Quote from: brg444 on October 24, 2014, 08:37:25 PM

Quote from: MrBig on October 24, 2014, 08:06:01 PM

Quote from: Capt Drake on October 24, 2014, 06:11:36 PM

Competition only leads for the best fitted miners, like nature.

So yes, the system was designed around this concept.

If this is the case, then it's a flawed system. What happens when mining is controlled by a small handful of companies and governments decide to shut them down or seize control of them? What happens if they get hacked? What happens if they go rogue? They're not pools that people can just pull their hashing power away from.

Remember that Bitcoin did not solve the Byzantine Generals problem but merely created an economic incentive for actors to behave.

The fact is, ASICs and professionalized mining ultimately improves decentralization.

https://gist.github.com/oleganza/bd14f60643395706efaa

Quote

A reader asked me over email recently:

Have you posted anything or had any thoughts on Ghash.IO situation?
Nothing on this. I think it's just early volatility in bitcoin space. Some company (CEX) got serious about making a private mining farm and made a whopping share. Others will follow soon.

The dirty little secret of the blockchain is that it's not secure until increasing the hashrate by even 1% is an enormous economic feat. Currently it's not impossibly expensive to build your own farm with significant share - therefore the network is not very theoretically secure. Even if every existing pool had no more than 10%, you can't be sure that some guy does not unleash enormous hashing power at once and reverts some transactions.

When more companies start building private farms (and they will, it's the only cost-efficient way to mine; individual miners will soon disappear), you'll see more even distribution of the hashrate, but most importantly, the growth of hashrate will get slower. Because the slower it grows, the more robust the proof-of-work chain is.

That only applies to the third question. Hackers don't care about the miner's incentive, and neither do governments. Besides what we're seeing right now is less companies building mega-mining farms and a more uneven distribution of hashrate.