[nosuchthing]

No one should have to buy Bitcoin when you can mine it, oh wait it's all being printed in warehouses owned by wealthy capital holders.

Surely this is Satoshi's design goal.

Also don't worry about the exchanges operating out of obscure off shore islands, they probably arn't operating fractional reserves.

[AgentME]

Bitcoin mining wasn't invented just to be an egalitarian "everyone can earn money from their computer" sort of thing. The decentralized design that Bitcoin uses needs people to do lots of processing work, the people doing this work need to be incentivized somehow to keep doing that, and then somehow the units of the new currency need to be distributed out, presumably in a way fairer than just starting Satoshi out with a large balance. Mining solves these issues.

[nas]

I hate the term "mining" for that reason. It is not like mining gold. I would have preferred if they called it "digital notary service". That's what the miners are doing. They are notarizing transactions so people can agree on the ledger and so that double-spends cannot happen. Early in the life of the system, the notary service is subsidized by inflation. Later (after many halving of rewards), they will be compensated with transaction fees.

If someone can devise a way to perform the notary service without proof-of-work, I'm pretty sure Bitcoin will move to it. Right now, no other system has been shown to actually work. Proof-of-stake systems are in the works but, as far as I know, none of them are considered trustworthy at this point.

Edit: I would like to also say that I'm sympathetic to the opinion that Bitcoin mining is too wasteful of resources (i.e. electricity). I think the system is perhaps flawed in terms of the connection between Bitcoin price and the economic drivers of difficulty. When the price is high, the mining rewards are such that there is huge pressure to increase mining costs. Do we actually need that level of security? OTOH, hard to blame Satoshi for the design since it is hard to foresee how quickly the system gets adopted.

[nosuchthing]

  "The decentralized design that Bitcoin uses needs people to do lots of processing work"

You should try reading Satoshi's white paper which explains what that processing work is. (hint: there's not really any processing outside of generating a bunch of random worthless nonces in the hope that one nonce will be accepted as a winning lottery number)

The Proof of Work "algorithm" is completely unnecessary for processing transactions, and it's actually quite simple. To the point, PoW simply asks for a random number for the purpose of creating a lottery. If you want Bitcoins, you need to waste more real world energy and capital on hardware to print more lottery tickets (nonces).

The Bitcoin network and all the transactions on the network could easily be run on cheap hardware, a raspberry pi even. The PoW filter is a psychological tool for "governance" (write access) to the database, granted now exclusively to wealthy capital holders. Effectively granting the Bitcoin / PoW network to the wealthiest speculators who can devote resources to be sacrificed in return for digital lottery printers, which in turn give a chance to generate numbers in the cryptocoin database.

Curious why someone would design a currency system in objection to the financial plutocracy, when the design inevitably restricts control of the entire network only to existing capital?

It's no mistake Satoshi owns at least 1,148,800 BTC.

[DINKDINK]

>The Proof of Work "algorithm" is completely unnecessary for processing transactions

The Distributed Systems community awaits your proposal for a solution to Byzantine Fault Tolerance in open, decentralized, adversarial networks. Why would you withhold an alternative solution to PoW?

>The PoW filter is a psychological tool for "governance" (write access) to the database, granted now exclusively to wealthy capital holders.

No amount of PoW allows a block producer to write data to a node that a node operator hasn't consented to accept by their choice of consensus rules. Your argument is "capital holders" can force consumers to purchase whatever they produce. Consumers induce producers. Producers cannot induce consumers. Producers can /speculate/ that latent consumption may exist but without purchasing consumers, production will eventually end.

>why someone would design a currency system in objection to banks, that inevitably restricts control of the entire network only to existing capital?

Money warehouses and credit creators (banks) are not capital. Capital is the product of work / R&D / creation.

[beaner]

Miners have to sell their coin to remain profitable. This distributes the coin well, and ensures a highly liquid market.

The largest brokerage is US-based (coinbase) and the largest exchange is Binance, which has most of its funds auditable on various blockchains.

Also just hold your own keys if you're worried about it. The ability to opt-out of custodianship is kind of the point.

[gamblor956]

Miners have to sell their coin to remain profitable.

No, they don't. They just have to sell a notation in their database that a coin is owed to someone. This is what MtGox did, and it's what Coinbase still does. The trick is to maintain just enough coin to be able to transfer out coins on request (as MtGox tried to do), or to just claim that it will take a few days to process the transaction (as Coinbase does).

Binance, which has most of its funds auditable on various blockchains.

A company owned by Binance audited Binance's books. And posted the results of the audit online...but not the underlying data. This is useful from the POV of conducting a third-party audit...

[beaner]

You're conflating miners and brokerages and they don't operate nearly anything like each other.

Miners do not custody funds. Large miners that control a farm can't run on empty, they need to pay for space, hardware, and electricity - they need to sell through crypto through a brokerage to end users to make a profit. The brokerage (e.g. Coinbase) may then custody those funds on behalf of brokerage users, but the miner no longer has it.

Mining pools directly pay out the pool contributors in crypto who then themselves decide to either save or spend.

There are some "cloud mining" services but they don't account for a lot of power and most end users play with them at a loss.

A brokerage does not own or generate new coin, it simply holds it on behalf of users and enables exchanges between users via the market.

"[Coinbase] claim that it will take a few days to process the transaction" -> This is very vague. When you withdraw crypto it generally happens near instantly. If you're talking about a purchase which involves processing a fiat withdrawal from a bank, that's not the same thing.

Re: Binance, you can audit it yourself at addresses like this: https://www.blockchain.com/btc/address/34xp4vRoCGJym3xR7yCVP...

[kinghajj]

For the blockchain to be as secure as possible, a large amount of capital must be invested into mining it, far more than the average individual possesses.

There are plenty of exchanges in reliable jurisdictions (Coinbase, Bitstamp, etc.), why do a few shady ones matter?

[drexlspivey]

You can rent their hardware via Nicehash etc and mine it yourself if that's your thing.