Topic: difficulty too high while bitcoin society too small (Read 31398 times)

You are equating 'safe-ness' of the currency (ie can it be hacked, or otherwise fraudulently manipulated) with pure stampeding feeding-upon-itself bubblemania...two different issues.

Right now it is pretty clear that demand is overwhelming supply of BTC...the only question that needs answered regarding whether this is a bubble is if people are demanding those coins for the exchange of goods and services or are they demanding those coins because they just went up over %9000 and they are convinced they will do it endlessly...and so snatch up the meagre supply at that price and stash them in an encrypted wallet....i'm guessing it's the second...

The real test comes when some bit of news or outside disturbance of some kind causes a little hiccup in this run-up..and starts shaking a few speculators from their trees....(ie a correction).

How safe do we need a bitcoin to be? Well, it depends on price.

Difficulty means that bitcoins are more secure. Mining is used to process transactions, and as we reach an increasing computing capacity it's more and more difficult to trick the system into double-spending. When price rises, miners back the value of a bitcoin making it safer.

In other words, it will only be a bubble if we don't actually need bitcoins to be that safe.

The elephant in the room here is what appears to be rampant SPECULATION.

If exchange rate increases for BTC were due to an increasing demand from individuals who would like to use those coins for goods and services, I would feel alot more warm and fuzzy about it.

But I fear that what we have here (at least in this small little time chunk of bitcoin's overall history), is a speculation machine.  People hear about bitcoin and the "make cash from your wall socket" angle from various articles and rush to snap up a used 5870 from Craigslist to begin printing money.  They then experience a difficulty increase and say wtf??  Then of couse, buying up the relatively cheaper bitcoins on the exchanges looks mighty attractive (cause it is always and ever going to increase in price right? )  Enough people doing this drives the price up...which low and behold, makes mining attractive again to a whole new batch of speculators. 

The problem as I see it is that the apparent 'strength' of the currency is really just a giant speculative bubble, supported by a legion of basement dwellers hoarding BTC's in encrypted wallets.

Again, this might still all shake out in the end...after this phase of rampant speculation...I am VERY curious to see if/how that transition will occur.

Agree.

But the faith should not be dependent on many people MINING Bitcoin, but on many people USING Bitcoin.

I can relate to your feelings, since I discovered the hype for myself a few days ago. I realize that by the time my next deployment step with these shiny new 6990 watercooled miners is running, I will probably be heating my appartment with it and not making profit at current rates.

The real faith comes with people USING it to buy and sell goods and this needs a totally different form of software development.

Can't we always produce more coins just by splitting them further?

So maybe we should look into splitting techniques and into wallet improvement.

On the other hand: A thing which scales exponentially...always is very bad to adapt. So let's see.

And: If we split coins and prices go up...the early adopters in mining will make a fortune...and this might lead to greed and bad temper in the community. Still, it's granted. The guys took the risc !

I dont see afterburner being a troll. I mean he has gone to great lenghts to explain his points, and it seems he also wants to see the project succeed. Why so much aggressivity guys? If you dont like the thread, or dont like discussing possible bitcoin flaws, read somewhere else.

His motivations for being interested in the project initially (like wanting to be a miner) are not relevant. We all have different motivations, and all of them are valid.

I am investing some money in this thing, and I am glad there are smart people analizing possible problems of the project. Getting too passionate about this is not healthy for rational thinking. Neither is blocking yourself from considering potential flaws.

This thread makes me wonder of something very important. As a newbie, I have a question for the comunity:

Will the current implentation of Bitcoin induce CONCENTRATION of mining/block-creation power in few hands as difficulty goes up faster than moores law, and more and more expensive hardware is needed to be in the game??

Could we reach the time where interested big corporations or governments could be the only relevant block producers??

If that is the case, can concentration of power in mining bring security issues? In other words, if some cartels are formed, could the whole bitcoin project be manipulated by few people?? By adultering block chains for example??

I think whats important to consider from afterburner issue is this:

IS DESCENTRALIZED BLOCK CREATION IMPORTANT FOR THE SECURITY AND LONG TERM INDEPENDENCE OF BITCOIN?

I read somewhere that Bitcoin assumes never a 50%+  of the mining power will be concentrated in one hand. This is ludicrous to my current level of understanding.

This raises some further questions. As difficulty changes every 2 weeks, what happens if a Google like company gets into the game suddenlly with 10x the total combined power of current miners? Coud this sudden change of rules endanger bitcoin? Destroy it? I mean lets consider this wild posibilities. For big corporations this move would be peanuts. Remember that the atomic bomb was the largest project in history, done in secret, and its whole effect was deployed in just minutes. And that was with the analog technology of 65 years ago.

Very eager to read the answers from the experts arround here.

I wanted my first post to be in a thread with a Amazing Troll from the bowels of hell so here i am,
I'm new to the forums, but not bitcoins at all, it seems you don't understand the idea that the bitcoin protocol has been decided already, the way it works is with hash/s, there is NO way to change the Crypto-currency system, sure, the difficulty can change to 1, and then the guys on ATI cards will still kick your sorry atom ass, it doesn't MATTER,just because you can't afford a ATI card doesn't mean something is wrong with the currency, not everyone is suppose to mine, you constantly make grandiose assumptions that are wrong in their core, you totally ignore some comments that obviously are too hard for you to comprehend, so here is my advice to you.

Step 1:
Find a Brick, also, a stone or anything hard at that size would do.
Step 2:
Wait until 2 AM
Step 3:
Go to some closed shop with a Show window, throw brick at window, get the cash, run, don't get busted.
Step 4:
Go to Sleep, wake up at 10 AM
Step 5:
Go to Newegg, and order your Brand new ATI Card!
Step 6:
Start mining, stop trolling about the system being bad because you can't afford a ATI card.

You seem to miss the fact, that it doesn't matter how the difficulty works, GPU's will always(in the foreseeable future) will kick your CPU's Ass in hash calculations.
the fact the difficulty is so high doesn't mean its less profitable, the opposite, you could have possibly mined a lot more BTC before, but back then, that BTC wasn't worth nearly anything on Exchange Value, Stop trolling, get yourself educated, spell check what you write since when you type with typos and are being incoherent, it makes you look more of a douche(that I'm certain you are,cheapskate).

Dude, this is awesome (except the part about chargeback by "third party")

Until you (or whoever will implement this), is done, I'll just use bitcoin, if you don't mind.

Awesome!

Please, please, please, please don't post here again until you are done writing it and have formal verification and proof of correctness in triplicate.

Unfortunately, bitcoin has other severe design damages. It's code should be completely rewritten from scratch, preferably in Haskell programming language. Because bitcoin algorithms has business with huge amount of money, they must be formally verified, like seL4 microkernel.

So, that is HUGE amount of work, I can not do it myself alone. I may just write 'boundary' design conditions:

- mining amount of BTC, per unit time, should be proportional to CPU/GPU power, but in degree LESS than 1, till 90% BTC will be mined, algorithm must prohibit any parallelisation like ATI GPU does with current bitcoin algorithm

- distributed system should reject any possibility to group miners or peers in pools by design: they should be completely independent forever

- mining difficulty should be normalized to attract at least 1 000 000 miners world-wide, being on-line each day, on average

- transaction propagation should work in 'soft' real time conditions: we must guaranty that ANY transaction should be completed in 10 minutes, without paying fee, and if fee is 1% of transaction volume, we must guaranty that ANY transaction should be completed in 10 seconds

- if client wish, he could able to get possibility to de-anonymize, and to attract third-party that can roll back a transaction, if second-party is unhonest

Afterburner, I suggest you start your own block chain with your superior ruleset. I'm sure everyone will see how awesome it is and drop Bitcoin like a hot bowl of semen!

"The truth stings your eyes".

SETI @ home society was growing exponetially up to Guiness Records Book, ONLY because
- SETI @ home 'difficulty algorithm' is of small constant CPU power consumption and
- fundamental psychological idea - 'to find brothers by intellingence'.

it's more pertinent than the arguments you've been putting forth in this thread

I'm starting to think that this whole thread is a psychological test.

Guys, it was just a psychological test. Why all of you do focus upon "vinyl vs. mp3" theme?
Why you do not focus on "bitcoin society vs. seti@home society growing rate"?

It is the kind of your thinking process: you focus on unrelevant themes, because they are more saturated emotionally. Vinil is a fetish itself, I know. Why we do not speak about girls? LOL))

Let's focus upon the main problem. Learn, how to control your thinking process from blur.

actually at this stage of the game why would anyone ever buy a cd when they can  own some awesome vinyl and just burn/rip a cd?

Of course this only works for people actually willing to buy music.

And buying an album that is worthwhile in it's entirety which is a whole 'nother issue these days

ah, not this bs again...

you would be surprised how many kids listen to vynil.

Great enthusiasm!

But 99.9% of people can not distinguish an mp3 @ 320 kbits/s quality from CDDA quality. For many genres of music, mp3 with such a rate is even more perfect than CDDA, because of mp3's psychoacoustics algorithm.

Young people do not accept vynil records, they simply go to youtube, itunes, vkontakte.ru, etc. So vynil records are rarities with volume, confirmed by few thousands 'old-men' world-wide.

What kind of service can you offer to young people, directly via BTC?

About SETI @ Home,
http://en.wikipedia.org/wiki/SETI@home#Statistics

Bitcoin society does provide the money profit to participants, but is too small and frozen by difficulty algorithm, int its childhood.

SETI @ Home does not provide anything - it spends electricity only - and see: "It is acknowledged by the Guinness World Records as the largest computation in history".

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Actual data on total number of BTC Exchanges' participants - *coming soon*. There is very pessimistic light too, as with total number of miners (~3000).