Steve H wrote on 08/31/13 at 08:30:10:Sounds interesting.
So, why does the mining get less and less productive? Is it some built in mechanism to force you to spend or something?
Its part of the entire sub-system. UNlike like paper money or any other phyisical money, this electronic currency could be mass produced ad-infinitum.. SO built into the system were several strategies, to prevent that:
difficulty level - this kicks in two ways:
1: the difficulty starts low and forever increases. This give early adopters an incentive, but blocks over production on a long term scale. This growth in difficulty is a static rate.
2: Over-production suppression. The difficulty can also go up or down based on current output versus expected growth path.
3: max coins produced. Thats right, there is finite amount of coins that EVER will be produced. 84 million. Once that is reached, there could be an inflationary element that would likely occur.
Difficulty on (LTC) 2013-09-02 is 1102.3148011, when I started is was just over 300. So its 3 times harder ( nearly 4) to mine that back in April.
Because the entire system is not centralized and is "open", not putting such functions into the base algorithm would just beg crime. OF course the fiat systems in use the world over DO commit the crime of debasing their currency... including the USA. So what politicians promise not to do.. is prevented by the LTC algorithm at its inception. Imagine if the governments were forced to be honest and not debase their currency. The world would be a very different place.
Bitcoins began as something mined via CPU. The CPU was displaced by the GPU which was 100 times faster. That was replaced with the custom ASIC, which is even faster, and more stable. So yes, in way you either have to invest in better mining tech or get left behind. LTC progressed from CPU to GPU nearly immediately. But LTC was created by design to not be friendly with ASIC products. Still as the difficulty increases, I would need to add more GPUs or give up. I choose to give up.