Topic: Will huge difficulty result in low adoption? (Read 3908 times)

Remeber that unless Bernanke, we cannot control the rate of bitcoins mined. It is more or less a fixed function in time. 50 Bitcoins every 10 minutes. More miners does not mean more bitcoins, only higher difficulty, and less bitcoins per miner.

True, forgot about the bordellos. Someones got to service all those sweaty Bitcoin miners at the end of a hard days labor LOL.

Seriously, I think Bitcoin will have a pronounced effect on the Adult industry, and has some very interesting gender issues associated (making gold-digging if not obsolete, at least harder for the government to facilitate)- but probably a topic for another thread.

I view the difficulty increases not as a problem, but as a solution to a larger problem. Right now, and for last couple of months people been acting like Bernanke, purchasing ATI cards left and right to print money, at same time we were fortunate enough to have enough speculators (like me) who bought this new issued currency to sustain this mining mania.

Right now i think we're approaching a point where the amount of speculators/buyers VS the amount of miners is beginning to look unhealthy (and we can verify that on shortterm technicals on BTC price charts).

I think as anything else about the bitcoin concept this difficulty increase automatically puts the potential supply/demand imbalance straight back into a healthy balance, so we can have a longer term "stable price", which is precisely what's needed to have greater adaptability, merchants want price stability not rally/mining-mania.

Spot on

And bordel owners, dont forget bordel owners. Mining was a man thing, there were almost no woman and the miners needed to spend their littel earnings to get some pleasure.

I think the analogy is apt- but I think history will repeat itself. There were people who made a lot of money during the Gold Rush and went back to their countries and build mansions with the proceeds- but few were miners. Most in the Gold Rush were so busy mining, speculating, trading and in general trying to get "rich" that they could not be bothered with things like cooking, doing laundry and selling basic goods. The merchants and service providers- those that sold to the miners and the speculators were the ones that fared best overall.

Im mining, so from a short term selfish point of view, I want it to be as profitable as any other miner. But I am completely aware that mining will become a very low yiedl activity as new miners comes in. Its only a matter of time.

But for the Bitcoin economy this will probably be a good thing (and so it will be a good thing for miners long term, because its important to remember that if the Bitcoin economy does not develop mining will make no sense). When mining has only a marginal profit, the mining frenzy will stop and people will see Bitcoin again as a currency and not as a way to produce free money.

Btw, its important that we focus on selling Bitcoin as a currency, as something you can use to buy stuff, and not as a scheme to make make easy money.

IMO, mining competition analysis in the future has nothing to do with bicoin price, only difficulty. Why? Beacuse at any price, the rules of competition will be the same for everyone. Why? Because diffculty adjusts when total online mining power increases or decreases. The system has to mine one block every 10 minutes on average, so if more mining power comes online, difficulty increases for everyone. This system will reward those miners who can sustain hashing at the lowest cost possible, no matter the price. Economies of scale are inevitable, unless you get subsidy from a government or from a group that wants to participate for strategic reasons rather than profit reasons (that is mining below cost).

If we just focus in a free market scenario (wrong for me, but lets just assume this), then there is no way small investments in mining power will be able to remain in business for a long time. More efficient (that means more expensive in economies of scale) hashing infrastructure will put the small miners out of business.

If you think economies of scale will not be present in mining, I would like to know what makes you think so, as this would mean completely different rules for the future of bitcoin.

The price is no where near it's eventual value if bitcoin is not replaced by something better or shut down. Just like land was nowhere near it's eventual value when you could get it in land grabs in the old west.

If prices rise, miners follow and then difficulty. What you get out in USD remains remarkably stable. If price falls, miners leave and difficulty drops. What you get out in USD remains remarkably stable. The only scenario that forces great specializations in mining is where price stabilizes, hashes increase, difficulty follows and ASICs take over due to low power consumption. What are the chances of price staying stable honestly?

Bitcoin is highly divisible, if 80 % concentrates in a few pockets ( which normal money also does ) and demand stays high the price wil rise and there will still be enough BTC to drive the world economy. And if prices rise the hoarders will eventually feel rich enough to spend and push those coins back into circulation.

Keep mining till you are only making 100% over power then switch to Namecoin. Then switch back as the price difficulty allows.

Why does everyone come up with these negative dynamics all the time?

The future of mining is almost all of the bitcoins being rewarded to a select few who chose to spend tens of thousands if not more on their hardware and who continually sell and re-invest in new hardware.  Its kind of stupid that at 6.5 million bitcoins out of what 21 million total, its already going to be concentrated in the hands of a few.  I will be done mining after 2 more difficulty increases most likely, unless the price of a bitcoin skyrockets.  The problem with bitcoins is that to keep people mining, the price HAS to skyrocket, and for the price to skyrocket continually, there is no way businesses will come anywhere near it.  If it reaches an equilibrium, then mining basically dies.

What on earth are you guys on about!? Mining is getting more rewarding in purchasing power, not less. Mining, if the proceeds are sold (dumped) drive down price, not up. The community is not growing because of miners, miners are increasing because the community is growing and pulling the price up with it.

I run www.bitcoin.co.za and the first questions we get are "how can I buy bitcoins?" followed by "how can I help?" not "how can I make a killing mining?"

There are not remotely enough miners at the moment, you could replace all the capacity with less than $10 million in hardware. That is totally doable if a large financial house figures out we intend to take their printing press from them. We need about a hundred fold more miners to be safe, remember we are our own army.

I don't think Bitcoin adoption will be based on mining. Hardly anyone even knows, or cares what mining is.

There are already coins in circulation for people to use. The value (adoption) of the currency will be determined by people's willingness to use them to buy goods and service.

The problem I see with comparing Bitcoins to the gold rush is that gold already had a value when the rush started.  You could have probably walked into most banks or stores back then and plunked down gold and received goods and services.

Bitcoins on the other hand is still finding their value.  Yes, in the current BTC community they have some value, but outside of that, without exchanges, there's really not much you can do with them.  The problem is, they'll never gain traction with vendors without people clamoring to use them and with the draw of mining waning I think that pool of people wanting to use them is going to stagnate.  It's kind of a chicken and egg thing...

So, what can we do about it?  How do you continue to draw new people into the Bitcoin economy when the primary driver up till now (making 'free' money by mining) is going to become unavailable/unrealistic for most? 

It certainly needs to come from the consumer side because I don't think simply getting vendors to accept BTC is really going to do the trick.  Even if Bitcoin started getting accepted today by the likes of Amazon, 99.999% of their consumers are going to keep paying in their current currencies because it's easy and there's no reason for them to use anything different.  Bitcoins need something to draw in new 'users'.

i think adoption might slow a little bit but as long as those you stop mining dont cash out and run then i dont see to much of a problem. Older solo miners or casual miners that dump and run is whats going to be a problem. Not many people see bitcoins as a currency they are just trying to get rich quick with it. On the other hand adoption can stay stable or keep increasing if jobs full/part time started popping up.

There are already more than enough miners. It's only important for mining to remain stable (so there isn't some huge delay for confirmations)  and for their to be some decentralization (so no one can hack the system).  That's already been achieved.

What we need now are more Bitcoin users (read: junkies finding out about the silk road).

Mining isn't all there is to bitcoin. It's just the first stage in the life of a bitcoin.
Most of us don't work at the mint but we use our national currencies just the same.

The best way to get paid in any currency is to offer products or services in exchange. That's how we make our bucks out there, and it's the easiest way to make bucks in here.

IMHO you are right. Mining as the driving factor for mass adoption is going to end soon. Now we need business accepting Bitcoins for transactions. But its a pitty that mining will never be democratic and descentralized under the current paradigm. I strongly feel we should fix this.

Ah, I didn't notice that thread, thanks for pointing it out.

I agree that there will be a bigger investment needed to mine, but I guess my thought process is that it's the new blood coming in with excitement that drives adoption.  As people come in and start reading/mining they talk it up elsewhere which creates a buzz.  As merchants start hearing about it, they want in, etc.

But when it gets prohibitively expensive for new folks to join the mining fold, I think they'll look at it, dismiss it and then forget about it.  It's easy for someone to get excited when their 200 MH/sec card is making enough money to pay for itself, not so easy when you need to invest a few thousand and get 10x that much to even break in.

Mining will requiere bigger investments to stay in the business. Here is a thread that touches a similar concern:

Inevitable development into mining elite?
http://forum.bitcoin.org/index.php?topic=15345.msg204163#msg204163

I want to lead off with saying I'm having a blast with Bitcoin and I'm certainly not blasting the concept or idea.  There hasn't been a tech project that's kept me engaged and engrossed this much since I first got my Commodore 64 way back in the day.  I really want to just toss this topic out there for a lively debate and hear some opinions on it.

As I've watched Bitcoin taking off over the last few months I've been wondering what some of the drivers were.  Increase in value of the BTC of course put dollar signs in a lot of people's eyes.  But I think one of the main reasons it started taking off is the fact that people truly believed (and rightfully so a few months ago) that they had a great shot at finding Bitcoins and making some cash.  Since the barrier for entry is simply a PC and a free program, people have flocked to Bitcoin.  But as difficulty ramps up, I think a lot of this excitement around Bitcoins will dry up as people begin to see that unless they're prepared to make a heavy investment, they'll likely never see more than a few Bitcoins.

You can easily liken this to the gold rush in the late 1800's.  Everyone believed they had a shot to get rich.  As excitement built up, people flooded into the regions, some with a simple gold pan, others with all sorts of equipment.  But the point was that they all thought they had a chance to end up rich.  Why not?  'There's gold in them thar hills' and it's up for grabs.  While most people probably never found a speck of gold, the point was they all believed they could find it.

On the other hand, with Bitcoin, a simple trip to the Bitcoin Mining Calculator shows the cold hard truth to anyone what their prospects are for mining Bitcoins.  Many people are not going to want to mine, knowing that it's a losing proposition and they'll likely spend more for another graphics cards and electricity than they'll find in months.  Heck, with the jump in difficulty probably about to hit tomorrow, even with a GH/sec (which most casual folks would probably not even reach), you'd only get a bit over a coin a day and solo mining is probably out of the picture.

So as the excitement quickly wanes, do we think that will have any impact on the long term adoption of Bitcoin since a lot of people will dismiss it immediately or within a month or two and we'll be stuck with only the 'hardcore' miners and speculators?

What are your guys (and gals) thoughts on it?