Quote from: bytemaster on July 05, 2013, 03:28:20 PM

In my opinion, one of the goals of Bitcoin was that the network would be 'decentralized' and owned by 'everyone' and 'no one'. However, it is very clear that there are two classes of people in the Bitcoin world. Those who 'own the network' and those who 'pay to use the network'. What I mean by this is that only miners profit directly from the operation of the network. Everyone else pays the miners through inflation or fees. Mining is now centralized to the point that 3 or 4 people could colude and control the majority of the hashing power. These people own the network, everyone else pays to play.

It will always be the case (with Bitcoin) that specialization will tend make mining profitable only to a few and benefit from economics of scale.

Unfortunately, the cost of running / operating the network isn't entirely born by the miners. Every user is providing bandwidth and mirroring services and these users are not reimbursed in any way. Miners, because they are centralized, will tend to favor more centralization, larger blocks, etc until all aspects of the network grow beyond what can be truly decentralized.

I contend that an ideal crypto-currency should allow everyone who owns it to profit from its use and that owning & mining should be equally profitable. This would be accomplished by paying dividends to owners from 50% of the transaction fees. From a capital perspective, owning such a crypto-currency would be just as profitable as mining such a crypto-currency. Competition would drive the ROI of investing in ASIC/etc to the dividend rate and no lower because if given the choice between buying ASIC for $1M or buying $1M of the crypto-currency both would expect the same rate of return yet going the ASIC route is far more risky.

The effect of a dividend-paying crypto-currency is that it would be even less inflationary that Bitcoin. If you remove half of the inflation bitcoin has experienced then the total value of everyone's bitcoins would be almost 2x. If there was profit to be made by holding Bitcoins then their value would be over 2x.

Why would we want control to be in the miners hands? do you not realise soon only companies will control mining?

jasperIL2267

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