Hacker News Reader

Comment by dogma1138 | Hacker News Reader

Nothing wrong with licensing, cryptocurrencies on the other well meh...

All of those "proof of work" type schemes eventually will dwindle down to the same centralized network they are aiming to replace.

With the amount of compute power required to perform any operation mining will end up being handled by a couple of big players which the rest will use a proxy.

BitCoin already is pretty much centralized with mining becoming an operation which requires you to setup a bloody data center to get into the game, yes allot of those are some weird complexes in the middle of no-where China, but they are still bloody huge and expensive.

And there isn't much you can do about it, if you build a network which establishes "trust" based on "effort" the effort cannot be trivial, or to be more exact the amount of trust one will have in such network is tied directly to the amount of effort one has to put into it to perform a given task.

View on HN

That's not true. While bitcoin mining is conducted through pools, what mining pools do is entirely public. Miners can easy choose another pool if one abuses their power.

For example, in 2014 a pool named GHash.io was close to obtaining 50% hashpower. It is customary for pools to stop accepting new signups when they are close to 50%, however GHash.io refused to do so. The miners organised an exodus and GHash lost half of their miners in a month.

What is stopping people from setting up multiple pools and getting 50% that way?

How do you really know all those pool operators are actually different people?

For a 'trustless' system, it seems like you need to place an awful lot of to trust in this small, secretive cabal of mining operators.

I understand from what you're saying that bitcoin is continually dependent on social customs that have already reached the verges of failure.

At the moment (some) miners are motivated to avoid 51% attack because they gain more from protecting Bitcoin's value than they do from profiteering with a 51% attack.

If that stops being the case, even for a moment, then the 51% attack will happen.

http://www.coindesk.com/eba-51-attack-remains-bitcoins-bigge... [2 weeks ago]

Yup, it's like pretending VISA and MASTERCARD are decentralized forms of currency. At least you can buy a beer with them in under 10 minutes.

You can indeed buy anything less than ~$100 instantly with Bitcoin. Payment processors like BitPay and Coinbase accept zero confirmation transactions for small amounts, simply because the costs of double-spending 0 confirm are massive.

So what you're saying is that you can do instant transactions with bitcoin if you don't actually use bitcoin.

No he's saying the cost of double spending is much larger than $100 so merchants will/should generally accept those.

No, Coinbase and BitPay accept 0-confirmation transactions when you pay a vendor by publishing a Bitcoin transaction through the Bitcoin peer-to-peer network, if the vendor has set it up to do so.

I thought bitcoin was a decentralized currency that didn't use payment processors like VISA / MasterCard...

Bitcoin doesn't require payment processors, but it doesn't prevent people from using them either.

Which is exactly what grandparent said:

> All of those "proof of work" type schemes eventually will dwindle down to the same centralized network they are aiming to replace.

I don't think (s)he was talking about the payment processors, but about the centralization of mining, which is a different issue.

And a payment processor in Bitcoin is closer to a company that runs cash registers than a provider like VISA. The worry is about the companies that want to control both ends, like Coinbase, not payment processors in general that simply take care of accepting BTC on behalf of the payee.

They'll up being the same in the end it's just the logical financial evolution of the scheme.

With ever increasing mining complexity coupled with ever growing demand for more and more mining since the rate of transactions in the system is directly tied to its mining rate when the block rewards will become rarer and rare till they eventually halt you'll pretty much will end up only with the "Banks" doing or controlling the mining since they'll have to ensure at least a minimal mining rate which covers their transaction volume.

the rate of transactions in the system is directly tied to its mining rate

How so? That's not my understanding at all - you could have a rate of transaction at the level of VISA with just a dozen computers or so. The mining difficulty is a consequence of having many miners (which makes the software auto-increase the difficulty of the problem), not of the increased transaction rate.

the block rewards will become rarer and rare till they eventually halt

That's why there are transaction fees, which pay the miners in lieu of the block rewards.

It's an ouroboros turning into a catch 22 you can't have an open system with high level of trust if the computation is trivial.

Ever increasing difficulty raises the bar so high that it centralizes a system due to the hardware requirements (there is no way to effectively mine BC today on standard computing hardware sorry) and their costs.

Look at the BC network now it's either huge centrally controlled mining pools or multi-million dollar mining farms which are controlled by individuals, this isn't decentralization of anything but computing assets as far the the pools are concerned.

There's an intention is to transition ethereum from proof of work, to proof of stake, to avoid some of the mining centralization and waste.

Reply on news.ycombinator.com