Bitcoin/GBP withdrawal issue...

[ehhhhhhh]

Here's a PDF on it if anyone interested.

[watercooled]

I never got into it myself, but I occasionally see how things are going with it. Those ASICs have been promised for a long time, and have yet to materialise.

ATM, a fair few people seem to be using FPGAs to mine, far more efficiently than GPUs, so the difficulty bar raises, and a lot of GPUs are now break-even or less unless you have very cheap/free electricity.

If ASICs ever make it to market, it will happen again, and anything but ASICs will be useless for mining, so you essentially have the vendor(s) controlling the system.

IMHO they should have chosen a far more complex operation than something like SHA, so it didn't scale so well with GPU/etc and put people unwilling to spend a lot of money to buy in at a massive disadvantage.

[ehhhhhhh]

I never got into it myself, but I occasionally see how things are going with it. Those ASICs have been promised for a long time, and have yet to materialise.

ATM, a fair few people seem to be using FPGAs to mine, far more efficiently than GPUs, so the difficulty bar raises, and a lot of GPUs are now break-even or less unless you have very cheap/free electricity.

If ASICs ever make it to market, it will happen again, and anything but ASICs will be useless for mining, so you essentially have the vendor(s) controlling the system.

IMHO they should have chosen a far more complex operation than something like SHA, so it didn't scale so well with GPU/etc and put people unwilling to spend a lot of money to buy in at a massive disadvantage.

The same happened when the CPU -> GPU transition took place so I can't see how is that a problem?

The same will be repeated once a more efficient (and widely available) FPGA or ASIC miner hits the market.

There are 2 companies which already launched their ASIC equipment. Avalon was the first, however let's just call that a paper launch (around 5 confirmed products shipped). The other is a ASICminer.

... so you essentially have the vendor(s) controlling the system.

How would they control the system? care to explain?

[watercooled]

People already own CPUs and GPUs, and the prices are what they are. ASICs are massively expensive to develop and produce, and the price will be dictated solely by competition (or lack thereof) between the vendors, who are entrusted with not keeping back half (or more) of the units for their own gain, massively increasing the difficulty margin, making anything else too inefficient. It looks like the only currently-functioning ASICs are run and controlled by a company, not available to purchase to run yourself.

As I said, it's becoming profitable only for people who have massive amounts of money (millions) to invest/risk, ironic for a system intended to put everyone on a level playing field...

[ehhhhhhh]

As I said, it's becoming profitable only for people who have massive amounts of money (millions) to invest/risk, ironic for a system intended to put everyone on a level playing field...

For the last 6+ months, mining with GPUs became pointless. Getting into "worthwile" mining involved a fair amount of investment anyways and a huge risk (operating 1000W+ systems 0/24 ;-)
There was a short time period (when the first gpu clients arrived) when you could make a fair amount of BTC with your existing GPU but it didn't last long.

I feel that your perspective can be applied for every scope of businesses though. If someone has more money than you then they can achieve "more".

I look forward to more efficient mining devices, in my opinion more people are willing to operate low power devices compared to those thirsty GPUs.

As for

ironic for a system intended to put everyone on a level playing field...

Where did you get this?

[Agent]

As I said, it's becoming profitable only for people who have massive amounts of money (millions) to invest/risk, ironic for a system intended to put everyone on a level playing field...

Bitcoin was never designed as a 'level playing field' in terms of coin generation / profit. ever. I'm at a loss why anyone thinks this was ever the case?

The only thing that Bitcoin ever set out to do was allow people to trade a digital currency, separate of the banks, with a value determined by its users. It's excelled at this.

[watercooled]

Or better wording, intended to avoid putting anyone in control of the value of the currency. In this case it would be the ASIC vendors. I didn't necessarily mean only profit, I just find it interesting that there's now a very high bar to cross before you can even break even - rich can become richer, everyone else gains nothing.

As I said, a better designed system to prevent embarrassingly parallel scalability or ASIC implementation would have made it much fairer, for longer at least.

[Agent]

Or better wording, intended to avoid putting anyone in control of the value of the currency. In this case it would be the ASIC vendors.

As above - The value of Bitcoin is controlled by it's users. They decide it's value ultimately. The people generating new coins (It's not at a huge rate compared to the past) doesn't have a massive effect on the buy and sell rate of sold coins in reality due to the volume traded (against how many is in the system). That's just supply and demand.

Thousands of Bitcoins are often traded each hour. On Feb 28th, Mtgox traded over 23 thousand Bitcoins in one hour alone.

But even with that to one side, Bitcoins were never designed to "avoid putting anyone in control of the value of the currency". They were designed to allow free trade of a digital currency in a fairly open way. Nothing more.

I didn't necessarily mean only profit, I just find it interesting that there's now a very high bar to cross before you can even break even - rich can become richer, everyone else gains nothing.

Bitcoin wasn't intended to be a profit making exercise though. It's just a side effect of the currency value changing. This isn't a Bitcoin specific problem.

The rich can get richer in 'real world' money trading. Bitcoin has never intended to stop this. It was only ever intended to allow the free trading of a digital currency.

edit - and the same could happen in terms of a 'real' world crash. If Bitcoin crashed to nothing over night, how much would be lost on systems and what they have in Bitcoins? It could be catastrophic for investors. It's not a one way profit system.

As I said, a better designed system to prevent embarrassingly parallel scalability or ASIC implementation would have made it much fairer, for longer at least.

Bitcoin was never intended to be 'fair'. It was designed to be secure.

Bitcoin needs to be appreciated for what it is, and not what it isn't. It sets out to solve one very simple problem with currency and does it well. The issues you're talking about are not what Bitcoin was invented for. It's not a failing of a currency that people can invest into it and make money on the markets - that's just a valid business as much as speculating on the cost of gold.

[ehhhhhhh]

Or better wording, intended to avoid putting anyone in control of the value of the currency. In this case it would be the ASIC vendors. I didn't necessarily mean only profit, I just find it interesting that there's now a very high bar to cross before you can even break even - rich can become richer, everyone else gains nothing.

As I said, a better designed system to prevent embarrassingly parallel scalability or ASIC implementation would have made it much fairer, for longer at least.

This is another misconception, "bitcoin" is far more than mining. There was the same "very high bar" if your aim was to earn significant amount of money back then.

[watercooled]

I understand that, and ideally Bitcoin mining is break-even for everyone, assuming the same price/performance for hardware/power for everyone, but for example, ASICs are designed only for mining, and with profitability as an obvious main goal. Unfortunately, they make everything else useless, forcing people to buy stuff from these companies. They will *not* increase power efficiency to the extent people seem to be assuming, perhaps initially they will, but once people start buying them, a few things will likely happen. First, people using CPU/GPU will likely stop bothering unless they have lots of free power as it will cost far more in power than they gain in return. Second, the value of Bitcoins is ultimately determined by power used and, to a lesser extent, initial cost of hardware - once ASICs gain some market share, they will end up being no more 'efficient', in terms of value per Joule, than a GPU is now.

Yes, I'm probably overstating a few things, but I'm clearly far from the only one to see things this way.

[ehhhhhhh]

I understand that, and ideally Bitcoin mining is break-even for everyone, assuming the same price/performance for hardware/power for everyone, but for example, ASICs are designed only for mining, and with profitability as an obvious main goal. Unfortunately, they make everything else useless, forcing people to buy stuff from these companies. They will *not* increase power efficiency to the extent people seem to be assuming, perhaps initially they will, but once people start buying them, a few things will likely happen. First, people using CPU/GPU will likely stop bothering unless they have lots of free power as it will cost far more in power than they gain in return. Second, the value of Bitcoins is ultimately determined by power used and, to a lesser extent, initial cost of hardware - once ASICs gain some market share, they will end up being no more 'efficient', in terms of value per Joule, than a GPU is now.

Yes, I'm probably overstating a few things, but I'm clearly far from the only one to see things this way.

what do you mean by value per joule?

I think you should read a bit more on the subject.

[watercooled]

Value of Bitcoin per unit of energy. The value isn't just plucked out of the air, the value relative to 'proper' currencies is dictated largely by the price of the electricity consumed. Not entirely, maybe, but it's definitely a factor. Basically, if electricity was truly unlimited/free for everyone, Bitcoins would be worth far less, if anything, maybe dictated more by initial hardware cost. Conversely, if everyone had to pay far more for electricity, Bitcoins would have far more value relative to existing currency. Simple.

[ehhhhhhh]

Value of Bitcoin per unit of energy. The value isn't just plucked out of the air, the value relative to 'proper' currencies is dictated largely by the price of the electricity consumed. Not entirely, maybe, but it's definitely a factor. Basically, if electricity was truly unlimited/free for everyone, Bitcoins would be worth far less, if anything, maybe dictated more by initial hardware cost. Conversely, if everyone had to pay far more for electricity, Bitcoins would have far more value relative to existing currency. Simple.

The price of bitcoin has nothing to do with the price of electricity. The biggest factor which drives the price is demand.

Edit: What do you think of the value of the £,$, etc?

[Agent]

Unfortunately, they make everything else useless, forcing people to buy stuff from these companies.......First, people using CPU/GPU will likely stop bothering unless they have lots of free power as it will cost far more in power than they gain in return

You are not forced to do anything. If you want the best performance, you buy the best kit. If you can't buy the best kit, you don't get the best performance.

Bitcoin started on the CPU. When the GPU came about and was MUCH better to mine on everyone moved to it. Now given the chance, everyone would move to ASIC. There were people who couldn't move from the CPU to the GPU because they didn't have the cash. The same applies going from GPU to ASIC.

CPU users were not forced to use a GPU, in the same way current GPU users are not forced to go ASIC.

In the end if "people using CPU/GPU will likely stop bothering" this is not an issue as far as Bitcoin is concerned. In fact this is only a good thing, as it means the overall efficiency of the coins being generated is higher.

First, people using CPU/GPU will likely stop bothering unless they have lots of free power as it will cost far more in power than they gain in return.

Let them stop. Bitcoin doesn't care. The currency fluctuates and services can be updated dynamically to the current Bitcoin:Realworld prices in real time if prices do change as a result. There have been far bigger things that have changed the value of the currency though (like the mtgox hack).

[Agent]

Basically, if electricity was truly unlimited/free for everyone, Bitcoins would be worth far less, if anything, maybe dictated more by initial hardware cost. Conversely, if everyone had to pay far more for electricity, Bitcoins would have far more value relative to existing currency. Simple.

But Bitcoins are dynamic due to their digital basis.

You talk about "Bitcoins would be worth far less" but it doesn't matter because Bitcoin is dynamic in nature and is only tied to the perceived value that the users of it have.

Lets just assume for a second that everyone does have unlimited energy and due to that, there are twice the number of Bitcoins in the system (doesn't work mathematically, but it's a crude example). Do you know what would happen? The costs of Bitcoin services would be multiplied by 2. The money in your wallet would be worth half as much.

The beauty behind Bitcoin is that the money in your wallet also scales with the cost of the services. So sure, free electricity = more Bitcoins, which means 1 Bitcoin = "less". But it doesn't matter, because as a result the amount of Bitcoins traded for an item would be higher. You don't have to trade in 'solid' Bitcoins. Trading 0.001 is fine.

[watercooled]

It does have a lot to do with the price of electricity, as I explained, and again RELATIVE to the price of existing currencies, which is and will remain important as long as they coexist. The ~1.6 exchange rate between USD and GBP doesn't exist because someone in a shirt decided it should be that way, it's the result of many factors effecting each economy. Bitcoins are ultimately proof of work done, and the work is performed by electricity purchased using existing currency. I'm not trying to argue it is the only factor, but it most certainly is a factor.

Also, as I explained, efficiency will likely not increase once ASICs have gained some market share. Even the ASIC vendors themselves are mentioning programs to limit how many individuals can buy to prevent saturating the market too quickly. If everyone could get hold of a plug and play ASIC device, they would very quickly go from looking easily profitable to near break-even, and you're back where you started, only you're now relying on some companies that have proved less than reliable already.

I'm talking about miners being forced to buy new gear, not everyone on the planet, and my posts are aimed mainly at that side of things, if you hadn't guessed by now.

Mining may not be the only purpose of bitcoin, but you can be certain there are a heck of a lot of people using it purely for that, maybe even exceeding people just using it as a currency. Sure, that could change if/when it gains widespread acceptance, but it's not true ATM.

/looping so unsubbed