rpietila Altcoin Observer

[Roy Badami]

Thoughts, anyone?

I don't think you can trust the ASICs in the way you suggest. The ones already delivered and paid for in the hands of customers, perhaps. But chip production costs are usually quite low, especially for mature processes with high yield. Manufacturers constrain their production volume in order to achieve a high selling price (or if they are mining themselves, to maximize profitability by not driving up difficulty) and recoup NRE.

But consider the same economics from the point of view of a rogue ASIC-developer. He can run off 10x or 100x as many ASICs at only modestly increased cost, and then use them to attack the network instead of for mining.

Yes, indeed, you could be right.  I've certainly considered that scenario.  But isn't the CPU scenario worse?  There's a huge pool of CPUs already out there and assembled into machines.

The only real protection from this risk seems to be that it is usually more profitable to mine than attack.

[...]

Satoshi said something along these lines in his paper. [...]

Yes indeed.  Satoshi's real genius was to create a system with the right incentives, at all levels.

As I said, this is still a "thought in progress".  But I worry less about the evil SHA-256 ASIC plant then about the evil NSA CPU cluster.  I think there are enough producers churning out SHA-256 ASICs as fast as they can (certainly including many we don't know about, that are just mining for their own benefit rather than selling miners) that the attack you describe is actually becomeing pretty unlikely.

roy

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[Joshuar]

Monero just became the main coin on poloniex...litecoin market was switched for a monero market....Looks like monero really is something to take seriously.

[smooth]

But isn't the CPU scenario worse?  There's a huge pool of CPUs already out there and assembled into machines.

Not necessarily. The task of assembling them into an attack is still a significant investment. And once that is done you face the question of whether it is more profitable to mine or attack. Empirically it seems the incentives are usually to mine, with a few (so far) outlier exceptions (low-usage coins with large rapid drops in hash rate).

You mentioned Google or NSA, but both Google and NSA have those computers for a reason, so presumably they are already doing something. If you want to take those computers and use them to attack a coin, that has a significant opportunity cost. And even at that, Google still isn't that big. XMR is reasonably close (1-2 orders of magnitude) to exceeding Google's rumored entire 1m computer capacity (meaning you would have to shut down Google to pull off the attack -- good luck with that plan), and XMR is still a tiny coin.

I think you underestimate the task of building a large attack. By contrast, any subset of these computers can just go ahead and mine instead

[dnaleor]

Monero just became the main coin on poloniex...litecoin market was switched for a monero market....Looks like monero really is something to take seriously.

this is just the beginning. I'm waiting for monero to take over the LTC market cap

[Joshuar]

Monero just became the main coin on poloniex...litecoin market was switched for a monero market....Looks like monero really is something to take seriously.

this is just the beginning. I'm waiting for monero to take over the LTC market cap

Considering how I support/ed Darkcoin, which was poised to take over LTC's marketcap if it werent for the messed up forks, etc etc. I have no doubt that Monero will be able to take over LTC's market cap since it lacks any of those faults tbh.

[aminorex]

Personally I think there will be room in the market for balanced currency like this.

The economics of money are ruthless. If there is no niche to be filled, the thing withers away from its use as currency. Worldwide, not many niches are available.

Agreed.  That does not mean that appcoin X is not a good investment.  But it does mean that appcoin X is almost certainly not a candidate for a substantial slice of global liquidity, as are BTC and XMR for the moment.  An appcoin such as Ethereum, or name your favorite, might be a very good investment without a 1,000,000x upside.

[smooth]

Personally I think there will be room in the market for balanced currency like this.

The economics of money are ruthless. If there is no niche to be filled, the thing withers away from its use as currency. Worldwide, not many niches are available.

Agreed.  That does not mean that appcoin X is not a good investment.  But it does mean that appcoin X is almost certainly not a candidate for a substantial slice of global liquidity, as are BTC and XMR for the moment.  An appcoin such as Ethereum, or name your favorite, might be a very good investment without a 1,000,000x upside.

I think he was talking about Bitmark. Is that an appcoin? As far as I can tell it was just trying to be a regular coin, but I couldn't be sure.

[aminorex]

Considering how I support/ed Darkcoin, which was poised to take over LTC's marketcap if it werent for the messed up forks, etc etc. I have no doubt that Monero will be able to take over LTC's market cap since it lacks any of those faults tbh.

I bought DRK as well, when there was no superior alternative.  It was a good choice for me.  I hope that you benefitted as well.  And although the forks &c haven't done DRK any good, I don't blame its fate on those.  One could recover from such problems.  The fundamental issues are twofold: (1) what the cryptographic community likes to call 'snake-oil cryptography', and (2) the 'scam' tag that comes from pre-mine (and ponzi marketing).  It is nigh impossible to recover from those.

[aminorex]

Monero just became the main coin on poloniex...litecoin market was switched for a monero market....Looks like monero really is something to take seriously.

Brilliant.  I hope this bumps their xn volume.  I will probably try some large volume marginal alt scalps, just to reward PLX (with negative costs).

[aminorex]

Yes indeed.  Satoshi's real genius was to create a system with the right incentives, at all levels.

Amen.  A heartbreaking work of staggering genius.  Mining decentralization has been the most persistently obvious weak point.

As I said, this is still a "thought in progress".  But I worry less about the evil SHA-256 ASIC plant then about the evil NSA CPU cluster.  

This +1000.  

The government actor is the only substantive challenge, and also the critical differentiator between BTC and XMR, for the highly competent actor:  Anyone can run dark on the bitcoin chain, with comparable security probabilities to those enjoyed by a somewhat more naive XMR runner, if they apply layered technologies.    Access and ease of use are the substantive differentiator for XMR, which will give it the bulk of the dark liquidity market.  The bigger the money, the more desirable it is to capture that liquidity market.  The bigger the money, the more important it is to harden against a nation-state actor.    The biggest money will have a natural affinity for the most secure platform, and will use dark channels effectively, by means of high technical expertise, but the second tier of large money will be more important in aggregate, and will require ease of use, conjoined with robust cryptographic assurances.  That tier will be seeking assurances which are  responsive to nation-state threat models.  XMR has the potential to meet this need, although it cannot now, and will benefit enormously from doing so.  I keep emphasizing this, because incentives work wonders, but only if the relevant actors are aware of them, to be motivated accordingly.

[aminorex]

I think he was talking about Bitmark. Is that an appcoin? As far as I can tell it was just trying to be a regular coin, but I couldn't be sure.

Like you, I am not troubling myself to do any diligence, such as to address Bitmark.  Hence, I abstracted away from the specific coin (thus, 'appcoin X') to make what I felt was a useful point (for the median reader).  I have no knowledge from which to address topics specific to Bitmark.

[Joshuar]

Considering how I support/ed Darkcoin, which was poised to take over LTC's marketcap if it werent for the messed up forks, etc etc. I have no doubt that Monero will be able to take over LTC's market cap since it lacks any of those faults tbh.

I bought DRK as well, when there was no superior alternative.  It was a good choice for me.  I hope that you benefitted as well.  And although the forks &c haven't done DRK any good, I don't blame its fate on those.  One could recover from such problems.  The fundamental issues are twofold: (1) what the cryptographic community likes to call 'snake-oil cryptography', and (2) the 'scam' tag that comes from pre-mine (and ponzi marketing).  It is nigh impossible to recover from those.

Yes, thats what made me decide to invest in Monero. Darkcoin was the front contender for anonymity, but the instamine hinders it immensely, I was skeptical of Monero at first naturally, since I was a Darkcoin "bagholder", but in time I've come to accept that Monero  is the superior choice, both because of its superior anonymity and fair release. I also really like it's name.

[r0ach]

OK.  I've been thinking about this for a while.  And this is still a "thought in progress".  But...

On ASICs, and ASIC-resistant PoW.

The currency is dead in the water if an ASIC comes out before more than half of the currency is mined IMO.  Litecoin would be an example of this.  It only has 30 of 80 million mined, and now the entire revenue stream of the network basically goes straight to the pockets of ASIC manufacturers.  There's no reason for the average human to want to become involved in the network under that situation, and it has hampered the uptake of BTC severely.  CPU coins, on the other hand, are born with this problem from day one due to botnets, and the fact that very few people own large CPU mining rigs to compete with them.  A long GPU mining period seems essential to establishing a currency.

As for the monopolization of XMR due to ASIC, such as what happened to Litecoin, XMR has a rather short mining period, a little too short in my opinion, so there's less risk of a situation like mentioned above occurring.  My idea of soft forking to have multiple PoW algorithms should the first one become ASIC monopolized too soon is probably completely unnecessary given how short XMR mining period is.  Dealing with continuous weighting upkeep in that situation is also a developer hassle and kind of defies the idea of decentralization having someone babysit the code.

[akujin]

Could anyone explain to me why there's too much fuss about anon coins and how would ordinary users benefit from this feature?
Say, someone wants to buy 2nd hand ps4 from someone. Why would he be so eager to use cryptos with anon feature and hide his transactions?

[r0ach]

Say, someone wants to buy 2nd hand ps4 from someone. Why would he be so eager to use cryptos with anon feature and hide his transactions?

There's always been the chance of governments attempting to outlaw cyrptocurrency outright.  If they don't do that, they might also attempt to kill it with overbearing regulation, or according to Anonymint, confiscation.  People see anonymous coins as being a safeguard to both of those variables, amongst others.  Purely speculative on my part of course.

[akujin]

Say, someone wants to buy 2nd hand ps4 from someone. Why would he be so eager to use cryptos with anon feature and hide his transactions?

There's always been the chance of governments attempting to outlaw cyrptocurrency outright.  If they don't do that, they might also attempt to kill it with overbearing regulation, or according to Anonymint, confiscation.  People see anonymous coins as being a safeguard to both of those variables, amongst others.  Purely speculative on my part of course.

But the more you try to hide your transactions, the more they keep an eye on you. And also, the government may persuade companies like amazon, dell, etc. not to support cryptos with these feature.

[hodlmybtc]

Say, someone wants to buy 2nd hand ps4 from someone. Why would he be so eager to use cryptos with anon feature and hide his transactions?

There's always been the chance of governments attempting to outlaw cyrptocurrency outright.  If they don't do that, they might also attempt to kill it with overbearing regulation, or according to Anonymint, confiscation.  People see anonymous coins as being a safeguard to both of those variables, amongst others.  Purely speculative on my part of course.

I agree it's a safeguard to those things you mentioned.

However I was thinking about general privacy and anonymous coins being more useful for illegal marketplaces like Silk Road etc. (Not that I use them but whatever)

With all the revelations by Edward Snowden about how there really isn't much privacy left in this world people will want to have their finances private more than anything I think.

With Bitcoin you can have privacy but you would really have to take serious measures at every step and screwing one thing up and everyone can have an insight in your finances, every transaction is recorded in the blockchain forever.

[kbm]

Say, someone wants to buy 2nd hand ps4 from someone. Why would he be so eager to use cryptos with anon feature and hide his transactions?

There's always been the chance of governments attempting to outlaw cyrptocurrency outright.  If they don't do that, they might also attempt to kill it with overbearing regulation, or according to Anonymint, confiscation.  People see anonymous coins as being a safeguard to both of those variables, amongst others.  Purely speculative on my part of course.

I'd see this as only part of the picture, specifically a minutely small part of it right now in July 2014.

I don't see anonymous transactions as an absolute necessity for the purchasing of consumer goods. I don't really care if someone looks up on a blockchain that I bought boots and socks last year. I do care that people could look up my previous paychecks on a blockchain, by simply having my previous address. I'd also care greatly if I were to be running a business that both competitors, customers and hired labor could see every single transaction I had performed in the past simply by having my address and doing business with me. It's a venue that would only open up a lot of headaches if all those details were to be made automatically and immediately public.

I would have contractors underbidding each other with information that I don't currently share ever, I would have competition both knowing who my customers are (and the details of the interactions with me), and potentially buying them/influencing them and in turn threatening my business. I would have employees relentlessly asking me questions that they shouldn't ever need to ask. Having a public blockchain in such situations would present a series of ethical questions that most people are not ready to answer. It would present a series of multiple problems that, for a business, are already mitigated by banks obscuring payment data. If that were to be removed, I can't imagine it being less than extremely disruptive.

Should cashier A know what cashier B gets paid? Apart from that, should anyone who ever sent you money know the exact contents of your wallet (as well as any other tx's you've made)? Should I allow my contractors to potentially bankrupt themselves, or put them in a situation where they are permanently compelled to offer more for less (and in turn potentially lead to offering less for less)? Should I allow myself to open my customers to pursuit by potentially unwelcomed attention from someone they otherwise would have never had contact with?

A private blockchain acts much like a spam filter IMO. My personal opinion as a consumer, I do not mind terribly the spam. My personal opinion as someone who's been a part of industry/business for over a decade, I would not touch bitcoin knowing that it would just give me headaches. Businesses can't be convinced to 'hold it because it'll be worth more some day', because they already have something that's making them lots of money (their business). They're not gonna put that at risk, and trade one thing that can be worth something some day, for something that's valuable today. I'm not talking about one-man shops.

[akujin]

Say, someone wants to buy 2nd hand ps4 from someone. Why would he be so eager to use cryptos with anon feature and hide his transactions?

There's always been the chance of governments attempting to outlaw cyrptocurrency outright.  If they don't do that, they might also attempt to kill it with overbearing regulation, or according to Anonymint, confiscation.  People see anonymous coins as being a safeguard to both of those variables, amongst others.  Purely speculative on my part of course.

I'd see this as only part of the picture, specifically a minutely small part of it right now in July 2014.

I don't see anonymous transactions as an absolute necessity for the purchasing of consumer goods. I don't really care if someone looks up on a blockchain that I bought boots and socks last year. I do care that people could look up my previous paychecks on a blockchain, by simply having my previous address. I'd also care greatly if I were to be running a business that both competitors, customers and hired labor could see every single transaction I had performed in the past simply by having my address and doing business with me. It's a venue that would only open up a lot of headaches if all those details were to be made automatically and immediately public.

I would have contractors underbidding each other with information that I don't currently share ever, I would have competition both knowing who my customers are (and the details of the interactions with me), and potentially buying them/influencing them and in turn threatening my business. I would have employees relentlessly asking me questions that they shouldn't ever need to ask. Having a public blockchain in such situations would present a series of ethical questions that most people are not ready to answer. It would present a series of multiple problems that, for a business, are already mitigated by banks obscuring payment data. If that were to be removed, I can't imagine it being less than extremely disruptive.

Should cashier A know what cashier B gets paid? Apart from that, should anyone who ever sent you money know the exact contents of your wallet (as well as any other tx's you've made)? Should I allow my contractors to potentially bankrupt themselves, or put them in a situation where they are permanently compelled to offer more for less (and in turn potentially lead to offering less for less)? Should I allow myself to open my customers to pursuit by potentially unwelcomed attention from someone they otherwise would have never had contact with?

A private blockchain acts much like a spam filter IMO. My personal opinion as a consumer, I do not mind terribly the spam. My personal opinion as someone who's been a part of industry/business for over a decade, I would not touch bitcoin knowing that it would just give me headaches. Businesses can't be convinced to 'hold it because it'll be worth more some day', because they already have something that's making them lots of money (their business). They're not gonna put that at risk, and trade one thing that can be worth something some day, for something that's valuable today. I'm not talking about one-man shops.

That's if they get your address.
Also, when people look at the blockchain, all they'll see is someone sent this amount to this address. They'd not know what that is for unless there's a message included.
And you could easily change address anytime you want.

[r0ach]

My reply was mostly to someone who said they didn't care about privacy in Bitcoin.  Even if you don't care about privacy at all, the non-anonymous networks might not survive due to overbearing government regulation, or even confiscation.  If Bitcoin was subject to crazy laws in the US and not suitable for use here, but works fine in Luxemborg, the US is still the market maker and changing to something else more functional here would probably bring everyone else along.

I would say it's arguably easier to hide gold than Bitcoin, assuming you aren't a trillionaire, and they have already made a run at gold confiscation.  Bitcoin confiscation doesn't seem that unrealistic when the government wants some extra income.