difficulty too high while bitcoin society too small

[LMGTFY]

Look at the volume in dollars, not Bitcoins.

SEVERE MISTAKE! You introduce the NEW THING, LOOK at the volume of NEW THING.
The volume of NEW THING MUST be great, for NEW THING to be THE CURRENCY.

And remember, number of traders depending on time is MORE important even than volume of NEW THING itself.
What if 10 000 traders sell/buy BTC each other, and volume of this process is 99% of total BTC volume.
And 100 000 newbies sell/buy BTC, in 1% volume. This is TYPICAL DANGER situation.

Volume in dollars.

The growth occurs in volume of dollars, not volume of bitcoin.  The volume of bitcoin can only grow linearly.  So the volume of dollars is what grows exponentially.

What bitcoinBull said. The supply of new bitcoins is relatively static - roughly 50 every ten minutes. Expecting exponential growth of bitcoin supply is just wrong. A "SEVERE MISTAKE!", even.

Incidentally, afterburner229, could you knock it off with the ALL-CAPS? You can use *stars* for emphasis, or use the formatting tools or format your text manually, like this:

Code:

[b]This is bold[/b]

-> This is bold

Code:

[i]This is italicised[/i]

-> This is italicised
Better yet, allow the quality of your arguments to persuade, rather than the CAPITALS or formatting.

[afterburner229]

What bitcoinBull said. The supply of new bitcoins is relatively static - roughly 50 every ten minutes. Expecting exponential growth of bitcoin supply is just wrong. A "SEVERE MISTAKE!", even.

I speak about total volume of BTC being traded on all BTC exchanges world-wide, per day. Also you can study the number of different goods' kinds, being traded for BTC directly (just T-shirts & coffee caps & etc??).

But remember, computing BTC trade volume, or number of goods' kinds, sell for BTC, is not the goal itself. To estimate the number of miners & number of traders, as function of time is THE goal.

Of course, to estimate number of miners & traders is not trivial. Possible hints are given by number of exchanges being opened, per unit time. Or number of NEW kind of goods being selled *directly* for BTC, per unit time, weighted by their trade volumes in BTC.

MtGox being the largest exchange, may indicate the things quite accurately. So if I see average trade volume of BTC upon MtGox is not increasing exponentially (or ever increasing) for 1.6 months, it is good indicator of danger.

So, answer me:
- how many traders there are on all BTC exchanges world-wide, as graph/function of time?
- how many miners there are on all BTC pools (&singles) world-wide, as graph/function of time?
- how many goods (kinds of goods, volumes of goods) sell directly for BTC world-wide, as graph/function of time?

As soon as you compute these 3 functions/graphs, you see the confirmation, that current difficulty algorithm kills bitcoin society.

[LMGTFY]

What bitcoinBull said. The supply of new bitcoins is relatively static - roughly 50 every ten minutes. Expecting exponential growth of bitcoin supply is just wrong. A "SEVERE MISTAKE!", even.

I speak about total volume of BTC being traded on all BTC exchanges world-wide, per day. Also you can study the number of different goods' kinds, being traded for BTC directly (just T-shirts & coffee caps & etc??).

But remember, computing BTC trade volume, or number of goods' kinds, sell for BTC, is not the goal itself. To estimate the number of miners & number of traders, as function of time is THE goal.

Of course, to estimate number of miners & traders is not trivial. Possible hints are given by number of exchanges being opened, per unit time. Or number of NEW kind of goods being selled *directly* for BTC, per unit time, weighted by their trade volumes in BTC.

MtGox being the largest exchange, may indicate the things quite accurately. So if I see average trade volume of BTC upon MtGox is not increasing exponentially (or ever increasing) for 1.6 months, it is good indicator of danger.

So, answer me:
- how many traders there are on all BTC exchanges world-wide, as graph/function of time?
- how many miners there are on all BTC pools (&singles) world-wide, as graph/function of time?
- how many goods (kinds of goods, volumes of goods) sell directly for BTC world-wide, as graph/function of time?

As soon as you compute these 3 functions/graphs, you see the confirmation, that current difficulty algorithm kills bitcoin society.

No. You're the one coming up with wild theories. You need to back them up with hard data, not ask people who disagree with you to do your research for you. It's time for you to "put up or shut up". Let's see your data, the data you used to arrive at your hypothesis.

[molecular]

2. 10 000 MINERS & TRADERS SPREAD WORLD-WIDE IS NOT THE SOCIETY FOR THE CURRENCY.
3. CURRENT DIFFICULTY ALGORITHM DOES NOT ALLOW FOR NUMBER OF MEMBERS TO GROW EXPONENTIALLY.

If by MEMBER, you mean mining operator, that might be true.

But: did everyone mine gold from a gold-mine back in the gold-rush days, or only 10.000 people?

How many people *use(d)* gold? More than 10.000? Yes!

Also: of course people can still get into mining business: use a pool, you'll get your fair share, just as the old miners.

[afterburner229]

No. You're the one coming up with wild theories. You need to back them up with hard data, not ask people who disagree with you to do your research for you. It's time for you to "put up or shut up". Let's see your data, the data you used to arrive at your hypothesis.

Gold words. Now I see your are honest person in your deep thinking. I will try to do that. So I will not speak abouth this theme for some days..
-----------------
You may consider another problem - mining pools.

There is no formal 'cryptographic-trust' relationship between miner and pool. So pool's admin can manipulate with profits, powers, etc. But, because the difficulty is skyrocketing, single person can not mine effectively. So, pool's admins become the aces of bitcoin society. Now we can see 3-4 large pools. Their aces may make a cartel deal.

You see, pool's admins becomes the global corporations, exactly what we want to avoid in bitcoin system. So bitcoin currency is centolized even now, in earlier stages. With current difficulty algorithm (& bitcoin communication protocol) there is no chance to de-centrolize bitcoin in such thinking.

p.s. also, single miner may wait for *weeks* to generate a block. he can not see *continuous* (but small) profit grow, being single.

[LMGTFY]

No. You're the one coming up with wild theories. You need to back them up with hard data, not ask people who disagree with you to do your research for you. It's time for you to "put up or shut up". Let's see your data, the data you used to arrive at your hypothesis.

Gold words. Now I see your are honest person in your deep thinking. I will try to do that. So I will not speak abouth this theme for some days..
-----------------
You may consider another problem - mining pools.

There is no formal 'cryptographic-trust' relationship between miner and pool. So pool's admin can manipulate with profits, powers, etc. But, because the difficulty is skyrocketing, single person can not mine effectively. So, pool's admins become the aces of bitcoin society. Now we can see 3-4 large pools. Their aces may make a cartel deal.

You see, pool's admins becomes the global corporations, exactly what we want to avoid in bitcoin system. So bitcoin currency is centolized even now, in earlier stages. With current difficulty algorithm (& bitcoin communication protocol) there is no chance to de-centrolize bitcoin in such thinking.

Again, no. I'm not wasting my time considering things on your behalf. You have a theory? Then come up with data to support it, and bring it all here together. Otherwise you're just wasting our time. Your latest theory, by the way, is not exactly new. It's been debated ad nauseum elsewhere on this forum.

p.s. also, single miner may wait for *weeks* to generate a block. he can not see *continuous* (but small) profit grow, being single.

[markm]

All else being equal, what kind of curve does your valuation based on difficulty follow?

For example if all buy/sell/trade interfaces for blockchain-based currencies all accepted any such currency, but at different exchange rates, what kind of relation would you expect, or possibly even code if coding artificial intelligence market-maker bots, between difficulty and value?

Or if considering multiple currencies confuses the issue too much, how much value would how much change in difficulty change your personal valuation of how much a bitcoin is worth to you?

The "you" herein is intended generally to each reader.

Possibly some readers do not particularly care whether difficulty is high or low, only whether technical indicators seem to be predicting a rise or fall in the price of the coins?

But because I have seen many comments indicating that any blockchain running at less difficulty than whatever difficulty bitcoin happens to be running at any given moment in time is relatively worthless compared to the higher difficulty blockchain (at least if the higher difficulty one happens to be the original bitcoins' blockchain) I am interested in clarifing numerically that "relatively" relation. Is it a simply direct ratio? Or exponential? Asyptotic at some point? Or what?

How important would difficulty be if it turned out that the original bitcoin was the one running at lower difficulty? How much value would bitcoins lose in your personal valuation at what ratio of lower difficulty that an other or many other blockchain(s)?

Do those who believe prices will reach some kind of equilibrium near the cost of mining them believe whichever blockchain comes closest to that equilibrium would on that basis seem to them a better buy, having a more realistic, in their system of valuation, price?

-MarkM-

[afterburner229]

Some mothematical model of miners is READY!

First, look @
http://bitcoin.sipa.be/speed.png

Consider latest 2.5 months, we can see an exponential-like 'loop' in exponential axis 0Y:
a 'loop' (ROUGHLY) starts @ Mar 15, 2011 (700 000 Mhash/s), ends @ May 30, 2011 (3 500 000 MHash/s).

Note, there is also previous 'loop' of the same 'form' on the graph @ Dec 15 2010 - Feb 28 2011 (note, the same 2.5 months duration)

The latest 'loop' can be represented as a formula:

total_power (t, days, in MHash/s) = 250*(3162 + 2.5*10^ (0.0466*t)),
where
3162 - CONSTANT number of miners @ period Mar 15, 2011 - May 30, 2011 (our 'famous' ~ 10 000 miners)
250 MHash/s - typical power of GPU of single miner before upgrade @ Mar 15, 2011
250*2.5=625 MHash/s - typical power of GPU of single miner  after upgrade @ May 30, 2011, where we observe a tiny 'fall' of total power
(note, compare with Mar 05 2011)
0.0466 - is norm koefficient, that all miners has upgraded their GPU till May 30, 2011, from 250 MHash/s to 625 MHash/s

I assume all miners observe how does total power increases with time. They are 'race participants'. And becouse they did not understand MY bitcoin society's crash theorem, they want to obtain max. profit, so they were forced to upgrade their GPU and continue 'racing'.

So, miners' 'total intelligence' is a classic system with positive feedback.

See the MODEL graph plotted:

Code:

http://www.wolframalpha.com/input/?i=plot+log_10+%28250*%283162+%2B+2.5*10^+%280.0466*t%29%29%29+t+from+0+to+100

total_power (0 = Mar 15, 201) = 794328 MHash/s (log_10 = 5.9)
total_power (75 days = May 30, 2011) = 3162227 MHash/s (log_10 = 6.5)

compare with data ACTUALLY observed:
total_power (0 = Mar 15, 201) = 700000 Mhash/s
total_power (75 days = May 30, 2011) = 3500000 MHash/s.

ALMOST 90% MATCH.

==================

If the number of miners were growing exponentially itself, we PRIMARILY observe LINEAR curve in the exponetial axis (0Y).

In fact, since Dec 15 2010, @

http://bitcoin.sipa.be/speed.png

WE DO NOT observe any growing LINEAR behaviour (in exponetial axis).

So number of miners = 3162 = const (t), since Mar 15, 2011 by evidence, and (may be) since Dec 15 2010 too.

If you still interested in, I may compute & model the Dec 15 2010 - Feb 28 2011 period too.

[FreeMoney]

You've convinced me, I'm switching back to SETI.

Wait actually I don't have any equipment because mining is a specialized task that I don't need to concern myself with because I don't have a comparative advantage there.

[wb3]

Ah, SETI is offline due to funding. 

[Scottingham]

I don't mine either.  Why mine when you can offer a service to the Bitcoin community?

http://forum.bitcoin.org/index.php?topic=8565.msg124597#msg124597

Vinyl for bitcoins!

~Scottingham

[afterburner229]

You've convinced me, I'm switching back to SETI.

Wait actually I don't have any equipment because mining is a specialized task that I don't need to concern myself with because I don't have a comparative advantage there.

About SETI @ Home,

With over 5.2 million participants worldwide, the project is the distributed computing project with the most participants to date. The original intent of SETI@home was to utilize 50,000-100,000 home computers.[10] Since its launch on May 17, 1999, the project has logged over two million years of aggregate computing time. On September 26, 2001, SETI@home had performed a total of 1021 floating point operations. It is acknowledged by the Guinness World Records as the largest computation in history.[16] With over 278,832 active computers in the system (2.4 million total) in 234 countries, as of November 14, 2009, SETI@home has the ability to compute over 769 teraFLOPS.[17] For comparison, the Cray Jaguar, which as of 26 September 2009 was the world's fastest supercomputer, achieved 1759 teraFLOPS.

http://en.wikipedia.org/wiki/SETI@home#Statistics

Bitcoin society does provide the money profit to participants, but is too small and frozen by difficulty algorithm, int its childhood.

SETI @ Home does not provide anything - it spends electricity only - and see: "It is acknowledged by the Guinness World Records as the largest computation in history".

----
Actual data on total number of BTC Exchanges' participants - *coming soon*. There is very pessimistic light too, as with total number of miners (~3000).

[afterburner229]

I don't mine either.  Why mine when you can offer a service to the Bitcoin community?

http://forum.bitcoin.org/index.php?topic=8565.msg124597#msg124597

Vinyl for bitcoins!

~Scottingham

Great enthusiasm!

But 99.9% of people can not distinguish an mp3 @ 320 kbits/s quality from CDDA quality. For many genres of music, mp3 with such a rate is even more perfect than CDDA, because of mp3's psychoacoustics algorithm.

Young people do not accept vynil records, they simply go to youtube, itunes, vkontakte.ru, etc. So vynil records are rarities with volume, confirmed by few thousands 'old-men' world-wide.

What kind of service can you offer to young people, directly via BTC?

[vuce]

But 99.9% of people can not distinguish an mp3 @ 320 kbits/s quality from CDDA quality. For many genres of music, mp3 with such a rate is even more perfect than CDDA, because of mp3's psychoacoustics algorithm.

ah, not this bs again...

Young people do not accept vynil records, they simply go to youtube, itunes, vkontakte.ru, etc. So vynil records are rarities with volume, confirmed by few thousands 'old-men' world-wide.

you would be surprised how many kids listen to vynil.

[stic.man]

actually at this stage of the game why would anyone ever buy a cd when they can  own some awesome vinyl and just burn/rip a cd?

Of course this only works for people actually willing to buy music.

And buying an album that is worthwhile in it's entirety which is a whole 'nother issue these days

[afterburner229]

Guys, it was just a psychological test. Why all of you do focus upon "vinyl vs. mp3" theme?
Why you do not focus on "bitcoin society vs. seti@home society growing rate"?

It is the kind of your thinking process: you focus on unrelevant themes, because they are more saturated emotionally. Vinil is a fetish itself, I know. Why we do not speak about girls? LOL))

Let's focus upon the main problem. Learn, how to control your thinking process from blur.

[kjj]

Guys, it was just a psychological test. Why all of you do focus upon "vinyl vs. mp3" theme?
Why you do not focus on "bitcoin society vs. seti@home society growing rate"?

It is the kind of your thinking process: you focus on unrelevant themes, because they are more saturated emotionally. Vinil is a fetish itself, I know. Why we do not speak about girls? LOL))

Let's focus upon the main problem. Learn, how to control your thinking process from blur.

I'm starting to think that this whole thread is a psychological test.

[stic.man]

Guys, it was just a psychological test. Why all of you do focus upon "vinyl vs. mp3" theme?
Why you do not focus on "bitcoin society vs. seti@home society growing rate"?

It is the kind of your thinking process: you focus on unrelevant themes, because they are more saturated emotionally. Vinil is a fetish itself, I know. Why we do not speak about girls? LOL))

Let's focus upon the main problem. Learn, how to control your thinking process from blur.

it's more pertinent than the arguments you've been putting forth in this thread

[afterburner229]

it's more pertinent than the arguments you've been putting forth in this thread

"The truth stings your eyes".

SETI @ home society was growing exponetially up to Guiness Records Book, ONLY because
- SETI @ home 'difficulty algorithm' is of small constant CPU power consumption and
- fundamental psychological idea - 'to find brothers by intellingence'.

[BitterTea]

Afterburner, I suggest you start your own block chain with your superior ruleset. I'm sure everyone will see how awesome it is and drop Bitcoin like a hot bowl of semen!