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> I'm also familiar with Ethereum, and I still don't see it as better than a company-run database for anything like uber/airbnb/etc with a central company behin

by natrius 11y ago

> I'm also familiar with Ethereum, and I still don't see it as better than a company-run database for anything like uber/airbnb/etc with a central company behind it. It's better because no one is taking a cut off of the transactions that the network enables. No one has to approve a new application that uses the network, so every application can build on top of the network. The people own the network, not companies. This isn't just better, it's better to the degree that the Internet was better than private networks. That difference was world changing, and this one will be too. > Additionally, if you change your mining to be "people users trust", your security is now equivalent to corporate database security -- a lead pipe to the head to get a password in. Blockchains have programs that validate transactions. You'd have to get every validator to incorporate a fraudulent transaction. Hacking three financial institutions at the same time, for example, is pretty hard. Ten is even harder.

Jasper_ 11y ago
That's a nice pipe dream. Unfortunately, it's not how Bitcoin has played out in the real world. The Bitcoin network has unfortunately not been owned by the people, but instead dominated by Chinese miners with ASICs. The current low-ball estimate based on public numbers is that Chinese miners account for ~70% of the hashrate -- see https://blockchain.info/pools https://blockchain.info/pools As the database gets larger and larger, less and less people can afford the disk space, bandwidth, and electricity, and they will be pushed out by people who can. The current scalability of Bitcoin, with its absolutely miniscule userbase, and incredibly high miner count, can barely scrape past 3 transactions per second. Attempts at trying to fix this have absolutely fractured the community. See BIP101 / BitcoinXT and the resulting blowout, especially on the /r/bitcoin subreddit. The security of Bitcoin is abysmal. There are major mining pools that don't even bother to validate the incoming transactions, since validating was slower than not validating, and more blocks means more money -- https://bitcoin.org/en/alert/2015-07-04-spv-mining https://bitcoin.org/en/alert/2015-07-04-spv-mining Oh, how are these BTC miners getting money? BitPay's statistics say that $76 million, a disproportionate majority of their payouts, go to miners: http://d.ibtimes.co.uk/en/full/1433561/bitcoin-merchants-mainstream-bitpay-cryptocurrency.jpg http://d.ibtimes.co.uk/en/full/1433561/bitcoin-merchants-mai... So Bitcoin seems to be a vehicle for Chinese BTC miners to trade cheap electricity for VC money. Up until everything bursts, at least. It's also worth mentioning that if anybody was able to get these miners to collude, they could completely crash it if they wanted to. Bitcoin's security is largely based on no one entity having a majority of the network's power. Etherum has all of the same problems and none of the solutions. The official FAQ even says that we're going to see a tilted hashrate arms race ("AMD GPUs will be 'faster' than similarly priced NVIDIA GPUs") -- https://forum.ethereum.org/discussion/197/how-to-help-secure-the-ethereum-network-faq https://forum.ethereum.org/discussion/197/how-to-help-secure...
- Animats 11y ago
  "Bitcoin seems to be a vehicle for Chinese BTC miners to trade cheap electricity for VC money." I suspect that some of the Chinese BTC mining is simply a way to convert yuan to dollars. That's hard to do from inside China, because the People's Bank of China imposes currency controls. Back in 2013, it was possible to buy Bitcoin with yuan transferred through the banking system within China and sell it outside China for dollars. That's what cause the big run-up in Bitcoin to over $1000. Then the PBOC clamped down, which caused the big drop in Bitcoin to around $250. Bitcoin mining, though, is viewed as manufacturing and export under Chinese law. Those activities are encouraged, and subsidies may be available for construction and power. The Bitcoins can be sold outside China for dollars or euros. So, even if the mining just breaks even, it has utility for the owners of the mining operations.
  - chillydawg 11y ago
    I'm not sure how flooding the market with bitcoin trying to buy USD would drive the USD price of bitcoin up. I think you have something backwards here.
    - Animats 11y ago
      It has nothing to do with driving the price of Bitcoin up. It just turns yuan into dollars or euros, which is otherwise quite difficult.
- natrius 11y ago
  > The Bitcoin network has unfortunately not been owned by the people, but instead dominated by Chinese miners with ASICs. This is not the ownership I'm talking about. It doesn't matter who gets the reward for a particular transaction. What matters is how many people are validating the transactions to ensure that no one is putting fraudulent data into a blockchain's database. Those Chinese miners that comprise 70% of the hashrate have no power to dictate which transactions are valid and which aren't. If they try to incorporate invalid transactions, they will be ignored.

by natrius 11y ago

Jasper_ 11y ago

That's a nice pipe dream. Unfortunately, it's not how Bitcoin has played out in the real world. The Bitcoin network has unfortunately not been owned by the people, but instead dominated by Chinese miners with ASICs. The current low-ball estimate based on public numbers is that Chinese miners account for ~70% of the hashrate -- see https://blockchain.info/pools https://blockchain.info/pools As the database gets larger and larger, less and less people can afford the disk space, bandwidth, and electricity, and they will be pushed out by people who can. The current scalability of Bitcoin, with its absolutely miniscule userbase, and incredibly high miner count, can barely scrape past 3 transactions per second. Attempts at trying to fix this have absolutely fractured the community. See BIP101 / BitcoinXT and the resulting blowout, especially on the /r/bitcoin subreddit. The security of Bitcoin is abysmal. There are major mining pools that don't even bother to validate the incoming transactions, since validating was slower than not validating, and more blocks means more money -- https://bitcoin.org/en/alert/2015-07-04-spv-mining https://bitcoin.org/en/alert/2015-07-04-spv-mining Oh, how are these BTC miners getting money? BitPay's statistics say that $76 million, a disproportionate majority of their payouts, go to miners: http://d.ibtimes.co.uk/en/full/1433561/bitcoin-merchants-mainstream-bitpay-cryptocurrency.jpg http://d.ibtimes.co.uk/en/full/1433561/bitcoin-merchants-mai... So Bitcoin seems to be a vehicle for Chinese BTC miners to trade cheap electricity for VC money. Up until everything bursts, at least. It's also worth mentioning that if anybody was able to get these miners to collude, they could completely crash it if they wanted to. Bitcoin's security is largely based on no one entity having a majority of the network's power. Etherum has all of the same problems and none of the solutions. The official FAQ even says that we're going to see a tilted hashrate arms race ("AMD GPUs will be 'faster' than similarly priced NVIDIA GPUs") -- https://forum.ethereum.org/discussion/197/how-to-help-secure-the-ethereum-network-faq https://forum.ethereum.org/discussion/197/how-to-help-secure...

Animats 11y ago
"Bitcoin seems to be a vehicle for Chinese BTC miners to trade cheap electricity for VC money." I suspect that some of the Chinese BTC mining is simply a way to convert yuan to dollars. That's hard to do from inside China, because the People's Bank of China imposes currency controls. Back in 2013, it was possible to buy Bitcoin with yuan transferred through the banking system within China and sell it outside China for dollars. That's what cause the big run-up in Bitcoin to over $1000. Then the PBOC clamped down, which caused the big drop in Bitcoin to around $250. Bitcoin mining, though, is viewed as manufacturing and export under Chinese law. Those activities are encouraged, and subsidies may be available for construction and power. The Bitcoins can be sold outside China for dollars or euros. So, even if the mining just breaks even, it has utility for the owners of the mining operations.
- chillydawg 11y ago
  I'm not sure how flooding the market with bitcoin trying to buy USD would drive the USD price of bitcoin up. I think you have something backwards here.
  - Animats 11y ago
    It has nothing to do with driving the price of Bitcoin up. It just turns yuan into dollars or euros, which is otherwise quite difficult.
natrius 11y ago
> The Bitcoin network has unfortunately not been owned by the people, but instead dominated by Chinese miners with ASICs. This is not the ownership I'm talking about. It doesn't matter who gets the reward for a particular transaction. What matters is how many people are validating the transactions to ensure that no one is putting fraudulent data into a blockchain's database. Those Chinese miners that comprise 70% of the hashrate have no power to dictate which transactions are valid and which aren't. If they try to incorporate invalid transactions, they will be ignored.