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Author Topic: Difficulty post ASIC?  (Read 10583 times)
arklan
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June 23, 2012, 07:44:28 AM
 #1

so, how high do we really think difficulty will go before reaching relative stability? for this discussion, lets assume the BFL products, prices and release time frame are accurate. do we see the price increasing quickly by a factor of ten as ASIC's come online? x100? more? you tell me.

personally i have no idea. too many variables for me to guess at. we don't know how many ASIC based units they can manfuacture and ship or in what time frame. we also don't have a reliable way t figure how many will actually sell, as far as i know.

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June 23, 2012, 08:21:30 AM
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If everything is acurate then they will have chip with base potencial of 3.5GH/s @ ~2W. With little "overclocking" it will be 4GH/s @2.5W. 10 of these will be in Single= 40GH/s and 250 in MiniRig=1TH/s. I doubt they design 3 different chips. How many they can realese to wild in one week? 100 for sure. Lets assume 500 per month = 2TH/s. So difficulty will double in summer next year... With cheap electricity GPU miners don't have to worry for at least one year.
Thats of course speculation, that don't include others ASIC manufacturers.
My guess is that price of bitcoin will drop signifficantly becuse they will be "made" cheaply, very cheaply.

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June 23, 2012, 08:38:13 AM
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If everything is acurate then they will have chip with base potencial of 3.5GH/s @ ~2W. With little "overclocking" it will be 4GH/s @2.5W. 10 of these will be in Single= 40GH/s and 250 in MiniRig=1TH/s. I doubt they design 3 different chips. How many they can realese to wild in one week? 100 for sure. Lets assume 500 per month = 2TH/s. So difficulty will double in summer next year... With cheap electricity GPU miners don't have to worry for at least one year.
Thats of course speculation, that don't include others ASIC manufacturers.
My guess is that price of bitcoin will drop signifficantly becuse they will be "made" cheaply, very cheaply.

Here is some real numbers for you if they ship ~13 th/s boxes in a week then the network capacity has doubled right there and if they ship the same the next week the difficulty goes up another 50%. At that point in time gpu miners are just about dead in the water if everyone turns off their gpus and bfl ships another 13 th/s boxes then diff remains the same for that third week. Fourth week same shipment diff goes up by 33%, now actually the diff increase would be in the fifth week by now as the previous two were not enough to make it change in seven days but are enough to do it in the fifth for both combined. And that leaves out the other smaller boxes that will be shipping at the same time and the die hard gpu miners who will hold on.
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June 23, 2012, 09:02:34 AM
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Difficulty dosen't change in 2 week intervals,it changes in 2016 block intervals.So time is irrelavent.It could change in as little as a day or less maybe.

If I'm correct,diff is 131,384 per th/s,so multiply this by your th/s guess............

So ,50 th/s x 131,384 =6569200 difficulty.

and 10 gh/s @ 6569200 diff @ $5 per coin =฿46.55=$232.73 (per month).Heck,this is close to what I make now with 2 gh/s,except the power used will be ALOT less  Grin

Is my math correct Huh

Still not as bad as all may think,don't forget,someone said " terahash is the new gigahash"  Wink


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June 23, 2012, 11:32:56 AM
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i'm kinda expecting that my current ~350 mhash will need ot be replaced with a 3.5 ghash to remain at the same income level a year from now (in bitcoin number, not $, cause i can't begin to guess where THAT will be) so thats, what, a x5 difficulty increase combined with the halving of the reward, or thereabouts.

i just hope this transition, if BFL pulls the hardware off, doesn't destroy profitable mining... afterall, if it's not profitable, the number of people willing to do it out of charity will be incredibly small, which puts the enter bitcoin idea at risk.

then again, if difficulty got that high, people would stop mining, and difficulty would then lower, making mining profitable again... but then they'd turn their rigs back on and...

my head hurts.
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June 23, 2012, 04:53:06 PM
 #6

BFL Trade-In impact on Bitcoin Difficulty
Speculation based on my complete mastery (not)

Time frame of 5 months.  Assuming BFL delivery matches past performance.
Per SC chip output velocity will be greater with at least 10x chips per SC Single.

25 BTC block reward.  It's too close to call whether BFL can get SC delivered prior to reward halving.

BFL Singles sold (estimate)

500

BFL Mini Rigs sold (estimate)

20

Network capacity represented

Singles - ~ 400 GH
Mini Rigs - ~ 500 GH


BFL Trade-In network capacity impact
using a trade-in scenario of 4 Singles (FPGA) converted to 3 SC Singles, 2 Jalapenos (90% trade-in conversion to SC)
Mini Rig.  Straightforward conversion.  1:1 plus capital.

4 Singles trade-in credit - $2,400
Trade-in cash obligation  - $2,400
$4,800

3 SC Singles - $4,500
2 SC Jalapenos - $300
$4,800

1 Mini Rig trade-in credit - $15,000
Trade-in cash obligation - $15,000
$30,000

SC Mini Rig - $30,000


Single capacity loss (FPGA)

360 GH

Mini Rig capacity loss (FPGA)

500 GH


SC Single/Jalapeno capacity gained

14.3 Terahash

SC Mini Rig capacity gained

20 Terahash

Current network capacity (Mini Rigs/Singles not yet delivered and online added)

~ 12.5-14.5 Terahash

Minus Single (FPGA) capacity

~ 12.1-14.1 Terahash

Minus Mini Rig (FPGA) capacity

~ 11.6 - 13.6 Terahash

Minus GPU attrition (Let's say an initial conservative loss of 70% GPU capacity where GPU is assumed to represent 85% of current network capacity)

~ 3.6-5.6 Terahash

Minus non BFL FPGA attrition (Same attrition estimates as GPU)

~ 2.7-4.7 Terahash

(As you can see the advent of ASICs for bitcoin hashing decimates prior technology.  In and of itself is fine.)

Plus BFL Trade-in capacity

SC Singles

~ 17-19 Terahash

SC Mini Rigs

~ 37-39 Terahash


Resulting hashing difficulty increase

~ 181%

Average pre-existing BFL miner capacity increase (using trade-in figures above)

~ 39x increase in capacity

Current vs. BFL SC profitability per GH  (including block reward halving)

 -82%

BFL SC Profitability/ROI (Excluding prior investments.  Exchange rate remains constant.  Block reward - 25 btc.  Excluding all other factors that would lead to difficulty adjustments)

~ 62 days


What we can immediately take away from this (considering only the figures above)

1.  GPU currently represents a large portion of network capacity.  Immediate effects of BFL trade-in activity could be blunted by GPU attrition.  Depends how sensitive to electricity costs.
2.  Miner profitability will be, at a minimum, approximately 82% less profitable per GH.
3.  Once additional BFL SC sales beyond trade-in transactions occurs we are looking at a significant additional difficulty increase.
4.  If one hopes that GPU actors will not participate in BFL SC ROI calculation looks very good.


Now.  Let's see what happens when GPU actors participate in BFL ASIC.

Assumptions (attempting to be conservative with estimates)

1.  40% of former GPU actors (that's 40% of the actors representing 8 Terahash of current capacity - those that suffer attrition) leave mining.  60% remain to rebuild their operations using BFL SC.
2.  These 60% of GPU actors choosing to rebuild operations spend approx. 60% of their initial GPU capital outlays on BFL SC units.


Equating current GPU capacity to capital

60% (of those suffering attrition) of 8 TH.  4.8 TH at ~ $1,200 per GH. $5.7 million. 60% capital re-up - $3.4 million.

BFL SC approximate cost per GH.  $38

Additional network capacity from re-uping former GPU actors

~ 89 Terahash

Total network capacity

~ 127 Terahash

Resulting hashing difficulty increase (from current difficulty)

~ 840%

Current vs. BFL SC profitability per GH  (including block reward halving)

 -94%

BFL SC Profitability/ROI (overall.  Excluding prior investments.)

~ 205 days
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June 24, 2012, 01:52:58 PM
 #7


Additional network capacity from re-uping former GPU actors

~ 89 Terahash

Total network capacity

~ 127 Terahash

Resulting hashing difficulty increase (from current difficulty)

~ 840%


BFL SC Profitability/ROI (overall.  Excluding prior investments.)

~ 205 days

This is a nice analysis.  I think it's a plausible estimate.  Of course everything depends upon the ability of BFL to actually deliver, the appearance of competing solutions, and the rate they are able to sustain production after the initial shipments.  The 205 day breakeven you estimate for ASICs is around the level where rational investors will not purchase more hardware, so at that stage either prices drop or difficulty plateaus.  That market signal is badly muted if people continue paying 4-6 months in advance for hardware though.  There is a serious risk of a difficulty overshoot that kills everyone's ROI (except for BFL of course).

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June 24, 2012, 05:08:17 PM
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This is a nice analysis.  I think it's a plausible estimate.  Of course everything depends upon the ability of BFL to actually deliver, the appearance of competing solutions, and the rate they are able to sustain production after the initial shipments.  The 205 day breakeven you estimate for ASICs is around the level where rational investors will not purchase more hardware, so at that stage either prices drop or difficulty plateaus.  That market signal is badly muted if people continue paying 4-6 months in advance for hardware though.  There is a serious risk of a difficulty overshoot that kills everyone's ROI (except for BFL of course).



Thanks.  Yes, pilling up orders without having visibility to volume could be very bad.

At least we have order numbers to use with estimation.
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June 25, 2012, 03:08:19 AM
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Difficulty will approach infinity and ROI will increase along with it. Eventually it won't be profitable to mine at all, but many people will leave their miners on anyway, just like Bitcoin pre-GPU. The price will increase drastically in a short period of time again eventually drawing the attention of government and institutional interest, but the resulting crash will probably eliminate any profitably of mining.

Eventually, after an extended period of non-profitability, enough miners will lobby their respective governments to force developers to put transaction fees into the clients and prevent other miners from implementing new ASIC development without government approval. The justification for these measures will be that such miners do the community/world a service that they get no pay for, so they should be compensated. Pools will be where many of these new mining operation rules are enforced. Pool operators will regularly be called upon by their respective Congressional and parliamentary leaders and testify on various activities. Some will even be asked to present regular updates to the UN.

Multiple TOR-specific (or otherwise) pools will eventually surpass 51% of the Bitcoin network and pools and developers will be forced by the government to ignore any TOR-related Bitcoin activity, thus forcing a fork of the blockchain. Again, the justification will be that since we can't be certain that a 51% attack isn't happening by the TOR pools, it simply must be happening. False evidence may even be fabricated that such a thing was attempted. The resulting crash in the "legal" blockchain will be stopped by further government intervention, including arrests of anyone providing exchange services of legal to illegal Bitcoin. Anyone who was known to own any significant amount of "legal" Bitcoin will be forced to hand over their wallets for the forked "illegal" blockchain. Many will, on principle, oppose such measures and they will be imprisoned or otherwise eliminated for doing so.

Obviously I'm talking about stuff that will be taking place years or perhaps decades from now, but such is the inevitable nature of man and his government.

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June 25, 2012, 03:51:41 AM
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Difficulty will approach infinity and ROI will increase along with it. Eventually it won't be profitable to mine at all, but many people will leave their miners on anyway, just like Bitcoin pre-GPU. The price will increase drastically in a short period of time again eventually drawing the attention of government and institutional interest, but the resulting crash will probably eliminate any profitably of mining.

Eventually, after an extended period of non-profitability, enough miners will lobby their respective governments to force developers to put transaction fees into the clients and prevent other miners from implementing new ASIC development without government approval. The justification for these measures will be that such miners do the community/world a service that they get no pay for, so they should be compensated. Pools will be where many of these new mining operation rules are enforced. Pool operators will regularly be called upon by their respective Congressional and parliamentary leaders and testify on various activities. Some will even be asked to present regular updates to the UN.

Multiple TOR-specific (or otherwise) pools will eventually surpass 51% of the Bitcoin network and pools and developers will be forced by the government to ignore any TOR-related Bitcoin activity, thus forcing a fork of the blockchain. Again, the justification will be that since we can't be certain that a 51% attack isn't happening by the TOR pools, it simply must be happening. False evidence may even be fabricated that such a thing was attempted. The resulting crash in the "legal" blockchain will be stopped by further government intervention, including arrests of anyone providing exchange services of legal to illegal Bitcoin. Anyone who was known to own any significant amount of "legal" Bitcoin will be forced to hand over their wallets for the forked "illegal" blockchain. Many will, on principle, oppose such measures and they will be imprisoned or otherwise eliminated for doing so.

Obviously I'm talking about stuff that will be taking place years or perhaps decades from now, but such is the inevitable nature of man and his government.

I agree. This is what will probably happen.  Roll Eyes

I see the difficulty going way up, and the mining power being centralized. It won't go to real banks, but it will go to that set of people who have both a lot of capital and a desire to spend it on strange cryptocurrency-related ventures. The kind of people who currently assemble vaguely professional GPU racks will switch to purpose-built hardware, and the kind of people who don't will no longer mine profitably.

The rate of Bitcoin generation will remain exactly the same. So changes in price will reflect how the Bitcoin market feels about this centralization of hashing power. I am predicting a downward move, because very few Bitcoin enthusiasts are also centralization fans.
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June 25, 2012, 04:11:51 AM
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The sky is the limit...If BFL gets only 500 jalapeno orders look for a minimum hash rate increase of 1750Gh/s. Add in 10 rigs at 1000Gh/s and its not a pretty picture for mining difficulty.
CPU's made it an every mans game like tag, no equipment required. GPU's still lets every man with a few bucks to spend on a video card play, think snowboarding, without the gear and the lift ticket you can't play. ASIC's mean everyone who buys a special piece of hardware has a huge advantage over the average guy at home. So, You get your car and they get a helicopter to get to work.

If Joe the plumber cant make a few BTC he is not going to play and that is bad for BTC. Grandma is never going to buy into it then.
Environmentalists will see it as another way we waste natural resources on electricity.
For you conspiracy theory guys.. About $15 Million in BFL's for an "agency" buys over 500Th/s and messes with a $50million crypto-currency  economy.

Changing the entry requirements to serious players only alters this bitcoin experiment in bad way 

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June 25, 2012, 06:52:05 AM
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The sky is the limit...If BFL gets only 500 jalapeno orders look for a minimum hash rate increase of 1750Gh/s. Add in 10 rigs at 1000Gh/s and its not a pretty picture for mining difficulty.
CPU's made it an every mans game like tag, no equipment required. GPU's still lets every man with a few bucks to spend on a video card play, think snowboarding, without the gear and the lift ticket you can't play. ASIC's mean everyone who buys a special piece of hardware has a huge advantage over the average guy at home. So, You get your car and they get a helicopter to get to work.

If Joe the plumber cant make a few BTC he is not going to play and that is bad for BTC. Grandma is never going to buy into it then.
Environmentalists will see it as another way we waste natural resources on electricity.
For you conspiracy theory guys.. About $15 Million in BFL's for an "agency" buys over 500Th/s and messes with a $50million crypto-currency  economy.

Changing the entry requirements to serious players only alters this bitcoin experiment in bad way 


Well said

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June 25, 2012, 07:07:07 AM
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ASIC's are available to EVERYONE,just like a video card you need a few bucks,BUT,you don't need to know how to "build" anything(like a PC).Just buy it,setup the mining software & GO!!!!!!!!!!!!!!!

This IS for the layman & general public.It WILL secure the network like never before.

The sky is falling,wtf is everyone on drugs Huh

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June 25, 2012, 11:38:55 AM
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ASIC's are available to EVERYONE,just like a video card you need a few bucks,BUT,you don't need to know how to "build" anything(like a PC).Just buy it,setup the mining software & GO!!!!!!!!!!!!!!!

This IS for the layman & general public.It WILL secure the network like never before.

The sky is falling,wtf is everyone on drugs Huh

+1 What are people worried about? Suppose SC MR ROI is 200 days. An SC Single is only 9% more in terms of $/Mh, so it would be profitable in 218 days. This requires and investment of $1300, an amount that very many small players in GPU mining found within their reach. The Jalapeno is 42.5% more than the SC MR in terms of $/Mh, so it would be profitable in 285 days. And this is only $150 - well within the reach of very small players who before might have just bought one $150 GPU. Plus it doubles as a cup warmer - woot! GPU can't do that! A lot of people will probably buy Jalapenos just for fun and not care about the ROI. Add to this the fact that these are plug and play mining appliances, so you don't have to spend days reading forum posts to figure out how to get the thing running, and it's obvious that ASIC will make mining *more* accessible to small players. It will take longer for them to get a ROI, but that was true before with GPUs (i.e. efficiency gains for a rig with 5 or 6 GPUs). MR owners owners will have more of an advantage than I've let on here b/c they will do better in short rounds in pools for example, but the same was true before with big players and their huge GPU farms. I've also assumed a constant difficulty, so Singles/Jalapenos might take longer to reach profitability with difficulty increases, but again the same was true before for large vs small players in GPU. It's true that ASICs will make mining so accessible that this might accelerate the decrease in profitability that we've already been seeing for a long time, but it's unclear how much, and this is probably a long way off. At some point we should see an equilibrium where ROI takes a long time, but is nonetheless possible. And for Jalapenos the ROI may take so long that it doesn't look very attractive, but realistically that was true a while ago for someone with one $150 GPU. ASIC increases the hashing power of the network, but so far I haven't seen a solid argument that it will make it less secure or less profitable - if anything it makes it more secure and no more or less profitable than it was before. It's just a change, and a good one IMO.   
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June 25, 2012, 05:20:42 PM
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And for Jalapenos the ROI may take so long that it doesn't look very attractive, but realistically that was true a while ago for someone with one $150 GPU. ASIC increases the hashing power of the network, but so far I haven't seen a solid argument that it will make it less secure or less profitable - if anything it makes it more secure and no more or less profitable than it was before. It's just a change, and a good one IMO.   

I agree, it's good for Bitcoin, but bad for all these miners and people expecting to "get rich quick" by buying. They are going to be looking at VERY long ROI, enough that it is unprofitable for them, now the question is, what are they doing to do because of this? The block reward halving is a threat to them, enough miners making not enough money means they are going to pursue some very ingenuitive things, and an attempted fork of the blockchain into an alt-currency that doesn't have the reward halving isn't entirely out of the realm of possibility here.

We really should be talking about what is going to happen when thousands of miners and GLBSE businesses are faced with the prospect of no profits, because I really do think it's going to result in increased pressure on developers to change the way Bitcoin is done. The real winners here will be anyone that owns Bitcoin, because fork or not, they'll still win.

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June 25, 2012, 05:47:01 PM
 #16

The sky is the limit...If BFL gets only 500 jalapeno orders look for a minimum hash rate increase of 1750Gh/s. Add in 10 rigs at 1000Gh/s and its not a pretty picture for mining difficulty.
CPU's made it an every mans game like tag, no equipment required. GPU's still lets every man with a few bucks to spend on a video card play, think snowboarding, without the gear and the lift ticket you can't play. ASIC's mean everyone who buys a special piece of hardware has a huge advantage over the average guy at home. So, You get your car and they get a helicopter to get to work.

If Joe the plumber cant make a few BTC he is not going to play and that is bad for BTC. Grandma is never going to buy into it then.
Environmentalists will see it as another way we waste natural resources on electricity.
For you conspiracy theory guys.. About $15 Million in BFL's for an "agency" buys over 500Th/s and messes with a $50million crypto-currency  economy.

Changing the entry requirements to serious players only alters this bitcoin experiment in bad way 


Well said


+1   I tried to state this as well but I was flamed for being a GPU having hater.   No one wants to talk about this reality.   At this point it seems to be a forgone conclusion and we will just need to sit back and watch.    The senior developers like Gavin really need to weigh in, I am still surprised we have heard nothing except an off-hand tweet calling the Jally "cool".

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June 25, 2012, 05:53:40 PM
 #17

ASIC's are available to EVERYONE,just like a video card you need a few bucks,BUT,you don't need to know how to "build" anything(like a PC).Just buy it,setup the mining software & GO!!!!!!!!!!!!!!!

This IS for the layman & general public.It WILL secure the network like never before.

The sky is falling,wtf is everyone on drugs Huh


You don't seem to be able to read the above comments and actually address what they are saying.  I am not trying to troll you, but some very valid points have been made and its like everyone seems to ignore it and then say, "ASIC's are available to EVERYONE,just like a video card you need a few bucks,BUT,you don't need to know how to "build" anything(like a PC).Just buy it,setup the mining software & GO!!!!!!!!!!!!!!!".   To make it clear, the argument against ASIC is that is will centralize the network over time because people will quit when it is not profitable AND an agency (gov) could easily come in and purchase enough capacity to pull off the 51% attack (their pockets are much deeper and it would be just a trickle in the bucket for them). 

This is what you should address first before the quote from you I quoted.

Sincerely,
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June 25, 2012, 06:33:28 PM
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OK.. so I have kind of a different take on where difficulty post-asic will wind up....

I have no idea in hard numbers / actual terms... but in relative terms, it will wind up wherever it needs to be for the break-even running costs point to be around 10 cents per Kw/hr..   (this will of course vary based upon the USD/BTC exchange rate)

So.. if your electric costs more than 10 cents, don't even bother getting on the waiting list.. you'll never get your money back.

If you pay between 5 and 10 cents.. your break even (initial purchase + running costs) will be 1 to several years...   Up to your individual confidince in bitcoin if you wanna play.....

If you pay less than 5 cents.. Time to beg/borrow/mortgage-the-farm and buy as many ASICs as you can.  You will be in the select few who will still be able to mint money mining. 

If you happen to live in the arctic circle, and heat with electric.. well then you might wanna consider robbing a few banks....  Just buy the company outright.

And one last thought...  just like the gold rush, ultimately the ones who make the most money will be those that provide the picks & shovels (errr ASICs).. not the miners. 

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June 25, 2012, 07:45:32 PM
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ASIC's are available to EVERYONE,just like a video card you need a few bucks,BUT,you don't need to know how to "build" anything(like a PC).Just buy it,setup the mining software & GO!!!!!!!!!!!!!!!

This IS for the layman & general public.It WILL secure the network like never before.

The sky is falling,wtf is everyone on drugs Huh


You don't seem to be able to read the above comments and actually address what they are saying.  I am not trying to troll you, but some very valid points have been made and its like everyone seems to ignore it and then say, "ASIC's are available to EVERYONE,just like a video card you need a few bucks,BUT,you don't need to know how to "build" anything(like a PC).Just buy it,setup the mining software & GO!!!!!!!!!!!!!!!".   To make it clear, the argument against ASIC is that is will centralize the network over time because people will quit when it is not profitable AND an agency (gov) could easily come in and purchase enough capacity to pull off the 51% attack (their pockets are much deeper and it would be just a trickle in the bucket for them).  

This is what you should address first before the quote from you I quoted.

Sincerely,
D

The way I see it:What's easier to 51% attack,a 10TH network or a 250TH network...............................

I just don't see Bitcoin being centralized at any point,sorry.

BTW,I was hacked on MTgox & was told "call the police & get a report & send it to us",guess what the police said........wtf are BTC?Huh...what do you want us to do?Huh.............I don't think any gov agency will have anything to do with BTC anytime soon,(unless SR gets too big & money laundering gets out of hand)maybe many years down the road,MAYBE.

"If you run into an asshole in the morning, you ran into an asshole. If you run into assholes all day long, you are the asshole."  -Raylan Givens
Got GOXXED ?? https://www.youtube.com/watch?v=9KiqRpPiJAU&feature=youtu.be
"An ASIC being late is perfectly normal, predictable, and legal..."Hashfast & BFL slogan Smiley
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June 25, 2012, 08:18:14 PM
 #20


The way I see it:What's easier to 51% attack,a 10TH network or a 250TH network...............................

I just don't see Bitcoin being centralized at any point,sorry.

BTW,I was hacked on MTgox & was told "call the police & get a report & send it to us",guess what the police said........wtf are BTC?Huh...what do you want us to do?Huh.............I don't think any gov agency will have anything to do with BTC anytime soon,(unless SR gets too big & money laundering gets out of hand)maybe many years down the road,MAYBE.

The local authorities are not an issue and sadly like you experienced, not much help either.  A 12+THash (current avg) network is actually impressive by using off the shelf hardware and some specialized hardware.  

I am unsure the costs at this stage are going to be worth the network speed increase.  We are assuming bigger is better.   Profit Incentive is a very important aspect of the BTC concept.  It is what allows many disassociated parties to collectively work towards a common goal in not a purely socialistic or communistic manner other than the important fact that we all share in the benefits of the network.



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