It's about time to turn off PoW mining

[kokojie]

My reasoning:
* Each transaction in Bitcoin costs hundreds of time more than a credit card transaction to process. (currently this is subsidized by inflow of capital into the eco-system, so users haven't felt the full effect).

* Hundreds of millions of dollars are paid to mining hardware vendor and electricity company. This will continue year after year, and only will grow more and more as Bitcoin grows bigger. The Bitcoin community is being bled dry. The price action this year shows that even with massive amount of big name adoption and good news, the inflow of capital is having trouble to keep up with the insane surge of mining cost.

* There are better ways to secure the network, for example Bitshares's DPoS system or ETH's upcoming PoS system. Money is re-invested into the eco-system and community, instead of paid to hardware vendor and electric company.

[xeroc]

Btw, you can hold BTC in Bitshares 

LOL

yhea .. but you cannot just switch of mining in bitcoin.
1) the people heavily invested in miners
2) you need a very well tested alternative blockchain security scheme
3) you need to switch over all merchants, exchanges and users AT ONCE with an hardfork

I am not so sure if the bitcoin community is up to that radical change!

[Walter Rothbard]

The Bitcoin community is being bled dry.

And laughing all the way to the bank!

[BrianM]

yes shut it all down 

[seriouscoin]

My reasoning:
* Each transaction in Bitcoin costs hundreds of time more than a credit card transaction to process. (currently this is subsidized by inflow of capital into the eco-system, so users haven't felt the full effect).

* Hundreds of millions of dollars are paid to mining hardware vendor and electricity company. This will continue year after year, and only will grow more and more as Bitcoin grows bigger. The Bitcoin community is being bled dry. The price action this year shows that even with massive amount of big name adoption and good news, the inflow of capital is having trouble to keep up with the insane surge of mining cost.

* There are better ways to secure the network, for example Bitshares's DPoS system. Money is re-invested into the eco-system and community, instead of paid to hardware vendor and electric company.

* If Bitcoin doesn't drop PoW and embrace the much more efficient DPoS system. I can see Bitshares eventually overtake Bitcoin. Simply because Bitcoin eco-system is bleeding hundreds of millions of dollars each year, and the DPoS re-invests the money and grows the eco-system/community each year.

Btw, you can hold BTC in Bitshares 

I stopped right there, said to myself, another idiot telling the world about it.


Only dumbfck mix up tx processing with bitcoin supply.

[SgtSpike]

My reasoning:
* Each transaction in Bitcoin costs hundreds of time more than a credit card transaction to process. (currently this is subsidized by inflow of capital into the eco-system, so users haven't felt the full effect).

* Hundreds of millions of dollars are paid to mining hardware vendor and electricity company. This will continue year after year, and only will grow more and more as Bitcoin grows bigger. The Bitcoin community is being bled dry. The price action this year shows that even with massive amount of big name adoption and good news, the inflow of capital is having trouble to keep up with the insane surge of mining cost.

* There are better ways to secure the network, for example Bitshares's DPoS system. Money is re-invested into the eco-system and community, instead of paid to hardware vendor and electric company.

* If Bitcoin doesn't drop PoW and embrace the much more efficient DPoS system. I can see Bitshares eventually overtake Bitcoin. Simply because Bitcoin eco-system is bleeding hundreds of millions of dollars each year, and the DPoS re-invests the money and grows the eco-system/community each year.

Btw, you can hold BTC in Bitshares 

1) I'm assuming you're including the block reward as part of the transaction "cost".  That's not a valid comparison, since that is money injected into the network.  Even if it was, upon reduction to negligibility of the block reward, that number will drop dramatically.  The free market will eventually settle on what makes a fair transaction cost is in absence of a block reward.

2) So hundreds of millions of dollars is better paid to people who hoard Bitcoins?  Won't PoS this only increase the problem of hoarding?  And honestly, I don't care if miners have to sell 100% of their coins to make a buck.  So be it - the market will settle on an appropriate price for Bitcoin with the increase of Bitcoin supply on the exchanges, and that will be that.  There's no such thing as "The Bitcoin community is being bled dry", as you would like to suggest.  The price is being held down, perhaps, but is that the only stick with which we should measure success?  To me, it is an excellent thing, because a lower price means a better distribution of Bitcoins among people.  More people holding Bitcoin = better long term success of Bitcoin.  PoS would encourage fewer people to hold Bitcoin (because fewer people would want to sell) = lower long term success.

3) I disagree, for the reasons listed in #2.

4) If Bitshares proves itself to be a better system, then so be it.  The free market will decide.  I don't see any reason to fork Bitcoin away from what it is not to match another system that already exists.  Let each system with its unique variables stand on its own, and we'll see which is the better system simply by watching what the free market decides.

[kokojie]

1) I'm assuming you're including the block reward as part of the transaction "cost".  That's not a valid comparison, since that is money injected into the network.  Even if it was, upon reduction to negligibility of the block reward, that number will drop dramatically.  The free market will eventually settle on what makes a fair transaction cost is in absence of a block reward.

Yes, when block reward is gone, that number may drop dramatically, but what then? what about 51% attack? Right now a PoW 51% attack on Bitcoin would cost hundreds of million dollars too, if the block reward is gone, then transaction fees better make up for it, otherwise a 51% attack would become very cheap.

Now if the transaction fee does make up for the block reward, then we are still back to to the original problem, hundreds of millions of dollars bleeding from the community each year, and paid to hardware vendor/electric company.

This is the paradox of PoW, you can't make it too cheap for 51% attack, but when you make it expensive, you bleed money from the community and eco-system.

So my point is, currently the block reward is what's keeping Bitcoin security safe against a 51% attack, that's why it should be included in the cost of transaction.

[kokojie]

The Bitcoin community is being bled dry.

And laughing all the way to the bank!

Yes, for speculators that held from years ago, they are laughing all the way to the bank, including myself, I have made very large profits from buying Bitcoin over 3 years ago.

But for Bitcoin eco-system, the current PoW mining situation is toxic for the survival of Bitcoin eco-system.

[SgtSpike]

1) I'm assuming you're including the block reward as part of the transaction "cost".  That's not a valid comparison, since that is money injected into the network.  Even if it was, upon reduction to negligibility of the block reward, that number will drop dramatically.  The free market will eventually settle on what makes a fair transaction cost is in absence of a block reward.

Yes, when block reward is gone, that number may drop dramatically, but what then? what about 51% attack? Right now a PoW 51% attack on Bitcoin would cost hundreds of million dollars too, if the block reward is gone, then transaction fees better make up for it, otherwise a 51% attack would become very cheap.

Now if the transaction fee does make up for the block reward, then we are still back to to the original problem, hundreds of millions of dollars bleeding from the community each year, and paid to hardware vendor/electric company.

You're too short-sighted.  If Bitcoin is still around by the time the block reward is insignificant to miners, then it's going to be worth a lot more than it is now, and a lot more transactions are going to be pushed through it than are pushed now, upping the reward per block.  Transaction fees aside, think about it - the price only has to DOUBLE in 4 years to maintain the same value of reward to miners.  In the last 4 years, the price has gone from $0.0025/bitcoin to $500/bitcoin.  That's 200,000 times the current value. Now certainly, the value of Bitcoin cannot continue rising indefinitely, but one thing is for certain: if Bitcoin is successful, then block rewards will continue sustaining mining for decades to come.  If Bitcoin ISN'T worth a lot more by the time the block reward is insignificant, then the Bitcoin experiment effectively failed, because the current value isn't enough for a significant number of people to be using it for transacting and storing value.

And you've still failed to convince me how money is "bleeding" from the community.  What does that even mean?  What do you expect miners would be doing with their money if mining wasn't available?

Finally, what's the correct level of security that Bitcoin needs?  A 51% attack would be detrimental, but it wouldn't mean the end of Bitcoin.  There are ways to counter and mitigate it, and the worst that would happen is a suspension of transactions until the attack is resolved.  So, what's to say that $10M of attack prevention isn't enough?  Currently it would cost somewhere in the hundreds of millions, but is that really necessary?  I'd be interested to see some analysis in that regard.

[redsn0w]

And if the bitcoin change a Po* system? Or do a fork ?  Is it a stupid idea .. or  it can be possible  ?  Let me know  .

[kokojie]

1) I'm assuming you're including the block reward as part of the transaction "cost".  That's not a valid comparison, since that is money injected into the network.  Even if it was, upon reduction to negligibility of the block reward, that number will drop dramatically.  The free market will eventually settle on what makes a fair transaction cost is in absence of a block reward.

Yes, when block reward is gone, that number may drop dramatically, but what then? what about 51% attack? Right now a PoW 51% attack on Bitcoin would cost hundreds of million dollars too, if the block reward is gone, then transaction fees better make up for it, otherwise a 51% attack would become very cheap.

Now if the transaction fee does make up for the block reward, then we are still back to to the original problem, hundreds of millions of dollars bleeding from the community each year, and paid to hardware vendor/electric company.

You're too short-sighted.  If Bitcoin is still around by the time the block reward is insignificant to miners, then it's going to be worth a lot more than it is now, and a lot more transactions are going to be pushed through it than are pushed now, upping the reward per block.  Transaction fees aside, think about it - the price only has to DOUBLE in 4 years to maintain the same value of reward to miners.  In the last 4 years, the price has gone from $0.0025/bitcoin to $500/bitcoin.  That's 200,000 times the current value. Now certainly, the value of Bitcoin cannot continue rising indefinitely, but one thing is for certain: if Bitcoin is successful, then block rewards will continue sustaining mining for decades to come.  If Bitcoin ISN'T worth a lot more by the time the block reward is insignificant, then the Bitcoin experiment effectively failed, because the current value isn't enough for a significant number of people to be using it for transacting and storing value.

And you've still failed to convince me how money is "bleeding" from the community.  What does that even mean?  What do you expect miners would be doing with their money if mining wasn't available?

Finally, what's the correct level of security that Bitcoin needs?  A 51% attack would be detrimental, but it wouldn't mean the end of Bitcoin.  There are ways to counter and mitigate it, and the worst that would happen is a suspension of transactions until the attack is resolved.  So, what's to say that $10M of attack prevention isn't enough?  Currently it would cost somewhere in the hundreds of millions, but is that really necessary?  I'd be interested to see some analysis in that regard.

If Bitcoin eco-system is to become that big, say 1 Trillion, then the mining cost MUST also rise to match it, otherwise the incentive to 51% attack the network is too high, since it would be cheap to do so.

Why money is "bleeding" from the community? I thought it's pretty clear. Someone is paying for the hardware and electricity, correct? on the surface, the miners are paying. But then the miners gets paid by block reward, which they probably immediately sell to cover their cost. Those who buys these newly minted Bitcoin are paying. The existing Bitcoin holders and eco-system did not gain any value from this process.

But with a DPoS system, since there's no need to pay hardware vendor and electric company, the money is used to directly purchase the currency, and the existing currency holders and eco-system all benefit from this inflow of money.

[SgtSpike]

1) I'm assuming you're including the block reward as part of the transaction "cost".  That's not a valid comparison, since that is money injected into the network.  Even if it was, upon reduction to negligibility of the block reward, that number will drop dramatically.  The free market will eventually settle on what makes a fair transaction cost is in absence of a block reward.

Yes, when block reward is gone, that number may drop dramatically, but what then? what about 51% attack? Right now a PoW 51% attack on Bitcoin would cost hundreds of million dollars too, if the block reward is gone, then transaction fees better make up for it, otherwise a 51% attack would become very cheap.

Now if the transaction fee does make up for the block reward, then we are still back to to the original problem, hundreds of millions of dollars bleeding from the community each year, and paid to hardware vendor/electric company.

You're too short-sighted.  If Bitcoin is still around by the time the block reward is insignificant to miners, then it's going to be worth a lot more than it is now, and a lot more transactions are going to be pushed through it than are pushed now, upping the reward per block.  Transaction fees aside, think about it - the price only has to DOUBLE in 4 years to maintain the same value of reward to miners.  In the last 4 years, the price has gone from $0.0025/bitcoin to $500/bitcoin.  That's 200,000 times the current value. Now certainly, the value of Bitcoin cannot continue rising indefinitely, but one thing is for certain: if Bitcoin is successful, then block rewards will continue sustaining mining for decades to come.  If Bitcoin ISN'T worth a lot more by the time the block reward is insignificant, then the Bitcoin experiment effectively failed, because the current value isn't enough for a significant number of people to be using it for transacting and storing value.

And you've still failed to convince me how money is "bleeding" from the community.  What does that even mean?  What do you expect miners would be doing with their money if mining wasn't available?

Finally, what's the correct level of security that Bitcoin needs?  A 51% attack would be detrimental, but it wouldn't mean the end of Bitcoin.  There are ways to counter and mitigate it, and the worst that would happen is a suspension of transactions until the attack is resolved.  So, what's to say that $10M of attack prevention isn't enough?  Currently it would cost somewhere in the hundreds of millions, but is that really necessary?  I'd be interested to see some analysis in that regard.

If Bitcoin eco-system is to become that big, say 1 Trillion, then the mining cost MUST also rise to match it, otherwise the incentive to 51% attack the network is too high, since it would be cheap to do so.

Why money is "bleeding" from the community? I thought it's pretty clear. Someone is paying for the hardware and electricity, correct? on the surface, the miners are paying. But then the miners gets paid by block reward, which they probably immediately sell to cover their cost. Those who buys these newly minted Bitcoin are paying. The existing Bitcoin holders and eco-system did not gain any value from this process.

But with a DPoS system, since there's no need to pay hardware vendor and electric company, they money is used to directly purchase the currency, and the existing currency holders and eco-system all benefit from this inflow of money.

What exactly is the incentive to 51% attack the network?  What could someone hope to accomplish financially with a 51% attack?  Because I tried to figure out a scenario where someone could make hundreds of millions of dollars with a 51% attack, and have thus far failed to see one.  Please enlighten me.

Ok, the bleeding money makes sense now.  You consider the value not being added for additional persons investing in Bitcoin to be bleeding.  I can agree with that.  I also agree that PoS would increase the value of current holdings vs the reward essentially going towards paying for mining.  That said, I don't think PoS is a valid long-term solution, simply because it encourages too much holding/hoarding.  Rewarding the holders will only serve to increase the rate at which holders hold.  But, time will tell.  If PoS is truly a better solution, then BitShares or a comparable will eventually emerge as the winner of the cryptocurrency race.

[kokojie]

What exactly is the incentive to 51% attack the network?  What could someone hope to accomplish financially with a 51% attack?  Because I tried to figure out a scenario where someone could make hundreds of millions of dollars with a 51% attack, and have thus far failed to see one.  Please enlighten me.

Ok, the bleeding money makes sense now.  You consider the value not being added for additional persons investing in Bitcoin to be bleeding.  I can agree with that.  I also agree that PoS would increase the value of current holdings vs the reward essentially going towards paying for mining.  That said, I don't think PoS is a valid long-term solution, simply because it encourages too much holding/hoarding.  Rewarding the holders will only serve to increase the rate at which holders hold.  But, time will tell.  If PoS is truly a better solution, then BitShares or a comparable will eventually emerge as the winner of the cryptocurrency race.

I think you could think of it this way. If it cost $1B to attack/cause huge trouble to a country like say Slovenia with no repercussion, no country in the world would do it, because it's not worth it. But now if I tell you if you spend $1B, and you could attack/cause huge trouble and loss for the United States of America (and still with no repercussion), I would bet at least several dozen countries in this world will do it in a heart beat. My point is, as you become large and powerful, then the cost to attack you MUST also rise, it can not be cheap. Otherwise, someone WILL attack Bitcoin, just so he could say I did it, and if Bitcoin does get that big, I think the existing established banks/creditcard/governments have PLENTY of incentive to do just that.

Now the advantage of a PoS system, is that it's naturally resistant against a 51% attack. To attack a PoS eco-system, you must have resources several times the value of the eco-system, otherwise, you WILL fail. On the other hand, to attack a PoW system, you just have to buy enough hardware to overwhelm the current miners, which currently cost about only 10% of Bitcoin eco-system value. This is why there has been exact ZERO successful 51% attack on any PoS alt coin, while plenty of PoW alt coin has been attacked to death.

[SgtSpike]

What exactly is the incentive to 51% attack the network?  What could someone hope to accomplish financially with a 51% attack?  Because I tried to figure out a scenario where someone could make hundreds of millions of dollars with a 51% attack, and have thus far failed to see one.  Please enlighten me.

Ok, the bleeding money makes sense now.  You consider the value not being added for additional persons investing in Bitcoin to be bleeding.  I can agree with that.  I also agree that PoS would increase the value of current holdings vs the reward essentially going towards paying for mining.  That said, I don't think PoS is a valid long-term solution, simply because it encourages too much holding/hoarding.  Rewarding the holders will only serve to increase the rate at which holders hold.  But, time will tell.  If PoS is truly a better solution, then BitShares or a comparable will eventually emerge as the winner of the cryptocurrency race.

I think you could think of it this way. If it cost $1B to attack/cause huge trouble to a country like say Slovenia with no repercussion, no country in the world would do it, because it's not worth it. But now if I tell you if you spend $1B, and you could attack/cause huge trouble and loss for the United States of America (and still with no repercussion), I would bet at least several dozen countries in this world will do it in a heart beat. My point is, as you become large and powerful, then the cost to attack you MUST also rise, it can not be cheap. Otherwise, someone WILL attack Bitcoin, just so he could say I did it, and if Bitcoin does get that big, I think the existing established banks/creditcard/governments have PLENTY of incentive to do just that.

Now the advantage of a PoS system, is that it's naturally resistant against a 51% attack. To attack a PoS eco-system, you must have resources several times the value of the eco-system, otherwise, you WILL fail. On the other hand, to attack a PoW system, you just have to buy enough hardware to overwhelm the current miners, which currently cost about only 10% of Bitcoin eco-system value. This is why there has been exact ZERO successful 51% attack on any PoS alt coin, while plenty of PoW alt coin has been attacked to death.

Fair points, and well explained!

[HELP.org]

Finally, what's the correct level of security that Bitcoin needs?  A 51% attack would be detrimental, but it wouldn't mean the end of Bitcoin.  There are ways to counter and mitigate it, and the worst that would happen is a suspension of transactions until the attack is resolved.  So, what's to say that $10M of attack prevention isn't enough?  Currently it would cost somewhere in the hundreds of millions, but is that really necessary?  I'd be interested to see some analysis in that regard.

A 51% attack is not just a mining pool getting 51%.  If some entity got 51% and mined secretly all past transactions could be wiped out from the block they started mining.  It could mean weeks or months of transactions could be wiped out.  If someone wiped out the last 6 months of Bitcoin transactions I think that would kill it.  The cost analysis that I have seen calculated a price based on buying equipment from vendors.  A 51% attack like this would mean the entity would make their own hardware.  If they had control of places that manufacture chips that would make a big difference with the cost.  I don't think it would happen but it is not completely out of the question.

[Beliathon]

The Bitcoin community is being bled dry.

And laughing all the way to the bank!

Correction... we ARE our own banks.

I don't feel like I am being bled dry. But then again, I went all in before China.

[cambda]

Finally, what's the correct level of security that Bitcoin needs?  A 51% attack would be detrimental, but it wouldn't mean the end of Bitcoin.  There are ways to counter and mitigate it, and the worst that would happen is a suspension of transactions until the attack is resolved.  So, what's to say that $10M of attack prevention isn't enough?  Currently it would cost somewhere in the hundreds of millions, but is that really necessary?  I'd be interested to see some analysis in that regard.

A 51% attack is not just a mining pool getting 51%.  If some entity got 51% and mined secretly all past transactions could be wiped out from the block they started mining.  It could mean weeks or months of transactions could be wiped out.  If someone wiped out the last 6 months of Bitcoin transactions I think that would kill it.  The cost analysis that I have seen calculated a price based on buying equipment from vendors.  A 51% attack like this would mean the entity would make their own hardware.  If they had control of places that manufacture chips that would make a big difference with the cost.  I don't think it would happen but it is not completely out of the question.

Satoshi client have checkpoints, (9.3.1rc at block 295.000 I guess) so you cannot publish 6 months old longest blockchain, most Bitcoin clients will simply reject it.

[minerpumpkin]

It's a self-regulating process actually. Of course we don't need 'all those miners running their giant Chinese farms' Bitcoin would work just fine with just 10 USB Block Erupters mining happily. Yes, it's true the only thing that PoW is good for is being a limiting factor. I doubt we can change the algorithm all at once, though...

[HELP.org]

Finally, what's the correct level of security that Bitcoin needs?  A 51% attack would be detrimental, but it wouldn't mean the end of Bitcoin.  There are ways to counter and mitigate it, and the worst that would happen is a suspension of transactions until the attack is resolved.  So, what's to say that $10M of attack prevention isn't enough?  Currently it would cost somewhere in the hundreds of millions, but is that really necessary?  I'd be interested to see some analysis in that regard.

A 51% attack is not just a mining pool getting 51%.  If some entity got 51% and mined secretly all past transactions could be wiped out from the block they started mining.  It could mean weeks or months of transactions could be wiped out.  If someone wiped out the last 6 months of Bitcoin transactions I think that would kill it.  The cost analysis that I have seen calculated a price based on buying equipment from vendors.  A 51% attack like this would mean the entity would make their own hardware.  If they had control of places that manufacture chips that would make a big difference with the cost.  I don't think it would happen but it is not completely out of the question.

Satoshi client have checkpoints, (9.3.1rc at block 295.000 I guess) so you cannot publish 6 months old longest blockchain, most Bitcoin clients will simply reject it.

Do you have more info on this?  Are checkpoints made every so often?  If someone had a 51% starting today how long could they go before a checkpoint?

[master-P]

Finally, what's the correct level of security that Bitcoin needs?  A 51% attack would be detrimental, but it wouldn't mean the end of Bitcoin.  There are ways to counter and mitigate it, and the worst that would happen is a suspension of transactions until the attack is resolved.  So, what's to say that $10M of attack prevention isn't enough?  Currently it would cost somewhere in the hundreds of millions, but is that really necessary?  I'd be interested to see some analysis in that regard.

A 51% attack is not just a mining pool getting 51%.  If some entity got 51% and mined secretly all past transactions could be wiped out from the block they started mining.  It could mean weeks or months of transactions could be wiped out.  If someone wiped out the last 6 months of Bitcoin transactions I think that would kill it.  The cost analysis that I have seen calculated a price based on buying equipment from vendors.  A 51% attack like this would mean the entity would make their own hardware.  If they had control of places that manufacture chips that would make a big difference with the cost.  I don't think it would happen but it is not completely out of the question.

The key to this scenario is that they would need to activity attack the network by secretly mining and then reverse the past transactions (or perform some other attack). If they simply have 51% of the hashpower and do not launch an attack then nothing would happen.

You give a good example of how it would be cheaper for someone to launch an attack, but you fail to mention the fact that if the attack was not launched then the would-be attacker could use their equipment to mine legitimately and earn a lot of bitcoin.