[ANN] A public company will build a huge Bitcoin Mining Operation (ASIC).

[gusti]

no need to worry about the future of bitcoin, eventually other companies will
come with ASIC's offers and will be selling them also

[bulanula]

no need to worry about the future of bitcoin, eventually other companies will
come with ASIC's offers and will be selling them also

Too much faith in free market detected.

I don't think anyone will be able to invest another 1+ million USD when the BitCorp ( copyrighted name Vladimir, you have to pay licensing ) already did so and has their 10 ghash/s for $10 design and owns most of the network.

[DeathAndTaxes]

You guys are forgetting that this isn't the only game in town. Even if he was to set up and run --lets say-- 2 Thash/s  of ASICs, that isn't a monopoly or even 50%.

51% is a monopoly.  You simply exclude blocks by all other miners.

Making a better miner is great.  Trying to monopolize the network isn't so great.

Say this does launch and they get up to 2TH/s (20% of the network).  If profitable there is no reason not to expand so they grow to 25%, 30%, 35% of the network.  At that point it becomes asinine to NOT just expand to 51% and instantly DOUBLE the profits of investors.

Hypothetically say $1M buys you 20% of the network.
$2M then buys you 40% of the network but
$2.6M buys you 51% of the network = 100% of the network.

A private entity having 20%+ of the network is something to be concerned about.  If a company is in striking distance of spending a small amount more to instantly double profits (by excluding all other miners) it is naive to think they won't.

[gusti]

no need to worry about the future of bitcoin, eventually other companies will
come with ASIC's offers and will be selling them also

Too much faith in free market detected.

I don't think anyone will be able to invest another 1+ million USD when the BitCorp ( copyrighted name Vladimir, you have to pay licensing ) already did so and has their 10 ghash/s for $10 design.

if bitcoin market cap goes up, mining will be a multi billion industry, and 1M invest will be nothing compared

[gusti]

You guys are forgetting that this isn't the only game in town. Even if he was to set up and run --lets say-- 2 Thash/s  of ASICs, that isn't a monopoly or even 50%.

51% is a monopoly.  You simply exclude blocks by all other miners.

Making a better miner is great.  Trying to monopolize the network isn't so great.

I don't believe that anybody with a stake in bitcoin business will consciously kill it,
by trying to monopolize ... a centralized bitcoin is not bitcoin anymore   

[DeathAndTaxes]

if bitcoin market cap goes up, mining will be a multi billion industry, and 1M invest will be nothing compared

Well after the subsidy cut the network will produce 1.3M BTC per year.  For that to be a billion dollars in revenue would require BTC price to be $761 ea.    So sure BTC mining may "someday" be a billion dollar industry but we are likely a ways from that.

[rjk]

You guys are forgetting that this isn't the only game in town. Even if he was to set up and run --lets say-- 2 Thash/s  of ASICs, that isn't a monopoly or even 50%.

51% is a monopoly.  You simply exclude blocks by all other miners.

Making a better miner is great.  Trying to monopolize the network isn't so great.

Say this does launch and they get up to 2TH/s (20% of the network).  If profitable there is no reason not to expand so they grow to 25%, 30%, 35% of the network.  At that point it becomes asinine to NOT just expand to 51% and instantly DOUBLE the profits of investors.

Hypothetically say $1M buys you 20% of the network.
$2M then buys you 40% of the network but
$2.6M buys you 51% of the network = 100% of the network.

A private entity having 20%+ of the network is something to be concerned about.  If a company is in striking distance of spending a small amount more to instantly double profits (by excluding all other miners) it is naive to think they won't.

That only gets you so far. You shit all over the network, take everyone's money, and then what? Bitcoin collapses, and you don't actually have that much to show for it, since there is no more money to wring out. That isn't a long-term investment strategy, that is just fucking retarded.

[DeathAndTaxes]

I don't believe that anybody with a stake in bitcoin business will consciously kill it,
by trying to monopolize ... a centralized bitcoin is not bitcoin anymore   

Conciously no but companies are motivated to maximize profits.  If you could spend 10% more on your hashing farm and double your profits would you?  Obviously you would but you can't because your 0.001% to 1% of network doesn't have that option.

If someone got within striking range you would very quickly see the "justifications".  Well doing this makes Bitcoin more efficient, doing this allows us to keep more hashing power in reserve to fight an attack, doing this still keeps Bitcoin decentralized in theory, doing this is no different than MtGox having 90% of BTC:fiat trade, etc.

[bulanula]

You guys are forgetting that this isn't the only game in town. Even if he was to set up and run --lets say-- 2 Thash/s  of ASICs, that isn't a monopoly or even 50%.

51% is a monopoly.  You simply exclude blocks by all other miners.

Making a better miner is great.  Trying to monopolize the network isn't so great.

Say this does launch and they get up to 2TH/s (20% of the network).  If profitable there is no reason not to expand so they grow to 25%, 30%, 35% of the network.  At that point it becomes asinine to NOT just expand to 51% and instantly DOUBLE the profits of investors.

Hypothetically say $1M buys you 20% of the network.
$2M then buys you 40% of the network but
$2.6M buys you 51% of the network = 100% of the network.

A private entity having 20%+ of the network is something to be concerned about.  If a company is in striking distance of spending a small amount more to instantly double profits (by excluding all other miners) it is naive to think they won't.

That only gets you so far. You shit all over the network, take everyone's money, and then what? Bitcoin collapses, and you don't actually have that much to show for it, since there is no more money to wring out. That isn't a long-term investment strategy, that is just fucking retarded.

<tinfoil_hat> Not retarded if this guy works for the banks or for the government. ATM we don't have any guarantee that this is not the case and they are trying to use us as investors to collapse our own system / BTC at a cheaper price for the bankers / taxpayer than would be possible otherwise on their own without BitCorp raising capital for a 51% using ASIC. IMHO this technique would be very viable to kill BTC and stop all transactions and make the system worthless rather than going the economic exchange manipulation route which is quite longer and does not guarantee people losing faith. </tinfoil_hat>

[DeathAndTaxes]

That only gets you so far. You shit all over the network, take everyone's money, and then what? Bitcoin collapses, and you don't actually have that much to show for it, since there is no more money to wring out. That isn't a long-term investment strategy, that is just fucking retarded.

Would Bitcoin collapse?   How many miners use Deepbit despite the danger that creates (hell DB almost had 51% of network at one point).  How many traders use MtGox despite the 90%+ centralization that causes?  Do you think Silk Road users really care if mining is centralized?  Do you think they would even know?  Do "trades" (who honestly are just unregulated gamblers) really care who runs the network?

Your belief that
a) people would know once an entity gets 51%
b) everyone would abandon it once an entity hits 51%
c) the operators would take the risk of a & b and value it higher than DOUBLING profits.

will all happen guaranteed (as in a 0.00000000000000000000000000000% chance of one of the above not happening) is at the very least naive.

Most likely Bitcoin would continue to operate even if an entity achieved a monopoly.  There may be a short term sell off but most of the activity on Bitcoin is speculation and one can speculate just as easy with a single miner than 1000+ miners.  Some would bet againsts, when price gets low enough some would bet for.  In time the network could adapt to a single CURRENT operator.  If the operator failed the network wouldn't fail so it would still remain decentralized at least in theory.

To say it is "fucking retarded" is silly.  It is a risk but investing $1M into Bitcoin is also a risk.


The other potential  is an outside force leveraging the 20%+ network.  Say Vlad go aproached by Chase who said "it looks like you have spent $2M so far and the NPV of your future revenue stream is $3.8M.  We want to buy your company out to monopolize Bitcoin.  Either Bitcoin continues to operate and we own it or it fails and we eliminated a threat.  We will buyout your company for $7.6M (an instant 100% profit to you and your investors), keep you and your staff on (maybe with some nice 300% increase in salary).  Spend another $1M or so and gain 51% = 100% control of the network.  

Maybe Vlad would tell Chase and their $7,600,000 check to pack sand but maybe just maybe he wouldn't.

TL/DR version:
Selling ASIC processors (even at a healthy profit) on open market furthers decentralization, building massive private hashing farms on scale never seen before only furthers centralization.  That can't be refuted.

[hazek]

You guys are forgetting that this isn't the only game in town. Even if he was to set up and run --lets say-- 2 Thash/s  of ASICs, that isn't a monopoly or even 50%.

51% is a monopoly.  You simply exclude blocks by all other miners.

Making a better miner is great.  Trying to monopolize the network isn't so great.

Bullshit. There's nothing wrong with free market monopolies.

I suspect in the end we will have only a few big mining companies. And the fact that using Bitcoin is voluntary is what will keep them honest. If people have free choice to go to some other currency then these few companies will be forced in their own self interest to continuously stay honest and true to the rules of Bitcoin.

 Only people who have never run a voluntary business would claim otherwise.

You seem to forget that in a market regulated and constrained by market participants "elections" are held every single day by way of keep customers happy.  If you can't do that, you go out of business.

[rjk]

You assume that the coins are hoarded, and not spent on the market. How long can the market sustain the sale of the coins generated from having 50% of the mining power continuously?

[DeathAndTaxes]

You assume that the coins are hoarded, and not spent on the market. How long can the market sustain the sale of the coins generated from having 50%100% of the mining power continuously?

51% = 100%.  No company would stop at 50%.  It would be saying "I prefer half the revenue for the same amount of cost".

[rjk]

You assume that the coins are hoarded, and not spent on the market. How long can the market sustain the sale of the coins generated from having 50%100% of the mining power continuously?

51% = 100%.  No company would stop at 50%.  It would be saying "I prefer half the revenue for the same amount of cost".

It only equals 100% when you purposely do bad things with it, such as orphaning blocks by fiddling with your timestamps.

If you were to become 100% by doing bad things with your hash power, why wouldn't the system collapse around itself? How would it stay up?

[DeathAndTaxes]

It only equals 100% when you purposely do bad things with it, such as orphaning blocks by fiddling with your timestamps.

If you were to become 100% by doing bad things with your hash power, why wouldn't the system collapse around itself? How would it stay up?

Bad things for who?  Other miners?  What does some guy buying some weed on SR really care if a miner got excluded from his cut.  Wording like "bad things" has no useful context.  What is "bad things"?  How do these "bad things" affect USERS not MINERS?

I asked the same thing up thread.  You make it seem like an instant collapse to $0.00000000000 per BTC will happen instantly when someone excludes other miners.  Why?  People use deepbit, people use Mt.Gox, people use lots of centralized services.  The belief that Bitcoin would collapse is simply unproven.

Still someone with 51% hashing power could boost their profits in a limited fashion and test the waters by randomly orphaning some % of blocks.  Orpahn 10% of the competing blocks and you are getting 10% more profits for no more work.  You still preserve the illusion of a decentralized network.

Then spend some of that money to affect mindshare.  "see a corporation votes by shares so if Bitcorp Enterpises has 100% of the hashing power it isn't a monopoly because each shareholder can vote.  Mining is still decentralized among thousands of shareholders". 

One could even draw  relatively accurate analogy that a private company with thousands of shareholders and 100% of hashing power is just as decentralized as p2pool having 100% of hashing power.

[rjk]

I don't think you could maintain any such "illusion" for long. Such an event happening would remove any remaining faith in the system, besides all the extra coins dragging the market down to ~nil.

[EskimoBob]

"Bitcoin Mining Contract" = Scam! Only idiots will buy into crap like this.
And this Vladimir is full of s**t. Enough said!

[DeathAndTaxes]

I don't think you could maintain any such "illusion" for long. Such an event happening would remove any remaining faith in the system, besides all the extra coins dragging the market down to ~nil.

Why does the market price of Bitcoin matter?  If anything a private company could control the flow of coins to reduce volatility increasing the utility to merchants and users.

[rjk]

I don't think you could maintain any such "illusion" for long. Such an event happening would remove any remaining faith in the system, besides all the extra coins dragging the market down to ~nil.

Why does the market price of Bitcoin matter?  If anything a private company could control the flow of coins to reduce volatility increasing the utility to merchants and users.

Because they are selling contracts to people (who would probably be cashing out), not running it themselves as a private enterprise.

[wogaut]

watching closely