Topic: Is Bitcoin over-paying for Hash-Power Security? - page 3. (Read 7931 times)

Yes we must make it too expensive for them to win, and this is not wasting resources. This is using resources wisely and as efficiently as possible. Don't underestimate the ingenuity of mankind when given the diverse opportunities to experiment and find the most efficient means that are not available to the central bankers. Remember they operate top-down and thus they can't locate next to every small stream. There are only so many large rivers and they have already tapped most of them and the electricity is committed already to other things. Electricity is the resource they don't have enough of.

I suppose they could generate electricity at much lower cost with breeder nuclear, but we could hope that if individuals are given this opportunity, with $2 trillion prize, then private industry will create their own breeder reactors.  


You conflate consumption with "no value was created". Consumption drives efficiency and the creation of new knowledge and methods.

Your theory is that if we consume less, we produce more. Wrong! That is theory of Marxism and Malthusiam.

The key is that when there is no debt driving consumption, then this is pure competition and survival-of-the-fittest, i.e. efficiency.

Money is the most marketable commodity... there is nothing socialist about it and you have no clue what you are talking about when it comes to either economics or socialism.   I will now bow out of any future economic discussions with you.

You ignored that I wrote, "Money is socialist by nature, yet mining is diverse, and there are many opportunities for individuals to experiment with different strategies, which is thus capitalism."

For example, installing a hydrogenerator on a stream in your farm.

No, I choose to conserve my electric bill.   I waist my resources as a shareholder in this currency by paying people for unnecessary work and thus reducing my dividend payment.  Even if I pay myself... I do so at the expense of other shareholders and this is a 'conflict of interest' situation. 

Now as an 'outsider' and non-shareholder I would be experience an opportunity cost if I didn't mine while it was profitable.   This is only true because as an outsider I am not the one paying for the mining.

If there is no profit to be made on mining, then no one is earning it. In that case, it is a cost that society has decided to pay because it is much more prosperous than be slaves to top-down central banking.

If you choose to not mine with your existing PC (assuming we get PoW hash correct), when your PC is idle while you are sleeping, then you choose to waste your resources.

You also forget that mining is one way to obtain coins anonymously and without needing fiat. It is the fountain or source of coins that don't originate from fiat, thus we need more of it, not less and less which is the egregious design error of Bitcoin.

Money is socialist by nature, yet mining is diverse, and there are many opportunities for individuals to experiment with different strategies, which is thus capitalism.

This latest argument effectively says...

"In order to beet the evil central bankers, we must consume scarce economic resources searching for rare nonce values so that we can distribute an increasingly expensive to create digital currency to the masses.   If we can only make it too expensive for THEM to mine enough to own the network then we will win!"   

This is the ultimate mix up of the means and ends, cause and effect.  It is raining because the side walk is wet!         

You do not beat them by consuming resources, you beat them by producing value that they don't own and cannot steal at cheaper and cheaper costs.   By providing a product that is both in demand and out of their control that provides value rather than consuming value you benefit society.   

If you make it about resource consumption they will always win!  You must make it about efficiency and value production.

This is a lie and demonstrates 'group identity' which is the foundation upon which all arguments for socialism is based.  If I am not mining, then I am not paying this to my self.  Instead, I am paying those who are mining out of my potential dividends based upon my ownership of the shares.  It is not the rational way to maximize shareholder value.

You seem to forget that if we get the PoW correct, we could hopefully be paying this to ourselves.

You don't seem to understand that the largest threat to mankind is that central banking is top-down. This top-down entity is capable of extracting a huge percentage of what society produces, and directing towards any threat to their power.

In order to create an economic incentive for humanity, we need to give a large percentage of global production to mining, so that individuals will have a vested interest to defeat central banking. This will be war, if we are really serious about winning.

Otherwise, just bend over and pull down your underwear and take it.

P.S. I will not delete my post. It is entirely on topic. Why are you trying to censor the information that people need so they can know the threat we are really facing.

This is entirely off topic, please delete your post.

General of all American Intelligence

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2.3 TRillion Dollars Missing from DOD Day before 911 2001. DOD = Dept of Defense.

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I had all the names and who was paid what in Russia by whom. That is part of what was taken by the government and then it miraculously was destroyed in World Trade Center building 7 that collapsed with nothing hitting it. The SEC replied to my request for my files saying they were all destroyed in WTC 7 (see below).

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Looks like we may start bombing Syria on roughly 9/11.

Ok, I am shocked!!  85% of people who have voted made the only vote that could possibly be wrong!   The reason 'more is always better' is wrong is because it entirely ignores cost (real and opportunity) as well as marginal utility.  In fact, I am willing to bet that given the choice between paying 10% of their bitcoins to some miner and not... most of these people would choose not to!   Why?  Because the opportunity cost would now be personal and not 'socialized' and people tend to think clearer when their own money is on the line.

So, I challenge each of you who voted for 'more is always better' to either withdraw your vote and post how much you would pay or select one of the other options.   Either that, or post here and explain why more is always better.

All of that said, I have come up with a solution to setting the mining reward vs dividend rate that will always ensure that 'market consensus' on the value of hashing power is used rather than any price fixing on my part.

I agree with this idea about dividends. I also agree that bitcoin is overpaying for security. I've been saying both of these things for years now. You can probably find 200 posts in my post history that make this claim.

However, your solution is not going to work unless it incorporates a complete overhaul of the mining process. Capping miners take from txn fees is not feasible. They can always publish an address for receiving fees and only include txns that offer bribes to this address. The fact that there are no fees in the protocol doesn't mean that POW miners can't demand fees and enforce this demand as a prerequisite for issuing a successful txn.

You have to adjust the mining process so that the people receiving dividends also control which txns enter blocks.

What is that type of mining process called? Proof of Stake.

I am trying to think of a way the system can switch over the to slower way that still works if the SOBs start filtering the packets over the whole network, i.e. we call the blocks in or something or obfuscate the packets in other kinds of network traffic.

The design considerations are different than when one isn't considering such a grave threat.

I am not saying I don't want your BitAssets, but for me that is not the main priority right now in my mind. I feel we are facing a much more dire threat from 2016 to 2020 at least.

And I am really sick and tired of people telling me I am wacko for thinking these things.

People are so naive.

Please everyone go watch the video I linked upthread (page 1) of the four-star general Wesley Clark telling us that the USA government planned for a long time to overthrow 7 countries in the Middle East.

Understand this is about building a pipeline to Europe to remove Russia's monopoly over natural gas to Europe. But there is a larger picture, which about reorganizing the financial system from dollar reserves to SDRs so that the rise of the developed world can be controlled by the same international bankers who have been around since central banking was established in the 16th century. I think you all know the names.

Remember what I taught everyone over in your main BitShares thread, who ever controls the unit-of-account controls the world, because all other currencies and assets float in value relative to the most liquid money.

When the world's energy has to paid in dollars (and soon to be SDRs), then they control the world.

The other of the currencies of the world will float relative to SDRs, so that countries will be slaves to the SDRs.

Why do you think the USA is involving in the Spratlys island dispute near the Philippines that is also claimed by China? It is all about making sure that Asia does not produce their own natural gas, because there is a huge investment now in the USA to build pipelines to Louisiana and Texas and ship liquefied natural gas over to Asia. What do you think the BP oil fiasco in the Gulf of Mexico was about? It is all about them gaining unfettered control over that region to implement these plans.


Exactly. We are paying much more than the 5% debasement to the SOBs.

So we need to pay a lot for security. So that people can build the side-infrastructure to route around the SOBs. Maybe they will use short-wave or HAM radio if necessary?

This is why I am not against pools, as long as we keep them below say 5% of the network difficulty, which I think we can do by making the clients and protocol smarter.

I am thinking of things that aren't even your radar with BitShares. I wish I could find someone willing to work with me?

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I am talking in the abstract sense.  Bitcoin is the same as the BitShares network without dividends or BitAssets.  Anyone designing a new alt-coin could learn from the economics of hash-power security.

Sorry, didn't see your sig/ didn't read the entire thread carefully enough.  I assumed we were talking about bitcoin network as-is.

With BitShares the blockchain has access to price information and thus can calculate mining rewards in terms of dollars rather than the currency itself.   Money not paid to the miner is paid as dividends.  Thus the more money paid in dividends the higher the value of the currency.    So this is not 0-sum, I could reduce the mining reward increase dividends and see the result that the value of the currency rises by more than the reduction in mining reward.  This is a complex differential equation interacting with market forces.    But assuming I could target a certain value of hash power that is independent from the value of the currency itself it could work.

With bitshares there exists a ratio between dividends and mining rewards.  I believe that the ratio should not be fixed, but should decrease as the market cap increases.  The exact equation to pick is some what arbitrary, but picking a constant factor is also just as arbitrary and will certainly lead to too much value being directed toward hashing power.

Specialized gear (the "S" in ASIC) leads to centralization.  If bitcoins could be mined with gear acquired to serve other needs (CPUs, GPUs), there is almost no entry barrier to bitcoin mining.  That's history.  No more.  Bitcoin mining requires gear as specialized & unusual as the Aardvark.  It mines well, but that's all that it does & once the power costs surpass the value of bitcoins produced, it's the dumpster, not ebay.  I think centralization is self-evident.

Not sure how you get away from security costs (in dollars) shadowing bitcoin value (in dollars).  Not sure if knowing all of this allows us to change any of it.

Yes.   Because the attack vector is double spending and the value of transactions doesn't change as the network grows.  High-value transactions would not be anonymous and thus not subject to a double-spend attack.

I mentioned the dollar amount specifically because is the value of bitcoin doubled, we could have the same security as we do to day while paying half the bitcoins and thus reduce inflation.  I want to compare the 'economic cost of security' vs the 'economic benefit of security' and my conjecture is that cost of security does not scale linearly in percentage terms with the market cap of the currency.

I would also like to redefine the term 'security' because hash power is only one form of security.  So the real question is how much hash-power security is required and how much benefit does each additional hash provide relative to the cost of acquiring it.

Furthermore, I submit that over-paying leads to centralization which ultimately undermines the goal of 'security' and replaces it with a small cabal that can perform a 51% attack at prices so cheap that the average man can no longer have any economic influence on the direction of the currency or what transactions get processed.   So clearly overpaying for hash-power-security is counter productive and actually hurts the network despite having a higher hash rate.

Can we discuss bitcoin security using bitcoins instead of dollars?

If bitcoin value (in $$$) doubles, the dollar total spent on securing the network should also double.  Denominating security cost in bitcoins would spare us needles mental acrobatics.

I'm also not sure of utility to be gained from the answer.

Profit is the primary motivator of both ASIC manufacturers and miners.  Not network security.  If additional hashpower didn't offer any extra security, it wouldn't effect the miner arms race in the slightest.

TL;DR:  Added security is simply a byproduct, not the goal of upping the hashrate.  As long as it is possible to make more bitcoins with MinerX than the sum of its cost & energy cost, MinerX will go online.  If security is improved?  That's just a clever bit of the bitcoin concept.