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Bitcoin is a Startup

blog.tlrobinson.net

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Re: Bitcoin is a Startup

#21

Post by kevinpet »

ewillbefull wrote: post #16
wmf wrote: post #11

Earlier quoted context omitted.

Just mine no transactions. After the network grinds to a halt the exchange rate will crater and then you can close out your short position.

It will almost certainly cost more money to obtain 51% hashrate than you could gain from a short position, by the time mining rewards aren't enough of an incentive. Even the NSA doesn't have enough computing power to achieve 51%.

This is naive. There's no natural process that ensures the network stays well distributed. If Bitcoin takes off, then why would the next hardware miner maker sell the product? Maybe they find it better to just run a significant portion of the market rather than deal with clients.

10 years from now, what if we have a handful of bitcoin mining firms, similar to the current role played by market makers like Getco or Knight?

You can't just dismiss this point. You need to come up with some process that makes it more valuable for someone to be a small player in the network than to go all-in.

Re: Bitcoin is a Startup

#23

Post by lingben »

jhuckestein wrote: post #6

I love Bitcoin and own some myself, but from the title I expected this article to be about how the "founders" of Bitcoin cash out from an early financing round and spend the rest of their days rich, regardless of whether the concept survives.

Given time everyone will come to realize that bitcoin is a very complex and elaborate ponzi scheme. One that will rewrite the books on scams.

Re: Bitcoin is a Startup

#24

Post by ewillbefull »

tlrobinson wrote: post #20
ewillbefull wrote: post #16

Earlier quoted context omitted.

It will almost certainly cost more money to obtain 51% hashrate than you could gain from a short position, by the time mining rewards aren't enough of an incentive. Even the NSA doesn't have enough computing power to achieve 51%.

I agree with the first sentence, but I'm pretty sure the NSA could do it. Until recently it would have only cost a few million dollars to fab enough ASICs for a 51% attack. I haven't seen a recent analysis, but it's probably still only in the 10s of millions (possibly 100s of millions)

The NSA probably specializes in general purpose computational power, they couldn't afford to compete with ASICs at this point. But they probably could destroy any alt-coin alternative to bitcoin in a heartbeat, especially Litecoin which is designed to be mined by general purpose hardware.

Re: Bitcoin is a Startup

#25

Post by dragonwriter »

ewillbefull wrote: post #16
wmf wrote: post #11

Earlier quoted context omitted.

Just mine no transactions. After the network grinds to a halt the exchange rate will crater and then you can close out your short position.

It will almost certainly cost more money to obtain 51% hashrate than you could gain from a short position, by the time mining rewards aren't enough of an incentive. Even the NSA doesn't have enough computing power to achieve 51%.

> It will almost certainly cost more money to obtain 51% hashrate than you could gain from a short position

If true, that means it wouldn't be an action of a rational attacker bent on financial gain, but not all attackers are rational, and financial gain isn't the only conceivable motive for an attack on bitcoin.

> Even the NSA doesn't have enough computing power to achieve 51%.

How, exactly, are you assessing the quantity of the relevant type of computing power available to the NSA in order to make this claim?

Re: Bitcoin is a Startup

#26

Post by dragonwriter »

ewillbefull wrote: post #24
tlrobinson wrote: post #20

Earlier quoted context omitted.

I agree with the first sentence, but I'm pretty sure the NSA could do it. Until recently it would have only cost a few million dollars to fab enough ASICs for a 51% attack. I haven't seen a recent analysis, but it's probably still only in the 10s of millions (possibly 100s of millions)

The NSA probably specializes in general purpose computational power, they couldn't afford to compete with ASICs at this point. But they probably could destroy any alt-coin alternative to bitcoin in a heartbeat, especially Litecoin which is designed to be mined by general purpose hardware.

> The NSA probably specializes in general purpose computational power,

I would agree that this is likely in the sense that the bulk of their expenditures on computing power are likely directed at general purpose computing power.

That doesn't really mean that they couldn't have expended fairly vast amounts on special purpose computing, as well.

> they couldn't afford to compete with ASICs at this point.

Given that the NSA is kind of concerned about monitoring things (especially things used by people who are particularly concerned about avoiding government monitoring), and given the degree to which people with that interest have been the focus of bitcoin, on what basis do you assume that they didn't get in on the ground floor with ASICS as they became available (or earlier)?

Re: Bitcoin is a Startup

#27

Post by TDL »

lingben wrote: post #23
jhuckestein wrote: post #6

I love Bitcoin and own some myself, but from the title I expected this article to be about how the "founders" of Bitcoin cash out from an early financing round and spend the rest of their days rich, regardless of whether the concept survives.

Given time everyone will come to realize that bitcoin is a very complex and elaborate ponzi scheme. One that will rewrite the books on scams.

How is it a ponzi scheme?

Re: Bitcoin is a Startup

#28

Post by drivebyacct2 »

lingben wrote: post #23
jhuckestein wrote: post #6

I love Bitcoin and own some myself, but from the title I expected this article to be about how the "founders" of Bitcoin cash out from an early financing round and spend the rest of their days rich, regardless of whether the concept survives.

Given time everyone will come to realize that bitcoin is a very complex and elaborate ponzi scheme. One that will rewrite the books on scams.

My favorite part is when this is repeated over and over without any explanation or elaboration.

Re: Bitcoin is a Startup

#29

Post by [deleted] »

randyrand wrote: post #15
fragsworth wrote: post #5

Slightly off-topic, but I don't understand how it can survive long-term. A 51% attack seems inevitable. The ability to short-sell bitcoins will eventually become widespread. Weigh the estimated cost of building a 51% attack network versus the estimated gains of short-selling all the bitcoins in the world. Suppose you can make 10% of the market cap ($1.5B) of bitcoins by short-selling the entire market - a very low es…

While I mostly agree with you - it's easier said than done. How exactly are you going to buy $150 million (or whatever the needed amount is) of ASICs without being noticed? The government could obviously do it - but at least in the near future that sounds far fetched. Like wise as soon as your attack is noticed your IP addresses would be blocked by the other clients preventing you from adding to the chain. Edit: afte…

[deleted]

Re: Bitcoin is a Startup

#30

Post by tlrobinson »

dragonwriter wrote: post #26
ewillbefull wrote: post #24

Earlier quoted context omitted.

The NSA probably specializes in general purpose computational power, they couldn't afford to compete with ASICs at this point. But they probably could destroy any alt-coin alternative to bitcoin in a heartbeat, especially Litecoin which is designed to be mined by general purpose hardware.

> The NSA probably specializes in general purpose computational power, I would agree that this is likely in the sense that the bulk of their expenditures on computing power are likely directed at general purpose computing power. That doesn't really mean that they couldn't have expended fairly vast amounts on special purpose computing, as well. > they couldn't afford to compete with ASICs at this point. Given that the…

ASICs (or mining in general) aren't needed to monitor all Bitcoin transactions. A mining node is indistinguishable from a non-mining (full) node.

The only reason for ASICs is mining (either legitimate or as an attack)

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