Slashdot Mirror
Bitcoin Gold, the Latest Bitcoin Fork, Explained (arstechnica.com)
Timothy B. Lee via Ars Technica explains Bitcoin Gold: A new cryptocurrency called Bitcoin Gold is now live on the Internet. It aims to correct what its backers see as a serious flaw in the design of the original Bitcoin. There are hundreds of cryptocurrencies on the Internet, and many of them are derived from Bitcoin in one way or another. But Bitcoin Gold -- like Bitcoin Cash, another Bitcoin spinoff that was created in August -- is different in two important ways. Bitcoin Gold is branding itself as a version of Bitcoin rather than merely new platforms derived from Bitcoin's source code. It has also chosen to retain Bitcoin's transaction history, which means that, if you owned bitcoins before the fork, you now own an equal amount of "gold" bitcoins. While Bitcoin Cash was designed to resolve Bitcoin's capacity crunch with larger blocks, Bitcoin Gold aims to tackle another of Bitcoin's perceived flaws: the increasing centralization of the mining industry that verifies and secures Bitcoin transactions.
The original vision for Bitcoin was that anyone would be able to participate in Bitcoin mining with their personal PCs, earning a bit of extra cash as they helped to support the network. But as Bitcoin became more valuable, people discovered that Bitcoin mining could be done much more efficiently with custom-built application-specific integrated circuits (ASICs). As a result, Bitcoin mining became a specialized and highly concentrated industry. The leading companies in this new industry wield a disproportionate amount of power over the Bitcoin network. Bitcoin Gold aims to dethrone these mining companies by introducing an alternative mining algorithm that's much less susceptible to ASIC-based optimization. In theory, that will allow ordinary Bitcoin Gold users to earn extra cash with their spare computing cycles, just as people could do in the early days of Bitcoin.
The original vision for Bitcoin was that anyone would be able to participate in Bitcoin mining with their personal PCs, earning a bit of extra cash as they helped to support the network. But as Bitcoin became more valuable, people discovered that Bitcoin mining could be done much more efficiently with custom-built application-specific integrated circuits (ASICs). As a result, Bitcoin mining became a specialized and highly concentrated industry. The leading companies in this new industry wield a disproportionate amount of power over the Bitcoin network. Bitcoin Gold aims to dethrone these mining companies by introducing an alternative mining algorithm that's much less susceptible to ASIC-based optimization. In theory, that will allow ordinary Bitcoin Gold users to earn extra cash with their spare computing cycles, just as people could do in the early days of Bitcoin.
Bitcoin Gold is a shady operation. Here are their developers being called out for implementing a hidden fee in the software.
If they control the algorithms, they can decentralize mining more directly by giving preference to solvers who haven't been awarded recently. There is a problem with "solving farms" generating large numbers of identities, but that can be at least partly addressed by geographic distribution. If a solving farm entity is determined enough to get itself located at many diverse points around the globe, that's at least one component of diversity.
"Virtual location" can be in-part determined by ping-time triangulation. Servers attempting to game their location reporting can be downgraded based on abnormally high ping times. Servers with fast ping times are rewarded proportionally higher. So, a little guy running a single rig with good ping in a low-density of solvers location might get rewarded at "full rate" for his solves, while a bigger house running 100 rigs might get rewarded only 10% of full rate for each of their solves, making it more attractive for little guys to participate, particularly in locations without a lot of little solvers.
I laughed and laughed and laughed.
From the paper (PDF):
Hmm... Needs less than 1 gigabyte. For external chips, that costs, let me see, $16 in modest quantities. Want it cheaper? Here is a magazine article from 4 years ago about people embedding memory in ASIC dies. In a modern chip process, 700 MB fits into what, a 5mm square?
They wave their hand over it in the paper, so it isn't like they ignored the cheapness-of-memory problem entirely. What if we assume that they are right and they have indeed found a problem with a critical dependency on memory throughput. Is there an obvious solution to that problem? What is the fastest memory in the world? (What word is entirely missing from their paper?) SRAM. In-die SRAM can be absurdly fast, like full core speed for arbitrary values of "core speed" and no wait cycles. It makes no sense to load a CPU up with piles of the stuff because caching has diminishing returns. But, what if your goal was to use ~6 billion cells of SRAM not as a cache, but as your main memory... How much faster would that ASIC be than a general purpose CPU?
Bottom line, if you imagine that you have a computation problem that can't be solved by building a single-purpose chip, you are almost certainly wrong. Either you don't understand your problem, or you don't understand the array of solutions available to solvers.
See that "Preview" button?
Back when internet hit mainstream, we had a Dot-Com boom. Anyone could start a website in their basement, grab a cleaver domain name, raise money, spend it like it's raining cash, go IPO and collect money from naive buyers who invested purely because they wanted to get on the bandwagon. Not everyone succeeded in the end, but a large number of people did burn through a ton of cash, and some people did make millions before the bubble burst in 2001, when the world ran out of suckers to offload the dot-com stocks to at an even more inflated price.
So is this a new cryptocurrency bubble in progress now? Anyone can fork existing cryptocurrencies, or create new ones (harder to do but not impossible), call it something that inspires trust in unsuspecting buyers who feel like they want to get a piece of the action, take the money and run? How long before that bursts and there are hundreds if not thousands worthless crypto-currencies, like dot-coms after 2001?