Posted: May 28, 2012 9:41 am
GrahamH wrote:byofrcs wrote:
The network. Anyone (you , me, the governments) can setup a mining node. Just buy some fast GPU and join a mining operation.
The promise is because the coin is a chain of cryptographic hashes that is authenticated by the network. To abuse this you need to break 256 bit crypto and mess with a network of unknown peers.
As processor speeds grow then the system automatically makes it harder to generate a valid hash.
So the value of a BitCoin is a number of CPU cycles?
Yup - that is why you use GPUs or custom FPGA to get the most flops per joule plus the system automatically makes it harder as time goes on for a new coin to be made. The coins are limited by design to 21 million but these can be chopped up into fractions of 8 decimal places. It is a deflationary currency in the end as that is all there will ever be.
As a wide-stab-in-the-dark imagination In 100 years time when we are asteroid mining and have fusion reactors and are moving towards a post-scarcity world then bitcoins will be the only scarce currency (unless other scarce money is created).