back to article Altcoins will DESTROY the IT industry and spawn an infosec NIGHTMARE

Much has been written about how Bitcoin will affect libertarian society, banks, money and government, but there are some other effects that bear consideration: what it will do to the IT industry. Imagine you've always lusted after the highest of high end graphics cards. Why pay £500 for something that's only for improving the …

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Valid Points

I think though that to say that they (graphics cards purchased for mining) 'will not have a resale value' is an exaggeration.

It's almost certainly true however that the resale value of cards will be affected by the glut of cards which are purchased for mining and then dumped onto the second hand market when they quickly become obsoleted by a newer card. So it's true that people buying such cards would be wise to expect to be selling them for considerably less than the current going rate.

Which is potentially good news for gamers looking for second hand cards in a few month, although the question arises: do you want to buy a card which has been nuked at maximum load 24/7 for the last six months?

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Anonymous Coward

Re: Valid Points

A lot of miners do it because they had the video card for gaming anyway - so when it becomes unprofitable they will just stop mining and the cards will just be used for gaming. I'm sure some GPUs will have been bought purely for mining but even there it depends on a lot of factors - some people may keep them running for longer if their other costs (electricity mainly) are cheaper than others.

We are also a long way off the electricity costing as much as the (alt)coins are worth - even where electricity is expensive here in the UK and (although certainly illegal) I am sure there are people who are mining this stuff on someone else's electricity bill - so for them the economics are completely different.

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Anonymous Coward

Re: Valid Points

The cards all have thermal controls and (should) operate within their design parameters - so I would think a card used 24x7 as a miner is still perfectly good after 6 months - they run hot all the time but that's probably no worse than the thermal stress of heating up / cooling down that would happen in a normal machine. Many of these cards will have multi-year warranties anyway.

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Re: Valid Points

I know that in theory they should be fine, however the truth is that they are not really designed, as gaming GPUs, to run 24x7.

Given the choice between one which had seen normal use, and one which has had it's nuts clocked off and then been run with a custom water block at the absolute thermal limit for 2000 hours without a break, I'd choose the former, all else being equal. Perhaps that's just my suspicious nature.

Quite right about the warranties, but having to return stuff is hassle I prefer to avoid.

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Re: Valid Points

That's why you don't run them to maximum, you run them at around 75% fan speed and keep the temps below 90 (i use 80). I have not had any issue with graphics cards in 1.5 years of mining bitcoins then alt coins.

I did resell the cards and mentioned the period of their usage. Also the assumptions in this article are wrong, miners are always shifting cards on ebay and these often go to games machines or other miners. There won't be a glut in the market as scrypt based alt coins pop up and fizzle away continuously. If you know what you are doing you then use a multipool which mines the most profitable coin and then auto transfers to an exchange which auto sells for BTC which then auto deposits to your BTC wallet.

Doing it that way you never really reach a point where it costs more power then it does to continue mining which is usually the only thing that forces an upgrade. In my case it's kept me in high end gaming cards as between the resell value+coins mined and sold- electricity i am still making a clear profit each month and heating my office nicely. The machine sits mining and i can stop it when i want to game and restart afterwards. using a coinswitching pool means i don't have to care too much about what coin the flavor of the month is as my holdings are auto cashed out and make a tidy profit for doing nothing. The only issue is in the summer getting the heat out can be a pain (no aircon) but there are ways around that.

The cards all hit ebay at different times so there is never really a glut. There has been a shortage of some models of new cards that has been attributed to miners but other then that it does not affect the normal pc buying world in the slightest.

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Re: Valid Points

>>"I am sure there are people who are mining this stuff on someone else's electricity bill - so for them the economics are completely different."

By "someone else", do you mean parents? Cause I have a sneaking suspicion that a lot of the bitcoin mining going on is by live-at-home kids - people who have the free time and subsidised living costs. I imagine there will be a few raised voices when the electricity bill comes in!

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And ...

Financial services regulation will destroy the alternative coins industry. But not before some massive frauds are perpetrated

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Re: And ...

Who? People, like Cypriots, who don't trust their governments and financial institutions.

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Anonymous Coward

Re: And ...

The issue is 'the people' may not trust their governments to manage money - current fiat money is typically not backed by anything other than a promise and they can be easy to break if times get tough.

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Re: And ...

The legitimate use case is that these crypto currencies are in some sense like gold: their rarity isn't controlled by governments, but by natural availability. They attempt to correct for the one problem of gold in that their rate of discovery is reliably predictable. Diamonds have an even worse problem than gold in that that their production is known to be controlled by a small number of suppliers.

Personally, I don't see it happening. I believe the author should have written 'Libertarian' instead of 'libertarian' because it's the hard core crackpots who push this ideologically. The crooks have thrown in precisely because it so far is anonymous and the cops haven't figured out a way to control it (I think they will, and I think the pressure point is actually fairly obvious). And the opportunists are looking to make a quick buck/pound/yen while the making is good.

Now the knock on effects described in the article are a different story. At some point the tulip bulb market in graphics cards will implode. So long as you haven't actually mortgaged the house to buy one, I don't regard that as a bad thing. But the advancements in password cracking are a whole other story.

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Re: And ...

quote: "The thing is, who other than criminals or speculators really want Bitcoins? If somebody could come up with a legitimate use that can't be fulfilled with existing currencies, surely the answer is to find a way of generating a financial product to fulfil that need. Bitcoins are basically a replacement for diamonds, and there are reasons why diamonds have never become widespread currencies.

Rather than downvote, explain why I'm wrong."

Currency is currency; barter tokens to enable the exchange of goods or services, and a "valid" currency is one accepted by both vendor and purchaser. We already have multiple currencies with variable exchange rates, so why would one more (or less) be an issue? If I am already at liberty to purchase goods for GBP, EUR, USD or CHF, why is BTC somewhow different? Since I live in the UK I'd struggle to find a "legitimate" use for EUR or CHF with local vendors. Doesn't stop them being "legitimate" currencies though, widely accepted (in certain geographic regions) and with published exchange rates for those geographic regions they are not accepted in.

If multiple vendors are willing to accept BTC, then BTC is a valid currency for those vendors, much like the Tongan pa'anga or Azerbaijani marat are accepted by some vendors, but not others.

The reason diamonds are not a widespread currency is also fairly obvious; we no longer use gold or silver directly as currency, so the inherent value of the tokens are irrelevant. All that is important is the stated value of the token, so there is little point trying to fit an appropriately sized diamond into something to give it value. If we move back to coins being made of something worth exactly the stated value, then I could see a point for diamonds, but that concept hasn't been used for some time.

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Re: And ...

As well as getting round governments, they also get around the Visa/Mastercard/Paypal monopoly.

Say you want to donate money to Wikileaks (don't ask me why, but for our purpose you do). Because their actions have been deemed unsavoury, you can't donate with your Visa or Mastercard because Visa and Mastercard are refusing to let you do that. Ditto for Paypal*. Now you can either send your pound notes in the post and hope the postman doesn't nick them, or you can use bitcoin. There is the value.

Of course, that's not likely to be an everyday scenario for anyone. But where other payment options have failed, bitcoin will be there and it can't really be blocked. Therein lies the value. You might be supporting freedom of speech advocates in Iran, or it might be NAMBLA, but it's your call and The Man can't stop you.

*Disclaimer - I'm not sure if this is still true, it certainly was at one point

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Re: And ...

"Who? People, like Cypriots, who don't trust their governments and financial institutions."

Better a few gold coins in an Oxo tin under the bed, than placing one's wealth in the latest web driven bullshit boom.

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Re: "The Man can't stop you"

They certainly could if they wanted to but they may just choose to keep monitoring and manipulating a compromised system

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Re: And ...

There's a lot of interest from political enthusiasts. The libertarians view it as a way to escape the tyranny of government control and usher in a new economic utopia, while the usual anti-corporate types see the potential to escape from the corrupt clutches of the financial industry.

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Re: And ...

quote: "Better a few gold coins in an Oxo tin under the bed, than placing one's wealth in the latest web driven bullshit boom."

Right up until the price of gold tanks, of course, and those few coins in the tin become worth less than the paper cloth already in your wallet.

The gold standard has come and gone, allowing the price of gold to fluctuate as wildly as any other commodity. Thus gold (and by extension platinum, diamonds, and other "precious" items) are no longer guaranteed to be worth the same in the future as they are now. The UK famously sold off half its gold reserve when gold was at a low, in order to finance the purchase of... foreign currencies.

I'm not saying your experience will be the opposite (buying high and finding the price tanks from $1200/oz. back to $300/oz.) but I also cannot guarantee that it won't fall back to those levels, since nobody uses the gold standard any more there are no real limits on the price variance. Gold is now only worth what someone will pay for it, rather than defining the value of other items :'(

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Re: I think the pressure point is actually fairly obvious

and the very day I post that comment they were busy working that very pressure point:

http://www.theregister.co.uk/2014/01/27/feds_collar_bigname_bitcoin_trader_in_moneylaundering_investigation/

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Anonymous Coward

This one will run and run....

... until they run out of mugs to buy the coins.

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Anonymous Coward

Re: This one will run and run....

Are you kidding? The market is going *UP* and will never crash!

Trust me. I'm A. Tulip, former real estate manager.

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Coat

Re: This one will run and run....

Tulip? Where's mister Pin then?

Where's my -ing coat, the one with "The Truth" in the pocket?

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Re: This one will run and run....

I always think of them when I see adverts for ING Direct. I just wish ING would put the missing word back into their company name. It would be a great name actually. Look at us! We're -ing Direct!

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Black Helicopters

So what you're saying here

The combined Bitcoin world is generating over 14,000,000,000,000,000 codes a second. Devices which can generate 10,000,000,000 hashes a second now fit on a USB stick.

Bitcoin, and all the other alt-coins, is training a skillset for building password-cracking hardware that is both powerful and portable.

Is that this is yet another fiendishly clever NSA program that has stupendously backfired?

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Black Helicopters

Re: So what you're saying here

You think those are bitcoins you are working on.....meh, that is mealy the cover story.

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Re: So what you're saying here

re: "Devices which can generate 10,000,000,000 hashes a second now fit on a USB stick."

Shouldn't that says 'programs' instead of 'Devices'?

Doesn't matter to me, I have enough trouble with real money.

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Re: So what you're saying here

nope, the vast majority of bitcoin miners plug their device in, run cgminer and leave alone. It is no different to installing a game and requires no crypto knowledge.

Only a few people are actually writing software or building hardware and these tend to be the people that are already doing it. i.e electronics engineers and security students.

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Anonymous Coward

Re: So what you're saying here

"Bitcoin, and all the other alt-coins, is training a skillset for building password-cracking hardware that is both powerful and portable."

Although, the use of GPUs for encryption cracking isn't new. It was quite popular for cracking satellite TV encryption codes, before P2P and the like made downloading TV and films more accessible.

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The new renaissance

The article boils down to the point that manufacturing always lags demand. Then it overcompensates, floods the market, crashes the price and starts lagging when the next fad arrives. So far, so normal.

What is interesting is the realisation that there is mind-numblingly fast processing power available - with more to come. None of which is encumbered by operating systems (which have been described as a way of slowing down a computer to a manageable speed) and/or the massive overheads of securing the whole mess..

Perhaps, when all the fuss over bitcoin dies down, all this excess power can be harnessed into something useful. My proposals would be proper speaker-independent voice recognition and maybe the ability to do some real-time processing on HD video streams. You know the sort of thing: replace the news-reader's head with a talking cat, remove all their clothes, have yourself playing centre-forward for your favourite football team.

I can see that this could well be the next phase of software development. Let's face it: operating systems have been, essentially, stagnant for the past 20 years (merely adding new polish to the UIs and support for new hardware). Office apps likewise - after formatting and spell checkers, how many features does the average user need, want or use. Games? Well, someone who was frozen in time for the nearly 40 years since Wack-a-Mole would instantly recognize todays FPS games as kin, even if the graphics has changed for the prettier. So maybe all this superfluous computing power can be put to some new and original uses. After all, has anyone ever found a Bitcoin?

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Re: The new renaissance

@Pete2 14:04

You are right about the poor quality of voice recognition technology. National press (Telegraph) and trade press (Register) are full of woeful errors. For example, people pour over documents to tow the line.

OCR is pretty good with modern typefaces on clean documents, but is weak with old fashioned typed documents.

The average typist, e.g. me, is not very good. I do find the coloured squiggles of MS Word to be generally helpful, but some people don't seem to bother.

We need a software kit that quells / The prevalence of awfull spells / And so it needs a lot of bells / and whistles till the answer gels.

Fast hardware may help.

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Re: The new renaissance

Perhaps, when all the fuss over bitcoin dies down, all this excess power can be harnessed into something useful. My proposals would be proper speaker-independent voice recognition and maybe the ability to do some real-time processing on HD video streams. You know the sort of thing: replace the news-reader's head with a talking cat, remove all their clothes, have yourself playing centre-forward for your favourite football team.

We're working on the voice recognition part. I think the stumbling block here is the "intuition" factor: being able to make accurate educated guesses based on incomplete data. That's a "hard" problem right now because the human brain and a deterministic computer don't work the same way. We've made progress in the field using neural nets, but translating this progress to discrete computers again isn't as easy as it sounds.

As for video encoding, this has been asked about ever since GPGPU computing has appeared. One problem: motion estimation, probably the most computationally-intensive task of modern lossy video encoding, doesn't suit well to GPGPU because it has a divergent workload: that is, in worst case, it can end up branching into more subtasks than you have compute units on the GPU, and if you have to shuffle the subtasks, you usually end up better off sending it back to the CPU which sees things more generally and has a more direct line to the main memory. I've seen the x264 forums discussing this aspect.

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Coat

Re: The new renaissance

I had my red pen out to correct you when I realised what you meant.

I'll just... be over there.

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Anonymous Coward

Re: The new renaissance

"... when all the fuss over bitcoin dies down, all this excess power can be harnessed into something useful ..."

Machines blocking every possible pathway you may be hiding in ...

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Re: The new renaissance

ITYM: OCR is pretty good with modem typefaces on dean documents, but is weak with old fashionecl typed docurnents.

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I'm mining Litecoins as we speak...

... and also Dogecoins too on another PC.

Collectively, my mining PC's have a KHash rate of about 2000, and they're making coins all the time, which are worth real money. Yes their value fluctuates heavily, and their maybe a crash at some point. Their may also be another bull run.

Roll back 5 years to when Bitcoins first came out, and nobody would have predicted their rise. Fast forward to today where we have 100's of other alt-coins and again in a few years nobody can predict what will happen. Personally I think half of the current alt-coins will fall by the wayside, but others will prosper.

It's a really interesting market thats developing.

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Anonymous Coward

Re: I'm mining Litecoins as we speak...

The difficulty is going up but so is the price so it balances out - it's still profitable - well at the moment.

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Re: I'm mining Litecoins as we speak...

Personally I think half of the current alt-coins will fall by the wayside

Half? Read up on the Network Effect. Think 99%.

I think that the thing most likely to kill BTC is its own success. Should it ever get to a position where World+Dog is buying their beer and gum using it then the blockchain may well be so silted up that the verification lag per transaction will become unacceptable for larger sums.

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Re: I'm mining Litecoins as we speak...

Iitecoins were designed to not hand a massive advantage to specialist hardware over CPUs, but due to how it implemented the Scrypt proof-of-work GPUs are still faster.

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Me too

Free pizza and game codes. Hope this lasts for a while.

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Re: I'm mining Litecoins as we speak...

I think that the thing most likely to kill BTC is its own success. Should it ever get to a position where World+Dog is buying their beer and gum using it then the blockchain may well be so silted up that the verification lag per transaction will become unacceptable for larger sums.

This more than anything else has been what's turned me off Bitcoin. Keeping up with the block chain was actually seriously eating into my network bandwidth.

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Mushroom

"You don't want to be left with all the cards at the end of the game."

Brilliant line!

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All your passwords are belong to us!

The guys who will really go for the used video cards are the ones who can profit the most from them. Got a database full of "encrypted" passwords? Not for long! Then they will be plain text passwords.

Of course, all of these video cards could be scarfed up by science! Yes, you have a research budget, but no supercomputer. What to do? Lay your hands on that cheap post-coin goodness!

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Re: All your passwords are belong to us!

That will depend on the algorithms used to encrypt them. Some of them are still computationally infeasible even with modern tech (a matter of degree), barring exploits (a matter of kind).

As for the laboratories, I'm sure cheap GPUs will start being looked at by universities interested in a HPC cluster (since they've been using hybrid kits for a few years now).

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Re: All your passwords are belong to us!

Universities are already using cheap GPUs in various forms for cluster based processing.

As far as I understand it, currently not often specifically as large HPC clusters but certainly for smaller systems with 10s of cards rather than 100s. You'd be surprised at what gets done on a limited budget and the innovation this forces.

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Thumb Up

Re: All your passwords are belong to us!: not just UNIs

A mate went freelance as a drug design consultant, a couple of years ago now. No wet lab, no supercomputer, just a couple of machines with not-even-top-of-the-range Nvidia cards (plus his biocad subject knowledge, of course).

He reckons that he has customers and is doing OK: this kind of proposition would not have been tenable pre GPU computing, but it will become increasingly common as people realise that they don't need the mainframe in the basement of their company/university to convert their science knowledge into cash.

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Re: All your passwords are belong to us!

"Of course, all of these video cards could be scarfed up by science! Yes, you have a research budget, but no supercomputer. What to do? Lay your hands on that cheap post-coin goodness!"

In the meantime those of us who do science are being hamstrung by the inflated price of GPUs, and grant money has a nasty tendency to come with strings requiring it be spent _now_, not when prices crash.

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Anonymous Coward

All that effort

Instead of mining, crack the passwords that protect coins already mined.

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Re: All that effort

"Instead of mining, crack the passwords that protect coins already mined."

There are none. Well, not in the blockchain. The blockchain is made of transaction after transaction, in such a way that the later validates the previous. One could try to break this - but he would need MORE hashpower than the rest of the network combined.

At he moment the hashrate of the Litecoin network is =~ 68,9 gigahashes. To put it in perspective: a Radeon 7970 has about 750 kilohashes of processing power. To succeed at a 51% atack, one would have to get 51% of the processing power of the ENTIRE network. That means his own machines count too.

68,9 gigahashes are about 91258 Radeons 7970. Add enough boards that this one person would have 51% of ALL. It is feasible, but hardly lucrative. Especially since the heist wouldn't go unnoticed, and either the coin would crash or the problem solved.

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Stop

Popular delusions and the madness of crowds

I am currently reading 'Popular Delusions And The Madness Of Crowds", (1841) C MacKay

We have been here before, many many times.

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Re: Popular delusions and the madness of crowds

Please bear in mind that Mackay's book is extremely biased overall, uses a plagiarized account of the tulip bubble and the book itself was written to help pump up a bubble in railway stocks which Mackay was invested in. The best way to explain why railway stocks weren't a bubble was to discuss previous bubbles and why this time was apparently different.

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Re: Popular delusions and the madness of crowds

I recommend ploughing through this masterpiece of research.

http://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691152640

It turns out, that it never is "different". Same old same old ...

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