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Sinkhole Sucks Brains From Wasteful Bitcoin Mining Botnet
judgecorp writes "A sinkhole has taken a quarter of the bots out of the ZeroAcess botnet which was making money for its operators through click fraud and Bitcoin mining. This particular Bitcoin mining operation was only profitable through the use of stolen electricity — according to Symantec, which operated the sinkhole, ZeroAccess was using $561,000 of electricity a day on infected PCs, to generate about $2000 worth of Bitcoin."
" ZeroAccess was using $561,000 of electricity a day on infected PCs, to generate about $2000 worth of Bitcoin/"
Just as with government spending, the important the RoI must take into account the origin of each money input.
i.e.: The $2,000 must not be compared to the $561,000, but to the cost of developing/acquiring the botnet.
What is it with Slashdot and people using the phrase "Ponzi scheme" to refer to anything they think is a scam?
Yes, Bitcoin mining becomes less profitable over time, because the goal of the system is not to make people money, but to create a sustainable currency. The "gold rush" was engineered in to build up the basic level of hardware needed to make the system useful, and now that there are a lot of bitcoin machines doing transactions we no longer need to hand out a reward for showing up.
No kidding!!! What do you say at this point?
if that hurting yourself brings other people in danger, yes.
Some people are that stupid that this is the only way of learning from their mistakes.
I can go and discuss a lot of reasons why this is off course stupid but if people already read my post that means they probably are smart enough to see that this is not realistic with current laws and consequences but hell, somebody had to say it.
For the same reason, drunk driving (or DUI) isn't tolerated on the roads. It's harmful for the entire system, not just to one individual.
Views expressed do not necessarily reflect those of the author.
I'm probably being naive here, but without the ability to issue new bitcoins isn't the currency doomed?
If all of the bitcoins have been mined then surely either the currency will collapse, or inflation will be rampant. If inflation is rampant then people will just hoard the coins and the currency will collapse. Also I'm guessing bitcoins will be 'lost' in the same way that gold or paper notes are lost, so long term without the ability to mine new coins the total number is gonna go down.
I might be missing something but I have a feeling that a proper currency probably needs new money. A proper useful currency anyway.
A few months ago I mentioned that botnets would be used for bitcoin mining and everybody was all over me saying it could never work because people would be suspicious of their machines running at 100% all day and start running scans. Yet here we are...
No sig today...
On the uni network I was plugged into some years ago infected machines were redirected to a quarantine page that said "You are infected. Fix it and tell us about it. After that we'll restore your normal access to the network". I think the quarantining was automated, the unquarantining was not. This could go a long way without breaking machines.
You're thinking of deflation, not inflation which is the opposite.
A few months ago I mentioned that botnets would be used for bitcoin mining and everybody was all over me saying it could never work because people would be suspicious of their machines running at 100% all day and start running scans. Yet here we are...
No, no-one except for a troll was all over you, to everyone else that was obvious and they didn't care about your post.
The entire Bitcoin concept is a shiny, hi-tech Ponzi scheme. Those that "invested" by spending CPU cycles (electricty) early made out. By design, no one else ever will unless, of course, they can steal the resources necessary to do the mining.
For some reason, you seem to only look at BitCoin as some kind of an 'investment' tool.
No wonder you see Ponzi schemes everywhere if fast buck is all you care about.
To be fair, killing people with flu would reduce healthcare costs, and would increase the number of jobs available (or reduce the state pension costs if the person is retired). The undertaking business would also boom during Winter months, and inheritance tax income would be higher because people would be more likely to have higher savings due to dying early. Of course it would increase training costs for companies whose employees have been killed, so it's not all good news. Also, it might upset some family members.
Correct (other than the inflation thing, where you meant deflation). Essentially Bitcoin's "Growth" is (a) engineered to slow down to a standstill in a few years and (b) cannot in any way be related to the growth of the underlying economy. If the economy tries to grow 10% in a year, and would under normal circumstances, assuming there's not already slack in the monetary base, there will not be enough Bitcoins to cover the increased commerce.
About the best you can say about it is that if we had a problem where people are doing too much work, Bitcoins would fix that...
Now, in fairness, I should point out that Bitcoin's defenders here normally argue that it's all OK because what can happen is banks can issue tokens equal in value to a single Bitcoin, backed by a smaller number they'd have in reserve combined with themselves (because they're effectively loans of one bitcoin to the person who takes one.) This is called Fractional Reserve Banking, is used in the real world, works well, and has the itty-bitty problem that virtually all the people who seem to be obsessed with Bitcoins really, really, really, don't like FSB, considering it a form of fraud. It isn't, it's a quirk of accounting, but it's hard for many people to get their heads around as is the fiat money system, so they get upset and start saying "What we need is something backed by something real", "Oh, I know, what about a whole load of computational power that's lost when making the coins", "Yes, great idea, even though it doesn't make sense because you can't turn the coin back into that computational power so it isn't, actually, backed by anything after all", and then this happens.
You are not alone. This is not normal. None of this is normal.
For that matter, any popular website could be used for mining via page hits e.g. a site could throw a hash computation into every page served, store the result in a cookie and return the result with the next request. It'd probably happen so fast people wouldn't even notice their CPU cycles being stolen. Perhaps some sites are already do this.
Well, it doesn't have most of the characteristics that make a currency work, the main one being that it's inherently deflationary. This is a terrible thing for a currency, due to this psychological phenomenon called money illusion. This makes the monetary base shrink over time, instead of grow, turning said prospective currency into an investment vehicle. It's just natural behavior when something increases its value when you hold it. This makes most of the currency be there as a holder of value than as a method of exchange, increasing the demand of money over time.
Just pick any model of a currency that we have, and insert the parameters required to make it behave like bitcoin, and see what it does. It's not pretty.
I think you need to review the purpose or meaning of having a currency "backed" by something. The whole point is that the real value is in the scarcity of the currency or resource backing the currency. Anything that is truly scarce can "back" a currency because it represents an expenditure of resources that can't be counterfeited. This is why gold has value. Mining gold takes resources (time, transportation, and exposition of which are the most difficult to come by -- merely finding the gold) which you never recover, but the gold itself is the valuable asset that backs itself and/or other currencies. Bitcoin, then, could be viewed similarly. You spend the resources to acquire a new bitcoin by "mining" it, which you should never expect to get back, just like you can never expect to get back the time and other resources you spend to mine gold. Bitcoin, like gold, retains its value in its quality of scarcity. You can't get another one without expending resources relative to its value. That's why the existing bitcoins retain their value and new bitcoins add value to the bitcoin economy. They don't need any external backing because they are scarce and represent a past expenditure of resources, just like gold.
The problem with Fractional Reserve Banking is that there is no real money. Fiat currency is by nature imaginary; but in this case fiat currency isn't printed and spent into the economy, but rather loaned into existence. That means every piece of currency in existence is basically owed to someone else, with the caveat that it's probably not in the hands of the debtor who owes it to said creditor.
On top of this, loans necessarily incur interest, meaning more money is required to pay off the loan than borrowed, meaning inflation, meaning that every piece of currency that comes into existence causes inflation and immediately creates a need for more currency to come into existence at a later date. It's not that predictably later we will need more currency because of another action, but that the event of currency becoming accessible creates the situation that more currency needs to be made accessible.
In essence, each unit of currency loaned into existence causes inflation by increasing the money supply ("printing money") and by increasing the amount of money owed (monetary demand to pay off the interest). We operate on a negative currency system, where the system becomes more and more poor as the amount of currency increases. Our entire economy is continuously indebted, and the growth of the money supply is accomplished by the growth of debt and the continuous loss of wealth.
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Doesn't that just mean that the interest rate is bad. 10% per year on a currency in deflation is ridiculous. The interest rate on such a currency should be 0% or less because the mere fact that the currency is gaining value would represent its own interest.
This crap is so old it's actually mentioned in the bitcoin FAQ:
http://bitcoin.org/en/faq#wont-bitcoin-fall-in-a-deflationary-spiral
There is lots of academic research that indicates the "deflationary spiral" doesn't happen like that.
Bitcoin having a fixed final size is just fine - it means when the economy grows, everyones money becomes worth a little bit more, i.e. prices fall a bit. Things get cheaper. That's sort of what you expect from progress, isn't it?
Being only vaguely familiar with hacker jargon, I was expecting an actual sinkhole: in the ground, into which computers were literally falling.
Is 1563649 a prime number?
Bitcoin uses a different philosophy. The below is pretty rough, as I've just started to understand it all myself.
Fiat currencies as we have them right now are unlimited money related to limited resources. If the number of goods in the economy grows, the money can grow as well, keeping it balance. But it doesn't have to, it can also grow slower or faster. In general, it grows faster, creating inflation.
Gold or other backed currencies were limited money related to limited resources. They would grow if the amount of gold (or whatever) grew, so the expansion of money was largely unrelated to the changes in the overall economy, which is pretty bad, but worked for a while because the amount of gold was not growing or shrinking dramatically. Until the spanish hauled it home by the boatload from the New World.
Bitcoin is the strange new beast: A limited amount of money related to a limited resource, but with a well known growth potential and limit. While also unrelated to the currency, this means that it is not erratic. It also tends towards deflation rather then inflation. Once the financial sector, which is built entirely on inflation, catches on, I wouldn't be surprised if there were a couple of fatal accidents. Bitcoin isn't undermining any particular currency, it is undermining the currency system.
And yes, the economic danger with Bitcoin is that as it becomes more valuable over time, hoarding it can be more profitable then investing it. Our current economic system is fueled by inflation because for the rich, investing is more profitable than being Scrooge McDuck. However that same system continuously shafts the non-rich, i.e. the 99%. If we had constant deflation instead of constant inflation, saving up for your retirement, or house, or car, would be so much easier.
Imagine you had started to work in 1950. You'd be about ready to retire. The accumulated inflation between 1950 and today is 870.4%. The first years of savings you may have accumulated are worth about 10% of what you put in today. Interest is the only thing saving your day. The game worked well for a couple decades, but interest rates have been laughable for a decade now with inflation staying largely constant.
Make no mistake. Inflation is not your friend if you aren't super-rich. A currency that won't inflate will have a dramatic impact on our economic system. What exactly remains to be seen, but at least the old games won't work anymore.
Assorted stuff I do sometimes: Lemuria.org
Because, as has been demonstrated here, the economics of producing bitcoins mean that there is a huge incentive to use stolen resources to produce them. Secure currency? No, just another incentive to create botnets.
You'll forgive me if I don't take the word of bitcoin.org when discussing problems with Bitcoin.
Spent money _IS_ the economy.
No, goods and services are the economy. Money is just a placeholder, and the act of spending money is merely a rearrangement of goods. Neither are essential; the economy can exist without money, albeit less efficiently. But before you can spend, both you and others must have produced and saved in order to have goods to trade.
It is consumer demand, the desire for consumption, which drives the economy, not consumption itself. Between desire and consumption lies production. Production exists in response to demand, and in turn enables consumption. In order for the economy to grow the capacity for production must increase, which requires saving and investment. The returns from saving (in a deflationary economy) and investment provide the effective consumer demand for the extra goods being produced.
Second, if bitcoins are worth significantly more over time, why would anyone lend money? Good luck running a healthy economy in that currency.
You would lend money because you expect to get back more bitcoins than you lent, obviously. You wouldn't lend only to get back less, even if they're worth more than the larger number you started with, because you could have just held on to the original bitcoins for an even better ROI. That's good, since only below-average investments would have a negative nominal return, and you wouldn't want to bring down the average. (With a fixed currency supply, the rate of deflation matches the average "risk-free" ROI.)
More investment is not always better, particularly when it diverts resources from better investments. With a deliberately inflationary currency this sort of malinvestment is much harder to identify.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
I played a bit with a miner on my computer for a while just to understand Bitcoin a little better. I calculated the difference in electricity use between my computer idling and mining. Even ignoring hardware cost (it was already bought for other purposes, after all) and only calculating the DIFFERENCE between idle and mining (the computer is always on), projected profits on the mining didn't even cover the difference in electricity usage, and my electricity costs aren't high.
Part of this has to do with the price of Bitcoins at the time, but more of it has to do with the fact that even high-end NVIDIA cards are bad choices for Bitcoin miners.
Presumably, most computers in such a botnet aren't running high-end AMD video cards, and many of them are going to be office computers and inexpensive home desktops and laptops without a dedicated 3D video card. Mining in CPU mode is laughably pointless. Less so if you're not paying for the electricity.
Like you, I'm not convinced Bitcoins do more good than harm, strictly based on being a semi-fiat currency whose backing is, effectively, electricity waste.