Crypto Tokens: A Breakthrough in Open Network Design
medium.com
medium.com
That said, I am trying to understand if there is enough value to go around when the network is smaller than (n) nodes? What if the application is not one that will benefit greatly from network effect, doesn't have need for the security/auth model and doesn't need massive compute/resources? What if it will never grow beyond a certain number of nodes (for whatever reason)? Note: those are NOT my opinions expressed in question form...they are pure questions that I want to brainstorm and hope that the responses are along the lines of "here's how those types of apps can benefit".
Also, at mass adoption levels (while understanding we are nowhere near that, but for the sake of the thought experiment), do we end up with millions of micro-networks, rather than the relatively small number of networks we have today? If so, does the crypto token model still hold up? My gut is it would for the infrastructure providers because they can support (n) networks. I am not sure about the rest of the ecosystem or what constructs need to be built/added if that model is to thrive?
We at present are seeing the Bitcoin network saturate and the average cost per transaction has climbed as it should continue to if it is moving towards optimal economics. Ethereum's scaling problem is even more conplex than Bitcoin's considering the state information held in the chain and scripting capabilities.
There are a few approaches being built to handle these issues. One is payment channels like lightning where the public chain is only used for settlement. Another is private blockchains like consortiums which would allow limited access and abuse of the ledger. Yet another factor is sidechains that could create a way to keep information off of the main public chain.
https://bitcointalk.org/index.php?topic=3332.0
The only reason Bitcoin transactions cost so much is artificial scarcity of block space, which increases the proof of work generated per transaction. The absence of a static limit in Ethereum is one of its major advantages over Bitcoin.
Also, the resource requirements for running a node are a lot higher than most people are willing to tolerate even at 1mb blocks. Huge portions of the incentives, security, and decentralization of the network depend on people running full validating nodes. A big misconception in cryptocurrency is that miners can set the rules of the network. That's only true if you aren't running a full node.
The dynamic block size in ethereum is an easy attack vector that can be exploited by a large miner. The miner simply increases the blocksize as much as possible, and fills blocks with autogenerated transactions to make verification more expensive for small nodes. Once you get it high enough, your competition will start dropping off the network. If home users stop running full nodes too, now it's a lot easier to change the rules of the network - instead of convincing everyone, you only need to convince everyone willing to pay for a full node. And if that's tens of thousands per month, it's not going to be many people.
The costs under an attack scenario were not what the parent comment was making a claim about. The defence costs per transaction actually decrease with each marginal increase in the number of transactions, because the number of parties worldwide with the resources capable of attacking a blockchain diminishes as the cost of a successful attack increases.
>Also, the resource requirements for running a node are a lot higher than most people are willing to tolerate even at 1mb blocks.
Again, not relevant to the issue at hand, which is the cost of the computing resources used per transaction in a distributed network.
>The dynamic block size in ethereum is an easy attack vector that can be exploited by a large miner.
Ridiculous scaremongering.
I have a bet on for £1000 with a futurist friend that he say with 10 years half of humanity will have made a transaction on a blockchain and I say not.
My only regret at this stage is that I didn't make the bet in Bitcoin...
These tokens might have great potential in third world countries where confidence in central government and justice is low, so your friend has a chance.
That's a huge thing, but in the long run, I think that will be the only thing.
There are 6 large banks in the US, with at least another 2 dozen managing upwards of $100 billion in assets.
No one has really explained to me why I'm better off trusting a cartel of unregulated miners to a cartel of regulated banks, especially when there's several dozen banks who have assets equal to the total value of cryptocurrencies just in the US.
Similarly, if any one bank doesn't follow the rules, they get kicked out of the financial network, to similar effect. You don't have to trust a bank, you trust the banking (and legal) system.
Isn't that the soft-fork / hard-fork distinction?
It is true that miners in general cannot use their hashpower to force a hard-fork, but they can, I think, cause a soft-fork.
And, soft-forks can do a lot of stuff.
In that case, you're talking about mining pools, which are different from miners. Individual miners participate in different mining pools, and can choose to use different pools at any time. Pool operators don't have that much control over the mining power, as miners will readily use a different pool if it's seen as a better alternative.
Historically, any time that a particular pool gets large enough to be a concern, miners switch off from using it as the risk to the network easily outweighs the small marginal benefit they may get from using a popular pool.
Miner centralization is certainly one of the primary risks in the Bitcoin network, but it's also one that's easy to overstate. Even with fairly extreme miner centralization, it's hard to come up with a good way to abuse that power without the rest of the network participants simply forking away from you.
There's good reason to think that the current level of geographic centralization in China is likely a maximum. The rapid development of ASIC hardware has kept investment timelines short as old hardware is rapidly obsolete. As hard limits in IC design are reached, this development has slowed, and may result in more competitive opportunities in other areas.
Banks on the other hand can print money, change the interest rate, steal, block people from the system for arbitrary reasons.
Most people don't realize that a 51% attack is not a 'we get to do anything we want now' attack. Miners still need to follow the fundamental rules of the network, and they also need to blow huge amounts of cash on electricity to maintain the attack. Today that would cost millions of dollars -per day-. That money needs to come from somewhere, and generally that comes from selling the coins that the miners get paid. If they make the system useless, the coins they get won't have enough value to pay the bills.
So there are a lot of dimensions that mean a cartel of miners could reasonably be construed as an acceptable alternative to banks.
1. What about blockchain length? The article kind of alludes to this, but there seems to be this "we'll deal with that problem later" idea, even though it seems critical. The answer I always got that chains would fork or be stored distributively but then that suggested the primary use would be in small networks, or that there would be critical problems to solve sooner rather than later.
2. Isn't a guaranteed decrease in monetary supply a problem? I was kind of under the impression that ideally a currency experiences a small amount of increase monetary supply, to avoid things becoming prohibitively expensive. The process of generating coin seems kind of backward to me in many ways, although I'm not an expert in the area.
2. No, as the cost of the token or cryptocurrency goes up, the nominal price of service goes down. For example, Siacoin is currently around $0.015; let's assume it costs a dollar a month to store 1 TB. You would pay around 67 siacoin. However, as the value of siacoin goes up to $.02, you would only need to pay 50 siacoins instead (assuming the cost of storage is constant).
[1] https://www.stellar.org/stories/adventures-in-galactic-conse...
Traditionally say I have a php/mysql site, that's on a server, say Digital Ocean and files are uploaded to Amazon storage.
How does that translate to Etheruem? What about private messages? If everything is public on the block chain, isn't that an issue? Does Etheruem run code?
Can anyone point me to some reading on this? And how to create a 'decentralized' social network?
This is the future and I'd like to get a handle on it, thanks!
Of course, having all the dbs of all the apps replicated in every node is not really optimal and that will be solved using sidechains.
How can I convince people to use my Facebook killer app instead of Facebook if they have to pay for every action (update profile, send message, post something, etc.), the price is not clear in advance (who knows how much "gas" every action would cost), and the process of publishing is not instant (IIRC Facebook has 2 billions of active users, can Ethereum handle that scale? It's supposed to be used by thousands of different projects, right?).
What's sidechain? Is it something I have to develop myself (i.e. something Ethereum does not provide out of the box)? If that's the case why do I need Ethereum at all?
This doesn't use the ether gas as payment, but a PoW to encrypt the message locally then sent.
Ethereum's data store will come from Swarm: https://github.com/ethersphere/swarm
With these two additional pieces it is trivial to build and conduct a social network on ethereum's blockchain.
Bitcoin concerns me. If/when BTC is makes its appearance in the every day lives of ordinary people, its anonymity value will have eroded significantly. Traditional currencies have not yet started to compete with BTC, but they can and they will if necessary. Try getting a mortgage, car loan, business loan with BTC as collateral as one example of where my concerns rest. Look at the grossly inverted price of BTC and gold prices (artificially assuming 1BTC = 1Oz).
Before BTC there was growing dissatisfaction with money center currencies that persists today. BTC 'took the edge off' for many in those circles and may have relieved pressure on gold prices.
I don't necessarily believe this, but I've read in economic revisionist circles that BTC would be means for certain central banks to redirect some demand and attention for precious metals away from their vaults and toward an asset class they, better than anyone, are capable of mining with their existing computing infrastructure. So, by invention or acquiescence, BTC serves money center interests, for now, but not indefinitely.
BTC remains a highly speculative and risky asset/network in my mind.
the main problem, i then see is that if these tokens are required to use the platform, wouldnt their cost be prohibitive? and the platform wont be useful?
these tokens are going up in value just like bitcoin which always had actual use (mostly on blackmarket) so their incentives are aligned with the token being used as a currency, but not as an app token that is required for the product.
so in effect, these are just over hyped quasi securities offerings and trading.
What i'm interested in is the ability of token networks to be useful for legitimate transactions between entities. I think in particular there's potential for token networks to increase the trust and liquidity of virtual goods. Right now cryptocoins are basically only useful for traditional transactions that cash is already very efficient at. What I want to see more of is using the logging and trust ideas of token network to develop transactions between virtual goods, that normally exist in siloed ecosystems.
Does anyone have a more formal explanation of how blockchain is being used here?