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I'm a software dev who is considering becoming a bitcoiner, mostly to explore its possibilities. I think a currency free from the baggage of the modern financial systems will allow great things to be done. I see lots of other people are thinking the same way (there are numerous BC prediction markets, for example).
However, I don't want to invest time and money in a seriously flawed or doomed system.
BC appears to have at least one potentially-fatal flaw: the 51% attack. I'm unsure why it was assumed this would not be a problem? Profits from mining would seem to increase when on reaches over 50% of the world's mining power. This would seem to encourage powerful mining pools. While current norms and other incentives may discourage black-hat miners, I don't think it is reasonable to rely on these incentives.
Edit: In other words, is there an economy of scale in being the dominate miner?
Edit 2: While it looks like there was a successful BC double-spend, it was the result of a white-hat exploiting a bug, not a 51% attack. However, a few altcoins (e.g. reddcoin) have been the target of 51% attacks, so my research on their repercussions will start there.
In addition, BC would appear to have a number of other flaws:
- The necessity for each wallet to contain the entire block chain. Edit: Apparently I was reading some dated information. This is wrong.
- Governments have never seemed keen to give up their monopoly on the money supply.
- The computing power wasted by mining.
- It complects the generation of a public ledger with a specific currency.
Side note: After reading about BC and 51% attacks, I am beginning to think "the network effect is the mind killer" might be a more general expression of "politics is the mind killer". There is a lot of noise out there.
Help and insight is appreciated.
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