Hacker News Reader

Comment by lalaland1125 | Hacker News Reader

I really wonder if the authors of this paper actually understand how Proof of Work works. The game theory behind PoW requires it to be wasteful in order to create strong incentives for constructing valid blocks. If the work is useful, then there is no incentive as there is no potential loss for attacking the network. The security of the network comes intrinsically from the waste.

View on HN

I would argue that only some fraction x of the work should be wasteful. If the work would cost c on the market, it cost (1 + x)c on the network. Then if 51% attack total cost = (1 + x)c then only (x c) is wasted while c is recovered from the market. But just having (x c) is not enough to attack since you have to gain access to (loan) c which is an additional entry barrier.

Then that fraction would distort the incentive value of the work, in a way that compromised the Blockchain's security. (Proportionately).

Yes, but not proportionately since an access to capital would be an additional cost. Eg. Imagine 2 situations when you can earn $100 by investment:

1. Buy sth for $100 end sell for $200

2. Buy for $1mln end sell for $1 000 100

Option 1. seems much more accessible.

This is equivalent to burning the cost of interest for that loan as wasted PoW. Any sophisticated attacker will have effectively unlimited capital at prevailing interest rates.

That would be the whole gain: set of attackers would be filtered down to sophisticated ones. That would be advantageous for the network since the more centralized potential attackers are, the easier it is to deal with them.

> the more centralized potential attackers are, the easier it is to deal with them.

The opposite of this is true, as you are talking about "centralised" in the context of "a smaller group of people" and not "a smaller cluster of attacking machines". The most sophisticated adversaries are the hardest to deal with.

Still it is harder to deal with sophisticated AND not sophisticated attackers than with "only" sophisticated ones.

I also think "wastefull" is the wrong word. It simply has to not benefit the miner MORE than everyone else.

For example, if there was a pure public good project that could provide random input / output, then it would still work.

Primecoin is an example of that. While finding those specific primes is of extremely minimal value, it would still work even if solving those primes had considerable value - because it would be equally valuable to all.

Primecoin in particular turns out not to be a proof-of-useful-work system because the creators manually reward people for their work (the work isn't directly a form of mining on the chain).

And keep in mind, even for bitcoin, some of the work is useful, since the computer chips it uses will heat up, and that has value for HVAC. It’s certainly not as cheap per unit of heating as you can get with equipment built for that purpose, but there is still a positive value c there.

I would argue against the PoW having to be wasteful. It has to be difficult (in terms of compute power and time) but not wasteful. I'm not affiliated in any way with this, but there is one project that uses PoW to search for large primes.

Which only works because there those primes have no economic value.

The issue is economic, not technical. If I can sell the “useful” side effect of mining, then I can subsidize any attack I perform. The actual security of the network is only the work that has non-reimburseable costs.

It could work if you can't decide who the benefited person is. I.e. solving problems out of a random pool of them or so.

Do people pay for their problems to be solved in such a way? As long as I can translate PoW into cash, it stops providing benefit as PoW.

The important things are that:

a) it is economically rational to mine on the correct chain

b) there are substantial economic net costs to mining on a wrong fork of the chain (and these are high enough that it is prohibitively expensive to mount an attack which would fool people as to what chain is correct)

Right?

It doesnt matter. As long as the value is Equal for everyone, it doesn't benefit that specific miner more than everyone else who didnt mine, then it still works because everyone has the same incentive and same immediate benefit.

Finding primes aren't a great example. ... but unfortunately, they are the best example we have so far.

Agreed, the issue is economic. That's one of the things that I find fascinating about Byzantine Fault Tolerant state machine replication. You can view cryptocurrencies as a method of payment for the economic incentive of playing fair. I think the big story here is that we can have a BFT distributed consensus!

Also, I think those large primes do have economic value (https://en.wikipedia.org/wiki/Largest_known_prime_number#Pri...). I'm not sure if that's the purpose of PrimeCoin or who would get the prize, but they nonetheless have some economic value.

It actually has to be costly, not difficult. And not wasteful.

To see this, note that all POW and POS chains have "difficulty" functions that are actually just cost functions in external markets (hashpower or capital). What secures the difficulty of the attack in all casds is the supply curve of some block production factor in an external market.

For the network to be secure it has to be a waste of money, not philosophically wasteful.

It only needs to be wasteful for whoever is doing the computations. It can be useful for other people. Especially if it's not worth a lot of money.

But that is the conundrum. If the "work" is not really worth anything to other people, then the work isn't useful. If it is useful, it makes attacking the blockchain free. The security is because the work can't be used for anything except securing the network.

As long as the work is as useful to everyone equally (regardless of who mines), then it still works.

For example, if it were solving an incredibly complex mathematical or scientific problem that benefits all of mankind - then the incentive is equal for everyone.

which is the premise of Primecoin, IIRC.

It looks good on paper but doesn't work in reality, bitcoin just works..

Are you claiming that anything useful that requires thermodynamic work can be monetized? You may be right but that isn't obvious.

It's a simpler claim than that. The claim is that anything useful can be monetised.

If you come up with something useful, but noone is willing to buy it at any price, what's your basis for claiming that it's useful?

If the useful product is intellectual, and proving work involves publishing the product freely, how do you monetize it? Selling support contracts a la FLOSS?

It also happens that both these conditions (intellectual product + must be published freely) are the typical approach of PoW blockchains.

It strikes me that is can still be useful, it just has to produce a good whose value cannot be internalized. It would need to be a perfect public good. Can’t think of any examples though.

Just as a heads up, Saito has a quantifiable cost of attack (for attackers) while still paying for a form of useful work (tx routing / fee collection) so waste and security are not intrinsically related.

https://org.saito.tech/saito-economics

The approach works exactly because money is guaranteed to be pulled away from the block producer. Given that it always costs more money to produce blocks than attackers can earn from them, only honest nodes (who spend other people's money) have am incentive to do so. Cost of attack is the money attackers cannot get back if they spend their own money to censor the network. Check it out!

It doesn't have to be wasteful but the computation must be asymmetric. That is it must be much more difficult to compute than to verify. The SHA-256 nonce discovery computation used by Bitcoin has this property, but is not really useful.

Others have given the example of PrimeCoin which is asymmetric, but somewhat useful as it discovers prime numbers.

A great metaphor for this is a Sudoku puzzle. It is much harder to solve than it is to check the solution.

The security of the network depends on the work being widely distributed and having a lot of work to do.

If there is a lot of work but one worker is performing over half the work, that worker can compromise the network.

If there are a lot of workers but little work, a new worker who is more capable can compromise the network.

No it doesn't have to be wasteful. I do not follow crypto anymore but I remember gridcoin and primecoin as good examples of work not being wasteful.

The gridcoin wiki states that it uses proof of stake instead of proof of work. The OP's comment is only relevant to proof of work.

Indeed, for some reason I tough that it is POW since it rewards work done on BOINC platform.

The work only needs to be wasteful from a personal compensation perspective. It can still generate a public good.

Reply on news.ycombinator.com