All The Fees

[cbeast]

Where do you get the 100 btc? Simple question.

Many possibilities.  Here is one:

Allow for high difficulty mining by individuals without assets. At the onset, no one has assets so everyone has to mine this way. Over time people accumulate coins. Once this happens, it becomes practically impossible for stakeless miners to compete (e.g. like mining with a CPU today). After the initial period, "mining" entry requires purchase of coins on an exchange.

Here's my point. What's to stop a corrupt authority from extorting btc from citizens to fund mining for the banks? Eventually, governments, banks, and big corporations will own most of the mining power anyway, but why make it easy for them by letting them have that power cheap? It's easier to find a mining pool to extort than have to compete on an even playing field with everyone.

tl;dr - On a theoretical level proof of stake seems great, but it is susceptable to the law of unintended consequences.

[cunicula]

Here's my point. What's to stop a corrupt authority from extorting btc from citizens to fund mining for the banks? Eventually, governments, banks, and big corporations will own most of the mining power anyway, but why make it easy for them by letting them have that power cheap? It's easier to find a mining pool to extort than have to compete on an even playing field with everyone.

tl;dr - On a theoretical level proof of stake seems great, but it is susceptable to the law of unintended consequences.

You are an idiot.

[Costia]

Here's my point. What's to stop a corrupt authority from extorting btc from citizens to fund mining for the banks? Eventually, governments, banks, and big corporations will own most of the mining power anyway, but why make it easy for them by letting them have that power cheap? It's easier to find a mining pool to extort than have to compete on an even playing field with everyone.

tl;dr - On a theoretical level proof of stake seems great, but it is susceptable to the law of unintended consequences.

You are an idiot.

http://i652.photobucket.com/albums/uu244/RastiMinato/invalidrobocopisridinga.jpg

[cbeast]

Here's my point. What's to stop a corrupt authority from extorting btc from citizens to fund mining for the banks? Eventually, governments, banks, and big corporations will own most of the mining power anyway, but why make it easy for them by letting them have that power cheap? It's easier to find a mining pool to extort than have to compete on an even playing field with everyone.

tl;dr - On a theoretical level proof of stake seems great, but it is susceptable to the law of unintended consequences.

You are an idiot.

http://i652.photobucket.com/albums/uu244/RastiMinato/invalidrobocopisridinga.jpg

Seriously, some programmers may be very book smart but have little common sense about real world issues. Get a life.

[Gabi]

If the government is corrupt then the only solution is something like in lybia and other places: revolution.

[Costia]

Here's my point. What's to stop a corrupt authority from extorting btc from citizens to fund mining for the banks? Eventually, governments, banks, and big corporations will own most of the mining power anyway, but why make it easy for them by letting them have that power cheap? It's easier to find a mining pool to extort than have to compete on an even playing field with everyone.

tl;dr - On a theoretical level proof of stake seems great, but it is susceptable to the law of unintended consequences.

You are an idiot.

http://i652.photobucket.com/albums/uu244/RastiMinato/invalidrobocopisridinga.jpg

Seriously, some programmers may be very book smart but have little common sense about real world issues. Get a life.

my response was to cunicula not you

[cbeast]

Here's my point. What's to stop a corrupt authority from extorting btc from citizens to fund mining for the banks? Eventually, governments, banks, and big corporations will own most of the mining power anyway, but why make it easy for them by letting them have that power cheap? It's easier to find a mining pool to extort than have to compete on an even playing field with everyone.

tl;dr - On a theoretical level proof of stake seems great, but it is susceptable to the law of unintended consequences.

You are an idiot.

http://i652.photobucket.com/albums/uu244/RastiMinato/invalidrobocopisridinga.jpg

Seriously, some programmers may be very book smart but have little common sense about real world issues. Get a life.

my response was to cunicula not you

Heh, I haven't had my coffee yet. Apologies to you Costia.

[cunicula]

Here's my point. What's to stop a corrupt authority from extorting btc from citizens to fund mining for the banks? Eventually, governments, banks, and big corporations will own most of the mining power anyway, but why make it easy for them by letting them have that power cheap? It's easier to find a mining pool to extort than have to compete on an even playing field with everyone.

tl;dr - On a theoretical level proof of stake seems great, but it is susceptable to the law of unintended consequences.

You are an idiot.

http://i652.photobucket.com/albums/uu244/RastiMinato/invalidrobocopisridinga.jpg

I'm missing some irony here, but I like the robocop on the horse. The problem is the failure to use logical arguments. I guess "Your argument is invalid" works, but I would prefer "you fucking worthless piece of shit idiot."

[kokojie]

I don't think that's the right comparison, in the end I had to pay .6%+0.25c just to own the BTC. With paypal, it's completely free to own paypal USD.

The btc fee advantage comes when conducting transaction. Paypal charges the 2.9%+.30c in transactions. Right now you don't have to pay a fee to conduct btc to btc transactions, though I imagine this will change in the future once mining no longer produce much coins.

Which fees?

Fees for convenience?

Bank->Dwolla = free
Dwolla->MtGox = $.25
MtGox->BTC = typically .5% to .6% for majority of users, I imagine

Total exchange fees for Bank(USD)->BTC = .6% + $.25

Fee for transaction in the same currency using Paypal? 2.9% + $.30

Edit: I should have been more clear. I was trying to contrast the fees of going the slow route (Bank->Dwolla) vs. the fast route (buying BTC with PPUSD or something)

[cbeast]

I would call "proof by stake" instead "proof by power." If my country has a bigger military than yours, I will demand you to pay a fealty so that my miners will be able to support the economy, "for your own good."

[cunicula]

Forum is mental cesspool.

Data points:

I would call "proof by stake" instead "proof by power." If my country has a bigger military than yours, I will demand you to pay a fealty so that my miners will be able to support the economy, "for your own good."

If the government is corrupt then the only solution is something like in lybia and other places: revolution.

[cbeast]

Forum is mental cesspool.

Data points:

I would call "proof by stake" instead "proof by power." If my country has a bigger military than yours, I will demand you to pay a fealty so that my miners will be able to support the economy, "for your own good."

If the government is corrupt then the only solution is something like in lybia and other places: revolution.

So where is this peer reviewed journal or even a good thorough discussion of proof of stake? I think it has been dismissed by the code gods.

[J Pitt]

So where is this peer reviewed journal or even a good thorough discussion of proof of stake? I think it has been dismissed by the code gods.

Interesting discussions are here:

https://bitcointalk.org/index.php?topic=27787.0
https://bitcointalk.org/index.php?topic=37194.0

I'm not sure that the Bitcoin devs (if those are code gods of which you speak) are necessarily dismissive so much as focused on improvements to the existing Bitcoin model.

[chrisrico]

cunicula: Since you think proof of stake is better (more efficient, as secure, as "fair") than proof of work, are you working to create a new cryptocurrency based upon those rules? If it is truly better, it should replace Bitcoin, or at least force it to change.

[cbeast]

So where is this peer reviewed journal or even a good thorough discussion of proof of stake? I think it has been dismissed by the code gods.

Interesting discussions are here:

https://bitcointalk.org/index.php?topic=27787.0
https://bitcointalk.org/index.php?topic=37194.0

I'm not sure that the Bitcoin devs (if those are code gods of which you speak) are necessarily dismissive so much as focused on improvements to the existing Bitcoin model.

Those threads were pretty much ignored by most devs. I think I read just about everything on the forums on the matter, it just doesn't seem to be a fleshed out idea. I think Stratum does sort of address creating a network of trust, in addition to pools. We'll see, maybe there is some development going on behind the scenes somewhere that will surprise me.

[PrintCoins]

The amount of energy consumed grows to match the price of bitcoins. Energy is basically the margin cost of mining, and bitcoins is the revenue. Miners will start buying more cards to mine more when the payout is higher, eventually pushing them to an equilibrium where everyone starts complaining that it is not profitable any more.

If the revenue were to drop to 1BTC per block, miners would start unplugging their machines to cut costs, and the difficulty would drop to match this change. Once you win a block, the cost to add a transaction is nearly nil, and to ignore low value transactions will mean that the next miner will be able to take them and pocket them.

So your solution is "we don't need fees" because when block reward falls 90% then hashing power will fall 90%.  Except if hashing power falls 90% then Bitcoin is vulnerable to 51% attack.

It is possible for Bitcoin to have low fees.  Lower than ACH, lower than VISA, lower than WU but something needs to pay for the network.  If the network is vulnerable to 51% attack then the value of Bitcoin will decline relative to that risk.  If it it is trivially easy/cheap to 51% attack the network then the value of Bitcoin is nothing.

Keep in mind that more's law also applies to miners, and 2 years from now all that mining equipment will be obsolete, so unless miners keep buying equipment, they will be replace by a new set of miners who will get twice the hash rate at half the cost (energy consumption probably won't drop).

Which provides no security.  New attackers will have access to the same hashing power.  Thus in 2 years 10TH is more like only 5TH now.  If the network is 20TH it is only roughly as secure as it is today.  The nominal network rate is irrelevant.  What matter is the cost of an attack.  Today 10TH is prohibitively expensive.  In 60 years the Iphone 87 may have 20TH/s of computational power.   Moore's law can't make Bitcoin "stronger" because both defenders and attackers have access to the same powerful new gear.

Unless some miners get 50% of the hashing power (or some cartel forms), market laws will apply, and the cost to add a transaction will be the limit to the actual required fee. All that power consumption and fancy graphics cards will end up being sunk cost at the point of transaction recording, and thus be irrelevant.

Didn't you say that due to more efficient gear miners will be forced to either turn off rigs or upgrade them.  Equipment has a finite lifespan both physically and economically.  The equipment cost can be computed per hash by block by taking blocks of effective lifespan divided by the equipment cost adjusted for the time value of money.

You make some great points. If there is virtually no reward (the fees suck since they just amount to record keeping cost) then there will be no serious mining. If there is no serious mining, the whole system could be in effect shut down.

So what happens at that point? I guess you would have to mine to complete your own transactions, and you might as well take the fees of others while you are at it. So others might feel the same way and put forward gpu power to just get their transactions to be solid. You would see the stamp of miners that you trust and would hash their stuff to help them maintain being on the main branch. . .

So maybe mining would not actually turn out to be for financial rewards. Maybe it would just be a collective of people that own bitcoins, and see value in keeping things in the control of people who aren't screwing up the system. The miners would be the people who have transactions to send and maybe the will need to occasionally resend the transactions when a bad agent tries to derail the works.

Or maybe at this point the pools might become the central nodes and only hash on branches that other approved pools have hashed on. You join a pool because if you mine solo your branch might get ignored (not trusted).

[Revalin]

While the returns would be small, the cost of mining is also small.  Instead of buying racks of GPUs and feeding them considerable amounts of electricity, transactions could be signed with no more processing power than a smartphone...  A fraction of a watt for the current scale of the Bitcoin economy.  If you had a large savings account, would you take zero return for free or 0.5% for essentially free?

The efficiency is a compelling argument, and I can see how it would work.  It's just the secondary effects that worry me.

[cbeast]

https://en.bitcoin.it/wiki/Transaction_fees

It is envisioned that over time the cumulative effect of collecting transaction fees will allow somebody creating new blocks to "earn" more bitcoins than will be mined from new bitcoins created by the new block itself. This is also an incentive to keep trying to create new blocks even if the value of the newly created block from the mining activity is zero in the far future.

[cunicula]

cunicula: Since you think proof of stake is better (more efficient, as secure, as "fair") than proof of work, are you working to create a new cryptocurrency based upon those rules? If it is truly better, it should replace Bitcoin, or at least force it to change.

I don't know how to code. I can't even make a webpage. I am an economist, so I have some knowledge of how incentive systems can be used to elicit truthful information (a subfield in economics called mechanism design).

Learn what that means here:

http://en.wikipedia.org/wiki/Mechanism_design

My backstory is as follows:

1) I became interested in bitcoin
2) thought it was brilliant
3) realized it had huge inefficiencies that could be fixed in theory. (this issue with proof of stake is just one of several things but perhaps the most important)
4) wanted to know if people were interested in fixing them
5) realized that everyone was attached to the current system
6) learned that these attachments were not supported by logical arguments
7) became disillusioned and took to cursing people out.

To be fair, mechanism design people wouldn't listen to coders either. I should not be surprised, but am.

[cbeast]

I am looking forward to making money on fee transactions!