No Miners Scenario - what will happen if average miners stop mining?

[capcook]

Hello everyone,

I have to premise that I am a total noob so forgive me if I talk dumb. 
Anyway, I was thinking about this:

• New altcoins every day... how long this will last? Ppl will get tired or this mess, no?
• On the other hand, ppl who has average gpu rigs wants altcoins, for better opportunities
• so no altcoins, no more average and small miners

the above led me to the following thoughts:

• What will happen if medium and small miners disappear?
• Then, will big expensive ASIC miners assume a role similar to that of central banks?
• If this happens, will bitcoin be abandoned in the long run for failing to maintain democracy in its ecosystem?

What do you think?

[1714890321]

1714890321

[guybrushthreepwood]

I think there will always be a market for alts, but the altcoin market will eventually become saturated and a lot of coins will fail on launch. And I can't see why miners will abandon Bitcoin. The more miners that do will mean more money for the rest. There will always be supply and demand for mining.

[BitThink]

Small miners join a pool so actually there's no much difference. Now mining is already in the hands of big pool operators.

[capcook]

And I can't see why miners will abandon Bitcoin. The more miners that do will mean more money for the rest. There will always be supply and demand for mining.

Yes, but if I understand it correctly profitable mining of main cryptocurrencies (BTC, LTC...) is getting more and more difficult with commonly avaible computer hw, right?
Of course mine is more an abstract hypothesis, but what happens if mining activity becomes increasingly "less grassroot" and more "enterprise like"? Will this put an hazard to cryptocurrencies in general, destroying the main key concept behind it?

[BlockChainLottery]

And I can't see why miners will abandon Bitcoin. The more miners that do will mean more money for the rest. There will always be supply and demand for mining.

Yes, but if I understand it correctly profitable mining of main cryptocurrencies (BTC, LTC...) is getting more and more difficult with commonly avaible computer hw, right?
Of course mine is more an abstract hypothesis, but what happens if mining activity becomes increasingly "less grassroot" and more "enterprise like"? Will this put an hazard to cryptocurrencies in general, destroying the main key concept behind it?

Well yes, probably. But thanks to pool mining it doesn't have to happen. Even alt coins are profitable until the masses find out. In that case small miners can join mining pools for Bitcoin. But how about the power pool owners have in choosing the protocol version. Well if a lot of small miners don't like what the pool owner chooses, they can all go to a different pool. So in my opinion Bitcoin stays a currency based on what the majority wants.

[capcook]

Well yes, probably. But thanks to pool mining it doesn't have to happen.

Excuse my ignorance, but how pools are a guarantee of suistainable profitability for rigs made of commonly avaible pc components? I understand they increase efficiency, but up to a certain point, no?

The matter I see is the entrance on the scene of dedicated mining hw, like ASICs and FGPAs. OK most GPU mining rigs are doubtfoully serving other purposes than mining, so one can argue there is little or no difference between them.
But I think the difference is far from being purely conceptual. Everyone that has a common PC with an edge for gaming is already possessing a minimal mining rig, and that is the democratic aspect. The other one is far less ideological: dedicated hw can be subject to restrictions by governments, so controlled in a way or another (bans, license requirements, taxes etc.), generic hw cannot be controlled in such fashion.

[BlockChainLottery]

Well yes, probably. But thanks to pool mining it doesn't have to happen.

Excuse my ignorance, but how pools are a guarantee of suistainable profitability for rigs made of commonly avaible pc components? I understand they increase efficiency, but up to a certain point, no?

Yes, you're right. It not really profitable to mine with a computer anymore.

The matter I see is the entrance on the scene of dedicated mining hw, like ASICs and FGPAs. OK most GPU mining rigs are doubtfoully serving other purposes than mining, so one can argue there is little or no difference between them.
But I think the difference is far from being purely conceptual. Everyone that has a common PC with an edge for gaming is already possessing a minimal mining rig, and that is the democratic aspect. The other one is far less ideological: dedicated hw can be subject to restrictions by governments, so controlled in a way or another (bans, license requirements, taxes etc.), generic hw cannot be controlled in such fashion.

ASIC miners are just dedicated to hashing, which can be used for other (not really mainstream) things than just for Bitcoin.

Talking about the democratic aspect, mining isn't free. And most of the people having a PC for gaming laying around probably aren't going to mine. The fact that something is (more or less democratic) doesn't mean it should be free to vote. After all, as member of a nation you also have to pay taxes. So to keep Bitcoin running, and more importantly the way you want it to keep running by 'voting', you also have to make a financial contribution. Problem stays that more wealthy people have more voting power. But they have to keep in mind that if they make Bitcoin in something the less wealthy people don't like Bitcoin will never become popular.

[Undone]

Excuse my ignorance, but how pools are a guarantee of suistainable profitability for rigs made of commonly avaible pc components? I understand they increase efficiency, but up to a certain point, no?

You're asking good questions, capcook.

It seems like you're sort of conflating "commonly available pc components" with the concept of hashing power in general. Hashing power is itself the end-all in the mining game. Well...that and electricity cost per k/hash.

Pool mining just guarantees you a steady payout versus solo mining. So the point is that pool mining always makes mining accessible to any miner. But electricity costs as a function of efficiency with regards to hashrate is also basically the biggest factor.

One of the above posters then explains it well - if a pool is crooked, the miners will ditch him and move to another pool. The large-scale industrial mining operations will have an incredibly difficult time overtaking the enormous hoard of small to medium sized miners that form the majority of the pools, so long as pool mining exists. And it will, given the incentive for pool operators to operate a pool.

I agree with your hypothesis, though. If massive industrial mining operations controlled the supply of bitcoin, it might reshape bitcoin's model. But that just isn't going to happen, fortunately.

[capcook]

Thanks Undone! I kinda get it now... miners can be small but pools will remain big well enough to compete with "industrial mining". Miners joining a pool are like ppl voting a party, in a way...

[Undone]

Pools provide an entry point to miners of any size - small, medium, or large. But they're especially an entry point to small/medium sized miners.

A given pool doesn't have to be "big." There could be lots of small pools or a few big pools, and the effect would be the same. Except that in the scenario where there are only a few big pools, a smaller number of people (the pool operators) have a large amount of bitcoin that they've collected through pool fees.

So I suppose it would be correct to say that many small pools decreases risk to the network. But I think any worry about this is unnecessary.

[Erdogan]

OP: Did you dig out the gold and make that wedding ring yourself? Did you make your latest smartphone yourself out of clay and sticks?

Mining is big business. Sometimes it makes sense to let an association of individuals do things on a larger scale than what is possible for single persons. There is nothing wrong with large companies as long as they operate in the free market.

[richmke]

OP: Did you dig out the gold and make that wedding ring yourself? Did you make your latest smartphone yourself out of clay and sticks?

Mining is big business. Sometimes it makes sense to let an association of individuals do things on a larger scale than what is possible for single persons. There is nothing wrong with large companies as long as they operate in the free market.

There is a difference between a product with an intrinsic value (like gold, or video game), vs crypto currency, which has no intrinsic value. Even if gold had no industrial purpose, you could sell it as a paperweight.

The problem with crypto currencies is the same problem as Tulip Mania in 1637. The price of tulips became what the next guy would buy it for, and not its intrinsic value.

Country sponsored currencies, like the USD, EURO, RMB, etc. have the government to force usage. If you want to buy and sell in the USA, the official currency is the USD. You can use other currencies, but then you have much higher transaction costs (1% foreign exchange fees to deposit/withdraw at your bank).

There is nothing that forces usage of Bitcoin, or any other crypto currency. If there was widespread adoption, then that would give some support, but as soon as a problem occurred (someone figured out how to hack the blockchain), there could be fast defection and the currency would crash. Not unlike what is happening at MTgox, or when a country's currency crashes.

There is one possibility for the survival of a crypto currency: If the currency could, by its terms, be converted into something like Gold. Instead of computer mining, the only way to get a gold-ecoin is to deposit gold (or if the depository accepted currency that it then used to buy gold). GLD (exchange traded gold) could be used as the interim until exchanged for physical bars that are then stored. As long as the currency can be freely traded in and out of gold, people will feel secure buying it.

Once the average person stops mining, who is left to trade in bitcoin? A few large miners (let's call them companies). The last company left, who will they trade with? They will be left holding the bag of worthless bitcoins.

[Erdogan]

OP: Did you dig out the gold and make that wedding ring yourself? Did you make your latest smartphone yourself out of clay and sticks?

Mining is big business. Sometimes it makes sense to let an association of individuals do things on a larger scale than what is possible for single persons. There is nothing wrong with large companies as long as they operate in the free market.

There is a difference between a product with an intrinsic value (like gold, or video game), vs crypto currency, which has no intrinsic value. Even if gold had no industrial purpose, you could sell it as a paperweight.

The problem with crypto currencies is the same problem as Tulip Mania in 1637. The price of tulips became what the next guy would buy it for, and not its intrinsic value.

Country sponsored currencies, like the USD, EURO, RMB, etc. have the government to force usage. If you want to buy and sell in the USA, the official currency is the USD. You can use other currencies, but then you have much higher transaction costs (1% foreign exchange fees to deposit/withdraw at your bank).

There is nothing that forces usage of Bitcoin, or any other crypto currency. If there was widespread adoption, then that would give some support, but as soon as a problem occurred (someone figured out how to hack the blockchain), there could be fast defection and the currency would crash. Not unlike what is happening at MTgox, or when a country's currency crashes.

There is one possibility for the survival of a crypto currency: If the currency could, by its terms, be converted into something like Gold. Instead of computer mining, the only way to get a gold-ecoin is to deposit gold (or if the depository accepted currency that it then used to buy gold). GLD (exchange traded gold) could be used as the interim until exchanged for physical bars that are then stored. As long as the currency can be freely traded in and out of gold, people will feel secure buying it.

Once the average person stops mining, who is left to trade in bitcoin? A few large miners (let's call them companies). The last company left will be holding the bag of worthless bitcoins.

That is a nice collection of already punctured arguments you have there.

To the question in the thread title: Nothing. Nothing happens, the bitcoin train choo choos on like it never knew, to great adoption and great unit value.

[coinpharmer]

all we need right now is a few new usb asic miner producers..  we need more products in the <50$ range and in the <500$ range. shit, find a way to attach the low cost miner to a btc address and include the privet key information on the packaging and lock it to mine bitcoin without a pool and lock it. call them lottery tickets! haha id buy some, simular odds and it secures the network.

[capcook]

There is nothing wrong with large companies as long as they operate in the free market.

Yes, but this is very unlikely to happen. If mining will become a large company only thing, I doubt governments will let 'em act freely since they are producing a currency, not to mention a currency with "subversive" goals in its manifesto.
Even the most btc friendly nations are talking about regulation right now. They have been caught off guard but I doubt they will let this go smooth.

As far from intrinsic value of BTC, it is only driven by demand-offer. A problem I keep seeing is that it's not still very liquid in the real world: ok many businesses are starting to accept it but we are very far from  the "I can but whatever I could with regular money". The only thing that can act as a force in favor of BTC, is its community, I think.

[Erdogan]

There is nothing wrong with large companies as long as they operate in the free market.

Yes, but this is very unlikely to happen. If mining will become a large company only thing, I doubt governments will let 'em act freely since they are producing a currency, not to mention a currency with "subversive" goals in its manifesto.
[...]

This is a good reason why the market probably will not gravitate towards mining with just a few large companies.

[Mr. Socko]

OP: Did you dig out the gold and make that wedding ring yourself? Did you make your latest smartphone yourself out of clay and sticks?

Mining is big business. Sometimes it makes sense to let an association of individuals do things on a larger scale than what is possible for single persons. There is nothing wrong with large companies as long as they operate in the free market.

There is a difference between a product with an intrinsic value (like gold, or video game), vs crypto currency, which has no intrinsic value. Even if gold had no industrial purpose, you could sell it as a paperweight.

The problem with crypto currencies is the same problem as Tulip Mania in 1637. The price of tulips became what the next guy would buy it for, and not its intrinsic value.

Country sponsored currencies, like the USD, EURO, RMB, etc. have the government to force usage. If you want to buy and sell in the USA, the official currency is the USD. You can use other currencies, but then you have much higher transaction costs (1% foreign exchange fees to deposit/withdraw at your bank).

There is nothing that forces usage of Bitcoin, or any other crypto currency. If there was widespread adoption, then that would give some support, but as soon as a problem occurred (someone figured out how to hack the blockchain), there could be fast defection and the currency would crash. Not unlike what is happening at MTgox, or when a country's currency crashes.

There is one possibility for the survival of a crypto currency: If the currency could, by its terms, be converted into something like Gold. Instead of computer mining, the only way to get a gold-ecoin is to deposit gold (or if the depository accepted currency that it then used to buy gold). GLD (exchange traded gold) could be used as the interim until exchanged for physical bars that are then stored. As long as the currency can be freely traded in and out of gold, people will feel secure buying it.

Once the average person stops mining, who is left to trade in bitcoin? A few large miners (let's call them companies). The last company left, who will they trade with? They will be left holding the bag of worthless bitcoins.

Somebody needs to manage that gold. Thus the currency becomes centralized, and faith has to be placed that the operator of this service won't run off with the gold, go bankrupt, or whatever. A currency does not need a backing, and if it got hacked having a gold backing wouldn't help it out. It COULD work, say Kitco decided to start a proof of stake crypto currency and back each unit with an ounce of gold so your buy in price is the spot price of gold. If someone wanted to buy in with USD Kitco has plenty of gold that it could probably accommodate those requests as well. It COULD work in theory, if you trust Kitco. Kitco would act as it's own exchange between gold, dollars, or units of it's crypto currency, each unit backed by one ounce of gold.

If the currency takes off suddenly it could face problems of governments going after the organization known as kitco for starting this currency and subverting their own fractional reserve currencies, which may or may not matter to them. Then there's the matter of tracking the so called "tax gains" on whatever appreciation or loss gold has... better to avoid the tax bullshit in the first place and just pay sales tax on whatever you are buying, not having to worry about capital gains or losses which is and would be a royal pain in the ass to calculate for every single transaction made.

[richmke]

Somebody needs to manage that gold. Thus the currency becomes centralized, and faith has to be placed that the operator of this service won't run off with the gold, go bankrupt, or whatever.

That's why I referenced GLD. GLD has been around for at least a decade. People trust it. The government isn't going after them.