Ethereum 2.0 – Minimum deposit reached
launchpad.ethereum.org
launchpad.ethereum.org
1. Network operators (stakers) deposit at least 524,288 ETH in a special contract
2. The early Eth2 blockchain (the "beacon chain") launches Dec 1st
3. The Eth1 blockchain will be merged into Eth2 (details TBD)
4. Other features will be added to make Eth2 fully functional (sharding being the biggest feature)
Just a few minutes ago, step 1 has been accomplished.
It also changes the distribution of mined coin. Whereas currently it takes an equal mining cost to reap an equal reward, proof-of-stake rewards those who already have enough to stake. This is essentially a recreation of the inflation system we have in the fiat world, where printed money first goes to the government, who can spend it at its current value, eventually having it entropy out to other users through spending, at reduced purchasing power. This makes the rich richer, and increases inequality of savings in the network.
So it's not exactly the same refrigerator, so to speak.
As opposed to people who have money buying mining hardware to make more money that can be invested into mining hardware?
Proof-of-stake is completely unlike this. People who "have" are not required to exchange any effort to reap new reward. They retain purchasing power while the "have-nots" lose purchasing power.
I dunno if I struck a nerve with you with these points about proof of stake or something. I'm not completely against it - I think it should be tried, and Ethereum is a great network to try it with. But I also don't think it's completely perfect. I also think proof-of-work is very defensible and likely to succeed in unexpected ways.
Proof-of-stake doesn't require this natural, market-driven redistribution. It exchanges it for an inflationary process that further separates the rich and the poor.
They're fundamentally different.
Do you want an example?
> If you mine and do not sell, you perpetually consume and fail in short order.
With ETH you can mine ETH, lock in a MakerDAO vault and pay your operations with very low-interest DAI and use that to finance all your operational costs.
As long as your profit from mining is higher than the interest from minting DAI (which is very easy to do), you can mine forever without ever giving up the original ETH. Your only limitation would be in how many people would be willing to buy all the DAI you will be minting.
This is no different than a PoS system, except that it still has to bear all the PoW costs and externalities.
Which ones? I don't believe I am, they're just not the point being discussed here.
In other words, you are ignoring (not paying attention, leaving aside) an aspect that should be considered.
(You asked for a good-faith conversation, but after these types of replies it gets hard to take you seriously. The quote "It is hard to get a man to understand something when his salary depends on not understanding it" becomes more and more apt with each response you give.)
I'm not sure how your quote applies, my salary doesn't depend on Bitcoin.
Read again. I described an mechanism that you can be a miner of a PoW mechanism and still be able to finance your operation without selling the asset you mined, effectively turning the economic model of it from PoW into PoS, while keeping the horrible externalities and costs of PoW.
Entry costs in PoS are significantly lower; you just need a consumer-grade computer, broadband and the electricity to power a consumer-grade computer (i.e. of the order of 100 W). In PoW, you need specialized equipment (ASICs), larger amounts of energy (of the order of 1000s W) and broadband, this equipment will also need be renewed every few years.
The minimum stake of 32 ETH (in the case of Ethereum) can be avoided by using pooled mining, so that's not a true barrier of entry.
Being a validator still requires effort, you need to set-up and maintain the infrastructure and guarantee sufficient availability (higher than 2/3 of the time) to avoid being penalized. As with any economic activity where there is ample competition in the end the profit margins will be quite thin, so presenting this as free-money for the "haves" is just dishonest. If staking rewards are too high, more people will be tempted to stake, reducing the staking rewards, if they get too low some people will be disincentivized to stake and stop doing so, raising the rewards. This will tend to balance around just marginally profitable. This also happens in PoW mining. Main difference being that due to the low entry costs in PoS this economic activity is accessible to a much larger amount of people.
You can find here a graph showing the staking rewards vs total staked ETH.
Don't forget, those that do not have enough to stake can pool their resources together.
P.s: tell me where in the world you can open a bank (not a bank account, but an actual bank which can receive deposits from Central Banks) with only 10-20k USD.
P.P.s: There is growing talk about existing central banks that are considering issuing their own blockchain version of their currencies, bypass large banks and have money go directly to people through controlled accounts. It would be basically be a Government-sanctioned version of Tether/USDC/EURS.
That's great! And makes a lot of sense. However, it still requires locking capital. Those who do not have a lot of money, spend a much higher percentage of their money, and therefore need it to be liquid. So though pooling may reduce the effect of inflationary rich-poor inequality increases, I don't think it would eliminate it.
Well, duh. No system will ever be perfect and there will always be costs associated with BFT systems. The question is knowing how these systems compare with one another and what kind of trade-offs are there.
It is impossible to dispute that the costs of keeping a PoS-based system is overall lower than the current state-of-the-art, yet you try to knock PoS while ignoring all the analog issues with PoW? Your cognitive dissonance is showing.
That is very questionable.
This pattern seems to be everywhere. Cheaper electricity: more electricity used. Bigger roads: more miles travelled. More efficient engines: bigger, more powerful cars. Plastic recycling: more plastic used. I challenge you to find any improvement in efficiency which has led to a reduced footprint.
What's more likely is you have spent the money saved on something else.
what if i told you that the constant level of energy spent is the level of security bitcoin users demand by virtue of buying it at current price level?
would you say constant provision of certain level of security is waste?
I'd say that you're wrong because security is not the primary thing they're buying.
> would you say constant provision of certain level of security is waste?
I would say that doing so through a constantly increasing level of energy use is indeed a waste.
sounds like speculation. it's a major desirability factor in bitcoin.
> constantly increasing level of energy use is indeed a waste
the more money you store in a vault - the more security it needs for you to sleep well. you wouldn't lock a $5000 bike with $5 lock. so difficulty increase correlates very much with amount of wealth poured into bitcoin.
edit: typo
No, that's a plain fact. Nobody ever buys security as an end unto itself. You buy security to protect the thing you really want. Which in the case of Bitcoin is by a vast majority "getting rich".
> you wouldn't lock a $5000 bike with $5 lock. so difficulty increase correlates very much with amount of wealth poured into bitcoin.
It correlates, but not in direct proportion. With any other kind of security, you don't need to spend 10 times as much to protect a 10 times higher value, and there is a possibility of security getting cheaper due to advances in technology.
a thing that can't be taken away from you due to security characteristics of the medium - that's very much a factor in purchasing decision. among many other factors. different people value different factors, so just be reasonable and admit that you can't know how are those factors valued by all the purchasers.
> Which in the case of Bitcoin is by a vast majority "getting rich".
you may be out of touch a little. there are phases in every investment vehicle and while bitcoin is still in price discovery, there definitely are people who are in it to get rich quick, but as volatility goes down and actually valuable characteristics are becoming more widely known, the proportion of those people goes down.
> With any other kind of security, you don't need to spend 10 times as much to protect a 10 times higher value
why not? maybe the coefficients are off, but the more value you want to secure - the more you have to pay. that's how it works literally everywhere in the world.
> there is a possibility of security getting cheaper due to advances in technology.
maybe there are and maybe we will discover them in future, but the thing at hand that we're discussing is whether or not to call "wasteful" the process via which wealth ownership is secured by energy consumption.
Bitcoin's proof-of-work is basically a conversion of energy directly into money. This pushes competition towards cheaper and cheaper sources of energy. First it's finding jurisdictions that subsidize it, then it's creating your own cheaper energy sources. Proof-of-work incentivizes cheap & renewable energy investment.
The penultimate phase is custom off-grid mining farms that power themselves via their own renewables. The endgame is that all energy companies will primarily be Bitcoin mining companies, feeding their excess renewable energy into the grid to power homes, etc.
Or you could just skip the Bitcoin part...
In this scenario there is NO SUCH THING as 'excess' energy. Or reducing dependence on fossil fuel, so long as that can still be used to produce energy to mine bitcoin with.
You're right about competition and market dynamics, but it is utterly and completely dedicated to converting ALL the energy into money without any left over. To fail to do so is to fail to be competitive. I really do not understand this talk about 'excess' energy.
Could that energy go to better (which is subjective of course) things? Sure, but if it's not and there is demand as well as excess supply it incentivises energy companies to at least _keep up_ with what they currently provide.
There also physical limits to efficiency of energy transformation and slightly less heat loss per unit of energy with much more energy production is not exactly what climate needs right now.
So even if Bitcoin mining were to cause global electricity production to increase by an order of magnitude, it would still be a rounding error compared to the amount of global warming caused by the Sun directly.
Thinking about it thermodynamically, though, in a future where Bitcoin mining uses only excess solar and wind energy, it wouldn't be adding any heat to the planet because that energy would have become heat anyway.
Also what about the Manufacruring/production of devices to convert solar/wind energy to electricity and to mine bitcoins? It’s based on non-renewable elements (of course any chemical process is reversible given enough energy but Entropy still grows mercilessly) and requires a lot of extra energy.
EDIT: as far as we know, thermodynamically all energy will become heat at the end (although not sure if it should be called heat, since there will be no flux). However, we as humanity are/should be quite concerned first about decades and earth’s atmosphere/oceans (and connected parts) not millennia and energetically balance Earth as whole to come.
In principle energy from sun could also be stored in form of chemical bonds energy (as it’s the case for biomass) or even nuclear energy (yup, sun-powered nuclear fusion sounds unlikely but why not ;). Then biomass (less efficiently) or nuclei/atoms could be ejected from earth allowing to disperse sun’s thermal energy somewhere else.
What a fucking dystopia that would be.
But I think by the time Bitcoin becomes so universal that all energy companies are mining companies, it is likely to already be at the scale of USD/EUR, or even become the reserve currency of the world, in which case it would not fluctuate nearly as much as it does now.
Sure, people who can afford energy storage themselves would be sorted. (Most of the time) Anyone below that wealth threshold would be at the mercy of "am I more important than the monetary gain today".
Bitcoin's success has more to do with its monetary policy and hard-money aspects than with the way it consumes energy. Monetary policy isn't something we've seen any innovation with at all in the crypto space. Different coins have different inflation curves, but inflation curves exist in all currencies. They're not a new concept, they've just got specific variants.
But also, Bitcoin isn't static. It's still being developed. And I think its focus on slow stability and payments makes it more attractive, not less, in the long-term.
It's already been here 11 years, 20 is not so many more. I fully expect it to still be around then, and almost certainly in the top position in crypto, if not globally among all currencies.
Cheap yes, renewable no. Complete non sequitur there.
> The endgame is that all energy companies will primarily be Bitcoin mining companies, feeding their excess renewable energy into the grid to power homes, etc.
Absolute insanity straight out of postapocalyptic SF.
"The ancients destroyed their civilization by funelling an ever increasing share of resources towards some kind of elaborate game of numbers".
Robust because the phenomenon can begin detached from the energy grid by profit-seeking entities with capital to invest. Doesn't need permission, can be smaller, independent and eventually have something to offer back to the grid, but don't require it initially. Ability to bootstrap outside of regulation as a result. More nodes, more competition, shared excess. Fewer singular points of failure, more redundant, less fragile.
"Future," because that's a great vision for the future.
Nuclear energy has high fixed costs but then scales pretty well. As crypto currencies with PoW become a major industry, it's not difficult to imagine it might be cost-effective to build huge nuclear plants in some corrupt African country. (Africa has also huge untapped uranium ore deposits)
Nuclear works in stable, rules-following countries like France where its high energy paybacks subsidise good salaries for an army of bureaucrats enforcing the rules.
We are literally stuck with 50 year old technology in nuclear energy, as unfortunately progress has been slow.
With the fuel cost being basically free (thorium), the and the operational cost low because the system runs with little human intervention energy should actually end up incredibly cheap once we engineer these system in a better way.
> Cheap yes, renewable no. Complete non sequitur there.
That's the main point. There's no inherent incentive to use clean energy for mining. There's opposite stories about obsolete aluminum plants staying alive in China by just using their energy allocations to mine Bitcoin.
I’m very interested in reading about it though
I've read it some time ago. I recalled it as less speculative than it seems now.
The premise is that energy is a large part of aluminium production cost and the plants work on small margins. An over-investment into energy production provides cheap energy and allows the aluminium plants to improve their margins via crypto mining.
These dams are built in such a way that they need to continue to provide power or the equipment starts to fail.
It is also literally too expensive to build and maintain the lines to ship the power elsewhere.
Alcoa was more than happy to lease their space to someone who was going to use the power going to their facilities. There isn't much industry at this point that would fit.
All of the successful facilities that I know of (including my own) seek out cheap power... which happens to also be clean power. Hydropower. Most use existing facilities that were otherwise going to waste.
We use hydropower because it is clean and cheap. Those are the incentives.
The aluminum plants shut down... not stay running. Both mining and plants use huge amounts of continuous power. Bitcoin mining is far more profitable... no need to keep the aluminum going.
The difference that I'm keeping an interested eye on is even if gold mining ceases, the energy required to produce a new gram of gold doesn't really change so a gram of gold still proves as much as it ever did. It isn't so clear yet that Bitcoin proves anything without an active mining network.
If Bitcoin mining becomes unprofitable, Bitcoin users could incentivize it through increased transaction fees.
Of course, what you say about transaction fees is true too - if miners are receiving less in 'mined' bitcoins, then they are likely to demand more in fees. You can already see this happening - when I first used bitcoin, nobody charged any fees at all, relying only on the mining rewards for covering their mining costs.
Gold is valuable because people buy it. People don't buy it because of some hypothetical amount of energy that went into producing it, they buy it mostly because it's shiny and rare (and sometimes because it doesn't corrode much or conducts well).
The energy cost to produce is relevant to its price only in so far as it feeds into the supply / demand equation.
Prices depend on supply and demand. Gold is scarce, thus supply is low, and is useful (beautiful, can conduct electricity), thus demand is high.
Bitcoin is scarce, yeah, as it requires a lot of energy to produce it. But it's not really useful for now, people buy it only for speculation. So demand exists, but it might fluctuate a lot.
Platinum for instance was at one point considered the level "above gold", but it has since been overtaken. Gold simply is the better brand. It's the same for Bitcoin versus all other digital currencies.
> But it's not really useful for now, people buy it only for speculation.
Speculation itself is useful. Bypassing the financial system is useful.
A price of $18,000 per unit of Bitcoin might sound ridiculous, but it needs to be considered that the market cap of Bitcoin, representing most of the world's cryptocurrency market, is only $200 billion. That is comparable to the assets of a medium-sized US bank.
Uranium fuel takes a lot of effort to refine, but it's still cheaper than gold; partially because it's simply more common in the crust.
These things are true but not necessarily so. Things can be scarce without being difficult to refine from raw materials (a stamp). Things can be difficult to extract without being particularly scarce (aluminium). Things can be valuable without being scarce (TVs), things can be scarce and not valuable (an original artwork by my 4 year old daughter).
The only thing that makes something valuable is that it is valued by people. People are weird and have lots of different reasons for valuing things. There are lots of things I could burn an insane amount of energy and money on that would not result in anything valued by others.
The idea that something should be valued based on the work that went into creating it is interesting as a hypothetical idea but not something that is very relevant to the actual world we live in.
If anything, you've got it backwards:
> it's scarce because it requires a lot of work to extract
It requires a lot of work to extract because it was so valuable that all the easy-to-extract gold was taken and put in jewelry and vaults.
– boring grey in colour
– not a good conductor of electricity
– not particularly strong, but not ductile or easily malleable either
– not useful for any practical or ornamental purpose
and one special, magical property:
– can be transported over a communications channel
If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it.
-Satoshi Nakamoto, August 2010
People in 100 years will be saying this about social media, not Bitcoin
Energy will become cheap even for malicious actors, so bitcoin hash difficulty will have to go up in order to keep it costly for them to fake transactions. Which means energy usage goes up too. There's no way to avoid "work" in a proof-of-work scheme.
Wasteful, why not put all their power output into Bitcoin mining then? Sounds like a version of the nano machines story multiplying and eating the planet, in this case for the sole purpose to mine Bitcoin, leaving a carcass of the Earth and nobody to spend those coins.
Nope! Putting more energy is not going to make more money into the system, is just makes it more likely that you get to be in the front of a firehose that drips money into the system in a constant rate.
Putting more energy into the system just increases the cost of money itself. But no one wants money, what people want is the what money can buy. Instead of spending ever more energy to get into the front of the line, one could just use the energy for something productive and then sell it.
This doesn't negate what I'm trying to say. That the energy amount is variable but the currency units output on the other side are static doesn't change the fact that energy is being turned into money. By contributing a higher fraction of the input, you get a higher fraction of the output.
If anything, higher energy input can only be justified when the money being made as a result has an equivalent value or purchasing power. You're confusing units of currency for the actual purchasing power they represent, which actually is variable.
> no one wants money, what people want is the what money can buy
This is wrong. People want the option to have things in the future, which is exactly what money is.
There are other ways to get a "higher fraction of the output" that do not involve contributing to the input. That is the point you are missing.
You are treating this is a some function of fundamental physics. It's not. We are only talking about "conversion of energy into money" because that is what the best current implementation of a BFT system is using.
It's accidental. You are focused on the "Work" part of "Proof-of-Work", when what we care about for solving consensus in distributed part is the "Proof".
Yes, that's my point isn't it? I said "Bitcoin's proof of work is basically a conversion of energy directly into money." I did not say "all systems for ensuring the soundness of proofs in blockchains are a conversion of energy directly into money."
What we care about is trust minimization. It just happens that the first system utilized, proof-of-work, provides the best-yet incentives for ensuring trust minimization, and the most equitable distribution of coin. It being accidental does not mean it is not the the best method for securing "proof." (Which isn't to say that it is necessarily the best of all possible methods, only that the simple fact of it being first and accidental does not negate that it may be.)
And the costs of achieving those.
> provides the best-yet incentives
At an ever-growing prohibitive cost.
> most equitable distribution of coin.
Hardly true when you have more than 50% of the hashing power coming from farms ran in China on subsidized power and not paying for externalities.
By equitable distribution, I mean that mining is on average only marginally profitable; the bulk of mined coin needs to be sold on the open market, which means there is always liquidity and availability to those seeking to enter or exit.
Hashing power centralization and coin distribution are different topics. Decentralization of hashing power will continue to increase as the renewable energy costs continue to lower, because they will eventually match and then lower beneath the subsidized rates currently available only in specific jurisdictions. Costs will shift to initial capital investment rather than energy supply.
No, you have it backwards. A BTC that is already mined has as much value as a BTC that is yet to be mined, whether now or twenty years in the future.
Again, the fact that we spend energy to get more BTC is just accidental. There is no absolute law that postulates that the cost of energy and price of the asset need to be correlated.
> Decentralization of hashing power will continue to increase as the renewable energy costs continue to lower.
You are talking about spherical cows, I am talking about actual implementation of the system. Renewable energy costs mean jack shit when you have big central entities subsidizing dirty energy and if no one pays for the externalities. Also, it doesn't matter how "clean" a source of energy is. Unless you find a way to break the law of thermodynamics, the best way to be sustainable is to not consume the energy in the first place.
There are already plenty of market incentives for us to be more efficient and produce energy, we don't need to have an artificial component added to this system for it to work.
The problem is arguing a correlation between computation and work for price of BTC and/or cost of energy. That is the mistake from OP.
Then of course there is the whole notion that using a lot of power is in and of itself a big evil, which is ridiculous. Even from an environmental perspective, big industries are by far the biggest offenders. By shifting the perspective of the discourse away from the real offenders towards other "problems", we are doing a disservice to the actual issues.
At this point I'm convinced it's a movement composed primarily of people who don't understand what they're talking about, sprinkled with a light dash of actual malicious actors. This makes sense, as that's a realistic cross-section of the internet at large.
TLDR; custody banking model keeps people out of control of their own property.
There is a big problem with private property rights and safety guaranties of your capital today in most of the world. There are three problems: unstable govs in 3rd world countries, capital moving restrictions and QEs.
I'm, for example, not from developed country, so I have several restrictions on my own money, some of which may be applied to US/Europe citizens and some may not:
1) my gov, speaking softly, is not stable. I have no guarantee on my bank accounts in the long term (eg 20+ years). I can assume that funds can be at least inflated in several times, if not withdrawn in the name of some "patriotic" gov initiative. It would be much better to have my funds away from such jurisdiction. It's safer to have the funds out of **any** jurisdiction due to some political conflicts and attacks. US and their banks are likely to freeze Russian/China/Iran citizens funds as well when another conflict will arise.
2) Capital moving. Even if someone assume that some jurisdiction is safe - there is another problem - not any country makes capital flowing outside its border legal. You just **can't** move your **own** funds somewhere where you see it fit the most. Domestic banks may be completely controlled by the gov and too much cash can be easily arrested on its way by customs.
3) QEs, which is my favorite part and applied to any human on the earth today. Your money is used to "save" someone without your direct permission even if you live in good country, paid your taxes and did nothing wrong. Just by printing more money - practically making your hard-earned money cheaper and less useful. They'd say that you can move your money to stocks (US, by the way, there is no stable stocks but theirs), but you both will need to pay tax from your so called profits (the hell, on SP500 I won't even earn on the long run, I barely save initial funds considering inflation!) and forced to invest in american economy, which not everyone (surprise!) want to do. And stocks can fail badly.
Currently, crypto traders are busy learning that all the rest of the financial world, including things like credit and financial derivatives (encapsulated in smart contracts), can still apply to cryptocurrencies.
Things like consumer credit and fractional reserve banking will show up in crypto soon (if they haven't already). It's just a matter of trusted entities offering specific smart contracts.
The one thing I really dislike about most crypto is the traceability: unless you use privacy coins (which themselves have dubious security claims), every transaction is 100% traceable.
Even if you want to put predatory lending practices that are at the very heart of those networks aside (why would you, but hypothetically) you are left with networks that disproportionately disadvantage certain classes of people: a good example is sex workers, it being the case that these networks are managed inside the US they are fundamentally puritanical. Usually these arguments are couched in environmental euphemisms such as "there is higher risk". These measures are proxied into networks that run on top of the lowest network, but they are positively stimulated to keep them that way.
If those things don't bother you, you may be swayed by the fact that they're both based inside the US. Broadly speaking, we don't need to get into why that is an entity that tends to spread suffering around.
Before there was a viable alternative to POW for achieving the goals of a decentralised currency, it was at least debateable about whether the benefits of the decentralised currency were worth the cost of POW compared to the alternatives, but now that it appears POS is a viable alternative, there can be no question - POW costs too much power.
Wow. This is beyond delusional.
It's a conversion of energy into coinage which can be used by people to repay their debts to others.
p.s. somebody really dislikes my opinions, as i'm banned from commenting on HN for the last couple hours or so :D
There's nothing about markets nor cryptocurrencies that guarantees that they efficiently select for the currency that requires the least electricity. You completely ignore social alignment issues as well as inertia.
Also, sorry to burst your bubble, but universe doesn’t care about socially beneficial outcomes. If a thing has valuable characteristics, no matter how socially harmful you may perceive it to be - those characteristics will not go anywhere.
So right now you’re basically arguing that bitcoin isn’t valuable because you don’t like what it’s valued for. There’s nothing wrong with that, but at least admit how highly subjective and contrary to available evidence that opinion is.
Do you have the ability to show that PoS is NOT as secure as PoW?
> Also, sorry to burst your bubble, but universe doesn’t care about socially beneficial outcomes.
No shit. Never said it was. In fact when I mentioned market failures I made it explicit that I believe this to be true.
> So right now you’re basically arguing that bitcoin isn’t valuable because you don’t like what it’s valued for. There’s nothing wrong with that, but at least admit how highly subjective and contrary to available evidence that opinion is.
What the fuck are you talking about?? I never said anything remotely related to this. I said that your idea of "PoW is never wasteful" was meaningless. Maybe you were paused from posting on HN for straw manning?
yes. if you spend enough time offline - there is no possible way for you to be sure that you've synchronised to genuine chain without trusting a third party. that problem is not solvable under PoS and that problem is exactly what PoW was designed to solve.
> I never said anything remotely related to this.
you did, by implying that markets value bitcoin incorrectly.
you also didn't show that "PoW is not wasteful" is incorrect (note that i never said "PoW is never wasteful", it's wasteful when nobody needs the proof that is being produced, but as long as bitcoin price is not zero, that proof is useful and therefore not wasteful), the statement that "if somebody can do what PoW does for less energy then PoW is wasteful" requires you to prove that somebody can actually do that before you can claim that PoW is wasteful.
If you really want to stop waste then try to convince people to stop worrying about whether others have more stuff than they do. John Lennon wrote a well-known song about this idea. You could try imagining it too. Unfortunately you've got billions of years of evolution against you, but good luck!
Alternatively, if you can figure out a way to do it without proof of work then you'll stop all of this waste while still appealing to our animalistic instincts.
But, then again, who are you to talk about waste anyway? What makes your life not a waste of energy? Don't you consume food every single day?
I don't think POS is an adequate replacement. POW was an intentional design choice because of the highly competitive environment that it creates.
Since the original bitcoin concept was solving the byzantine generals problem, the entire point of all the cryptographic work was to be trustless.
If you are cool with trust, you can have reversibility, lost password retrieval, anti-money laundering checks, and all the other features of the existing financial system.
It would be a carbon copy of that, of course, which would raise the question of what problem this system is solving for people.
But I understand that Ethereum is about distributed computing, not transactions, so the calculus may be different. The point being to replace AWS, not Western Union.
I'm personally not sold on why a distributed trust algorithm would be superior to trusting AWS or Azure, given that those services can give you a refund for errors, are subject to the legal system, have a brand reputation to maintain, and so on.
The important question is not which of these ideas is better than each other, but which is better than existing infrastructure.
With PoW, we trust that the mining algorithm is going to take X amount of time given Y amount of computation. That arguably removes trust from people and puts it in the properties of tech.
PoS argues that PoW is just a proxy indicator of stake, where the stake is computing resources that are committed to mining. With PoS, rather than reifying your resources into CPUs that churn wastefully, we reify the resources into in-ledger coins which are held in escrow. Block-writers are selected randomly from a pool of miners which are weighted by the amount of stake in escrow. If the miner violates the protocol, they lose their escrowed stake.
So PoS moves from "trust in algorithm runtime on modern hardware" to "trust in economic game theory," I figure.
Just think about it. The algorithm can be changed by anybody. What does prevent the miners from changing the source code to allow them double spending or even extra coins?
But if they do that and don't have a significant hashrate that do the same, they are on a blockchain fork that is worthless to anybody else.
So we trust in the economic game theory that miners don't tamper with the code.
It can. But the key point is if you change the algorithm by say reducing the number of hashes required (so you increase your chance of winning) it can be detected by just inspecting the block. You don't need access to the code, or be able to watch it running, or trust some hardware, or the person running it, or anything else beyond inspecting the output block and trusting calculating the hash is as hard as it appears. The easy of doing that check that is ultimately what keeps the system safe. Everybody can trivially determine you've cheated, so everybody knows you've behaved in a way that helps you and hurts them, so everybody rejects your block. I guess you could call it game theory, but it is a drop simple game that is easy to analyse and see it gets the desired end result - your bitcoins trade has been immutably recorded in the block chain.
I don't understand how PoS stake works, but the parents description ("reify the resources into in-ledger coins ... block-writers are selected randomly ... weighted by the amount of stake in escrow") makes it sound much more complex. So complex that I wonder if it can be verified by just taking a quick peek at the output block it produced. If it can't, and it's something that relies on trusting code, people or hardware, and within that complexity may well lie a hidden flaw that leads to everyone realising they lost control of their Ethereum days or weeks after it happened. The importance of days or weeks is it's already been cashed out before you realised what was happening.
But I guess that's all wild speculation, and I should look at the algorithm.
Verifying if the consensus rules hold is equally simple in both POS and POW. But with Bitcoin's POW, the hashrate is part of the consensus rules by requiring the hash of the output block having a certain property which can only be attained in a timely manner with enough processing power and luck (in that sense, also in POW a block proposer is chosen "randomly").
With POS, you don't have the hashrate. But you have the stake which (in Ethereum's POS) is lost if you try to vote for more than one possible new block for the chain. Which is a direct economic incentive to behave correctly.
I can't help but think that cryptocurrency mining is mostly responsible. And supposedly long term mining just fries GPUs, so the used market is dubious anyway.
Eth2 is going to be extremely light, and is going to run fine on a ~$600 NUC that consumes about 10W. At 20% annual amortization, $0.15/kWh and 10k different validators (people), the total cost of running eth2 is... $1.3M. That's a mind-boggling difference of 4700x.
Real costs may be a bit larger as some individual stakers can be less efficient (like running on a 150W average power pc) but compared to what bitcoin consumes - still a rounding error.
Calling this a waste of electricity is the same as calling the hundreds of thousands (if not more than a million) of employess of central banks, regulation authorities, payment processors, etc waste of air. Really really naive and childish.
P.S. Did anyone ever calculate the carbon footprint of all these people whose jobs are going to be taken over and compared it? I haven't done the approximation/calculation, but I am pretty sure that cryptocurrencies are going to be a massive improvement over the current system in that aspect as well.
If you have a more efficient way to mine bitcoin, just do it, you will be rich, or just tell everyone else and everybody will use it.
They literally had to go against everything they said and stood for by manually intervening or throw the investments of thousands under the bus. Either you're a decentralized system ruled by consensus or you have top-down hirarchy but you can't claim both. They proofed that a human would intervene any time the proverbial sh!t hits the fan which makes them no better than an expensive but centrally controlled set-up of an RDBMS.
Ethereum is snake-oil and if I see a CV that says blockchain without making crystal clear what they're doing in that space it goes immediately in the recycle bin.
There literally are no valid use-cases (other than buying heroin) in crypto today. And anyone who peddles this stuff always looks like a shill. the tragic is that all this sounds like hyperbole until you realize the same is true for all the BS ideas that got (and still are) peddled since 2017 (wink-wink nudge-nudge $iota the blockchain that isn't one and that manages to invent the only hash-function which isn't collision resistant).
Even as a hyperbole, this seems odd. The various decentralized name resolution blockchains seem to be a valid use case, for instance. Sure, it's still possible for project politics to cause issues (like the hard fork), it's just significantly costlier.
Crypto has been overhyped, but I think it's a mistake to say that there are "literally no valid use-cases," especially in a world where FAANGs seem to want to exert ever-greater control over what we can do with their systems. Crypto has a horrible UX at the moment ("first, you need to set up your wallet...") and it has an underdeveloped infrastructure, resulting in awkward centralized single points of failure (e.g. crypto exchanges). On top of that, no one has developed a "killer app" that could appeal to the mainstream computer user. As a consequence, the prices of crypto vary wildly, since the "real economy" seems to be dwarfed by simple speculation. The whole space right now is filled with criminals and ideologues and scalawags. (I imagine most of the ICO fraudsters have run out of coin.)
This is interesting. Cross-shard attacks were a major flaw in shard designs. How is this solved exactly and who is "us" in this sentence? How can the network force a miner/validator to use a specific random shard?
Definitely worth to follow how the Eth1->Eth2 evolution will play out, but I wonder if is not too late for Ethereum while newer kids on the block [1], much more agile due to lack of legacy overhead, have already launched solutions for many of the problems (PoS, sharding, scarcity, WASM smart contract infra, super-high TPS etc.)[2] that Ethereum will be trying to...in the next year or so.
[0] https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma
The vast majority of projects out there are pure speculations and a decent scan through their blog posts, whitepapers and activity on their public repos should be enough to decide if they're building something meaningful (and worth to follow long term) or not.
https://cointelegraph.com/news/ethereum-set-to-become-first-...
The minimum deposit for ETH2 is a very small percentage of the total premined (i.e. out of thin air) ETH that insiders were beneficiaries of. Take this event with a grain of salt, even the creator of Ethereum says the meat and bones of ETH2 is still years away.
Same goes with sharing, how much is it argued this will speed up the transaction process?
If you consider that modern systems with the required specs can run on 10W, you should get ~90kWh in a year.
Transaction-speed wise, there is a lot of talk about 100000+ TPS, but the general consensus seem to be that this will only be achieved with extra L2 support and that a more realistic number for "pure on-chain" throughput is in the high-hundreds / low thousands.
Seems like a "If they come, we will build it" problem.
The main issue is that most of them still are very complex to get fully operational, there is no big consensus among users on "what-to-use-when" and they all require a non-insignificant cost to setup in terms of all the contract transactions needed to get in and out of the chain.
There is no reason to doubt that they be more mature along with ETH2 and that that L1-L2 will complement each other nicely.
The problem comes with attracting such participation, which isn't warranted without that very participation having already been established.
Carts and horses and such.
Also, I said that there are many things yet in the way to facilitate adoption, no need to move the goal-posts.
I never said there were goal-posts... if anything I said they couldn't exist, and even if you could score, you'd get points in the wrong game.
This is akin to saying that it doesn't matter that e.g Brazil has a more advanced banking retail industry compared to the arcane networks from the US because the Brazilian economy is not as big as the US.
This is silly, because not only the two economies can co-exist, there is no technical aspects that stops other chains to adopt PoS as well it also ignores that the value can be migrated from one chain to another.
Increasing throughput in Ethereum would make everything more valuable. Just as an example, people can get their BTC and transform wrap them to use in the ethereum chain. With ETH2, it will be cheaper to wrap BTC and cheaper to use it in transactions.Its utility will be increased.
In terms of utilization, Ethereum already has, exceeding Bitcoin in transactions per day:
And doing so while the average complexity of transactions, which is measured by the number of gas units a transaction consumes, has increased:
https://etherscan.io/chart/gasused
It has also overtaken Bitcoin in the economic demand for its blockspace, with Ethereum miners earning more in fees than Bitcoin miners:
https://coinmetrics.io/charts/#assets=btc,eth_log=false_left...
Launching an ecommerce will suddenly be much easier for a many more people.
I'm also very interested in seeing how governments will respond, the revolution WILL be coming whether they like it or not.
Besides, one distant analogy: I remember reading how internet will revolutionise totalitarian governments, because it is an unstoppable river of information. Well, China, North Korea and Saudi Arabia are going strong regardless.
Bitcoin/eth are great, until some crony government introduces the death penalty for using it, or sth.
There is one thing a centralised digital currency makes far easier, though. It makes it easier to "print" new money and cream that off into bankers' pockets. Most of the richest people in the world are in finance.
so what's different this time? to me it seems ETH is always overpromise, always underdeliver kind of project. they promised global scalable world computer since inception in 2015, now they say it was never possible with ETH1 and they need to hardfork to ETH2. why do you have any confidence in their statements?
Eth2 is also not hard fork. The old chain will be attached to the new chain
PoW and PoS are algorithms to order transactions, but how many transactions and how often to order them are just tunable parameters.
the real scalability "tech" that is being sneaked in while everybody is busy talking about PoS is sharding, which essentially means abandoning the idea of serializability of the underlying database, leading to vastly more complex failure modes, reliance on very tight clock synchronization and zero real world testing of such approach.
so yeah, good luck...
You're wrong, PoW is a poisson process which means time to generate blocks must be a very small fraction of average block time. Block times in PoS have a normal distribution with tight std, which means block generation can take even 1/3 of block time, giving some leeway for propagation.
1) The length of comments posted in Internet discussion forums
2) Users' dwell time on online articles
3) income of 97%–99% of the population
4) Milk production by cows
5) Amounts of rainfall
6) Size distributions of rainfall droplets
7) The size of cash payments and size of transactions in Bitcoin
Many other examples could be found here: https://en.wikipedia.org/wiki/Log-normal_distribution
There's some confusion in this question. A log normal distribution is proof enough that multiplication exists.
3 and 7 are trivial because there are clear compounding effects - they are most obvious in finance. 5 is easy too, more rainfall means more water evaporates, it's a simple multiplicative cycle. 1 because larger response is more likely to generate more larger responses.
There's no causal relation between multiple factors in block propagation. It snows and latency to starlink rises. There's congestion somewhere because a new tv series is being massively downloaded. A node has random clock skew of 1 s. These are all additive.
Ha-ha. Maybe it's a good reason to forge the evidence. However, it doesn't mean you can't forge an additive law here!
In 3 you can add value of house to the value of car instead of "multiplying" them. In 7 you can add values "cent by cent". "Multiplicative cycle" in 5 is a real conspiracy theory. Is there the same thing for "cow's milk"? Could you increase milk yield with the same "multiplicative cycle"?
According to this logic bank interests for credits with "simple interest" should have a normal distribution and those with "compound interest" should have a log-normal one!
I can give you more simple criteria for all cases above:
1) "The length of comments" can't be negative
2) "Users' dwell time" can't be negative
3) income can't be negative
4) cow's don't suck milk from farmers
5) Law of Gravity works for rainfalls
6) Size rainfall droplets can't be negative
7) Payer is the one who pays
8) "Latency" and "delay" for nodes can't be negative too. It's very likely that it has a log-normal distribution as many other sort of delay.
https://medium.com/aztec-protocol/aztec-zkrollup-layer-2-pri...
Monero doesn't have many users (the daily transaction count is also maximum daily user count), so achieving a larger anonymity set should happen very fast. It's also going to be much more scalable. Not to mention anonymous dollars are a unique value proposition in itself.
So it's a centralized joke?
I imagine they added a ToS to avoid "I used your website and I lost all my money"-type lawsuits.
The ToS basically says you're not allowed to do illegal things, and they are not liable for any damages caused by using the website. In addition they have some restrictions in place in order to protect users of the website from fraud/phishing and other damage.
Do you think this is unnecessarily oppressive?
I hope that enough other people also see that potential as Ethereum 2 rolls out over the next year or two.
Btw I believe these posts are against the mod rules.
- Early adapter become extremely rich (Developers)
- Transaction costs O(n) network complexity
- Every operation in the network result in no more than O(polylog(n))
- Energy Issues (Proof of Work)
- Speculative markets making the coins not usefull for day to day shopping
- Scams
- More Scams
- Pseudo Decentralization (centralize around Ethereum Foundation... Blockstream, Miners, Dev environments (Github), ISPs)
- Scams
If you skip all the subjective stuff and whether "works for shopping" is the goal.. both of your big-O comments have counter examples (check out Coda for 1) as does your energy comment (Eth2 is an effort to switch to Proof of Stake, amongst other upgrades).
That's the typical blockchain reply, suggest yet another ICO out of the ocean of ICOs out there.
> as does your energy comment (Eth2 is an effort to switch to Proof of Stake, amongst other upgrades)
I don't know muuch about Eth2 so I will give you that one.
I've been working in the space for 6 years. I give no craps about the asset, but yes, I think cutting edge cryptography is fascinating.
I tend to agree that the vast majority of "work" in the space is garbage, as are the majority of assets.
Have you ever checked on your own any such "counter example"?
The banking system fails this test regularly BTW. It too attracts the same variety of people and recent history is littered with people testing the limits of the system and causing minor and major financial incidents as a side effect. Our legal system actively protects these shady types too. You could say that blockchains are designed to function despite the presence of such people. So, their presence is a given but not necessarily a bug.
Now specifically Ethereum 2 is proof of stake; not proof of work. So it has limited energy issues associated with v1 and Bitcoin. This also kills the mining use case and shifts power to those holding stake.
Transaction complexity and throughput remain problematic compared to non block chain based systems but are probably good enough for most use cases and of course vastly better than v1, which I would argue was never really suitable for any serious use cases because of its slow transactions and uncertain outcomes when they spanned minutes to hours instead of seconds (which also stops any kind of interactive payment scenario dead in its tracks). Using side chains for micro transactions, payment channels, etc. is a common/practical workaround and probably also desirable from a privacy point of view.
Pseudo decentralization is policy choice. Different blockchains make different trade-offs here. There's inherent friction between purists/utopioans on one hand and people to do real stuff on the other hand. Pure decentralization is mostly not very practical in a lot of domains and technically overkill for common requirements. In the case of a financial system, you in any case need the buy-in of legal entities and governments. There's an implied level of central control. That's why ripple and stellar are popular with fintechs. Good enough as a shared ledger and for implementing e.g. remittance networks and complex financial products. Enabling anarchists is not a design goal for them.
In the end, a blockchain is just a tamper proof block chain. You use it in a legal system that may or may not allow you to use it and that may or may not provide you some legal protections against ripped off. Facebook found that out the hard way when they tried to compete with central banks last year and then realized that that would put them in the cross hairs of financial authorities, which is when they backtracked their position doing something weaker at some point later (probably never at this point). Stepping outside the common legal frameworks is only easy if you are not really a part of it to begin with.
Ethereum used to have a soft cap of 100M coins. They removed the cap.
Ethereum is no Bitcoin. It's more akin to dogecoin/fiat with its infinite money.
Hope POS works so Bitcoin can adopt it.
There is however something wrong with defaulting on promises made at launch.
That didn't happen, mere years after its launch they blew through the cap and are already 15% over.
Ethereum builtin limits work as an incentive to force timely decisions. The initial 100M limit, and the difficulty bombs (which cause "ice ages") ensured that the initial versions of Ethereum wouldn't be able to run forever: mining rewards would stop, or mining would be too difficult to be profitable. This impending doom ensures the protocol needs to be updated, and once that conversation regarding the new consensus is active, it is easier to bring in new changes and improvements too.
One final point: whoever bought ETH at any point up to mid 2017 has seen massive returns. It could be argued that this is precisely because of the changes Ethereum has undergone over time, and that keeping close to the initial design would have been worse.
It's fine to protect against theft, but it's not fine when it's only enforced arbitrarily and only when the core developers themselves are affected.
This is the whole premise behind the irreversibility of cryptocurrencies, that the only fair thing is to never do it, and when you abandon that why not go all the way to a centralized database?
Ethereum is therefore not fit to be a currency, and should be treated as a world computer experiment.
Blockchains do introduce code as law, but if the code can change then they also introduce legislatures (the miners). Those legislatures have voting power equivalent to their % of mining control. The point isn't to make transactions irreversible; the point is to create a system of distributed control in which a decision to revert a transaction requires consensus among the miner/legislators.
Even in the bug fix there wasn't any unit testing involved. I'm using multisig to store all my Bitcoins, so it scared me extremely. With Bitcoin I read through the multisig code (stack machine) before putting money onto the blockchain. With Ethereum the code changes so fast, that with all the hard forks I wouldn't be able to verify the code. ,,Don't trust, verify'' doesn't work there.
Great, then I'm just not planning to use smart contracts in Ethereum, I'll be fine without them.
You're right about the Bitcoin bug, but Ethereum had a lot of its own bugs (with downtimes as well). I'm not trying to argue with you, because I'm sure you know about them, just fail to accept.
[1]https://medium.com/@mark_91397/xrp-will-be-a-world-reserve-c...