What assumptions are people using to justify adding mining rigs? - page 2.

fnord123

newbie

Activity: 47

Merit: 0

Quote from: Sjalq on June 02, 2011, 04:36:41 PM

LOL, I meant BETTING is illegal.

Let's make it something like falls to x and recovers to 5x within 4 weeks then? Where x is something real darn small.

Where I live the investigators are mostly concerned with violent crime.

Again, is your regard for the law based on moral concerns or repercussion concerns?

My regard for the law is partially moral and partially repercussion-based. Morally, I don't like to break laws unless I think they are really stupid. Betting laws I think are really stupid. Laws against other currencies I am not yet sure are really stupid. In terms of repercussions, the USA has put people in jail for alternative currencies before.

x/5x doesn't work for me - if BTC is $10 today, $0.01 tomorrow, and $0.05 in 4 weeks, I would lose the bet. Given in such a scenario I would be right that it would be a bad investment to buy mining equipment, I've no interest in the bet. My feeling is the bitcoin market would never recover (e.g. hit $10/BTC again) if no alternate BTC <--> $ ACH capable link was established.

Sjalq

sr. member

Activity: 280

Merit: 250

LOL, I meant BETTING is illegal.

Let's make it something like falls to x and recovers to 5x within 4 weeks then? Where x is something real darn small.

Where I live the investigators are mostly concerned with violent crime.

Again, is your regard for the law based on moral concerns or repercussion concerns?

fnord123

newbie

Activity: 47

Merit: 0

Quote from: Sjalq on June 02, 2011, 02:36:19 PM

The replacement exchange will need to some time to recover from the loss of the US market.

Can I modify? If the price on whatever the prominent exchange is, is not prominently trending up within 2 months of losing the USD link then I lose. I do however win if it falls to 0 first but recovers to a readable, upwards trending price within the 2month period.
Can we define upwards trend as higher than 2 weeks before the end of the 2 months?

On payment, are you suggesting that because you are law abiding or because you fear you will get caught?

If I understand your suggestion correctly, if Dwolla goes away tomorrow and BTC drops to $0.01, then two weeks later is worth $0.02, I would lose the bet. I don't want to make that bet.

In terms of bet legality - I meant if laws were passed (or regulations issued, court precedents set, etc.) that specifically apply to bitcoin transactions, mostly because I don't like breaking the law. In terms of getting caught, we could easily get caught - any competent investigator could subpoena the operator of this forum to determine our IP addresses, get our home/business/whatever location from our ISP, get a warrant for our computers, and find the wallet file used to generate the address. Once they show that our wallet has the private key associated with the address receiving payment, I'd be willing to bet that would be sufficient evidence for a prosecutor to convince a jury that I (or you) was the one who received the coins.

fnord123

newbie

Activity: 47

Merit: 0

Quote from: Sjalq on June 02, 2011, 03:04:14 PM

Well we would know who they are, they are already on this list http://www.top500.org/ Wink

Sorry to sound sarcastic but even if they knock down the 2 biggest groups they would not practically be able to overcome the remainder of the network.

If any significant botnet owner decided to they could DDOS pretty much all the major pools. Most (all?) of the pool servers are run by small time operators who don't have the infrastructure needed to survive a big DDOS attack. Ditto hacking wise - one guy setting up a server and typing yum update now and then does not make a robust system. Once all the mining pools are offline the size of the problem is a lot smaller.

gigabytecoin

sr. member

Activity: 280

Merit: 252

Quote from: Genrobo on June 02, 2011, 01:18:39 PM

Nope, you're right on.
The only thing people are using to justify investing large amounts of money into this...
Is Bitcoin price speculation.

I justify my miner purchases knowing that I will be able to sell them for at least 50% of what I paid within the year.

xenon481

sr. member

Activity: 406

Merit: 250

Quote from: Sjalq on June 02, 2011, 03:04:14 PM

Well we would know who they are, they are already on this list http://www.top500.org/ Wink

Sorry to sound sarcastic but even if they knock down the 2 biggest groups they would not practically be able to overcome the remainder of the network.

Overcoming the entire network right now is easily within reach of any large or governmental organization. The last calculations that I remember seeing about this recently said that it would take less than $2,000,000USD worth of hardware.

Sjalq

sr. member

Activity: 280

Merit: 250

Well we would know who they are, they are already on this list http://www.top500.org/ Wink

Sorry to sound sarcastic but even if they knock down the 2 biggest groups they would not practically be able to overcome the remainder of the network.

xenon481

sr. member

Activity: 406

Merit: 250

Quote from: Sjalq on June 02, 2011, 02:54:35 PM

Quote from: Hawkix on June 02, 2011, 02:48:56 PM

Currently, there are about 5-6 pools who mine around 75% of the whole Bitcoins. If you target those pools with DDoS attacks, you can make them unstable, failing, etc. The result would be 4 times slower Bitcoin network.

Sure, new pools may show up. It will take some time, though. And they can be targeted, too.

Actually, I think that the above is already being performed by SOMEONE.

So how does that affect the safety or security of BTC?

During the time that 75% of the network hashing power isn't processing, a malicious group only needs to overcome the remaining hashing power to double-spend.

Sjalq

sr. member

Activity: 280

Merit: 250

Quote from: Hawkix on June 02, 2011, 02:48:56 PM

Currently, there are about 5-6 pools who mine around 75% of the whole Bitcoins. If you target those pools with DDoS attacks, you can make them unstable, failing, etc. The result would be 4 times slower Bitcoin network.

Sure, new pools may show up. It will take some time, though. And they can be targeted, too.

Actually, I think that the above is already being performed by SOMEONE.

So how does that affect the safety or security of BTC?

xenon481

sr. member

Activity: 406

Merit: 250

Quote from: fnord123 on June 02, 2011, 01:38:49 PM

Quote from: Jack of Diamonds on June 02, 2011, 01:20:26 PM

I just don't see a likely scenario where the price will suddenly start plummeting or simply stagnating at $9-$10 when mining becomes harder & more users become aware of bitcoin every day.

Here are some scenarios where this can happen:

The Dwolla/MtGox BTC <--> $$$ link breaks, perhaps due to pressure from bank regulators in response to Paypal or VC/MC lobbyists.
The speculators who are buying BTC run out of money/the bubble bursts, as Genrobo mentioned
Someone hacks MtGox or some other key BitCoin participant to steal BTC balances
Someone identifies a cryptographic fault with the Bitcoin scheme

All of these scenarios would cause a crash in BTC values. I guess you can argue they are unlikely - at least the first two seen quite plausible to me.

I think the absolutely most probable situation is that somebody writes some malware that spreads easily and steals wallet.dat files.

There have been a small number of cases of this so far, but none of them have spread. But the reward for such a thing goes up exponentially as Bitcoin is more widely used.

Hawkix

hero member

Activity: 531

Merit: 505

Currently, there are about 5-6 pools who mine around 75% of the whole Bitcoins. If you target those pools with DDoS attacks, you can make them unstable, failing, etc. The result would be 4 times slower Bitcoin network.

Sure, new pools may show up. It will take some time, though. And they can be targeted, too.

Actually, I think that the above is already being performed by SOMEONE.

Sjalq

sr. member

Activity: 280

Merit: 250

PS to my knowledge wagers are only legal in Arizona in the USA. So you are already breaking the law by betting aren't you?

Sjalq

sr. member

Activity: 280

Merit: 250

The replacement exchange will need to some time to recover from the loss of the US market.

Can I modify? If the price on whatever the prominent exchange is, is not prominently trending up within 2 months of losing the USD link then I lose. I do however win if it falls to 0 first but recovers to a readable, upwards trending price within the 2month period.
Can we define upwards trend as higher than 2 weeks before the end of the 2 months?

On payment, are you suggesting that because you are law abiding or because you fear you will get caught?

fnord123

newbie

Activity: 47

Merit: 0

Quote from: Sjalq on June 02, 2011, 02:13:04 PM

Specify the bet a bit more and I'll consider it

Ok, how about this:

On some date X, the MtGox/Dwolla BTC <--> USD link may go down
If on that date X, there is no other equivalent link that allows BTC to be efficiently converted to a USD bank account (i.e. ACH transfer), and
Exactly one month from that date (X+1M), there is still no such link, and
As of (X+1M), the BTC : $ exchange rate has gone down on Mt.Gox or whatever other BTC exchange is most prominent, then
Sjalq will send Fnord123 1.0 bitcoins at address 1qTmELHiwZ8M5HXnQU5bbZ4z7Qva57ZwD, otherwise
If the exchange rate has gone up, Fnord123 will send one bitcoin to Sjalq at address (you fill it in)
Within 24 hours of agreeing on the best, each of Fnord123 and Sjalq will place 1.0 bitcoin in the address they post and leave it the bet conditions are met or until we cancel the bet
Either can cancel it until the first event (Mtg Gox/Dwolla link goes down) by posting here. No cancelling after that.

How's that for specifying it a bit more?

Only caveat I would add is that it has to be legal to do so in both our jurisdictions (I am in the USA) - if the USA (or where you live, if elsewhere) makes it illegal to pay/receive bitcoins, the bet is off.

Sjalq

sr. member

Activity: 280

Merit: 250

Quote from: fnord123 on June 02, 2011, 02:04:34 PM

Quote from: Sjalq on June 02, 2011, 01:42:24 PM

Quote from: fnord123 on June 02, 2011, 01:38:49 PM

The Dwolla/MtGox BTC <--> $$$ link breaks, perhaps due to pressure from bank regulators in response to Paypal or VC/MC lobbyists.

All of these scenarios would cause a crash in BTC values. I guess you can argue they are unlikely - at least the first two seen quite plausible to me.

True, but if this happens quadruple your mining equipment as fast as you can. Some other jurisdiction will pick it up.

If it is no longer convenient to exchange bitcoins for USD you will see a major portion of the bitcoin economy go away. This is true until the bitcoin network becomes self sufficient (i.e. one can efficiently exchange bitcoins for a significant portion of the things one needs). If a major chunk of the bitcoin economy goes away, the bitcoin economy shrinks and the bitcoins become worth less.

I'll bet you a bitcoin that if the Dwolla/MtGox link goes down, bitcoin exchange rates will drop in pretty much every other currency the following week. If you don't like that bet, propose an alternative bet and put your money where your mouth is

Almost everyone who owns Bitcoins today, will still own them if the US declares it illegal or closes MtGox. They will not want their investment to become worthless, even if they are in the US. They will now effectively have a secret offshore bank account. There will be massive incentive to set up a functional exchange someplace more free, like Switzerland, Lichtenstein, Hong Kong, Singapore, Chile, you name it. Amir Taaki is involved in setting up opensource exchanges to make it easy for countries to get going changing local currency for BTC.

I agree that for a while (a short while) you will not be able to price BTC. After that business will resume, perhaps with the initial exclusion of new clients from the US, but at the same exponential rate as it is now.

Specify the bet a bit more and I'll consider it

fnord123

newbie

Activity: 47

Merit: 0

Quote from: Sjalq on June 02, 2011, 01:42:24 PM

Quote from: fnord123 on June 02, 2011, 01:38:49 PM

The Dwolla/MtGox BTC <--> $$$ link breaks, perhaps due to pressure from bank regulators in response to Paypal or VC/MC lobbyists.

All of these scenarios would cause a crash in BTC values. I guess you can argue they are unlikely - at least the first two seen quite plausible to me.

True, but if this happens quadruple your mining equipment as fast as you can. Some other jurisdiction will pick it up.

If it is no longer convenient to exchange bitcoins for USD you will see a major portion of the bitcoin economy go away. This is true until the bitcoin network becomes self sufficient (i.e. one can efficiently exchange bitcoins for a significant portion of the things one needs). If a major chunk of the bitcoin economy goes away, the bitcoin economy shrinks and the bitcoins become worth less.

I'll bet you a bitcoin that if the Dwolla/MtGox link goes down, bitcoin exchange rates will drop in pretty much every other currency the following week. If you don't like that bet, propose an alternative bet and put your money where your mouth is

Sjalq

sr. member

Activity: 280

Merit: 250

Of what scale?

The bitcoin network now employs about 50% of the combined capacity of the TOP 500 supercomputers on earth?

Jack of Diamonds

sr. member

Activity: 252

Merit: 251

Quote from: fnord123 on June 02, 2011, 01:38:49 PM

Someone identifies a cryptographic fault with the Bitcoin scheme

Well, I'd actually argue that this one is the most likely, especially given a large enough botnet and financial interest (more profit in using the botnet to forge transactions than participating in block discovery).

Even Satoshi agrees that BTC is "practically" impossible to forge, but it's technically feasible by a large enough attacker. I don't know how well the creators have prepared for an attack of this scale.

Yes, real currency can be forged as well convincibly (some might argue much easier than bitcoins) but at least it's backed by brute force of the issuing state. The only consequence of dumping illegitimate cash into a market is small scale inflation. Dumping forged bitcoins into the market will ruin BTC's reputation.

Sjalq

sr. member

Activity: 280

Merit: 250

Quote from: fnord123 on June 02, 2011, 01:38:49 PM

The Dwolla/MtGox BTC <--> $$$ link breaks, perhaps due to pressure from bank regulators in response to Paypal or VC/MC lobbyists.

All of these scenarios would cause a crash in BTC values. I guess you can argue they are unlikely - at least the first two seen quite plausible to me.

True, but if this happens quadruple your mining equipment as fast as you can. Some other jurisdiction will pick it up.

Jack of Diamonds

sr. member

Activity: 252

Merit: 251

Quote from: Genrobo on June 02, 2011, 01:21:45 PM

Not been into economics long, eh?

I've seen more bubbles burst than a kid chewing bubble gum.

I'm not saying it will rise indefinitely into the hundreds of thousands or millions. In reality, I don't even care what makes up the price as long as it stays at that, drops lower or rises. I'm saying it still pays off to mine, even a year later. At 8ghps I'm still making way, way more than the cost of electricity and AC.

And that's going to be the same for anyone starting today. At worst, they lose out on the electricity costs and 10-20% resale value of the hardware if everything drops to zero tomorrow. At best, they pay off their initial investment in a month or less and gain profit after that.

Note that I didn't go into the specifics of what makes up BTC value. I'm merely answering OP's question about why some people still invest into new rigs. Of course Paypal/LR/ MTGOX raids etc. are possible. They just seem like a distant possibility at the moment.

Topic: What assumptions are people using to justify adding mining rigs? - page 2. (Read 5093 times)