it's currently relatively easy to create wild swings in currency value with a small amount of resources.  This is "bad" because wild swings in value of a currency discourages economic activity in that currency since business depends on predictability at least in the short term.  Who wants to use bitcoins when the value of them could swing enormously because someone is trying to manipulate prices to their own advantage?

I'm new to bitcoin, but find the whole idea intriguing.  I actually find the whole idea of speculation in this market to be fascinating and educational.  Whatever you're planning on doing, just do it.

[jgarzik]

The bitcoin currency market is so small, any number of things can produce wild swings.

Just wait until someone wants to buy $10,000 USD worth of bitcoins (and then convert back to dollars later on).

[knightmb]

Once block 70560 comes around, we will know if the other part (Nenolod's) plans were a lie as well.

[Red]

Once block 70560 comes around, we will know if the other part (Nenolod's) plans were a lie as well.

Could you decode your meaning for me? I'm a little slow.

I don't think Nenolod has any intention of screwing with or manipulating bitcoin values in the future. At least not given his obviously announced plans. On the contrary, he is literally "banking" on Bitcoins becoming successful.

I'm assuming that he is just going to use bitcoins as backing for his own inter-MMO exchange currency. I'm not an MMO player so excuse my lame examples, but suppose someone was really good at cybersex in say secondlife, but they wanted to trade their services for say a magical sword in world of warcraft. It sounds like Nenolod wants to build an exchange for that. But how do you value orgasms vs magical swords? If you do it in USD, you open yourself to a world of needless regulatory pain. If you do it in Nenocoins, no one will bat an eye.

However, if he backs his Nenocoins with Bitcoins, he gets a bonus selling point in that Nenocoins can be converted to USD or fiat currencies, without him suffering any government grief.

It really is a clever idea! Kudos!

Why would he go through all the grief he did of running 1,000 servers?  I'm sure he started the gag as a hack. But after contemplating it for a couple of days he realized, Duh!  Bitcoins have designed in steady deflation!

Say he gathered 60,000 bitcoins. That represents about $300.00 worth of market cap (last I checked). If his claims are true, he was able to collect them at a discount for only $100.00. In addition, he could quietly gather all of them without competing against himself by driving up Bitcoin prices.

So now he is done. For $100.00 he has all the Bitcoins he'll ever need. If Bitcoins become successful, he no longer has to deal with the bitcoin market again. If Bitcoins fail, he has lost minimal value for a development task the size he is working on. (about 2 hours of paid programmer time).

That was what I meant about early adopter "Bitcoin Lord".

[knightmb]

Once block 70560 comes around, we will know if the other part (Nenolod's) plans were a lie as well.

Could you decode your meaning for me? I'm a little slow.

Your not slow, it's just cryptic talk really. Basically, people are worried he is going to mess with the market. Mainly, they thought he had a 1,000 CPU farm churning out Bit Coins like he was printing money. Which going by his own words, he was leading everyone to believe. At the same time though, many stories about Bit Coin were spreading across the Internet, so traffic to the site increased, many people downloaded the client and set their PC to start "generating coin" so to speak.

Since Bit Coin regulates coin production based on CPU power, all these new people running the client were adding more CPU power to the pool. Thus, the difficulty of each block generation (50 BTC) in this case started to increase rapidly. He used this situation to offer up no proof of nothing more than he had a server farm out there somewhere churning Bit Coins. At the same time, everyone is hoping on board Bit Coin and naturally increasing the difficulty of block generation.

So, people would cross correlate that since he said he had a server farm making coins and the difficulty had jumped up so rapidly, they assumed he was telling the truth.

The breakdown though is given the short amount of time he claimed to have generated 85K of Bit Coin went against of the logic of just how many BTC can actually be generated. According to his own tweets, he was producing 85K in under a few days. By logic, he can't because it would take an 11 day straight coin generating server farm to do this, plus no one else would be able to generate any coin. I was generating plenty during the time he claims to have his server farm up and running, so on that front he was lying I believe.

He now claims that he shut down that server farm long ago and that he has all he needs. Fair enough, if that's true, then by block 70,560 the difficulty of BTC coin generation will take a nose dive.

On another front, he mentions how much he spent using cloud computing to generate all the BTC. I use cloud computing myself and I know how much it cost to use that much CPU power and it's certainly not the few hundred dollars he claims. So, again, I believe he was caught in another lie.

And finally the third reason, and one I don't ever mention, is because some members at this forum have way more CPU resources than he claim to have and they know what the generation rates for them was before and after his claims. His CPU power doesn't pan out against real world experience or else he had the worlds slowest 1,000 core setup.

I don't think Nenolod has any intention of screwing with or manipulating bitcoin values in the future. At least not given his obviously announced plans. On the contrary, he is literally "banking" on Bitcoins becoming successful.

I'm assuming that he is just going to use bitcoins as backing for his own inter-MMO exchange currency. I'm not an MMO player so excuse my lame examples, but suppose someone was really good at cybersex in say secondlife, but they wanted to trade their services for say a magical sword in world of warcraft. It sounds like Nenolod wants to build an exchange for that. But how do you value orgasms vs magical swords? If you do it in USD, you open yourself to a world of needless regulatory pain. If you do it in Nenocoins, no one will bat an eye.

However, if he backs his Nenocoins with Bitcoins, he gets a bonus selling point in that Nenocoins can be converted to USD or fiat currencies, without him suffering any government grief.

It really is a clever idea! Kudos!

Why would he go through all the grief he did of running 1,000 servers?  I'm sure he started the gag as a hack. But after contemplating it for a couple of days he realized, Duh!  Bitcoins have designed in steady deflation!

Say he gathered 60,000 bitcoins. That represents about $300.00 worth of market cap (last I checked). If his claims are true, he was able to collect them at a discount for only $100.00. In addition, he could quietly gather all of them without competing against himself by driving up Bitcoin prices.

So now he is done. For $100.00 he has all the Bitcoins he'll ever need. If Bitcoins become successful, he no longer has to deal with the bitcoin market again. If Bitcoins fail, he has lost minimal value for a development task the size he is working on. (about 2 hours of paid programmer time).

That was what I meant about early adopter "Bitcoin Lord".

I have to disagree, but only for one reason. He wanted a large amount of BTC and the easiest way was to take advantage of the situation when Bit Coin had a lot of press and he knew the difficulty of all these new people joining would increase and thus make it much harder to generate BTC. Using this, he puts out a claim that he has a massive server farm running somewhere and how he's out to show that BTC can be bought out with enough money. At first, it seems logical to people, so they feel the current BTC they have will probably be worthless. He buys up all the BTC he can at fire sale prices and then ends up with a lot of BTC when it's done.

What he does with it, I'll leave that to him. But to go through all of that for only 85K BTC is really just a drop in bucket compared to how much some people have right now.

Only he knows the truth, but in the end after some time, we will at least know if his methods were false or not. What he does with his real or made up amounts of BTC is his own business and I'm not concerned about that. I'm only concerned when I see someone trying to use scare tactics to take advantage of a market. I compare it to someone claiming they have invented a device that can turn water into gold for only $9.99, the gold market plummets, someone buys all the gold at cheap prices, then later people realize that the original water to gold machine was just a lie. The price goes back up, someone gets very rich 

[Red]

Wow, Thanks! Nice explanation. Far more than I expected!

He now claims that he shut down that server farm long ago and that he has all he needs. Fair enough, if that's true, then by block 70,560 the difficulty of BTC coin generation will take a nose dive.

I think what I was missing is that block 70,560 is the next difficulty reset point.

I have to disagree, but ...

I think your math speaks for itself. Thanks for sharing your analysis.

I initially thought the "attack on bitcoin" was a simple case of 1) see bitcoin get good press. The most intriguing thing for many people is the ideal of generating "free money". So, 2) during the wave of new adopters run 1,000 competitive bots against a couple hundred noobs. Most noobs succeed only in spinning their desktop fans really fast, and burning their legs on their laptops. (I almost did!)   3) They abandon bitcoin taking their coins in the process, and spawn a wave of bad press, "I ran bitcoin for two weeks and all I got were two roasted balls!"  4) He gloats a little to his friends.

His new story makes Bitcoin all the more interesting for me though. I'm hoping he really does have a constructive use for any coins he gathered.

I'm only concerned when I see someone trying to use scare tactics to take advantage of a market. I compare it to someone claiming they have invented a device that can turn water into gold for only $9.99, the gold market plummets, someone buys all the gold at cheap prices, then later people realize that the original water to gold machine was just a lie. The price goes back up, someone gets very rich 

Of course, outlandish claims and gullibility are always market forces.

It should be possible to analyze the market transactions to see if there was a surge there as well. Just a thought.

What he does with it, I'll leave that to him. But to go through all of that for only 85K BTC is really just a drop in bucket compared to how much some people have right now.

I've actually been wonder quite a bit about the new Bitcoin Lords.  I know there are stats on how many coins were generated and what accounts they are in... But are there any statistics on
1) How rich is rich in Bitcoins? A sort of Forbes 400 kind of thing.
2) how many Real Life node operators are there?
3) now many nodes are running full time and intermittently. Graphed over time kind of thing

[knightmb]

I've actually been wonder quite a bit about the new Bitcoin Lords.  I know there are stats on how many coins were generated and what accounts they are in... But are there any statistics on
1) How rich is rich in Bitcoins? A sort of Forbes 400 kind of thing.
2) how many Real Life node operators are there?
3) now many nodes are running full time and intermittently. Graphed over time kind of thing

Given that 70,000 blocks = roughly 3.5 million bit coins. Having 85k would give him about 2.4% of the market. I know a lot of the market exchange sites for Bit Coin have at least that or more BTC for the trade volume. I would be curious myself 

[FreeMoney]

He now claims that he shut down that server farm long ago and that he has all he needs. Fair enough, if that's true, then by block 70,560 the difficulty of BTC coin generation will take a nose dive.

We're generating over 9 blocks an hour, so it's going to slow down. Right?

[kiba]

Of course, outlandish claims and gullibility are always market forces.

It should be possible to analyze the market transactions to see if there was a surge there as well. Just a thought.

Than one should make use of that information to win big in the market. This will increase market efficiency by ensuring that bad speculators' money flow to good and less gullible speculators who will be able to allocate resources more appropriately.

[ArtForz]

The numbers don't add up.
Right before /. the whole network was only averaging about 200 Mhash/s
Rising to approx. 1200 Mh/s in the 24h after /.
Then a pretty steady increase to currently about 1700 Mh/s over the following 10 days.
No discernible dips, not at switch to 181.5, nowhere else either.
Okay, the current numbers are big enough that a hundred slowish machines or so won't really show up, but then they also won't make much of a difference.
So I guess it was a cluster of TI-84s or simply making impressive-sounding shit up on the fly.

[Red]

Then a pretty steady increase to currently about 1700 Mh/s over the following 10 days.

Sorry for the noob question, but how is the 1700 Mh/s number calculated or gathered? I saw my local node's speed in the GUI. Didn't notice a network speed.

Are there also stats for the number of nodes running over the same time period?

[knightmb]

We're generating over 9 blocks an hour, so it's going to slow down. Right?

The blocks per hour try to remain steady, the difficulty just goes down. Basically he's saying "I made it hard for everyone because my machine(s) were winning every time", now that the machines are shut off, "you all should be winning the blocks everytime".

So the rate remains constant, but everyone should start generating more blocks (perhaps a few per day instead of 1 every 2 weeks like before).

[ArtForz]

Sorry for the noob question, but how is the 1700 Mh/s number calculated or gathered? I saw my local node's speed in the GUI. Didn't notice a network speed.

Relatively easy, using block timestamp + difficulty extracted from blocks.dat
for example, take the interval from block #68832 to #68976 (= 144 blocks = nominal 24h time period)
68832 was generated 2010/07/18 07:19
68976 was generated 2010/07/19 02:43
difference is 69862 sec
69862 sec / 144 blocks = ~485 sec/block
at a difficulty of 181.5, on average, a block gets found after roughly 2**32 * 181.5 tries
so ~ 780000M tries/block / 485 sec/block = ~ 1607M tries/sec
these numbers are of course influenced by the "randomness" of finding blocks, but they are a lot better than blind guesses.
If you are statistically inclined you can also calculate standard margin of error, use overlapping ranges to smooth the curve, ...

The blocks per hour try to remain steady, the difficulty just goes down. Basically he's saying "I made it hard for everyone because my machine(s) were winning every time", now that the machines are shut off, "you all should be winning the blocks everytime".

So the rate remains constant, but everyone should start generating more blocks (perhaps a few per day instead of 1 every 2 weeks like before).

The network adjusts difficulty every 2016 blocks to get to 6 blocks/hour average, basically factor = (14 * 24 * 60 * 60) / (actual # of seconds taken for the last 2016 blocks); factor = max(0.25, factor);  factor = min(4, factor); new_difficulty = old_diffculty * factor
And, as I said, the total hash rate after he supposedly stopped his nodes went UP.
If things continue like this, on the next iteration we'll end up with a difficulty increase to ~ 230.
Which means then at 1000khash/s you'll generate a block every ~11d10h on average, which comes out to ~ 0.1825BTC/h

[Red]

Relatively easy, using block timestamp + difficulty extracted from blocks.dat

Yes relatively easy... LOL!  :-)

Thanks for the explanation, but I'll be taking your word for it from now on!

[knightmb]

The network adjusts difficulty every 2016 blocks to get to 6 blocks/hour average, basically factor = (14 * 24 * 60 * 60) / (actual # of seconds taken for the last 2016 blocks); factor = max(0.25, factor);  factor = min(4, factor); new_difficulty = old_diffculty * factor
And, as I said, the total hash rate after he supposedly stopped his nodes went UP.
If things continue like this, on the next iteration we'll end up with a difficulty increase to ~ 230.
Which means then at 1000khash/s you'll generate a block every ~11d10h on average, which comes out to ~ 0.1825BTC/h

That's what I was expecting too, but I was using napkin math, glad you took the time to work out the real numbers. Either someone has stopped the search for SETI or Gene Finding to start making Bit Coins or a lot of people have installed the client on their PC and have it churning 24/7 to mine coins. I guess since all the downloads come from sourceforge, I wonder how many downloads have taken place in the last few months? I know I've downloaded the client hundreds of times now to install it