I'm assuming that given the choice between software upgrade A, from some foreign source, that modifies the protocol in favor of some other interest group, or software upgrade B, from the same place they got their software in the first place, that protects their own interests, they would choose B.
Wait, are you saying that there is an Authority that the bitcoiners must trust?
You must be referring to the The Shrem Karpelès & Friends Foundation, and/or Gavin Andersen who works for it, as the source of the Red Button upgrade B. But why do you presume that an entity that has Sergei "Ponzi King" Mavrodi and Brock "RealCoin" Pierce on board, as well as many of the big miners, would not side with the big miners' cartel? How can you be sure that Gavin will not be employed by the cartel at the time?
The Red Button
threat may serve to protect the user's interests against miner abuse, if it is credible. However, actually
carrying out that threat would be extremely damaging to the users, because it would inevitably split the coin and cause the total price to drop. Whoever calls for rebellion and releases that code will not be "protecting the users interests", but telling them to sacrifice their money for the sake of the PoIotPUGTiiaGI (Principle of Inviolability of the Protocol Unless Gavin Thinks it is a Good Idea).
Perhaps the Red Button solution should be renamed "the Jim Jones solution"?
As for who would mine on their PC, that is simply incentive based. The same 25 BTC are being produced every 10 minutes.
You meant 12.5 rebelBTC per block. (It is the ex-bitcoin miners who will earn 25 cartelBTC per block.) But it doesn't matter.
Given 25 BTC being mined every 10 minutes, profit motive will attract people to mine on their computers, mine on the old computer in their attack, mine on their friends' computers, buy new computers, etc. until approximately the same 150 MW is mining as before.
Correction: until the electricity and equipment costs are Pr*1800 $/day, where Pr is the market value of the rebelBTC coin; that is, at most (Pr/Po)*75 MW, where Po is the BTC price before the cartel's announcement. Even if the rebel's bitcoin were to retain the full value of the old bitcoin, that would be only 75 MW. But it doesn't matter, either.
Please redo your calculation after recognizing that even if only 10% of users get involved, at all, with mining, many of those will get involved on a significantly larger scale. [ Many players will ] join the party, bringing many more computers to grab their share of the "Free Internet Money!"
Well, the cartel will want to be the first in that line. As soon as John Connor releases the rebel mining code, the SkyNet cartel will download it and set some rented CPUs to the task of jamming the rebel blockchain (and warn users that it will be doing that). The cartel will keep increasing their CPU power as needed, so as to retain a majority of hashpower in that chain too. So, the users who upgrade their wallet software to the rebel protocol will not be able to use their coins; and any opportunistic miners who try mining the rebel chain will get nothing. This attack may cost the cartel a lot of money, but the stake for them is half a million dollars a day for 2 years, so they will try all they can to preserve the value of their coin. How long will it be, before the rebel users and miners give up?
(By the way, I meant that the cartel can rent cloud
computing, not cloud
mining as it its usually understood.)
Note also that, since the goal of pressing the Red Button is to destroy the value of bitcoin, the cartel could also justify the jamming of the rebel chain as an action to save bitcoin by preventing the disastrous split; and call for all good bitcoiners to come to the help of their cause, by cooperating in the jamming.
But it doesn't matter either.
I hope you kept reading my post beyond the first half, specifically beyond this sentence: "But let's say that a substantial number of users do join the rebel ranks, and the cartel leaves the Red Button chain alone, or fails to jam it."
Note that the effect of the Red Button would be to create a new crypto, the rebelBTC, that is a cloned copy of the original Bitcoin (oldBTC), including its state. Namely, every owner of N oldBTC receives a gift of N rebelBTC, sitting in the same address of the rebel blockchain, which is accessed with the same private key. Meanwhile, the cartel will give N cartelBTC to the same user, in the cartel's blockchain, while blocking further use of the oldBTC. From that point on, each copy of each original satoshi can be hoarded, sold, spent, or burned independently of the other copy.
(For example, the USMS will suddenly find themselves owning 94'000 rebelBTC and 94'000 cartelBTC, as well as 94'000 oldBTC that they cannot move because of the cartel's jamming. They could auction each separately or (more likely) bundle them together in lots of (say) 2000 rebelBTC plus 2000 cartelBTC. In this second case, they would need to duplicate each transaction request for both chains as they deliver the coins to the winning bidders.)
The point is that the Red Button does not "steal" the users from the cartel's chain. It does not even give the unhappy users the option of taking their BTC out of the cartel chain and into the rebel chain. All bitcoin users would become users of
both coins.
So the cartel chain will continue to have all the bitcoin users, as well bitcoin's 500 PH/s network; whereas the rebel chain will have all the users but only a nascent CPU network.
This would be a very interesting experiment. Has this ever happened before -- somebody creating an altcoin that duplicates bitcoin's protocol
and its state, namely a persistent fork of the bitcoin blockchain?
The first question is what will happen to the prices Pc and Pr of the two coins, cartelBTC and rebelBTC, and how would they compare to the price Po of bitcoin before the split. It seems unlikely that Pc + Pr will be more than Po. (If that were the case, people would rush to press the Red Button now, without waiting for any attack!) Most likely, some of the old value would be lost, and the rest would be split between the two chains; so that Pr + Pc << Po.
The next question is how the remaining value will be split between the two chains. That depends on the credibility of the two coins in the eyes of prospective buyers (bitcoiners and non-bitcoiners). If the cartel sets out to jam the rebel chain, and manages to keep it jammed for sufficiently long time, then Pr will soon be zero. Since normal users will see no diffrence between oldBTC and cartelBTC, Pc will probably retain a significant fraction of Po. (I would guess Pc will be almost equal to Po, actually; but I know that I live in a fantasy world where bitcoiners care more about their money than about the ancap ideals.).
If a mining cartel does indeed fork the protocol in its favor as your model predicts, then I will come back here and eat crow. If it doesn't happen (over some reasonable period of time -- say by the next block having or the one thereafter), will you do the same? As you know I would prefer a substantial bet, but you apparently are either not confident in or insincere about your statements or don't like the idea of receiving free money from a stranger on the internet.
As I said before, I am not
predicting anything. You and other people claimed that a miner cartel cannot force a change in the protocol. I tried to show that it can, by providing a step-by-step plan that they could follow. That plan would obviously work, just as it always works for any cartel that can deny an essential service to its customers. But that would be an unpleasant fact, so you prefer to believe the fantasy that the 300 Spartan bitcoiners would rally at Gavin's call in a suicidal stand against the army of Persian money-chasers…
If Gavin could really do that, then who would put money into bitcoin?
)
