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Comment by noxer | Hacker News Reader

Footnotes #2 is rather unlikely. First PoS is not the successor of PoW. Its the same idea all over again. People are rewarded for wasting capital opportunity instead of energy. It only makes sense for them if they get enough return on the capital. Therefore it can not be cheap. Someone has to pay thous stakers. Trough fees or trough inflation. Neither is in the interest of the accentual user of the network.

FBA (Federated Byzantine Agreement) DLT are the real successors to PoW. They provide no incentives for running/"securing" the network instead the people who wanna use it runs it themself that and obviously they have no interest in wasting resources or making the usage expensive.

The second thing that is very unlikely is that bitcoin will move away from PoW. The miners are in control. If they dont want to move away, people can only fork and at that point the general consensus is that the fork is no longer "the real bitcoin".

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> at that point the general consensus is that the fork is no longer "the real bitcoin".

As far as I can tell the general consensus about what is "the real bitcoin" is where bitcoin's fiat that is supposedly absent is actually hiding.

idk what you mean with bitcoins fiat.

Bitcoin is a fiat currency

definitely not.

Why not? Its rules of operation are merely those that are agreed upon by a loose coalition of people. Those people decide to change the rules arbitrarily, viz. hard forks.

See comment above. I dont make the definitions and neither do you.

OK, if you want to argue that bitcoin doesn't fit a specific dictionary definition then congratulations, you have won the argument!

But that is not my point. Bitcoin supporters don't support bitcoin because the alternative is "government-issued currency that is not backed by a commodity such as gold". They support bitcoin because the "fiat" alternative has certain consequences in the real world such as being subject to the arbitrary whims of a government.

Yet the existence of hard forks shows that bitcoin is subject to the arbitrary whims of a nebulous group of people. Therefore I don't see why it avoids the downsides (as they see it) of fiat currency.

No, not at all there was no argument. Bitcoin isn't fiat. Thats a fact not an argument. You specifically asked why, so I gave you the reason. Words have meanings. We use fiat currency as a term specifically to exclude cryptos and other money-like assets like gold or diamonds. This is not debatable.

If you want to says something else regard some other statements then you need to reply to the correct message so the author can see it. The whole rest of your message makes no sense as a reply to my answer.

Can you expand on why it isn't a fiat currency?

"Fiat money is a government-issued currency that is not backed by a commodity such as gold."

Thats the next best definition I could find Bitcoin doesn't fit in there at all.

Staking and inflation don’t have to be bad if everyone can participate in staking and their coins still remain liquid.

Its not bad on its own, but paying the running cost of the network with inflation means the people who hold a token pay for it (indirectly trough inflation loses) not the people who use the network.

Staking however does not make sense if the reward is paid trough inflation that cancels each other out assuming most of the supply is staked. So where does the money come from that actually pays to run the network and pays the profit that stakers make? It must come from fees.

Now you have a misalignment of interests. User want low fees and high security and stakers want high fees (an potentially low security to justify more staking and staking rewards for doing so). The free market meets somewhere in the middle, however a blockchain was supposed to remove the middlemen that sucks out value and provides little and overprices benefits (expensive security). Now you have just decentralized the middlemen but its still there and sucks outs value optimized for profit.

Meanwhile the actual user already have aligned interest (secure and cheap) and the simplest way to make sure the actual user run the system, is if you remove the incentives. If there is no way to make profit from just running it, then the only reason to run it, is if you make profit form using it. An backwards if you make profit form using it then you are willing to pay to keep it running an secure. Thats sustainable and optimized for use.

A PoS system could only be achieved, if all tokens are hold by the people who use the system and holding are directly proportional to their usage. For obvious reason this would never happen.

Have a link where I can read more?

Could not find something to read about this topic directly but here https://www.youtube.com/watch?v=fo8ZScrXFZE is a great talk about why the incentives in blockchains systems are bad for the system and its users.

The speaker is an ex-btc dev and one of the creator of the first public FBA based blockchain. (which obviously mean hes biased but good arguments are good arguments)

Interesting, thanks for the link! At first blush, my main concern with such a system is tragedy of the commons – without an artificial incentive, it seems likely that people would say "everyone else is running a full node, why do I need to, that will just cost me money". And then boom, everybody does it and you don't have a network anymore.

Well everyone can see how many people are running the network so if the number would drop someone who uses it would probably think twice if they should stop as well ryt? Unless all decided to shutdown at the same time but that's kinda statistically impossible. Also if they all turn it back on its back. Its ofc similarly absurd that this would happen but at least in theory the network could pause if no one wants to run it.

Also a very important factor is the cost to run it is cheap because there is a shared incentive to have performant software and energy efficient hardware. And the "people" who actually would want to run a node 24/7 are most likely companies who already have the hardware and the IT team to maintenance it etc. etc. The additional cost my be a few thousand dollars per year but that's not much for such a company.

BTW networks using this tech are running since 8+ years and consistently have more Tx than bitcoin [1] Its rather unlikely that not enough "people" could be found to keep it running.

[1] https://bitinfocharts.com/comparison/transactions-btc-eth-xr... (note that the yellow line only shows payment type Tx but there is also a DEX and other types of Tx like an offer create Tx (for trading) these are not shown since these do not exist on BTC. The total number of all Tx from all types would be way higher between 5 and 10 Millions per day.)

Yeah, I'm still a bit confused about how this works in practice. I remember when XRPL first started the vast majority of nodes were run by Ripple themselves, which obviously kinda defeats the purpose of a decentralized cryptocurrency.

With regard to throughput, yes XRPL is higher than Bitcoin network, though a similar number of txns to Ethereum, which A. has smart contracts B. hasn't yet integrated their Layer 1 scaling solutions (sharding, PoS) which apparently should increase throughput by many multiples.

If you like it technically I suggest reading the official documentation about the consensus mechanism.

Yes, all of them where run by Ripple to provide geographical decentralization. This is purely to achieve a high uptime and ofc demonstrate that the software works. The actual consensus mechanism ofc is(was) not decentral at all at that time. Similarly when satoshi started mining the first blocks it was also not decentral. Its kinda impossible to start decentral unless you agree with other parties to start at a specific time but technically everyone involved "colluded" for this so it kinda still defeats the point. Maybe there is a better way to start such a network but looking back, it doesn't really matter since in the beginning no one used/trusted it anyway and nothing of value could be moved since the tokens had no value so who cares if one party had full control. Currently neither Ripple nor any other entity has enough nodes to enforce or prevent a change. Last year the first amendment (a feature update) was accepted without the votes from ripples nodes. Decentralization is ofc open in one direction so its neither perfect nor finished but at lest it goes in the right direction unlike for example BTC where the mining power coming from china seems to increase year after year. AFAIK the XRPL dev team currently works on a feature that should increase reliability if a larger part of the nodes fail or get disconnected from the others. This would allow more decentralization without risking the network to halt if for example a geographical region is cut off from the rest of the network. Currently if too many nodes are disconnected at once the network would halt to prevent unintentional forking. Like if the network would be spited in halve it stops rather than both sides making different forward progress.

>though a similar number of txns to Ethereum

Actually it way higher because the XRPL has a build in DEX the vast majority of transactions are offers which usually aren't counter because they dont move value they just offer it, which may or may not result in an actual exchange and transactions that move value. But the comparison is kinda pointless anyway since XRPL Tx are almost free no one can really know which of the transaction are "meaningful" compared to eth/btc where ofc no one would make any Tx that isn't "meaningful" to them simply because it costs quite a lot.

There is also a research paper for scaling the XRPL even more but I'm p sure its implementation is on hold because it simply doesn't make much sense at the time with 5-10M Tx per day there is still 10k% grows possible and there is an existing off-chain solution for high throughput channels as well.

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