Bitcoins

paddyrg

In the tech press this morning, selfish mining requiring a block chain mining coalition of 33% of miners by volume would have a selfish advantage by keeping mined coins unpublished until they release the longer keychain which will automatically propagate in preference to the shorter one.

33% sounds unlikely, except when you consider the two biggest mining groups currently represent 28% and 23% already. If they combine forces or even if another 6% join the larger, they have a competitive advantage.

This might be the 50% thing mentioned above somewhere, I may be behind with the news, but just want to flag it as an example of the human element meaning an idealised solution may be skewed as will always tend to happen.

sabretoothtigger

33% wouldnt mean much, they'd soon lose out to the majority who can process faster.
Even at 51% they need to process new blocks in the chain as fast as possible to stop others correcting the mistakes I think.

I dont think this is a new flaw. Capitalism is self motivated and uncentralised not like our current system, what is vital is competitive elements between all parties so between all the greed they are doing something useful inadvertently.

If they combine forces

If they choose to undermine the miner system by combining and authorising false transactions (ie 51% of all miners agree to falsify - or the union heads of each group).
The value of the coins will fall dramatically, that is a kind of rough self correction. Im not sure its any worse then real money which we have now biased to government collusion.

On a technical side I think miners destroying their coin worth with corruption is not clever. The miners now are tied to specific equipment, they paid thousands just to process Bitcoin. Their equipment worth is lost, its not usable for other things.
So they get 'free' coins but lose their deposits - this sounds like negative feedback to me (ie. self correcting problem)

human element meaning an idealised solution may be skewed

capitalism is not idealism, its accepting the simple reality that people work harder when it benefits themselves.
Communism is idealism and in theory I'd agree but in practise its far worse reality as people will not work properly if strictly ordered, I guess its natural for that to favour military discipline as its backbone but capitalism is more efficent even flawed

Every bit of software I've ever written was beautiful and perfect until it wasn't. Enigma was uncrackable, until it wasn't.

Bitcoin is crackable, they just need a fast enough computer.
One that can beat everyone else in the world who are constantly improving the encryption for the current chain of transactions.
If a gov was going to do this they have left it a bit late, I dont think the USA gov has the manufacturing processes to make enough chips and assemble them in parallel for breaking this code.
They could do it if they could stop all others working or maybe they force a takeover of intel and stop them doing anything else but making chips for Sha256 encryption processes. I think they'd need to go to war to do these things ?

paddyrg

Ooh I've got another question if anyone knows - what is the electricity cost of a bitcoin? Not historic ones, but now, today, UK. We're getting fuel price increase horror stories, and btc require many many floating point operations as I understand it, so it should be ballpark calculable?

vectistim

It will depend on your computer - if you use a normal computer forget it. I believe it's possible driving fancy graphics cards, and the next option is dedicated machines.

Same as gold mining - buy shares in the company selling shovels.

paddyrg

Oh I don't think I'll be selling metaphorical shovels in this market sector any time soon. I've heard rumours that actually cashing out through MTGox is problematic -http://www.coindesk.com/withdrawals-from-mt-gox-growing-pains-or-banking-bottleneck/ for instance. Exchange rate can be whatever you like if you can't actually exchange!

I still think btc is a lovely, clever idea and am similarly convinced a heap of amateur speculators are going to get badly burned fingers, much like everyone who tried to talk gold up, but more dramatically. Time will tell, happy to be wrong about it, but really don't think I am!

JohnRo

vectistim wrote: »

It will depend on your computer - if you use a normal computer forget it. I believe it's possible driving fancy graphics cards, and the next option is dedicated machines.

Same as gold mining - buy shares in the company selling shovels.

All sorts of measurements, bottom line is how much, how fast at what cost. Unfortunately there are several variables so the answer is never static.

The primary barriers to mining for profit are the substantial cost of worthwhile equipment, ever increasing blockchain difficulty caused by mining pools pumping out an ever increasing global hash rate and the cost of electricity required to power all that hardware, which all ultimately needs to and can only be offset by the value of the bitcoins mined unless it's a loss making venture, which mining now is for the vast majority, but who are obviously hoping for a future bitcoin "price" far above it's current value.

Things like internet costs can be reasonably discounted since most people would have that regardless.

ASICS - nothing to do with sporty footwear - are the only game in town - no other worthwhile hardware option is available and ASIC miners are often compared in Mh/s/$

If you look at something like a KnC Jupiter hashing 500Gh/s and retailing at $4995 that gives an index number of near enough 100

compare that with a strong graphics card like a ATI Radeon 7970 hashing 600Mh/s and costing around $550 giving an index of approx. 1

Then factor in running cost, electricity, a Jupiter uses approx 900W where a ATI Radeon 7970 would probably use 450 with the PC required to run it.

It's obvious the dedicated ASICS are massively more powerful and also more efficient with it. It's also obvious, as per the shovels comment, the people profiting right now are those making the hardware.

I'd say it's close to impossible to work out what each coin in existence has actually cost in electricity. Anyway current global hash rate is 3265 Th/s according to genesis block so if you assume everyone has a KnC Jupiter as a cheapest possible cost scenario that's 6530 of them mining 24/7 at ~800W so total electricity use each day is somewhere around 130 MWh by my reckoning.

[Deleted User]

paddyrg wrote: »

Ooh I've got another question if anyone knows - what is the electricity cost of a bitcoin? Not historic ones, but now, today, UK. We're getting fuel price increase horror stories, and btc require many many floating point operations as I understand it, so it should be ballpark calculable?

Not entirely possible because Bitcoin mining is not static.

There is a fixed number of Bitcoins that can be mined, more are released into the network as time goes on. The difficult of mining is based on the network hash rate, so the more people mining the harder it is to mine. Every 2 weeks the network updates the difficulty to keep in line with the targets. There is a long term schedule of Bitcoin mining, there can only ever be 21 million Bitcoins, once 21 million have been distributed the network will cease distributing any more, this is expected to happen in 2140 based on the halving of the rate.

Think of Bitcoin mining like feeding ducks in the park: There's a big bag of torn up bread that is being thrown to the ducks. If there's 1 duck they will get a lot of bread with minimal effort because it has no competition and if there's 100 ducks they'll be expending a lot of energy to get the limited bread and eventually the bag will run out of bread.

If the network was made up of just 3 nodes, they would mine the same amount of Bitcoins per week as would be mined if the network had 300,000 nodes. This means that the electricity cost per Bitcoin is directly related to the size of the network, which is constantly changing.

Explanation of difficulty: https://en.bitcoin.it/wiki/Difficulty

Live charts of network difficulty: http://bitcoindifficulty.com/

As you can see from the charts it is growing extremely fast at the moment, mining is becoming very unprofitable very fast.

sabretoothtigger

The first bitcoins took a minute to make and cost almost nothing. If people run their equipment off solar power then its always been free but the real question is opportunity cost vs utility of product

Some units are 3w to run but are very slow now bitcoin encryption got difficult


The worth of BTC should be based around trade done in the two weeks I think. Each two weeks is 2016 new transaction blocks or BTC coins. So the economy is expanding in theory at $514,080 or 320,544 pounds a fortnight
[without trade growth, the price must fall ie. the fear of a bubble popping]

$2.75bn for all the coins or 2bn pounds and 1,239,538 coins sent a day or $316,082,286.

So its only operating on 9 days worth of coins traded, Im sure dollars or normal money doesnt move that fast.
Compares to a share really, if there is big news in BP or whoever then they will trade the entire worth of the company in a day or so as people are not sure of the price - obviously not all sell or buy at once but its a volatile turnover for sure

JohnRo

citricsquid wrote: »

Every 2 weeks the network updates the difficulty to keep in line with the targets.

The algorithm recalculates and adjusts the difficulty every 2016 blocks based on the time it took to find those last 2016 blocks.

The purpose of the shifting difficulty is to maintain a single block discovery rate of one every 10 minutes (on average)

Archi_Bald

roflmao

http://www.bbc.co.uk/news/technology-24871444