

The Bitcoin Lottery - rl1987
http://cryptome.org/0004/bitcoin-lottery.htm

======
Jetlag
There I stood in front the infernal machine. Crumbled, soggy paper in hand. It
fell to pieces before I even had the thought to preserve it somehow. Sixteen
random characters, gone in the wash. My thesis, gone in the wash. A decade,
gone in the wash.

I could try to rewrite it. But I wouldn't even know where to start. Of course
all my research was encrypted too! I'm no idiot! This was work, this was hard
work. I'm not even sure I could remember it all. "I wrote them down in my
diary so I wouldn't have to remember."

I did the calculation. Brute forcing the password would take more than my
lifetime with all the machines in the lab. Would Moore save me? Could I stand
the wait? Later on, I stood on the roof of the math building (a quiet escape a
few grad students shared) contemplating my next move. Looking out, late at
night, it came to me. I couldn't do it, but the _they_ could. Even just a
fraction of the computers out there could get me my thesis back.

But how? I could create a distributed computing project, it was something I
had worked on before. But there was no way to attract the required users. I
needed something as least as big as the largest projects that already existed.
I needed to give people something. A bounty isn't enough, the prime project
has a great bounty, but I need more users. They _all_ want money. But I had no
money. So, I gave them the next best thing: the promise of money.

~~~
mrcharles
What's your pen name so I can buy your books.

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gburt
Bitcoin should be rewritten to be some function of something "useful" like the
SETI@Home project. Consider if you could have "solving sha256 problems" be
simultaneously "computing the next largest prime" (arguably useful, at least,
more so than what its currently doing) or "computing patterns in DNA".

~~~
weavejester
The difficulty is that the problem must be of a predictable complexity. In
other words, you must know ahead of time how long it takes a given amount of
processing power to find the solution.

~~~
dodo53
Would predictable statistical distribution of complexity not be enough? As in,
you get a randomly assigned job, that takes on average a given amount of
processing power, and is proven to not need more than some upper limit - or
even, you time out after a given amount of processing power and request a new
job. And ideally have each unit small enough that mining will completing
multiple jobs so difference in complexity starts averaging out.

~~~
weavejester
You'd also need to be pretty certain that no-one's going to come up with a
faster algorithm for solving the problem. I can't think of any real-world
problems to which all these criteria would apply.

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ivankirigin
Someone please do the math on the energy lost in GPUs calculating hashes
compared to the dollar value of the bitcoin rewards. The average miner might
be better off just powering down their machines.

~~~
sethg
Never mind the energy; think of the capital expenditure. If I have US$1,000
lying around, I could either put it in a mutual fund, getting a certain number
of dollars per month (with which I could buy bitcoins), or I could buy a kick-
ass GPU card and become a miner, generating a certain number of bitcoins per
month (which I could then sell in exchange for dollars). At current interest
rates, which is a better investment?

~~~
Unseelie
Paypal's money market yeild is currently .06% per week. At that rate, with
$1000, you make .6 dollars a week, and buy maybe a bitcoin each month and a
half...the discussion here is about earning a bitcoin a day mining, so I'm
assuming you're down under a third of the mining return.

Assuming the cost of the electricitiy is 1.26 cents per kwh, and your machine
is running at around 800 wats, constantly, that's 720 hours and 576 kwh, seven
dollars a month...so the cost of running doesn't seem to be that high either.

Edited for bad math. May continue to do so. Please point out errors.

~~~
maukdaddy
Long-term average stock market return is 5-8% depending on who you ask. So an
index fund or balanced fund of funds would yield much better returns than
bitcoin.

~~~
rorrr
The (S&P 500) stock market return:

1) Since 1971 (40 years) is roughly 1300%, which is 19.63% annualized
(1.1963^40 = 1300).

2) Since 1950 (60 years) is roughly 7680%, which is 16.08% annualized
(1.1608^60 = 7680)

[http://chart.finance.yahoo.com/z?s=%5eGSPC&t=my&q=l&...](http://chart.finance.yahoo.com/z?s=%5eGSPC&t=my&q=l&l=on&z=l&p=s&a=v&p=s&lang=en-
US&region=US)

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Tichy
Related: here is how to calculate the expected number of days. Though I did
not add in BitCoin specific parameters. But suppose you need to have zeros in
the first k bits, I suppose the probability for each lottery ticket/number is
(256-k)/256 (I assume that SHA256 has 256 bits, too lazy to look it up).

[http://blog.blinker.net/2011/02/08/expected-number-of-
coin-t...](http://blog.blinker.net/2011/02/08/expected-number-of-coin-tosses-
until-you-get-tail/)

At the moment I generate about 5BTC/day with my dual-core ATI graphics card.
Two months ago (when I started), it was twice that.

~~~
dmn001
You could also use the bitcoin calculator:
<http://www.alloscomp.com/bitcoin/calculator.php>

~~~
Tichy
Of course, my blog post just explains how to implement something like the
bitcoin calculator.

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anigma
Sounds like the people running large botnets could just farm the crap out of
this.

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maqr
To me, at least, bitcoin isn't about a lottery and it isn't about winning.
It's about laying the framework for the foundation of an open and secure
currency. Who cares, in the long run, who won the most coins right now? I
don't think many people have large stakes of bitcoins that they're hoping to
get rich off of.

The mining cost should eventually be reflective of the value of the _features_
of the cryptocurrency. In other words, if you want pseudoanonymous secure p2p
transactions, buying bitcoins is like paying for that service. Who's providing
the service? The miners, which are just the people keeping the network running
so that others can use it.

~~~
sethg
_Who cares, in the long run, who won the most coins right now?_

In the long run, people with a lot of coins tend to get even more coins. I
don’t see why I should participate in an “open and secure currency” that
benefits people who let their hardware run wild doing mathematical operations
which, outside the currency system itself, are pointless. At least gold has
some aesthetic and industrial value.

------
tectonic
Every post hyping Bitcoin increases the value of the Bitcoin held by those
making the posts.

~~~
phamilton
But every new miner decreases the output of each mining rig. Posts about
spending and using bitcoins benefit those who have bitcoins far more than
"Free money" posts do.

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mikecane
Countdown to Goldman Sachs and then all of Wall Street jumping in ... 5...
4... 3...

~~~
wmf
Nah, there isn't enough money to be stolen here.

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wccrawford
Wait, seriously? And people trust this system?

~~~
gburt
What's not to trust? It seems that the clients determine what they trust, and
so long as the majority of clients agree, all is well.

There are economic problems with bitcoin as a currency (its a fiat currency,
effectively, except without the fiat - it has scarcity with no intrinsic
value), but the algorithm component seems solid to me.

~~~
wccrawford
The gamble. Earning bitcoins is based on -luck-.

I don't gamble. This is not some religious thing, but simply because I like to
have control over my fate, and gambling takes that control.

~~~
hugh3
_I don't gamble. This is not some religious thing, but simply because I like
to have control over my fate, and gambling takes that control_ Bu Interesting
attitude. But of course you _don't_ have control over your fate. One day
you're going to contract the disease which kills you, and you don't have any
choice over when that happens or what it is. And between now and then, dozens
of major events will happen in your life which you _also_ didn't choose.

Maybe you like to have the illusion of control over your fate?

Personally I like to keep my life exposed to some randomness.

------
tobylane
Is there a point to these hashes? Does bitcoin just encourage people as a
whole to make a trillion trillion hashes? I hope there'll never be a green
bitcoin, it would be such a lie.

Can't someone adapt it to look for md5/sha clashes?

~~~
gmartres
The whole point is to verify that transactions are legitimate:
<https://en.bitcoin.it/wiki/Category:Mining>

~~~
tobylane
I think I get it, but it could be a lot more accessible. Law-makers (not
lawyers) would be less wrongly opposed to something they understand.

------
rilkeanheart
Anyone care to adapt this system for e-voting, in general?

~~~
Unseelie
Why on earth would you want to base votes on who has the most computing power?

~~~
scarlson
Assuming Hardware = Wattage Output = Voting power;

US power sources overlayed on 2008 Electoral Map. Too close to call.

<http://i.imgur.com/d1Fyf.jpg>

I was too lazy to fix Alaska and Hawaii.

Source:
[http://www.npr.org/templates/story/story.php?storyId=1109973...](http://www.npr.org/templates/story/story.php?storyId=110997398)

~~~
Unseelie
Please explain the intent of that graphic? Or, rather, what does where the
electicity is have to do with voting power, aside from the congruence with
cities?

