The Bitcoin Lottery

http://cryptome.org/0004/bitcoin-lottery.htm

by rl1987 • 15 years ago

50 87 15 years ago

wccrawford2• 15 years ago

Wait, seriously? And people trust this system?

gburt4• 15 years ago

What's not to trust? It seems that the clients determine what they trust, and so long as the majority of clients agree, all is well.

There are economic problems with bitcoin as a currency (its a fiat currency, effectively, except without the fiat - it has scarcity with no intrinsic value), but the algorithm component seems solid to me.

marssaxman3• 15 years ago

All the fiat offers is confidence that you won't be the one left holding the hot potato. Seems to me bitcoin provides the same confidence through mathematical cleverness, which is actually more trustworthy in the long run.

wccrawford2• 15 years ago

The gamble. Earning bitcoins is based on -luck-.

I don't gamble. This is not some religious thing, but simply because I like to have control over my fate, and gambling takes that control.

rmc• 15 years ago

So long as the majority of clients agree?

So if someone controls 51% of the BitCoin clients they can do anything they want?! Sounds like a flaw. Once lots of money is involved, it would make sense for people to start throwing botnets at this to hack it.

zby• 15 years ago

Well - the protocol is published and everyone can verify it for himself, the implementations are also open-source. This is not like someone is drawing a lot for you and you need to trust that he is doing that fairly - it is your computer that is doing that and it also checks that the others play by the rules.

watmough• 15 years ago

For those interested in an interesting take on how money really works, Steve Keen wrote this amazing article:

http://www.debtdeflation.com/blogs/2009/01/31/therovingcaval...

gburt4• 15 years ago

Bitcoin should be rewritten to be some function of something "useful" like the SETI@Home project. Consider if you could have "solving sha256 problems" be simultaneously "computing the next largest prime" (arguably useful, at least, more so than what its currently doing) or "computing patterns in DNA".

weavejester5• 15 years ago

The difficulty is that the problem must be of a predictable complexity. In other words, you must know ahead of time how long it takes a given amount of processing power to find the solution.

dodo53• 15 years ago

Would predictable statistical distribution of complexity not be enough? As in, you get a randomly assigned job, that takes on average a given amount of processing power, and is proven to not need more than some upper limit - or even, you time out after a given amount of processing power and request a new job. And ideally have each unit small enough that mining will completing multiple jobs so difference in complexity starts averaging out.

amackera• 15 years ago

It is doing something useful, it's computing and keeping track of transactions that occur across the network.

Groxx• 15 years ago

And providing security against attacks. The more legitimate miners, the harder it is to gain control of the system.

ivankirigin3• 15 years ago

Someone please do the math on the energy lost in GPUs calculating hashes compared to the dollar value of the bitcoin rewards. The average miner might be better off just powering down their machines.

siegecraft2• 15 years ago

This math has already been done (see https://en.bitcoin.it/wiki/Power_Calc). Right now it's (theoretically) profitable to generate bitcoins; that would change if the exchange rate goes down.

Unseelie9• 15 years ago

That's making the assumption that the exchange rate goes down. If, (big if) the currency finds demand..the exchange rate goes up.

I saw it pointed out somewhere that bitcoins are meant to be rare, and that once the final bitcoin is generated, as there's meant to be a set ammount, there will be many orders of magnitudes less of them than dollars, euros, or the etc. So, even if the cost right now is high, having a hash of them could become worth a great deal.

That is of course speculative, but when there's going to be 1 bitcoin for every 600,000 of today's dollars...assuming the sum of bitcoins becomes worth a thousandth of that of dollars, each bitcoin will be worth 600 dollars...run a mining op for one coin a day for a year(365 coins), hold onto it for a while, average the price down to 300 dollars a coin...sell for a hundred grand...

So running a bitcoin mining opp, or even buying the coins at current market value, is a feasible long term high risk investment. I wouldn't suggest putting all your eggs in that basket, but I would suggest adding the purchase of the occasional bitcoin (or the cost of mining) to your list of high risk investments.

sethg2• 15 years ago

Never mind the energy; think of the capital expenditure. If I have US$1,000 lying around, I could either put it in a mutual fund, getting a certain number of dollars per month (with which I could buy bitcoins), or I could buy a kick-ass GPU card and become a miner, generating a certain number of bitcoins per month (which I could then sell in exchange for dollars). At current interest rates, which is a better investment?

weavejester5• 15 years ago

Currently, mining is considerably more profitable. With $1000 you could probably put together a server that would generate 700 MHash/s, which currently equates to about $1000 in profit per month. You'd repay your initial investment quite quickly.

However, a mutual fund represents a consistent and safe income. I very much doubt that bitcoin mining will remain as profitable as it is now for very long.

Unseelie9• 15 years ago

Paypal's money market yeild is currently .06% per week. At that rate, with $1000, you make .6 dollars a week, and buy maybe a bitcoin each month and a half...the discussion here is about earning a bitcoin a day mining, so I'm assuming you're down under a third of the mining return.

Assuming the cost of the electricitiy is 1.26 cents per kwh, and your machine is running at around 800 wats, constantly, that's 720 hours and 576 kwh, seven dollars a month...so the cost of running doesn't seem to be that high either.

Edited for bad math. May continue to do so. Please point out errors.

illumin8• 15 years ago

US Treasury Series I Savings bonds are currently paying 4.6% per year (their rate rises with inflation), income is tax exempt until redeemed, and can be redeemed at any time after 1 year.

I think you'd be better off going to the nearest bank with your $1,000 and buying an I bond. It's not a popular thing to do (only grandmas seem to like these things), but it's a pretty much slam dunk investment with zero risk.

weavejester5• 15 years ago

Actually, even with a $200 ATI graphics card, you can earn about $500 revenue per month for about $100 in electrical costs.

That said, I suspect such a high level of profit won't last for long. It remains to be seen whether the current high value of bitcoins will last, and the more miners there are, the more profit has to be shared.

Unseelie9• 15 years ago

how'd you arive at $100 in electrical costs? that's rather higher than I calculated, and actually more than my home's entire monthly bill, with four computers being run sporadically, plus the central air nearly constantly, the washer, drier, water heater, refridgerator, tv, and other incedentals...

kinghajj• 15 years ago

I think some of us are counting on the price to rise before we see significant return on investment. And for some others, electricity may be free, or at least not paid by themselves.

As for estimating the whole network's energy, here's a gross, probably exaggerated way to measure it. My 5870 gets 370 Mhash/s at 188 W. The current network rate is 2000 Ghash/s. 2000 / 0.37 * 188 = ~1 megawatt. Seems reasonable, especially since it's distributed worldwide.

xbryanx• 15 years ago

I know I sound like a nutjob, but consider the carbon! A new currency built upon intensive coal hungry computing hardly seems like a long or even mid-term sustainable idea.

webXL• 15 years ago

What about all the CO2 increases caused by cutting down trees in order to store value on paper, and physically mining gold?

nowarninglabel• 15 years ago

It's a valid concern, but it would be better to weight it against the current carbon costs of existing currencies.

IbJacked• 15 years ago

However, the energy costs are upfront and non-recurring. The number of bit coins produced every 4 years is halved, capping out at about 21,000,000.

Tichy6• 15 years ago

With the exchange rate atm being >7$/BTC, at the moment it is still profitable. As soon as it becomes unprofitable, I'll power down the machine. My miner costs me ~65EUR/month in electricity.

On the other hand, lots of other people will probably power down their miners, too, so that mining will become easier again. Then it could become feasible to mine again...

I am actually sorry about the waste of energy, but I decided that for once I'd join in the fun. I have never owned a car, so I hope that makes up for the waste to some extent.

ivankirigin3• 15 years ago

a proper analysis might take into account the desirability of converting to estimate the number of miners which directly affects the cost of conversion. My guess is that as the number of bitcoins created starts to get rate limited, it will be right right below profitability over the long term because many miners can steal energy (e.g. a personal box at work) to warp the market.

Jetlag• 15 years ago

There I stood in front the infernal machine. Crumbled, soggy paper in hand. It fell to pieces before I even had the thought to preserve it somehow. Sixteen random characters, gone in the wash. My thesis, gone in the wash. A decade, gone in the wash.

I could try to rewrite it. But I wouldn't even know where to start. Of course all my research was encrypted too! I'm no idiot! This was work, this was hard work. I'm not even sure I could remember it all. "I wrote them down in my diary so I wouldn't have to remember."

I did the calculation. Brute forcing the password would take more than my lifetime with all the machines in the lab. Would Moore save me? Could I stand the wait? Later on, I stood on the roof of the math building (a quiet escape a few grad students shared) contemplating my next move. Looking out, late at night, it came to me. I couldn't do it, but the they could. Even just a fraction of the computers out there could get me my thesis back.

But how? I could create a distributed computing project, it was something I had worked on before. But there was no way to attract the required users. I needed something as least as big as the largest projects that already existed. I needed to give people something. A bounty isn't enough, the prime project has a great bounty, but I need more users. They all want money. But I had no money. So, I gave them the next best thing: the promise of money.

mrcharles• 15 years ago

What's your pen name so I can buy your books.

gwern3• 15 years ago

Sounds like the start of an older Neal Stephenson novel (eg. _Snow Crash_ or _The Big U_).

nicpottier• 15 years ago

Seriously.. have you written larger works? Would love to read them.

rilkeanheart• 15 years ago

Anyone care to adapt this system for e-voting, in general?

Unseelie9• 15 years ago

Why on earth would you want to base votes on who has the most computing power?

scarlson• 15 years ago

Assuming Hardware = Wattage Output = Voting power;

US power sources overlayed on 2008 Electoral Map. Too close to call.

http://i.imgur.com/d1Fyf.jpg

I was too lazy to fix Alaska and Hawaii.

Source: http://www.npr.org/templates/story/story.php?storyId=1109973...

gwern3• 15 years ago

No. There are already vastly superior anonymous e-voting schemes. The only usecase would be if you wanted to put some restriction on voting but still leave it open to everyone in the world, so it'd be kind of like Namecoin but paying for votes rather than DNS.

anigma• 15 years ago

Sounds like the people running large botnets could just farm the crap out of this.

Tichy6• 15 years ago

Related: here is how to calculate the expected number of days. Though I did not add in BitCoin specific parameters. But suppose you need to have zeros in the first k bits, I suppose the probability for each lottery ticket/number is (256-k)/256 (I assume that SHA256 has 256 bits, too lazy to look it up).

http://blog.blinker.net/2011/02/08/expected-number-of-coin-t...

At the moment I generate about 5BTC/day with my dual-core ATI graphics card. Two months ago (when I started), it was twice that.

dmn001• 15 years ago

You could also use the bitcoin calculator: http://www.alloscomp.com/bitcoin/calculator.php

Tichy6• 15 years ago

Of course, my blog post just explains how to implement something like the bitcoin calculator.

mikecane• 15 years ago

Countdown to Goldman Sachs and then all of Wall Street jumping in ... 5... 4... 3...

wmf4• 15 years ago

Nah, there isn't enough money to be stolen here.

maqr• 15 years ago

To me, at least, bitcoin isn't about a lottery and it isn't about winning. It's about laying the framework for the foundation of an open and secure currency. Who cares, in the long run, who won the most coins right now? I don't think many people have large stakes of bitcoins that they're hoping to get rich off of.

The mining cost should eventually be reflective of the value of the features of the cryptocurrency. In other words, if you want pseudoanonymous secure p2p transactions, buying bitcoins is like paying for that service. Who's providing the service? The miners, which are just the people keeping the network running so that others can use it.

sethg2• 15 years ago

Who cares, in the long run, who won the most coins right now?

In the long run, people with a lot of coins tend to get even more coins. I don’t see why I should participate in an “open and secure currency” that benefits people who let their hardware run wild doing mathematical operations which, outside the currency system itself, are pointless. At least gold has some aesthetic and industrial value.

tectonic• 15 years ago

Every post hyping Bitcoin increases the value of the Bitcoin held by those making the posts.

phamilton• 15 years ago

But every new miner decreases the output of each mining rig. Posts about spending and using bitcoins benefit those who have bitcoins far more than "Free money" posts do.

tobylane2• 15 years ago

Is there a point to these hashes? Does bitcoin just encourage people as a whole to make a trillion trillion hashes? I hope there'll never be a green bitcoin, it would be such a lie.

Can't someone adapt it to look for md5/sha clashes?

gmartres• 15 years ago

The whole point is to verify that transactions are legitimate: https://en.bitcoin.it/wiki/Category:Mining

tobylane2• 15 years ago

I think I get it, but it could be a lot more accessible. Law-makers (not lawyers) would be less wrongly opposed to something they understand.

The Bitcoin Lottery

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