difficulty too high while bitcoin society too small

[afterburner229]

Hi, there

I studied a lot of bitcoin-associated info in last few days. So I see one problem - the idea is excellent, but the
"constant set" is bad-adjusted.

I consider "constant set" is:
- total number of bitcoins = 21 mln.
- average block generation rate = 1 in 10 minuts
- BTC profit per block generated/closed = 50 BTC per block

See, the "constant set" mentioned above leads to exponential difficluty, in LAST FEW DAYS: roughly
- 144000 for 3-5 days ago
- 240000 for now
- 360000 for 3-5 days in nearest future (some 1100 blocks remain till next difficulty increase).

Next, see: bitcoin society is some 10 000 people now, while for bitcoin currency system to work economically stable, it need some 100 000 people or more, spread around the world.

Next, if I want to enter bitcoin mining society now, as a newbie, I need:
- spend some $1000 for mining rig, or more
- use mining pools
- profit decreases exponentially

Of course you say, deflation scenario is not a problem because we can divide 1 bitcoin till 8 digits, also BTC/$ exchange ratio is adjusting automatically while deflation takes place..

I say : NO, it's THE PROBLEM, because bitcoin mining society is some 10 000 people, NOT some 100 000, NOT million, while Earth's population is 6 000 000 000 people, see 10 000 / 6 000 000 000 is TOO TINY for stability!

bitcoin society is in SEVERE DANGER of collapse!

What to do? May be, we need "constant set" adjustment, to attract MUCH MORE people?

[benjamindees]

Personally I think the solution is to help and encourage large BTC holders to purchase things produced within the BTC economy.  There needs to be a way to facilitate that.

In other words, instead of spending $1000 on mining equipment to see diminishing returns, newcomers can spend $1000 on producing some good and see rising returns.

[FreeMoney]

Generally if you want something and don't want to do it yourself you can pay someone. I highly recommend that strategy.

[afterburner229]

Personally I think the solution is to help and encourage large BTC holders to purchase things produced within the BTC economy.  There needs to be a way to facilitate that.

In other words, instead of spending $1000 on mining equipment to see diminishing returns, newcomers can spend $1000 on producing some good and see rising returns.

Oh, no, no, no

What is bitcoin? Why I am being newbie, should trust in it? What motivation for me to sell goods for BTC??!

bitcoin society is some 10 000 people, and current software (with current "constant set") DOES limit bitcoin society in some 100 000 people or less, because difficulty is being normalized to generate constant number of blocks per unit time, 1 bock per 10 minutes.

you see, 10 000 people is NOT a thing to trust in, or to operate with.

and you see, no one miner will remove his mining power from generation process, so difficulty will increase till mining will be unprofitable acording to electricity power costs. This moment will be reached in some 100 000 people attracted for mining, or less.

As 10 000 people, 100 000 people is NOT a thing to trust in, or to operate with. IN TERMS of wold-wide totally distributed currency!

So, your politics is simply turns bitcoin system into small financial 'sect', or 'pyramid'.

I think, bitcoin "constant set" MUST be normalized to reach EXPONENTIAL newbie miner income rate, TILL 1 000 000 people will be attracted for mining. Then you may change EXPONENTIAL rate to some POLINOMINAL one, then to some LINEAR one, and then, to some CONSTANT. This limited constant number of miners should be some 100 000 000 - 1 000 000 000, i.e. each 1/100-1/10 Earth's citizen should be miner or peer.

Otherwise, no motivation for newbies, and apparent bitcoin system failure in nearest future (2012 at 25 BTC per block switch) with max. number of attracted people some 100 000.

[elewton]

I really see your point afterburner.
We would very much like to spread exponentially.  I am working on a free website that uses Bitcoins, but it is difficult, since I'm not a professional programmer and am busy with working at getting the old money I need to live and get enough Bitcoins to start up the website.

The best thing we can do is spread the increase usefulness of Bitcoin.  I agree that it's risky to invest in the Bitcoin economy, but I like to take risks occasionally, and my estimation of the potential usefulness of Bitcoin makes it worthwhile to me.  Does it to you?

[Garrett Burgwardt]

You're missing the point that bitcoin mining isn't meant to be that  profitable for most people.

There is far too much focus on mining in the media attention IMO.

[afterburner229]

I really see your point afterburner.
We would very much like to spread exponentially.  I am working on a free website that uses Bitcoins, but it is difficult, since I'm not a professional programmer and am busy with working at getting the old money I need to live and get enough Bitcoins to start up the website.

The best thing we can do is spread the increase usefulness of Bitcoin.  I agree that it's risky to invest in the Bitcoin economy, but I like to take risks occasionally, and my estimation of the potential usefulness of Bitcoin makes it worthwhile to me.  Does it to you?

I understand you, but at your piont of view, bitcoin is just financial game or little risky business.

At my point, bitcoin is what OFFICIAL bitcoin site writes: WORLD-WIDE totally distributed, totally defended, and totally mathematically prooven currency, not just dollar replacement, but even GOLD replacement.

The value of Gold is confirmed by 6 000 000 000 Earth's citizen, the value of bitcoin is confirmed by 10 000 people. Feel the difference? That's while bitcoin, from mathematical point of view, IS the strong replacement for gold.

But real confirmation may be acheved ONLY by number of attracted people, NOT mathematics! No one cares, what mathematics prooves! It's geeky!

Also, if we allow attraction of 1 000 000 people as base minimun, it will be a win-win strategy for all us. I.e. it will be, in total perspective, much more profitable game, than now. And much less risky.

[afterburner229]

You're missing the point that bitcoin mining isn't meant to be that  profitable for most people.

There is far too much focus on mining in the media attention IMO.

Of course, but 10 000 current people is simply nothing to do with, for the GLOBAL currency.

See, FEW days ago, at difficult 144 000, I WAS ready to mining, but FEW days after today, at difficult 360 000 I WILL NOT BE ready.

Feel, FEW days, not FEW years, not FEW months! And 10 000 people, NOT 100 000, NOT 1 000 000 000.

This is the problem!

[BitLex]

what has all of this todo with mining?


there's no 6 000 000 000 Earth's citizens mining gold, that's just a few hundred.

bitcoin is not about mining coins, it's about transferring coins.
you don't need to mine bitcoins to value bitcoins.

[mewantsbitcoins]

Calm down.

There is no problem. User base is steadily increasing as is difficulty. Mining isn't for general public and soon it won't be for gamers/amateurs either. In the future few people with knowledge, time and a hefty investment will be able to mine. Bitcoin is meant to be traded for goods and services - not mined. Mining is just the way to introduce it into circulation

[elewton]

...the value of bitcoin is confirmed by 10 000 people....

Pff.  No it isn't.  If you offered most people here 100,000 USD worth of Bitcoins or 50,000 USD worth of Gold and 50,000 worth of Bitcoins, I bet they'd take the diversified risk.

There are simply 10,000 (or whatever) people who have sufficient faith in Bitcoin to make it part of their personal economic decisions.

[afterburner229]

what has all of this todo with mining?


there's no 6 000 000 000 Earth's citizens mining gold, that's just a few hundred.

bitcoin is not about mining coins, it's about transferring coins.
you don't need to mine bitcoins to value bitcoins.

Yes, there's no 6 000 000 000 Earth's citizens mining gold, that's just a few hundred.

But 6 000 000 000 Earth's citizens CONFIRM value of Gold.

And only 10-20 000 people, according of what percentage do not mine, just sell or buy bitcoins & goods, CONFIRM value of bitcoin.

If number of miners will be frozen by the current algorithm, number of people who trust in bitcoin, will be drop down - just at 25 BTW per block switch. So I proove, bitcoin is just financial 'pyramid', if you do not change current algorithm.

[afterburner229]

...the value of bitcoin is confirmed by 10 000 people....

Pff.  No it isn't.  If you offered most people here 100,000 USD worth of Bitcoins or 50,000 USD worth of Gold and 50,000 worth of Bitcoins, I bet they'd take the diversified risk.

There are simply 10,000 (or whatever) people who have sufficient faith in Bitcoin to make it part of their personal economic decisions.

See my comment below - if there are only 10 000 miners in the world frozen, I do not trust in bitcoin, because number of people who confirm value of bitcoin is COMPARABLE to number of miners. It is not a rule, it's just happen for bitcoin historically.

(!) For gold, number of people who confirm value >> number of miners.

With digital currency you never achive Gold rate of confirmation, at 10 000 people who mine.

[kjj]

I'm sorry man, I just can't understand what it is that you are trying to say.  I think you are upset that you missed the goldrush.  But we can't make the block hashing easier just to give you another shot at mining riches.

[afterburner229]

I'm sorry man, I just can't understand what it is that you are trying to say.  I think you are upset that you missed the goldrush.  But we can't make the block hashing easier just to give you another shot at mining riches.

I just say, I even proove, with current algorithm, bitcoin system will fail down somewhere in 2012, probably at switch 50 BTC to 25 BTC per block. More exactly - when mining will reach unprofitable against electrical power, with typical hardware for newbie - 5850x2 or 5970.

It happens because number of people who confirm value of bitcoin is comparable with number of miners. And this situation does NOT take place with Gold. ALL people on Earth trust in gold value. 20 000 people trust in bitcoin value.

And you leave no way to join to trust in bitcoin. The only method - allow mining to be profitable to MILLIONS of people at time intervals YEARS, not DAYS (see difficalty rate & prognosis).

[stic.man]

Isn't this the reason why the transaction fees exist?  Won't the fees subsidize the increased difficulty/reduced rewards for mining?

[FooDSt4mP]

I'm sorry man, I just can't understand what it is that you are trying to say.  I think you are upset that you missed the goldrush.  But we can't make the block hashing easier just to give you another shot at mining riches.

I just say, I even proove, with current algorithm, bitcoin system will fail down somewhere in 2012, probably at switch 50 BTC to 25 BTC per block. More exactly - when mining will reach unprofitable against electrical power, with typical hardware for newbie - 5850x2 or 5970.

It happens because number of people who confirm value of bitcoin is comparable with number of miners. And this situation does NOT take place with Gold. ALL people on Earth trust in gold value. 20 000 people trust in bitcoin value.

And you leave no way to join to trust in bitcoin. The only method - allow mining to be profitable to MILLIONS of people at time intervals YEARS, not DAYS (see difficalty rate & prognosis).

So you're saying you would be more confident about bitcoin if there was a larger percentage of non-miners?  I might agree to that, but I don't think we need to be yelling about the sky falling just yet.  The economy is growing.

[barbarousrelic]

"There aren't enough people in the Bitcoin community" is correct. But it is relatively new, and so this is to be expected.

Also, you are conflating the Bitcoin mining community with the Bitcoin community itself. They are not the same. Mining is not the point of Bitcoin. You don't have to be a miner to be involved with Bitcoin.

If mining becomes unprofitable for its electric power, either the difficulty will drop (as people stop mining) or the value of Bicoins will increase. It's self-correcting.

It happens because number of people who confirm value of bitcoin is comparable with number of miners. And this situation does NOT take place with Gold. ALL people on Earth trust in gold value. 20 000 people trust in bitcoin value.

And you leave no way to join to trust in bitcoin. The only method - allow mining to be profitable to MILLIONS of people at time intervals YEARS, not DAYS (see difficalty rate & prognosis).

Miners are not the entirety of the Bitcoin community. I do not mine and I trust Bitcoin for a fraction of my wealth.

[da2ce7]

people will stop mining when it gets unprofitable.  This will reduce the ratio of miners / non-miners.  Making the economy stable again.

Edit: you are also forgetting about technology advances that improve mining.  They increase the difficulty _while_ reducing the total number of people mining.  (That was seen when many people dropped out when CPU mining became unprofitable).

[server]

I just say, I even proove, with current algorithm, bitcoin system will fail down somewhere in 2012, probably at switch 50 BTC to 25 BTC per block. More exactly - when mining will reach unprofitable against electrical power, with typical hardware for newbie - 5850x2 or 5970.

It happens because number of people who confirm value of bitcoin is comparable with number of miners. And this situation does NOT take place with Gold. ALL people on Earth trust in gold value. 20 000 people trust in bitcoin value.

And you leave no way to join to trust in bitcoin. The only method - allow mining to be profitable to MILLIONS of people at time intervals YEARS, not DAYS (see difficalty rate & prognosis).

I think aftherburner229 is right.
And the group of people thinking this and acting on it, will increase.

Also a few people (the pre-goldrush users, seniors and moderators of this forum) try to protect their investments/wealth, are not objective, this stands in the way of a bitcoin breakthrough.