4 ms·

People are down-voting this (presumably for containing the words "central authority") but it's actually pretty realistic. What we need is a log-linear graph of

by drostie 13y ago

People are down-voting this (presumably for containing the words "central authority") but it's actually pretty realistic. What we need is a log-linear graph of a few things. The BitCoin production rate is ramping down exponentially, and everybody who gets interested in BitCoin makes BitCoin more interesting, so there is probably an exponential increase in both the value of BitCoin and the number of miners of BitCoin. Finally, the cost of the ASICs needed to mine BitCoin effectively are diminishing by Moore's law at an exponential rate. Probably when you add these effects on a log-linear plot together, they add up to a straight line going slightly upwards; it's still worthwhile to join the network. But if you just think about it for a second, all of these could change. Moore's law can break down, interest can level off, miners' ambitions could skyrocket. It is quite plausible that the line would shift downward and new people would stop coming in, and eventually the smaller groups would stop running their own BitCoin miners. The larger miners might even buy them up. When that happens one can certainly imagine that an oligopoly of more than 50% of the computational resources of the network emerges, which turns BitCoin into a centrally regulated currency.

eru 13y ago
Moore's law has not too much to do with bitcoin, since the difficulty of mining is adjusted automatically.
- drostie 13y ago
  That was the very first thing I said; the production rate is ramping down exponentially. I agree that if you're a consumer, Moore's law has less to do with BitCoin, but the whole point of the comment was stop looking from a consumer's perspective. From the point of view of a miner -- i.e. of the computational clusters which compete to make the ledger work -- Moore's law has plenty to do with BitCoin. The fact that the production rate is constant means that there's essentially a fixed-size "pie" in any given time-frame. The fact that electronics are becoming cheaper and better means that your investment of $X today can be matched by an investment of k $X tomorrow for some k < 1. The person who does that will eat up part of the pie, leaving less for you. And why should you look at it from the point of view of the miners? Because the economic pressures on the miners determine whether the system eventually stabilizes into an oligopoly. If it does, then it can degenerate into a central-authority currency.

by drostie 13y ago

eru 13y ago

Moore's law has not too much to do with bitcoin, since the difficulty of mining is adjusted automatically.

drostie 13y ago
That was the very first thing I said; the production rate is ramping down exponentially. I agree that if you're a consumer, Moore's law has less to do with BitCoin, but the whole point of the comment was stop looking from a consumer's perspective. From the point of view of a miner -- i.e. of the computational clusters which compete to make the ledger work -- Moore's law has plenty to do with BitCoin. The fact that the production rate is constant means that there's essentially a fixed-size "pie" in any given time-frame. The fact that electronics are becoming cheaper and better means that your investment of $X today can be matched by an investment of k $X tomorrow for some k < 1. The person who does that will eat up part of the pie, leaving less for you. And why should you look at it from the point of view of the miners? Because the economic pressures on the miners determine whether the system eventually stabilizes into an oligopoly. If it does, then it can degenerate into a central-authority currency.