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

[kjj]

Yes, a 51% miner effectively has 100%. That is correct. That is why 51% is twice as profitable as 49%. Actually, more than twice as profitable in the medium to long-term, but I won't go into the details here. That is why it makes sense to perform a massive centralized investment like this to get 51%. Once you have it, you get all the coins and everyone else gives up. Winner take none.

Cunicula, don't take this the wrong way, but could you please shut the fuck up, or maybe even go die in a fire or something like that?  Not every thread on these forums exists for you to go trolling in.

[nedbert9]

Yes, a 51% miner effectively has 100%. That is correct. That is why 51% is twice as profitable as 49%. Actually, more than twice as profitable in the medium to long-term, but I won't go into the details here. That is why it makes sense to perform a massive centralized investment like this to get 51%. Once you have it, you get all the coins and everyone else gives up. Winner take none.

Cunicula, don't take this the wrong way, but could you please shut the fuck up, or maybe even go die in a fire or something like that?  Not every thread on these forums exists for you to go trolling in.

lulz.

Put another way.  No disrespect, but STFU.

Ahhh, thanks for that.

[P4man]

@Vladimir
To quote myself:

I understand you may not be able to give all details, but the fundamentals of your business plan still arent clear to me.

Am I right saying the IP, chip design (and mask set, assuming there is one yet?) belong to a third party supplier ?

IOW, what exactly do you need the money for? To buy third party equipment, or to develop silicon. This is not a minor difference to put it mildly.

[cunicula]

Yes, a 51% miner effectively has 100%. That is correct. That is why 51% is twice as profitable as 49%. Actually, more than twice as profitable in the medium to long-term, but I won't go into the details here. That is why it makes sense to perform a massive centralized investment like this to get 51%. Once you have it, you get all the coins and everyone else gives up. Winner take none.

Cunicula, don't take this the wrong way, but could you please shut the fuck up, or maybe even go die in a fire or something like that?  Not every thread on these forums exists for you to go trolling in.

lulz.

Put another way.  No disrespect, but STFU.

Ahhh, thanks for that.

Okay, well I guess you are right. Since Vlad is just setting up a large non-monopolistic mining organization, this isn't really the place for me to go trolling. I'll delete my posts and take my posting to other threads.

[Vladimir]

Would you be interested in codifying a provision into your bylaws which prevents you from rejecting valid blocks from other miners?  It would be easier for me to invest dollars if you made it an uphill battle for any future management to start monopolizing block production.  

RaggedMonk, this is technically possible. However, all it would change is increase required shareholder vote from 50% to 75%. While I usually prefer to run with default articles, your proposal has a merit. Feel free to make specific suggestions on the wording. I will pay attention.

I do read this thread and see all the questions. However, I may chose to not answers some of the questions. It is nothing personal it just means that I either cannot answer them or do not want to (just yet).

[hazek]

Yes, a 51% miner effectively has 100%. That is correct. That is why 51% is twice as profitable as 49%. Actually, more than twice as profitable in the medium to long-term, but I won't go into the details here. That is why it makes sense to perform a massive centralized investment like this to get 51%. Once you have it, you get all the coins and everyone else gives up. Winner take none.

Cunicula, don't take this the wrong way, but could you please shut the fuck up, or maybe even go die in a fire or something like that?  Not every thread on these forums exists for you to go trolling in.

Please notice how orangey his ignore link is and while you're at it, give it a click yourself. I promise you'll have a much better experience on this forum

[DeathAndTaxes]

That was exactly the point of my question and again, afaik (and please educate me if that's wrong) orphans are not included into the block rate calculations, so the remaining 49% of valid and verified blocks produced will not all orphans. Of course I agree there will be a lot of orphans and mining efficiency of regular miners will suffer in the process.
If they all were orphans, a 51% miner had effectively 100%.

A 51% miner could have 100% of the generated blocks and 100% of block rewards.  So yes a 51% miner effectively has 100%.  Every block produced by the 49% would be orphaned out (eventually).

[wogaut]

That was exactly the point of my question and again, afaik (and please educate me if that's wrong) orphans are not included into the block rate calculations, so the remaining 49% of valid and verified blocks produced will not all orphans. Of course I agree there will be a lot of orphans and mining efficiency of regular miners will suffer in the process.
If they all were orphans, a 51% miner had effectively 100%.

A 51% miner could have 100% of the generated blocks and 100% of block rewards.  So yes a 51% miner effectively has 100%.  Every block produced by the 49% would be orphaned out (eventually).

Either they are orphaned or not. What does the eventually mean?

[kokjo]

That was exactly the point of my question and again, afaik (and please educate me if that's wrong) orphans are not included into the block rate calculations, so the remaining 49% of valid and verified blocks produced will not all orphans. Of course I agree there will be a lot of orphans and mining efficiency of regular miners will suffer in the process.
If they all were orphans, a 51% miner had effectively 100%.

A 51% miner could have 100% of the generated blocks and 100% of block rewards.  So yes a 51% miner effectively has 100%.  Every block produced by the 49% would be orphaned out (eventually).

Either they are orphaned or not. What does the eventually mean?

i means a miner COULD do it, but COULD choose not to too.

[DeathAndTaxes]

Either they are orphaned or not. What does the eventually mean?

Ophan isn't instantaneous.  

The chain with the most hashing power will ALWAYS eventually the longest and orphan out any other competing chains.  Eventually is a given but how low is subject to variance.

Say one entity (A) has 51% hashing power.  Everyone else is (B) and has a combined 49%.

block #1000 is current block
B builds a block #1001  (we will call it 1001B)

If A builds the next block (1002A) it never risks being orphaned as long as it builds on the longest chain.
If B builds the next block (1002B) and A decides to abandon the block it is working on and build on top of 1002B then the chain continues
If B builds the next block (1002B) but A decides to continue its chain and publish 1002A then eventually 1002B will be abandoned.

Maybe team "B" even gets lucky and builds 1003B, 1004B, 1005B.  Sweet got 5 blocks despite A having 51%.  The victory is short lived because the math is unavoidable.  A has 51% of hashing power.  The 1% is like house edge in a casino.  Over a long enough chain of blocks A will build the longer chain and when that happens 1001B, 1002B, 1003B, 1004B & 10005B will all be orphaned.   It is inevitable and unavoidable.  It is the same dynamic in play with a 51% attack.

51% hashing power = 51% to 100% hashing power.  The miner with 51% can choose how many blocks to oprhan and how much profit they want to make.

[DeathAndTaxes]

i means a miner COULD do it, but COULD choose not to too.

It would mean the corporation is choosing lower profits over higher ones.  If the company is publicly traded and Bitcoin became large enough to the point that 51% vs 100% is tens of millions or even billions a year it is inevitable that the company will increase their profits by getting more revenue for the exact same amount of work.

The US govt COULD build a massive hashing farm with 51% of Bitcoin network and then use it to protect not hurt Bitcoin also.
Paypal COULD decide to cut their fees 90% next year.
The FED COULD decide to no longer inflate the US dollar.

Yeah lots of things COULD happen.

[wachtwoord]

No rational miner will ever reject all other blocks when he has 51% because this will lower the value of the BTC he is mining. Irrational miners however ...

[DeathAndTaxes]

No rational miner will ever reject all other blocks when he has 51% because this will lower the value of the BTC he is mining. Irrational miners however ...

What about reject 10% of the blocks to make a bonus 10%.  Give the market time to accept that and realize that monopoly or not the only way the mining company profits is it Bitcoin continues.  A year or two later start orphaning 15% to 20% of competing blocks randomly to boost profits to shareholders.  

Convince other miners to simply buy shares.  "See it is still Democratic shareholders control the network".  Then ramp up the orphan rate to 25%, 30%. Eventually making 1.5 BTC for every 1 BTC earned "fairly".  Who would't take 50% higher profits if they could.  In time market will accept the dominance of one entity and they can move to orphaning all other blocks.  

At that point one has maximized revenue and can boost profits further by turning off some hashing power.  If others try to mine just turn it back on so you are >51% again and orphan all their work.    One could cut operating costs significantly by having say 20TH/s but only using 2TH/s continually to protect the network (and profits).  The other 18TH/s is simply the "threat" to convince any attacker an attack is not economical.

[cunicula]

No rational miner will ever reject all other blocks when he has 51% because this will lower the value of the BTC he is mining. Irrational miners however ...

No rational user will stop using bitcoin because of the identity of the person processing their txns. Therefore, there is no rational reason to believe that a monopoly would negatively affect price. In fact, the rational argument points in the opposite direction.

Monopolized Control -> Stronger incentives for monopolist to develop uses for bitcoin -> More new uses developed -> Higher price

Your argument goes

Monopolized Control Less Useful -> Lower Price

I'm not understanding the part. Seems illogical. Could you explain without introducing irrational behavior?

[wogaut]

Either they are orphaned or not. What does the eventually mean?

Ophan isn't instantaneous.  

The chain with the most hashing power will ALWAYS eventually the longest and orphan out any other competing chains.  Eventually is a given but how low is subject to variance.

Say one entity (A) has 51% hashing power.  Everyone else is (B) and has a combined 49%.

block #1000 is current block
B builds a block #1001  (we will call it 1001B)

If A builds the next block (1002A) it never risks being orphaned as long as it builds on the longest chain.
If B builds the next block (1002B) and A decides to abandon the block it is working on and build on top of 1002B then the chain continues
If B builds the next block (1002B) but A decides to continue its chain and publish 1002A then eventually 1002B will be abandoned.

Maybe team "B" even gets lucky and builds 1003B, 1004B, 1005B.  Sweet got 5 blocks despite A having 51%.  The victory is short lived because the math is unavoidable.  A has 51% of hashing power.  The 1% is like house edge in a casino.  Over a long enough chain of blocks A will build the longer chain and when that happens 1001B, 1002B, 1003B, 1004B & 10005B will all be orphaned.   It is inevitable and unavoidable.  It is the same dynamic in play with a 51% attack.

51% hashing power = 51% to 100% hashing power.  The miner with 51% can choose how many blocks to oprhan and how much profit they want to make.

So if B builds following blocks on chain A, it will create a valid block, meaning if B plays by the rules of A, it can still successfully mine blocks. Or not?

Only if A changes the rules without including B, like in a 51% attack, then B would start producing orphans. But that comes back to the statement, that A could monopolize Bitcoin with 51% but doesn't need to.

So D&T, are you assuming in your explanation, that A will eventually change the rules in his favor?

[wachtwoord]

@cunicula: Bitcoins security is largely based on the decentralization of control. Using a centralized approach one would have to trust a single entity to, for instance not double spend. Replacing the distributed  securing authority with a single centralized one just turns Bitcoin into another Fiat currency. Even inflation could be introduced at the mercy of the central authority! This significantly reduces the value of the currency.

@DeathAndTaxes: Sure that could very well happen. The drop-off in value would simply be smeared out over many years. The loss in intrinsic value of the currency would be the same, so market prices will follow soner or later (markets can be irrational for potentially long periods).

To be clear: I am not saying the system would have zero value. it would be useful similar to how the Candian Mintchip has value. There will simply be more value for a miner with >51% to accepts valid blocks of others and in turn he will stop holding 51% of the market in the future when suffient competitors enter the market.

[DeathAndTaxes]

So D&T, are you assuming in your explanation, that A will eventually change the rules in his favor?

Once again what "rules"?  Of course A will do what is in their favor.  By definition corporations are REQUIRED to maximize profits for shareholders.  In the US an officer (CEO, etc) of a corporation can be personally sued for failing to maximize shareholder value.  If a company can get x% incremental value without any increase  in production cost it is naive to think they won't take that "option".  Even if Vlad was a Bitcoin knight in shining armor a public company will be held accountable to the market, brokers, and fund managers.  They will want to see the "option" taken and if that means replacing Bitcoin friendly CEO with one who puts shareholder's interests first


Ask yourself this question?  How/why are banks "evil"?  Why do they load consumers down with heavy fees, borrow money for next to nothing, and charge high interest?  Shareholders demand it and they are in a position to get away with it.

[P4man]

I do read this thread and see all the questions. However, I may chose to not answers some of the questions. It is nothing personal it just means that I either cannot answer them or do not want to (just yet).

so you cant even tell if your company seeks capital to buy third party systems or to develop your own IP and chips ?
Why then, post anything at all?

[evoorhees]

I say go for it, Vlad!

Man, all this nonsense about monopolization again!! My goodness - I'll chalk it down to public education but I swear it's amazing how many people confuse the evils of coercive state-based monopolization with the non-issue of market-based centralization.

Markets move toward efficiency. If Vlad's venture is successful (profitable), then that's where the market's going. If we need to enforce inefficiency to protect bitcoin from "scary centralization" then the experiment already failed.

Every rational market actor should be trying to figure out how to mine more than anyone else. Nothing wrong with that, and I hope Vlad is wildly successful in his capitalistic endeavors. I see no reason to think Bitcoin will be weakened by its systems advancing forward. And if indeed Bitcoin is weakened merely by advancement, then we ought to discover this sooner rather than later, and Vlad is doing everyone a public service.

Kick ass Vlad, just don't use up all the world's electricity cause I still need coffee in the morning.

[disclaimer201]

Announcing a paramount monopoly in mining would be a good trick to drive many people to sell off their coins in panic. Result: Cheap coins to buy before people found out it isn't really a present danger and the price will slowly rise again.

If I held a substantial amount of hashing power of the network I'd also make sure people won't notice it. MM could be mining at 10 different pools hiding his 20% of the share until he could go for a 51% attack. After the next difficulty change we will know more.

BUT it looks like the 51% attack may be Bitcoin's sore point after all. It won't be Vlad's or anyone's fault. It will simply be the major flaw everyone has been looking for and was glad they didn't find. The system really seemed bullet proof so far. Perhaps the time will come sooner than later that "shit hits the fan" as some here in the forum may call the end of the game.

Let's hope I am wrong or the developers decide to change the algorithm so Asics have no chance at this (too early) stage of Bitcoin.