Visa’s top-secret Operations Center / Bitcoin is so much cooler & cheaper :)

[ptshamrock]

http://www.usatoday.com/tech/news/story/2012-03-25/visa-data-center/53774904/1

SOMEWHERE ON THE EASTERN SEABOARD – Prisons are easier to enter than Visa's top-secret Operations Center East, its biggest, newest and most advanced U.S. data center.

The 8-acre facility looks like any other industrial park in a sleepy suburb. But the serene setting masks hundreds of cameras and a crack team of former military personnel. Hydraulic bollards beneath the road leading to the OCE can be quickly raised to stop an intruding car going 50 mph. Any speed faster, and the car can't navigate a hairpin turn, sending it into a drainage pond that functions as a modern-day moat.

The data center resembles a fortress, with dogged attention to detail. It can withstand earthquakes and hurricane-force winds of up to 170 mph. A 1.5-million-gallon storage tank cools the system. Diesel generators onsite have enough power, in the event of an outage, to keep the center running for nine days. They generate enough electricity for 25,000 households.

Once you get clearance from a guard station, get an OK from a roving security guy in a golf cart, and surrender a photo and fingerprint inside, the adventure begins.

There are plenty of reasons for the airtight security. Billions, in fact.

In an era when mobile purchases on smartphones and tablets are expected to grow 73% to $11.6 billion in the U.S. this year, security is a necessary obsession at OCE — and an acknowledgment of the perils posed by profit-minded hackers.

Mobile payments are just a trickle of the more than 200 million daily transactions processed here and at one other Visa data center in North America.

"We're at the forefront of data centers," says Rick Knight, head of global systems operations and engineering. "Now everyone has to do it."

The fortress is home to the facility's 130 workers, who are entrusted with the arduous task of keeping hackers out and the network up.

OCE is a "Tier 4" center, a certification from data center research organization Uptime Institute that requires that every mainframe, air conditioner and battery have a backup.

To meet such lofty standards, Visa has poured hundreds of millions of dollars annually into developing state-of-the-art risk-management technology. VisaNet's services include transaction risk scoring, data encryption and transaction alerts. It all adds up to highly accurate models to identify and address potential fraudulent deals before they're concluded. That has contributed in great part to global fraud rates of just 6 cents per $100 spent, according to Visa.

Visa's core-transaction network is private, immune — the company says — from Internet dangers such as denial-of-service attacks by the likes of Anonymous. When hackers took down Visa's corporate website in 2010, for example, it had no impact on the core network.

Data about data centers

More than half of the world's 13,000 large data centers are in the U.S., according to market researcher Gartner. It estimates $22 billion will be spent on new centers worldwide this year, after growth sputtered during the recession.

Data centers are increasingly in vogue as demand for digital data explodes with the popularity of cloud computing, tablets and smartphones. Google, Facebook and Apple are among the large tech companies that built their data centers in rural areas to save on land and power.

"Physical security is the foundation where you start," says John Thielens, chief security officer of Axway, a business-software vendor. "If you can afford it, build a data center. The big guys build their own."

At the same time, Hewlett-Packard, IBM and others have plunged into the business of managing data centers for corporate clients, says Philip Russom, a research director for The Data Warehousing Institute. Amazon.com says it offers cloud-based "data centers for rent."

"The growth in data center construction is very much tied to the growth in the amount of data which needs to be stored and delivered to businesses and consumers," says Rakesh Shah, director of product marketing and strategy at data-security firm Arbor Networks.

Visa is loath to say how much it spent to build its data center, but a conservative estimate is probably hundreds of millions of dollars, based on construction costs and equipment housed at the facility.

Once inside, visitors encounter a "mantrap" portal, which requires a badge and biometric image of the right index finger to gain access to the data center. The digital image is necessary to pass through a phalanx of shatter-resistant glass doors.

A NASA-like command center, with a 40x20-foot wall of screens and 42 firewalls, monitors the company's worldwide network, which Visa says processes 2,500 transactions per second.

Inside the fortress

The data center's main corridor is about three football fields long, connecting seven 20,000-square-foot rooms called pods.

Two pods contain Visa's core network, a third its corporate networks, and the fourth, development work. A fifth pod handles Visa's new mobile platforms, such as the recently acquired Fundamo, a mobile financial services platform. Two dormant pods await expansion.

Pods 4 and 5 are the brains of the network, a blur of hard drives spinning and fans whirring amid rows of IBM mainframes, Cisco Systems switches and EMC and Hitachi storage arrays. They're all connected by 3,000 miles of cable — enough to traverse the country.

"Yeah, this place is pretty impressive, but there's a lot at stake (in terms of security)," Knight says. "We need to keep things safe."

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[BubbleBoy]

Bitcoin is so much cooler & cheaper

Are you sure about that ? In order for Bitcoin to scale to Visa volumes (5 trillion $/year), and assuming the average bitcoin is spent once per month (for M1 US dollars this period is about 45 days), the total capitalization of Bitcoin should rise to 400 bln dollars, or an exchange rate of about 40000 $/BTC.

This sharp price rise would enable about 75 billion dollars of mining fees for the remainder of 2012, and 50 billion dollars mining fees in 2013 and onwards, after the block reward drops to 25BTC/block. That's almost 300 bln $ in mining fees for the next 5 years. No less than about 200 bln$ if we account for the expansion of BTC monetary base, and keep the payment volume constant. On a competitive mining market, the bulk of this 200 bln dollars would go towards mining rigs and electricity, while the remainder will represent mining profits.

Visa's data center, impressive as it may seem, is still 1000x cheaper than the corresponding Bitcoin infrastructure.

[ptshamrock]

Ur right probably..

what title do u sugest?

My main problem with this datacenter is the centralisation..

and if btc ever gets this market share there will be mini asics everywhere ...

[cbeast]

VISA is fine for what it is now. The Bitcoin network isn't finished yet. It will scale way beyond anything VISA can dream of and will force VISA to adapt Bitcoin to stay in business.

and if btc ever gets this market share there will be mini asics everywhere ...

This is one step.

[BubbleBoy]

My main problem with this datacenter is the centralisation..

Sure, the infrastructure will be decentralized, maybe in 1000 "small" data centers, each the size of Visa's
As for ASICS, you can bet they will be the only form of mining, however that does not change the amount of resources Bitcoin farming will command since they will be available to all players and the difficulty will rise dramatically to compensate.

We could assume some minority players will have top technology with say 2x performance per watt most miners have, thus they will be able to pocket higher profits that could go for charity or for building nice mansions for their rich financiers. Still, the bulk of those 200bln$ worth of resources will be destroyed in the mad game of "proof of work".

[guruvan]

Bitcoin is so much cooler & cheaper

Are you sure about that ? In order for Bitcoin to scale to Visa volumes (5 trillion $/year), and assuming the average bitcoin is spent once per month (for M1 US dollars this period is about 45 days), the total capitalization of Bitcoin should rise to 400 bln dollars, or an exchange rate of about 40.000 $/BTC.

This sharp price rise would enable about 75 billion dollars of mining fees for the remainder of 2012, and 50 billion dollars mining fees in 2013 and onwards, after the block reward drops to 25BTC/block. That's almost 300 bln $ in mining fees for the next 5 years. No less than about 200 bln$ if we account for the expansion of BTC monetary base, and keep the payment volume constant. On a competitive mining market, the bulk of this 200 bln dollars would go towards mining rigs and electricity, while the remainder will represent mining profits.

Visa's data center, impressive as it may seem, is still 1000x cheaper than the corresponding Bitcoin infrastructure.

8M BTC * USD$40 < $USD400Billion.

to reach that level 1BTC would be $48,780.49 around now, or $19,047.62 once all BTC are made

At that level, security at the mine will be intense.

[cbeast]

Forget VISA. I expect Bitcoin to take on the $900 Trillion derivatives market and blow it up a few orders of magnitude.

[DavinciJ15]

Bitcoin is so much cooler & cheaper

Are you sure about that ? In order for Bitcoin to scale to Visa volumes (5 trillion $/year), and assuming the average bitcoin is spent once per month (for M1 US dollars this period is about 45 days), the total capitalization of Bitcoin should rise to 400 bln dollars, or an exchange rate of about 40.000 $/BTC.

This sharp price rise would enable about 75 billion dollars of mining fees for the remainder of 2012, and 50 billion dollars mining fees in 2013 and onwards, after the block reward drops to 25BTC/block. That's almost 300 bln $ in mining fees for the next 5 years. No less than about 200 bln$ if we account for the expansion of BTC monetary base, and keep the payment volume constant. On a competitive mining market, the bulk of this 200 bln dollars would go towards mining rigs and electricity, while the remainder will represent mining profits.

Visa's data center, impressive as it may seem, is still 1000x cheaper than the corresponding Bitcoin infrastructure.

Your math MAY be a bit off in many of your statements, first $40.00/btc would have a value of 400 million not billion then you statement that data center is 1000x cheaper than bitcoin infrastructure is also may not be accurate.  Currently there is 11.37 Terahashs, each gig hash represents $1500 in equipment investment on average, thus 11,370 x 1500 = $17,055,000 even if we doubled it that would just be the cost of the empty building not mentioning the all the taxes kick backs, environmentalist bullshit, delays, and paper work.

Just my 2 bit cents.

[DeathAndTaxes]

Yeah the math is off because it is based on VISA scale volume and 8x increase in BTC price.

While BTC may someday be that large it likely will be when subisidies are much lower.  fees will rise but not as much as subsidies are declining.  While the nominal value of BTC in fiat may rise in BTC terms future block likely will be worth much less than 50 BTC.  We will see the first step of that in 2013.  Block subsidy will decline to 25 and while miners may push for higher fees it is unlikely going to be even 10% of the subsidy drop.

So the network is likely to be cheaper and more efficient in the future (on a per tx basis) if/when BTC hits even Paypal level volumes much less VISA.  Also the "math" fails to account this is just an article on VISA newest datacenter.  They have lots of datacenters all over the world increasing their infrastructure cost by a magnitude.

TL/DR version:
If BTC cost is 1000x higher than VISA cost then BTC is dead now, so uninstall the client.  VISA gross profit margin is 28%.  Thus the price to users is ~4x their cost.  If BTC cost is 1000x higher then BTC ultimate price to users would be 250x what VISA price is.  Of course I don't think BTC will ever cost more than a tiny fraction of VISA but it shows how silly the 1000x number is.

[ptshamrock]

Forget VISA. I expect Bitcoin to take on the $900 Trillion derivatives market and blow it up a few orders of magnitude.

FUCK YEAH !

[MatthewLM]

Maybe I'm wrong about this but shouldn't bitcoin mining become more efficient as it scales since more transactions can be put into each block? And the amount of mining power would rely upon the profitability of doing mining so that if the revenues for mining goes down, then that will make it less profitable and miners would leave the scene, reducing the amount of mining power? With more transactions there can be more transaction fees per block.

[triplehelix]

TL/DR version:
If BTC cost is 1000x higher than VISA cost then BTC is dead now, so uninstall the client.  VISA gross profit margin is 28%.  Thus the cost to users is ~4x their cost.  If BTC cost is 1000x higher then BTC ultimate cost to users would be 250x what VISA cost is.  Kinda hard to attract users to that.   The reality is BTC cost is a tiny fraction of VISA once the network is "fully grown".

i think mining will become cost ineffective for the average joe long before that.  i imagine if bitcoin were to grow to these levels, corporate mining will come into play, and most likely exchanges and particularly bitcoin payment processor companies will have a large portion of the mining infrastructure for additional profit, fast proliferation of transactions, and security.

[DeathAndTaxes]

TL/DR version:
If BTC cost is 1000x higher than VISA cost then BTC is dead now, so uninstall the client.  VISA gross profit margin is 28%.  Thus the cost to users is ~4x their cost.  If BTC cost is 1000x higher then BTC ultimate cost to users would be 250x what VISA cost is.  Kinda hard to attract users to that.   The reality is BTC cost is a tiny fraction of VISA once the network is "fully grown".

i think mining will become cost ineffective for the average joe long before that.  i imagine if bitcoin were to grow to these levels, corporate mining will come into play, and most likely exchanges and particularly bitcoin payment processor companies will have a large portion of the mining infrastructure for additional profit, fast proliferation of transactions, and security.

I agree but I mean for USERS.

If the math was right and BTC cost was 1000x VISA cost and visa has a 4x markup then BTC price to end users (non-miners) would be 250x as high as VISA even if miners worked for cost.  That is obviously untrue.

[Phinnaeus Gage]

Source: Fake Wikileaks

Thanks, in (main) part, to the fees we collect from our growing customer base, VISA

...has poured hundreds of millions of dollars annually into developing state-of-the-art risk-management technology.

Cost of a Bitcoin building in 2010: $0
Cost of a Bitcoin Building in 2012: $0
Cost of a Bitcoin Building in 2030: $0
If Bitcoin ends the FED: Priceless!

[BubbleBoy]

The math is fine: if 10 million coins are in existence, in order to reach annual Visa volumes a coin needs to be worth 40000$. Proportionately less after more coins are minted, proportionately more if the payment volume rises. The mining revenue would rise to 1 million USD/block in 2013 - 2016, and the miners will use those earnings for rigs, electricity and profits.

The 1000x apparent inefficiency as compared to Visa has nothing to do with the actual efficiency of the Bitcoin payment network, rather to the particular way coin minting is performed. If Bitcoin achieves Visa levels after the initial coin distribution phase is completed (a few decades from now), the mining revenues will be much more modest. The 1000x factor is true today, and will halve every four years.

If the math was right and BTC cost was 1000x VISA cost and visa has a 4x markup then BTC price to end users (non-miners) would be 250x as high as VISA even if miners worked for cost.  That is obviously untrue.

You are not accounting for the hidden revenue that seigniorage generates. Since Visa works with national currencies it does not have this revenue stream, so all it's markup is passed on the the consumers.

When an investor buys bitcoins for the first time, he enables miners to burn those resources in their mining rigs and mine a shiny new bitcoin for him. The resources are forever wasted but apparently he still "has the money" in new bitcoins - a curious case of having one's cake and eating it too. Conversely when Bitcoin will fail (as all human endeavors eventually do), someone will be left holding worthless bits. So from the point of view of the participants in Bitcoin, the markup  is deffered until the system is closed, whenever that may be - tomorrow or one thousand years from now.

<soapbox>
From the point of view of the society, we are better off avoiding a proof-of-work monetary system, like Bitcoin or gold. If we can convince our governments to issue sound, non-inflationary fiat money we can put those wasted resources to better use today. It's travesty of our times that the resources saved by fiat money, instead of making the society richer, are siphoned by the rent seeking bankster elite.
</soapbox>

[bitcoinbetas]

What is Visa?

[triplehelix]

What is Visa?

its what good looking russian women use to come to the US.

[DavinciJ15]

You are not accounting for the hidden revenue that seigniorage generates. Since Visa works with national currencies it does not have this revenue stream, so all it's markup is passed on the the consumers.

OK, I see your point now. However the seigniorage is the fraudulent part of Visa.  {In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual;} The credit system does not inform the individuals that the credit is created with no cost to the bank, thus interest paid on balances owed makes you a free slave, also this diminishes the value of all other currency in existence.

Some may say... Whats wrong with this system?  

Well if you create wealth you added to society by creating something people wanted or needed and you can spend or save the effort in another product of the free market, historically such a product has been gold or silver.  If you loan the gold you are effectively transferring the work you provided and saved to a debtor, (unlike loaning out unlimited money) if the debtor did not pay you back no extra value was added to the economy.  If a bank is not paid back they must pay back the outstanding balance thus same as if we used gold, so you may ask where is the fraud?   However the fraud is the banks know that's not what happens.  The banks ether gets A BAIL OUT by getting your government to go into debt, (taxing you to pay their bad loans) or by going into debt them selves to cover the loses, or the debt is marked on their books as still good (aka "mark to model").

Thus I must agree with 1000x efficiency of VISA if you get money (AKA stored labor and production) for free.

However if you include the real cost of the free labor and production its not very efficient.

[cunicula]

My main problem with this datacenter is the centralisation..

Sure, the infrastructure will be decentralized, maybe in 1000 "small" data centers, each the size of Visa's
As for ASICS, you can bet they will be the only form of mining, however that does not change the amount of resources Bitcoin farming will command since they will be available to all players and the difficulty will rise dramatically to compensate.

We could assume some minority players will have top technology with say 2x performance per watt most miners have, thus they will be able to pocket higher profits that could go for charity or for building nice mansions for their rich financiers. Still, the bulk of those 200bln$ worth of resources will be destroyed in the mad game of "proof of work".

There is no way that bitcoin could survive that long without incorporating proof-of-stake to replace proof-of-work. The scenario where bitcoin grows to become some vast resource consuming monster is not plausible. The solution is on the table, if bitcoin seems workable in the long-run, someone will come along and implement it.

[DavinciJ15]

<soapbox>
From the point of view of the society, we are better off avoiding a proof-of-work monetary system, like Bitcoin or gold. If we can convince our governments to issue sound, non-inflationary fiat money we can put those wasted resources to better use today. It's travesty of our times that the resources saved by fiat money, instead of making the society richer, are siphoned by the rent seeking bankster elite.
</soapbox>

BubbleBoy is a good person.  How do I know?  Only a good person would believe the government will do the right thing with direct access to a monetary printing press.  I'm sure you would do the right thing but historically we never really gotten good people in government.