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Satoshi Nakamoto

Bitcoin minting and botnets

If people believe that bitcoin is simply a way for botnet herders to convert spare cpu cycles into cash, they are unlikely to participate.

The following content was written by knightmb on August 06, 2010, 10:51:51 AM in the thread Bitcoin minting is thermodynamically perverse. All content is owned by the author of the bitcointalk.org post. (original)


I understand the bitcoin is not INTENDED to be about the minting. The essence of my criticism is that a digital currency SHOULD NOT be “about the minting” but the current bitcoin system works against that goal! My argument is that the current minting system limits the utility of the currency largely because entirely too much attention is focused on “winning the block generation lottery” and the process of choosing these winners is highly inefficient and resource intensive.
I think that’s the issue you have though, you think it’s inefficient and resource intensive on purpose when really it’s not. No one is required to generate coins to use the system. If you click the generate coin list, you are basically volunteering your resources to strengthen the network and in exchange, you *might* get some coin for it. Since coin is in demand to use the system, someone has to generate it. If generation was as easy as “input how many you want, *bam*, you have 1 million now” it would make the entire system pointless. It’s a chicken and the egg puzzle except there really isn’t a puzzle here. People need bitcoins, they generate them at a fixed rate to make it worth spending the CPU time.
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If potential users of the currency believe that bitcoin is simply a way for botnet herders to convert spare cpu cycles into cash, they are unlikely to participate in the emergence of the economy. The current system could easily result in the perception that bitcoin is basically being used as a vector for the indirect monetization of the theft of electricity via compromised computer systems. I assume most people interested in bitcoin understand that self-interested individuals will obviously seek to exploit opportunities like this, and the design of a popular currency has to prioritize how a prospective user will evaluate its fairness.
There’s no reason to think of it that way, anymore than the local barber is collecting hair to clone an army of super-men for world domination. You have to draw the line somewhere. If someone is going to steal electricity, targeting a 30 watt computer doesn’t make a lot of sense.

I have seen the topic come up here a few times “what if someone seeks to exploit this?” and the answer is the same over and over, it has been designed from the ground up to counter this exact concern. If you want to “game” the system, you need a lot of CPU power. CPU power cost money. The system scales itself to the available CPU power it has so if you bought 10,000 EC2 sessions from Amazon and started a massive bitcoin generating farm, you would never make more money out of it than what you put into it for long because the system would self-adjust against it. If someone throughs a massive botnet at it, the same thing will happen. The system is set for self-feedback, so to try to steal from everyone is to try to steal from yourself at the same time.

The following content was written by gridecon on August 06, 2010, 04:48:00 PM in the thread Bitcoin minting is thermodynamically perverse. All content is owned by the author of the bitcointalk.org post. (original)


If potential users of the currency believe that bitcoin is simply a way for botnet herders to convert spare cpu cycles into cash, they are unlikely to participate in the emergence of the economy. The current system could easily result in the perception that bitcoin is basically being used as a vector for the indirect monetization of the theft of electricity via compromised computer systems. I assume most people interested in bitcoin understand that self-interested individuals will obviously seek to exploit opportunities like this, and the design of a popular currency has to prioritize how a prospective user will evaluate its fairness.
There’s no reason to think of it that way, anymore than the local barber is collecting hair to clone an army of super-men for world domination. You have to draw the line somewhere. If someone is going to steal electricity, targeting a 30 watt computer doesn’t make a lot of sense.

I have seen the topic come up here a few times “what if someone seeks to exploit this?” and the answer is the same over and over, it has been designed from the ground up to counter this exact concern. If you want to “game” the system, you need a lot of CPU power. CPU power cost money. The system scales itself to the available CPU power it has so if you bought 10,000 EC2 sessions from Amazon and started a massive bitcoin generating farm, you would never make more money out of it than what you put into it for long because the system would self-adjust against it. If someone throughs a massive botnet at it, the same thing will happen. The system is set for self-feedback, so to try to steal from everyone is to try to steal from yourself at the same time.
I think you are rationalizing away a serious issue. Botnets exist, and the owners of botnets seek to monetize them. Bitcoin minting is an available strategy. Saying “If someone is going to steal electricity, targeting a 30 watt computer doesn’t make a lot of sense” is a complete non sequitir. Being in control of a botnet means YOU ALREADY HAVE STOLEN the electricity, the question is – how are you going to make use of it? It is very simple economics that bitcoin production is roughly proportional to energy input, and that therefore the most efficient producers will be those who are able to obtain that electricity at zero cost.

In making an analysis of an economic system, you obviously proceed by determining how self-interested actors will behave in that system. I am completely unconvinced by hand-waving arguments that try to claim people will not behave in selfish and unethical ways, if they see an opportunity for profit. We already KNOW that people are throwing a lot of computational resources into minting bitcoins, the steadily increasing difficulty is exactly equivalent to a steadily increasing computational cost of the system! The more energy invested in the production of the same quantity of coins, the harder bitcoin has to work to deliver value added on that cost.

Again, an analysis of the behavior of self-interested actors is instructive. The most energy-efficient scenario for bitcoin generation in the current regime would be if there was ONE NETBOOK that generated all the coins – the rate of coin production is fixed, so you’d still have the same amount of coins entering circulation. The person who ran that netbook would obviously be in a position to charge a high “rent” from the population that needed bitcoins for their transactions. An examination of this limit case makes it clear that bitcoin minters have a strong incentive to encourage use and circulation of the currency while discouraging additional minting nodes from coming online. This is not any kind of criticism of anyone’s ethics – it is simply an examination of how the game is set up, and what strategies players will adopt.

As an overall point, I also do not agree with the idea that the very high computational burden of coin generation is in fact a necessity of the current system. As I understand it, currency creation is fundamentally metered by TIME – and if that is the fundamental controlling variable, what is the need for everyone to “roll as many dice as posible” within that given time period? The “chain of proof” for coin ownership and transactions doesn’t depend on the method for spawning coins.

The following content was written by knightmb on August 06, 2010, 05:24:10 PM in the thread Bitcoin minting is thermodynamically perverse. All content is owned by the author of the bitcointalk.org post. (original)


I think you are rationalizing away a serious issue. Botnets exist, and the owners of botnets seek to monetize them. Bitcoin minting is an available strategy. Saying “If someone is going to steal electricity, targeting a 30 watt computer doesn’t make a lot of sense” is a complete non sequitir. Being in control of a botnet means YOU ALREADY HAVE STOLEN the electricity, the question is – how are you going to make use of it? It is very simple economics that bitcoin production is roughly proportional to energy input, and that therefore the most efficient producers will be those who are able to obtain that electricity at zero cost.
A botnet is a stolen computer already, the concern people have is that it will take over bitcoin in some way. What you are talking about is what we already know. They use the stolen CPU time to generate BTC and then sell it on the market. It’s stolen CPU time, we have no control of that. What we do have control over is how much damage it can do to others that are running honest clients.
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In making an analysis of an economic system, you obviously proceed by determining how self-interested actors will behave in that system. I am completely unconvinced by hand-waving arguments that try to claim people will not behave in selfish and unethical ways, if they see an opportunity for profit. We already KNOW that people are throwing a lot of computational resources into minting bitcoins, the steadily increasing difficulty is exactly equivalent to a steadily increasing computational cost of the system! The more energy invested in the production of the same quantity of coins, the harder bitcoin has to work to deliver value added on that cost.
The system was designed with that in mind. That’s why it uses a formula that forces anyone that participates in the protocol to behave or else they are ignored. So if anyone is going to game the system, they have to do it by the rules that everyone else is following. Right now, the only rule to game is CPU time. It’s either expensive, donated, or stolen.

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Again, an analysis of the behavior of self-interested actors is instructive. The most energy-efficient scenario for bitcoin generation in the current regime would be if there was ONE NETBOOK that generated all the coins – the rate of coin production is fixed, so you’d still have the same amount of coins entering circulation. The person who ran that netbook would obviously be in a position to charge a high “rent” from the population that needed bitcoins for their transactions. An examination of this limit case makes it clear that bitcoin minters have a strong incentive to encourage use and circulation of the currency while discouraging additional minting nodes from coming online. This is not any kind of criticism of anyone’s ethics – it is simply an examination of how the game is set up, and what strategies players will adopt.

As an overall point, I also do not agree with the idea that the very high computational burden of coin generation is in fact a necessity of the current system. As I understand it, currency creation is fundamentally metered by TIME – and if that is the fundamental controlling variable, what is the need for everyone to “roll as many dice as posible” within that given time period? The “chain of proof” for coin ownership and transactions doesn’t depend on the method for spawning coins.
That’s the problem with having one PC generate all the coin, that one PC is a central authority of it and can price it anyway he/she likes. To de-centralize it means you need some way to force everyone to play by the rules or else one person will try to bend the rules.

I respect that you don’t agree with how it works, so I offer up that we be shown a better way that we can’t all punch holes in. It’s open source software, if there is a better way, it can be used. Currently the rules are why they are because the entire network is designed with “trust no one” but instead “trust everyone collectively”.

The following content was written by NewLibertyStandard on August 06, 2010, 07:20:47 PM in the thread Bitcoin minting is thermodynamically perverse. All content is owned by the author of the bitcointalk.org post. (original)


I had all four of my cores dedicated previously toward the goal of generating bitcoins, but it’s no longer worth the cost to me. I am now only generating using one core but the goal is no longer to generate bitcoins. My current goal is to help maintain the strength of the network and to help the network recover (get to the next block adjustment) when and if a large botnet drops out. Bitcoin was about generating bitcoins, but now it’s not. Now it’s about competing botnets providing a secure and reliable foundation for an open currency. Yeah, they’re stealing the electricity and yeah, they’re profiting, but at least they’re putting their stolen CPU cycles to a useful and accepted purpose instead of more harmful activities that they probably would be engaged in if they had not discovered bitcoin.

The following content was written by gridecon on August 06, 2010, 07:30:32 PM in the thread Bitcoin minting is thermodynamically perverse. All content is owned by the author of the bitcointalk.org post. (original)


I had all four of my cores dedicated previously toward the goal of generating bitcoins, but it’s no longer worth the cost to me. I am now only generating using one core but the goal is no longer to generate bitcoins. My current goal is to help maintain the strength of the network and to help the network recover (get to the next block adjustment) when and if a large botnet drops out. Bitcoin was about generating bitcoins, but now it’s not. Now it’s about competing botnets providing a secure and reliable foundation for an open currency. Yeah, they’re stealing the electricity and yeah, they’re profiting, but at least they’re putting their stolen CPU cycles to a useful and accepted purpose instead of more harmful activities that they probably would be engaged in if they had not discovered bitcoin.
Ok, bravo for an amazingly honest and straightforward answer. That is probably the most overall convincing argument I have seen made in the thread. You are arguing that the overall social utility of Bitcoin is “worth it” – worth both the raw energy cost of the computational work, and worth the regrettable fact that it provides a profit opportunity for botnet operators. I don’t have a proposal for how exactly you measure the costs and benefits, but I entirely agree with your analysis of the bottom line of the situation. You could even make the argument that minting bitcoins as an activity is less harmful than other botnet activities like sending out spam.
Ali Sherief

By Ali Sherief

Editor-in-chief and serial coder & blogger.