The Bitcoin Lottery
cryptome.org
cryptome.org
I could try to rewrite it. But I wouldn't even know where to start. Of course all my research was encrypted too! I'm no idiot! This was work, this was hard work. I'm not even sure I could remember it all. "I wrote them down in my diary so I wouldn't have to remember."
I did the calculation. Brute forcing the password would take more than my lifetime with all the machines in the lab. Would Moore save me? Could I stand the wait? Later on, I stood on the roof of the math building (a quiet escape a few grad students shared) contemplating my next move. Looking out, late at night, it came to me. I couldn't do it, but the they could. Even just a fraction of the computers out there could get me my thesis back.
But how? I could create a distributed computing project, it was something I had worked on before. But there was no way to attract the required users. I needed something as least as big as the largest projects that already existed. I needed to give people something. A bounty isn't enough, the prime project has a great bounty, but I need more users. They all want money. But I had no money. So, I gave them the next best thing: the promise of money.
I saw it pointed out somewhere that bitcoins are meant to be rare, and that once the final bitcoin is generated, as there's meant to be a set ammount, there will be many orders of magnitudes less of them than dollars, euros, or the etc. So, even if the cost right now is high, having a hash of them could become worth a great deal.
That is of course speculative, but when there's going to be 1 bitcoin for every 600,000 of today's dollars...assuming the sum of bitcoins becomes worth a thousandth of that of dollars, each bitcoin will be worth 600 dollars...run a mining op for one coin a day for a year(365 coins), hold onto it for a while, average the price down to 300 dollars a coin...sell for a hundred grand...
So running a bitcoin mining opp, or even buying the coins at current market value, is a feasible long term high risk investment. I wouldn't suggest putting all your eggs in that basket, but I would suggest adding the purchase of the occasional bitcoin (or the cost of mining) to your list of high risk investments.
When bitcoins become rare why won't someone else start a new bitcoin2? I think there's an asymptotic max price that can't be crossed.
The rules are as follows:
1. Every string of bits that is a bitcoin is also a Bitcoin Prime.
2. Currently I own all extant Bitcoins Prime, but I'm willing to sell them. Right now I am willing to sell them at a 50% discount relative to Bitcoins, so you can get twice the Bitcoins Prime for your US dollars.
You'd be an idiot to buy Bitcoin when you can buy Bitcoin Prime at half the price, right?
However, a mutual fund represents a consistent and safe income. I very much doubt that bitcoin mining will remain as profitable as it is now for very long.
Assuming the cost of the electricitiy is 1.26 cents per kwh, and your machine is running at around 800 wats, constantly, that's 720 hours and 576 kwh, seven dollars a month...so the cost of running doesn't seem to be that high either.
Edited for bad math. May continue to do so. Please point out errors.
1) Since 1971 (40 years) is roughly 1300%, which is 19.63% annualized (1.1963^40 = 1300).
2) Since 1950 (60 years) is roughly 7680%, which is 16.08% annualized (1.1608^60 = 7680)
I think you'd be better off going to the nearest bank with your $1,000 and buying an I bond. It's not a popular thing to do (only grandmas seem to like these things), but it's a pretty much slam dunk investment with zero risk.
That said, I suspect such a high level of profit won't last for long. It remains to be seen whether the current high value of bitcoins will last, and the more miners there are, the more profit has to be shared.
As for estimating the whole network's energy, here's a gross, probably exaggerated way to measure it. My 5870 gets 370 Mhash/s at 188 W. The current network rate is 2000 Ghash/s. 2000 / 0.37 * 188 = ~1 megawatt. Seems reasonable, especially since it's distributed worldwide.
On the other hand, lots of other people will probably power down their miners, too, so that mining will become easier again. Then it could become feasible to mine again...
I am actually sorry about the waste of energy, but I decided that for once I'd join in the fun. I have never owned a car, so I hope that makes up for the waste to some extent.
When I started my analysis was essentially "if I am lucky I can get back my investment and get a new gaming PC that pays for itself".
There is a constant for M that is independent of P, M_power_leech.
http://blog.blinker.net/2011/02/08/expected-number-of-coin-t...
At the moment I generate about 5BTC/day with my dual-core ATI graphics card. Two months ago (when I started), it was twice that.
The mining cost should eventually be reflective of the value of the features of the cryptocurrency. In other words, if you want pseudoanonymous secure p2p transactions, buying bitcoins is like paying for that service. Who's providing the service? The miners, which are just the people keeping the network running so that others can use it.
In the long run, people with a lot of coins tend to get even more coins. I don’t see why I should participate in an “open and secure currency” that benefits people who let their hardware run wild doing mathematical operations which, outside the currency system itself, are pointless. At least gold has some aesthetic and industrial value.
There are economic problems with bitcoin as a currency (its a fiat currency, effectively, except without the fiat - it has scarcity with no intrinsic value), but the algorithm component seems solid to me.
For example, if an overwhelming majority of people with bitcoins(or USD) decides tomorrow to not ever use them again, then the remainder that have them are screwed. If the places that the currency can be uses cease to exist, the currency is worthless. There isn't any technical solution to this problem, the economy just ceases to exist. Obviously, this is an extreme case, but it's entirely possible that this can happen with any currency over an extended period of time if it doesn't catch on, or if investors lose confidence in the currency itself.
Part of what it means to have confidence in a currency is to be reasonably sure that its inflation will be limited to a rate that allows you to exchange your currency tokens before they are drained of value. Passing the hot potato, etc. With a fiat currency that confidence is based on nothing more than your beliefs about the central issuing agent's likely future actions.
What's new with bitcoin is that there is no central authority who can decide what the inflation rate should be. The inflation rate is built into the mathematical definition of the currency, and it is self-limiting: the more work people put into mining bitcoins, the longer it takes to find new ones. This is not true of any existing currency, and is in fact an improvement on existing currencies.
Even if we don't all end up deciding to build an economy around bitcoin, this is an important achievement, something future currency designers ought to make note of.
What cryptography (reasonably) guarantees is that bitcoins aren't double-spent, aren't created from thin air. Not that they preserve value or are acceptable as payment.
Part of what makes this work is our mutual knowledge that it would be very hard for either of us to game the system. I can't just print up new dollars and neither can you; this means that the dollars you give me are very likely to have been given to you by someone else, which makes it very likely that I will be able to pass them on to someone else, which makes them useful and therefore valuable. If I could just print up my own dollars out of thin air, I wouldn't actually need to do any work to acquire them, which would make me less likely to accept them in trade for whatever it is you want from me; if everyone else is in the same position, then none of us have any reason to accept dollars from each other, and the currency is no longer useful as a means for exchanging debts. So the usefulness of any currency depends on the degree to which it is difficult to create new currency units.
This is what I mean by confidence that bitcoins are going to remain valuable: people can't just pull them out of thin air. It takes a lot of work to get a bitcoin. Right now the bitcoin system is new so lots of people are mining bitcoins, but once there are enough of them it will be easier to get a bitcoin by doing some other kind of work than by mining. This is all we need for bitcoins to become a useful medium of exchange for IOUs, should we decide to use it that way.
That is the minimum it offers. It also offers the ability to transact with the government, who is the largest sole consumer in our economy, and a whole host of other things.
I don't gamble. This is not some religious thing, but simply because I like to have control over my fate, and gambling takes that control.
Maybe you like to have the illusion of control over your fate?
Personally I like to keep my life exposed to some randomness.
If you invest serious computing power into that, then there's not enough variance in it to be called gambling anymore. Betting on 6-6 in a single dice throw is gambling, betting on the percentage of 6-6's in a trillion dice throws is boring.
So if someone controls 51% of the BitCoin clients they can do anything they want?! Sounds like a flaw. Once lots of money is involved, it would make sense for people to start throwing botnets at this to hack it.
http://www.debtdeflation.com/blogs/2009/01/31/therovingcaval...
Can't someone adapt it to look for md5/sha clashes?
US power sources overlayed on 2008 Electoral Map. Too close to call.
I was too lazy to fix Alaska and Hawaii.
Source: http://www.npr.org/templates/story/story.php?storyId=1109973...