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Author Topic: Another respected cryptographer predicts collapse in bitcoin mining  (Read 9968 times)
HorseRider
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February 23, 2012, 03:47:35 PM
 #41



The OP is wrong, I can prove it. No matter the price is high or low, the effective miner is profitable.

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February 23, 2012, 03:52:51 PM
 #42


But these are like Popular Science. I'm sure you could find BS in Popular Science too. Were you referring to popular science when you said "Computer Science paper?" If not, then it is not really a valid analogy, is it?

If the majority of professional CompScis read, quoted and applied Popular Science at work, then I'd have to say Popular Science is "considered reputable." There's simply a different standard between these two fields. The evidence is out there in the streets Wink

What are you talking about, specifically? You seem to be obfuscating.

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February 23, 2012, 03:57:23 PM
 #43

and the cryptographer's reputation is ruined by this prediction.

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February 23, 2012, 04:01:15 PM
 #44


Keynesianism is not sound economics, it's done empirically.

It is evidence-based and therefore "not sound". Intelligent Design, huh?

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muyuu
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February 23, 2012, 04:08:10 PM
 #45


But these are like Popular Science. I'm sure you could find BS in Popular Science too. Were you referring to popular science when you said "Computer Science paper?" If not, then it is not really a valid analogy, is it?

If the majority of professional CompScis read, quoted and applied Popular Science at work, then I'd have to say Popular Science is "considered reputable." There's simply a different standard between these two fields. The evidence is out there in the streets Wink

What are you talking about, specifically? You seem to be obfuscating.

I was just addressing your analogy here, sorry if I didn't explain myself clearly  Huh  I said "Computer Science paper" but I didn't say "Economics paper" nor was I comparing there. I just pointed out that "reputable publications" about economy, that have a lot more readership and repercussion that this "paper" can dream to have, very often have this level of quality and even worse.

The fact that the blockchain chugs along just fine and that bitcoin continues to be useful right now has a lot more weight and "proves" much more than any "analysis" of this sort. Most people with sense will agree.

In any case I don't really think this discussion about fields is going to be fruitful. Bitcoin is susceptible to a number of fields and any decent general analysis will have to be multidisciplinary.

If you want we can probably take this conversation to the off-topic section. I tend to go on tangential points a bit too much. Sorry about that.

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cunicula
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February 23, 2012, 04:12:34 PM
 #46


But these are like Popular Science. I'm sure you could find BS in Popular Science too. Were you referring to popular science when you said "Computer Science paper?" If not, then it is not really a valid analogy, is it?

If the majority of professional CompScis read, quoted and applied Popular Science at work, then I'd have to say Popular Science is "considered reputable." There's simply a different standard between these two fields. The evidence is out there in the streets Wink

What are you talking about, specifically? You seem to be obfuscating.

I was just addressing your analogy here, sorry if I didn't explain myself clearly  Huh  I said "Computer Science paper" but I didn't say "Economics paper" nor was I comparing there. I just pointed out that "reputable publications" about economy, that have a lot more readership and repercussion that this "paper" can dream to have, very often have this level of quality and even worse.

The fact that the blockchain chugs along just fine and that bitcoin continues to be useful right now has a lot more weight and "proves" much more than any "analysis" of this sort. Most people with sense will agree.

In any case I don't really think this discussion about fields is going to be fruitful. Bitcoin is susceptible to a number of fields and any decent general analysis will have to be multidisciplinary.

If you want we can probably take this conversation to the off-topic section. I tend to go on tangential points a bit too much. Sorry about that.

No that's okay. I actually agree with what you say here, so I think we can amicably conclude the exchange.

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February 23, 2012, 04:14:33 PM
 #47

Joseph Affonso Xaxo has reminded me on Google+ that the authors confuse Bitcoin with Tenebrix, a CPU-friendly, GPU-hostile cryptocurrency.  https://bitcointalk.org/index.php?topic=45667.0

Also see, Would any of the current botnets be able to launch and sustain a 51% attack?

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I also cover the bitcoin economy for Forbes, American Banker, PaymentsSource, and CoinDesk.
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February 23, 2012, 04:38:28 PM
 #48

As someone that has dealt with botnets a lot in the last year on BTC Guild, I don't see them pushing out honest miners.  Not unless botnets can find a way to mask themselves from the pool ops.  Solo mining isn't really an option for botnets as far as I can see due to the inability to mask the synchronization of a more than 1 GB blockchain on every bot.

Right now spotting a botnet fairly easy to do manually, a little trickier to automate.  But there is not a single botnet out there that I've seen that has an efficiency ratio close to a legit miner, paired with hitting the server with far more longpoll connections than any regular worker.

The only way I see botnets replacing honest miners is if a way to mine coins solo is designed that doesn't require a bitcoin client running on the system.  This would let a botnet mine coins for a specific wallet address across all their solo miners. 

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February 23, 2012, 07:49:17 PM
 #49

Once botnets take over, criminality increases, honest users decamp and
collapse follows.
This makes no sense.

What is the problem if botnets do the mining? Honest miners are those that care about mining legitimate blocks and has nothing to do with where they get their power from and at what price (even if they steal energy for free to mine). Also the final arguments can be said about any currency. If I am a criminal I could steal peoples dollars and sell them on the market to create volatility. I don't see the point here...

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February 23, 2012, 08:15:46 PM
 #50

Quote
One could operate a mining botnet and slowly lower the Bitcoin market price by regularly selling
small amounts of bitcoins with a declining price. As the honest miners are squeezed out, further manipulations of the
Bitcoin system are possible.

This is the part at which I realized the writer is a cryptographer, not an economist, and concluded that this article is irrelevant. Even if all of Bitcoin is mined by competing botnets it will still survive just fine. Don't forget that Bitcoin mining rewards will eventually decrease to zero, and mining will mainly be supported by transaction fees. If all the mining is done by free botnets, it will just mean that transaction fees will be able to remain low.

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February 23, 2012, 08:21:26 PM
 #51

This guy is wrong on everything.

Here is another one...Incentive.
You control a huge botnet and mine a million Bitcoins for free.

What is the most likely thing to do?

A. Crash the Bitcoin market..Because?

Or B.

B. Hold them and become a Billionaire?

Ofcourse you might get hired to do this...
But if thats the case, make sure they pay you well.

He also assumes that the Botnet will get enough Bitcoins each day to be able to drive the price down.
If the Botnet gets 1000 coins, that might not have any effect at all unless he hold them for 100 days.
But if he holds them for 100 days, the price can rise while he hold them and as the price gets lower it becomes easier to buy them.

There are more.
There is this javascript mining program which can mine on peoples computers while they are looking at a webpage.
What if a few large newspapers or even games started to use this as a kind of payment for reading the news for free...
 








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February 24, 2012, 12:51:27 AM
 #52

Connecting botnet to mining causes botnet to be exposed to infected users and therefore liquidated. Not profitable activity.
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February 24, 2012, 06:52:36 AM
 #53

Keynesian makes up a large minority viewpoint in academic macroeconomics. It is not dominant. It is only among government policymakers that Keynesian is the dominant viewpoint.

[Don't get me started on Austrian economics because that is complete wackjob rubbish that asshats believe in. I'm not responding to asshats here. It is not an enjoyable use of my time.]

It is not that Keynesian is necessarily wrong. In fact, I think it is correct, but exceptionally difficult to prove or disprove.

Keynesian propositions are not economics but political dogma. And what is a Keynesian doing around here? Chartalist!

A common logical fallacy is the argumentum ad hominem. As Ludwig von Mises wrote, "Only ideas can overcome ideas." Have you even read the magnum opus Human Action which is available for free? I can understand why it may not be enjoyable for you, if you can even understand it. Most all of the issues raised in this entire thread are thoroughly discussed in the first 70 pages.

The white paper is flawed for several reasons including asymmetrical knowledge, specialty capital goods, opportunity cost, arbitrage and tax considerations.

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February 24, 2012, 08:03:51 AM
 #54

What kind of hash rate can a botnet pull? I guess the threat is if botnets are king they can perform double spends but one might think it be more profitable to just run the network legitimately and not devalue bitcoin to zero.

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February 24, 2012, 09:50:15 PM
 #55

OPs point would be valid if Botnets were a lot easier to get hold of and that the reward were greater (preventing opportunity cost). As it is, the economic theory is there but in practice botnets just aren't strong enough. The "parent's/office's electricity" problem is of far greater magnitude, as is the "losing money but cool" problem. None of these drive bitcoin below cost of electricity, and the latter 2 help to secure bitcoin's value even further by removing the short term profit motive and making sure the blockchain remains secure, even when the Profit:Loss ratio is temporarily skewed against them.
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February 24, 2012, 10:49:38 PM
 #56

As long as botnets are running according to Bitcoin protocol to secure transactions, the Bitcoin are not threaten in any way, it only benefits.

And most importantly botnets are ineffective for long term mining operation. The software runs on CPU, the CPU are in orders of magnitude less efficient than high-end GPU, the computer are sluggish as hell and as a result the opreating system are reinstalled and bot is lost.

I have a impression that author of that paper have got it all wrong.

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February 25, 2012, 10:39:57 AM
 #57

I don't follow the "respected cryptographer": botnets may be one day similar to FPGAs or ASICS, if they can improve the efficiency of mining. In what way do they bring an incentive to crash the market ?
If botnets provided a low cost resource (certainly not zero cost because development, distribution ,maintenance may be cheap but not free) so easily why assume that honest miners would not be majority in using botnets?

Any "expert" who cites an economist from the 16th century (whose reasoning was based on gold money) better have a sound logic, otherwise he makes a fool of himself.

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February 25, 2012, 01:12:20 PM
 #58

The interesting thing about this unedited and not well thought out paper is why it was written.  It's not clear to me.
Perhaps they are fishing for a buyer.

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February 25, 2012, 02:08:06 PM
 #59

if there's one thing we've learned about these doom and gloom papers is that talk is cheap.

We have a lot of "experts"willing to throw around theories but not willing to put up the money, time, our effort to actually demonstrate their hypotheses.

  If there was anything to what they have to say then they'd just take  those millions and run
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February 25, 2012, 03:55:05 PM
 #60

if there's one thing we've learned about these doom and gloom papers is that talk is cheap.

We have a lot of "experts"willing to throw around theories but not willing to put up the money, time, our effort to actually demonstrate their hypotheses.

  If there was anything to what they have to say then they'd just take  those millions and run

What the hell are you talking about? What would you have the experts do to demonstrate their hypothesis?

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