2 ms·

Not necessarily. You cannot magic GH into existence. Merely wanting it does not mean you can get it. So the higher the GH the more secure the network, lower the

Not necessarily. You cannot magic GH into existence. Merely wanting it does not mean you can get it. So the higher the GH the more secure the network, lower the cost of GH and the bad actor and good actor are competing for the same product. The good actor requires less GH to continue to be a good actor than a bad actor requires to become a bad actor. If the bad actor does not mange to obtain 51% of the network hash power then they have to be a good actor or get rid of their equipment.

mikeash 12y ago
Thinking about it more, the problem is that there's currently no link between the amount of money allocated to Bitcoin security and the actual need for it. There's some efficient amount of money to spend on security, and markets will generally aim for that amount, even if they don't necessarily hit it exactly. In the version of Bitcoin where the mining reward is negligible and miners are mostly paid with transaction fees, it should happen there as well. But the mining reward is currently substantial, which greatly over-allocates resources to security. Add that in to the fact that Bitcoin mining has huge externalities in many parts of the world, due to the fact that electricity is often produced by burning coal, and coal externalities are poorly accounted for, and you have a big problem. Or rather, you would have a big problem if Bitcoin were big enough to matter.
- TheDong 12y ago
  You say "there's some efficient amount of money to spend on security, and markets will aim for that amount ... will happen with negligible mining reward" I think is false. See comment: https://news.ycombinator.com/item?id=8887085 https://news.ycombinator.com/item?id=8887085 I would say the upper bound on the amount of energy someone will spend on BTC is roughly the cost of (prestige of mounting a 51% attack) + (BTC market cap of one individual). If people allocate resources to BTC efficiently then one rogue person will just mount an attack and take over the network for the combination of prestige and fortune. Any person with large BTC wealth will want to have more security to protect his investment appropriately, and your security against said attacks is buying more hashing power. The fact that over time hardware becomes cheaper just means it's a constant losing battle. Other markets that allocate money to security I think can reach an efficient amount because the system they're protecting does not, as a core part of it, require you to have more processing power than your user's / people you transact with. The two security models are so drastically different I don't think a comparison can be made. Perhaps the closest comparison is password hashing where it's good practice to increase difficulty over time to slow down attacks, but with 2FA and lockouts after N attempts, you actually don't need to allocate significant resources there.

mikeash 12y ago

Thinking about it more, the problem is that there's currently no link between the amount of money allocated to Bitcoin security and the actual need for it. There's some efficient amount of money to spend on security, and markets will generally aim for that amount, even if they don't necessarily hit it exactly. In the version of Bitcoin where the mining reward is negligible and miners are mostly paid with transaction fees, it should happen there as well. But the mining reward is currently substantial, which greatly over-allocates resources to security. Add that in to the fact that Bitcoin mining has huge externalities in many parts of the world, due to the fact that electricity is often produced by burning coal, and coal externalities are poorly accounted for, and you have a big problem. Or rather, you would have a big problem if Bitcoin were big enough to matter.

TheDong 12y ago
You say "there's some efficient amount of money to spend on security, and markets will aim for that amount ... will happen with negligible mining reward" I think is false. See comment: https://news.ycombinator.com/item?id=8887085 https://news.ycombinator.com/item?id=8887085 I would say the upper bound on the amount of energy someone will spend on BTC is roughly the cost of (prestige of mounting a 51% attack) + (BTC market cap of one individual). If people allocate resources to BTC efficiently then one rogue person will just mount an attack and take over the network for the combination of prestige and fortune. Any person with large BTC wealth will want to have more security to protect his investment appropriately, and your security against said attacks is buying more hashing power. The fact that over time hardware becomes cheaper just means it's a constant losing battle. Other markets that allocate money to security I think can reach an efficient amount because the system they're protecting does not, as a core part of it, require you to have more processing power than your user's / people you transact with. The two security models are so drastically different I don't think a comparison can be made. Perhaps the closest comparison is password hashing where it's good practice to increase difficulty over time to slow down attacks, but with 2FA and lockouts after N attempts, you actually don't need to allocate significant resources there.