GPU-mineable cryptos are arguably more decentralized.
Did he simply miss this design aspect or does this sound fishy to you?
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Bitcoin was not designed to only be mineable with specialized hardware. When Bitcoin was created in 2009, ASIC miners did not exist, SHA256d ASICs did not exist. Even GPU mining software did not exist because mining was a completely new thing. Bitcoin's difficulty was low enough for Bitcoin to be CPU mined on a laptop.
However over time, as more and more people began using and mining Bitcoin, the difficulty increased. Eventually someone figured out how to do GPU mining and wrote software for it, so Bitcoin moved on to GPU mining. Eventually someone figured out how to mine Bitcoin using FPGAs (Field Programmable Gate Arrays) so Bitcoin moved onto being mined with FPGAs. Eventually someone figured out how to build ASICs (Application Specific Integrated Circuits) for mining Bitcoin, so Bitcoin moved onto ASIC mining.
Satoshi did not intend for Bitcoin to be mined with ASICs (or even GPUs or FPGAs); it was meant to be mined on CPUs, but over time, as technology advanced, people figured out better ways to mine.
answered Nov 9 '17 at 22:19
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3Just to add, this is mentioned in the original whitepaper which is a short read. I'd recommend anyone interested in Bitcoin to read it as a starting point. bitcoin.org/bitcoin.pdf – Toby Hawkins Nov 9 '17 at 22:55
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56It's not really "someone figured out" how to mine on FPGAs or ASICs: an intelligent first year undergraduate could port SHA256 from C to Verilog. It's more that it began to make economic sense. ASICs in particular require a big enough up-front investment that you need economies of scale. – Peter Taylor Nov 9 '17 at 23:27
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3@PeterTaylor It is not the case that an intelligent first-year could design an ASIC to efficiently mine Bitcoin. – jwg Nov 10 '17 at 13:51
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4@jwg: if we're to nitpick and catch words, he said "a student could" not "any student can" and that makes a whole lot of difference :) – quetzalcoatl Nov 10 '17 at 20:52
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Also keep in mind that it took a while for the hardware to actually be profitable. At the start, I remember tat ASICs were nice but the profit margin was very low. The cost of the device plus the cost of electricity and the cost of cooling meant a very significant investment to see a return higher then say a US$ savings account (which isn't much). As hardware got better and cheaper the profit margins increased, and made it a more viable option. – coteyr Nov 10 '17 at 21:37
GPU-mineable cryptos are arguably more decentralized.
Sure, but in a bad way.
Say you want to attack or compromise bitcoin. You have to buy ASICs to do it. You could use GPUs or CPUs, but you would be at a tremendous disadvantage. The honest guys would win.
So you have to invest in all these ASICs to attack bitcoin. And if you succeed, you turn your expensive ASICs into space heaters. That makes it very unlikely that such an attack will be cost-effective. That makes the system more secure.
By contrast, there are computing clusters with large numbers of GPUs. You can rent them by the hour. That means you can attack a digital asset secured by an algorithm that runs efficiently on a GPU without having to invest in it. That makes it less secure.
People can argue about how much of a decentralization difference it makes and whether that matters. But this security difference seems, at least to me, to be much more significantly. Satoshi accidentally got it right.
answered Nov 10 '17 at 12:11
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4I wouldn't say "accidentally". Bitcoin was intentionally designed so that the difficulty of mining would increase to compensate for increased computing power. It's doing exactly what it was supposed to do: making sure that it will always be hard enough to mine that it's not feasible for an attacker to dominate the network, no matter how much more powerful our computers become. Think of mining difficulty not in terms of absolute difficulty but in terms of difficulty relative to the average computing power available at the time - the relative difficulty is designed to always remain the same. – Micheal Johnson Nov 10 '17 at 14:45
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4@MichealJohnson What I mean by "accidentally" is that I don't think Satoshi thought through the consequences of picking an algorithm that has the particular characteristics SHA256d has. He didn't think through what would happen if the algorithm required lots of memory versus what would happen if it required lots of branching. By accident, he picked an algorithm that accelerates on ASICs extremely well. And many people even initially thought that was a bad thing. (And this question shows that many people still do.) But I think time will prove that it's the best choice. – David Schwartz Nov 10 '17 at 21:22
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1@MichealJohnson I honestly don't see how that's even remotely relevant to the issues being discussed here. – David Schwartz Nov 11 '17 at 17:51
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1@MichealJohnson You are very, very wrong. But I'm not sure I can untangle your confusion in the space here. First: He did accidentally choose an algorithm with particular characteristics. There's no evidence he considered the differences between memory hard, decision hard, and calculation hard algorithms. And that makes a huge difference in the final result because whatever is most efficient at executing the algorithm is what will wind up executing it. – David Schwartz Nov 11 '17 at 20:25
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1@MichealJohnson Second, you are considering miners who seek to make a profit from mining rather than attackers who seek to disrupt the system (for example, to make a profit by shorting bitcoin). If Satoshi had picked and algorithm that worked best on GPUs, then attackers would rent GPU clusters to attack the system. I'm not sure if you didn't read my answer or didn't understand it, but what you are saying has nothing to do with the issue -- which is attack resistance. – David Schwartz Nov 11 '17 at 20:25
People who say that GPU mining is more decentralized than ASIC mining forget that GPUs don't descend from the sky. There are companies that manufacture them, and since GPUs are incredibly complex pieces of hardware, the barrier of entry to this market is huge. If a startup company wants to start manufacturing GPUs for mining, it can't.
Right now, cryptocurrency mining is still a relatively small part of the business of companies like AMD and Nvidia. but as it grows, these companies will effectively be the controllers of mining.
Much better, in my opinion, is to have the hash function as simple as possible, so as the market grows, plenty of companies will have the opportunity to compete in manufacturing mining hardware.
That Bitcoin is only mineable on specialised hardware is not itself a design choice. It is a consequence of hinging the integrity of the system on a proof of work, combined with great interest in mining.
The following is an oversimplification, but it's the concepts that are interesting anyway.
The Bitcoin protocol itself does not mandate that mining must be so difficult that it can only be done with specialised hardware. However, the protocol does mandate that a block should be found on average every 10 minutes by the entire population of miners combined. Therefore the Bitcoin protocol has a difficulty parameter which is continually adjusted so that this 10 minutes goal is approximately followed.
As interest in Bitcoin has increased, so has the interest in mining Bitcoins, and so the population and power of miners has grown. Double the population or power of miners, and you halve the average time to find a block - and so the system will adjust by doubling the difficulty. The reward for finding a block is also independent of the number of miners, so doubling the population of miners also means each miner will on average get half as much mining reward per unit of time.
So: As the miner population grows and the difficulty increases, the profit margin for miners shrinks. Eventually mining is only barely profitable with very efficient hardware. This is not directly a design decision, but a necessary consequence of the decentralised design.
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This is false. It's a design choice. He could have, for example, picked an algorithm that runs with maximal efficiency on commodity CPUs. (As some other coins have.) He picked SHA256d which requires very little memory and almost no branching. That's why it's (for practical purposes) only mineable on specialized hardware. It may not have been a conscious choice, but it's the result of that design choice. – David Schwartz Nov 10 '17 at 21:24
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2@DavidSchwartz, I don't think it's practical to design something that is most efficient on commodity CPUs. If your proof of work makes use of a subset of a CPU's capabilities, then the most efficient way to perform that work is on a device that only provides that subset. If it makes use of the full range of capabilities, then not only is it best performed on commodity CPUs, it is best performed on the one specific commodity CPU you designed it for. – Mark Nov 10 '17 at 22:14
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@Mark Not so for two reasons: 1) Economies of scale and the billions of dollars companies like Intel put into optimizing commodity CPUs can outweigh the benefits of removing unused functions but losing the economies of scale and optimizations. 2) It is not particularly difficult to make the algorithm tunable such that it continues to perform best on commodity CPUs as they evolve. – David Schwartz Nov 14 '17 at 18:58
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@DavidSchwartz, I think your being unfair. In my opinion, Satoshi couldn't have known Bitcoin was going to grow as fast as it did. In fact, he himself thought it wasn't going to work. Satoshi picked SHA-256 because it was what Hashcash used for proof of work. – ecavero Feb 2 '18 at 2:36
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@ecavero I agree that he couldn't have known the future, but nevertheless, he chose a mining algorithm that does not require lots of memory and does not require lots of decision making. That was a design choice. Far from being unfair, he accidentally got it right. – David Schwartz Feb 2 '18 at 5:09
Your question lacks historical sense.
When Satoshi Nakamoto considered Bitcoin, he had lots of very difficult problems to solve. For instance, the problem of distributed authentication, a problem that was never solved before. You should recall that there was no peer-to-peer electronic cash system before Bitcoin.
So, some of the current problems with Bitcoin could not be foretold, even by geniuses like the creator (or creators) of Bitcoin. It became such a huge phenomenon never seen before.
In any case, it is unfair to state that Bitcoin is not decentralized, since it is mined in many parts of the world, by many companies; it is still peer-to-peer. It is only concentrated, meaning that only large company pools can mine it efficiently.
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Satoshi designed it so CPU's would mine making a decentralized network. I don't think he had the foresight to see that ASICs would come out and dominate the market. – Marc Alexander Nov 15 '17 at 17:33
I wouldn't be surprised if CPUs were more viable to mine with back in 2009 than graphic cards, in terms of hashpower, hence why he only thought of the CPU.
See for example the top notch graphic cards of 2009, vs the best processors,
http://www.tomshardware.com/charts/2009-desktop-cpu-charts-update-1/3DMark-Vantage-1.0.2,1396.html
Now as time advanced, GPUs became much faster and were able to generate much more hashpower, but by that time Bitcoin was already running SHA-256.
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The first GPU miner for Bitcoin only appeared around the end of 2010. – Pieter Wuille Nov 9 '17 at 23:20
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7It wasn't so much that GPUs became faster, as that they became more versatile. In 2009, OpenCL was still in development, CUDA was of limited practical use, and most GPGPU computations were done via the cumbersome process of reformulating them as operations on graphics primitives. – Mark Nov 9 '17 at 23:47
