Bitcoin Block #210 000 mined - reward halving

This is a fixable problem. BIP 0037[0] for example tries to mitigate the size issue with bloom filters, so you no longer need to download the complete block chain to be able to verify transactions.

[0]: https://en.bitcoin.it/wiki/BIP_0037

There's already a couple of ways around this. One is the 'online wallet' set up, where someone already has the complete block chain online, the other is the bootstrap approach, whereby although you still download the entire chain, you can do it a lot more quickly via Bittorrent or the like.

But generally, I imagine most people would go with the online wallet approach if they're not comfortable with the drive space requirements.

I also believe that it is possible (theoretically, at least) to essentially just start somewhere further in the chain, in a way. Having said that, that would probably remove you from the option to mine at the same time. Maybe?

Hard drive and network cost per gigabyte is always falling, and much faster than the blockchain is increasing, so it's not expected this will be a huge problem. But what you say is true that it will "centralise" more in a sense - but the barriers to entry will still be much smaller than any other financial institution so there will likely be many groups still involved with processing the block chain.

If it's just the download time that's bothering you, try the electrum client: http://electrum.ecdsa.org/

It uses a remote blockchain so that you don't have to sync with the network. But you control the wallet (the private keys that let you spend the coins) so it doesn't suffer from the problems of the online hosted wallets where you are not in control of your coins.

Efficiency in syncing the blockchain appears to be the number one priority of the bitcoin client developers right now. The next release, 0.8.0, will have major improvements in this area.

from https://bitcoinfoundation.org/blog/?p=16 "new features are being added to the protocol to support alternative implementations– next major release of bitcoind/Bitcoin-Qt (version 0.8) should support for “bloom filters” to get just the transactions relevant to your wallet"

"...optimize transaction storage so validating transactions requires much less disk access and memory..."

Several gigs may be prohibitive for an end user, but not for anyone who wants to set up a server. How many people run their own email servers any more? Spam control and all the security and other BS is a giant PITA. That doesn't mean, however, that there isn't still Hotmail, Gmail and Yahoo. Email is not centralized.

Though, I see that this is a bit different. If I had 1000 bitcoins I wouldn't want to put it on any server but my own. But, then again, I'd be pretty rich and downloading a few gigs of data wouldn't be the end of the world. ;)

I think that the sustainability issue can be managed with bloom filters etc, but you are correct. Under the current model where the entire block chain must be in the possession of every client, Bitcoin is not remotely close to sustainable. Imagine if, in order to process credit cards, you had to download transaction data for every credit card transaction in the history of credit cards.

What surprises me is that the original creators, who were obviously very intelligent, didn't anticipate this becoming a problem and create the system from the ground up to address it.

You don't need to store the entire block chain in every client, even in a model where you don't want to trust a third party server. Most of the block chain is "dead," in that the coins in those transactions have changed hands since then. You can drop those transactions as they can't affect anything. Further, since the block chain contains a Merkle tree, each client only needs to have log(n) blocks on hand to validate the entire tree (i.e., provided by someone else or federated across the network).

There's a lot of compression possible that the client hasn't bothered with yet. The community expects this to eventually be a solved problem.

1) They're working on that problem, and it's solvable without disrupting the security.

2) You can always use one of a number of online wallets who will host the blockchain for you.

Nobody is, that's why it's usually pissing everyone. A "Party" button might have done a better job.

Sorry, it was meant to be a bit of fun and I wasn't expecting it to get on HN front page (developer).

It's just for fun...

needs more <blink> tag

Can you expand on this for a non bitcoin-savvy person?

I saw that, too, and was really surprised at the fees generated. Didn't realise it was specifically for that block, though, until I saw that the one prior only got 0.53BTC :)

I doubt that the Bitcoin community is large enough to affect the video card market.

I'd say give it another month or two. Many are still able to mine profitably if they have 4x cards per rig (dividing the "fixed (power) costs" of motherboard, psu, etc). Once ASIC mining hardware comes online, GPUs will be completely worthless for Bitcoin mining.

But if you see a deal, by all means grab it.

* Disclosure, I am the community manager for a GPU-centric Bitcoin mining pool

More like FPGAs and ASICs.

I expect the moon to be made of green cheese.

... GPU mining is still fairly profitable with the half reward for ~most people (those who don't have electricity over $.15/kwh or so). My expectation is that the difficulty is currently lower than its proper equilibrium because people have opted to not purchase more GPUs while anticipating the introduction of ASIC devices.

> I expect the difficulty to halve.

Why would it? Those who have invested in dedicated mining hardware aren't going to switch it off just because the reward has halved. At least not until mining fails to pay for the electricity that goes into it (but I don't expect that will ever happen.)

Difficulty would only halve if none of the miners had anticipated the block reward halving.

I bailed out and sold my 100 btc at 5$ and then patted myself on the back when it hit 3$. I didn't buy back in like I should have and now I am kicking myself in the ass.

Don't let yourself make the same mistake again. I'm thinking of buying some more soon.

Transaction fees will be one factor, and are already built in. Pay a transaction fee and your transaction gets processed faster.

But also, miners who can't be profitable anymore will drop out. As they do, the mining difficulty will decrease until mining becomes viable again. On the other hand, the first special purpose mining ASICs are starting to be offered, and people with those will be able to mine more efficiently.

I'm not expecting the bitcoin price to change significantly, since I figure it's determined more by the demand for bitcoins than by production costs. Looking forward to seeing whether that's correct.

This person is misinformed. Mining is still quite profitable to many of us. Eg. each one of my Cairnsmore1 FPGA boards makes about $43/month, after the halving. Before the halving, they made $86/month. I paid $640 for each one. Electrical cost for one of them (40W) is $2.90/month at the worldwide average rate of $0.10/kWh.

1) GPU mining is still profitable, if your power is cheap.

2) FPGA mining is still plenty profitable (I'm making, eh, 20BTC a day or so? And already paid for my hardware)

3) ASIC, coming soon, will change everything again, but keep it profitable

Bitcoin are "mined" by miners across the globe who run special software on their machines/mining rigs. Each time a block was mined before block #210 000 miner earned 50 bitcoins (+transaction fees). Now, it will got only 25 bitcoins. It's part of Bitcoin specification. More reading: https://en.bitcoin.it/wiki/Mining#Reward

Bitcoin works by having "blocks" of data, containing transaction history (every Bitcoin transfer someone has made - it is only actually made when incorporated into a block), "mined" by a network. These blocks are mined by incrementing a value in the block of data computing a hash of it, until it falls within a certain range. The fact the hash must be in this range results in Bitcoin miners having to do millions of hash computations until they find the correct one, creating a significant level of difficulty in producing a block. This difficulty means that it is difficult to spend Bitcoins twice, since you would theoretically need to control 50% of the computing power working away at it. Each miner is competing with every other to mine the next block first. Whoever does so can add a "reward" of Bitcoins to the block of transactions, and this is how new Bitcoins are made. Over time, the Bitcoin network increases the difficulty by making the range of valid hashes narrower, so that even as more miners join the network, it will still take roughly 10 minutes until the next block is mined. What's happened in this case is that now the reward, previously 50 BTC, has been halved to 25 BTC. I should note that miners can also deduct transaction fees... anyone who makes a transaction can add a small fee. This adds an additional incentive for miners to mine a block beyond the other reward. It also means, of course, that they prioritise whoever pays the highest fee.