[cryptography] Bitcoin observation

coderman coderman at gmail.com
Tue Jul 5 03:07:50 EDT 2011


On Mon, Jul 4, 2011 at 11:44 PM, Jon Callas <jon at callas.org> wrote:
> ...
> Did you know that if a Bitcoin is destroyed, then the value of all the other Bitcoins goes up slightly? That's incredible. It's amazing and leads to some emergent properties.

this is not completely correct. it is only true if you destroy a
bitcoin in circulation. (for whatever interpretation of "in
circulation" is reasonable.)

for example, there's one guy sitting on a cache of 371,000 bitcoins
generated when the network was small and computation was minuscule.
these were never in circulation, and for sake of argument, consider
the physical media containing the keys for the coins is lost (not
destroyed).

how does this affect the value of other coins?


> If you have a bunch of Bitcoins and you want to increase your worth, you can do this by one of three ways:
>
> (1) Create more Bitcoins.
> (2) Buy up more Bitcoins, with the end state of that strategy being that you've cornered the market.
> (3) Destroy other people's Bitcoins. The end state of that is also that you've cornered the market.

0. steal other people's bitcoins. this is currently the most
productive means for obtaining more bitcoin value, as proven over the
last few months. <cue rant on building secure software systems here>

1. is only available while there are coins to be generated. at some
point all coins will be mined and:

4. collecting transaction fees for participating in the network is the
last option in this list.


regarding the remainder of your argument, the ability to divide
bitcoins into arbitrarily smaller and smaller units implies that such
an attacker will be chasing an asymptote; never able to reach
definitive control while leaving a large network trading amongst
themselves in millionths of a coin...

the impacts of a large H are still interesting, even if never leading
to one player takes all...



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