I've devoted my life to cryptocurrency since 2011 and still question whether or not this system even makes sense. It seems too expensive with the technology we have today. Once privacy, such as zk-SNARK, is added, it becomes unreasonable.
Perhaps this is what a bubble looks like. I wasn't there for the dotcom boom. Loss of critical thinking.
We can only speculate on the technical problems if we don't really know for certain what the application is that they have in mind.
Everybody seems to see value in blockchain tech, though nobody seems certain what the best applications of it are. I admired the UN's use of Ethereum as a tokenized payment method for refugees to 'purchase' relief supplies at camps in Jordan[1]. Problem is, scale that up to consumer-level transactions and we have a problem (at present, anyway).
If you want to go back to discussing the root viability of Ethereum's tech, sure -- but I think that's another subject than the main one in this thread.
[0] https://www.bloomberg.com/news/articles/2016-12-21/who-owns-... [1] https://www.wired.de/collection/tech/blockchain-fluechtlinge...
I guess an outside force (private corporation or government) can try to leverage that as a weakness by injecting capital into their own mining operation, thus making it unsustainable for miner to operate and then getting the majority but that would be a whole other story (and we would still have ways to mitigate it).
There could also be some kind of critical point where too many miners keep doing it unsustainably, in hope to survive longer than others and stay up (but that would be absurd, they could just start it up again later when it will be sustainable again, but humans are humans...). They all close at a similar point and the difficulty stay way too high and it's literally too expensive to reach the next difficulty change. Even then, we could try to inject cash at that point or developpers may force a difficulty change... but it may be too expensive and we abandon Bitcoin because of that.
This is not absurd at all, most miners have a lot of sunken capital as well as ongoing costs such as fixed term rent and electricity contracts they cannot easily get out of, thus many continue to operate at a loss just in case price improves over time. A lot of traditional businesses also follow this model.
The problem is that it makes consensus harder to reach, since there's no problem with having 10 different chains, because no energy needs to be burned off for each chain. This, effectively, makes your account balance a democratic decision by nodes in the Ethereum network (as opposed to forcing someone to burn off large amounts of energy if they want to alter your balance).
History being decided by democratic vote is exactly what proof-of-work avoids, or at least makes extremely expensive.
It is misleading to describe PoS as a democratic vote. There is no voting as that could be faked.
If you want an allegory maybe jury duty for the richest. That also captures the basic problem with it, when the chosen few collude. Let's just say it is an active research area.
I disagree. With PoS there is, ultimate, only the democratic vote.
For example, in a network with 1,000 nodes, let's say 95% follow one chain and ignore another chain, and that the remaining 5% follow that other chain. The two chains are completely different, but are both valid. In a PoS-system there would be no way, besides democratic vote, to determine which chain is the right one. You're forced to either ask someone you know which chain he's using, or just go with the 95%-chain. With Bitcoin, the answer is very simple: you follow the chain with the largest amount of work, regardless of how many nodes say the one with less work is the right one.
Bitcoin is inherently non-democratic in this scenario, as all nodes only care about chain work, and not how many nodes follow which chain. As opposed to PoS, where two competing, valid chains only differ in which (trusted/untrusted?) -- and how many -- nodes follow each chain.
The second chain is just an alt coin resulting of a fork.
I haven't seen any specific details for Ethereum bonded validators, but the hardware required is likely to be a cheap VPS with a reliable internet connection, at least judging by other active proof of stake projects.
https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ#how...
Other projects using PoS survive by doing things like frequent block chain checkpoints (a notary stamped block if you will), which arguably isn't very decentralized or at least not trustless. If you have a notary anyway there are more efficient ways to go about things.
like trusting in bob: http://intheoreum.org/
be warned: this link contains humor.
The longer answer can be found here[0]
[0]:https://www.cryptocompare.com/coins/guides/what-is-the-ether...
Could you elaborate on what drives the high cost? Or what would need to change for this to viable?
1. Miners to validate 1MB of transactions every 10 minutes
2. Users to be able to confirm that the entire chain of transactions was properly validated by the miners
Some ways to make #1 more efficient make #2 more difficult, so they are somewhat at odds with each other. For now, we're looking at a write throughput of between 1tps to 20tps for Bitcoin and Ethereum.
If you don't care about #2, then you don't need the mining model anymore, or even a blockchain. You can just put all your transactions in MySQL, Cassandra, R3 Corda or whatever and you can subsequently crank up your transaction throughput. You can get >10,000tps with MySQL.
https://www.reddit.com/r/ethtrader/comments/6o3hev/link_to_e...