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[tvbcof]

Bitcoin is economically broken at the fundamental level with respect to support reward for POW.  This because it will always approach net zero no matter what.

PoW is economically broken because the margins tend towards zero? Seriously?

Yes.  It means that to attack Bitcoin one must only make the reward higher to do so.  And if the reward for supporting Bitcoin tends toward zero the cost of doing so is fairly minimal.

This in the best of worlds when the valuations are fairly steady (or their derivatives are.)  In the real world we can expect a fair amount of sha256 being idle for significant amounts of time due to mining being a money loser.  With luck it would shift to supporting the next scam-coin but sooner or later a sha256 scam-coin will realize that their best chance is to nuke Bitcoin and try to siphen off some of the userbase.  In fact here's an idea for scam-coin designers that I just thought of:  'merge-demining'.  That is, mine the scam-coin and fuck with Bitcoin at the same time.

In reality, as I mentioned, someone wishing to attack Bitcoin by better rewarding the failing miners will probably find themselves up against some money who wishes to exploit other aspects of the Bitcoin network which they alone can monetize.  That's the same thing as Bitcoin dieing to me, but probably not to everyone.  Many sheep would probably welcome it.  Probably they'll get 'cash back' for using Bitcoin...just need to authenticate through the right framework...

Sidechains base their value on (being) Bitcoin so they have every reason to keep it healthy.  They actually need no real POW (or other such device) because the backing role is taken by Bitcoin and the peg...as long as Bitcoin remains solid.  They do need to interface with Bitcoin and that is done through mining which is needed to exercise their peg (maybe?)  This is how I visualize sidechains at least, but I'm not the designer of them.  I do see such a thing as the best hope for Bitcoin in a form I appreciate though.

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[tvbcof]

No, it's not. But payout to miners are way too high in this very first example here. Miners rule the market and shortsellers riding it down - with no end to it.
It's not the POW, it's the high rewards. But totally OT now.
...

I agree with that.  Ideally the reward to miners would be such that it did not make economic sense to form specialized high capital investment entities if that were somehow possible.  Even more would be that other functions of the network (transfer nodes and what could one day be something akin to what TOR calls exit nodes) were rewarded so that there would be a lot of them and they were diverse.

These ships have sailed however.  We've got what we've got.

[cbeast]

I wasn't the one to start using ad hominem.

There are actually two distinct constructs at play here, they are not equivalent. Consider:

Me.

Your argument makes no sense, you defend central planning, and therefore you're a socialist fuckwit.

You.

You're this, and that, also lalalalala I can't hear all the sense you make because it goes against my conviction of being entitled to free stuff.

An empty post filled with a strawman "you defend central planning", an ad hominem "socialist fuckwit", and another strawman "being entitled". Bravo!

[jonald_fyookball]

Bitcoin is economically broken at the fundamental level with respect to support reward for POW.  This because it will always approach net zero no matter what.

PoW is economically broken because the margins tend towards zero? Seriously?

Yes.  It means that to attack Bitcoin one must only make the reward higher to do so.  And if the reward for supporting Bitcoin tends toward zero the cost of doing so is fairly minimal.

Not exactly... because even if the net profit tends toward slightly above breakeven, the gross rewards still ensure a high network hashrate which cannot be attacked without suffering major financial losses.
Still makes more sense to participate in the network (or not at all) than to attack it.

[tvbcof]

Bitcoin is economically broken at the fundamental level with respect to support reward for POW.  This because it will always approach net zero no matter what.

PoW is economically broken because the margins tend towards zero? Seriously?

Yes.  It means that to attack Bitcoin one must only make the reward higher to do so.  And if the reward for supporting Bitcoin tends toward zero the cost of doing so is fairly minimal.

Not exactly... because even if the net profit tends toward slightly above breakeven, the gross rewards still ensure a high network hashrate which cannot be attacked without suffering major financial losses.
Still makes more sense to participate in the network (or not at all) than to attack it.

Several points:

 - With any significant fluctuation in value we should expect a fair percentage of mining to be below net zero.

 - I would not rule out a 'major financial loss' being acceptable to some who could be threatened by competition from a successful Bitcoin.

 - Being able to accurately predict the future (say, because you are going to implement an attack and it will probably be successful in achieving a result) could offer ways to realize a significant reward which would offset some costs.

 - How much sense it makes to power-down vs. to participate in an attack depends a great deal on whether you have gear which might be useful in the future or is likely to be at the end of it's useful life.  This depends on, among other things, the technological landscape, the likely future of Bitcoin, and the jurisdictional issues on one's locale.

All that said, you well could be right.  Your gross v. net observations are good ones.  I would not bet that my concerns are terribly valid.  This is theoretical hand-waving mostly, and I always like to play devil's advocate.

---

I would point out that a system collapse is not the only kind of attack and probably not the most likely one.  I would consider tainting to be very much an attack and probably terminal for the system.  Certainly it would be terminal for my interest in it (though my coins and transactions are clean so I would just register and liquidate at the first whiff of trouble here...and it is the thing I watch for most closely.)  Here is something I could easily see happening:

 - govt works with a partner to do some sort of licence and registration service.

 - partner runs infrastructure to efficiently communicate {color}-listed transactions, authorize clean block formations, or whatever implementation works.  (I've wondered aloud whether the new Inverse Bloom Filter Lookup Tables could help here.)

 - govt makes regulations that all miners must comply at the risk of confiscation of gear and/or other mild punishments.  Or perhaps just a tax break.

 - govt coordinates with other governments to follow more or less the same pattern and use the same tech partner(s).  The only business model I could see for 'Coin Validation' (who seems to be at least playing dead) was this.

Really the biggest argument I see against something like that would be that A) Bitcoin in it's present form is really pretty useful as a honeypot, and B) attacks of this nature would just provoke development of a more hardened system.

The same weakness in terms of minimal profits I outlined above exists here, however, and just as much of a factor.  It would be more easy for a miner to capitulate (rather than shut down) because a fair fraction of the population (and even plenty of Bitcoiners perhaps!) would see it as a good thing.  Gotta do something about all those evil terrorists, druggies, pedos, etc you know.

[cbeast]

Bitcoin is economically broken at the fundamental level with respect to support reward for POW.  This because it will always approach net zero no matter what.

PoW is economically broken because the margins tend towards zero? Seriously?

Yes.  It means that to attack Bitcoin one must only make the reward higher to do so.  And if the reward for supporting Bitcoin tends toward zero the cost of doing so is fairly minimal.

Not exactly... because even if the net profit tends toward slightly above breakeven, the gross rewards still ensure a high network hashrate which cannot be attacked without suffering major financial losses.
Still makes more sense to participate in the network (or not at all) than to attack it.

Several points:

 - With any significant fluctuation in value we should expect a fair percentage of mining to be below net zero.

 - I would not rule out a 'major financial loss' being acceptable to some who could be threatened by competition from a successful Bitcoin.

 - Being able to accurately predict the future (say, because you are going to implement an attack and it will probably be successful in achieving a result) could offer ways to realize a significant reward which would offset some costs.

 - How much sense it makes to power-down vs. to participate in an attack depends a great deal on whether you have gear which might be useful in the future or is likely to be at the end of it's useful life.  This depends on, among other things, the technological landscape, the likely future of Bitcoin, and the jurisdictional issues on one's locale.

All that said, you well could be right.  Your gross v. net observations are good ones.  I would not bet that my concerns are terribly valid.  This is theoretical hand-waving mostly, and I always like to play devil's advocate.

---

I would point out that a system collapse is not the only kind of attack and probably not the most likely one.  I would consider tainting to be very much an attack and probably terminal for the system.  Certainly it would be terminal for my interest in it (though my coins and transactions are clean so I would just register and liquidate at the first whiff of trouble here...and it is the thing I watch for most closely.)  Here is something I could easily see happening:

 - govt works with a partner to do some sort of licence and registration service.

 - partner runs infrastructure to efficiently communicate {color}-listed transactions, authorize clean block formations, or whatever implementation works.  (I've wondered aloud whether the new Inverse Bloom Filter Lookup Tables could help here.)

 - govt makes regulations that all miners must comply at the risk of confiscation of gear and/or other mild punishments.  Or perhaps just a tax break.

 - govt coordinates with other governments to follow more or less the same pattern and use the same tech partner(s).  The only business model I could see for 'Coin Validation' (who seems to be at least playing dead) was this.

Really the biggest argument I see against something like that would be that A) Bitcoin in it's present form is really pretty useful as a honeypot, and B) attacks of this nature would just provoke development of a more hardened system.

The same weakness in terms of minimal profits I outlined above exists here, however, and just as much of a factor.  It would be more easy for a miner to capitulate (rather than shut down) because a fair fraction of the population (and even plenty of Bitcoiners perhaps!) would see it as a good thing.  Gotta do something about all those evil terrorists, druggies, pedos, etc you know.

Since the only point in question was a matter of profits, I was curious why you decided to rant further in this thread. Then I remembered having asked a question about your feelings about PoW mining. Of course I won't quote the entire thread here, but you answered it nicely here.

Certainly I'd want fewer unknowns and more knows before I was very comfortable with huge fraction of my net worth riding on Bitcoin.

What variables would you like to know to make you cofortable?

[tvbcof]

  - snip: quote above where I specifically addressed profits several times since they are critical

Since the only point in question was a matter of profits, I was curious why you decided to rant further in this thread. Then I remembered having asked a question about your feelings about PoW mining. Of course I won't quote the entire thread here, but you answered it nicely here.

 - snip: incomplete quote from a different thread which is pretty unrelated.

I'm struggling mightily to see any point to (or sense in) your post here.

I also don't remember your asking my feelings about PoW.  In a nutshell I like proof-of-work fine, but like anything it needs to be implemented fairly carefully to optimize it's usefulness.

PoS is a different matter (to the limited extent that I understand it since I've not studied it at all.)  I see little benefit in a monetary system to having the ability to make the rules by virtue of having the most money.  That's pretty similar to and no improvement over our current fiat systems IMHO and it's brought us a lot of troubles.  There are probably some corner cases (besides scam-coins) where it makes sense economically but I cannot think of any off-hand.

[cbeast]

In a nutshell I like proof-of-work fine, but like anything it needs to be implemented fairly carefully to optimize it's usefulness.

Here you go again making very vague statements. You did answer my question from the other thread and in that other thread you won't pin down a clear answer either. Don't change the subject with non-PoW social engineering schemes.

but like anything it needs to be implemented fairly

It was announced in a white paper long before its public release and is open source. That's about as fair as you can get in the real world. It's usefulness is upgraded through an open source system. Anyone that has the best scientific research to achieve peer-reviewed consensus contributes to the optimization of usefulness.

[tvbcof]

...

but like anything it needs to be implemented fairly

It was announced in a white paper long before its public release and is open source. That's about as fair as you can get in the real world. It's usefulness is upgraded through an open source system. Anyone that has the best scientific research to achieve peer-reviewed consensus contributes to the optimization of usefulness.

Who's quote is that?  It's not mine.  If it's your own invention then you are basically forgot to pull the shades before playing with yourself and I've little interest in being involved in the endeavor.

[cbeast]

...

but like anything it needs to be implemented fairly

It was announced in a white paper long before its public release and is open source. That's about as fair as you can get in the real world. It's usefulness is upgraded through an open source system. Anyone that has the best scientific research to achieve peer-reviewed consensus contributes to the optimization of usefulness.

Who's quote is that?  It's not mine.  If it's your own invention then you are basically forgot to pull the shades before playing with yourself and I've little interest in being involved in the endeavor.

Your mistake here, I quoted you verbatim.
 DO NOT POST SESC LINKS #top

[davout]

Yes.  It means that to attack Bitcoin one must only make the reward higher to do so.  And if the reward for supporting Bitcoin tends toward zero the cost of doing so is fairly minimal.

It's the margin that tends to zero, not the reward.
Your attack is self-correcting, manage to make the global hashrate drop, everyone's rig is suddenly more valuable.

[bitcoin1992]

if there is a consensus that something needs to be changed, we have the technology and the motivation to make that change. Bitcoin is not set in stone

[Rampion]

My point on this matter hasn't change since the very beginning, and it is summed up in Garzik's words in my signature.

Block space scarcity is needed for a healthy fee market. If someone wants to make economic micro-transactions they can use an altcoin (such as "Bitcoin 2" proposed by Gavin) or just an off-chain solution.

[btc_enigma]

Watching .. interesting discussion

[VectorChief]

My point on this matter hasn't change since the very beginning, and it is summed up in Garzik's words in my signature.

Block space scarcity is needed for a healthy fee market. If someone wants to make economic micro-transactions they can use an altcoin (such as "Bitcoin 2" proposed by Gavin) or just an off-chain solution.

Not everything is economical in this world, because not everything can be bought. If it was so, then one country would simply print a bunch of bank notes and buy out all other countries for nothing. See? Doesn't work that way. That's why countries maintain their armies, which is costly, but that is the price of sovereignity.

Once Bitcoin is big enough and used by major players worldwide, the competition for control of the global money system will move beyond simple monetary incentive, as stakes would be much higher in this game. Bitcoin's PoW scheme allows to keep money and control orthogonal to each other, that's why this system will keep oscillating indefinitely and never fully converge towards permanent centralization.

If Bitcoin is restrained from achieving this status, another coin will take its place.

[danielpbarron]

My point on this matter hasn't change since the very beginning, and it is summed up in Garzik's words in my signature.

Block space scarcity is needed for a healthy fee market. If someone wants to make economic micro-transactions they can use an altcoin (such as "Bitcoin 2" proposed by Gavin) or just an off-chain solution.

Not everything is economical in this world, because not everything can be bought. If it was so, then one country would simply print a bunch of bank notes and buy out all other countries for nothing. See? Doesn't work that way. That's why countries maintain their armies, which is costly, but that is the price of sovereignity.

We can just stop reading there. Idiot contradicts himself in three sentences.

[tvbcof]

...

but like anything it needs to be implemented fairly

It was announced in a white paper long before its public release and is open source. That's about as fair as you can get in the real world. It's usefulness is upgraded through an open source system. Anyone that has the best scientific research to achieve peer-reviewed consensus contributes to the optimization of usefulness.

Who's quote is that?  It's not mine.  If it's your own invention then you are basically forgot to pull the shades before playing with yourself and I've little interest in being involved in the endeavor.

Your mistake here, I quoted you verbatim.
 DO NOT POST SESC LINKS #top

Ah, Fonzie's bogus URL trick.  Not as common as your 'false-strawman' on the other thread though.  The new cbeast is plumbing the depths for sure.

Good morning class.  Yesterday we derived the chances of a thread spanning more than 10 pages and not containing a false-strawman assertion.   In today's class we will talk about the ethics of retaining a 'Donator' tag when buying an old forum personna.

If you legitimately did screw up the URL and are trying to indicate that "fairly carefully" and "fairly" are the same thing (then go on to give a dissertation about 'fairness') that's pretty weak sauce.

[thelibertycap]

thanks for the discount on bitcoin gavin, continue your shit and i might accumulate a real fortune. not in the form of gavincoins of course, there are better alternatives when we are talking altcoins.

[jonald_fyookball]

thanks for the discount on bitcoin gavin, continue your shit and i might accumulate a real fortune. not in the form of gavincoins of course, there are better alternatives when we are talking altcoins.

Please don't tell me you think that the recent price drop is because of Gavin's research on bigger block sizes.

[tvbcof]

Yes.  It means that to attack Bitcoin one must only make the reward higher to do so.  And if the reward for supporting Bitcoin tends toward zero the cost of doing so is fairly minimal.

It's the margin that tends to zero, not the reward.
Your attack is self-correcting, manage to make the global hashrate drop, everyone's rig is suddenly more valuable.

Tell us all a bit more about the magic of hashrate adjustments and the lightning responses.  /sarc  IIRC, some sha256 alt coins which use the same mechanism found it more practical to just re-distribute new binaries than to wait it out when faced with PoW attacks.

Yesterday there was an hour when only one block was mined in an hour and a fee-paying transaction didn't get into it.  One quite experienced user started to freak out.  This is yet another in a long list of reasons to stop dreaming about using native Bitcoin for the masses to buy trinkets.  If sidechains were what was being used by the majority for their daily energy-drink needs it provides a rather nice buffer.  The sidecoin could not inflate or deflate while an attack on native Bitcoin was dealt with, but most user's would probably barely know it.