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> Hashpower is heavily tilted towards large mining pools, many of them in China, but it is still the best measure of consensus and support the network has. I'm

by rlpb 9y ago

> Hashpower is heavily tilted towards large mining pools, many of them in China, but it is still the best measure of consensus and support the network has. I'm not convinced by this argument at all. Consensus in the network is derived by the traders who give Bitcoin its value, not the miners. If anything, the miners are on the opposite end of the equation as they have to sell their mined coin to pay for their mining expenses (since silicon and electricity are typically purchased in fiat currency). Look at the exchanges for consensus, not the miners. The miners are effectively slaves to the system. I don't understand why it's so common to give them so much weight.

ploxiln 9y ago
First, miners also invest in the future of the coin when they invest in building up a mining operation for it. Second, if most miners stop mining a coin, it can kill it. At least the next few blocks will take a very long time to be confirmed. Just as importantly, the security of the system is reduced because a large miner could theoretically overwhelm the remaining hashpower and execute a "51% attack" for some short-term profit. It's unlikely, but the confidence in the coin is partly based on it being impossible.
- CydeWeys 9y ago
  > Second, if most miners stop mining a coin, it can kill it. This won't happen though. Miners are out to make a profit, full stop. They mine whatever currency is most profitable, so hash power follows price. Bitcoin has over half of the total cryptocurrency market cap. So long as Bitcoin itself is highly valuable, the miners will naturally follow along as well. And as some miners temporarily defect (thus incurring massive hourly losses in opportunity costs from mining less valuable currencies), transaction fees on Bitcoin simply go up higher, making each block worth significantly more reward, thus tempting the defectors with ever-increasing profits to defect back to mining Bitcoin. There is no mining cartel.

by rlpb 9y ago

ploxiln 9y ago

First, miners also invest in the future of the coin when they invest in building up a mining operation for it. Second, if most miners stop mining a coin, it can kill it. At least the next few blocks will take a very long time to be confirmed. Just as importantly, the security of the system is reduced because a large miner could theoretically overwhelm the remaining hashpower and execute a "51% attack" for some short-term profit. It's unlikely, but the confidence in the coin is partly based on it being impossible.

CydeWeys 9y ago
> Second, if most miners stop mining a coin, it can kill it. This won't happen though. Miners are out to make a profit, full stop. They mine whatever currency is most profitable, so hash power follows price. Bitcoin has over half of the total cryptocurrency market cap. So long as Bitcoin itself is highly valuable, the miners will naturally follow along as well. And as some miners temporarily defect (thus incurring massive hourly losses in opportunity costs from mining less valuable currencies), transaction fees on Bitcoin simply go up higher, making each block worth significantly more reward, thus tempting the defectors with ever-increasing profits to defect back to mining Bitcoin. There is no mining cartel.