There are no barriers to entry. There is a cost to enter profitably, which is gladly rising, and it filters unlegitimate or undercapitalized from entry. If you however have the labor capital to bear the cost and provide an efficient service, noone is stopping you. The rising cost in an unregulated and blind free market from my view increases security for all users. Also, you are free to mine at a loss too.
Perhaps you can explain why rising cost and high barriers to entry (ie to mine NOT at a loss) increases security for all? Wouldn't having diversification in the mining community be a good thing? I do realize that the entire system is NOT designed to be egalitarian at all. Much like the "real world" in the btc sphere the same rule applies - those with money will make money. But extreme concentration of interests/control in any monetary system/store of value detracts from the usage value of the system. Correct me if I'm wrong but isn't bitcoin supposed to be an anarcho-capitalist ideal. Perhaps here there is a clash of ideas. Some see bitcoin as just an improved version of gold - digital gold. What I wish it to be is a monetary system and store of value owned by everyone and controlled by no-one.
You have a monopoly in hardware production because it's the best. This is an unregulated market. Users have a choice. Bitmain competed and is reaping the rewards. It was free for anyone.
Nah, it's not the best and it never was. If you're talking from a pure quality point of view Bitmain hardware is not the best. It just happens to be the best priced because they have access to cheap labor and certain other advantages afforded to them by their geographical location. It's just a pure accident of history that Bitmain came out a winner in this game. It was almost pre-destined lol. I'm also sure that Satoshi already knew that the first ASICs will be coming out of China and that eventually China will dominate this industry.
As far as obscurity in China. You might argue that Bitmain is being subsidized by some other interests in order to be able to mine efficiently when hardly anyone else can. But you can also argue that they simply made it more effficient than the rest. We simply don't know and we should not care. Bitcoin does not care. It is blind. This would effectively mean someone is mining at a loss which consequently means someone is paying out of their pocket for added value of your Bitcoins.
Well, that point was pure speculation. We don't know and likely will never know the web of interests and control in the ASIC and mining industry. I would argue that we should care though. Users should care just as much as users of the FIAT monetary system should care who has undue power of the money _they_ use. Most people don't care though and that is the problem. The idea behind a sound monetary system is that it limits this very same centralized meddling and control that someone is bound to attempt to do - because human nature. Nah I don't think Bitmain is mining at a loss. It's not about being subsidized, it's about them using their vast and super cheap hashpower to push the other miners out. The true cost of their chips is dollars. The actual value of their miners is at best a few hundred dollars
Don't worry they are not mining at a loss nor are they subsidizing your btc usage. If anything the miners who buy their gear are subsidizing their mining farms and development costs. For them this is the name of the game; roll money from hardware sales into their own massive mining farms. Whatever gear you buy from them is coming out of their live mining farms.
And actually, as far as Companies are concerned, I reckon selling hardware or hash rate is an important part of hedging their Bitcoin investment and I don't envision Bitmain to stop selling it. If they did, a whole new Market would be created for it anyway. Future Bitcoin mining value is already encompassed in Hardware pricing. So they get today, free of interest, what could or could not be gotten tomorrow, without obsolescence. Essentially passing on the risk at the cost of very few returns. If Bitmain were to stop selling equipment, they would start carrying all the risk of a highly volatile asset. Decentralization is actually in their favor.
For Legitimate Cloud Based Mining is even better. They effectively create a subsidy whereas with rising difficulty or rising electricity price, your contract is unprofitable, but they can keep mining for themselves with your rented hashpower because effectively you subsidized it. It is unprofitable for you, but not for them. It's a question of Risk. You are betting on rising prices to support difficulty, they are hedging on the eventuality of falling prices.
Yep! You are absolutely right and it is a very smart way to do business. I don't think they'll stop selling either as long as there are smaller manufacturing processes (ie silicon chips) to invest millions of dollars into. They will use sale of older gen gear to subsidize new gen gear. I bet you that they are already working on 10nm or smaller chips and are using their mining farm profits and sales profits to pay for that.
The dream every "big miner" aspires to is to eventually build their own mining ASICs. I'm kind of sad that today we only have Bitmain and Canaan.
I am sorry. Probably this wasn't the best place to bring up these issue.
Maybe maybe not. Perhaps we should start our own thread to continue this discussion.
As for scalability, I honestly do not think we need to make choices on what Bitcoin can or should be. As I said, I am not a technical expert, so which technology is used for scaling is outside my expertise.
I will say however that Bitcoin can be everything at once. There is really no need to discuss whether we want it as a settlement layer, a store of value, a medium of exchange, a payment processing network, whatever...
It’s simple if you imagine Bitcoin as Gold. And you can easily imagine Bitcoin as Gold on Steroids. I am pretty sure that Satoshi Nakamoto envisioned it like that, because he solved all the problems that Gold had as Sound Money and made it so that we would not need to follow the same path Gold did.
a) Bitcoin Vs Gold
• Divisibility
Much better than Gold. Easier to divide, virtually costless to do so.
• Fungibility
Much better than Gold. All Bitcoins are truly equal. No quality differences.
• Easy Transport
Goes without Saying
• Store of Value
Probably on par. Remember, talking about Bitcoin Vs Gold in a non-Fiat world.
• Ownership
This is where Bitcoin clearly beats Gold. You can exercise and maintain effective ownership. No confiscation risks. Nothing.
I reckon that even the bigger fees and delays should not be dramatized when you are comparing Bitcoin with Gold or any other Money. In a sane world, Bitcoin would do its job Better than Gold. Better yet, it would free Gold to its other relevant uses, rather than being hoarded, which effectively inflates its price, which then gets reflected in the goods where Gold is necessarily present, thus increasing efficiency and bringing value to everything and everyone down the chain.
Forget comparing it to FIAT. FIAT has no value other than being Legal Tender. The reality is, right now, you are better off getting immediate value for your paper money rather than hoarding it and I further postulate it has always been like this since the implementation of FIAT. Money has lost its essential quality as store of value. The better thing to do is receive a paycheck, keep what you need for day to day and just go buy a store of value or get immediate value out of it. My tactic? Just leverage. Get as much debt as you can, buy a store of value, like Real Estate, Gold, Bitcoin, whatever. Pay it back with the same worthless shit money they give you and keep the good.
I postulate that Bitcoin can be an entire Monetary System.
b) Bitcoin as a Monetary System:
• Medium of Exchange
We’ve already checked this.
• Bank
Each participant can be its own Bank and have Ownership of his coins. The capability of offering Bank Services by each person is also there, and is transparent. Furthermore, for true free banking, each person also has the capacity to issue their own notes backed by their public Bitcoin Holdings. Although this would be pointless if everyone used Bitcoin. In the current circumstances, I see it as a bonus. It brings hedging opportunities.
• Clearing House
If sidechains are implemented, the main chain has this property.
• Central Bank
Bitcoin, or the main chain, is in fact a Central Bank. Regardless of the decentralization of its participants.
There is no need to choose a path. Bitcoin can have it all and does it more efficiently than anyone.
Bitcoin can be a Dollar, a Bar of Gold, a Certificate, a Clearing House, a Bank, a Central Bank. Everything in a Monetary System can be encompassed by Bitcoin. More efficiently, more transparently, more democratically and more secure. And essentially, all at once.
My main point is Proof of Work should not be changed. Ever. Bitcoin needs to be backed by Energy, otherwise it has no value in the real world other than speculative.
The market will work itself out in what regards monopolies, provided Cryptography continues its job as a Guarantor of Democracy and Transparency. The reality is: How worthless would a 100% Chinese Miner Monopoly make Bitcoin, in a free market where we can just fork it or simply use another Cryptocurrency. Unless Bitcoin turns into Legal Tender and all other Currencies are outlawed. Which in itself would require an impossible consensus.
For scaling, it doesn't really matter to me whether unlimited blocksize or not. It matters that usability improves and that transactions are processed efficiently which from my understanding, all proposed solutions guarantee. Gold would not lose its properties as a store of value if we could infinitely divide it and transact it frictionlessly. And Bitcoin will not as well.
As for the average Joe, which constantly keeps being brought up, he has no usefulness. His energy is better expended providing other labour more efficiently. You do not need to impose a Quota that NFL teams play with an Amateur. It is a professionalized business.
Do not tax Bitcoin. This is not a Welfare State.
I would agree that the proof of work should not be changed now because it would affect people's confidence in bitcoin. It would erase a lot of money invested in the mining hardware necessary to secure the network. However that's just a practical argument not a moral or economic one. Perhaps there are better ways to structure the reward mechanism. That's why you have a ton of altcoins out there which attempt to experiment with changing this part of the cryptocurrency secret sauce. For bitcoin it's a bit too late into the game to make such a radical change. I'm not saying that it will not happen nor that it should not but I think it would have some bad consequences at this stage.
I think a lot of btc users would not be happy with a 100% Chinese Miner Monopoly Coin (aka ChinaCoin). I would envision a lot of the current btc user base would move to altcoins. There are a LOT of them out there and one can even argue some may be superior in some ways to bitcoin. BTC does not have the luxury of being the only game in town these days. It needs to COMPETE with the altcoins. There is nothing intrinsically special about bitcoin either. You gotta ask yourself if you're trying to avoid the central bank controlled FIAT monetary system why create a digital version of it where a small kabal of people exercise undue influence and control over the system?
It will be interesting to see how BTC competes with the altcoins and what it will morph into. Some of the purists will argue that if bitcoin gets some of the features now common in other coins it will no longer be "bitcoin". Just wait, the debate hasn't even started! If there is this much slow gear grinding about SegWit wait until other protocol changes are suggested/implemented/etc.
I agree with you. It does not matter per se what scalability tech is used, but ideally I would want it to be the best tech possible and one that does not favor any particular group of people. I actually do care about the technical aspect as well as the social and economic aspect. What I want out of bitcoin is a system that empowers me and others and gives us control over _our_ money. I am an ideologue true enough.
So yeah maybe we should start our own thread. People are going to get pissed when we slam our wall-o-text in their eyeballs lool.
