$100k of FPGAs, Mining Bitcoins at 110 Ghash/sec
bitfury.org
bitfury.org
I think that bitcoin will continue to have some success in areas that wish for privacy, but will not reach the heights that some people predict.
Second, if you were to create "inflatacoin", with a small but real inflation rate, who would adopt it? It would probably be better economically speaking, but people prefer putting their money in things that stay stable or grow over time.
I don't know the solution to bitcoin's deflation, but IMO it's still a problem.
I don't see how the hoarding/early adopter thing would destroy bitcoin. Bitcoin isn't fair, but lack of fairness doesn't necessarily make the project unsuccessful.
And usually people don't purchase things because they are "fair". People purchase luxury cars, big houses, drugs etc. for purely selfish reasons, to enjoy life. If we think that currency is just another selection in the market, people will use the currency that will benefit them most. Fairness has nothing to do with it.
That is not the case with bitcoin so far.
I was going to post exactly that. People are funny. If they perceive something is biased against them, they are much less likely to adopt its' use or even encourage its' existence. In fact, I bet there is a fair bit of quiet satisfaction around here every time another "$xxxx bitcoin stolen" story gets posted simply because most of us feel as tho the ship has sailed and we missed it. FWIW, I don't really care one way or another - if this currency exists in ten years, it'll just be another opportunity I missed early on. I'm at peace with that, but I am also not going to buy a bitcoin mining rig. :P
Will anyone go to the expense of an ASIC?
Would a well funded group with access to FPGA technology early on in the chain, when others were using GPUs, have been enough to crash the currency?
And does anyone believe that a government would not be able to destroy bitcoin, trivially, by spending a few days mining?
Given the almost limitless divisibility of bitcoins I don't think it's much of a threat. I'd be far more worried about laws being passed that made bitcoins punishable by jailtime.
While goverments have the money to do it, do they have the capabilities and incentives?
The main reason a government would want to do this is that control over the coin of the realm is a major source of state power. If a government ever concluded that bitcoin posed a credible threat to that power, that would be a strong incentive to undermine it.
You think NSA or GCHQ[1] don't have the knowledge to implement an efficient bitcoin machine? You think they don't have the money? You think they don't already have significant computing power?
Or are you suggesting they'd be hampered by legal oversight issues?
[1] GCHQ probably have the most powerful computing facility in Europe. That puts them amongst the most powerful computing centres world wide.
This seems likely. I don't imagine that FPGA clusters depreciate much over periods of a few years. I bet you could make most of the investment back by selling them off to some research firm once the return from the mining dropped. There must be plenty of hi-tech research based startups that need to do serious number crunching on a budget.
In other words, people are not hoarding them, but are trading them very, very frequently.
And this is just measuring MtGox's volume. Other trades (merchant sales, other exchanges, etc) are likely surpassing MtGox's volume in aggregate...
Add: so 7200 coins/day in 2009, 3600 coins/day starting 2013, 1800 coins/day starting 2017 etc.
I'm not sure that evidence of trading is evidence of non-hoarding. It's only 0.5% of the total number of bitcoins out there that are traded daily. Is that a lot? I'm not sure, but I don't think we can compare it to the number of coins created daily and draw conclusions from that.
Some people are hoarding them. A lot of them. Or at least they claim to be.
As someone who has mined, bought bitcoins, and tried using them at bitcoin stores, there is really nothing special I can buy with them, and can and have dropped 20-50% in a matter of hours.
That's not very convincing. A better comparison evidence would compare the daily exchange to the total inventory.
However, the real question is more granular. If we look at #exchanges/age for each bitcoin, what do we find?
I'd expect to find that some bitcoins have higher turn-over than others even if there's no hoarding, but what fraction have never been traded, or have been traded less than 3 times?
It goes like this. Say you are a miner. You mine. At the moment you get your bitcoins, you've realized value in the sum of ( $Bgenerated - $Bcost (your hardware, etc)).
From that point on 'hoarding' is no different than going to an exchange and buying $Bgenerated in bitcoins with dollars.
So your argument for 'hoarders' having a tremendous unfair advantage is seriously flawed. They have no greater advantage than any speculator going and making a bet in bitcoin long term value.
The real value generated is the one they capture at mine time, and there is a super efficient market for that with very slim profits.
I don't know what the skeptics think, but to me, the fact that at least 2 wealthy individuals or entities have invested $100k in 360-FPGA farms should send a signal that at least some consider Bitcoin sufficiently reliable, trusted, and stable to warrant this kind of investment. They put their money where their mouth is.
I will soon write a blog post documenting the numerous other FPGA board vendors that started designing custom boards targetting the Bitcoin mining market.
Disclosure: I am myself a long-time miner.
I don't believe they are sending ANY signal that Bitcoin is reliable, trusted or stable. In fact I personally see this as a clear sign that Bitcoin is fundamentally unfair and easily gamed.
More mining, more secure blockchain, etc.
Curious that you used the word "unfair". It is quite likely that the fairness of bitcoin, is not related to it's future viability.
Disparity is alive and well in the real world, and seems to be doing just fine.
(not that I think it shouldn't be)
These guys are selling shovels to the miners.
"Step right up! Get your ~10k/month bitcoin mining gear right here! Only $90,000 and _guaranteed_ to make you rich!"
I don't see any false advertising here. I think the people who invest to these things know the risks. After all, bitcoin is pretty open project. You can easily calculate how much you will be making money with this with current difficulty/exchange rate. Of course both of them will probably fluctuate heavily in the coming years.
Another notable modern example is Apple and the App Store - sure Rovio "struck it rich" with Angry Birds, which Apple "only" skimmed 30%off the top, but how much _more_ money do you suppose Apple has made as a result of Rovio's success spurring on many many imitators? (all of whom pay Apple $100/yr + 30% of whatever success they manage)
110e9 (hash/sec) * 3600 (sec/hour) * 730 (hour/month) / (2^32 * 1733208 (current difficulty factor)) * 50 (coins/block) * 5.1 (current exchange rate: usd/coin) = $9903 per month
Minus about $730/month in electricity for the 10kW it consumes, assuming an average worldwide rate of $0.10/kWh.
So could be a case of security by obscurity here?
Sure mine the BTC and it won't be possible to trace back to the machine.
If anyone is interested in the project, you can check it out here: http://projects.tonigemayel.com/bitcoin-os/
http://www.reddit.com/r/IAmA/comments/sq7cy/iama_a_malware_c...