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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 peop

by 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.
- Jasper_ 11y ago
  Something has to validate transactions. If miners don't do it, who else will? Clients run by users won't, because they can't store the 50GB-and-ever-growing blockchain locally. They simply use the SPV protocol, which trusts that somebody else has validated the chain for them. As you can tell by the bitcoin.org alert, it was a serious issue that miners stopped validating transactions, because lots of wallets blindly trusted the longest chain, which was actually invalid. The majority hashrate can effectively determine the longest chain, and thus, most wallet implementations out there. Even if the wallets start doing limited validation, the Chinese miners could always exclude specific transactions they don't like.

by Jasper_ 11y ago

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.

Jasper_ 11y ago
Something has to validate transactions. If miners don't do it, who else will? Clients run by users won't, because they can't store the 50GB-and-ever-growing blockchain locally. They simply use the SPV protocol, which trusts that somebody else has validated the chain for them. As you can tell by the bitcoin.org alert, it was a serious issue that miners stopped validating transactions, because lots of wallets blindly trusted the longest chain, which was actually invalid. The majority hashrate can effectively determine the longest chain, and thus, most wallet implementations out there. Even if the wallets start doing limited validation, the Chinese miners could always exclude specific transactions they don't like.