Topic: difficulty too high while bitcoin society too small - page 2. (Read 31343 times)

I don't mine either.  Why mine when you can offer a service to the Bitcoin community?

http://forum.bitcoin.org/index.php?topic=8565.msg124597#msg124597

Vinyl for bitcoins!

~Scottingham

Ah, SETI is offline due to funding. 

You've convinced me, I'm switching back to SETI.

Wait actually I don't have any equipment because mining is a specialized task that I don't need to concern myself with because I don't have a comparative advantage there.

Some mothematical model of miners is READY!

First, look @
http://bitcoin.sipa.be/speed.png

Consider latest 2.5 months, we can see an exponential-like 'loop' in exponential axis 0Y:
a 'loop' (ROUGHLY) starts @ Mar 15, 2011 (700 000 Mhash/s), ends @ May 30, 2011 (3 500 000 MHash/s).

Note, there is also previous 'loop' of the same 'form' on the graph @ Dec 15 2010 - Feb 28 2011 (note, the same 2.5 months duration)

The latest 'loop' can be represented as a formula:

total_power (t, days, in MHash/s) = 250*(3162 + 2.5*10^ (0.0466*t)),
where
3162 - CONSTANT number of miners @ period Mar 15, 2011 - May 30, 2011 (our 'famous' ~ 10 000 miners)
250 MHash/s - typical power of GPU of single miner before upgrade @ Mar 15, 2011
250*2.5=625 MHash/s - typical power of GPU of single miner  after upgrade @ May 30, 2011, where we observe a tiny 'fall' of total power
(note, compare with Mar 05 2011)
0.0466 - is norm koefficient, that all miners has upgraded their GPU till May 30, 2011, from 250 MHash/s to 625 MHash/s

I assume all miners observe how does total power increases with time. They are 'race participants'. And becouse they did not understand MY bitcoin society's crash theorem, they want to obtain max. profit, so they were forced to upgrade their GPU and continue 'racing'.

So, miners' 'total intelligence' is a classic system with positive feedback.

See the MODEL graph plotted:


total_power (0 = Mar 15, 201) = 794328 MHash/s (log_10 = 5.9)
total_power (75 days = May 30, 2011) = 3162227 MHash/s (log_10 = 6.5)

compare with data ACTUALLY observed:
total_power (0 = Mar 15, 201) = 700000 Mhash/s
total_power (75 days = May 30, 2011) = 3500000 MHash/s.

ALMOST 90% MATCH.

==================

If the number of miners were growing exponentially itself, we PRIMARILY observe LINEAR curve in the exponetial axis (0Y).

In fact, since Dec 15 2010, @

http://bitcoin.sipa.be/speed.png

WE DO NOT observe any growing LINEAR behaviour (in exponetial axis).

So number of miners = 3162 = const (t), since Mar 15, 2011 by evidence, and (may be) since Dec 15 2010 too.

If you still interested in, I may compute & model the Dec 15 2010 - Feb 28 2011 period too.

All else being equal, what kind of curve does your valuation based on difficulty follow?

For example if all buy/sell/trade interfaces for blockchain-based currencies all accepted any such currency, but at different exchange rates, what kind of relation would you expect, or possibly even code if coding artificial intelligence market-maker bots, between difficulty and value?

Or if considering multiple currencies confuses the issue too much, how much value would how much change in difficulty change your personal valuation of how much a bitcoin is worth to you?

The "you" herein is intended generally to each reader.

Possibly some readers do not particularly care whether difficulty is high or low, only whether technical indicators seem to be predicting a rise or fall in the price of the coins?

But because I have seen many comments indicating that any blockchain running at less difficulty than whatever difficulty bitcoin happens to be running at any given moment in time is relatively worthless compared to the higher difficulty blockchain (at least if the higher difficulty one happens to be the original bitcoins' blockchain) I am interested in clarifing numerically that "relatively" relation. Is it a simply direct ratio? Or exponential? Asyptotic at some point? Or what?

How important would difficulty be if it turned out that the original bitcoin was the one running at lower difficulty? How much value would bitcoins lose in your personal valuation at what ratio of lower difficulty that an other or many other blockchain(s)?

Do those who believe prices will reach some kind of equilibrium near the cost of mining them believe whichever blockchain comes closest to that equilibrium would on that basis seem to them a better buy, having a more realistic, in their system of valuation, price?

-MarkM-

Again, no. I'm not wasting my time considering things on your behalf. You have a theory? Then come up with data to support it, and bring it all here together. Otherwise you're just wasting our time. Your latest theory, by the way, is not exactly new. It's been debated ad nauseum elsewhere on this forum.

Gold words. Now I see your are honest person in your deep thinking. I will try to do that. So I will not speak abouth this theme for some days..
-----------------
You may consider another problem - mining pools.

There is no formal 'cryptographic-trust' relationship between miner and pool. So pool's admin can manipulate with profits, powers, etc. But, because the difficulty is skyrocketing, single person can not mine effectively. So, pool's admins become the aces of bitcoin society. Now we can see 3-4 large pools. Their aces may make a cartel deal.

You see, pool's admins becomes the global corporations, exactly what we want to avoid in bitcoin system. So bitcoin currency is centolized even now, in earlier stages. With current difficulty algorithm (& bitcoin communication protocol) there is no chance to de-centrolize bitcoin in such thinking.

p.s. also, single miner may wait for *weeks* to generate a block. he can not see *continuous* (but small) profit grow, being single.

If by MEMBER, you mean mining operator, that might be true.

But: did everyone mine gold from a gold-mine back in the gold-rush days, or only 10.000 people?

How many people *use(d)* gold? More than 10.000? Yes!

Also: of course people can still get into mining business: use a pool, you'll get your fair share, just as the old miners.

No. You're the one coming up with wild theories. You need to back them up with hard data, not ask people who disagree with you to do your research for you. It's time for you to "put up or shut up". Let's see your data, the data you used to arrive at your hypothesis.

I speak about total volume of BTC being traded on all BTC exchanges world-wide, per day. Also you can study the number of different goods' kinds, being traded for BTC directly (just T-shirts & coffee caps & etc??).

But remember, computing BTC trade volume, or number of goods' kinds, sell for BTC, is not the goal itself. To estimate the number of miners & number of traders, as function of time is THE goal.

Of course, to estimate number of miners & traders is not trivial. Possible hints are given by number of exchanges being opened, per unit time. Or number of NEW kind of goods being selled *directly* for BTC, per unit time, weighted by their trade volumes in BTC.

MtGox being the largest exchange, may indicate the things quite accurately. So if I see average trade volume of BTC upon MtGox is not increasing exponentially (or ever increasing) for 1.6 months, it is good indicator of danger.

So, answer me:
- how many traders there are on all BTC exchanges world-wide, as graph/function of time?
- how many miners there are on all BTC pools (&singles) world-wide, as graph/function of time?
- how many goods (kinds of goods, volumes of goods) sell directly for BTC world-wide, as graph/function of time?

As soon as you compute these 3 functions/graphs, you see the confirmation, that current difficulty algorithm kills bitcoin society.

What bitcoinBull said. The supply of new bitcoins is relatively static - roughly 50 every ten minutes. Expecting exponential growth of bitcoin supply is just wrong. A "SEVERE MISTAKE!", even.

Incidentally, afterburner229, could you knock it off with the ALL-CAPS? You can use *stars* for emphasis, or use the formatting tools or format your text manually, like this:
-> This is bold
-> This is italicised
Better yet, allow the quality of your arguments to persuade, rather than the CAPITALS or formatting.

I think this is more of an education issue than a practical issue. Mining is easy enough, and there are plenty of people right here who will help new miners get started. More importantly, perhaps, buying and selling bitcoins is easy - but people get hung up on MtGox. bitcoin-otc and Ubitex are both relatively straightforward (I've used bitcoin-otc, haven't used Ubitex so I may be wrong here...) and the exchange I use the most these days, britcoin, is very easy to use - no Liberty Reserve, Dwolla or anything else, I simply use my existing bank account. I appreciate not every country/currency has a britcoin, but everyone, anywhere, can use bitcoin-otc. If you live in a country with a lot of people you're bound to find someone wanting to trade sooner or later.

That is kind of an amusing contrast when set against other claims that it is too easy to simply start another currency using Bitcoin code and co-operate with / compete with the original Bitcoins.

If original bitcoins keep going up in value like they have been, pretty soon it will cost you less than a bitcoin for a whole new 21 million coins of your very own, named whatever you want to name them up to trademark / servicemark type law limitations, or even more than 21 million if you prefer your currency to have more than 21 million available to circulate.

So don't moan about not being able to grab millions of coins dirt cheap, go ahead and grab some of any or all of the types that still are dirt cheap and if they too are not cheap enough for you simply start your own that you can sell as cheap as you think such things ought to be.

Play your cards - or your Freeciv Galactic Milieu nation - right and you might find you have at least as many buyers right off the bat as there are Freeciv Galactic Milieu nations that have already started their own currency, and at least as many buyers eventually as there are nations supported by the Freeciv software (hint: it supports quite a few already and the number keeps growing...)

-MarkM-

The most important thing for bitcoin to survive is to make more people believe in this system.

Right now, it is too difficult for new guys to get some bitcoins (either by trade or by mining).

afterburner229 is a troll...

Gotta' troll the obvious troll. 

Volume in dollars.

The growth occurs in volume of dollars, not volume of bitcoin.  The volume of bitcoin can only grow linearly.  So the volume of dollars is what grows exponentially.

Still trying to understand this arbitrary 10,000 number's origins and how someone can ignore the media/forum spikes to assert that the userbase is static

That is the charitable interpretation, yes.  See my other posts in this thread for less polite theories.

LMGTFY,

I see you are on the right way. Just remember you must start the algorithm change BEFORE all BTC exchanges start to fall.
I recommed you to verify my computations on people-time dependence in FEW days.

Now, it is night in Moscow. I go to sleep.. bye for a while..

Someone correct me if I am wrong (I have not read this entire thread), but the fallacy here is that AfterBurner is equating the size of the Bitcoin 'society' with the size of the Bitcoin mining 'society'. Bitcoin mining will from here on out always be a niche enterprise within the Bitcoin 'society', dominated by those with the time and expertise to compete for mined Bitcoins. Everyone else is a speculator, entrepreneur, or trader. The number of people using Bitcoin outside of mining will be a much larger and limitless number of people. Hence, the total size of the Bitcoin 'society' is potentially many times larger than the size of the Bitcoin mining 'society'. I don't see a problem here.