BTC Security Broken?

[Apocollapse]

It's pretty simple:
1) Go here and find out the price of a miner as well as its hashrate and consumption:
https://shop.bitmain.com/?coin=BTC%2FBCH%2FBSV
2) Current income is 4.8 cents per th/s
https://www.viabtc.com/tools/calculator

Do the math on your power cost and how much you would earn! What would be easier? 

I pick Bitcoin Miner T21 with specifications:

SPOT Bitcoin Miner T21

Function   BTC/BCH/BSV  SHA256  Air-cooling Miner
Specifications   190T 3610W 19.0J/T

When I calculate the profit on viabtc, 190 TH/s generate 0.0001539 BTC or $8.78

Then I use electricity calculator, average of electricity cost in US is 16 cent per 1kWh. With power consumption 3160 watts (W) and 24 hours use per day.

I got electricity cost per day $13.8624

I didn't even include the maintenance cost, cooler, fan etc, but it means mining no longer profitable isn't?

[Wind_FURY]

Assuming that in future, Bitcoin continues its adoption and price growth, with higher price of Bitcoin, transaction fee will become higher with same fee rate.

So tell me, just because 100 more people use Visa than let's say American Express, you're going to pay 100 more in fees for that card instead of an AE one? Also if Nvidia shares went up 10x and Mirsoft only 2x, would you pay your broker 5 times the fees when you sell $1000 them?  

When BTC reaches 1million , you're going to be ok with paying a $1000 fee to order a $20 pizza?  
Just because the price of BTC has increased?

But actually, $1,000 fee is an exaggeration, no one would pay that high to have their transaction first in queue. Plus purchases in the blockchain that would pay high fees will not be financial transactions to pay for a $20.00 pizza. We already saw users pay more than $50.00 per transaction for their Ordinals dick pics and fart sounds, and their Runes. I believe those users are the only people who will pay high transaction fees, and therefore they might play an important part in Bitcoin's future.

7) (this is my favourite strategy, as I wrote about in the other thread): explore merge-mined sidechains and rollups. Each sidechain can have an utility token which would be merge-mined with Bitcoin. Basically, this would be a kind of "off chain tail emission".

I posted/asked about something the same, I believe probably last year.

But isn't merge-mining going to be like a block size increase? Because it would require miners to use more processing power, which will also require them to spend more capital to mine.

[d5000]

But isn't merge-mining going to be like a block size increase? Because it would require miners to use more processing power, which will also require them to spend more capital to mine.

The difference to a block size increase is that only miners would really be affected. It would still be cheap to operate a full node without mining. With all advantages this provides, for example privacy, and helping against other attacks on SPV clients.

Transaction processing costs on Drivechains or other merged-mined sidechains/altchains, in relation to hashing costs should be negligible for miners. Miners are generally extremely well connected to the network, so the biggest problem for "household" full nodes, bandwidth, does not really bother them. And historically a big percentage of the Bitcoin miners for example merge mined Namecoin, even if the NMC block reward was/is a small fraction of the Bitcoin block reward. It's ... at least something.

You could bet on that if the Sidechain/Drivechain model gets popular there will be more than one sidechain. Let's say we have our 4MB/10min BTC mainchain and 10 4MB/10min drivechains. Thus for a full node operator who wants to use one of these chains and in addition the mainchain, they still would have much lower transaction processing and bandwidth costs (8MB/10min) than if Bitcoin had 44 MB blocks to accomodate the same number of transactions.

[philipma1957]

It's pretty simple:
1) Go here and find out the price of a miner as well as its hashrate and consumption:
https://shop.bitmain.com/?coin=BTC%2FBCH%2FBSV
2) Current income is 4.8 cents per th/s
https://www.viabtc.com/tools/calculator

Do the math on your power cost and how much you would earn! What would be easier? 

I pick Bitcoin Miner T21 with specifications:

SPOT Bitcoin Miner T21

Function   BTC/BCH/BSV  SHA256  Air-cooling Miner
Specifications   190T 3610W 19.0J/T

When I calculate the profit on viabtc, 190 TH/s generate 0.0001539 BTC or $8.78

Then I use electricity calculator, average of electricity cost in US is 16 cent per 1kWh. With power consumption 3160 watts (W) and 24 hours use per day.

I got electricity cost per day $13.8624

I didn't even include the maintenance cost, cooler, fan etc, but it means mining no longer profitable isn't?

No it means 16 cent mining is a loser at the moment.

At 8 cents power costs $6.94 thats a winner

Heck I did a stab with a hoster at ten cents for the next 12 months. cost will be 220x12= 2640 the t21 cost 3500 with mods.

so 6140 for first year. I am pointed at https://pool.laurentiapool.org/#/user/146UJM5kgzLVUV23CXCf33KQKHckoX1gx3

I will see how it does.

[348Judah]

BTC's longterm security depends on people paying extremely high TX fees which won't happen in a free market.
"

Is there a gaping hole in this argument?

Hype on transaction fee is not what the bitcoin use to come down, neither does it determine what the tax rate is, the security is solely base on the protocols set up with the bitcoin network and as long as any of these does not break it concession, then there's going to be nothing can make it be under attack or experience a bridge in protocols, the security of bitcoin also depends on whether if the Bitcoin nodes could be attacked or not.

[stompix]

~

I pick Bitcoin Miner T21 with specifications:

SPOT Bitcoin Miner T21

Function   BTC/BCH/BSV  SHA256  Air-cooling Miner
Specifications   190T 3610W 19.0J/T

When I calculate the profit on viabtc, 190 TH/s generate 0.0001539 BTC or $8.78
Then I use electricity calculator, average of electricity cost in US is 16 cent per 1kWh. With power consumption 3160 watts (W) and 24 hours use per day.
I got electricity cost per day $13.8624
I didn't even include the maintenance cost, cooler, fan etc, but it means mining no longer profitable isn't?

Hihihi, 16 cents per kwh?
16 cents per kWh was a deal breaker 3 years ago, nobody under 8 cents is actively mining, the sweet spot for making money is around 4 cents after taxes. Phil has done a lot of calculations in the difficulty thread, but it essentially boils to this:

One TH/s of medium efficient gear will burn around half a kilowatt and earn 4.5 cents a day.
You're at 9 cents you might lose money, you're at 6-8 you might never ROI, you pay 2 cents you drink wine waiting for everyone else to go bankrupt.

But actually, $1,000 fee is an exaggeration, no one would pay that high to have their transaction first in queue. Plus purchases in the blockchain that would pay high fees will not be financial transactions to pay for a $20.00 pizza.

Of course not $1000, but you have on average 500k tx that need to generate 30 mils a day, so $60. Would you ay twice the pizza for a pizza?
More importantly, are you going to pay $60 to open a LN and $60 to close a LN?
You and me, maybe!
Average Joe and 1 million others, no!

We already saw users pay more than $50.00 per transaction for their Ordinals dick pics and fart sounds, and their Runes. I believe those users are the only people who will pay high transaction fees, and therefore they might play an important part in Bitcoin's future.

But, but, but...we need to ban dicks pics! 

Because it would require miners to use more processing power, which will also require them to spend more capital to mine.

Doge/LTC miners love it! 

[Casdinyard]

"
BTC's longterm security depends on people paying extremely high TX fees which won't happen in a free market.
"

Is there a gaping hole in this argument?

What makes rarities or antiques valued the way they are in our everyday society?

To answer that I would say simply because they are hard to come by and someone somewhere is willing to pay an unbelievable amount just to own it.

You can say the same goes for Bitcoin. If you look at it, the fee isn’t always that high, depending on the amount your sending at any point in time. Also, the intent you wish to archive which wouldn’t be far from privacy wouldn’t keep you far away from the innovation.

It really isn’t up to the fees you know, the purpose for which you wish to archive with it. You can swiftly get a large some across and get things done from the comfort of your home without following any definite procedure or stands to be audited on a transaction. This too is okay to keep things going for Bitcoin.

Except that's not how it works in the crypto industry, at least as the trend suggests.

Even now bitcoin's slowly losing its grip as the number 1 coin on the ecosystem, with better and more scalable tokens slowly climbing up the ladder to take its place. And for good reason too. Cause why the hell am I gonna stick with a coin that gets congested every tuesdays when I can switch over to another crypto that could basically do everything for me for a buck fifty, including doing my taxes (a bit exaggerated but you get my point).

The concept of "antiques" or scarcity in this industry would only work if that is the intended purpose of the coin/token itself. If it is not, people will switch over to a much better coin that suits their needs and provides what they want. It's just that easy.

Scalability is a massive problem for bitcoin that if left untouched would literally cause its end. Right now we're seeing the signs, we don't need to wait for its dying throes before we actually start doing something.

[d5000]

Even now bitcoin's slowly losing its grip as the number 1 coin on the ecosystem, with better and more scalable tokens slowly climbing up the ladder to take its place.

Which one? Solana?

Solana is valued only 50% of its ATH in 2021 (about $260). It's network stops working regularly for hours, which is much worse than Bitcoin's congestion moments. Full nodes have to handle a high throughput, forget it to run one of them on relatively cheap consumer hardware. The whole network is based on a principle similar to SPV.

And it's not decentralized. It could be described as distributed as Fastly or Cloudflare are, but entities managed by the founders have a lot of control over the network due to the enormous premine.

Basically Solana is a PoS version of BSV. Same is true for XRP and Tron. And all other "platforms" have either a much smaller "real" data throughput than Bitcoin (coins like LTC, BCH/BSV or Doge) or a similar fee problem than Bitcoin (Ethereum, Avalanche).

By the way, Bitcoin's "dominance" value, even if it's a highly flawed indicator, is steady over 50% according to Coingecko. Thus I don't know what you're talking about.

And yes, scalability is important but all these coins employ basically the "big blocks" paradigm and it doesn't solve scalability as long as all transactions have to be processed by all full nodes. The goal of scalability solutions is to bundle several transactions moving them partly off-chain or to alternative chains (sidechains/rollups) where only a part of the nodes have to process them. And in addition, as written in my previous post, it can solve the long term security problem providing a "tail emission" if implemented intelligently via merged-mining.

[NotATether]

The thing is, we can do something about it right now: The lightning network (cliché, I know) fees will remain low in the long term, so when anyone wants to make small payments they can create a Lightning channel just for that, but then you'd need something to incentivize moving channel funds the other way - maybe something like "micro-lending"?

[mpoletiek]

I think some of the confusion comes from the conflicting narrative:

"BTC is digital gold"

"BTC will replace fiat"

Can BTC do both? Or is the official narrative one or the other?

[AlphaBoy]

You can buy Bitcoin as it intended to be, P2P no middle man and you can save it in cold wallet no one will be able to hack it or even tax it.

most of the trading platform now require KYC but those are the one where you can turn your Bitcoins into Cash, if you want to hold it use the P2P method

[d5000]

Can BTC do both?

Good observation indeed.

My take on it is that it can do both, but not as a pure on-chain transaction tool. On-chain mechanisms are far too limited in scale, even as a digital gold it would only be of use for a low number of people, and even with slightly bigger blocks it would still not be enough that the majority of the world population could put their savings into BTC. This means that we need decentralized off-chain methods like LN, sidechains, rollups and so on.

Bitcoin's most important USPs, like censorship resistance, are more related to the "digital cash" use case. If we only pursue the pure digital gold mantra, the value would be probably more volatile over time, as liquidity would be limited to relatively few users. This would in some way contradict the "gold" concept.

If I was harsh I could say that the pure digital gold concept would lead to no value at all: If Bitcoin's main "USP" is that it goes up in value, then altcoins have theoretically a competitive advantage as they can grow much faster. Bitcoin would thus not be able to really benefit from this USP.

Instead, if we focus on censorship resistance and potential global usage also for payments, an ecosystem of different user classes (retail users and savers, merchants, service providers and so on) could be built which would be very difficult to surpass for any altcoin. I think this is already happening on a limited scale, and that's why Bitcoin's dominance stays high, but once the scalability solutions really take off, the competitive advantage of Bitcoin will be enormous and every "flippening" dream would come to an end. (Altcoins would continue to exist, though).

Thus, my opinion is that we need scalability solutions which enable Bitcoin also to be used as a fiat replacement. And this means that we have to accept the above dilemma and try to solve it.

A mix of LN and merged mined sidechains providing the "tail emission" like I outlined above would probably solve the problem.

And both gold and fiat would also only be partially replaced by BTC, I think. Both fiat (dynamic supply according to economic cycles) and gold (visual/haptic quality, industrial use) have use cases I think Bitcoin can't replace entirely.

[dezoel]

"Extremely high fee" is not what we have even right now, let alone in the future when we may even find a solution. Yes, it could do that now, if everyone started to move their money, there is nothing stopping it, but why not consider something like LN may eventually get to working, and we may do better. Look at the past ,we had legacy, and then we moved to segwit and now we are paying less, it has happened before and it may happen again, why not?

This is why I think security question here is not fee structure, that can change, we just need to make sure that we know that future is not decided and known, so we have no idea how the future will be. Maybe it will be very high, maybe it won't be, we just need to make sure we are in bitcoin for the right reasons.

For now yeah because the price is dumping once again but we already have a solution to this problem, in case it occurs again. You already mentioned a couple of them in fact. Maybe there are only people who are not yet aware of them or they don't feel like using them, for some reasons. There are users who use those new technologies on BTC, no matter what its condition.

It is possible to stop a moving transaction and most of the times it was the exchanges are the ones that has the ability of doing it. Security can be different to that matter and there are no problems with it. The only thing is that, like you said, the future is still unpredictable but we can only hope for the best for the coin.

[mpoletiek]

A mix of LN and merged mined sidechains providing the "tail emission" like I outlined above would probably solve the problem.

Does anyone else think LN introduces more problems than it solves?

I'd like to believe that the underlying technology is a game changer, but probably needs a few more iterations before becoming mature enough to solve for Fiat.

Is being a BTC zealot simply easier than doubling down and trying to solve this problem? Or do we truly believe BTC is as good as it gets?

[Cryptoprincess101]

What's an extremely high fee? What's high for you may be low for someone else.


In 2019 the average fee was around $1
In 2021 it was $2. In 2023 it went up a bit again, but stayed around $2.5.
I don't count extremes where due to congestion it skyrocketed above $20, which happened in 2018, 2021 and 2024.
What makes you think the fee will be much higher in the coming years? The history points towards a slow and gradual increase. You can still send a $2 tx if you want and it will go through.

I guess that's debatable, but I'm reluctant to say that a $2 fee is acceptable for a cup of coffee. That being said, I think Justin Bon's is saying that as the amount of rewards per block decrease TX fee's will continue to increase and must replace the miner's revenue from mining blocks otherwise they will exit the ecosystem. Current block sizes and a reduction in miners producing blocks will also increase TX fees?

You are right actually because since miners block rewards are being halved during every halving, the only way they can regain back is basically through the increase in transactions fees and since the price of Bitcoin increases during the bull season, congestion are meant to occur because a lot of people will definitely be withdrawing their Bitcoin which leads to severe congestion in mempool and in order for one transaction to be confirmed earlier than the other it will require high transactions fees before it can be quickly added to the next blocks so it is not new and since halving and increase in the price of Bitcoin will continue till the last blocks are mined, it then means that transaction fees will continue to increase. Just like the whales, high transaction fees means nothing to them so it's only those who are short term hodlers that are worried about high fees but for long term hodlers they don't care since they are hodling for long intervals and must have made huge profits that can still cover for the transaction fees.

[Fortify]

This is a well thought out thread in my opinion.

Here's the summary:

"
BTC's longterm security depends on people paying extremely high TX fees which won't happen in a free market.
"

Is there a gaping hole in this argument?

https://x.com/Justin_Bons/status/1810357305390616839

You should probably open by defining what you're talking about. When most people talk about security, they are referring to how well defended from an attack they are - the first meaning of your thread title is that some aspect of the mathematical integrity of the blockchain or bitcoin has been broken. Yet the discussion that you link to is not talking about this at all, it is just one persons opinion on whether people are willing to pay for higher transaction fees, which is also not true. I've seen bitcoin transaction fees stay relatively low even when it has been priced even higher than it is now. That is because more computational power is added to the blockchain if it is economical to the local energy prices and there is profitability involved - which is often the case especially with new green energy sources coming online daily.

[mpoletiek]

You should probably open by defining what you're talking about. When most people talk about security, they are referring to how well defended from an attack they are - the first meaning of your thread title is that some aspect of the mathematical integrity of the blockchain or bitcoin has been broken. Yet the discussion that you link to is not talking about this at all, it is just one persons opinion on whether people are willing to pay for higher transaction fees, which is also not true. I've seen bitcoin transaction fees stay relatively low even when it has been priced even higher than it is now. That is because more computational power is added to the blockchain if it is economical to the local energy prices and there is profitability involved - which is often the case especially with new green energy sources coming online daily.

Good point, in this case it's financial security instead of cryptographic or code/protocol integrity.

[d5000]

Does anyone else think LN introduces more problems than it solves?

No, if you limit its scope to the use case it currently already is used for: small payments (up to $100 for example).

It is unsure for me if it will become a solution for larger payments too, but that's why I think sidechains are also a piece in the puzzle.

There are of course possible usability improvements, but the general direction it is heading is the correct one I think. And I have also no problem with some people wanting to using it with a centralized service provider. I don't hear the same questionings from big blockers when people use centralized exchanges

And if the "BTC zealot" sentence is a hint that you favour an altcoin approach, then: all altcoins have the same problems and tradeoffs. If they want continuous/tail emission, then they are less attractive as store of value. If they want big blocks, then they tend towards centralization. PoS maybe is less dependant on market leadership for security, but has centralization and perhaps also undiscovered security problems, and it doesn't achieve the same amount of censorship resistance than PoW. And so on

[mpoletiek]

No, if you limit its scope to the use case it currently already is used for: small payments (up to $100 for example).

It is unsure for me if it will become a solution for larger payments too, but that's why I think sidechains are also a piece in the puzzle.

There are of course possible usability improvements, but the general direction it is heading is the correct one I think. And I have also no problem with some people wanting to using it with a centralized service provider. I don't hear the same questionings from big blockers when people use centralized exchanges

And if the "BTC zealot" sentence is a hint that you favour an altcoin approach, then: all altcoins have the same problems and tradeoffs. If they want continuous/tail emission, then they are less attractive as store of value. If they want big blocks, then they tend towards centralization. PoS maybe is less dependant on market leadership for security, but has centralization and perhaps also undiscovered security problems, and it doesn't achieve the same amount of censorship resistance than PoW. And so on

So $200 shoe purchases or general mall shopping is still up in the air?

My "BTC Zealot" sentence shouldn't be read into. I'm not a fan of alt-coins or the fragmentation that comes with L2's. I'm re-visiting PoW due to the madness that became of ETH.

I'm just wondering if our current PoW mechanism is as good as it gets or if there might be a better one that unlocks additional scalability without introducing MEV or forcing us into one direction of scaling.

For example; has anyone considered subnetting? If blockchain is a "protocol" and engineered to be the TCP/IP of value... Then perhaps we should spend some more engineering cycles on the underlying protocol instead of taking a game development approach, bolting on features that IMHO creates more problems than they solve.

I've found a paper the other day explaining Proof of Entropy Minima that seems to have a lot of potential, but I don't know if anyone is actually using it. However, that discussion is probably better suited to a separate thread. In fact, I apologize; I seem to have abandoned my OP. 

[pooya87]

I think some of the confusion comes from the conflicting narrative:

"BTC is digital gold"

"BTC will replace fiat"

Can BTC do both? Or is the official narrative one or the other?

Narratives like these are what people create for themselves to try to explain Bitcoin. Sometimes they go overboard like the second one "replace fiat". The reality is not always the same as the narratives people create.

Bitcoin is just an alternative option for people to choose. It is not supposed to replace anything. And of course Bitcoin has the potential to become money and by definition money does both: is a medium of exchange (can do what fiat does) and at the same time is a store of value (can do what gold does).