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Author Topic: Has anyone else thought about the role that GPU makers have in the BTC economy?  (Read 1321 times)
nereer
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May 09, 2011, 06:14:15 PM
 #1

I have just realised a potential hazard for bitcoin.

The big GPU developers could collude with certain miners or traders to profit before others. For example: ATI could release a GPU which is faster if run with certain instructions and then release this code only to select miners. Another (much more likely) example: a new GPU design is created that hashes exponentially faster than the current generation. Traders know that this will cause a price shock, possibly sending bitcoins down in value. Traders dump their holdings and then buy back when the news goes public.

It's almost like the GPU developers end up being like a Federal Reserve which has to be impartial and incremental in their forecasts.

This is not something I had thought about before, but come to think of it, it is a pretty big issue. How can we keep the ATIs and NVidias honest if there is plenty of money to be made and there are no legal repercussions?

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MoonShadow
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May 09, 2011, 06:18:25 PM
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Quiet dude!  You're cuttin' into my game!   Wink

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
FreeMoney
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May 09, 2011, 06:19:47 PM
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example: a new GPU design is created that hashes exponentially faster than the current generation.

Cards have been getting faster long before bitcoin and it will continue, it's not news or a secret.

 
Traders know that this will cause a price shock, possibly sending bitcoins down in value.  
 

It won't. More hashing power means higher difficulty, not more bitcoins (except in the very short term and we're talking <.01% increase compared to the stock now) or lower price.
 

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Gavin Andresen
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May 09, 2011, 06:20:57 PM
 #4

Collusion to gain oversized-profits never succeeds in the long-term, unless there are artificial barriers to entry (like government regulations).

I won't worry until our governments decide to pass the Officially Licensed and Inspected Bitcoin Generating Devices Law.

How often do you get the chance to work on a potentially world-changing project?
silversurfer
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May 09, 2011, 06:23:13 PM
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Some variation of this seems inevitable.  Perhaps it will be a government agency spending resources towards that goal instead of the ATIs or NVIDIAs.  Or a large investment fund.  Someone with vision for sure.

Overall that could be a boon to the bitcoin economy as the coins gain wider acceptance. 

That which is falling should also be pushed.
nereer
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May 09, 2011, 06:34:37 PM
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It won't. More hashing power means higher difficulty, not more bitcoins (except in the very short term and we're talking <.01% increase compared to the stock now) or lower price.

Are you quite sure? Traders on wall st. eagerly wait on the most obscure of financial news to profit from whatever price movement they expect. News from GPU manufacturers would be analogous to the fed declaring an interest rate hike.

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Vandroiy
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May 09, 2011, 06:57:01 PM
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One question is, how do they make money from that?

The operation is expensive. If they use it to mine, well, who cares? Let them, they work for us. If they use it to split and apply fraud, people will know, and Bitcoin value is likely to fall, they'll have the network and clients against them, etc... so many uncertainties. The danger of this attack depends not only on the value in BTC they can get (and that largely depends on value of BTC themselves) compared to the price for an attack, but also how much the BTC from reverted transactions are worth in the mess after the attack. I'm somewhat not afraid of a large company betting a lot of money on such an operation.

There's one more combination: the company doing it for mining, and a hacker or saboteur gaining control of the mining rigs to apply fraud for himself at the expense of the company's investment. That behaves like any large-scale hack on miners and might also happen if there's a security hole in mining software.

In the end, whenever I think of attacks of this kind, I come down the same path... what will the difficulty be, is high processing power good, is it necessary? I think low, no, no. But that's a large dispute in itself.

As long as we're minting, we have the great advantage that people happily provide their processing power. Remember that botnet? It just helped with mining and earned some money. Why would anyone risk loosing everything for a sub-100% attack profit margin when they can get a good bit of free money instead?


Are you quite sure? Traders on wall st. eagerly wait on the most obscure of financial news to profit from whatever price movement they expect. News from GPU manufacturers would be analogous to the fed declaring an interest rate hike.

That's no valid analog. Inflationary currencies are something completely different. The size of the newly minted bitcoins in comparison to the existent coins is shrinking every day, and with it the importance of mining within the market. Unless you can make assumptions on future trading fees -- *cough* again that subject *cough* -- you cannot tell whether miners will play a significant role in the future.

Of course, traders would expect price to rise if a large company plans something like that right now. Bitcoin is still small, surely price would rise if that were to happen. But if something else made the bitcoin market grow to a bigger size beforehand, relatively speaking, such an announcement would make only for a small change in price. The fed affects all dollars, miners just the corner they have access to. A very big difference.
MoonShadow
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May 09, 2011, 06:59:47 PM
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It won't. More hashing power means higher difficulty, not more bitcoins (except in the very short term and we're talking <.01% increase compared to the stock now) or lower price.

Are you quite sure?

We are quite sure that more hashing does not lead to more bitcoins in the long run.  We are also quite sure that the market is a self balancing thing, and if there is a profit to be made on hardware arbitrage then someone is going to try it.  I doubt that it would ever be significant enough of a problem to really impact the Bitcoin economy once it is big enough that hardware manufactures actual are tweaking their products for hashing performance.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
nereer
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May 09, 2011, 07:28:18 PM
 #9

Quote
We are quite sure that more hashing does not lead to more bitcoins in the long run.

Sure, I understood that. I don't think it's relevant.

There always has to be an incentive to mine, so unless bitcoin fundamentally breaks then mining will still be important/profitable even past 20 million coins. I think you, and Vandroiy have convinced me that the chances of the 1st outcome are unlikely but the second:

Those who hear the GPU manf plans before the public have an important advantage. you could see a group build up around the manufacturers that have access to newer technologies and trends than others. this is an unfair advantage and I don't see it being controlled unless there is some kind of authority (agh!) to control the dissemination of information and technology.

If you agree that Bitcoin needs a dedicated Q & A site please sign up for the Bitcoin StackExchange site!
MoonShadow
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May 09, 2011, 08:57:33 PM
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Those who hear the GPU manf plans before the public have an important advantage. you could see a group build up around the manufacturers that have access to newer technologies and trends than others. this is an unfair advantage and I don't see it being controlled unless there is some kind of authority (agh!) to control the dissemination of information and technology.

The world is full of unfair advantages.  This isn't a Bitcoin issue.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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