The resolution of bitcoin experiment

From November 15 to 26 the Bitcoin Cash network went through its most important experiment since the inception of Bitcoin itself. The so-called.
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This is primarily because much of the potential hydropower cannot be absorbed by the grid in western China, where many dams have been built over the past decade on the rivers flowing off the Tibetan plateau. Bitcoin mining operations are the rare customers that can show up near an isolated, idle hydropower station and gobble up electricity from turbines that otherwise wouldn't even be spinning.

The other factor I mentioned, that bitcoin mining in China provides an added return in the form of expatriated revenue, does not enter into the calculation of marginal cost. But it does effectively add several percent—the price of moving money out of China via other mechanisms—to Chinese miners' marginal revenue. And it's marginal revenue minus marginal cost that matters, not marginal cost alone. I don't believe large mining farms in China pay less than 2 cents per kWh. But if you have sources, quote them. I would like to be proven wrong.

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Farms don't usually disclose how much they pay strategically sensitive number , but I always do some back-of-the-napkin math when possible, eg. Why are these hydroelectric plants not connected to the main grid that powers Shanghai and Beijing? If the turbines are otherwise literally turned off, surely the transmission losses become irrelevant? It sounds like a distance and power storage issue. According to Wikipedia the distance shouldn't be an issue with HVDC lines and there's no need to store power, you can take some of the coal plants near the cities offline.

Bitcoin mining could be more decentralized if it better resembled a lottery, where huge numbers of people play for an expected loss. In other words, the lack of people mining at a loss makes mining profitable and hence subject to forces of centralization.

Hearn: The resolution of the Bitcoin experiment

There are several reasons why mining as a lottery substitute is rare, a major one being that commodity hardware is inefficient by many orders of magnitude, making even a botnet next to useless. Perhaps, if a proof of work, whose efficiency gap with custom hardware is at most an order of magnitude, were adopted or slowly phased in , enough lottery players would arise to make mining unprofitable at scale.

Ben explains the recent volatility in the Bitcoin space

Botnets should then just be welcomed as a modest increase in decentralization. Yes there are several other cryptocurrencies that at least attempt to address this issue. Those solutions were disregarded as non-essential technical improvements, and any change to Bitcoin would bring instability.

Now perhaps more people will see those as fundamentals to the currencies' goal. Bitcoin has barely changed in it's core protocol.

Mike Hearn: The resolution of the Bitcoin experiment

I hope other projects get more exposure in the future or Bitcoin becomes less afraid of change. It's a universal rule. If you look at bicycles, there were thousands of weird models built and tried before they found the one that really worked. You could never design a bicycle theoretically. Even now, after we've been building them for years, it's very difficult to understand just why a bicycle works — it's even difficult to formulate it as a mathematical problem.

But just by trial and error, we found out how to do it, and the error was essential. Has anyone run the numbers on what it would cost to build data centers with equivalent hashing power using the latest ASIC's in various areas taking into account labour and energy costs. Between a wealthy libertarians, BitCoin startups and crowd funding not necessarily donating, could be buying shares in a company that will mine, with a charter, governance etc and regain control to do whats required to make it work.

Wouldn't, say, a cryptocurrency that forces P2Pool solve this issue? There are two errors in your logic: 1 Mining power is still decentralized. It's not evenly distributed, true, but it is decentralized. It's still distributed across thousands of independent miners. That's a pretty unique situation. That's a false statement. To do some evil thing they will have to convince all of their miners to participate, and stay quiet at the same time.


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And all for what? TD-Linux on Jan 15, [—]. Unfortunately miners don't get to make any real decisions about e. Of course the miners can move to a different pool if bad things start happening, but it's only reactionary.

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There's some neat tech that gets around this that is compatible with Bitcoin, for example p2pool. It's not super popular yet but it solves some of these problems. FWIW both of the pools are essentially ran by the same people too. Or a cabal of them. Okay, so we need to trust three people, or whoever has the biggest datacenters.

There's more decentralization in the status-quo than the three or four big-name BTC Miners. True but not much more than those. I bet you de facto "control" of the US banking system could be said to exist in fewer than 20 entities. At least some portion of which are elected or appointed by elected officials. The big mining pools are also chosen by individual miners, who can change at any time. This, which is amusing. Miners produce a stream of bits by consuming CPU cycles, energy, data centers and admins.

First, China is a low cost producer across many product categories. It is not surprising that bitcoin mining is also on that list. Second, there are economies of scale to be exploited. Over time, it will become more profitable for the largest miners to increase capacity vs the smaller miners. The largest miners will get cheaper power contracts. That alone gives them an advantage that will allow them to take market share from the smaller miners. The end result is fewer, but larger, miners doing more work. Read the article, he was clearly laying the groundwork for this move back in Thanksgiving.

Whether or not Mike might profit from Bitcoin failing in favor of the alternate cryptocurrencies he works with , the picture he paints is one of inherent instability, mismanagement, and censorship, and it seems like a solid argument. I'm skeptical of where his money comes from, and I don't think he's unbiased enough that I would short BTC just on this article alone.

Michael Tsai - Blog - The Resolution of the Bitcoin Experiment

But I'm certainly less bullish on its future than I was. Which alternate cryptocurrencies is he working with? See link in the GP: "The use cases they are looking at and requirements they have cannot be met with the Bitcoin protocol, it just doesn't have the things they need. They are actually spending a lot more time looking at Ethereum than Bitcoin, as it's more obvious how to apply it to their use cases.

Is this comment intended to imply that Mike is being opaque with his intentions? The quote seems pretty much in line with the OP. No, only that the article is being misleading in it's breathless clickbaitiness. The quote is absolutely in line with the article; actually including the quote in the article would have rendered the headline 'Bitcoin dev thinks blockchains for banks are way cooler, has thought so for months, and is reluctantly moving on'; that might be a fun article to read, but it's not frontpaging HN.

If you read the entire article, you would not describe it as click-bait. The key quote is " Spoiler alert: it's not a limit of the Bitcoin protocol, but rather a political decision made by many of the Bitcoin Core developers.

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More proof that "clickbait" does not mean "a story that does not deliver on the headline's promise" but rather "something I don't like. What I take from this and I think I really should invest my own time in researching more on is psychology. People want to protect their investments. But because we are talking about money, don't confuse this for meaning that the investments are just about money. Investments in code contributions, investments in all the articles read, investments in community, friends, social networking, investments in belief systems, investment in the justification for choosing one thing rather than another.

It's simply not consistent to say "oh you only have 20BTC, so you've nothing to lose" or "oh, you made no code contributions, so why are you complaining" as both ignore the potential for massive psychological and personal investments. All these investments act as a barrier to change. It hurts, it hurts physically to lose big investments.