Topic: Why the economical part isn't mentioned on the whitepaper? (Read 529 times)

It is unprofitable if all you do is mine.
(Unless you are stealing Electricity and not paying for it.)

It is profitable ,
1. Sell Mining equipment or cloud mining to Noobs, that think it is more cost effective that just buying BTC
2. If You can use it , to raise money from Venture Capitalist



Dude read.

Free transactions, mean no transaction fees , not free routing.  



Their are 4 mining pools with over 51% on BTC network,
While the miners may point their asics at those pools,
the Pools Operators are determining how that hash is used.
Meaning 4 Pool operators could collude and 51% attack the BTC network at a moment's notice,
it is a known security flaw, even thru the miners can switch pools, it would be after the attack and the damage is done.
Which is why those 4 pool operators are all that is really securing the network, because they are the weakest link.
Your miners energy usage could triple or cut in half and those same 4 pool operators still have the same 51% attack ability
and have had for years now. * Note it is why some members here have been researching a way to remove pooling from bitcoin PoW network.*

https://bitcoin.stackexchange.com/questions/3488/what-can-a-pool-operator-do-with-their-miners-hashpower

Increasing blocksize is actually the easiest way,
because it require no modifications to the reward design that a Faster Block time would need to maintain the inflation rate.
Any of the three work.
Increase BlockSize
Faster BlockSpeed
Increased compression of TPS per block

Off-chain scaling is a Temporary Bandaid, that only offloads transactions that could have been onchain,
Once BTC onchain limits is maxed out , the offloading will also fail as new coins can't be offloaded.
Offloading is not scaling.



It is called Litecoin, it also has ~4 mining pools with over 51%.
So Bitcoin or Litecoin , a mere 4 pool operators secure it by not colluding to 51% attack it.

Your mistake is you look at energy waste or Hashrate,
which are totally irrelevant because the Mining Pool operators ability to 51% attack is unaffected in the least by either.
Weakest link in the Bitcoin Chain is the Pooling of Mining resources so that a few control their direction.
If the Pooling issue is ever fixed then you can trout hashrate as making it more secure, but until then it is only 4 guys ,
just like LTC securing the entire network.

That got derailed

/locked

Yes, and that's the reason BTC has no miner at all.

Good argument.





Yes, read what you wrote:


All nodes process transactions for free.

This alone shows that you don't really know a lot about BTC at all.
You can't even distinguish between normal nodes and mining nodes. Not even after pointing the difference out  




Yes.. calling blocksize increase the easiest way to scale AND calling LTC as secure as bitcoin.. This shows me that your are incapable of understanding the principles of cryptocurrencies.
At this point i stop arguing with you.

If you research a bit, and after you understood why these two statements from you are completely wrong, we can continue talking.

I know, it would be pretty much off-topic and you are one of the worst posters in this forum, the one who is just one block away from insulting the other party. But to make things clear:

It has been said too much but based on a wrong interpretation of what security is! Any PoW cryptocurrency is considered secure unless its implementation is basically flawed. You have low hash rate? you need to wait for more confirmations and you are secure if you do so.

Unlike most authors are used to say, bitcoin has always been secure since July 2009 until  now and its security level has not changed meaningfully. During the last decade price increase has triggered more security requirements and more hash rate at the same time. Security is the equilibrium state between the attacks incentives and their costs.

The beauty of bitcoin and PoW lies in the very basic ideas of bitcoin borrowed from game theory. When attackers get more incentivized to abuse their power (because of price surge) miners are experiencing even more incentives to invest on mining, in long run the security level remains stable, just the same in the big picture. You have always more costs for attacking the system compared to your gains, and it is the same for any state of the network being in its infancy or after decades of growth.

What you are saying doesn't make sense.

Either it is profitable or it is not.

That you won't earn much with almost no investment, should be obvious.




Each node does process and relay them for free.
You don't need to pay nodes for processing / relaying transactions.

What kind of question is that 




No. Not 4 pool operator.

You seems to have a big lack of knowledge regarding this topic.

The miner secure the network.. not the pool.

If a pool shuts down, the miner will switch to another one.
Miners are securing the network. Not the pools.




There are proposals to scale on-chain.
But off-chain is necessary too.

Segwit, schnorr, .. all contribute to better scaling - on chain.

If you are refering to the dumbest possible way to 'scale' - increasing blocksize - then you are wrong because increasing the block size is not scaling, it is postponing the problem.

Off-chain scaling is the most elegant way of allowing a big userbase to enter BTC.




There is not a single crypto currency which is even close to being as secure as bitcoin.
This statement shows how delusional you are.

But please.. name 1 currency which is close to being as secure as bitcoin.

Miners can't change consensus but they can easily run a chain rewrite attack if there is some incentive. Bitcoin wouldn't survive with a high enough incentive system and its subsequent resource consumptions in mining, as we need to keep block size low lowering the block reward should/may be compensated by price surge but removing it puts all the burden on tx fees which ends in high fees or low security situation.

And right below this:


The timing feels right to me. Which is why I believe when he realized the fact that the protocol was already set in stone, he left. The rest is history.

This sort of speculation about block reward variance is premature. It seems like the authors are drastically overstating the effect of block times on block rewards. They don't account for the fact that the Poisson distribution evens out over time, just like the average 10 minute target block time. They are cherry picking to suggest that empty blocks over the short run aren't mitigated by full blocks with high fees on the other side of the spectrum. I also question their assumptions about the success of forks that are incompatible with full nodes. I think history has shown that miners are far less powerful vis-a-vis consensus change than people once assumed.

No they won't. Although this user, @khaos77 mostly, has little knowledge about what he says as a PoS biased poster, it doesn't mean that he is always wrong  

The core idea of putting a cap on the volume and stopping block rewards, is false. At this time, transaction fees cover like 5% of the income which doesn't cover mining costs and without such a resource consumption a cryptocurrency system should not be considered  safe. This scene can't change in the future because bitcoin tx fees can not grow drastically. You just can't expect people to pay $100 USD for a single transaction.

This post is of December 10th 2010, he left forever in December 12th 2010. Which is why my thesis is that he realized on his lasts days here how there wouldn't be a consensus to increase the block size, it was too late. The project was too big for such a consensus to happen, which at the same time proved the success of decentralization, something that people like you can't grasp by still insisting that this is a problem of "Bitcoin devs not wanting to raise the blocksize". Thus Bitcoin became digital gold as a result.

Well, Hal Finney and satoshi did at least consider the possibility of total success as early as 2009:


I believe that it's impossible to create a decentralized cryptocurrency without the deflationary model because it doesn't allow for price discovery, so you would need central planning. This was also considered in Hal and satoshi 2009 exchanges:


I think he tried to model an emission curve similar to gold. We will never know how much luck was involved on things turning out this way (at this state, it's fair to claim Bitcoin a success already IMO). I tend to believe that satoshi considered every possible scenario unfolding given the initial total supply and block reward values, long term, also including blocksize. He decided to left when it was clear that the system was indeed set in stone and he wasn't needed anymore. That, coupled with the fact that Gavin started dicking around with the CIA around that time, must have caused his departure.


My point is that he may have realized that what was initially a temporal protection measure against spam, would become a variable that would vary as much as the total supply, in other words, never.

you have to remember that bitcoin has always been an experiment and practically the first of its kind. so you can't expect everything in it to be absolutely perfect. Satoshi considered a lot of things including the supply and i'd say 21 million was a good decision.

as for block size i don't think he had any plans from the beginning. the initial limitation had nothing to do with block size but it was with the database (implementation limitation) and then the actual limit was placed in 2010 to prevent spam

Fair enough.

However I'm not sure whether satoshi expected the project to be a success to begin with Arguably the jury is still out whether Bitcoin is a success. Sure it got nice purchasing power, but in the grand scheme of things Bitcoin is still little more than an experiment and cryptocurrencies have yet to grow up. For all we know deflationary digital currencies may be a dead end in the long term and inflation is the way to go after all.

That being said, I absolutely agree with you that the first cryptocurrency to enter the stage had to be of limited supply. Otherwise it would have never appealed to the speculators and remained an obscure little toy for nerds and anarcho-capitalists.

I'd even argue that the abrupt supply drops (ie. halvenings) as opposed to a steady decline in issuance played a major role in generating a hype cycle; with the duration of 4 years between each supply drop hitting a sweet spot of reminding people that Bitcoin is still alive and kicking just when they had forgotten about it (ie. the perfect recipe for FOMO).

How much of it was luck or calculation is anyone's guess, but I think it's safe to say that satoshi had at least some intuition about which values to choose. Intuition is hard to put on paper though. To that extend Bitcoin might merely be an experiment to empirically verify the issuance parameters I do believe that opting for limited supply was mostly a matter of principle though. After all Bitcoin was at least in part a response to the questionable monetary policies of the world's central banks and governments.

You don't have to be a "rich elite" to mine. You just need access to cheap electricity. Also, though it was not addressed in the whitepaper, Satoshi had predicted miner consolidation.


It was never assumed that transactions would be free. The whitepaper mentions fees as an integral part of the system.


You are assuming that an "insane" level of energy consumption is required for security. It is not.


I have read that paper. It makes some interesting points, but it is far from conclusive.

That's what he did, what I argue is that you cannot leave it to completely arbitrary numbers and expect the project to be a success. I doubt satoshi punched the keyboard and whatever numbers were typed that's what he used for total supply, block rewards and whatnot.

If for instance he decided to set the thing similar to Freicoin, which was inflationary and introduced the idea of "digital demurring", Bitcoin would have never caught up as a store of value, which coupled with the blocksize limitation, it would have been a failure. In fact, I suspect satoshi knew 1MB blocksize was set in stone years before it even was brought up by anyone else. The way I see it is that those things are "hard coded" in practice, but not mentioned in a explicit way. He was aware on the game theory that would unfold.

Of course you can. I mean, that's precisely what satoshi did, isn't it?

To be more precise, the specifics -- ie. currency rate and final supply -- of how currency issuance takes place is largely irrelevant. Arbitrary. An accidental property. Otherwise we wouldn't see so many diverse approaches at currency issuance rates which all achieve more or less the same.

The only important bits are (a) that currency is decentrally issued and (b) that securing the network is incentivized. That's all that was needed to be mentioned at that point in time, so that's all there is:

My point is that you cannot separate the economic aspects from the proposed way of solving double spending with the whole PoW system as if you lived in a vacuum. In order for the project to be functional in the real world it would need to grow from the economic pov otherwise all the code would be useless, thus why both are interrelated and why I find it interesting that there are 0 mentions of it on the whitepaper.

No he didn't.
He already knew that at some point there will be 'larger' server farms who are mining. And that a single individual won't mine in the future.

And neither is the market accessible to the 'rich elite' only.
Anyone can start mining with a relatively low budget.

Low budget -> low income.
High budget -> high income.


Just because you can't mine with a CPU or CPU anymore, it doesn't mean that you have to belong to the 'rich elite' to start mining.




No, they aren't. There are currently ~9100 nodes online.

These nodes also don't waste energy. They don't need much energy at all. A few $ per year isn't really a lot..


But you were probably refering to the miner 'wasting' energy, right ?
Well.. this energy isn't wasted either. It is absolutely necessary to guarantee the integrity and security of the bitcoin network.




They will.

As pointed out, the energy is not wasted. I don't know what kind of shitpost you were creating. And with what kind of purpose.
Maybe you are just not informed at all, or are following your own agenda. I don't know. And i honestly also don't care.

Please inform yourself before composing such shitposts.
It hurts my eyes (and mind) to read that bullshit.

---

Exactly this.

HeRetiK boilded it down to an essence.


Satoshi didn't want to attract investors. He didn't want to get rich. It was a proposal for a peer-2-peer digital currency. The first one.
Noone cared about the economic aspects.

Satoshi's whitepaper had a different target audience than the crypto projects you have nowadays.

Today most whitepapers try to garner investors so they focus mostly on supply and questionable technical terms. They are trying to sell an investment vehicle pretty much like banks do when they give you fancy prospects of their latest mutual funds.

Satoshi's whitepaper was about suggesting a concrete technical solution to a previously unsolved problem. To that extend the emission rate and overall supply were irrelevant, especially since there were no investors to speak of with the main audience being academics and cryptography enthusiasts.

it is probably because "whitepaper" is meant as some sort of summary or abstract of the idea that is introducing the protocol in as short a text as possible. it wasn't meant to explain every small details that the implementation of the idea contains, that would make the paper 50+ pages long instead of 8-9. for example bitcoin isn't working because it has 21 million cap, or the paper doesn't explain difficulty, scripts,....
also part "6. Incentive" has some explanations about supply and new coins, constant cap,... so it is not there isn't any mention at all!