Topic: CATO Evaluation of Bitcoin Eventual Collapse of protocol (Read 2403 times)

CATO, What do you think about Bitcoin???

Uhhhh??? Don't buy them...

Why???

Uhhh welll? Uhhhhh??? Flinstones use them and uhhhh they like Ghostbusters and uhhh to be successfull you have to be stupid and have manners too!!! Uhhh??? I have to go take my Alzheimer's Medication‎....

Uhhh??? Oh yeah now I remember... Bitcoin puts me out of a job and out of business....

This.  Also, in the not too distant future we'll hit the same process as CPUs, memory etc for miners.  E.g. 14 nm, 7 nm, 5nm.  Once mining rigs hit the same process that CPUs and other semiconductors are using for that generation hash rate increases will level off and growth will be due to the number of chips sold and much slower increases in hash rates due to process improvements.  E.g. the Avalon was a 110nm process for their chips, the AntMiner S3 is 28nm process and other chips are using smaller processes (all iirc although I think they are accurate or very close).  The performance increases between GPU and 110nm was huge.  The performance increases between 110n and 28nm (for example) are large too.  

However, going from 28nm to 14nm (what Intel is using in many of their chips now) is good, but not the same order of magnitude as 110nm to 28nm.  Once you see new mining rigs all running on the current process at a high clock rate, then I believe that you will end up with more opportunities for "hobby miners" since they will be able to project an ROI much easier and it will be much more likely that they will be able to have a ROI.  People will be much more inclined to purchase a miner if they know it won't be replaced by something 100 times better in 3 months.

This will be a somewhat more stable situation in terms of hash rate increases and miners coming to market.  It will be closer to how CPU mining was in 2010 and GPU mining was in, 2011-2012 (even the first third of 2013) where you could buy a few video cards and have a pretty good idea that they would return X BTC/week (decreasing slightly each week due to added GPUs on the network) for a year or two until a new video card came out and that might cause a slight increase in the difficulty increases.  And even then you might mine some fewer BTC/week but not 1/1000th of the number in that period like the difference between January 2013 and November 2014.

It is difficult to model and so it is not surprising that they may not be catching all the nuances there.  I certainly wouldn't be confident in being able to predict it all going forward.  Particularly with so many variables - regulations, halving in ~18 months, improvements (e.g. sidechains etc), new uses.

as for saying ghash is a 'dominant player'
the video shows that GHASH has 300k users.. thats 300k individual people. not one entity (but nice try with a ghost buster analogy)

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Yup. Additionally, large miners are likely to, eventually, vertically integrate other services. There are some potential negatives (as well as positives) to that, but it also probably means that there are a number of workable business models for a number of large fairly-efficient miners, as opposed to an endgame where strictly the least-cost producer gobbles all hashpower.

Regardless of all that, the same arguments that are thrown around about mining could be thrown around about data-centers in general (OMG! there will only be a single least-cost/massive-scale producer that will run everything!), or pretty much *any* industry for that matter; this is really just a (mostly) extrapolated-short-sight criticism of capitalism in general, not specifically bitcoin mining. Few industries actually coalesce to pure monopoly in practice.

Anyway, the natural incentives of bitcoin mining make it less likely than other domains.