I think Namecoin has a good value, but while I think Vladimir overestimates the inflation effect of merged mining, I still mostly agree with his post, which is negative towards uncontrolled merged mining. It requires small patch for bitcoind to make it "parent" for Namecoin blockchain, is the patch exclusive for Namecoin? If yes, what makes it exclusive, and if not, is there a way to design a merge mining patch, so it would be exclusive for a particular blockchain? That way bitcoin community would have a choice, when downloading a new version of bitcoin, if it wants to adopt a new blockchain.
I almost voted to close your question as speculative, it is a bit too vague for my taste.– ripper234Sep 12, 2011 at 6:09
@ripper234, the question is about the exclusiveness of the patch, it's not about discussing bitcoin inflation.– SerithSep 12, 2011 at 6:24
are you referring to a specific patch? To patches in general? Can you edit the question a bit to clarify this?– ripper234Sep 12, 2011 at 6:42
@ripper234, first in my question i referred to specific patch that will make Namecoin merge mining possible and then I also asked about merge mining patch in general.– SerithSep 12, 2011 at 7:10
Your question seems to be based on a misunderstanding. The patch simply allows you to do merged mining. It doesn't add support for other people to do merged mining to Bitcoin, as that is not necessary.
Anything placed in the Bitcoin hash chain will be secured by the Bitcoin mining process. If I put "HAVE A NICE DAY" into a transaction, as Eligius puts prayers, they will become a permanent part of the hash chain and will be secured by all the miners currently mining the Bitcoin hash chain whether they intend to secure it or not.
All that is required is that it not be illegal according to Bitcoin rules. (Otherwise, the block would be rejected.)
as far as I understand a pool operator or anyone who wants to do solo merge mining has to apply small patch to bitcoind file, is that correct? Sep 12, 2011 at 22:47
They need to generate the transaction set that includes the merged mining information, build work units based on that set, and then if they solve the work unit, assemble and publish the block with the transaction set. The most common way to do that is to modify bitcoind to do it. Sep 12, 2011 at 22:52
The patch has no effect on the parent blockchain, it just allows the patched bitcoind to be used for mining on both chains simultaneously. Only the child blockchain needs to be modified in order to support merged mining. There's no way for the Bitcoin network to prevent merged mining, even if doing so were desirable.
Merged mining does have to potential to allow alternate chains access to greater hash power (and thus security against double-spend attacks) than they would have had otherwise. However, this alone will not give them value as currency.
Bitcoin is able to sustain value because of its network effect. The more active users it has, the more useful it is to each user. The alternate blockchains have userbases that are a a few orders of magnitude smaller than Bitcoin's. Newcomers to the cryptocurrency world will tend to choose the more useful and popular chain, further increasing Bitcoin's lead.
Thank you for the answer, here I just wanted to know technical details about merge mining, but you are also welcome to discuss it's effect on bitcion economy at bitcoin.org.uk/forums/topic/… , where I made another post, because I think it is a fine line between competing blockchain and money supply manipulation. Sep 12, 2011 at 9:39
@Serith - Hashpower is not the only measure of a coin. If everybody uses Bitcoin, and you fork it to FooCoin with equivalent hash power, but nobody values FooCoin (it is traded at 1/10,000 a BTC), then you have not inflated the supply of money. Sep 12, 2011 at 11:05
For reference is the merged mining concept not exactly the same thing described at en.bitcoin.it/wiki/Alternative_Chains ? It sounds more or less the same to me. The issue seems to be that 'Namecoin' oddly chose to make things more complicated by creating a currency and attaching names to coins rather than using the system solely for distributed consensus. Sep 12, 2011 at 16:18
AFAIK the upcoming patch is for merged mining between Namecoin and Bitcoin only. In the future it might be able to modify the patch to allow more generalized merged mining between any number of coins.
This is not a bad thing
Quote from Gavin in the thread you linked to:
I don't see how shared mining dilutes bitcoins.
That's like saying "real-world miners find lots of other minerals when they search for gold; that dilutes the value of gold!"
Think of it as the bitcoin family of coins/blockchains. Eventually you might want to diverge your holding between the different coins, but the entire family just becomes stronger by universal merged mining.
Gold in real world has unique quality that no other mineral posses, it was used as "store of value" for hundreds of years, that's why other minerals can't compete with it. Sep 12, 2011 at 6:22
1@Serith: what about silver? It is also used as a "store of value" and is found in gold veins (e.g. the Kolar Gold Fields had gold with a 11% "silver impurity"). It's even extracted from rock in the same way with cyanide. As far as analogies go, Gavin's is a good one.– user220Sep 12, 2011 at 10:09
@Wim Coenen, analogy is a bad way to explain things, I shouldn't have used it. Made a better post at bitcoin.org.uk/forums/topic/… Sep 12, 2011 at 10:26
Keep in mind that whenever an alternative chain enables merged mining it is centralizing a huge amount of trust in the bitcoin ("Nakamoto chain") mining pool operators.
When people join a bitcoin mining pool, it's generally because they want bitcoins. Sure, a few people will ask their pool operator to add thischain or thatchain mining, and some pools will. But plenty of pools won't.
Anybody running a pool who has not told its miners "hey we are mining blartzcoin and I will split the reward with you" basically has a gigantic pile of blartzcoin hashpower to direct as he/she pleases. They're totally unaccountable in how they use that power. If they use it to screw up the alternative blockchain, and in doing so they sacrifice the altchain mining rewards, none of their miners will get upset and jump ship because they weren't expecting those rewards in the first place.
Merged mining is risky for altchains unless you can be reasonably sure that miners will demand that their pools mine that chain. Right now I think Namecoin is the only case where that's even close to being true. It's also the only chain with a coherent answer to the question "wait, doesn't bitcoin already serve this purpose?"
The patch allows many chains to be mined at once. It does not let them automatically get mined though. A miner or pool has to still choose to run that chain and add it to its merged mining proxy. So the chain still has to get support to get access to that power and get installed. No one can make a chain and force it to be mined (unless they are a large pool operator).