a hundred years ago most people thought the only way to make money in america was to be a gold miner. buying expensive equipment to mine for gold. now they have found it is much easier to just trade gold in shops/exchanges for profit.
once mining becomes too hard for the masses. the masses will move onto a new way of handling bitcoin. by trading it through service portals which internally (using binary databases) swap ownership, and maybe once at the end of the night they throw a transaction or 2 onto the block chain to even out the ledger(blockchain) between each of the services.
and people will begin selling products for their 20% profit in bitcoins, instead of thinking the only way to get bitcoins is through mining.
so relax mining is important for security, but not that important for profit making. there are more then 10000 ways to profit USING bitcoin that do not involve mining it.
Topic: But can it last? (Read 1148 times)
Sorry if this is covered elsewhere. But with an allowance of only one search per minute, I gave up trying to find it.
I seek assistance in trying to understand how bitcoin can last. My main concern is what happens as difficulty increases, transaction load increases, and the computational power needed to confirm transactions increases. We're beyond the point where CPU based mining is feasible. GPU mining is only possible in pools. ASICs are coming online that have more power, but when will that end?
It seems there will come a point in the future when only pools of $25,000 ASICs will be able to get anything done - and at what return? After many hours of reading on the topic, I'm left with the following questions:
1. Am I wrong that if no one is mining, no transactions get confirmed and nothing moves?
2. If the computing power is owned by only a few who can afford it, the integrity of the project is lost, isn't it?
3. Am I completely misunderstanding the way this works?
I seek assistance in trying to understand how bitcoin can last. My main concern is what happens as difficulty increases, transaction load increases, and the computational power needed to confirm transactions increases. We're beyond the point where CPU based mining is feasible. GPU mining is only possible in pools. ASICs are coming online that have more power, but when will that end?
It seems there will come a point in the future when only pools of $25,000 ASICs will be able to get anything done - and at what return? After many hours of reading on the topic, I'm left with the following questions:
1. Am I wrong that if no one is mining, no transactions get confirmed and nothing moves?
2. If the computing power is owned by only a few who can afford it, the integrity of the project is lost, isn't it?
3. Am I completely misunderstanding the way this works?
Yes, it can last.
The first thing you have to understand is Bitcoin is an experiment. A lot of what will happen with it is simply unknown. Being experimental isn't necessarily a depressing negative. The http protocol now used everywhere was experimental too. Bitcoin is a new model so it can't help being experimental. What Bitcoin has in its favor, though, are three very powerful assets: populist support, alliance with free markets, and very smart people working for its success.
Answering your questions:
1. Correct. As long as Bitcoin exists there must be someone mining.
2. Not necessarily. The composition of miners may change, but there will still be many of them. Also technology historically gets cheaper over time.
3. No you have a pretty good understanding.
You also have to understand Bitcoin is no longer alone. There are viable alt-coins now with the same desirable features as Bitcoin (anonymity, irreversibility etc.) like Litecoin which uses the Scrypt algorithm that made cpu mining again effective, and Novacoin. Movement toward overly centralized outcomes can move the market to support more decentralized versions.
Most Asics havent arrive yet.. so maybe in some months there will be alot of asics but now its ok.
Difficulty depend on total hashing power, less people mine? Difficulty decrease.
As for ASIC, you can buy 1000$ or 5000$ ASIC.
As for ASIC, you can buy 1000$ or 5000$ ASIC.
1. Am I wrong that if no one is mining, no transactions get confirmed and nothing moves?
if less people (lower hashrate) mine, the difficulty will go down
OK. That's an important piece that I missed.
Thank you for your concern.
1. Am I wrong that if no one is mining, no transactions get confirmed and nothing moves?
if less people (lower hashrate) mine, the difficulty will go down
That is the key point. Diffculty is always adjusted based on total hashing power. Therefore, if mining stops other miners will com on-line when it becomes economically advantageous. However, the big problem happens if one company decides to monopolize mining by producing ASICs and keeping them. Right now that is a possible threat because the current ASIC companies and very small and inexperienced.
1. Am I wrong that if no one is mining, no transactions get confirmed and nothing moves?
if less people (lower hashrate) mine, the difficulty will go down
1. Probably someone will be mining.
2. $25,000 ASICs have about the same cost of MHash/s/$ as the cheaper ASICs. See https://en.bitcoin.it/wiki/Mining_hardware_comparison. So it's not true that you have to buy $25,000 of mining equipment just to get in. $1,000 or even $250 will buy you a stake at the table with the same proportional ROI as the bigger miners.
3. Maybe a little. ASICs are a challenge mostly to non-ASICs. On the other hand, as specialized equipment they make Bitcoin mining more energy efficient, which is good in a way, even though it reduces the profit per MHash since the MHash of the network increases greatly with no corresponding increase in mining rewards.
Also, you can mine with your own GPU. The pools just make payouts more steady, as I understand it. Otherwise you might wait months between payouts. If you want to mine GPU, you should probably be mining Litecoin or one of its derivatives, not Bitcoin.
2. $25,000 ASICs have about the same cost of MHash/s/$ as the cheaper ASICs. See https://en.bitcoin.it/wiki/Mining_hardware_comparison. So it's not true that you have to buy $25,000 of mining equipment just to get in. $1,000 or even $250 will buy you a stake at the table with the same proportional ROI as the bigger miners.
3. Maybe a little. ASICs are a challenge mostly to non-ASICs. On the other hand, as specialized equipment they make Bitcoin mining more energy efficient, which is good in a way, even though it reduces the profit per MHash since the MHash of the network increases greatly with no corresponding increase in mining rewards.
Also, you can mine with your own GPU. The pools just make payouts more steady, as I understand it. Otherwise you might wait months between payouts. If you want to mine GPU, you should probably be mining Litecoin or one of its derivatives, not Bitcoin.
Sorry if this is covered elsewhere. But with an allowance of only one search per minute, I gave up trying to find it.
I seek assistance in trying to understand how bitcoin can last. My main concern is what happens as difficulty increases, transaction load increases, and the computational power needed to confirm transactions increases. We're beyond the point where CPU based mining is feasible. GPU mining is only possible in pools. ASICs are coming online that have more power, but when will that end?
It seems there will come a point in the future when only pools of $25,000 ASICs will be able to get anything done - and at what return? After many hours of reading on the topic, I'm left with the following questions:
1. Am I wrong that if no one is mining, no transactions get confirmed and nothing moves?
2. If the computing power is owned by only a few who can afford it, the integrity of the project is lost, isn't it?
3. Am I completely misunderstanding the way this works?
I seek assistance in trying to understand how bitcoin can last. My main concern is what happens as difficulty increases, transaction load increases, and the computational power needed to confirm transactions increases. We're beyond the point where CPU based mining is feasible. GPU mining is only possible in pools. ASICs are coming online that have more power, but when will that end?
It seems there will come a point in the future when only pools of $25,000 ASICs will be able to get anything done - and at what return? After many hours of reading on the topic, I'm left with the following questions:
1. Am I wrong that if no one is mining, no transactions get confirmed and nothing moves?
2. If the computing power is owned by only a few who can afford it, the integrity of the project is lost, isn't it?
3. Am I completely misunderstanding the way this works?
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