Topic: Anyone whose own some fair amount of bitcoins should also own a mining machine (Read 503 times)

For Bitcoin to be truly decentralised, each of the miners have to solo mine and not be mining for any other people. Mining pools can push for their own agendas and it is difficult for anyone else to detect. The fact is that, sure you can decentralise Bitcoin but it would have to come at a cost of people not being able to gain their investment back. And of course, who does the investment go to? Those mining companies that control a significant portion of the hashpower.

I certainly won't be mining, no matter how much I own. Because I know that the current price trend is not a direct relation to the monopolistic scene of mining. Miners aren't stupid, they would obviously try to pick those with higher fees.

Mining is profitable in Antarctic

I am so sick of the whining about the pizza, beers and coffee...technologies cannot be built over night !  I have a simple solution for everyone for now - I repeat:  for now ! Go buy your beers and pizza with the fiats- you've been doing that for hundred and thousands of year.  Another six months or a year will not hurt anybody!

And why the heck are you in such a hurry to validate and confirm the stupid coffee and beers ??  Hold your horses it will come soon enough...let's start with the higher priorities - like decentralization and keeping the big governments and the bankers away from our money !!  The whole reason why we are all here in the first place isn't it ??  

Same as I don't get why we so absolutely need smarter contracts ??  Yes, I understand it would be nice to have...but people:  prioritize yourself of what is more important !  You cannot have it all - at least not right now - soon - soon !!

Here are the key words:  priorities and patience !!!

Like mentioned in responses above it will not make any difference. It will cost alot more then what you might gain.

...BTW...nodes take a lot of work these days by inserting and removing these 100,000 1.44MB floppys I have storing the blockchain...

Where and when electric heat is needed or useful, there is no cost for mining.

First of all. I meant that China's government could be considered one collective miner. It was merely a point to show how much their government has subsidized mining with cheap electricity prices. I had no intention of saying that any individual was the same as any other. I am sorry if I was miss understood.

My point about more nodes was not about how many transactions were in a single block, but rather how many transactions the network could support before they started dropping.

I definitely did not say that Miners are not important or should not be incentivized..I am merely saying that full nodes are just as important, and should be incentivized as well.

Correct.  So there is no way to know which transaction is "First In".  Since every node would have a different order.


Correct.  The protocol does not have ANY rules about the order. Every miner can choose any valid order they want.  This is because it is the blockchain that decides the order of the transactions.  This is the WHOLE REASON THE BLOCKCHAIN EVEN EXISTS AT ALL.  Without the blockchain, there is no way to know what the order is, and that makes a decentralized cryptocurrency impossible to use).  With the blockchain, you can wait until your transaction is in the blockchain, and then you can know exactly what the order is.


Nope. That's not what happens at all.  You should probably take some time to learn a bit more about how bitcoin works, and what problems it solves before you try and suggest changes that will break it.


Correct.  The miners are free to choose any valid transactions when they build their blocks.  Since they must spend money on equipment, electricity, and a place to put the equipment, it makes sense that they would want to choose the transactions that pay them the most.


Until people aren't willing to pay the fee anymore.  Then the number of transactions drops, and the miners are forced to include cheaper transactions in their blocks in order to fill the blocks and increase their revenue.  The system will reach an equilibrium when the number of transactions that are willing to pay a specific fee is equal to the amount of space available in a block.  Then the blocks stay full, and the transaction fees stop increasing.


How do you know what order my mining node receives the transactions?  How can you assign an order to the transactions that my mining node receives?  Since there is no way for you to know the order that transactions are received at EVERY MINING NODE in the world, there is no way for your node to enforce a rule about it on those mining nodes.  You could solve this by having the mining nodes group some transactions together and declare the order.  To keep anyone else from lying about that order, you could require every mining node that groups transactions together to do some provable work before they can broadcast their group of transactions. Then you can require everyone to accept the queue of groups of transactions that has the most work.  Of course if you do that, you'll have invented the blockchain, and we already have one of those.  You still have no control over the order that mining nodes group those transactions in that blockchain that you are using as a queue, so you still haven't really solved your problem.


So, I can bribe a mining node to claim they got my transaction first? That way I can get into a block earlier?  And the higher my bribe, the more likely that a mining node will be willing to claim that my transaction was received first?  How is this any different than the fee competition that we already have?


You do understand that a node just sends the transaction to the nodes that it is directly connected to, right?  That's no different than a non-node wallet which also just sends the transaction to the nodes that it is directly connected to.  What about that is "faster"?  You still have no control over how quickly the nodes that you send to relay the transaction to the nodes they are connected to.


"The FIFO Queue"?

Where is this all-knowing queue found?  You do understand that there isn't a single queue somewhere that miners go to for transactions, right?  Each miner just keeps track for itself of the transactions that it has heard about from its peers.  Then it chooses from those transactions that it knows about.  You have no control over how that miner stores those transactions, no control over what it does with those transactions, and no way to know what order it received those transactions.  There may be transactions that you know about that the miner has never heard of, and there may be transactions that the miner has received which you know nothing about. If you don't know what transactions a miner has, then you aren't able to enforce your rules on their transaction selection.  They can just lie and claim that the only transactions they've heard of so far are the ones with the highest fees.  You wouldn't be able to prove otherwise.


Unless the miner lies and claims that they never heard about the businesses transaction.


Do segwit themselves?  To determine validity?  You are using words, but I don't think they mean what you seem to think they mean?  Perhaps they could just do orange juice themselves to determine the cleanliness of the transaction?  Bah, why am I even engaging with this nonsense?


Which we've now established can't work.


How will you identify a node?  How will you make sure that they get paid? How will you prevent someone from running a few million pretend nodes to collect all the fees while contributing nothing useful to the network?


The number of nodes has no effect on how many transactions fit into the blockchain.


I've not heard of any good ways to do this that aren't disastrously unstable.


Miners perform the VERY IMPORTANT job of choosing the order of the transactions, and cementing that order into the blockchain with the proof-of-work.  In exchange for performing this service to the community, we pay them.  Are you suggesting they shouldn't be paid to do this work for us?  If they aren't paid to do it, then why would they bother?  If they don't bother, then we don't have a usable system. The mining process is the reason we have a decentralized system.  Without the miners, we would need a single trusted entity that we could all go to to find out what the official order of transactions is.


Actually, it is the ONLY reason that the network is decentralized.


Which is a very racist and prejudiced thing to do.  To say that people that all live in the same country (or people that all have some similar physical features) are therefore identical and will all make identical decisions and automatically conspire together is beyond ridiculous and really ought to disqualify you from participating in any technical discussion, ever.


Your racism is showing again.


Even more so, we could say it is REALLY centralized in the northern hemisphere!  Perhaps we need to do something about that!  OMG! It is completely 100% centralized on the EARTH!

Get over it.


Yours certainly are.


Bitcoin probably would be better off if you would, please.

I guess what it really comes down to are a couple of things...if we want more decentralization then some of the resources should go to the full nodes or becoming node centric. Right now BTC is decidedly miner centric. Almost all the benefit goes to miners. I am not talking about usage benefit, just economic incentive benefit. That is not a bad thing, but it does tend toward having the network centralized...which in reality if you block all of China as 1, which essentially they are, then BTC is really centralized in China...which will not allow Bitcoin to become anything other than what it is now..so I guess our points are really mute. It is probably time to move on to some other coin...

I gotcha. So I totally agree that is how it is, but creating this competition especially with the growing amount of transactions is going to make Bitcoin specifically hard for mass adoption as a money transport. (Which I believe is what was originally intended...only recently people have been saying it is an asset to hold on to as an argument for higher fees. Much like buying/selling a home has huge amount of fees in the neighborhood of $15,000 between both the buyer and seller...closing, realtor, inspections... )

So, my argument to you then, to be able to have a system with a first come first serve basis could be by having more nodes and giving them a slice of the transaction fees...allowing the network to accept more transactions..

So yes, transactions are received at different times by different nodes, but that is not how transactions are entered into the mined block. What happens is when a block is mined, the transaction que is setup where the miner's software can accept the transaction into the block accepting the fee offered. It makes sense that the top fee amounts get included into the block first. This creates a competition which pushes fees higher. If instead  we assigned an order to the transaction when it was accepted by a node
based on first in first out and guarantee that the transaction(with a minimum transaction fee) then (if valid)  the transaction will eventually be added to the block chain, then this would have the effect of elimination of competition for the next block which would reduce transaction fees to the minimum. (There would be no reason to increase your fee because you que in line is based upon when the node broadcasts your transaction.)  This might also have the limited added effect of incentivizing running your own full node. Because then the faster you can broadcast a transaction the faster it would get to be mined...Once part of the FIFO que the business then can determine how long before the transaction will be added. Also businesses could do segwit themselves on the transaction to determine validity to decide whether to risk  giving the product and waiting for the confirmation or just waiting a predictable amount of time for the confirmation to come in before dispensing.

You can't have a "first come first serve" policy (i think this is what you are talking about) because the system would collapse in an huge queue of transactions. At some point you need to make a cut and stop dropping transactions because resources are limited, this is why the fee market is the only solution thus far, as well as trying to decrease block weight with measures that some consider controversial or unsafe.

What is clear is, increasing the blocksize centralizes the network, but it's yet to be seen if Bitcoin can survive with the same blocksize forever. All these block weight decrease measures (MAST, Schnorr, and the now active segwit) must be tested a ton and would need to be on the mainnet for a couple of years before I would call anything other than legacy transactions safe.

Trying to increase the blocksize will always be an incredibly complex problem that will most likely always end up in 2 Bitcoins, one that wants to stay as it was, and one that wants to have a bigger blocksize.

What do you mean by "first in first out"?
Transaction relay times do not matter because nodes receive different transactions at different times.
That's why the blockchain is needed and why blocks are timestamped.

So, I think there is a huge misconception of so called 'greedy' miners. The issue of higher fees isn't really the miners fault. It is the rules of the protocol that is.  For example:

 In the protocol (disregarding the security aspect for a moment) It doesn't matter if there is 1 miner mining or 1 billion miners mining. The maximum number of transactions allowed in a block is exactly the same and the amount of time for that block to be mined will also be the same. 

I think maybe a solution to high fees would be to make a rule that would require a First In First Out system with a guaranteed minimum fee. Now this wouldn't decrease transactions or transaction time, but would remove user incentives to offer higher fees because they would have to wait their turn to be confirmed, creating a more level playing ground. This would also give businesses some reassurance that they will get paid once the transaction has been broadcasted in a somewhat predictable matter of time.

Just a thought.

Actually, it can be done with a third of network hash power. The reason that considering nation-states is especially important here is that their incentives are external to Bitcoin block rewards. Therefore, rational mining incentive (itself still unproven long term) isn't necessarily a strong enough deterrent to prevent censorship attacks.


Sure. If vast amounts of wealth are transferred from fiat currencies to the Bitcoin economy, could that change the equation? If enough money flows from fiat currencies into Bitcoin/cryptocurrencies, surely governments will fear for their monetary sovereignty. Ideally, these events coincide such that governments actually have considerably less resources to attack the network.


Again, you are only talking about short-term profit. It's strange that people talking about mining as if it's not an investment. Your hardware and electricity costs are an investment. That doesn't necessarily entail immediately dumping to cover principal and overhead.


Yes, of course that's the assumption. If it weren't, then why would you make a long term investment? I already addressed the fact that buying bitcoins directly can be more profitable in the previous two posts....


At "an economic loss?" That's the nature of investing. How is that so different than buying BTC before it immediately dumps 50% in price? Investing involves a principal that can be lost. Mining investments entail USD principal/overhead and USD ROI. It's simply a form of investment in BTC where players like Bitmain currently have a big edge. That edge is disappearing, as discussed earlier.


What makes the cost unreasonable, on a long term basis? You apparently think the uptrend in difficulty will never end. Similarly, then, the uptrend in price will never end () So, why is the cost unreasonable? You point to the difficulty trend but refuse to acknowledge the BTCUSD price trend that corresponds to it.

As pointed out above, the incentives of nation-states to attack Bitcoin go far beyond block rewards. I'm far more concerned about mining pools that are operated or co-opted by nation-states. The network needs to harden against this possibility.


Sure, miners can run their own node. The reason they may not in the future is the same they don't now: hash pooling, orphan rates, optimal mining code, etc. None of that changes what I said.

As pointed out above, subsequent generations of ASICS will reduce the "cheap hardware" edge as optimizations become fewer and further between. Bitmain will not dominate the market forever as they have for the past 3-4 years. Also, the days of government-subsidized mining in China seem to be coming to an end, which seems to be pushing miners to different localities including Canada, Switzerland and others. Indeed, miners need cheap electricity, but for example, all of Hydro Quebec cryptocurrency customers get the same rate across Quebec: $0.0394/kwh (3.94 U.S. cents).

I was referring to the fact that it can't be a currency if users can't transact. Unless any entity can gain a large majority of control of the network, they cannot censor Bitcoin effectively. The point is, if an average joe can run a miner without any issues, cost, profitability, etc. Isn't it more likely for governments, who have vast amount of resources to be able to better obtain more hashpower than most people.

The marginal miners who can't cover their overheads are likely the small-time miners first. Mining farms would make it such that unless one has a cheap electricity, they cannot profit.

So that's under the assumption that Bitcoin will increase far above its current price point? Is it more profitable to buy ASICs and then mine than to just buy Bitcoins directly?
Yeah, I get the point. I still don't get why is it rational for normal users to be mining Bitcoins, at an economic loss without actually gaining anything. Big players have far too much hashpower than the users themselves. Sure, the network would be decentralised if everyone is mining with a significant hashpower but the cost of it makes it unreasonable for anyone to do so. There's no incentives for any mining farms to execute a 51% attack or anything similar.

I don't get the last part; can't the miners themselves just run their own node? They never needed a pool for them, antpool is ran by bitmain and so on.

Yeah sure, it may attempt to level the playing field. However, you have to keep in mind that most farms have access to cheap hardware and electricity that makes it suitable for mining.

What's your point? Who suggested you couldn't? The point was about hardening Bitcoin's network from attack. You conveniently omitted from the quote the statement about considering future nation-state attacks and censorship.


Yes. And marginal miners who can't cover their overheads shut down. The difficulty will only adjust downwards until an equilibrium is met and the trend reverses. That's the entire point of the difficulty adjustment algorithm. If mining speculation far outpaces price discovery, marginal miners shut down. This isn't a permanent situation.


Re-read what you quoted. Coins I mined years ago have ROI'd many times over. You're only thinking in terms of someone who immediately dumps to cover all overheads. You say you're talking about long term profitability when you're actually referring to short term profitability.


No one said it wasn't more profitable just to buy bitcoins. The theme of this thread is concentration within the mining ecosystem. Hence "consider it as an investment in the currency, since decentralized mining is required to secure Bitcoin from majority-miner attacks." The implication is that a casual mining investment will be less profitable than merely buying bitcoins. But merely holding bitcoins also gives you no say over the network. Only economically important (transacting) nodes and hash power is relevant to consensus change.
 

Again, you are only thinking in terms of never-ending difficulty increase (sort of like a never-ending bull market). If you think mining speculation will always look like the 2013-2018 period, I think you are gravely mistaken. That's not how markets work.

It's predicted that ASIC fabrication will become more competitive in the future, as optimizations become increasingly difficult. That can significantly level the playing field vs. players like Bitmain. For example:


You're also only thinking in terms of the current pool ecosystem, as if it's static. Pool incentives can certainly evolve over time to address the needs of miners. Like the exchange system, all current market participants flood to only a few entities. That may not always be true, especially if the interests of pool miners begin to diverge significantly from those of operators of prominent pools.

I don't think mining machine is a good method for improving your economy. I think the best method now is to study the rise and fall of bitcoin and invest in it. It's a method of earning the least amount of money but still has the words if you have smart calculations. On the mining machine, I think it costs a lot of power and reduces the life of the excavator. You should know that a bitcoin digger is not cheap.

so many misconceptions about bitcoin and blockchain in one topic (for TS)
you can own the goods but not the tools,so there is no need to own a miner if you have bitcoins
10 bitcoins is more than 130.000$ at current prices,do you think every single holder bothers with mining?
as it has been mentioned above,the number of miners and the increased difficulty doesn't solve the uncofirmed backlog