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As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

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Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#111

Post by Nursie »

stale2002 wrote: post #63
hudon wrote: post #50

Earlier quoted context omitted.

Haha, then “PoW is for security” is a myth. If you are correct (which is arguable), then you don’t need PoW, you just need an elected federation of validators. And validators won’t attack because of the counter-incentives you describe. So either PoW has a security hole related to dormant ASICs or it’s useless. Either way it’s not a good look.

Dormant POW could be as much of a benefit as it is a drawback. If someone owns 10s of millions of dollars worth of miners that are temporarily turned off, do you think this entity would want an attack to succeed? No. They'd want to protect their future investment in mining equipment. They might just turn that hashpower back in, if an attack was in progress, and take a temporary loss to fight off a temporary attack. E…

> If someone owns 10s of millions of dollars worth of miners that are temporarily turned off, do you think this entity would want an attack to succeed?

Well that depends on how much they're holding and how deep they are in the hole at the given time.

> No. They'd want to protect their future investment in mining equipment.

Unless they were in financial trouble and an attack would get them some cash, fast. The sort of financial trouble that can happen when a company invests, say, millions and millions of dollars into now-unprofitable hardware.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#112

Post by twblalock »

jMyles wrote: post #100
twblalock wrote: post #98

Earlier quoted context omitted.

There will always be people who say a breakthrough is just around the corner. How many years should the rest of us wait wait before we decide that blockchain tech was a dead end? It's already been around for a while and I can't think of any successful use cases outside of cryptocurrency.

Are you insinuating that there have been no breakthroughs in the past 2 years? How do you respond to the ones I have listed in the comment to which you're replying?

How have those so-called breakthroughs had an effect on the world outside the cryptocurrency bubble? Who has used them in industry?

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#113

Post by aeternus »

hudon wrote: post #50
stale2002 wrote: post #45

Earlier quoted context omitted.

People vastly overestimate the profitability of attacking a crypto network. There are tons and tons of much smaller coins, that can be attacked for very cheap, and yet attacks are still very rare. IMO, this is because double spends just aren't a very good idea. If you tried to steal money from an exchange, everyone would know it was you doing the attack, and then they wouldn't accept your money in the future, or mayb…

Haha, then “PoW is for security” is a myth. If you are correct (which is arguable), then you don’t need PoW, you just need an elected federation of validators. And validators won’t attack because of the counter-incentives you describe. So either PoW has a security hole related to dormant ASICs or it’s useless. Either way it’s not a good look.

This is a somewhat weak argument. I could say the same thing about door locks.. no lock is perfect and an attacker with sufficient resources can successfully subvert pretty much any lock. We don't depend only on locks but on police, neighbors, security-alarms, etc. This does not mean that locks are useless.

PoW provides some amount of security but in order to pull off a double-spend you have to not only gain majority hashrate, but also somehow actually spend/cash-out both 'copies' of your coins. This carries substantial risk as you first have to be long those coins (not smart when you are attacking the network). Then convince exchanges to convert both 'copies' while hoping they don't have systems that notice the massive increase in hash-rate nor the unexpected fork you are creating.

Simply shorting a coin, then attacking as more of a DoS may be more feasible but still carries risk as a successful defense could positively affect price.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#114

Post by jMyles »

hudon wrote: post #109
jMyles wrote: post #92

Earlier quoted context omitted.

I think that in very high-level terms, you're quite correct. You say, for example, 'it’s not clear to me that “decentralized technology” can prevent the very human process of holding others accountable' - I mean, yeah. That's a good starting point. On the other hand, your comment betrays some of the underlying revelation here: indeed, the MPAA has gone after the centralized components of peer-to-peer file sharing, as…

Sorry but I don’t buy this anarchist ideology. Evidence shows that these are the most peaceful times in human history, and governments are bigger than ever. Sure, we need to be smart about keeping leaders in check, and progress is jagged, but overall, aren’t you much happier to be born now than 3000 years ago? Would you have preferred to be born at any other time? Because if not, then you must realize that we’re here…

> aren’t you much happier to be born now than 3000 years ago?

Indeed I am - this is the most exciting time I can imagine being alive.

And I agree in full with everything you've said.

However, I think that governments, which have been essential for many of the developments we've enjoyed so far (and this is despite their reliably selfish and monopolistic tendencies), have largely run their course and are less useful with each passing day.

I am thankful even for my own government (in the USA), despite it being run in a completely childish fashion at this moment. But recognizing the importance of something doesn't mean that I want it to live forever. Indeed, I think it often means being willing to let it go.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#115

Post by InGodsName »

carlob wrote: post #103
InGodsName wrote: post #82

Earlier quoted context omitted.

No, but it certainly can be used for money laundering and tax evasion. It removes the need to trust a bookie or agent to move money offshore. There are lawyers/accountants in Switzerland and Hong Kong who will help you launder money from third world countries. Moving your assets offshore without local government knowing is not a crime in other country! Edit: why downvotes? What's wrong?

My point was that you are assuming some sort of libertarian viewpoint where nation-states trying to tax your money are fundamentally corrupt/socialist. I personally tend to think that in the vast majority of cases govt spending of tax money does more for the greater good than whatever a self-appointed authority would. There are many exception to this, but I still think this is largely true in democracies. But then ag…

Yeaa but if you go to some third world countries, you'll see high tax rate yet not enough benefits for your tax rate. Prime example is India where people still have power cuts yet business/salaried middle class pays north of 30% tax.

People there will happily pay 60% tax if they get even Rome level of infrastructure access

So, it's no brainer a lot of them move their money offshore.

Edit: people who feel they are not getting fair share of their infra quality, with this line of thinking will move money aboard doesn't matter if it's ethical/legal thing to do or not.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#116

Post by xenihn »

wpietri wrote: post #88
verdverm wrote: post #60

Earlier quoted context omitted.

A year ago, I was explaining to family why crypto was a thing. This year I'm explaining why it crashed and why it's to be avoided. Also, why blockchain and crypto are not the same thing. There are many who participated in the 2017 speculation that will actively avoid and advise against participation this go around. The bubble popped and it will be many years before we see worthy investments take shape.

I think another factor is that we've passed peak uncritical press coverage. Never again will there be as large an influx of media-driven naive optimists who think that the price will only go up.

That isn't true, it depends on the whims of the people who determine what those optimists say and write.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#117

Post by pera »

DenisM wrote: post #73

The most remarkable thing about BTC is diffusion of responsibility. If it was issued and marketed by a single entity the participants would be in hot water by now for violating the Securities and Exchange laws. However here we had one non-affiliated group of bigger miners issuing the coins and another group of volunteer enthusiasts hyping them up. Since the second group was not hired by the first, the first group can…

> If it was issued and marketed by a single entity the participants would be in hot water by now for violating the Securities and Exchange laws.

What laws are being violated by Bitcoin's participants?

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#118

Post by dlubarov »

stcredzero wrote: post #79
hudon wrote: post #16

Earlier quoted context omitted.

The difference is that even if the difficulty adjusts, there will be dormant ASICs waiting to be used. If the price lowers enough and enough ASICs are out on the bench, it’ll at one point becoming economically beneficial to turn them all on and attack the network rather than having them collect dust and depreciate.

Couldn't the protocol be extended, such that the hash algorithm could be switched periodically, in such a way that ASICs would no longer be profitable to produce?

That's essentially the approach Monero has taken. From [1],

> In sum, we strongly believe that it's beneficial to preserve our ASIC resistance. Therefore, we will perform an emergency hard fork to curb any potential threat from ASICs if needed. Furthermore, in order to maintain its goal of decentralization and to provide a deterrent for ASIC development and to protect against unknown or undetectable ASIC development, the Monero team proposes modifying the Cryptonight PoW hash every scheduled fork, twice a year.

[1] https://ww.getmonero.org/2018/02/11/PoW-change-and-key-reuse...

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#119

Post by lambda »

duxup wrote: post #97
barnabee wrote: post #57

Earlier quoted context omitted.

The difficulty (amount/cost of power required) goes up over time when the price goes up because more miners join the network as it becomes more profitable, which means that on average new coins are produced more often. The network targets a certain rate of production and it does this by increasing the difficulty. If the price drops and miners leave this will happen in reverse and coins will not be produced fast enoug…

Forgive me as I don't quite grok bitcoin. Does the math to calculate a coin change based on... price? For some reason I assumed the mathematical difficulty just naturally increased as part of what in my mind is "the mathematical problem" vs. number of coins.

No, the difficulty is based on the average rate of generation of blocks over the last few weeks.

If people put less computational power into generating blocks, fewer blocks will be generated. After each n blocks, nodes adjust their difficulty based on how long it took to generate those blocks, to try and achieve an average of a block every 10 minutes.

But how much computational power people are willing to put in depends on price. It only makes sense to mine if you get more out than you put in in the cost of buying the hardware, amortized over the life of the hardware, plus the cost of the power used in mining. If the price of Bitcoin drops, there are fewer people for whom it makes economic sense to continue mining, so some will turn off their miners, reducing the hash rate.

When global hash rate reduces like this, and the difficulty drops, then the people remaining will get more BTC per unit time from mining, so it can make economic sense for them to continue mining, as long as the price doesn't drop further. So indirectly, the total hash power of the bitcoin network is linked to the price of bitcoin; or, the price of bitcoin relative to the price of electric power.

Re: As Bitcoin Sinks, Industry Startups Are Forced to Cut Back

#120

Post by Nursie »

duxup wrote: post #97
barnabee wrote: post #57

Earlier quoted context omitted.

The difficulty (amount/cost of power required) goes up over time when the price goes up because more miners join the network as it becomes more profitable, which means that on average new coins are produced more often. The network targets a certain rate of production and it does this by increasing the difficulty. If the price drops and miners leave this will happen in reverse and coins will not be produced fast enoug…

Forgive me as I don't quite grok bitcoin. Does the math to calculate a coin change based on... price? For some reason I assumed the mathematical difficulty just naturally increased as part of what in my mind is "the mathematical problem" vs. number of coins.

> Does the math to calculate a coin change based on... price?

Indirectly.

> "the mathematical problem"

The mathematical problem is producing blocks. A block is a collection of transactions and a bit of metadata, including the address which gets the block reward. The block is hashed along with a counter or random factor (nonce), which is manipulated to try to find a sha-256 output with a certain number of leading 0 bits. The number of zeroes required by the network is the difficulty (this may be somewhat oversimplified).

Hashing has costs, hardware and power mostly. When the price of BTC rises such that the expected income is greater than the expected costs, people switch on more equipment and the network hashrate goes up.

As the hashrate goes up, the difficulty is adjusted by the network in order to keep the new block finidng time at about 10 minutes. If the price falls, miners find it unprofitable, go offline, the hashrate drops and then the difficulty also drops to keep the block time about the same. In this way the costs and rewards balance out.

But this also means that as the price of BTC rises, so does its (already huge) power consumption.

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