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Author Topic: Optimized cpu-version - LTC/FBX/TBX - what's about merged mining of these 3?  (Read 2647 times)
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December 23, 2011, 03:10:31 PM
 #21

But this will likely be harmful to LTC because it will obviously dilute it's value. There's a bit of the same problem with NMC diluting BTC's value
I don't think so.  What's your reasoning on this?

BTC: 1CDCLDBHbAzHyYUkk1wYHPYmrtDZNhk8zf
LTC: LMS7SqZJnqzxo76iDSEua33WCyYZdjaQoE
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December 23, 2011, 04:06:19 PM
 #22

I don't think so.  What's your reasoning on this?
Not sure... it just seems obvious, actually. Same global value for 3 currencies, requiring 3 clients, 3 balances to handle, etc. It's a bit as if your car ran on 2 different fuels, in 2 separate fuel tanks (that you could refuel at the same time, though, as in merged mining), and to turn right (like, to buy from merchant 1) you need to use fuel A but to turn left (like, to buy from merchant 2) you need to use fuel B. This doesn't look that terrible, but still it feels like added complexity with no added value.

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December 23, 2011, 05:28:00 PM
 #23

I don't think so.  What's your reasoning on this?
Not sure... it just seems obvious, actually. Same global value for 3 currencies, requiring 3 clients, 3 balances to handle, etc. It's a bit as if your car ran on 2 different fuels, in 2 separate fuel tanks (that you could refuel at the same time, though, as in merged mining), and to turn right (like, to buy from merchant 1) you need to use fuel A but to turn left (like, to buy from merchant 2) you need to use fuel B. This doesn't look that terrible, but still it feels like added complexity with no added value.
Your analogy would indicate that you don't understand how merged mining works.

Here's a better analogy: You need to take a document downtown to your lawyer, so you drive down and give it to him. But you remembered you also had to take a second document to him as well, so you bring it along with the first one. The fact that you brought the second document as well does not affect the first document's value, does not affect the first document getting to were it needed to go, nor does it affect the cost of getting the first document there.

Here's a very simplified explanation of how mining works. It glosses over a lot of things, but should help you understand:

1. Your computer does some calculations and produces a string of letters and numbers known as a "hash"
2. Your computer sends this to your mining pool.
3. The mining pool checks to see if the hash you sent "solves" a Bitcoin block.  If so, you earn some Bitcoins, if not you earn nothing.
4. Repeat.

Now, with merged mining, just modify step #3 and after checking if you hash solves a Bitcoin block, also check if it solves a Namecoin block.  You have nothing to lose because you already did the work to generate the hash.  If your hash solves a Namecoin block then you get some Namecoins for it.  But that in no way shape or form affects Bitcoin.

BTC: 1CDCLDBHbAzHyYUkk1wYHPYmrtDZNhk8zf
LTC: LMS7SqZJnqzxo76iDSEua33WCyYZdjaQoE
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December 23, 2011, 06:15:25 PM
 #24

Your analogy would indicate that you don't understand how merged mining works.
[...] If your hash solves a Namecoin block then you get some Namecoins for it. But that in no way shape or form affects Bitcoin.
Ok, I forgot to mention in my analogy that when I fill my 2 fuel tanks, I only pay to fill the first one while the second one if free. Please, stop assuming that all people criticizing merged mining don't understand how it works. It prevents you from getting the bigger picture, ie leaving aside the technical details to start thinking about what the PRACTICAL impact could be.

The practical impact is, if you generate one coin A AND one coin B instead of generating only one coin A OR one coin B (from the same effort), assuming that the global value you are generating is the same because it's a function of the cost to generate it (that seems like a fair assumption, although I'm aware it's not certain and probably not 100% accurate either), then the value of coin A and the value of coin B are likely to be averaged, ie to tend toward (original value of A + original value of B)/2. That's not a decrease yet, but when we add to this the fact that mining becomes, say, twice as difficult on average (in the case where there was an even mining power for A and B), the result of mining is (original value of A + original value of B)/2/2*2 (the last multiplier is because we now mine 2 coins instead of one)=
- the same as before, if coin A and coin B had the same value/diff ratio at the beginning,
- or lower for someone who was mining the coin with the best value/diff ratio
- or higher for someone who was mining the lowest value/diff ratio
So, the only winners in the process are those who mined the coin with a lower value/diff ratio, aka probably just a few gamblers, or a few people who didn't do the math.

Again, I'm not saying merged mining would directly decrease the global generated value. Just that it will split it over several ccurencies, rendering it less PRACTICAL to use, which in turn has a chance to actually decrease the generated value (because not practical = not wanted).
For BTC vs NMC, it seems like it didn't occur (yet, at least) because BTC has so much more support behind it (I don't mean customer support there Grin, just users and even merchants) that the coin value was indeed unlikely get averaged. For LTC vs TBX/FBX, which all have like zero merchants, well, I wouldn't be so sure. Since the only ccurrencies/users that can really benefit from merged mining are those with sub-average value/diff ratios, well, you can guess who would make a good deal (and who wouldn't) by merging the mining for LTC-TBX-FBX.
Of course, this is a very over-simplistic economical model, but that's the risk. If I'm already on the best ccurrency, I have no reason to want it to be merged with junk ccurencies. But if it does get merged, of course my best option then is to follow the move and merged-mine.

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December 23, 2011, 06:25:35 PM
 #25

Mining coins in any chain (regardless of the economic cost to you) increases not decreases the value of all the coins in that chain, because you are increasing the security of the chain by mining.

BTC: 1CDCLDBHbAzHyYUkk1wYHPYmrtDZNhk8zf
LTC: LMS7SqZJnqzxo76iDSEua33WCyYZdjaQoE
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December 23, 2011, 06:35:51 PM
 #26

Ok, I see where we have different views then: you assume that the value is all in the ultimate protection against this overrated 50%+1 attack, while I assume the value is mainly in the use/demand for the currency (which would in turn likely increase mining rate and thus security, +/- proportionally to the interest of actually performing the attack).
I'd just like to point out that the mining power in TBX and FBX is marginal compared to the one of LTC, so unfortunately merged mining wouldn't increase LTC's security a lot.

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December 23, 2011, 07:41:42 PM
 #27

So what you're trying to say is that if I'm mining BTC, and then I decide to do merged mining with Namecoins, I'm getting "free" Namecoins, thus lowering the value of name coins?

BTC: 1CDCLDBHbAzHyYUkk1wYHPYmrtDZNhk8zf
LTC: LMS7SqZJnqzxo76iDSEua33WCyYZdjaQoE
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December 23, 2011, 08:17:45 PM
 #28

So what you're trying to say is that if I'm mining BTC, and then I decide to do merged mining with Namecoins, I'm getting "free" Namecoins, thus lowering the value of name coins?
It's not a matter of your personal choice, it's a matter of what is done on the global scale. But as I explained, the coin values would tend to get averaged, so merged-mining BTC and NMC would rather decrease the value of BTC and increase the value of NMC. Although as I explained too the popularity difference was so huge to begin with (and the merged mining so marginally supported - ie notably not by the biggest BTC pool) that this effect remained negligible. Probably when the difference is that huge at the beginning we could even get the opposite effect: the weakest currency collapsing because most of the miners just sell it as they mine it to convert it into the other coin.
But anyway, the value from mining both didn't raise above the previous value of mining only BTC... except maybe if you consider the fact that the global hashing power diminished quite considerably since merged mining was introduced (which goes against the argument of merged mining = more hashing power).

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December 23, 2011, 08:31:08 PM
 #29

... so merged-mining BTC and NMC would rather decrease the value of BTC and increase the value of NMC.
Please explain why you think this would be true.

BTC: 1CDCLDBHbAzHyYUkk1wYHPYmrtDZNhk8zf
LTC: LMS7SqZJnqzxo76iDSEua33WCyYZdjaQoE
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December 23, 2011, 08:55:28 PM
 #30

Please explain why you think this would be true.
Cf post #25 above: https://bitcointalk.org/index.php?topic=55378.msg660413#msg660413
Even though actually we can have pretty much every combination such as (original value of A + original value of B) remains unchanged, it seems more likely that we'll reach one of the extreme, ie either both tending to the same value (the average) or one seriously dominating the other. It's not like fiat currencies, where every currency has a captive user base (the people who live in the currency's country), here people can pick whichever currency they want. So we're more likely to reach an equilibrium such as 50-50 or 0-100 than some other random combination such as (population of country 1 - population of country 2).

But anyway, we're starting with different (and even somewhat opposing) hypotheses so it's not surprising we come to different conclusions. And those are just theories and the only way to be sure is to actually implement the mayhem. I'm focusing on BTC anyway, so if you happen to screw LTC this way, well, be it... Maybe LTC will win by 100-0, after all Wink

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December 23, 2011, 09:18:50 PM
 #31

I read post #25.  You're basing what you're saying on the assumption that the cost of production dictates the value.  I believe that to be incorrect in this (unique) situation.  In my opinion, value is determined by market factors, namely supply and demand.  Now, a low or non-existent cost of production would normally cause supply to increase dramatically, reducing value.  The only problem here is that the supply of Bitcoins/Namecoins/Litecoins, etc is pre-determined in the total limit of supply and in the rate of production (difficulty changes keep the rate of production fairly static).  Given this, cheap or free production will not cause a large increase in supply, since the supply is controlled by other factors, thus the value won't change.

Think of it this way-- It doesn't matter if there is merged mining or not-- the same number of coins will be created on schedule whether they are created via merged mining or not.

BTC: 1CDCLDBHbAzHyYUkk1wYHPYmrtDZNhk8zf
LTC: LMS7SqZJnqzxo76iDSEua33WCyYZdjaQoE
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December 23, 2011, 09:52:43 PM
 #32

In my opinion, value is determined by market factors, namely supply and demand.
Precisely, supply and demand. In the case of merged mining we are supplying people with coins that they don't want. What will they do? Either exchange them all against coins they do want ("100-0" case), or if that new "unwanted" coin isn't too bad they might just adopt it and balance the demand they'd have only over one coin between the two of them (50-50 case).

Given this, cheap or free production will not cause a large increase in supply, since the supply is controlled by other factors, thus the value won't change.
Indeed I think I've been a bit inaccurate: a more accurate statement is that the global value people get from mining both coins during the same time remains the same. Still that doesn't change the part about:
- the same as before, if coin A and coin B had the same value/diff ratio at the beginning,
- or lower for someone who was mining the coin with the best value/diff ratio
- or higher for someone who was mining the lowest value/diff ratio
I have to admit this is giving me a headache now, maybe because it's getting late there ^^ Anyway, as I said, I don't care that much about LTC and I can't prevent someone from implementing merged mining, in which case it would be more profitable to merged mine than not to do it (which is why merged mining can't really fail to be a success in terms of adoption).

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December 23, 2011, 10:01:47 PM
 #33

I guess we kind of agree and kind of disagree.  The bottom line is that X coins will be produced in Y amount of time and nothing can change this, thus since production doesn't change, neither will price/value.

BTC: 1CDCLDBHbAzHyYUkk1wYHPYmrtDZNhk8zf
LTC: LMS7SqZJnqzxo76iDSEua33WCyYZdjaQoE
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December 23, 2011, 10:06:44 PM
 #34

You know what, let's do this merged mining thing and see what happens... Who knows, maybe we'll even become rich  Grin

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December 23, 2011, 10:15:21 PM
 #35

Sounds good. 

PS. It was fun debating with you.

BTC: 1CDCLDBHbAzHyYUkk1wYHPYmrtDZNhk8zf
LTC: LMS7SqZJnqzxo76iDSEua33WCyYZdjaQoE
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