Again I don't see any advantage of an ever growing and centralising mining industry. The upside of the ASICs is that they cannot be used for anything but Bitcoin mining, so if we find an equilibrium, where it is unprofitable to run a professional and profitable mining operation (Server space is expensive and the cost of something going wrong, hiring extra personal etc. is very risky). So why would you turn off your ASICs then, as they cost you a lot of money, and will at some point stabilise until the next big thing comes along. So the upside is that thanks to ASICs, even if BTC prices drop for a while, the network will not die. And once there's a lot of money involved in this industry, they will also do everything in their power to keep Bitcoin alive.
Sadly I think that there will never be an equilibrium with bitcoin. The price will go up and down and there will be periods where it's not profitable to mine because of the utility cost. The fixed coin supply will always keep the market attractive to all kinds of manipulative games.
And the thing that disturbs me the most is the lack of gain with the increase of the network. It's like people are paying each other to simulate work instead of doing real work that has any gain.
I disagree on several points.
- If I recall correctly, scrypt was intended to be GPU proof as well. But correct me if am wrong.
Scrypt wasn't intended to be GPU proof. The trick with scrypt is that it's hashrate is mostly dependent on memory. So, you can't make specialized chips to make the process faster.
- Scrypt ASICs are hitting the markets, and are in my opinion a bad investment for those just a little late to the party, since the developers of the scrypt coins one of their ambitions was to keep ASICs out, and so I think is the reasoning of most miners. Also the difference in hash rate is not spectacular, just the power consumption. So if majority chooses to alter the algorithm, your scrypt ASIC miner is worthless.
The cap between GPU mining and scrypt ASICs won't be big because of the previous reason. DDR5 memory is expensive and set with one price. Meaning, scrypt ASICs won't be much cheaper then graphics cards. They can even be more expensive because of the smaller production scale.
Scrypt ASICs can gain most on power efficiency, but the cost of production per hashrate won't be much cheaper.
- Bitcoin introduced lots of innovation and solved the problem of making digital items scarce, through the use of a public ledger. It was the first to market and revolutionary. Other coins might be better, I certainly hope so after all those years, but they evolutionary.
I agree with you here. Bitcoin was revolutionary and a beautiful piece of art in general. But no matter how I look at it, I don't see it supporting modern economics. The current fixed supply creates too much deflation and it makes bitcoin too attractive to speculation. When something is this attractive to speculation, then it won't ever find stability. Only thing that changes with increased market cap. is that players get involved with deeper pockets and better knowledge on how to manipulate an unregulated market.
- It's all about market cap and money, why would any business switch to a coin with a lower market cap. A 5 year hype is a feat by itself, I honestly think it's more than that.
I think that the main question that will begin the downfall of bitcoin is "Who are the owners of the majority of bitcoins?". We know that for years bitcoin was mostly used for drug trade. Meaning that there is no way to be sure that the majority of the bitcoin owners aren't really drug dealers. And there are plenty of high profile bitcoin thefts, including the current MtGox situation. Soon the government will start asking what guarantee does bitcoin have that new investments won't actually go to fill the pockets of the criminal element, like drug dealers and hackers. And the answer to these questions will be that it's better to start over from 0 and on a base that isn't so suitable to the criminal element then bitcoin was at the beginning.
