Question from Computer Illiterate Person About Mining and IP Addresses

PaulPaul Member Posts: 13
edited November 2014 in Mining
I don't understand how mining works. But I know the idea is to set up a system that creates a decentralized currency. Can anyone imagine what the price of Bitcoin would be if mining farms did not exist and Bitcoins were still mined by ordinary computers? Mining farms invest millions of dollars so they are forced to sell their coins as soon as they mine them, holding them is too risky - all this selling obviously puts downward pressure on the Bitcoin price. But if it was ordinary people mining with their home computers you know some would hold, and many might hold if the price was rising, which would just cause the price to rise more. I believe I have read that Ethereum is trying to dis-incentivize centralized mining, which would probably cause Ether to rise more in price and create a more decentralized user base and therefore a more vibrant economy. So my question is why couldn't some sort of IP denial system be put in place where only so many Ethers could be mined from a certain IP address over a certain period of time? Is this not possible to do because of technical reasons? (I'm assuming that all the computers in a mining farm have similar IP addresses because they have similar physical locations. But I don't know if that is actually the case.) (I know there are ways to mask IP addresses with a proxy, but maybe there are ways to catch that?)


  • PaulPaul Member Posts: 13
    edited November 2014
    It occurred to me that if this was possible Ether would be a distributed system and a decentralized one - wouldn't it make sense to spread the currency around the world as much as possible? Perhaps to make it easier to mine for Ethers in places in the world where they have not yet been generated and to make it more difficult in places where they are being generated?
  • JasperJasper Eindhoven, the NetherlandsMember Posts: 514 ✭✭✭
    Mining farms are forced to sell coin because they have to pay the bills in the local currency. As long as there is profit, people mine more. So the profit margin wont be a large fraction.

    Now, if regular people with jobs mine, they might be able to keep the coin, or use that to buy stuff, because it is extra.
    I know there are ways to mask IP addresses with a proxy, but maybe there are ways to catch that?
    At best, a game of cat and mouse, nevermind doing it in a decentralized manner.

    Looking it up, looks like IP address assignment is actually also semi-centrally controlled. Even without that it'd be fairly hopeless though.
  • sly5amsly5am Member Posts: 7
    edited April 2015
    I don't think we are able to distinguish that miners drive the price of bitcoins . In fact, The act of trading by both miners and buyers is what sets the value of BTC. Supply versus demand. The input of new coins is a constant, regardless if mining farms or hobby miners generate the currency. The main factor in driving the value of any crypto currency is adoption and the rate of that.
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