A Debate on the Usefulness of "Donating" Miners and their part in Bitcoin's long term outlook and uptake
I recently had a debate (mostly) with Blitzboom on the matter on #bitcoin-otc and decided I would post some of what was said here to open the discussion. It is mostly in reference to theymos's quote below (which was on the thread related to disabling the built-in miner, so I decided to not respond to it there):
I was thinking about that too but won't someone who essentially never solves a block have a near 0 effect on the network?
I'd guess that if you solve a block every 6 months on average (or worse) you won't speed it up / affect other miners you'll just waste energy. Is there any benefit to it at all? Assuming you're not in a pool of course.
If the idea spreads that mining helps the Bitcoin network, then tens of thousands of people might turn on generation. Many of these people won't ever win a block, but if some do, then the network will be affected. Every time an unprofitable miner wins a block (or whenever they contribute to a pool), the difficulty will go up.
When the difficulty goes up, the least efficient miners are pushed out of the market unless
they are volunteers. Volunteers therefore take up a greater and greater portion of the network's total CPU. This is bad for at least two reasons:
- The network becomes less efficient, using more energy than it needs to.
- "Amateur" miners are not able to respond to threats as quickly as professional miners. They're probably not running the most recent version of Bitcoin, and even if they are, professional miners can make changes to Bitcoin without a new release. The situation is better when the amateur miner is part of a pool, but if the pool goes rogue, the amateur miner will probably not know about it.
It's also really going to irritate me if I see propaganda saying, "Do your part: mine Bitcoins!" or something like that, when the network is perfectly capable of running without volunteers.
My objection to this is mostly due to its infeasibility in the long term in the current model of bitcoin adoption. In theymos' proposed model of the bitcoin economy, miners only exist where it is profitable for them, ie the price of bitcoin is higher than the price of electricity. This means that there will be relatively few high-power miners making up some large percent of the mining power (for the sake of argument, lets assume the rest of the miner's total power is negligible). Because bitcoin mining is profitable, those who have high end cards will bring them online and sell for their costs, making the price drop and leaving only the few most efficient miners. (Problem 1) This creates a system in which bitcoin's price is equal to the price of electricity. If this is how the bitcoin network always will be, there will always be a very small number of efficient miners who have some large percent of the total value of bitcoin. (Problem 2)
Problem 1: In order for the network to function the way it was designed, we need as many miners as possible. If mining is controlled by a few, slarge miners, it will always be succeptible to a double-spend attack by someone with considerable resources. Take, for example, ArtForz. Even if he were to triple his capacity, he would still not be nearly capable of defending the entire network against an attack by someone with the resources of the recent Mysterious Miner. If several others, like ArtForz, brought similar scale miners online (as would happen in theymos' model), even them together would not be able to defend against an attack by a very large botnet or the use of a supercomputer by a well-connected attacker (say, an attacker who works at a university and is willing to take the risk to take over the entire computer for a couple hours).
Problem 2: This is one of the largest issues with the perception of bitcoin by the average person, and is one of the largest complaints I see whenever someone posts about bitcoin. "It is a ponzi scheme". And as long as most new generation happens between a small community of large-power miners, it effectively is. New users pay the miners when they join (as miners are the largest sellers), but if many of them want out, there is no support there. As long as there exists miners which can crash the bitcoin market overnight (which would be very easy for some of the current large-scale miners such as ArtForz), the bitcoin economy carries with it many of the traits of a ponzi scheme (albeit a very open one) which makes MANY people very wary of investing.
If bitcoin is to be used by any medium to large size organizations, there needs to be very strong confidence in its ability to continue with some amount of value and with a secure network. IMHO this idea that mining is not good for the network is ridiculous, as currently, miners are making such large profits that the first thing people see in bitcoin is a ponzi scheme and this needs to disappear on the back of more mining power.
Feel free to tear this apart.