Eris
An interesting project came up in /r/bitcoin yesterday. Announced by /u/alsomahler at eris.projectdouglas.org, Eris is a distributed autonomous corporation designed to replace the Bitcoin Foundation. I'll withhold my judgement until I actually look at the source code and see this running, if this turns out to work as advertised, then perhaps my criticism of the $100k bounty from a month ago was a mistake. The text on the project's official website is well-documented and the developers clearly know what they are talking about.
However, I can't help but be extremely disappointed in that they chose Ethereum as the network for this project. Why would a replacement for the Bitcoin Foundation not use the bitcoin network as the foundation for the project? If the authors could not develop on the bitcoin network because there were features missing that they needed, then why not use one of the many platforms built on top of bitcoin instead of Ethereum? There are no features Ethereum provides that bitcoin cannot provide given a platform on top of the network. Unlike Ethereum, bitcoin is not premined, and it just seems odd that this new platform would be not be built on top of the protocol it represents.
Unfortunately, the simple fact that the platform is built on Ethereum makes it unlikely that it will gain traction among bitcoin users. However, if the code is as modular as advertised, then perhaps the lowest level could be modified to run on bitcoin wouldn't know the difference.
Altcoins are all the same
Take a look at this:
http://shoemakervillage.org/temp/mess.jpg
As you can see, altcoin mining is a mess. This chart would be easier to view if you could mouseover the graphs, but you should be able to get the point by just looking at the image.
Basically, the market seems to have decided that no altcoin has any feature that is any better than the others. Otherwise, it would not be profitable to mine and sell about 30 different coins in the course of a week. Unless I'm missing something, it would seem to me that if everyone decided that a certain coin had great future prospects, then its value would be soaring and it would be a goldmine. But that isn't the case.
Profitability was at $1.18/Mh/day for most of this weekend, which is the lowest it's been in a while. The profitability decline was mostly due to declining bitcoin prices, rather than an increase in difficulty. However, there are periodic spikes to numbers which may seem absurd (like $40) because of the way that these latest coins work.
Get rid of many problems at once
I stated in response to one of /u/moral_agent's posts yesterday that the 51% attack risk can be averted by implementing the same paper that's been out since January. Incidentally, the paper also gets rid of the 1MB transaction limit, which is a bigger risk than the 51% attack issue.
In simplistic terms, the idea is that you basically have many miners mining "sub-blocks" with a much lower difficulty, and then these blocks are combined into larger blocks, and finally they get included in the existing blocks that currently appear every 10 minutes. The reason why both problems are eliminated is because more transactions can be quickly processed into the many smaller blocks, and since the difficulty of the smallest blocks is low, there is no need to join GHash.io to mine them. The two greatest threats to bitcoins can be reduced in one fork.
How the 1MB transaction limit is like the GHash.io problem
The GHash.io problem is instructive of what is going to happen as the 1MB transaction limit disaster approaches. As with all things in life, people don't care about putting up a guardrail until someone drives off the road and dies. Nobody cared about the 51% attack issue until last week, and now that it has passed, nobody will care until it comes up again.
The 1MB transaction limit is an issue which nobody cares about at the moment. When transaction fees reach $2.00, then people will start to care. The reason why I think the limit will crash a bubble is because people will think that bitcoin isn't as cheap as was promised, and cost is one of the greatest advantages of the network. But once the crash occurs, fees will decline as transactions decline, so people will forget about the issue until the next bubble.
Never pay full price for anything
With the advent of bitcoin services, you shouldn't be paying full price for anything anymore. The minimum you should expect at most businesses is a 5% discount. Here are the ways that I reduce my costs, in order of effectiveness:
1. If available, go to places like Gift Card Zen, where used gift cards are available at prices as much as 15% off. Then, buy them with a credit card to get more cash back. In October, DISCOVER offered 5% off online purchases, so you could get gift cards for >20%.
2. Use credit cards with rotating categories to earn 5% cash back, and then compound that by depositing the cash back into gift cards or a bank account. For example, Chase offers 5% at restaurants this quarter, which allows me to save hundreds of dollars and buy time to work on my mining pool.
3. If the bitcoin gift card sites are offering 6%, and no credit card has rewards in that category, then you can get slightly less than 5% cash back by using bitcoins to buy gift cards (because 1% minus $0.15 is lost to Coinbase).
4. Search the Internet for online coupons. Last week, there was a coupon for Papa Johns that provided 50% off any order. I stacked that coupon with the restaurants bonus on Chase, and stacked that with a redemption for gift cards at another store, so in the end I ended up paying 44%, or $4.35, for a large Pepperoni pizza including tax.
I estimate that I increase my salary by at least $3k/yr by using these strategies. The advent of bitcoin gift card sites will probably make it possible for me to reach $4k in savings this year.
Other
- Days until July 24: 38