Topic: How Bitcoin Centralizes Profit & Control in the Hands of Miners - page 2. (Read 2587 times)

you should thank "specialized miners", since without them, bitcoin would have no such tremendous computing power...

some have already given a solution: creating an altercoin which can be mined only with CPU... but they ignore the fact that there still exist those who own botnets, by which they can control more than hundreds of thousands CPUs in the world...

Every one can enter the mining game. That automatically means that, as long as you can make money mining, new miners will enter the market until it reaches the point where it's barely providable.

It doesn't matter how much money is given to the miners, being it new coins or fees. This only sets the point for when it will not be providable any more to start mining and therefore new miners stop entering.

So the only thing that is actually influenced with how much money is given to miners is how much money is spend for securing the network.

The only reason that is currently not true is the transition to a new technology (ASIC) as soon as this transition is complete, mining will become barely providable, as it was with GPUs before.

Unfortunately, without miners to confirm your transactions, it is entirely possible for a government that controls hashing power to control when transactions get processed.   What good is your bitcoin if you cannot spend it unless you register your address with one of these mining entities?

There is another aspect to this, mining use to represent a cost effective way of buying bitcoins.   Now mining is no longer cost effective.

dude, your missing the point here.  More and more bitcoins pour into the hands of regular folk everyday as well as into the hands of miners. Even if only one coporation controls all minining, which won't happen, they currency will not be centralized to them because you, me and everyone else will have bitcoin!

Miner's tool is fixed like other models. Have you noticed the cost for mining 1oz Gold(24K)? USD 1,200, one of mining companies said.

Additionally, miners like to store more until good price like crude oil. The USD 100 per barrel is an infamous story I have heard.

That's just a price fluctuation

Or, more recently, you get crushed by inflation

Mining sucks man, its a grinders game of low, slow returns. And the miners secure the network, protecting your coins, they do you a favor.

If you have $25k to invest, I would easily suggest just buying $25k in BTC over buying $25k in mining gear, its not even close, esp at these prices ($70).

This was only true before the existence of ASICminer meant that they can leverage their massive economicies of scale, essentially free electricity costs (compared to joe blow), and huge solomine hash power / extra hardware to control the market

They pay fractions of what you pay for

1. $ per TH/sec hashing power (they can setup 1TH/sec for less than 10,000$.  Try to meet that anywhere else)
2. Electricity

I would say that mining is much riskier than holding bitcoins because bitcoins are designed to grow in value whereas mining hardware and reward is designed to decline in value due to competition. It is that profitable only before the hashing market saturation (and GPU mining seems to be unprofitable already). Also mining requires to deal with noise, heat, electricity bills, hardware failures, etc.


When you hold a bitcoin, you benefit from the growth of Bitcoin economy via deflation.

When you send a transaction with low fee, it is the same as if you were sending it with a high fee and receiving part of its cost as dividend.

So according to your definition, Bitcoin is an ideal crypto-currency.

Decentralized means "no one can stop you", not "everyone is doing it".

This is only temperary due to the introduction of ASIC devices, soon ASIC devices will be everywhere and there will be no economics of scale (you pay more electricity to get more coins), just like early days of GPU mining, the most profitable ones are those have free electricity, those large mining farms typically have huge cost

lol check it forum.emunie.com its the future

There is a large Ron Paul community here.

Didn't know we had a RP community here...

Those damned miners and their elite membership. I wish I was born into a family that was allowed to mine but I was not born with such privelidge.

Only the rich can mine, with their flying country to country in their private jets sipping on the blood of extinct animals.

But alas, to join such a wealthy elite is beyond us simple folk. One cannot change their stars.

Look; it's obvious that as mining gets more difficult, less people will participate in mining.  But the way the free market works is that any who want to compete, can.  If 3 or 4 people "own" the network, a company with startup capital can enter the market freely.  Right now people are competing for the block reward.  That's going to decrease.  The increase will come from fees.  If bitcoin becomes highly popular, then the fee reward should eventually outpace the block reward.  This encourages others to enter the mining arena.

Just because Joe Blow with $200 can't play, doesn't mean the network is centralized.

Also, the idea that only miners profit from the network is wrong.  Many people enjoy reduced costs of transmitting money as a result of bitcoin, and thus profit greatly.



Users are not required to mirror the blockchain; lite clients exist.  And of course miners want to centralize themselves, but the thing stopping them from doing that is competition.  Monopolies don't exist for long in truly free markets.


By all means, get one going.  If it's better than bitcoin, it will flourish.  If not, it will fail. 

In my opinion, one of the goals of Bitcoin was that the network would be 'decentralized' and owned by 'everyone' and 'no one'.    However, it is very clear that there are two classes of people in the Bitcoin world.  Those who 'own the network' and those who 'pay to use the network'.    What I mean by this is that only miners profit directly from the operation of the network.  Everyone else pays the miners through inflation or fees.   Mining is now centralized to the point that 3 or 4 people could colude and control the majority of the hashing power.   These people own the network, everyone else pays to play.

It will always be the case (with Bitcoin) that specialization will tend make mining profitable only to a few and  benefit from economics of scale.  

Unfortunately, the cost of running / operating the network isn't entirely born by the miners.  Every user is providing bandwidth and mirroring services and these users are not reimbursed in any way.  Miners, because they are centralized, will tend to favor more centralization, larger blocks, etc until all aspects of the network grow beyond what can be truly decentralized.  

I contend that an ideal crypto-currency should allow everyone who owns it to profit from its use and that owning & mining should be equally profitable.   This would be accomplished by paying dividends to owners from 50% of the transaction fees.    From a capital perspective, owning such a crypto-currency would be just as profitable as mining such a crypto-currency.   Competition would drive the ROI of investing in ASIC/etc to the dividend rate and no lower because if given the choice between buying ASIC for $1M or buying $1M of the crypto-currency both would expect the same rate of return yet going the ASIC route is far more risky.    

The effect of a dividend-paying crypto-currency is that it would be even less inflationary that Bitcoin.  If you remove half of the inflation bitcoin has experienced then the total value of everyone's bitcoins would be almost 2x.  If there was profit to be made by holding Bitcoins then their value would be over 2x.