Ethereum will use around 99.95% less energy post merge
blog.ethereum.org
blog.ethereum.org
https://news.ycombinator.com/item?id=27194586&p=2
https://news.ycombinator.com/item?id=27194586&p=3
https://news.ycombinator.com/item?id=27194586&p=4
https://news.ycombinator.com/item?id=27194586&p=5
(Posts like this will go away once we turn off pagination.)
Ethereum has been "about to release PoS" for almost 6 years now and all of the initial critiques (By issuing X units of value, you incentivize ~<X units of energy to be expended) Summarized here: https://www.truthcoin.info/blog/pow-cheapest/
If the curious reader is interested in reading more about the scope of fraud that the ethereum protocol has fueled read the post here: https://web.archive.org/web/20201214170136if_/https://www.re...
Why link to the archive.org copy and not the original? Ethereum people got mod access to the subreddit and deleted everything pointing out the fraud.
Vitalik Buterin & co. have no integrity.
Most people should be aware about how they defrauded everybody with the DAO and subsequent fork of Ethereum. But, of course, it has been conveniently sweeped under the rug.
Switching consensus to a different set of rules is entirely within the scope of a PoW system, and it's based on the same mechanism that gives legitimacy to the rest of the blockchain. The original Bitcoin paper explains this perfectly, so I won't replicate it here.
No, it means nothing unless users use, buy, and sell the coin. The miners' are subservient to them, assuming the miners are trying to make money. Miners do not decide or approve which set of consensus rules people decide to use, though they can, at a potentially quite significant loss, disrupt the functioning of the network somewhat.
Miners are users. If they don't mine the blocks, the system literally doesn't work. Suppose that a large majority of miners refuses to upgrade for some reason. One part of the users can upgrade and wait for new blocks for a long time, while the users that don't upgrade can actually use the system as if nothing happened. Who is going to throw in the towel first? Maybe it's the miners, maybe it's the ETH holders, you can't know.
The subservience of miners to users at large in the determination of the market leading fork is best exemplified in the scenario of users switching to a PoS chain. In this case the miners have no power to sabotage the upgraded chain.
Sure, you can alternatively anticipate that your fork will not get miner support and give it low difficulty, leaving it vulnerable to spam instead.
It doesn't change the fact that this fork now only has a tiny share of the hashrate, no better than some random altcoin. Why should it be considered the "real" chain? Because it has Vitalik Buterin's face on it? Maybe that works for Ethereum, but it wouldn't work for Bitcoin.
> The subservience of miners to users at large in the determination of the market leading fork is best exemplified in the scenario of users switching to a PoS chain.
...which hasn't happened yet. Of course, if your users don't care about hashrate or PoW, you can transition the software to anything. Maybe that's true for Ethereum. That doesn't make miners subservient. Either they're highly influential (PoW) or they're not part of the picture at all (PoS). There's no scenario in which you can force miners to adopt some change.
Your point was that miners' cooperation is required to successfully upgrade:
>>One part of the users can upgrade and wait for new blocks for a long time, while the users that don't upgrade can actually use the system as if nothing happened
My point is that an upgrade can be implemented without any cooperation from miners. A change to PoS would be the exemplar of that.
I didn't say that. My point is that miners will decide which chain gets the bigger hashrate and that chain is likely to be adopted as the "real" chain by users, if it's the vast majority of the miners. Furthermore, the prospect that there is no miner support would make users reluctant to upgrade in the first place.
> My point is that an upgrade can be implemented without any cooperation from miners. A change to PoS would be the exemplar of that.
What do you mean by "upgrade" then? Bitcoin was "upgraded" to Bitcoin Cash, an arguably better blockchain. Some people even consider it the "real" Bitcoin, but that's a minority opinion.
> A change to PoS would be the exemplar of that.
You can't use an event that hasn't happened yet as evidence to support your argument. Maybe there will be a flawless transition to PoS in Ethereum, due to influence of developers and the prospect of lower transaction fees. Maybe there will be ETH2 and ETH at the end, traded as distinct assets.
If that were true, then an upgrade that switches to PoS, i.e. a hashrate of zero, couldn't succeed, and it's safe to Ethereum's upgrade will succeed.
Non-sequitur.
> ...and the biases that motivate it
I do think it's obvious that many ideals of cryptocurrency can not be reconciled with Ethereum. There clearly is a lot ill-placed trust into key personalities such as Vitalik Buterin.
If you're "inflamed" by this assertion, which I believe is well-supported by the history of Ethereum, that should make you question your own biases.
Your entire argument is premised on this baseless starting assumption, that Ethereum is somehow not a genuine crypto and instead a 'cult of personality'. It's an absurd foundation for your position.
>>I do think it's obvious that many ideals of cryptocurrency can not be reconciled with Ethereum. There clearly is a lot ill-placed trust into key personalities such as Vitalik Buterin.
A good response to this:
https://twitter.com/AdrianoFeria/status/1393743016741965824
>>No. Vitalik is an influential contributor, but he has no authority over it. His influence is merited because his contributions have added immense value to $ETH. It's that simple.
>>TLDR: Influence != Authority
Again, one does not follow from the other.
My point is that you can't make generalized statements over crypto governance such as "miners are subservient", based on just the protocol.
We can infer from the history of a given cryptocurrency how its userbase will most likely react to proposed changes. For Bitcoin, that means "nothing happens without majority miner support". Nothing in the protocol says that this is how it works, of course.
Sure, it's users making the decision at the end of the day, but ultimately their hand is forced by the more influential actors in the system. For Bitcoin, that's the validators who have significant capital invested into infrastructure. For Ethereum, that's clearly the personalities, with Vitalik being at the forefront.
Given either alternatives, Bitcoin is unsurprisingly closer to the ideals that popularized cryptocurrency. I don't think there's much of a debate to be had here. Whether Ethereum should therefore be considered "genuine cryptocurrency" is irrelevant.
> "His influence is merited because his contributions have added immense value to $ETH."
This is a variant of the sunk cost fallacy. If your governance is de-facto based around clout - as opposed to capital expenditure - you have more centralization, because clout can't just be reproduced.
Miners follow money. Users "decide" about prices. Miners are subservient and largely irrelevant. "Don't talk to the staff".
Unless you are saying that folks who started 'stacking sats' during last two years are a bright bunch and they are capable of reasoning about CCs security.
> Why does every proposal without miner majority support fail?
Watch miners getting owned during Ethereum's transition to PoS.
If you preach a set of principles and then backtrack on them when it's convenient for you, you're a hypocrite and have no integrity. If you do this on purpose, to deceive people, and there's money involved then you arrived at the definition of fraud, +- some extra words.
https://news.bitcoin.com/parity-calls-for-ethereum-hard-fork...
Simple as that, it's decentralized, that's the whole point, you fundamentally can't tell people which fork to believe, people use whatever fork they want. And the people mostly wanted the fork with their money in the DAO preserved. People who wanted the unaltered chain stayed there, no big deal.
A hacker minted free Bitcoin in 2010 and the chain forked to remove that transaction. But nobody's talking about that being a scam. How is the Dao hack any different?
This would seem to be the main argument of that second article you posted summarizing the economics around PoS. The idea is that if you’re backing your crypto with itself (like in a PoS), the value that is locked in the staking system could be doing something else. (This is a very real point in that it doesn’t help decentralization—the same people that would stake their coin could spend that money mining Bitcoin.)
But it doesn’t seem to address any points in the conversation around the ethics of using electricity as a basis for proof of work.
compare: electric cars vs ice cars, electric cars can also end up consuming "dirty" electricity from coal fired plants, but that's an option vs. ice cars.
Perhaps renewable electricity producers could issue some sort of signed token which is then incorporated into the blockchain as proof that renewable electricity was purchased?
I'm mining crypto (very small amounts) as I as I type this, so I'm definitely not going to make the case that all crypto mining is an immoral waste of electricity. But I remain very interested in transition to a PoS system, so as to reduce the strain of crypto on the environment.
By the logic of that article asymmetric cryptography doesn't, because the value equal to what's protected by the key is magically wasted somewhere. Of course, that isn't true, because it's not possible to break asymmetric cryptography by brute force with expenditure equal to whatever is protected. Same applies to PoS.
It's maliciously created nonsense, which is most visible when he slyly equates locked tokens to wasted glucose. Wasted glucose is _real_ energy, while locked tokens are inherently worthless patterns of bits. Locking them is just a _trick_ to convince people to cooperate with each other - a game theory setting where everyone finds it most beneficial to cooperate. The whole point of the economy is to manipulate real resources - various forms of matter and energy [1] and locking tokens is just a different way of social organization. "Liquidity" (of digital tokens) isn't a real resource. "Money" isn't a real resource. If there's less _real_ energy wasted, the new social organization system is more efficient. That's the objective metric underneath it all, and clearly PoS is a more efficient way of organizing massive human cooperation than PoW.
[1] theoretically matter is a different form of energy, but at the current technological level they are separate inputs to the human economy, except for nuclear power
Not quite. He's arguing that MC = MR implies that PoS is really PoW through obscure means. There's more to securing PoS than asymmetric cryptography -- namely, you have to convince everyone that your keys (and the coins attached to them) are legitimate, and not the next guy's keys and coins on a fork. Convincing people of this isn't a cost-free task, especially if there's wealth to be accumulated through convincing more and more people that your coins are legitimate, and everyone else's conflicting coins on different forks are not.
This game of convincing people that your fork is the true fork is exactly what stake-grinding is. Given a choice, and no a priori knowledge, which history of the PoS chain is the true history? What would convince you that one is legitimate, and the other is not? The article argues that the act of convincing you is, itself, a form of PoW. After all, without PoW, looking at the chainstate isn't convincing -- if you have staked coins today, you could easily create a fork of the chain history where everyone else stopped spending except for you. Without no 3rd party way to verify if that actually happened, you could go around trying to bribe people to accept that your subsequent transactions on this fork are the chain's "true" transactions. There's many tactics for doing this -- you could go on Twitter and spam everyone; you could organize events and rallies; you could even take malicious actions and disable your rivals. You and everyone trying to do the same thing would be in competition to convince everyone else that your fork is the "true" fork. But regardless of the tactics, all of them require expenditures on your part in the forms of time, energy, health, stress, etc. Hence the "PoW by obscurity" argument. But at the end of the day, you'd be unwise spend any more than you'd expect to receive in return because of MC = MR.
Here's a concrete example. The reason you can tell that there's a lot more belief that ETH is the true Ethereum fork, and not ETC, is because ETH has a much higher PoW score than ETC. Miners can choose between ETH and ETC to mine, and they mine the one whose tokens are worth more. ETH is worth more because more people value it. Therefore, PoW is a proxy measurement of the social consensus -- more people believe in ETH than ETC.
If ETH were PoS at the time of the split, it would be a lot less obvious from the chainstate which one people would choose to use. Both chains' participants would try to make it look like their chains had more users by some other means. But the point in the article is that those "other means" are not only costly actions, but also the marginal cost each fork can afford for these actions is, in equilibrium, equal to their respective marginal revenues.
(I fully understand that this belief of mine is not shared by the majority of Ethereum users.)
Stake grinding is something else, in coins like NXT the producer of the next block was set by the seed based on the previous block, so it was possible to bruteforce blocks until you were also the next generator.
>The article argues that the act of convincing you is, itself, a form of PoW.
He makes a much stronger claim that resources spent on that (+ staking) are equal to revenue. There's an additional assumption in the article: he writes about marginal cost and revenue, but what he actually assumes is a system where average cost is equal to marginal cost, as it is in PoW under perfect competition. It's even equated explicitly in "“Rent” always forces production costs (MC) to always equal sale prices (MR)". He starts from the assumption that PoS uses exactly same resources as PoW and then shows it's true based on the assumption.
>Given a choice, and no a priori knowledge, which history of the PoS chain is the true history? What would convince you that one is legitimate, and the other is not?
What does 'true' and 'legitimate' mean here? The whole point is to interact with other people, so naturally I'm going to use the same network that people I want to interact with use. Same whether it's PoW or PoS - no real difference between choosing forks from some block height vs choosing networks with completely different genesis blocks and names.
Once the network is chosen a node has to follow it. The question of 'how long it's safe to be offline to reproduce the behavior of being online all the time' has a complex answer of percentage of slashed stake if two conflicting histories exist. Currently I think it's about 16% for one month, which is about $2B.
>Without no 3rd party way to verify if that actually happened, you could go around trying to bribe people to accept that your subsequent transactions on this fork are the chain's "true" transactions.
PoW doesn't change anything here, it's an arbitrary fork like any other. People that ended up with coins from mining can receive coins on your fork too, made with a much smaller mining difficulty. Mining cost is irrelevant because that's destroyed wealth - nobody ends up with it. The reason it won't happen in reality is because of network effects - even if you have external wealth able to pay enough at once to everyone that has to be paid, no single person wants to be left alone on a new fork - they would all have to move at once.
This sounds exactly like a special case of the game of convincing people that your fork is the true fork. NXT stakers each have their own preferred forks (i.e. the ones in which they get the most tokens), and are willing to spend energy to make it so their fork is accepted by the network.
> He starts from the assumption that PoS uses exactly same resources as PoW and then shows it's true based on the assumption.
Maybe it's not well-written here, but his argument is that PoS ultimately will require the same energy commitments as PoW through the act of each staker trying to convince both other stakers and newcomers (i.e. with no a priori knowledge of how the chain evolved) that their preferred fork is the fork the network accepts. A PoS chain may not take the same initial resources as a PoW chain, but it will over time.
Source: I've spoken to the author at conferences.
> What does 'true' and 'legitimate' mean here? The whole point is to interact with other people, so naturally I'm going to use the same network that people I want to interact with use.
And how do we know which fork this is, out of all the alternatives? You either have to ask people (i.e. you need a priori knowledge obtained out-of-band), or you need a way to independently but deterministically choose the fork that the economic majority of people use (which is the problem PoW solves).
> PoW doesn't change anything here, it's an arbitrary fork like any other.
Except, this is not what's happening in real life. People follow the canonical chain, and PoW helps them all determine what the canonical chain is without having to ask around.
In POW you still have to ask around, to find out what the canonical consensus protocol is. Having more POW alone is not enough to have your chain accepted, as it still needs to be valid according to the other rules of the protocol.
Both POS and POW depend on some level of subjectivity/trust, even while the latter relies on it less than the former.
https://blog.ethereum.org/2014/11/25/proof-stake-learned-lov...
No one is arguing that you don't have a trusted computing base.
What is being argued is, why make the TCB bigger when it doesn't need to be? Why trust someone to tell me what the current validator set or fork tip when I boot up my node, when there exists protocols whereby the node figures this out automatically?
Some people say that the energy cost of PoS justifies this, but that's not really true in the long run. This is the point Paul Sztorc was making in his article about MC = MR -- competing PoS forks will still spend the same amount of trying to convince you that their preferred fork is the canonical fork. PoW does this as well, but it gains you an in-band way to discover this, thereby making the TCB lower than it would be in PoS.
That's the point of debate: of course PoS proponents argue you can get more security at a given economic cost than you can with PoW, and that more than makes up for the security loss from the TCB bigger.
Sztorc's argument is heavily disputed in this thread, and you can see the arguments against it in the critiques provided.
The sad part is, PoS doesn't even gain you anything -- it's not cheaper. It's just a feel-good measure that doesn't solve the underlying problem.
> Sztorc's argument is heavily disputed in this thread, and you can see the arguments against it in the critiques provided.
Other people not understanding the argument doesn't make the argument wrong.
[1] The proof is in the appendix of this paper: https://eprint.iacr.org/2016/919.pdf. The gist is that they show that two forks are indistinguishable without a priori knowledge of which validator set is not corrupt.
That is a debatable point. The TCB amounts to a single hash, that the global Ethereum userbase has had at least three months to converge on, with extremely obvious ways of establishing its correctness. If that can't be securely established, it's unlikely a consensus on the correct software distribution channels can be established either, meaning new users would still be completely fucked.
And there are other factors that establish the security of the network besides how much subjectivity plays a role in consensus, like the economic incentives dissuading an attack, and the difficulty of acquiring the economic assets needed to attack the chain.
Sure, let's use Ethereum 2.0 as an example (but note that both myself and the linked paper talk about PoS in general.). Suppose I'm a newcomer to Ethereum 2.0 well after it launches. Suppose that, sometime after the launch but before my arrival on the scene, there's another DAO-like event where there's been a contentious chain split, and lots of bad blood on both sides of the split between developers, users, and exchanges. If I'm only interested in using the chain with the most economic activity, then why should I trust you and your servers to tell me who the initial validators are, especially now that you have a financial reason to tell me your preferred fork? It's like a bank asking me to choose between multiple sets of TLS certificates for all the banks I could conceivably use without giving me a chance to vet them -- why would I ever do this? And how would I even do this reliably?
In PoS, all I have to go on is your word against the others (this is the proof the paper makes) -- there is no way around this. In PoW, I can compare the hashpower between forks and use that to determine on my own which fork has the more valuable coin (and thus the larger economy for it). This, by itself, is a strictly more resilient system design.
What Paul Sztorc is saying is that in the event of contention between competing validator sets, both validators will spend resources equivalent to PoW trying to convince all these newcomers that their validators represent the most economic activity. This includes, but is not limited to, spending energy keeping your validator nodes from getting stolen or hijacked in a bid to change the validator set without consent. So, not only are the energy savings that TFA touts expected to disappear in the long run, but also the energy spend won't even help make the protocol more resilient.
Again, the only reason blockchains need consensus is to allow people to interact with each other - consensus is between people. Computers are just tools to make that easier. It's a fundamental contradiction to assume you can use any blockchain to make any economic transactions without interacting with other people - because economic transactions require other economic entities.
Of course when you assume something false you can prove any absurd result, like that PoS wastes same resources as PoW.
PoW relies on social coordination in the short term, because short term attacks are cheaper, so in the case of a 51% attack people would have to organize fast. PoS is extremely safe in the short term, and only maybe falls back on social coordination in the long term (again, only in the case of an attack), which is the correct security model.
>deterministically choose the fork that the economic majority of people use (which is the problem PoW solves)
No it doesn't. Mining revenue is an insignificant part of what the real consensus in any PoW coin is. For a while BCH had biggest revenues after the fork (because of their difficulty algorithm). Ethereum has higher mining revenues than bitcoin for months now (last 24h: $49M ethereum, $31.3M bitcoin) - does that make ethereum the true bitcoin now?
Did I say otherwise?
> Of course when you assume something false you can prove any absurd result, like that PoS wastes same resources as PoW.
Well, no widely-used PoS system exists (so we have no real-world examples to learn from), but despite this, you're insisting that no PoS system will use more than PoW from now until the last blockchain goes offline, despite these systems (in expectation) driving essentially unbound amounts of revenue. That's quite an extraordinary claim!
Let's steel-man this. Let's assume that a PoS blockchain becomes so widely successful that its token becomes a major world currency. Then what? Controlling a PoS node would be like controlling a country's reserve banks and mints. So, what keeps these nodes safe from asshats breaking into them and using them print themselves money? Like, why can't an armed band of asshats show up at my server rack and physically steal my validators' keys?
The answer of course is that the building security and law enforcement officers keep this from happening. But, where do these people come from? Who pays them? Where do they get their equipment? What do they do with the asshats they catch? How do they deal with escalations from asshats, and stay ahead of the asshats' tactics? How much energy is going into keeping these PoS nodes secure?
It appears that there is energy involved in keeping the PoS system running in the face of asshattery, and that energy is proportional to how important it is that it remains usable for the societies that rely on it. It seems, then, that the more successful PoS becomes, the more it co-opts the very infrastructure that keeps today's financial systems secure. That's a lot of energy!
So, in the event of success, I have no reason to believe that PoS will take less energy to secure than PoW, once I think about what has to go into securing a successful PoS system. At least with PoW, I can rest assured that if the asshats hijack a mining rig to print money, they'll have to continuously out-mine the rest of the world in perpetuity in order for their coins to remain realized on the canonical chain. PoS doesn't have that resiliency, which necessitates building and maintaining an extrinsic security apparatus to keep the staked coins from getting stolen in the first place. This security apparatus -- including all the laws, supply chains, manufacturing, and so on to keep it going as it becomes a more and more valuable target to asshats -- is on the MC side of the equation.
> No it doesn't. Mining revenue is an insignificant part of what the real consensus in any PoW coin is. For a while BCH had biggest revenues after the fork (because of their difficulty algorithm).
You've completely misread my comment. Miners mine on the chain that is most profitable to them, and the blockchains they mine on encode the history of their activities. Even though during a chain split it's not immediately apparent which resulting chain will attract the most miners over time, it does become apparent quickly enough. The revenues (and thus profits) come from users actually demanding the coins.
> Ethereum has higher mining revenues than bitcoin for months now (last 24h: $49M ethereum, $31.3M bitcoin) - does that make ethereum the true bitcoin now?
I thought it was widely understood that Bitcoin and Ethereum are not the same thing? If there is contention between two forks of the same blockchain, then PoW provides you a way to determine which one has more demand. PoW doesn't tell you anything about two different blockchains with two different difficulty algorithms (but it might tell you something about two different blockchains with the same difficult algorithm, such as Bitcoin vs Bitcoin Cash).
You forget that when the ETH/ETC split happened, the hashrate fluctuated immensely after the Poloniex listed ETC (and ETCs price skyrocketed) and many miners switched to mine ETC.
Now in hindsight it is obvious but during the chaotic days, it wasn't obvious which chain would be worth more in the future. That ETH had more POW done at that moment was unimportant. You had to use other means to decide which chain to use.
We use Eth 2.0 since December. Staking is even available with insurance on coinbase.
If you keep your copy pasta up to date, your FUD will be more believable.
The former is for when you control and trust all nodes in your network. The latter is for the more difficult problem of consensus when you don't trust the nodes - otherwise known as the Byzantine Generals problem in distributed systems research.
raft and paxos are basically the same, besides leader election, which raft's take makes it simply easier and possible even more efficient[0]. I say "possible" because that depends very much on the consensus state over time, which in most actual workloads can be pretty stable, so at least in some practice, e.g., with hypervisor-cluster like we do, they perform almost the same. The simpler approach of raft can help if you create a library for it from scratch, or for easier understanding when coming into that space, otherwise the differences does not matter too much (in practice), IMO.
Only distinction is classical consensus is permissioned whereas blockchains are typically permissionless.
At least the environmental problems are reduced with PoS
These statements are not in conflict.
I deleted a previous reply to you because I think I may have misunderstood what you wrote. In any case, are you saying the majority of miners have the ultimate control of the protocol rules of the cryptocurrency?
In 2017, the majority of miner hashpower wanted to change the Bitcoin protocol to increase 1MB blocksize to 2MB but the SegWit2x failed to be adopted. What's your interpretation of that event?
I'm not saying 51% of miners decide what the rules are. Suppose you had a Bitcoin fork that had 80% of the hashrate. How long would that situation need to persist until the major network participants decide to call that fork "Bitcoin"?
In the event that a censored party can create a heavier chain (has >50% of the mining power) then the argument that its more censorship resistant holds, but on the PoS side, you would be betting that not a single participant in the main chain included their new stake registration in their blocks. This is different than the PoW model as non-malicious nodes in PoW can still be part of the main chain. It's definitely not that cut and dry
Correcting that is the main point of this comment, the rest is just a side note.
I don’t really understand your point #2, but this very well may be because I don’t understand the proposed protocol.
You say “as long as they don’t double stake”, but if a given block is expected to probably be in the consensus chain, then either they don’t endorse it or whatever, not putting their stake behind it, and therefore, I would think whatever they do put their stake behind, if the block-to-be-censored is included in the long-run consensus, then what they backed isn’t, and so they get no reward, and so they lost out on potential reward, or, if they try to support multiple things, they lose (some fraction of) their stake.
Uh, unless they can be rewarded for supporting a block that is parallel to the block-to-censor even though the block-to-censor gets in? But that doesn’t seem right. I suppose there are uncle blocks maybe (idk if that is part of Ethereum’s planned PoS system or just its current system), but those have a substantially lower reward, so deliberately producing probably-uncles would still involve giving up rewards on average.
Again I could easily be missing something here.
Censored transactions can hire/pay miners who won't censor more transaction fees, to encourage them to include the transactions in a block. In other words, since transactors pay miners, transactors are customers of miners.
There is an open market competition– any miner censoring transactions will lose higher fees from people who send censored transactions.
Existing PoW miners can fork away from any new miners that won the last block.
The prospect that there's only ever going to be 21 million Bitcoin is ensured by nothing except majority opinion. It's not inconceivable that this will be relaxed in the future and Bitcoin will have a "Bitcoin Classic" fork where old rules are enforced. This could happen if, for instance, transaction fees don't make up for miner majority rewards.
That's your opinion.
> There of course will be forks that dont, but they are not bitcoin.
Again, that's your opinion.
But definitions are choices. People are free to choose what definitions they think of as “the definition of <x>”. Some such choices are likely to cause more confusion when they interact with others, but this is not always sufficient to discourage/prevent some faction of people from choosing some definition that differs from that used by some other faction.
Under the definition you are using for bitcoin, such a thing would not be the thing that you currently would consider bitcoin. That’s fine.
This doesn’t mean that people wouldn’t use the name “bitcoin” for it.
Perhaps 2000 years from now, the word “bitcoin” will instead refer to apples instead, due to random linguistic drift. (Or, a fruit which resembles apples. Will they technically count as apples, according to our current notion of apples?)
The informal consensus of network full (non-mining) nodes enforce that. Full nodes are economic actors, such as people who sell goods and services, who fully verify the chain. They simply refuse accept inflated Bitcoin.
A Bitcoin full (non-mining) node only takes 5GB storage space and 128MB RAM to run.
It does that now, but there is no guarantee that this consensus holds. Maybe it's quite likely that it holds, but nothing guarantees it.
> Full nodes are economic actors, such as people who sell goods and services, who fully verify the chain. They simply refuse accept inflated Bitcoin.
They can refuse to accept inflated Bitcoin, but somebody has to mine new blocks. If the vast majority of miners decide to do something, the remaining miners will have trouble mining new blocks and the entire system is heavily disrupted.
As you say, they are economic actors, so when faced with the decision of having a severe service disruption and giving in to miner demands, the choice may well be the latter. After all, why would they prefer to use a "original Bitcoin" that only has 1% of the hash rate? Because it has the original brand?
It's ironic that even modest monetary inflation is considered bad by so many Bitcoin proponents when that inflation is what pays for the Bitcoin network. Perhaps some day, transaction costs will make up for it, but that is not a given.
> A Bitcoin full (non-mining) node only takes 5GB storage space and 128MB RAM to run.
It's completely irrelevant how many non-mining nodes there are. The only thing that matters is who runs them (exchanges, merchants, actual users).
Why would anyone mine Bitcoin that merchants don't accept?
"Roughly 90% of the hash power once threatened to change the rules of #Bitcoin believing the users didn’t matter in the decision. The users spun up 10s of thousands of full nodes & told them to go f*ck themselves." [1]
[1] https://twitter.com/TheCryptoconomy/status/13940065488763084...
more info: https://www.youtube.com/watch?v=4IT4s-6T__k
Now if we could make it Proof of Human, one vote, one person, non-transferable, that would be true distributed consensus. Even then you would get people buying votes with advertising as we see today in “normal” elections.
You're missing the energy part of the equation (opex), that is continuously required.
Please point me in the direction where I can find some of these free ASIC miners.....
Run your own full node,
easiest option: getumbrel.com
It's exactly why the DAO hacker was censored -- they controlled more ETH than any single account in the system.
The whole process of running your own node has improved so much nowadays: getumbrel.com comes to mind.
Mining is expensive and low margin. Generally, the people who own the most Bitcoins are not the same as the people with the most mining rigs, the two parties tend to be completely divorced, and the miners tend to be strongly incentivized around not rocking the boat (for better or worse).
The other misunderstanding is that mining doesn't shape the protocol. The users shape the protocol, and can run any validation software they want. No user has to accept a block by a miner, and every block made by a miner has to conform to the protocol's rules.
POS isn't permissionless -- you literally have to buy a stake from existing holders in order to participate.
The probability that a raspi ever mines a block (like, if it were to start now, not if it was going since the network first started) is negligible.
Therefore, I consider the probability that a given raspi would contribute to the security of the network, or, I suppose equivalently, the degree to which it contributes, to be negligible.
Yes it is. You can manufacture your own mining rig, with no-one else's permission, without ever needing to so much as communicate with anyone who currently holds any bitcoin.
> To add insult to injury, most miners ignore the externalities of that electricity use.
Most cryptocurrency developers ignore the externalities of all the crime they're enabling, so it's not like the miners are any worse.
The distinction feels irrelevant
It doesn't matter if the coin becomes run by another geographic area if it's illegal for you to trade in them
There is little to no evidence of this. Completely unsupported conspiracy theory.
Sure they can. It's easy to only mine on top of blocks from certain sources, and if most of the network does this then those are the only blocks that matter.
And the motivation not to do it is the same, people will get mad and stop using the grossly manipulated coin.
This is patently false, endgame PoW centralizes mining around 3rd world coal/cheapest possible (stolen?) electricity. The overwhelming majority of the world has been priced out of BTC mining, not that they could get ahold of an ASIC anyways.
But that doesn't mean your bottle rocket will beat SpaceX there.
Crypto has made very little(perhaps zero) progress toward any solution in decentralizing power.
Also with Monero anyone can cpu mine it, and transaction participants are obfuscated.
With ARRR, miners don't know the identity of transaction participants.
At least POS gives the power to those that actually have an interest and stake in the currency itself.
PoW has a much more diversified set of actors with competing interests, which makes it much more difficult to change the rules. This is a feature not a bug.
You might as well claim that the Chinese Communist Party controls Bitcoin. Not entirely wrong, but misleading.
You can't just push some change that 99% of miners will refuse to mine blocks for. The remaining 1% would not be able to mine blocks for a long time with their puny hashrate. You'd have to reset difficulty and the system would be left in a highly vulnerable state. It would be a huge disruption. For that reason, nodes wouldn't attempt to enforce a change without significant miner support.
You can have reasonably clean fork only if enough miners agree on something, but that implies that the interest of miners is given a lot of consideration.
With the empty blocks attack, they prevent difficulty re-adjustment and also get rewarded with new btc unlike the refusal of service where they'll just be wasting their electricity without any rewards and the small miners will be able to produce blocks albeit in a much longer time than ~10 minutes.
That's the premise: If you want to do something that strongly goes against the interest of all miners, that cooperation will form naturally. If 99% of miners agree on something, the block time would be several hours. Difficulty adjustment would have to be patched in.
In the meantime, the miners on the "rogue chain" are mining blocks and clearing transactions. Who says that this chain is not Bitcoin? Why should all the stakeholders consider a broken chain with 1% of the hash power as the "one true Bitcoin", as opposed to a failed fork?
In practice, this means “nodes run by centralized exchanges”. Your narrative is fraught with risk.
Basically “Bitcoin” is defined as the chain with the highest cumulative hashing power¹.
¹: which investors expect will maximize returns under the banner of “Bitcoin”
Much of Satoshi’s genius was selecting values for constants, e.g. 21M max supply, conducive to the establishment of a global currency of fixed supply and generally aligning incentives of disparate entities such that the most likely outcome would be the upholding of community expectation. But none of that is technically guaranteed, rather its continuity is assured with exceedingly high likelihood due to historical choices made.
> You can see examples of this in history e.g. bitcoin.com mining a block with a greater block size than consensus allowed, which caused the block to be invalidated and the cost of energy wasted.
IIRC they weren’t a majority miner at the time. Had they been a majority miner, and had they been able to assure the community of global Bitcoin investors of the superior soundness of their choices, all bets would be off. Ultimately the block size debate was resolved with hashing power.
PoS just solidifies current stakeholders so that they no longer have to worry about competition from new players.
Versus taking that money and taking months to invest it into mining. Purchasing compute power is harder than purchasing ETH no matter how you slice it
Either way, you end up with a currency that is far more centralized than most stable paper currencies. The number of large stakeholders in Etherum is probably measured in the thousands. PoS will just further consolidate the stakeholders over time.
Ethereum isn't even reasonably transactable anymore. A single transaction costs like $40. As an actual currency, it died the same fate that Bitcoin did.
Too few people hold too many coins, and then they make rules that only benefit increasing the price.
If the miners really wanted to change the protocol, they would have done that. The exchanges would have followed, as they had declared that the longest chain would win, and that would be game over.
Instead the miners gave in to the perceived authority of the Core developers, who pinky promised to later raise the block size (which they backed away from).
This is a naive viewpoint. Ethereum (as a currency) is an "M0" token, like cash or Fed deposits. There's a lot of handwaving about bonds and whatnot, but essentially the Fed can create new money simply by changing numbers on a balance sheet, and they can make that money into folding money and change which they can issue.
The banking system is a complex system that creates IOUs on top of that base. Some of those IOUs are even better than the cash layer -- you can't buy stock, for example, for cash, you need bank IOUs to do that.
That said, then, what is PoW and PoS used for? They're essentially distributed methods of ensuring that nobody can forge money. So the equivalent in the world of dollars is not a bunch of bankers chuckling to themselves about how they're fleecing the plebes. The equivalent in the real world is a bunch of aircraft carriers and planes and bombs and people with big guns, which gives the ability to say (credibly) that it is a crime to forge dollars no matter who you are or where you live.
Largely funded by forging dollars.
Similarly only the Fed has the ability to make new dollars; although technically the US Treasury has this ability in a narrow sense. There's a lot of mummery around how the Fed goes about doing it, but that is the structurally correct way for dollars to be created. Calling it forgery or "theft by inflation" or whatever are political talking points.
Forgery is specifically when any other party in the world decides that they can mint coins or print bills.
Other parties can create dollars in other ways, like by committing fraud or by taking advantage of the fact that certain forms of IOUs are so liquid that they are considered cash equivalents. In the US this is a little locked down (although the overnight lending market is a particularly insidious form of shadow banking) but internationally the Eurodollar market is the wild west where anything goes. Anything, that is, except actually forging coins or bills.
Of course none of it is forgery, but the net impact is no different. As soon as the USD loses its reserve status, the US won't be able to maintain its hegemony that is funded largely via
> Fed has the ability to make new dollars; although technically the US Treasury has this ability in a narrow sense
"Certain forms of IOUs" would include money in checking accounts, which is much more money than the total of all bills in circulation, and this is part of M1.
There is absolutely nothing stopping an institution from accepting deposits of ETH, and then lending those ETH out by crediting other account holders with more ETH in their account. And it is equally possible to imagine that some vendors might prefer to receive their ETH payments as credits to their bank accounts, and thus the IOUs represented by these deposits become "ETH" in the same sense that bank deposits become "dollars".
But here we are strictly discussing the underlying specie. If account holders in a dollar bank demand their payment in specie, the bank is exposed to that risk. This risk is small but significant for modern banks because the credit market for dollars is very liquid, so they can easily sell loans for their present value to increase their cash exposure, and thus make good on the demands for specie.
The credit market for ETH is all but nonexistent except in very specific cases (basically just margin for exchanges) so an ETH bank would be extremely exposed to the risk of a run, and given the level of volatility and general deflationary trend in ETH it would be almost impossible to set a value on future ETH.
And yet people complain about cryptocurrency energy usage with a straight face!
The private networks for final settlement are becoming more interesting to market participants. And they are also aiming for distributed (sharded) proof of stake.
Can you tell more about this? Specially the "and this was to entice them to join the system at all." part.
The human interface to the system is a separate public agency called the Board of Governors, which simply tells the public what the Federal Reserve has done, and also communicates any changes to the Federal Reserve's charter (any legislative updates) to the DAO.
Decentralized?
> The Board of Governors' seven members guide the entire Fed system.
> The Board and FOMC make the Fed's decisions based on research.
https://www.thebalance.com/the-federal-reserve-system-and-it...
Some of the board members come from the member banks
Wake me up when The DAO hacker is caught and put in jail, and I'll re-consider the analogy.
There constraints on being a bank at all are not limited to federal reserve banks.
from: https://newrepublic.com/article/116913/federal-reserve-divid...
I'm personally very happy for PoS and hope that it'll be successful, I would be a lot less annoyed with cryptocurrency bullshit if it wasn't so wasteful. With proof-of-stakes it basically joins the ranks of essential oils and other MLM scams, I'm fine with that.
( Maybe kind of like how you can think of something which can burn by absorbing oxygen, as releasing phlogiston (which is just a lack of oxygen, in a certain sense)? )
It's using the power of Argentina for an MLM/Ponzi scheme that doesn't apparently create any value.
If it were a) broadly useful and b) used less power it would be another story.
'Cruise ships' at least allow people to 'cruise'.
Crypto is opting out of real money is the same way buying an unstable stock is. People are buying it hoping to get rich and convincing others to do the same, hoping they’ll sell it off before the price crashes and it’s completely worthless. Nobody is buying milk and eggs with GameStop stocks or *coins, and if they did, it’d make international news and that singular event would be referenced for 5 years by supporters as an example of how “real” their currency is.
Cryptocurrencies are indeed traded like meme stocks — their value is 100% based on narrative. The difference is meme stocks can’t be electronically transacted sans trusted third parties, which if you recall from the 2009 Satoshi paper, is the entire point of Bitcoin.
(There are other benefits to having a global currency of fixed supply controlled by computer algorithms, e.g. transparent supply metrics.)
> hoping they’ll sell it off before the price crashes and it’s completely worthless
What are the holders of Bitcoin supposed to sell it for, exactly? USD is being inflated. The stock market is insane. Housing is insane and comes with tax and maintenance liabilities virtually everywhere. Artwork is physical and illiquid. Government debt is increasingly dubious.
It would take governments becoming fiscally responsible and a return to a gold standard for Bitcoin to become less societally relevant. And even then, gold and gold-backed government monies would suffer from transparency issues and not being able to be electronically transacted sans trusted third parties.
I’m afraid there’s really just no good news here for people who refuse to invest in Bitcoin on general principle.
Which is in practice really no different from meme stocks today.
Meme stocks which are only transactable via trusted third parties and are inherently trapped inside the walled gardens of various centralized brokerage firms.
Conversely, Bitcoin can be self-custodied with FOSS, and is trivially spendable via TTPs and L2 protocols. But yes, in practice people are using cryptocurrencies as speculative stores of value almost exclusively.
Which is exactly my point.
Crypto is a decentralized meme stock. Unless crypto finds a way to become just a normal currency, it'll go the way of all memes over time: dead, once everyone and their grandma is sharing it.
Yes — insofar as cryptocurrency market valuation is based entirely on narrative.
No — in terms of it being possible to spend and store bitcoin sans trusted third parties.
(E.g. a Chilean real estate project developer — a Canadian expat without Chilean residency — once explained to me he had no choice but to use bitcoin in SA because the banks there refused to process his company’s regular large wire transfers.)
Bitcoin is in fact a bearer instrument, regardless of your beliefs about its credibility. How many national currencies are bearer instruments also without credibility in your eyes, for instance, and where does Bitcoin rank on that list?
> Unless crypto finds a way to become just a normal currency, it'll go the way of all memes over time: dead, once everyone and their grandma is sharing it.
That’s a narrative no better than any other which gets fielded every day on the crypto markets, although the benefactor of it is unclear to me. Cash and cryptocurrency are incredibly liquid compared to competing PMs and real estate. The S&P is down since 1970 when measured in gold, and central banks are racing to inflate fiat currencies.
But in the long run, it's not.
There are no cryptos which effectively server as either currencies or good stores of value. There are always many better alternatives in both cases.
If you want to opt out of currency - that's rational - you can buy land, low-overhead ETFs, indexes, bonds, gold, other currencies, Gold, commodities, and all of the above.
Consider the obvious problem with your stated benefits of crypto: for every supposed benefit, there are already other, better solutions.
The only thing crypto can do, that others cannot, is make you rich, quickly, by doing nothing, by getting others in to the pyramid.
In the long run, crypto has a role, but there's no crypto on the horizon that's really useful. Some day.
What’s the average PE ratio up to now on the S&P?
Land, where? Real estate is just as inflated as the stock market if not moreso; it also comes with a tax liability at minimum, and is far less liquid than equities, cash and cryptos.
PMs are no different from cryptocurrency in any meaningful respect, and are actively worse on many fronts — e.g. where do you custody it, how do you verify it, how do you exchange it easily, how do you prevent it from being seized or stolen.
Look, there’s a reason humans invented fiat currency. It would just be better if that currency were A) global, B) of fixed supply, and C) controlled by computer algorithms instead of political institutions.
> Consider the obvious problem with your stated benefits of crypto: for every supposed benefit, there are already other, better solutions.
That’s mostly true of non-money — read: non-bearer asset — use cases, like those epitomized by Ethereum and its many competitors.
(But even offline, gold transactions would require a great deal of care wrt anti-counterfeiting, and this is an edge case given gold’s primary use is as a speculative store of value.)
For all I know off the top of my head (where this comment is coming from), cruise ships aren't a significant driver of oil prices. I'd expect the scale of the shipping market to dwarf their effect, and I'd expect production to rise to meet their relatively steady demand, though I could be wrong about either or both. None of that (whatever the answers may be) means they aren't hideously wasteful in absolute and very meaningful terms.
I wouldn’t really be all that upset to see them banned but there’s no momentum for it. Crypto just happens to be really visible to a lot of people who see no personal benefit for its existence.
For sure, and in other contexts too, but I don’t think the issue of not being able to buy gas because cruise ships exist comes up often (mostly because AFAICT it’s not real). And that’s really my point: it’s perfectly valid to complain about cruise ships being wasteful without being able to point to some incredibly obvious consumer-facing manifestation of that waste, because them being wasteful (they are, obviously) isn’t predicated on any such manifestation. Despite the vast scale of their waste, they’re a drop in the bucket that is the global economy.
It's a bit ridiculous when regular stores have lotteries to grant you the privilege of purchasing one of a scarce number of GPUs... at regular retail price.
https://observers.france24.com/en/middle-east/20210203-in-ir...
Is it in the best interests of "the system" (interesting choice of words... instead of "the many") to require enterprise infrastructure in order to run a node?
And can you name a cryptocurrency which is anything other than a speculative store of value, and not something whose market cap is based on drum beating over social media?
That's a nice false equivalency, but I can go to the store and buy bread with USD. Where can I do that with cryptocurrency?
> And can you name a cryptocurrency which is anything other than a speculative store of value, and not something whose market cap is based on drum beating over social media?
Yes! Bitcoin circa 2014
Crypto-currency has inbuilt hierarchy, as people with more hashrate have proportional power over the monetary system. This is more hierarchy than an elected chairman of the fed, for example.
Is there way to continue using your Bitcoin in this case? Or is it effectively the same as having a bank account frozen (i.e. you can't conduct any transactions if you don't have broad connectivity).
Or am I misunderstanding something fundamental? (I realize it's probably not a single domain/endpoint like other sites I referenced, but the traffic probably has other characteristics that would make it easy for a state to disable).
Block access entirely? Only if they were willing to stop all communications and travel in/out of the country. You could carry keys on paper and instructions in your head and apply them on the "free side" of the border. I don't think it's practically possible to entirely prevent such transactions. You can make them illegal; you can make them difficult; you probably can't stop them as an individual country.
Or you could just use Tor.
That means raiding mining farms while limiting their number by limiting the size of Bitcoin.
Its only something the US or China could do.
Otherwise no, there is no way of completely blocking it. There are ways of making it impractical for the vast majority, though.
Blocking based on traffic analysis is easily bypassed by using a VPN/tor
Trading democratic control for oligarchical control is increasing hierarchy and there's no obvious benefit.
The core of anarchy is reticence towards hierarchy.
If this is the case, please illuminate us why they don't use their influence to increase block size or block rewards.
Given this information, is it worth rocking the boat while mining is still very profitable? No.
Isn't it the opposite. The cost of mining converges towards the current price of Bitcoin. Because when miners get Bitcoin as a reward they immediately sell it for profit.
https://twitter.com/search?q=from%3Arechelon%20bitcoin&src=t...
C4SS style anarchists and agorists are definitely on the economic right of even free market anarchists (mainly mutualists, decentral planners that admit a free market, etc, anarcho-syndicalists, mixed-economy libsocs, Bakuninists, etc...) in that they consider the state a far greater issue than capitalism. Most anarchists that like markets (which is most of them in some way) see capitalism as an equal or greater threat than the State as at least the State may share some power with the people in some cases.
btw, it is a success.
If not for crypto two companies would have a global monopoly on online transactions and able to banish you from global economy on a whim
There is no privacy and they've done some weird stuff to play the numbers.
E.g. they sent half of all SHIB to the creator of Etherum, why? Because that doubles the "circulating supply" and therefore market cap while not increasing the available supply at all.
This is a scheme to artificially increase the market cap, which mostly worked because VB burned 95% of all the SHIB he got & it got a lot of press.
It got popular before VB burned it.
and a community workgroups page here: https://www.getmonero.org/community/workgroups/
and here's a Twitter-article (ugh) from a maintainer of Monero regarding an attempted attack on Monero's privacy which refers to a number of privacy enhancements to Monero that have been implemented over the last three years: https://threadreaderapp.com/thread/1326130648491417602.html
Whether you take this as proof of legitimacy or otherwise, the IRS has a bounty of $625,000 for anyone who can crack the privacy aspect of Monero: https://securityboulevard.com/2020/09/can-you-crack-monero-i...
Skip to the conclusion of this review of Shiba Inu coin: https://www.coinbureau.com/review/shiba-inu/
I'm 100% serious here; it's been working fine for quite a number of years. The fiat conversion is pretty noisy but BTC on average goes up in value in fiat terms at a fast pace. BTC is easy to turn it into stuff. No one has ever censored my transactions or asked for ID. Even if you buy something really expensive or totally illegal. It has literally already worked. It started working the day that guy bought a pizza and it hasn't stopped working.
Such a vanishingly small percentage of cryptocurrency activity is actually used for trade (as opposed to speculation) that it is a novelty and newsworthy when it actually happens.
E.g. We all know about that guy who bought a pizza with BTC. And when Tesla decided to allow purchases via BTC (which they have since backtracked) it was a media sensation and market-moving. This is not normal.
It's how I learned about crypto in the first place- back ~2015, I ordered legitimate, had-a-prescription medication for my father from overseas using bitcoin, as it was the only way I could get it, as the even-with-insurance price in the states was beyond our means. Wound up doing so for several years, and it was much easier than dealing with the 'normal' ways of payment. A lot of the things I order from overseas in general I pay for in crypto, simply because it's cheaper & easier than doing regular currency conversions. I'm talking about regular things, like specialty foods, or everyday items I can't find in the states. Nothing even close to grey market or sketchy. Just regular financial transactions, using crypto.
I'm sure by numbers my <$100-equivalent purchases are small potatoes, but how is that not also true for regular money? There are billions of dollars of capital sloshing around in the markets, but that doesn't make my personal-level spending not useful.
Or do you genuinely fail to realise thay there is a difference between you and small number of other people relative to the global population using cryptocurrency as money as compared to everyone on the planet doing so?
There's facing statistical facts, and then there's just being flat-out negative.
Do you buy $5 items internationally? Because the bulk of my international orders are low value items. If I have to spend more on a transaction fee than the item costs, I'm not gonna buy the item. Oh, lightning you say? You really think I should trust that more than pay pal?
There are significant international transaction fees. There are also merchant fees involved for sellers. Much like the ubiquitous credit card fees, you may not see it line-itemized on your bill, but the costs are absolutely part of the price you see at checkout.
Literally everything I buy with crypto, the crypto network fees are less than what I would have paid otherwise.
With crypto, it depends. Which coin? Which wallet? Which seller or marketplace? I'm curious if you care to share more about your transactions, that cost less using crypto. Now, if you're saying that you bought at $100 and it's at $1000, and you "paid less" that way, that's just this stage of the ponzi scheme's doing, not an inherent feature of the network that lowers costs.
Regarding which coins I use, it's mostly Bitcoin Cash or Doge. No funny accounting or anything. The network transaction fees are readily available:
https://bitinfocharts.com/comparison/dogecoin-transactionfee...
https://bitinfocharts.com/comparison/bitcoin%20cash-transact...
Or don't do all that and intuit from it that the likely result is that in some cases crypto wins (when the purchase is large, when the crypto was acquired at closet to zero cost), and in others it doesn't (when the cost is small, or possibly even moderate and when you have to convert to crypto first).
Relying on a small handful of centralized private service providers for critical infrastructure is a bad idea. My situation is not unique or strange. I could most likely illegally submit false information or register new accounts, with the risk of having payments frozen or even held at any point. Some online vendors only use PayPal, which has lifetime banned me as a person, so by extension I can not purchase from these vendors.
I do trust Lightning more than any of these. I actually regularly use for payments for stuff like you mentioned. Last time a $11 purchase yesterday, which even including amortized channel opening cost was most certainly less fees than PayPal would have been.
——
You’re happy with PayPal now, because it works fine for you, but the increasing power they have over individuals and the economy is real, concerning and dangerous.
But I think for most people using lightning means getting an account with a wallet provider. Couldn't they suspend your account for violating ToS? I guess some people could setup their own channel but I don't think that's what most people do.
Proof of Stake just means the biggest entities will have control. That doesn't sound stable to me but good luck.
I someone can, someone else will for you.... that's the thing. I can't make a Paypal alternative for myself, so I can't do it for anything, but if I can build an alternative on the lightning network... well... someone else can do it and take care of people that can't.
The buy guys only care about the big numbers... but open the door to the smaller guys, and you'll see, they'll take care of the smaller numbers too.
If I paid for things with it then every transaction would require calculating capital gains/losses. And it's far worse than conventional assets like stocks because at least the brokers track that stuff for you.
1. Park your ETH/WBTC/BAT (a whole bunch of other tokens) on a smart contract as collateral so that you can withdraw a token that is pegged to the USD, or just go to a regular exchange to buy the stablecoin.
2. Use this token to make transactions online.
Tax advantages: you are not selling your volatile crypto, so you don't have to declare any sales or profits. On the other hand, if the crypto you place loses so much in value to the point where the smart contract liquidates you, you don't need to return the stable token and you can get a tax write-off.
With something as volatile as cryptocurrency it's not exactly a crazy idea that you'd buy at say $30k, take a loan at $60k and get liquidated at $50k and get stuck with a big tax bill
It uses the same “trick” billionaire CEOs use when they borrow against their shares to fund spending, instead of selling some shares and calling it “income”.
And if you peg your money to fiat, aren't you just ending up back where you started?
What you're describing sounds essentially like being my own brokerage back office to provide cash services to myself. That's nice for people who enjoy that sort of thing, I guess.
Not if you are talking about the idea that only crypto allows you to transact without a middleman and without the risk of having your funds seized or your account canceled.
But if you are simply talking about crypto as an way to invest: I can tell where I can park USDC and DAI and get 2% returns per month - and have gotten that consistently for the last 8 months. Can you tell me any traditional bank that can offer this good of a deal?
Well banks offer lower rates of interest, but they're FDIC insured, they have nice (ish) apps, they have regulations to protect consumers, etc.
I can tell you PLENTY of places i've parked my money (for the last 8 months) that have gotten much more than 2% return - but they don't have FDIC insurance (just like crypto).
The problem is compounded by the fact that people have every incentive to astro turf this technology to promote a get rich quick bubble. So the people claiming these accounts are safe may be lying. I would go so far as to say only a pyramid scheme can offer 2% monthly returns on a technology asset that produces nothing and has no inherent value.
First: I am sure you understand the difference between saying something has returned 2%/month on a given period and saying that something can offer "2% monthly returns". At no point I claimed guaranteed performance, all I did say is that I did get these returns on a very low-risk protocol and only used stable tokens to do it.
Second: the reason that I managed to get this type of return is because I provide liquidity to pools that have a better utilization rate (compound pool on Curve) than others that have more "popular" tokens. Effectively this means that if more people join the pool, its profitability will actually go down.
Third: the "profit" (mostly) comes from selling the tokens minted from the protocol that you are using (e.g, I am using Curve, so they mint their own CRV token as a reward for liquidity providers ) and not "in kind". The amount that you receive "in kind" is much smaller (to the order of 0.05%) and corresponds to some "transaction fee", so it's not compounded. It is physically impossible for these protocols to create more tokens out of thin air and therefore pyramid schemes (strictu sensu) are impossible to happen on the blockchain.
Am I "promoting a get rich bubble"? Quite the opposite: if you ever find me on these DeFi subreddits, you will find me clearly recommending people against buying these governance tokens. People buying them are speculating without any clue of the fundamentals of the protocols or how a competitor can come and destroy any kind of claimed competitive advantage. I lost count of how many threads I got on /r/uniswap telling them that any sensible person would never buy UNI, yet the token went up more than 10x in price in 6 months. For them, I am the conservative one because I am selling these tokens as early as possible, but I am more than happy to take their money.
Is this going to last for a long time? Quite unlikely, but my strategy is as low-risk as it can possibly be in the space, it keeps me liquid (I can withdraw my funds anytime), and has virtually no downside. Even if the profitability went down to 2%/year, it would be a better deal then leaving the money in a savings account.
To sum up: I'm all for healthy skepticism and informed criticism, but your comment provides neither.
If it was not your intention to imply your crypto scheme was as safe as a bank account or a traditional bank product like a CD, you did a bad job of communication what you were trying to say.
If you communicate (however unintentionally it might have been, I'll grant you the benefit of the doubt) like a sucker roped into ponzi scheme, it's only rational to assume you are one.
I didn't care about the details of your speculative business, I cared about the giant red flag you raised when you compared what you were doing to a bank offering.
In no point I am saying that what I am doing is "just as safe as a bank". And when @kobasa pointed out that it is indeed possible to have above-average returns given the information asymmetry, you doubled-down on your assumption and implication that I either (1) don't know what I am talking about or (2) am somehow being dishonest.
Frankly, you are being quite offensive and reading only whatever confirms your worldview. This is not the way to keep a conversation.
Smart contracts are somewhat Lindy: the longer they are in place, the more of an indication they are secure. I wouldn't recommend putting your money on any new contract, but Curve is around for long enough that I don't believe that it will get hacked in the next years. Sure, it is not as "secure" as a FDIC-insured savings account, but it is not degen-type of investment either.
What if you deposit your cash in a regular brokerage account and every week sell an equal amount (that is, one contract for every 100 shares you can afford to buy) of at-the-money puts on GLD? This is literally digital gold.
If the probability of gold going to zero (or GLD) is essentially nothing, and inflation is inevitably going to pick up, then this feels plausibly "risk free". The worst that can happen is you are assigned some shares, which you can sell or sell calls on. In any case, people are apparently willing to pay a surprising amount for short term volatility on it.
Even better, you can buy the cheapest longest dated out-of-the-money put to lay off some risk at minimal cost.
You may be able to do this on Robinhood, I haven't tried.
Just an idea...of course analyzing how this could hide large risks would be interesting.
Can you really imagine selling insurance against gold cratering in the near term being disastrous, barring leverage which can always ruin you?
I think it's probably important, for managing risk, to have the self control to only hold as many short contracts as you have cash for assignment, and also not to get greedy when the price moves in your favor, but wait until the end of the week to swap them for a different strike.
The downside scenario is gold dropping 50%, or 100%, which just seems implausible, maybe more implausible than in living memory.
I completely agree that the instances of use as currency is vanishingly small.
Visa: get card from wallet, type in number, type in CSC code.
Cryptocurrency: pull out phone, scan QR code.
In the US you can get a 2% rebate on what you spend with a credit card. In effect, you are credited back most of the merchant fees baked into transactions.
In which case cash or crypto requires a >2% discount to break even.
But it's been six years, now, since using crypto has been a genuine net benefit for me, and this is completely outside of any kind of monetary speculation. That's not nothing. Is it a useful comparison, one guy that works in tech vs. the world's financial systems?
If using crypto helps me, it can help other people, too. That's enough for a real start, all on its own.
I do think that coins with more reasonable transaction fees are actually used as normal, boring currency a lot more than crypto-naysayers think.
I also think the rampant speculation going on over coins like Doge is nuts, but it's worthwhile keeping in mind that if you're just using crypto as an exchange of value, with the purchase of the coin and its use at the same time, it doesn't really matter what the spot price is.
Where by constrained you mean it's a crime, right? Obviously you can argue that in this specific instance making it easier for criminals to evade law enforcement is a morally good thing, but cryptocurrency does the same thing for any profitable crime in any country, which is why I see it as such a negative thing overall.
Not in the way you mean it, no. Otherwise industrial-scale bitcoin miners, situated near power plants, wouldn't be able to operate in the open at all, yet they do. Without making any moral judgement one way or the other, China works differently than is generally understood by the West.
//
I don't want to downplay criminal use of crypto- its use in cryptolocker-type malware is a real problem, for example.
I do think it is important to recognise that criminals already use existing monetary systems quite well, and that fully-public blockchains have an audit trail that investigators could only dream of compared to plain cash.
Well, the western understanding is that it's a corrupt country where the powerful and well-connected can openly flout the law for some time - until they misread a shift in power dynamics and it becomes convenient to prosecute them. I'm sure that's not the only paradigm through which these things can be understood, but it doesn't seem inaccurate either.
> I do think it is important to recognise that criminals already use existing monetary systems quite well, and that fully-public blockchains have an audit trail that investigators could only dream of compared to plain cash.
Well it's not like cash is particularly clean - if someone wants to pay or be paid in cash only, I would see that as a sign that things were probably not entirely on the level. Presumably criminals continue to use cash in parallel only use cryptocurrencies where they gain an advantage from doing so - but there are plenty of cases where cryptocurrency does offer big advantages for crime (and all of the reasons people give for using cryptocurrency - sending money internationally, avoiding reporting requirements - seem like crime-friendly things). Even the traceability you mention seems to be seen as more of a bug than a feature by crypto advocates.
(They reached a settlement where they paid money and made an apology statement rather than going to court, as would most entities in their position).
> the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores – CNBV) which, across more than 20 volumes and some 10,000 pages, established how HSBC Mexico’s top management committed serious mistakes, such as:
> - Deliberately failing to report suspicious transactions.
> - Permitting the exponential growth of bulk dollar shipments on armored trucks bound for the US.
> - Deliberately delaying the issuance of client reports with unusual and suspicious transactions.
> - Maintaining business relationships, until the last possible moment, with people, businesses and currency exchange houses used by drug traffickers to acquire aircraft.
HSBC may not have been killing people themselves, but they unquestionably facilitated and profited from it. I'm a little surprised that someone would downplay their involvement given its scope TBH.
https://insightcrime.org/news/analysis/hsbc-dirty-money-whit...
And compare this to Bitcoin where there is no judgement call, no KYC at all, anyone can move money anywhere. I suppose it's harder to gather 10,000 pages about how poor the judgement calls were in hindsight when no-one's making those judgements, but I would hope that HN of all places would look past the sound and fury and pay attention to the actual outcomes.
(I’ve got an idea, and I think the answer is speculation….)
Converting BTC to Fiat and then spending Fiat isn’t the same as buying things with Bitcoin. It’s buying things in Fiat with extra steps.
This seems to me kind of like the argument that the government is "just" another gang of armed bandits.
There is a huge amount of value in predictable taxation rather than random robbery. Partly because of the variance, and partly because government has more of a long term interest in the viability of the citizenry, even if it weren't especially democratic per se.
And similarly, there's a huge value in a currency that gradually loses value over time rather than being up or down 5% in a day and 30% in a few weeks.
The whole point of currency is that it's not a long term investment asset, but a tool for trade, isn't it? So why would long run inflation be relevant?
They're not talking about volatility; they're talking about the average trend over time.
Short term volatility is a big disadvantage, while gradual loss in value doesn't matter for something that's not a long term investment.
I owe way more money than I have in cash, as does almost everyone, and my loans being in nominal currency, inflation only helps.
Ah, fair enough. That said:
> I owe way more money than I have in cash, as does almost everyone, and my loans being in nominal currency, inflation only helps.
This only works if you have a effective means of prohibiting (any) interest on those loans (ie anti-usury laws that actually have teeth). Otherwise the lender just bakes inflation into the interest.
That said, there are variable rate loans, but last year some lenders were actually offering such loans at a noticeable discount to prime (albeit with a floor that is above prime for now).
That helps a little, but relies on lenders underestimating future inflation. If they can predict X% inflation, they can price that into the initial fixed rate. So it's useful for making damages due to usury less variable - which is helpful for the same reasons insurance is helpful - but it doesn't usefully reduce them.
Yes, hypothetically, but they aren't, yet.
Which ultimately just ends up in people wanting speculation.
A bit of a generalisation, but I know plenty of people who hold Bitcoin and they all are buying it because it might be worth more in the future, and none are buying it to transact in Bitcoin and use it as a currency.
So, I don't want that. It's that simple. If you could transfer USD anywhere without audit and the US fed had it increasing in value, I wouldn't need bitcoin.
But they can't do that. They literally cannot afford to in the sense that the government they're attached to does deficit spending and the bond market isn't enough. They have to print. Not only must they print, but the spending that causes them to do it is heavily military. They're buying the tanks and planes they used to start wars for as long as any of us have been alive (Korea, Vietnam, Iraq, Afghanistan, etc.) Thus, every dollar I keep in my pocket is a continuous loan to their war machine; it loses value and that value goes to buying bombs.
I'm not participating any more. I'm taking my barbies and going home. Before BTC, there was no where to run to. Now there is. No more fiat. Long live deflationary, un-censor-able, distributed crypto currencies.
This is important in days like today, where a coffee would cost more in BTC this evening than it would have this morning - how do I know how many BTC I have spent without referring to the current market price in USD and calculating it?
Here's an infographic: https://www.visualcapitalist.com/all-of-the-worlds-money-and...
Companies don’t transact in Bitcoin because nobody wants to hold it. Except for companies getting a valuation boost from retail investors.
I looked into this claim, and I disagree. Google search for <<sotheby's cryptocurrency>>. The first two results for me were:
https://www.sothebys.com/en/articles/cryptocurrency-payment-...
https://www.sothebys.com/en/buy-sell/cryptocurrency-faq
They are allowing partial cryptocurrency payment for a single Banksy painting.
From the FAQ:
<< Which part of the transaction is payable in cryptocurrency?
Sotheby's will accept cryptocurrency for the hammer price of the lot. The buyer’s premium and overhead premium, as well as any taxes, must be paid in USD. >>
Sotheby's is simply facilitating the transaction as an auction house. They have zero exposure to cryptocurrency. I assume the cryptocurrency will be transferred to the seller after the auction is paid-in-full. The buyer must pay all non-hammer-price costs in USD to Sotheby's. (As I understand, these fees can be significant.)
Like some other posts mentioned, the seller could agree to receive seashells instead of cryptocurrency. All said, this seems like a very good publicity stunt by Sotheby's.
This article might help to explain more: https://www.investopedia.com/ask/answers/052715/how-big-deri...
When a client is buying or selling a derivative, they don't care about the notional -- they care about the delta (or gamma/other greek). You just turn the dial for notional to achieve the target delta/gamma.
Your second sentence does not make sense with respect to single name equity options. (I pick a simple product as a counterpoint.) I doubt anyone is losing sleep in 2021 over 'rho' (interest rate sensitivity) in their options trading book for any floating currency with short term rates below 1%. Thus, everything about the underlying price (including expected future divs and its historical volatility) drives the prices of single name equity options. (If you are referring to delta one derivatives, that is a whole different discussion. And yes, they trade -- equity swaps, because you can get implied leverage through financing.)
The main reason I don't buy things with cryptocurrency is that it would trigger a liquidation event and short term capital gains taxing.
Due to that, for US residents and citizens, it's not functional as a currency in its current form. I'm vehemently against taxing of cryptocurrency or treating it as a security by the IRS, but that's the way it is now.
Tesla and Musk are attention-sponges and it's a large part of how they're still operating.
In reality, an overwhelmingly large percentage of tangible trade is fasciliated by one specific cryptocurrency for one particular umbrella of goods and services that may have something to do with onions.
First, that last part is definitely not true. People do accept Bitcoin and buy things with it, and it’s not newsworthy at all unless it’s a meme-driven electric car company boss doing it. But secondly, why do these percentages actually matter? At what point does my valid use of something become dismissible because another use case which you don’t like gets popular? Do we dismiss people who actually like playing the Pokémon card game because lots of people collect the cards purely for speculation now?
For using it as everyday currency, there are debit cards that automatically convert your bitcoin to local currency at the time of payment. There are probably millions of people who use these debit cards. Bitcoin itself isn't suitable for everyday payments yet.
Before the edit window closes... 5 workarounds and counting. Are they interoperable, or is all this a thick layer of bullshit that users need to wade through to spend their "currency"? I see the plurality of "solutions" here indicative of a problem. Yes, you can fix anything with duct tape, but then it gets sticky
Also, it’s already used in defi, if you count that as “real world”. Reminds me of when anything on the internet wasnt “real”.
Considering how many spaces in new startups developed massive traction in that span of time (social networks, other forms of digital payments and banking, online marketplaces) the fact that there are no star products in such a span of time gives me little consideration.
There's $80 billion locked in DeFi right now. https://defipulse.com/
Uniswap has more transaction fees than the Bitcoin network https://cryptofees.info/history/2021-05-16
Institutions are even starting to get in https://twitter.com/stanikulechov/status/1394390461968633859
What has happened is defi tokens have appreciated through speculation. Sites like defi pulse erroneously represent the wealth locked into defi contracts as token_price * tokens_locked, which is trivial to manipulate for shallow-market tokens. Like, I can spin up a token with 1 billion units, buy one token for $1, and put the remaining tokens into a defi contract. Voila -- defi pulse reports $81 billion locked.
EDIT: downvotes aren't receipts, and downvoting doesn't change the accounting discrepancy.
This is what I heard when Lightning went live.
For one it would provide incentive to save money and spend it wisely, instead of mindlessly buying all that unnecessary crap.
And debtors. The very notion of taking out a loan for something becomes nigh impossible with a deflationary currency, particularly one as deflationary as Bitcoin. Seeing as how the lower and middle class tend to take out loans for all sorts of reasons (since if they had the sort of cash lying around to buy homes and cars and appliances and such outright, they probably would be neither lower nor middle class), the direct harm such a currency would have is readily apparent.
I also don't see how Keynes and speculative frenzies are connected, considering they existed long before his Treatise or General Theory.
Now that wording has a certain ring to it (in my ears).
"Consumption prone to drying up"? As if consumption alone were of any value. As if consumption were the foundation of all well being. As if it were something that needs to be tended to like some garden with flower beds.
Sounds more like ideology to me instead of reasoning.
In fact, Keynes himself famously thought that would be working 15 hours a week by now instead of...well...wherever all the work is going, some of which I suppose is propping up the consumption you don't approve of.
The average middle class (and below) person in any highly developed country has a mixture of assets, dominated by their house and cash savings in a bank. Most don't directly own financial assets -- stocks, bonds, etc. However, they are invested in a pension (national or private) that will certainly invest in financial assets.
That ship sailed long ago in the US if you use any exchange. Not using an ID is much, much harder now. And is kind of besides the point with a public ledger.
As a market practitioner of many decades, I must say I have never witness this level of froth and delusion before.
I'm studying it with great interest (and a touch of disdain about my fellow humans unbounded rationality/irrational exuberance about cryptos)
If your life savings were at risk of becoming worthless, you would also be defending cryptocurrencies as rabidly as these people.
In the first phase, it was purely retail speculation. However, we are now entering into a new phase. ETFs are being issued. This makes it easier for institutional money to buy. Also scary. I'm not concerned about "fast money" (hedge funds), but rather "slow money" like pension funds.
Final phase: I notice that investment banks are slowly beginning to open cryptocurrency trading desks. They may trade directly, but mostly they are interested in derivatives. That is my biggest fear. How is that any different than CDS on MBS/ABS/CDO? (Credit default swap on sub-prime mortgage bonds) In short: The underlying was junk loans. Derivs on crypto feels like the same wolf, but in a different skin!
You do not, not really. Merchant adoption is microscopic. Even prominent Bitcoin fans admit it's terrible as a payment system. E.g., Fred Wilson of Union Square Ventures: https://avc.com/2017/08/store-of-value-vs-payment-system/
Or look at Overstock, one of the few large retailers that accepts it. Something like 0.1% of their business is done using it, which explains why most other merchants don't bother. Even there, they price everything in dollars, so if the Bitcoin price shifts between you purchasing something and you returning it, you'll get the dollar equivalent, not the Bitcoin you gave them: https://www.nytimes.com/2021/02/03/style/what-can-you-actual...
This is especially obvious when you contrast it with something like M-Pesa, an e-cash system that launched around the same time. It's hugely popular in the countries it operates in. (Along the way, it did a lot for banking the unbanked, one of the mirage-like goals that Bitcoin is always approaching but never arrives at.) The transaction volume is orders of magnitude higher than Bitcoin. https://en.wikipedia.org/wiki/M-Pesa
Sure, it technically works; you can probably still buy a pizza somewhere. But "technically works" is a shaky standard even for something that just launched. It's no standard at all for something that launched the same time as Android or Uber.
Today's democracy is just a dictatorship in sheep's clothing, and I'm not convinced democratic governments were ever anything but.
> illegal activity like human trafficking, child porn, weapons trade, etc.
Boogiemen... Not that these things don't happen, but that they happen rarely, and the government doesn't even do a good job of stopping these things.
Worst of all good people believe the government stops these things and don't work to protect themselves and their community from them because of this belief.
We can't separate ourselves from society, nor should we want to. But we should also ensure checks are in place so that society's capacity to control the individual is not absolute, so as to mitigate the negative side-effects that can spring from its convulsions.
Perfect and immediate enforcement of every law prevents many undesireable activities, but it removes what I consider to be necessary alack from the system. It should be enough that the ledger is transparent, and the law can be retroactively enforced when law enforcement is made aware of the violation.
I've never understood why this is an explicit goal of any currency. Money is a way of keeping score of economic value produced. The economy is expected to create more value over time. That means you need more points, aka money, to represent that value.
If the economy grows by x% this year and all your money is in cash, then your relative share in the economy has declined. So of course the value of your cash has now reduced. The government was only indirectly involved insofar as it issued the currency that the value was measured in.
If you want your money to stop losing value, stop the economy from creating more value.
With economic growth, you would expect the economy to produce more items, thereby being able to buy the same things for cheaper. E.g., if we get better at producing electronics, you would expect their price to decline - and that's precisely what we've seen in the past couple of decades.
It is true that a period of economic growth could induce inflation in the short run if the growth resulted in an expansion of credit, which increases the money supply even if M1 is stable. But there's only so far you can stretch the money multiplier. And on the other hand, monetarists believe that increasing the money supply could resolve a recession, but for one, an increasing money supply clearly isn't required for economic growth (the 19th century in the US is emblematic of this, but in particular there were decades of deflation within that century with economic growth), and for another, increasing the money supply in the monetarist framework is brought about by a central bank, not caused by the growing economy.
[0]: Figure 1 of https://www.stlouisfed.org/publications/regional-economist/s...
I would also expect the value of the electronics industry, and its profits, to rise. Where's the additional money to denote that value coming from?
> There was practically no inflation in the United States during the 19th century
I can't speak to inflation in the 19th century. I'm not an economist and expert like the writer of that article. But as a percentage of household income, basic necessities (food, clothing, transportation, entertainment, energy) have undoubtedly become cheaper since the 19th century, despite inflation. Goods and services that don't follow normal supply-demand logic (education) or have excessive regulation controlling supply (healthcare, real estate) are the exception to this.
> the major exception in that period being the Civil War, a period of when the government needed to generate more revenue by printing more money
Money printing is the proximate cause, but not the root cause. The war increased demand, leading to increased prices i.e. inflation. The government printed more money to pay for the war, but it could alternatively have taken on more debt (and maybe it did, I'm not an economist or a historian).
Value does not come from money. Real value comes from the goods and services actually produced. As for whether profits increase, that depends. An increase in productivity in an industry might not necessarily entail an increase in profits for those in that industry. That's the basis for cartels, restriction production in order to boost profits.
> Goods and services that don't follow normal supply-demand logic (education) or have excessive regulation controlling supply (healthcare, real estate) are the exception to this.
This is not necessarily the case, i.e., services can decline in price as well as output increases. If, for example, the money supply were fixed but there were now twice as many workers, there is half the amount of money to go around for each person (but this is not really a problem because money is only useful as far as it is used to purchase goods and services, and in this scenario there are now twice as many goods and services to go around, so it balances out). So if the money supply were completely fixed, you would expect the price of everything to decline over time. However, historically, before the Federal Reserve, prices were relatively stable over periods as long as a hundred years. This is probably because the money supply was not actually fixed - it was backed by gold, and the more the economy grew, the more gold could be mined.
> The government printed more money to pay for the war, but it could alternatively have taken on more debt
Well, this is precisely how the Federal Reserve system works (at least in theory). It doesn't simply hand the government a blank check (although these days it might as well). It lends money to the government to spend. Actually, the process is slightly more convoluted. The government borrows money by selling bonds, and then bondholders sell those bonds to the Fed.
Regardless, the end result is the same, an influx of created money entering the economy. Other forms of lending plays a central part in money creation, through what's called the money multiplier, and the Fed has traditionally targeted inflation by lowering interest rates, making it cheaper to borrow money, encouraging more borrowing, and thereby increasing the money multiplier. So in any event, the cause of inflation is an expansion of the money supply. The money printer by itself is responsible for only M0, but other actions by the government can grow or shrink the larger money supply (M2).
I didn't say that. I said money measures value. Without money, value is purely subjective.
> Real value comes from the goods and services actually produced
Agreed. And making more money over time is a means of measuring "real value" creation. It's a crude approximation (patent trolls and telemarketers are strictly negative value IMO, and they still make money) but it's the best we have right now.
> An increase in productivity in an industry might not necessarily entail an increase in profits for those in that industry.
True. It can also spark price wars and a race to the bottom, which is great for consumers. However companies are required to make a profit in order to continue to survive. Otherwise they run out of money eventually. This is the current reality of balance sheets and return on capital and quarterly results. Wanting currencies to be deflationary under this reality is like wishing that time runs forward for everyone else while you keep getting younger.
> the money supply was not actually fixed - it was backed by gold
Why does anyone give a shit about gold? Why does it have any value? This whole thing is circular reasoning. "Gold standard currencies are good because they're deflationary. Deflationary currencies are good because they're backed by gold".
> the cause of inflation is an expansion of the money supply
When speaking of inflation, I feel like it's necessary to differentiate between nominal inflation (the number on your grocery receipt goes up) and real inflation (percentage of your income/assets spent at the grocery store goes up). Btw, I'm not an economist so I have no idea if these are real terms. But as a consumer, these are the only things that actually matter to me. I wouldn't care to live in the 19th century, when the price of wheat only increased by 10 cents/bushel decade-over-decade, if I couldn't afford enough food to feed my family.
Moreover, given how different everything in the 19th century was (open immigration, tons free land to settle, tons of newly discovered resources, less competition for everything, less well-developed capital markets, less global trade), I'm skeptical about how useful it is to compare prices of consumer goods back then to now.
Sure the money printer makes all the numbers go up in a scary way. But does it make people poorer in real terms? The answer to that IMO is, "it depends". If the money supply exceeds actual value produced in the economy, it does. If not, it doesn't.
> And making more money over time is a means of measuring "real value" creation.
This is only because that's a characteristic of how the modern money supply works. Money itself does not create value; if tomorrow the money printer turned off and from now until the end of time everyone worked with a fixed quantity of dollars, that would not stop value from being created.
> However companies are required to make a profit in order to continue to survive. Otherwise they run out of money eventually.
They could break even. Anyway, there is economic profit and normal profit. The latter refers to profit on the balance books, while economic profit accounts for the opportunity cost involved. In the pure competition model, the economic profit is driven to zero, yet companies making no economic profit will still survive. If a company can year over year make enough money to pay for its expenses and the expenses of its employees and operators, it will survive. It could make less money one year than the year before, but if its expenses declined as well, it can continue (note that this again doesn't entail less value produced, as more real products could be produced for a lower price). There's nothing fundamental about a deflationary currency that would prevent a company from making enough money to meet its costs.
> I wouldn't care to live in the 19th century, when the price of wheat only increased by 10 cents/bushel decade-over-decade, if I couldn't afford enough food to feed my family.
> Moreover, given how different everything in the 19th century was (open immigration, tons free land to settle, tons of newly discovered resources, less competition for everything, less well-developed capital markets, less global trade), I'm skeptical about how useful it is to compare prices of consumer goods back then to now.
I only spoke of the 19th century only to point out that economic growth is not the cause of inflation, as you had asserted above (with a possible exception in the short run as I mentioned above). It is caused by an expansion of the money supply.
Whether inflation or deflation are good or bad are separate arguments. I think both can lead to problems. Deflation encourages people to hoard money, as a productive investment that isn't productive enough could lose money; without deflation, even if you don't beat the opportunity cost you could have made, at least you're better off than if you had just kept your money as cash. Inflation, on the other hand, encourages risky and speculative investment. It is no coincidence that cryptocurrencies have exploded in price in the cheap money, low interest rate environment we currently have. Anyone who saves money in a bank is essentially losing money. So a good deal of money has been created, and it goes towards chasing any type of asset that is appreciating in value - stocks, land, and cryptocurrency. The S&P 500 has doubled in value in the last five years, but the economy did not even nominally grow by 20%. It is a recipe for a bubble, or worse if the Federal Reserve decides to try and keep that bubble from popping by any means necessary.
Because digital currency can't just be taken down, those that don't want to live under an inflationary de-facto tax, now have that option.
All of the advantages of defi boil down to increases in velocity of money. For example you can deposit funds into a contract and receive a token that represents your liquidity position. You can then use this token in other applications. So now you have this composability of money which allows people to create new financial primitives.
VET-> Supply Chain Authentication for Businesses https://www.vechain.org/
Are two real world examples that are starting to see adoption. Also this articles covers it well: https://101blockchains.com/practical-blockchain-use-cases/
I have no idea how these two projects are supposed to work. Who is supposed to use this if there isn't even a concise description of the product?
Judging by their Twitter accounts both of these companies have been around since 2017. How many active users do they have?
What is the point of that?
> So now you have this composability of money which allows people to create new financial primitives.
Are there any useful for anything beyond gambling/speculation/NFT-like FOMO-powered bubbles?
> What is the point of that?
Leveraging arbitrage
what can be usefully arbitraged in that time in way that guarantees no loss?
I'll leave it up to the audience to decide which one of us is biased.
Guess we can throw the internet into the trash bin too.
Would I work for a crypto startup or as a crypto developer in the US if I'm not a citizen? No
Does crypto work as advertised? Yes
Social wellfare, a 401k, etc... are also "get in first get more money out if you get in late" schemes. A lot of people already cashed out their crypto to tangible assets and are set for life. A lot of other people have our pools as a risky investment and every once in a while rabalance and it puts food on the table. It's full of people with bad intentions but open your eyes, so is the world, those people are also doing pump and dumps and pyramid schemes with fiat and the stock market and putting hits on drug dealers over snail mail or dead-drops.
Regardless, history has proven that the most legitimate branch of a blockchain wins, irrespective of security model. It will not be the actor with the most hash power or stake. For reference, see the Justin Sun/STEEM drama.
Vitalik Buterin has an interesting blog post on legitimacy: https://vitalik.ca/general/2021/03/23/legitimacy.html.
I would actually say PoS is more resistant to cabals and regulatory systems than PoW; PoW mining requires huge and visible capital investments and electricity consumption and it's incredibly easy for governments to detect and shut down miners in their own countries (not as true for GPU mining, but GPU-friendliness is difficult to sustain long term), whereas you can be a PoS validator with the most basic computer hardware from anywhere.
This is not how the Ethereum PoS chain's LMD GHOST fork choice works. If >1/3 drop offline, you stop finalizing, but the chain keeps growing.
From this, I can conclude at least one of the following:
* LMD GHOST is incorrect
* your understanding of it is incorrect
* LMD GHOST is not a BFT consensus algorithm
Hacking billions of dollars of cryptocurrency is NOT easy, and it gets harder with every passing month, because validators and hodlers have billions of dollars of incentive to protect themselves.
Which one is easier to do and get away with?
* Use them to vote for two chain histories, and thereby get the victims slashed?
* Launder the stolen coins, buy an ASIC fab, churn out ASICs, plug them into the power grid, and use them to continuously and sustainably attack a PoW chain for eternity, all while not getting caught?
In case it's not obvious, the first one can be done the second the compromise takes place. The second one takes years.
> Hacking billions of dollars of cryptocurrency is NOT easy, and it gets harder with every passing month, because validators and hodlers have billions of dollars of incentive to protect themselves.
Why should a hodler bet that over 2/3 of the chain's validators will never, ever be compromised? Money doesn't buy invulnerability, and an attacker only has to succeed once at breaking quorum to break the chain.
I salute you Sherlock.
(And there's BTC holders with more than 0.3% of all BTC)
And yet, they can't stake their Bitcoin gain influence in the network. They're just another user in user-land
(Keep in mind that in present-day Ethereum, the influence that PoW miners have in protocol governance is pretty minimal)
See how ridiculous it sounds?
(I'm guessing vbuterin is THE vbuterin here)
The DAO hack actually was an exploitation of the rules that everyone agreed upon in the DAO, recursively calling a function in your smart contract layer is not a bug.
This brings us to an interesting topic, bugs are common in software,
* Should you make the protocol layer so complex that it increases the probability of bugs being found, being harder to understand and potentially grind the whole system to a halt if a bug is found.
OR
* Should you break them up into layers where each layer has one responsibility (base monetary layer, a smart contract layer, a micro payments layer etc.)
https://medium.com/coinmonks/demystify-the-dark-forest-on-et...
The Bitcoin chain fork where the bug manifested wasn't reverted. Instead, a chain fork where the bug didn't manifest outgrew the one that did, and is now the canonical fork. If they wanted, miners could continue to mine the fork where the bug manifested. The point is, the Bitcoin protocol didn't change at all -- it merely presented miners and users a choice between two conflicting histories. You can start up a miner on the other fork today if you wanted.
This is not true for Ethereum. Because the undecidability of the EVM precludes miners from determining whether or not a given transaction would touch the DAO contract without first executing the transaction for less than the cost of executing them, there was really no good answer to dealing with the DAO hack. The options were:
* Let the DAO hacker keep the proceeds (this became Ethereum Classic)
* Change the network protocol to prevent the DAO code from ever running (this is Ethereum today)
* Change the EVM so it would permit miners to determine which contract(s) are reachable from a given transaction, thereby allowing them to filter out contracts that could move the DAO funds (a path not taken, because censorship)
That's right, thank you for adding the missing nuance.
1) His address is public (which I'm sure you're well aware and are intentionally ignoring so you can FUD): https://etherscan.io/address/0xab5801a7d398351b8be11c439e05c...
2) The blockchain wasn't mutated after the DAO hack. This has been well reported.
3) "He" didn't decide to do anything, the Ethereum community did.
Stop with the endless BTC maxi talking points and misinformation warfare.
https://web.archive.org/web/20201214170136if_/https://www.re...
from another post: https://news.ycombinator.com/item?id=27202347
And shockingly (/s) Vitalik allocated a disproportionate stake relative to 99% of people.
It's the rich getting richer but on the blockchain <tm>.
I'm concerned EIP1559 and PoS is a very short sighted implementation that will move towards centralization of the network.
There should be a floating minimum, or have no minimum at all to run a node. Not sure the exact tech solution, or I'd be submitting a pull request :).
That can always be changed if the number or validators is not sufficient to decentralize the network.
Current implementation depends on the exchange rate and creates an incentive structure towards centralization.
No, it does not. You are staking ETH, not USD. Essentially, you are staking a percentage of all ETH, percentage capped from below.
https://capitalgram.com/posts/ethereum-2.0-staking-and-stake...
I'm sorry, that sounds incorrect, many people have been "verifying" things independently and sounding the alarm, but nothing happens.
So “fresh” idea :)
For some people (not for me) living in poor countries, mining was a chance to improve their lives. Now it's sold for the opportunity to give more money to those who have large amounts of money.
All these talks about the climate are so ridiculous in this context - nobody even tried to calculate how much of that energy was produced by the wind or sun.
I've definitely seen some analysis that does? But I don't see how it matters. There's an opportunity cost there, where using solar or wind power for something like bitcoin could be better spend on something intrinsically (rather than abstractly) productive, like heating/cooling homes or whatever.
And like, if suddenly it was decided magically somehow that "all bitcoin must be produced with renewable energy" I don't think the world would be made better by the sudden rise in price of solar panels by 10x like has happened with video cards. There's an inherent price inflationary effect involved in anything that's capable of producing 'free money'.
Bitcoin is the illusion of decentralization.
Cryptocurrency discussions are notoriously filled with astroturfing. It’s a lot like what would happen if present-day nation states quite literally lived and died based on the market price of 24/7 globally traded bearer shares. The saying “well kept gardens die by pacifism” is resoundingly true here, to put it mildly.
Historically, the opponents to the now infamous “Bitcoin as digital gold” narrative were pushing things like gigablocks, nodes in datacenters, “Bitcoin as PayPal 2.0”, let’s replace all the core developers, etc based on populist appeals. There was no way to distinguish between those populist appeals and attempts to foil Bitcoin socially by all manner of biased attackers (and just plain ignorant people).
I think it’s rather telling that after these people forked to Bcash, they subsequently capped the block size of Bcash to 32MB and are now ironically scaling Bcash via sidechains — e.g. SmartBCH — against the backdrop of historically claiming BTC would never increase in price past $300 USD without a block size increase. To say their entire worldview has been invalidated would be an understatement.
Not sure how it changes the question I had anyway. The point I was responding to suggested that people might buy a bunch of ETH to influence the network. My question was about how that could be economically viable because it would take a very large investment to get any real influence would cost more than what they could get out of it (the value of the ETH they bought to influence the network would go to zero).
Yes there will be a number of custodians "competing" with each other, but they will all largely operate under the same regulatory jurisdiction (or at least cooperating jurisdictions). If a PoS currency becomes mainstream, the Federal Reserve (because regulated banks will be the largest custodians) and Dept. of Treasury will have significant influence on governance debates.
The big issue here is that governance decisions in PoW systems are split between miners (geographically distributed), custodians (largely US based) and other economic actors. In PoS systems only custodians will call the shots. That has very serious implications because custodians are regulated financial institutions with significant network effects, miners do not have this centralizing force.
Lastly, to actually become a miner in a PoS system requires you to find or create a cheap source of energy and hardware and maintain this advantage in perpetuity. This is external to the system and can be done without paying off any existing Bitcoin actor. In a PoS system you, by definition, need to pay to play - you must purchase a sufficient stake of the currency from an existing insider if you want to have a seat at the table. It's the perfect insider game. Some may argue it aligns incentives, but it also centralizes control.
These systems all have different tradeoffs. Maybe some people are ok with these tradeoffs for switching to PoS, but I'm not.
As far as I can tell, the power held by miners has been minimal; if miners had any significant power at all then the various issuance reductions and now EIP 1559 would not have been accepted nearly so smoothly. So when miners are replaced by PoS validators, the power that PoS validators will be inheriting is not that much...
> Yes there will be a number of custodians "competing" with each other, but they will all largely operate under the same regulatory jurisdiction (or at least cooperating jurisdictions)
Even if this is true (given all the decentralized staking pools coming out, and the still really large number of solo stakers, I really doubt it!), I don't see how that state of affairs would survive any attempt by governments to actually use their jurisdictional power. It's very easy to move stake around (or at least it will be very easy post-merge), so once a single pool does anything disagreeable people can just move their ETH to other pools. And staking infrastructure can live in any country; there aren't even constraints around needing to have cheap electricity there.
> This is external to the system and can be done without paying off any existing Bitcoin actor
I've heard this argument many times, but.... why does that even matter? Making a PoW farm requires paying off a hardware provider. Hardware providers are far more centralized than cryptocurrency hodlers, of which there are millions and you just need to find one willing to sell to you. "I want to buy coins but the existing hodlers are all colluding to not let me" is not a problem that anyone in the cryptocurrency space actually worries about in real life. Specialized hardware manufacturers, on the other hand, are few enough that such a thing is at least actually plausible....
Then everyone sees how truly democratic/free something is.
This isn't the problem. The problem is, "I want to buy enough coins to stake without being diluted but existing hodlers are all colluding to not let me by charging me a price equal to the total expected returns the staked coins would produce" The emphasized parts are where PoS has trouble. The market forces governing PoS incentivize hodlers rich enough to stake to never allow more stakers to arise -- the act of selling ETH is now also the act of giving up future revenue from keeping it and staking it.
* The "stock" (token) is constantly spitting
* The "stock" grants the bearer both a continuous dividend as well as a vote on deciding what "work" (transactions) the "company" (chain) takes on.
Is there a real-world stock with these properties?
Miners have no power because ETH governance is deliberately centralized away from them.
1. Ethereum has a founder (you), who can effectively unilaterally change the protocol. You've been clear for a long time that ETH miners are temporary participants in this project.
2. Very few ETH owners run their own node or participate in actively validating and enforcing governance decisions, so you and the dev team effectively call the shots. Miners have no choice but to follow whatever protocol update Infura and the few other node-as-a-service companies decide to support.
> I don't see how that state of affairs would survive any attempt by governments to actually use their jurisdictional power
Since the largest holders will be regulated legal entities, it will be quite trivial for governments to do this. Also my understanding is that ETH staking is not delegated, so moving funds is not trivial for institutions since this is highly regulated activity.
> so once a single pool does anything disagreeable people can just move their ETH to other pools
Deposits at financial institutions are sticky. People and institutions generally aren't going to withdraw their ETH from Coinbase because of some governance debate.
> I've heard this argument many times, but.... why does that even matter?
Because it's a decentralizing force. To build and pay for a mining operation you need to sell off your Bitcoin to (often new) buyers. A larger mining operation has larger costs and is constantly at the mercy of the energy and hardware markets. In comparison, all stakers, regardless of size, have effectively the same small fixed cost. A big institutional staker will continue to grow their wealth with no increase in cost and no competitive pressures. They just sit on their $$ and keep collecting more in perpetuity.
So, the absolute worst case for PoS is already pretty much the case for PoW.
Like it or not the Pareto principle or 80/20 rule may well be the most powerful law of the universe. It applies to everything from physical systems like stars and galaxies to social systems and individual human achievement.
I don't see why crytocurrency should be any different. Proof of work through cost of capital investment exhibits the exact same concentration of wealth and power, but at least PoS doesn't destroy the environment as a side effect.
I'm skeptical about why we need the decentralized aspect of cryto when it ends up centralizing anyway. Seems like a very inefficient way of doing things. Maybe we just want an immutable public ledger - but I could be wrong on that. It hasn't lived up to the hype yet.
Wars have been fought to force shared beliefs. It's fairly common in history for "real world resources" to be permanently burned in order to create a shared belief system in order to facilitate trade. For example, the Roman Empire or any other empire.
I'd rather use electrons to create shared belief than bullets and bombs.
"Turkeys voting for Christmas" comes to mind.
Cryptocurrency offers the opportunity to break away from the current hegemony - only for people to hand over the power back to the powerful.
Perhaps the world is in the current state - because that's what we deserve? (because we keep voting for it?)
Currently your money is transmitted by csv copies across thousands of companies, most of whom use a semi-manual process. Moving this type of transaction to a distributed ledger will save financial institutions billions in audit costs.
Proof of Work is brute Capitalism. It Capitalism without regard for life or health.
STX is Proof of Transfer (secured by bitcoin's hash-power and the Stacks network).
Proof of Transfer is the best of both worlds. It is community and global capitalism with community and global responsibility.
When a technology is simultaneously a store of value, & a utility, the demand for it is exponential, people will seek it in both states, but for different and individual purposes. STX earns BTC for the directed purposes of any individual and as that individual desires with minimal network effect. STX drives community demand only as demanded by the community. STX drives Network benefits only as desired by the Network.
Lets imagine a series of networked micro-communities built with sun energy using solar panels that photochemically convert the atmospheric water into liquid hydrogen. This is being done today.
That hydrogen is then stored as energy in fuel cell batteries. That energy is then used in part to mine community bitcoin.
That community bitcoin is used in part to build and maintain community infrastructure and finance community healthcare.
The community will also use a small portion of the wholesale mined bitcoin to leverage the Stacks Proof of Transfer PoX miners. The STX block reward will support the maintenance and expense of bitcoin mining. The winning PoX miner's committed bitcoin is allocated randomly to the locked Stacks token holders that are all also bitcoin miners.
The locked pools secure the stacks chain and bitcoin node operators secure the bitcoin chain.
The community through Non-fungible tokenized (NFTized) hashed identity quadratically vote on finance mechanisms using the creation of decidable language smart-contracts.
Those smart-contracts execute for community tokenized provenances or (NFT's) of decentralized communication, decentralized wealth & decentralized egalitarian and merit based commerce. And the by-product is pure H2O and clean air.
Literally the opposite happened, although PoW isn't very relevant here. Grassroot enthusiasts tried to fight a cabal of developers sabotaging adoption of bitcoin - and those users failed, mostly because of massive censorship on major social places. The idea was that users would instead go to a centralized network called Liquid.
The sabotage succeeded, the Liquid part didn't, users went elsewhere. Now it's 2021 and bitcoin has lost all network effects it ever had. Did you know bitcoin used to have tokens and even dexes (although poor)? Google mastercoin and counterparty.
In the long run, it turned out well, as ethereum is a way better foundation.
It's indeed possible it wouldn't have happened with PoS, as contrary to PoW stakers are long-term oriented - miners don't really care about long-term prospects and acquiesced, dooming bitcoin in the long term, but it's possible btc stakers would be afraid of going against core developers too.
In a proof of work system, you can buy your way to the grown-ups table by throwing enough money at mining gear.
In contrast, a proof-of-stake system requires someone to sell you enough of a stake to be relevant.
I suppose the question is whether it's easier to get someone to sell out their community, or find a bunch of graphics cards these days.
The assumption that people with the most stakes will act in the interest of the community has been proven flawed in many occasions. They will act in their own interest first whatever it wight be. The weak logical link is that their own interest always coincide with the interest of the community.
If someone could explain me how this assumption will always be true, I would be very happy.
Also, there's the inherent issue with Proof-of-Stake that Proof-of-Work doesn't have: the initial distribution of the coin has to be wide enough before it could feasibly self-maintain a PoS shift without being immediately vulnerable to consensus attacks. Ethereum is definitively mature enough by now, it wasn't a few years ago.
I don't understand how proof of stake works to the depth I understand proof of work. But this reassures me that it's feasable that they'll accomplish the same distributed consensus.
So then, could I say that Ethereum proof of stake will allow the owners of the coins (ether) to be independent from the owners of the mining operations?
or uhmm...
is the independence between the computaional costs of the "mining" and actual minted ether?
The whole idea is that Ether is so spread out now, it'd be unfeasible for someone to snatch up enough of it for an attack, in a similar way to how an ever-increasing difficulty makes it harder for a hostile actor to coordinate enough of it to make such attack.
Seriously, please answer if this is wrong!
It's not in the interest of Kraken or Coinbase to disrupt one of these PoS networks, but there is some barrier to entry for staking ETH2 or other PoS coins on your own, vs staking them on an exchange. In the case of ETH2, if your staking node goes down, you get slashed and lose some ETH. If there isn't slashing (not all PoS coins have that), I don't see what guarantee of network security or uptime there is.
I'd be curious what PoS coin experts think about this part. It seems like PoS / staking can lead to centralization. PoW has energy concerns for sure, but it has so far demonstrated decentralization pretty well.
I'm legitimately curious about this. I'd love for PoS to be feasible and am trying to understand it more.
[1] https://en.cryptonomist.ch/2021/04/20/ethereum-2-0-600-thous...
We've tried to mitigate it with constitutions in the political world and it helps to some extent but many would agree that there is still an exploitable hole in that those with power can use their own to gain more or mitigate risk. And any time you mitigate that feature/bug too much you run the risk of decreasing reward for work and stake, thereby delegitimizing the system itself or in the case we speak of, your currency. So pick your poison.
This is true, but those exchanges either charge fees or are going to charge them, making it more profitable to stake at home. Because offline penalties depend on correlation to how many other people are offline, it's actually safer to stake at home. Eth was accumulated primarily by devs that understood its value before everyone else. Devs are in general paid well. As a result, it's nothing special for those individuals to own thousands of eth - it was even possible to buy eth below $100 as recently as in 2020. Those 600k eth on Kraken aren't that much relatively.
Right now it's very early and many people aren't staking because there are much higher returns elsewhere, and before the merge withdrawals aren't possible, so you can't even go back if something better appears. I fully intend to stake at home once extreme yields elsewhere stop - in the long run staking is likely to have the highest yield on eth.
>PoW has energy concerns for sure, but it has so far demonstrated decentralization pretty well.
Mining is extremely centralized in China. Mining has infinite economies of scale + less efficient miners are pushed out, so the most efficient entity/location is certain to control all hashpower eventually (not necessarily China). https://www.nasdaq.com/articles/bitcoin-mining-hash-rate-dro...
> It's not in the interest of Kraken or Coinbase to disrupt one of these PoS networks, but there is some barrier to entry for staking ETH2 or other PoS coins on your own, vs staking them on an exchange. In the case of ETH2, if your staking node goes down, you get slashed and lose some ETH. If there isn't slashing (not all PoS coins have that), I don't see what guarantee of network security or uptime there is.
This is actually one place where ETH has tried to incentivize independent staking - the penalty for downtime is equal to the incentive for mining. In an extreme example, if you are down for 6 months of the year, and up for 6 months, the downtime costs should cancel out the earnings from the other 6 months. One caveat to this is that there are larger penalties for correlated downtime (ex: if a large portion of the network is down). This is to de-incentivize centralization of mining.
That said, as someone fairly technical that could run his own staking node, I am seriously considering using a centralized service, or at the very least using a vps. This makes me think that the the majority are going to be independently run on a slew of hosting providers and via centralized hosting providers.
There are also some interesting "decentralized" options like Rocketpool that haven't launched yet, but will allow staking via smart contracts against a pool of random nodes.
And then at the end of the day, the choice in staking providers should allow the network to at least react to centralization risks. Say a locality forces a provider to censor transactions in some way - I imagine folks will move their funds to a provider in another country, or switch to something like Rocketpool, effectively working around the issue.
What remains is to change the legacy clients to use the PoS network for choosing blocks, instead of miners. That has a working multi-client testnet.
* The design of the Beacon Chain is far more optimised than our initial designs for a PoS system
* There are far more crypto-economic edge cases in a PoS system when compared to PoW
* Software development is hard and time estimates are even harder
* The use of a hybrid fork choice to balance safety and liveness trade-offs
* There is a crazy amount of value being handles on Ethereum so it is necessary to be conservative with our changes (move fast and break things is not an option)
* There are 4 concurrent implementations being developed all of which need to be inter-compatible, and production ready
* As Ethereum governance is decentralised we need a shelling point for exactly what Ethereum PoS looks like, this takes time
* We have worked hard to create, encourage, and embrace standards with other chains so that the cryptocurrency community of tomorrow is more inter-compatible (eg. IETF BLS standard or libp2p networking)
* We have spent time designing around quantum-computing resistant backups for the majority of the cryptography (eg. validators all have a Lamport backup key though most don't realise it)
* New cryptography has been developed and previously abandoned schemes revitalised (eg. Verifiable Delay Functions or the Legendre PRF)
As far as I can tell, it was a trick to remove coin from circulation, locking it away where it could not be used again. The fact that people have tokenized these beacon coins on other chains to trade show that people want their money back!
Being able to leverage a committed sum of money via collateralization is as old as financial systems themselves.
If you can find any specific reasons for your take I'm very open to hearing about them?
In the legacy financial world, 2nd mortgages just lead to private inflation of the fiat money supply (the money is being conjured out of nothing to pay for an asset that was already paid for). Nothing is produced, except some energy is burned updating centralized databases.
Having systems where both realities exist is great. I'm a fan of hard money. It is honest.
Gonna need some citations here for this one.
There are a lot of people with perverse biases. Many of the comments enthusiastically defending Bitcoin are people who are sitting on BTC and have watched it get pummelled due to its ludicrous enormous-energy-for-something-that-does-nothing-for-humanity reality (seriously -- if I see one more chart comparing the entirety of the financial industry with Bitcoin. The former powers the entire world. The latter powers some speculators, criminals, and a minuscule number of legitimate transactions).
Really? If that energy consumption problem wasn't there, what advantages does Ethereum have over Bitcoin? Would it even exist, since it offers many of the same features?
That's why the past few years have seen a rise in fungible and non-fungible tokens (average merit of those aside for the sake of argument, since this is just answering the question "it offers many of the same features"), pretty much all of which are hosted on Ethereum or Ethereum code forks like Binance Smart Chain.
No shit, if you take away the defining feature of something, you will be left with very of value indeed.
That's like saying the web without HTTP is nothing for humanity.
I think there's a decent chance they may eventually pivot a bit and rebrand Polkadot or Substrate as an Ethereum layer 2 platform. They already seem to be leaning in that direction a bit.
There was poor governance and management that debilitated their ability to function during the 3 year bear market. And they got their act together. In the mean time, more product market fit was made apparent and upgrades to the instruction set for arbitrary execution was done to the network and continues to this day.
The Ethereum network consists of many-to-many relationships for approval transactions for ERC20 tokens to interact with other smart contracts. This wasn't even foreseeable 18 months ago, and 18 months before that the ERC20 protocol wasn't even ratified.
And also "audit the auditors". So they don't end up on a future rekt.news leaderboard.
Ethereum had 6 years of PoW now - most likely nothing else can repeat its distribution, ever. The time of PoW is visibly over.
Another point is that ethereum was icoed when crypto was tiny, few people believed smart contracts could have value and VC stayed away. Normal people are much more likely to sell just to buy a house. Now new coins start with coins distributed to VC and they are prepared to hold for years hoping for eth-tier returns. There's an argument that not that many people even knew about the ico - but the same is true for bitcoin mining early. It's very hard to quantify precisely but I think both have almost identical coin concentration.
Be wary of manipulative statistics that ignore the inherent differences between the utxo vs account model - like percentage of coins held by top x%. The assumed practice in an account-based model is for one user to use one address, while the current practice for utxo coins is to use one address per received transaction. Same is true for value sent per timeframe - because utxo relies on change addresses the actual transferred value is much smaller.
Thanks for pointing this out! I never thought about this. To me the biggest long term threat to btc is the shift in block rewards from mined coins to transaction fees. I am assuming a possibly much smaller security budget available for “wasting energy”. But at that point it still might be enough as there is no network effect supporting new pow chains anymore, that could threaten btc security by having more sha hashpower.
PoW had an implicit requirement for a global supply chain of hardware and energy which (kind of) made political and geopolitical games more difficult. With PoS, doing politics no longer requires work, which could lead to geopolicical wars. For example it might be possible to achieve wide enough consensus among stakers in Western countries to punish China (for some reason), e.g. willingly losing part of their stakes to empty major Chinese wallets. The fact that this doesn't really require physical effort but only persuasion is problematic.
ETH will be a real test about whether PoS works, as the other PoS cryptos are much smaller and less intertwined in other crypto projects. Historically, oligarchies led to wars
That being said, PoS is very much a human centric valuation (rich peoples opinions being the value), so yes: politics and then war seem likely.
Pretty much every fiat currency has the same issues as PoS, where eventually war becomes the cheapest way to retain value.
PoS, on the other hand, requires minimal extra work from the already-rich. They just sit on their butts getting richer.
so over time, the rich miners get richer at a faster rate than poor miners.
whereas under PoS, everyone gets the same % return (unless you stake with a pool, but even then you don't have these economies of scale like with mining.)
According to Ethereum's PoS implementation, this would require more than 33% of all staked Ethereum coordinating with modified clients in order to pull off. Then, another percentage of the stake adding up to 66% would have to be complicit in the attack, rather than actively defending against it by refusing to finalize blocks.
Compare this to PoW, where only 51% of hashrate needs to be participating/complicit to censor certain transactions, the other 49% have no way of fighting back, and the only tool the community has to fork away is to change the PoW algorithm.
Because of this, I actually believe PoS is more resistant than PoW to these kinds of attacks.
This is just such a small part of the whole equation.
1. They can't continuously attack with this, as you need to expend energy as long as you want to continue with the attack.
2. Even if you have majority hash-rate, you can't change the rules of the system (this has already happened)
2. Majority stakers can't change the rules of the system either.
Is that because the mined blocks themselves are still valid (i.e. the hashes check out), regardless of the presence of an attacker? But then how does it help the attacker in an economical sense? Doesn't the rest of the network know that the new 51% blocks are tainted, so to speak?
Yes. A censorship attack is just that - it's about mining valid blocks that ignore transactions from a certain party, and/or ignoring blocks from other block producers.
> But then how does it help the attacker in an economical sense?
If an attacker has 60% and censors all other block producers (40%), those other block producers won't be able to earn any mining rewards because teh 60% can continuously orphan the blocks they produce, putting them on non-longest-chain (invalid) forks.
In writing my last reply I forgot that difficulty adjustment only happens every 14 days (I can't remember how long it is with Ethereum's PoW, but let's take Bitcoin's PoW as an example), so it's likely that the attacker wouldn't earn any more mining rewards than an honest miner at first.
When that difficulty adjustment happens though, if the miner had been censoring for a good part of the past 14 days, the network would adjust to "consider their 60% the entire hashrate of the network", thus the attacker would start earning the other 40% of rewards for themselves in addition to the rewards they are supposed to earn.
> Doesn't the rest of the network know that the new 51% blocks are tainted, so to speak?
It becomes a very messy, subjective problem. For every block, you would have to prove whether the block producer is part of the censorship attack or just has an incomplete view of the network, which is an intractable computing problem without some sort of subjective heuristic requiring multiple network viewpoints and trusted parties.
And then also in practice most of the staking is performed by a small number of outsourced staking firms, which increases the power concentration even more.
And it also makes hardforks more traumatic because your economy and your consensus builders are fundamentally intertwined. You can't fork an exchange off of the network without also disrupting every single user that parks funds on that exchange. The same concern doesn't exist with PoW mining.
Anyone who willingly opts into staking on a shady exchange, agreeing to a contract saying that they might be slashed, needs to be prepared to be slashed.
On the other hand, any exchange that automatically opts user deposits into staking without notifying them should be criminally liable. That's a big breach of user trust.
One of the selling points of cryptocurrencies is that they make financial transactions and contracts possible without depending on a central authority.
I never realized this could even happen. And this is a HUGE problem for PoS if I am understanding this correctly. Because Exchanges don't even settle the transactions that often on chain, and could totally do this without user knowledge and then say they did with someone else's coins. You can't even prove it.
The problem of exchanges not keeping proper liquid reserves has nothing to do with PoS. If they stake customer ETH without permission, that ETH leaves their full custody and therefore they are lying to their customers about their reserves, and operating a fractional reserve scheme.
Since the cryptocurrency "big bang" in 2009, it's always been the case that you have to trust your exchange not to run away with your deposits, because they can show you whatever balance they want on your screen regardless of how many coins they actually own on the back-end.
Also the government doesn't want to gain control of Ethereum. If the government wants to use a crypto it will roll it's own and make it law, thereby having complete control of it from the get go, with no pesky premine for the foreign developers.
There is also a very delicate game to play if you're trying to hack a crypto for your own benefit. If a crypto network gets hacked it is likely to lose a ton of value and reputation. That's why ETH fell by 60% after the Dao hack. So you're really shooting yourself in the foot by being a malicious actor.
If I’m building a marketplace business in 2021, where I want to be “crypto-first” instead of relying on PayPal and Stripe Connect, where do I start?
The marketplace sells access to resources with an off-chain ACL system. It facilitates trades between resource sellers and buyers.
I assume I want a smart contract between buyer/seller to record resource grants on chain, which the access layer checks as a source of truth.
But if I were to do this on Ethereum, the gas fees would be really expensive. I’ve heard about Polygon and “optimistic roll-up.” Is this a viable solution?
If you're after dollars or euros, the on-ramp and off-ramp at exchanges adds a comparable, if not higher layer of fees than existing payment mechanisms, kind of defeating the whole purpose.
Unless you are building a dark web market, why would you want to? It will be more convenient for the vast majority of users to pay with card or PayPal.
Taxes are paid in fiat. Holding non-stablecoins would add even more of a tax headache because you'd have to track capital gain/loss as you enter/exit fiat for taxes / fees / vendors that don't accept crypto
Also the fact that general adoption has been slow so far may be a sign that there is not enough obvious value added for the average person to consider using crypto over fiat.
Using an L2 system will mean that your user will need to be using that specific L2 system as well, but the UX doesn't seem so bad (at least for ETH -> polygon, and for the cryptocurrecny space so far).
ETH 2.0 will reduce gas fees somewhat on the mainchain, but it's fairly obvious that there's huge demand, the sharding that ETH 2.0 will do is create 1 shard for execution & 63 for data only. Most L2 systems will mostly use the data shards, so we appear to be heading towards an L2 future.
In short if I were building a company in the space I'd be looking at deploying both on the mainchain (L1) and on a L2 system, but prioritize the L2 system. Unfortunately we may end up in a world where there are dozens or more L2 systems and either the users or the companies have to pay the cost to hop between them.
But I've absolutely never seen it in the wild.
(Tesla has recanted 'for now').
> In a 2013 video, a man appears to be paying for his meal at Subway using Bitcoin in Allentown, Pennsylvania.
And, many are only at select locations, "will be", "unveils plans", and "testing".
Contacting general or merchant support often took over 2 weeks to get a response, which was a deal-breaker for any service that would inevitably impact customers on our end.
It is just as secure as the base chain (unlike polygon) and has low fees and has been live for the past few months. This is a perfect solution to simple payments.
The difference between optimistic rollups and zero knowledge rollups is that you can’t deploy arbitrary smart contracts to zk rollup, it only supports a limited set of use cases, such as simple payments for now. Read more here https://vitalik.ca/general/2021/01/05/rollup.html
If you as a reader are interested in math & crypto the stuff being done in the zero knowledge space w.r.t. cryptocurrencies is really cool regardless of your opinion on cryptocurrencies in general.
IIRC they'll eventually create their own native token when their EVM compatible rollup is out.
https://help.coinbase.com/en/coinbase/trading-and-funding/ot...
1559 addresses fee stability and will help reduce fee spikes. It's purpose is not to reduce fees in general.
Bitcoin's attempted solution on this front is off-chain scaling via lightning network. As far as I can ascertain, this has had highly limited adoption.
Eth's attempted solution on this front is sharding. I can't claim to be an expert in this, but from my understanding after proof-of-stake is deployed, ethereum plans to deploy something like 64 separate "shards" which, from my understanding, are like extra blockchains for conducting transactions, and using some kind of complicated proof of stake system to keep it consistent. In this case, while the main-net still has limited global throughput, scaling up to add more side chains will allow scaling additional throughput. You can read more here https://ethereum.org/en/eth2/
As with lightning, we don't know how well this will actually end up going until it's deployed.
https://ethereum-magicians.org/t/a-rollup-centric-ethereum-r...
sharding + L2 rollups*
If you check the incoming transaction ID I'm sure you'll see it contained many many endpoint wallets.
That's how mining pools offer free withdrawals periodically. If you split it up amongst 100s of users, per user tx cost is very low.
BTC refuses to scale, Lightning is permanently broken.
Ethereum will reduce the fees with sharing, but that will take time.
Compared to other crypto, or on the scale of Visa and MasterCard?
In general, fees go up as the token price goes up since fees are usually charged as a function of transaction size or complexity, and also fees rise as a protocol hits its tx limits, but not always. Nano is an interesting cryptocurrency that is fee-less (although they just had to roll out an emergency update to improve spam resistance), so it's possible to design a fee-less system, but it's certainly even more experimental atm.
There are, however a number of cryptos that currently (and by intent) have <$0.01 (sometimes significantly less) fees. This includes (just going down by market cap): Ripple, Bitcoin Cash, Stellar, or Dash. For transactions, even though fees are a bit higher (about $0.06), I like Monero since it's one of the most private and widely used cryptocurrencies out there, and it's fees have actually significantly decreased due to technical improvements in transaction efficiency, dynamic blocksize, and an algorithm that can actually reduce fees as volume increases.
However, I cannot abide by a money speculation mechanism which uses as much electricity to mine worldwide as the Netherlands use in total. That's absolutely asinine to me.
So yes, it's currently not practical for microtransactions.
No. There are developers who actually prioritize on-chain scaling. For instance Bitcoin Cash and Monero have very cheap fees, and they will stay cheap for the foreseeable future.
As of writing, a Bitcoin transaction costs $4.76.
The last time I received a Bitcoin payment, it cost $0.36 in network fees. The network is currently more congested, so the fees are higher at the moment.
[1]: https://www.algorand.com/resources/news/carbon_negative_anno...
[2]: https://www.algorand.com/resources/blog/silvio-micali-lex-fr...
>To achieve a carbon-negative network, Algorand and ClimateTrade will implement a sustainability oracle which will notarize Algorand’s carbon footprint on-chain for each epoch (a set amount of blocks). With its advanced smart contracts, Algorand will then lock the equivalent amount of carbon credit as an ASA (Algorand Standard Asset) into a green treasury so that its protocol keeps running as carbon-negative.
I'm pretty familiar with the basics of cryptocurrency and blockchains, but the above paragraph makes almost no sense to me.
My pessimistic side suggests this could be purposeful obfuscation of implementation by using complex language. No one will question their solution if no one can understand it.
On the other hand, I'm a big proponent of the Algorand project and based on the general quality of their work (the tech, docs, tutorials, etc.), I'd be surprised if there were anything malignant going on.
It's a shame people don't understand that there's multiple aspects. Ethereum is much more decentralized, secure, have more dev mindshare, better community, tooling, and ecosystem. Let's also not forget that Algorand is powered by and centralized around team-run nodes.
Since you seem to indicate that you know what you're talking about, care enough to make a proper argument? You say Ethereum is more decentralized, secure and better tooling, but you never actually make a cohesive argument, only giving a list of "reasons" without any backing. I'm mostly interested in why you think Ethereum is "more secure" than Algorand, and what threat model are you considering here even?
> Algorand is powered by and centralized around team-run nodes
Hm, I run a Algorand node but I don't work for the Algorand team. What do you mean that Algorand is run by team-run nodes really? How do you even know which node belongs to who in the first place?
If only a fraction of the stake holders are validators at any given time, but the set of 1000 validators is selected randomly from token holders, then all you technically need is 1000 tokens (or more) and given enough time you will be selected as the only validator, right? You can then validate a fraudulent transaction, breaking security.
Now perhaps the amount of time it would take for this to occur would be longer than the heat death of the universe if you only have 1000 tokens, but at the very least, this substantially reduces the stake required to mount such an attack below the 51% required in a PoW system, right?
How is it “leaps and bounds” ahead of e.g. PoS Ethereum?
On a side note, I have mixed feelings about PoS. The idea behind Ethereum - that is, as I understand it, being able to deploy smart contracts using a Turing complete language -, is pretty intriguing; but the costs associated with doing so put me off. I tried to estimate how much it'd cost to deploy a fairly small smart contract a couple days ago (admittedly when 'gas costs' were high), and it would've been several hundred dollars, perhaps even surpassing a thousand. It seems like PoS would lower that, which is good, but comes at the great cost that people who aren't already in the game won't be able to acquire Ether without basically paying cash for it. That's a weird dependence on fiat currencies for a 'decentralized ledger'. (And yeah, there might be other means, but none of them are really practical for the average person.)
If there hadn't already been cryptocurrencies, nobody would've thought PoS to be a good idea. A bunch of people who hold some digital certificates that predictably multiply themselves want people to give them money to 'acquire' those? That would've sounded like a scam to me...
[0] https://decrypt.co/31646/nearly-120000-ethereum-wallets-prim...
Thankfully with ETH 2.0 the cost of publishing data on the chain will drop dramatically (there will be ~63x increase in throughput of publishing data, not transactions) so contract creation should be cheaper.
But really if you are interested in the space it might make sense to just publish on an L2 like polygon.
Mining at a rate necessary to get any reasonable amount of Ether is a huge investment, and is already out of reach for the average person. Setting your desktop computer to mine definitely won't pay for your small smart contract.
I started mining on my own PC a couple weeks ago, with the GPUs I already had (2x 1080ti) and made about 0.5 Ether so far. So it's definitely not impossible to get enough currency that enables you to interact or even deploy a smart contract on a consumer PC with a little bit of time.
I actually had to spin up a Virtual Machine with GPU passthrough to launch Windows because I couldn't get the GPU tweaks working on Linux. Really nice how vfio is now in the Linux kernel, it's been a breeze going through the setup (compared to a couple years ago when you needed a custom kernel.)
PoW is just as much depending on fiat currencies. You can't get electricity without paying for it, you can't get a mining rig without paying for it, etc. This is one of the more common critiques against PoS and it just doesn't hold true at all. With the decentralized finance ecosystem, you can put any supported asset to work and earn ETH or stablecoins or anything else you want and accumulate that way.
Maybe I'm an edge-case (I don't think so), but I was able to use the hardware I already owned, and the electricity already included in my utilities bill to acquire enough Ether that would allow me to deploy a smart contract. That won't be possible anymore in the future. So you're factually wrong, at least in my case.
It's ridiculous you talk about financial privilege. Who the hell do you think owns most crypto? You think it is people living on the streets in India? Children in Africa?
You sound super delusional. I can't believe it.
Do you want to be a citizen of that new government? What will they do for their citizens? Do they plan to build roads or anything else?
Seigniorage should go to the people not the capital holders.
Also, if people don't think there will be validators for each wallet with 32 coins -- which are producing Co2 -- then they are wrong. It just changes the game, not the incentives.
And the validators, PoS anyway, use very little energy even compared to traditional coin minting.
There's no inherent weird dependency on cash, there's only a dependency on whatever currency people choose to pay each other for work, which currently happens to be cash.
If people started paying each other in Ethereum-based tokens, you could close the loop and cash would not be a dependency.
https://capitalgram.com/posts/ethereum-2.0-staking-and-stake...
When BTC hits 250K per coin next year, expect 5x as much energy consumption to what it does use today. At 1M per coin we can expect 20x as much power consumption.
Highly unlikely that taxation can resolve this as global economy simply forces the miners to places where energy is cheap and abundant. And countries will view this as a competitive advantage as now there is a simple way to convert power directly into money. Many cases have shown that poor countries will use their environment to gain an upper hand and pull their country out of poverty. Sadly the impact to the environment is global.
https://bitcoinmagazine.com/business/bitcoin-uses-less-than-...
What does bitcoin do, right now, to make this even remotely comparable?
Do you all remember the energy FUD that the internet got back in the late 90s [1]?
Please! lets not sleepwalk into another PoS system on the internet to replace the previous one.
[1] https://www.forbes.com/forbes/1999/0531/6311070a.html?sh=3e2...
So, can they?
What’s the current transactions per day? How low can bitcoin energy consumption realistically go compared to where it is now?
Transaction per day -> it can do as many as you want. I run a lightning node and I've shown a lot of people how quick and cheap the transactions can be, and also how EASY it is to get setup to transact in bitcoin over lightning.
[0] https://blockchair.com/bitcoin/charts/average-transaction-am...
This doesn't fix the problem but it does fix the environmental impact.
This means that if you start acting maliciously, or even just not fulfilling your responsibilities (e.g. you let your computer go offline), then you are punished for it (depending on the severity of your offense, obviously).
Aka, you can't just wait for the money to roll in. You have to run a node, you have to verify blocks, and you have to make sure you're acting in the best interest of the network + keeping things running smoothly.
Specifically you are punished for:
- Being offline (the penalty is small, and roughly equal to the rewards earned by being online
- Running the same validator twice (huge penalty, be careful!)
It would seem that if some participants on the network can't abide by their national laws while running some contracts, the outcome would be inevitable. And then you would just get multiple chains running under multiple governments. This seems like a reinvention of the international banking system?
In this case, you can think about it as one person saying "I think it's a good idea if we do this" and a few hundred other people saying "I agree with you". Obviously, they're more likely to agree with the first person if they have some sort of institutional legitimacy. But is that "trust"? That's very different from the definition of "trust" that's generally used in protocol design.
https://haseebq.com/ethereum-is-now-unforkable-thanks-to-def...
So while this article is a (good?) argument for why all DeFi operators must follow USDC, it fails to make the case for why anyone else should care about the fate of centralized stablecoins. Maybe these reasons are obvious! But I don't know them.
Plus, due to slashing, you are uniquely responsible for mistakes your validator makes. So, staking comes with both responsibilities and consequences for breaching them, just like any legal contract.
The fact that you can rent a turnkey cloud solution to do all this work for you and split the profits isn't really relevant to the argument IMO (I consider staking with Coinbase "renting cloud computing" in a specialized way).
But as soon the switch happens, people will want to be staking their ETH in pools that will earn them money.
I don't have any problem with this in general, I don't think it is wrong to do business like that. But I personally prefer PoW because it looks like it naturally separates the mining work from exchanges, creating more decentralized economy.
How's that decentralized.
The times of home mining with CPU/GPUs are long gone
so do Ethereum users.
>In a PoS system there is an incentive for large stakeholders to increase block sizes.
this doesn't work because of Ethereum's social contract, just like it wouldn't work with Bitcoin.
Just because you stake a lot of ETH doesn't mean you suddenly have unilateral power to increase block sizes. There is a thing called consensus, and the entire community needs to achieve it to implement changes. Good luck trying to convince the community that bigger blocks that make it harder for small users to validate the chain is a good idea.
PoS also does not come with the property of innovation and disruption. In a PoW (especially ASIC-based) system you will find new ways to outperform your peers and disrupt old players.
PoW incentivices cheap energy in developing countries more than anything before. It is the fix for environmental problems.
That can only become true if and when governments decide to suddenly ban PoW, so that all that cheap energy services anything other than crypto. I don't think it works as an argument in favor of PoW, for the same reason "we're only spreading knowledge of chemistry and democratizing process engineering" doesn't work as an argument in favor of drug cartels.
Also, 'SR2Z is right - "cheap energy in developing countries" == coal.
IMO: it's much better than PoW as long as it doesn't end up too centralized. I'm not too sure how I feel about the minimum amount required to stake though, that seems a bit odd.
Also the current fiat system is debt based, which means that the vast majority of money is printed by banks and the money printing power is at the highest ranking sales person, and hidden.
If a person thinks that fiat payments work well, he hasn't really travelled yet to different cultures.
Fiat works, and works well. You're advised to keep some cash on hand, but it works multiple orders of ↑↑↑ [1] better than bitcoin
This is the genesis of a new crypto universe. It's hugely hyped, and a lot of it is clearly BS. But underlying the hype and hysteria there's a kernel of a new paradigm emerging.
Crypto applications promise to provide disintermediation on a scale not seen before. Direct peer to peer transactions, conducted transparently, without a need to verify trust and happening simultaneously anywhere in the world.
Not only that but smart contracts bring with them the potential to do stuff that simply is not possible right now. For example, providing instant conditional transactions (if my fave rental car is available book it, otherwise search for another solution, but only from these sources at this price) etc etc etc. We don't know what this means, but it could be a revolution. Or not. :)
Smart contracts, and all the other buzz words turn regular folk away. I'm hedging my bets on the coin with a dog on it for mass adoption. Even the word "Ethereum" (and "Eth") is less user-friendly to "Doge".
For me, all this ETH stuff is just hype (very few ETH owners actually care about the currency side of things and its already gone too far into pyramid scheme territory to ever recover imo). The dog coin works just great as it is right now for the amount of users it has. Any upgrades should be manageable before they are ever necessary.
They don't. All of "disentermidation" immediately turns around and restores all the institutions based on, you know, trust.
> Direct peer to peer transactions, conducted transparently, without a need to verify trust
Yup. Until you pay for something, and that something never arrives.
> (if my fave rental car is available book it, otherwise search for another solution, but only from these sources at this price)
Literally nothing prevents you from doing it right now, with existing technologies... Oh, wait. All rental car companies are closed to any integrations of any kind. Smart contracts will do literally nothing in this scenario.
Besides. If I go and rent a car from, say, Hertz, I get a contract written in plain language. It may be a little obtuse, but I can read and understand it. Smart contracts on the other hand are written in obscure esoteric programmming languages. Good luck telling people "don't worry, you won't be scammed out of your money because it has 'smart' and 'crypto' in it".
In practice it has never been more that a nuisance, as I've just gone to a different bank's ATM and it's been fine.
Count me among the people who have travelled and never encountered problems. I always bring two cards in case something weird happens, but I’ve never had to use the backup.
If established banking cards aren’t working in a country, it seems unlikely that relatively recent cryptocurrency would be working any better at their banking institutions. If their banks can’t take your bank card in exchange for cash, I doubt they’re going to be set up to take your Bitcoin.
Yes, this can be a real problem when traveling.
> Bitcoin always works …
This is obviously a completely bullshit statement. Bitcoin almost never works in places where credit cards or ‘fiat’ are accepted.
> If a person thinks that fiat payments work well, he hasn't really travelled yet to different cultures.
‘Fiat payments’ covers everything from the ATM network to cash to western union to Hawala. All aspects of fiat payments indeed have problems.
However the idea that today, Bitcoin solves these problems outside of a tiny fraction of contrived cases is a delusional fantasy.
Almost nobody in the world trades in Bitcoin. Almost everybody in the world trades in ‘fiat’.
However as a speculative instrument eth and Bitcoin are not my cup of tea.
How does that work? Is it a vanilla Eth transfer, or is a contract generated each time and you review the Solidity code before proceeding?
Similarly, you shouldn't necessarily trust a central bank when they want to print money. (I'm not inherently opposed to it and think the pros probably outweigh the cons for some situations and intents; just saying accountability in cases like these isn't as simple as "it's the people's will".)
Who has the highest amount of power in Bitcoin, and why haven't they done anything, for example increase the issuance?
How would that benefit them?
It's besides the point though, you can certainly benefit from holding power of the protocol but the reality is that there is very little of this dynamic.
Hence the impetus to try something different and more befitting the future of our species.
So, do you think that the dollar - and specifically the inflation schedule and distribution mechanisms of the dollar - can be reasonably said to be under democratic, rather than plutocratic, control?
But let's face it: most of the hype is in well-functioning democracies. Here, I cannot fathom why anyone would wanna replace fiat currencies with this crap.
In the "well functioning democracy" U.S. You have:
- Mistrust in institutions
- An insane asset inflation bubble fueled by the biggest fiat printing spree ever
Sure, the state hasn't failed. But are you really surprised people want to expose themselves to a new paradigm with different fundamentals for money and finance, this year?
Good luck paying for things with cryptocurrency-of-the-day without electricity. Or without authorities to call if your trading partner pulls a gun on you. But I'm sure the American solution is a diesel generator and an even bigger gun ;-)
This doesn't even begin to consider long term debt.
Mining has been concentrated in the hands of a few gigantic mining pools for a while, and PoS will actually make Ethereum more democratic. Again, this is based on documentation, there might be unforeseen consequences
Unforseen? This has been known before the miners eliminated the soft cap on EIP 669.
Obviously he's biased in favor of PoS for various reasons, but I think it's a worthy read.
The delusion that crypto is or can be the best thing humanity has ever created has to come to an end.
Let crypto just be another moderately useful system in society and let the speculation game die out.
The main difference with the fiat world is that with Ethereum you have transparency, and there is no corruption. You can't just bribe a politician to enact a rule you want. Everything that happens in the network is recorded permanently, and rules are not a suggestion, but a practical reality that can't be circumvented.
With endgame PoW only the rich can acquire mining ASICs and locate them in cheap/free (stolen) electricity zones. The vast majority of the world is entirely excluded from PoW mining BTC because the cost of electricity in their region makes mining unprofitable.
We could bring microtransactions to the web, and replace a lot of advertising, if transaction costs were zero.
Unfortunately, our representatives don't really represent us, so we're much closer to oligarchy than democracy.
Also, a full democracy it terrible. It's basically the equivalent of facebook... having representatives who's full time job is to be knowledgable is much better than giving everyone an equal say on everything.
This may be a radical take, but I think nations should introduce some unprecedented legislation: ban trade of proof-of-work cryptocurrencies.
Don't ban their trade because they make poor financial products, either because of rampant fraud or criminal activity. That's a different argument and requires different approaches. Ban their trade because global society shouldn't accept rampant incentives to literally burn up energy [1] to make financial products. Especially because proof-of-work simply just isn't necessary to have cryptocurrency.
Banning their trade won't categorically stop PoW cryptocurrencies. What it should do is completely tank their value and get the world to move on to less destructive coins.
I don't think there's any precedent for banning classes of financial products for environmental reasons, but it's time to create one.
[1]: In addition to environmental reasons, there's probably also economic ones. Mining burns through other scarce resources such as chip production capacity, although the true impact there is unclear.
I don't know and personally hold only a little bit, nothing I would be very pained to lose, but it would certainly cause a lot of economic harm to a lot of people to do what you propose. The idea cannot be taken seriously without first answering my question.
Bitcoin uses ~118 TWh - https://digiconomist.net/bitcoin-energy-consumption
Youtube souce is from 2019, Bitcoin one is current.
Other sources put Google’s total energy usage (including youtube) at around 12 TWh [1]. Total datacenter usage is estimated to be around 205 TWh [2].
[1] https://www.statista.com/statistics/788540/energy-consumptio...
[2] https://energyinnovation.org/2020/03/17/how-much-energy-do-d...
Bitcoin provides... idk a way for some people to make a lot of money and some others to lose it?...
Even if we say that BTC provides some value by transferring money etc. the amount of value per Watt is so slanted its ridiculous to even make that argument.
I could see a lot of people make the argument the production of a lot of energy intensive goods is not worth-while.
Which is to say, discussing on HN is a valid way to contribute your opinion to society. Voting is not your only voice.
if enough people agree that a law should be passed, and it's a high enough priority, and the opinion stays that way for a long time, then eventually enough politicians get on board by virtue of pressure from their voting base, and a law gets passed.
It's not great.
But on the other hand, near-immediate direct democracy is also not great, because it leads to knee-jerk reactions causing laws put in place. I'm thinking of stuff like the USAPATRIOT Act, except worse.
There will come a time when people like you -- who play God over others -- are ousted from society.
There are already laws in most countries forbidding you to litter, and you would never call that "playing God" - it just happens that littering with crypto mining is a multi billion dollar industry.
It's just not a realistic outlook on how typical people want society to function. Most people do not believe PoW cryptocurrency is important to society.
It's literally regulation to stop "Proof of work". Which is a generic algorithm that can be applied to other circumstances.
It could have applications in CAPTCHA's, or anti-spam.
It could be a critical component of other decentralized technologies, not just blockchain crypto currencies.
Making this math illegal JUST to kill cyptocurrencies seems a tad much, right?
Governments already have regulations for energy efficiency, waste and pollution, and for most things it's possible to negotiate reasonable limits.
For PoW it's not possible. If you put an upper limit on its wastefulness, it'll be a limit on its security. Even if we had a Dyson Sphere, PoW would eventually eat more than half of it just to be secure.
Maybe in theory but in actuality it is comprised of moneyed interests which is why it needs to be limited to preserve the freedom of the people.
I disagree. If we must cap the CO2 we can emit, we should definitely favor basic needs over luxury. Here in France, the government tried to set a carbon tax on gas (which is required for many simply to commute to work, with no affordable alternatives yet) but they refused to impose a tax on jet fuel which is known to be used by the ultra rich to fly their privates on the weekends (while they can afford high speed trains).
We should not just let money decide what's possible, when so many are still in need of basic necessities. Many could pay a 300% tax just to fly 10x a year across the globe (emitting many, many times the carbon footprint of an average household). How would that be fair, when the problem is not what people pay but how the planet is becoming inhabitable?
I do not believe consensus mechanism other than PoW can provide enough security for a cryptocurrency
What's interesting, is that you can gather ~300 random citizens - including jet setters and cryptofans - and let them think about it for two years in order to decide what they considered as basic needs, on a consensus basis. And then, we can organize a vote (e.g a referendum) to make sure society finds a common ground on this (just like we do for most things, such as banning crime).
See https://en.wikipedia.org/wiki/Citizens_Convention_for_Climat... for a good example.
I bet PoW would be far down the list of basic needs but it might, still. I like democracy (where people vote, not their fortune).
If carbon taxes go up, some things will no longer be worth spending energy on, but crypto mining is just competitive, so the value of mining will go up with the cost of energy and keep using as much energy as ever. The only thing that can stop it is reducing demand for the coins, which the government is not even trying to do yet.
That is not true. If the cost of energy increases, mining / hash rates will decrease. Miners are competing, and the limit to the price they will pay for electricity is the value of the cryptocurrency they are earning for the activity.
I am all for carbon taxes, to shape the market towards cleaner energy. And I do think it will successfully push miners even faster towards adoption of other energy sources.
Humanity will continue to require energy as it advances and banning anything "because it uses too much energy" is a ridiculous advice. How about we ban gold mining, or set quotas on the number of children people may have, that will surely contribute to our CO2 reduction goals. It's also Orwellian and reminiscent of how the world looked like for citizens of the USSR back in 1960-1990
it’s all fun and games until I ban something you rely on for your livelihood
And to do so for speculative fun is ridiculous.
Also, how do you decide which computing is good and which computing is bad?
Kill the value of POW as a store of money and see how much of that computing still happens. Then you’ll know how useful it is.
now, the question is: who decides what’s acceptable and what’s not acceptable for energy use?
That you only use it to watch videos that bring zero gain to your life is a You problem.
"the internet uses 10% of the total electricity consumption worldwide. How much of that is consumed by Youtube? After Netflix and embedded videos, Youtube is the third biggest global internet bandwidth eater. About 11.4% of global internet traffic is consumed by Youtube"
That figure assumes that the electricity usage of the internet is exactly related to the amount of bandwidth - so if YouTube uses 11.4% of the internet's total bandwidth, that means that YouTube uses 11.4% of the internet's total electricity consumption.
That is a highly dubious assumption.
VS
An estimate of Bitcoin power consumption by the Cambridge Centre for Alternative Finance.
I know which one I’m more prepared to believe.
Even if this were true. I go on YouTube and can learn things: recipes, FreeCad tutorials, coffee nerdery, harmonica lessons.
Bitcoin literally does nothing.
The virtue of energy use argument is just dumb.
As far as I can tell PoW is the most proven consensus mechanism so far. PoS may be promising though. ETH2 successfully switching will be telling.
Electricity is a commodity and a utility. Who are you or I to subjectively decide that a use is valuable or virtuous?
Is YouPorn worthy? Is MLB.tv valuable? What are the criteria that you use to determine worth?
Yes because people like porn and baseball.
Bitcoin is like gold. It’s valuable because other people say it’s valuable. But nothing useful happens when you mine crypto. Was I entertained? Did I learn something? Are they producing a widget? Even gold can be made into jewellery or used in electronics. Crypto literally just uses power.
Except make those little pieces of green paper in your wallet look foolish.
By enabling ransom ware attacks? Creating GPU shortages?
By optimizing around energy conservation at all costs, we have homes that cost 3x, held together with glue, susceptible to mold, and filled with toxic crap like vinyl.
You're advocating for violence against people who do things you don't like. Use your wallet and leave other people alone.
Oh give over, this is ridiculous too.
When other people are causing harm that affects everyone it's perfectly reasonable to look at legislation to kerb the behaviours.
And no, that's not violence. No.
i find views that want to ban anything for energy consumption ridiculous. also what the people advocating for this kind of thing are missing is that it’s all fun and games until something you rely gets banned because of reasons.
here are my proposals:
the entire banking system is obviously using a lot of power. how about we ban banks and go back to using paper money. that’s def more environmental friendly. /s
electric cars run on energy that’s generated with coal. that’s not cool. let’s ban electric cars and keep driving gas cars. they have been around for a long time and the technology is so good that we actually pollute less with a gas car /s
the internet in general and datacenters in particular are using a lot of power. let’s ban datacenters. guaranteed between environment afterwards /s
Also "until something you rely gets banned", what do you rely on bitcoin for besides being a store of value?
my point is that you don’t get to decide what i consume. and banning bitcoin == banning any type of computing that you don’t like. do you understand how much power a modern datacenter sucks? do you also understand that some things that run in a datacenter are straight up dangerous to the fabric of our society?
I am not making any decisions about your consumption. Our democratically elected government is responsible for making the best choices that balance our societal needs. Our government already regulates a lot of things around computing: Child porn/CSAM, export controls around cryptography, data privacy, the computer fraud and abuse act. This isn't novel stuff, having a computer doesn't mean you can do literally anything on it with zero consequences.
democracy? data privacy? thanks for the good laugh
Where do you see the problem in using less energy for a crypto currency? Why not make a cryptocurrency that uses even more energy?
Why not?
>or set quotas on the number of children people may have
Some people consume 10x less energy than others, so blindly capping the number of children does not seem a good idea. What about capping the carbon footprint per person instead?
We track and tax revenues (not perfectly but as well as we can). We could definitely track and cap carbon emissions. Sounds good to me!
Not right now it's not. Not when we have constraints on how much CO2 we can pump into our atmosphere.
Right now, and I mean right now, when we're having huge problems de-carbonising the planet's energy supplies and are risking making life very uncomfortable for ourselves for decades or centuries to come, limiting energy use is actually one of the few levers we have to try to make a difference.
In this current situation, bringing online a whole new mid-sized country's worth of energy consumption for a financial instrument is ridiculous, and a huge own-goal for humanity.
Proof of work is the only thing of value, the only distributed consensus model that is secure and the only way forward for store of value cryptocurrencies.
Unless you are suggesting taxing crypto itself, in which case… sure!
In other words, the amount it takes in can be given back to the average person -- in forms of tax rebates, investment in public transit, education, whatever. In an ideal world a carbon tax would have no adverse impact on lower and middle class people.
I should also add that in that world higher electricity cost due to carbon tax is a good thing -- it'll help carbon-neutral sources of energy to compete and replace the more dirty forms. Which is exactly what we want.
[1] - https://citizensclimatelobby.org/carbon-pricing-studies/
But perhaps more importantly, you wouldn't be taxed because others are using electricity for virtual money. You would be taxed because your carbon emissions are causing climate change, and to encourage you to reduce energy usage where possible.
All money has a cost on society. You have to do something to maintain its value. You don't think wars in the middle east -- to maintain the petrodollar -- have an environmental impact?
And when it isn't oil it'll be fights over germanium and lithium veins.
If you actually cared to do more than sit in a chair -- advocating random things you didn't research -- you'd be advocating for Thorium power. Thorium is nearly as abundant as lead -- it's all over the place -- and it's much more clean and less dangerous than even solar or wind.
Also, you can make the tax progressive so that the high consumers can pay much more.
What if we want to decide that we want to minimise carbon, but some use of energy is preferable (for instance consumer/home use) to bootstrapping new financial products?
and that's where the price signals what is preferable. The correct allocation of energy should be based on the price people are willing to pay for the energy. Like any other commodity.
Why? Why is that 'correct'? Why would we not want to ensure the population has affordable energy for home use, but others seeking to make a profit from it rather than use it for basic needs pay more?
You phrase your reply as some sort of moral absolute, but it's nothing of the sort.
Because we already have the former and we don't need the latter.
A carbon tax with a dividend doesn't make life harder for lower income people, because they already have below-average energy consumption (wealthier people have bigger houses that need more heat etc.) and as a result the dividend would be larger than what they pay in tax.
But you still want them to have good incentives. If they can use the dividend to switch to solar or buy an electric car, you want them to do this, because that's the whole point.
Meanwhile there is no reason to charge profit-seeking enterprises more than the true cost of their usage, because all that's doing is inhibiting economically productive activity. Aluminum smelting uses a tremendous amount of electricity, but what you want is to cause them to switch to non-carbon electrical generation, not to shut down operations.
Is not what was being proposed in the free-market fundamentalist post I was replying to.
> Meanwhile there is no reason to charge profit-seeking enterprises more than the true cost of their usage
But there might be if it's merely "burning energy for a new financial product", society might decide that it's not worth the carbon to have that around, regardless of tax, but that aluminium is a useful physical product.
We have differential taxes on all sorts of things, I don't see why they would be so wrong here.
But even given all that, my comment you're replying to was specifically adressing the "price should be the only indicator" assertions in the libertarian spiel above.
A carbon tax with a dividend is the free-market fundamentalist proposal. Markets require externalities to be priced and a dividend is the most economically efficient use of the revenue so generated.
> But there might be if it's merely "burning energy for a new financial product", society might decide that it's not worth the carbon to have that around, regardless of tax, but that aluminium is a useful physical product.
The way of determining which is pricing. If society values "new financial product" more than the cost of the energy, including the carbon tax, then it gets produced. If the carbon tax increases energy costs to the point that "new financial product" isn't viable in the market, it doesn't. Or it switches to non-carbon electrical generation at which point you can't blame them for climate change anymore and they're expediting the transition to renewable energy by financing the creation of generating capacity and increasing economies of scale.
It's specifically not the one I was replying to -
"The correct allocation of energy should be based on the price people are willing to pay for the energy. Like any other commodity."
> The way of determining which is pricing.
It's not the only way, it's not even the only way that's employed right now in a lot of places, for instance we don't apply sales tax to items we deem 'essential' here in the UK, have a 5% rate for some things and 20% for 'luxuries'.
Price is not the only mechanism available, nor is it always the best one.
This is in no way inconsistent with the need to price externalities, which is the default assumption in free market theories. (Otherwise you have obvious problems with people dumping industrial waste into rivers etc.)
> It's not the only way, it's not even the only way that's employed right now in a lot of places, for instance we don't apply sales tax to items we deem 'essential' here in the UK, have a 5% rate for some things and 20% for 'luxuries'.
Just because somebody does something doesn't make it a good idea.
Things like that have counterintuitive economic consequences. See what subsidized student loans do to education prices. Is this what we want for "essential" goods?
If we do that, the tax rate has to be higher for non-"essential" goods in order to generate a given amount of revenue. Now you're into central planning to determine what's "essential" and what isn't. Is a laptop a luxury good? A poor person might need one. What about an electric car? Meanwhile every such decision of what to tax more is subject to lobbying and corruption.
If you want to help the poor, give them money. They know what's "essential" to them better than the bureaucracy does.
There's nothing in free markets that will make this happen without regulation, as evidenced by the fact that it so far hasn't happened.
> Just because somebody does something doesn't make it a good idea.
No, but it also doesn't make it impossible or something which can just be dismissed. There blatantly are mechanisms that can be used other than the ones you mentioned. You don't like them, that's not the same as them not existing.
However ridiculous you want to make the results - oh my god now you're into planning! - this already happens in quite a number of pretty successful countries, so it's clearly not some bizarre fantasy.
According to hardcore libertarian free market theory, polluting someone else's property without their permission is a violation of their property rights. In principle this would make it impractical to burn anything at all, because the combustion products go out into the air and spread to someone else's property without their permission. You would need the permission of everybody everywhere, for which they would want to extract payment.
Obviously that isn't how it's implemented in the US, but that's what the theory says should happen.
A carbon tax + dividend is a pragmatic alternative. The criticism of it is actually that it gives the polluters too much -- maybe someone thinks the tax isn't high enough and wants to demand more of the carbon emitters. By implementing the tax you're taking away their right to refuse to have their air polluted and hold out for higher payment from the carbon emitters.
> You don't like them, that's not the same as them not existing.
Nobody was claiming that implementations of bad ideas don't exist.
Actually it sounded a lot like you were saying that the only way to do this was pricing.
Either way, you'd have to go a long way to convince me that the free market ideology principles are always better than what we can see working in a number of wealthy, successful countries already.
A carbon tax and dividend is certainly one way that such things could be achieved, though it's not the only way and it is a blunt instrument. It's not the only way or necessarily the best, and it doesn't allow a society to make choices with much granularity.
Your argument is basically that it is wrong to do so - I think that's a pseudo-religious belief.
i argue that pricing carbon is the only way to allow everyone in society to make their own choice with the granularity that you propose.
After all, when has central planning ever taken everyone into account properly? How will i know that policy makers will take my interests into account when they plan policies?
And in this specific case, what about the people who _do_ want to mine crypto? Why do they get the bad end of the stick, just because some authority says so?
That's the point - it's perfectly fine for a society to decide what energy can and can't be used for, because we don't live in a time when we have infinite, environmentally neutral power available to us.
An obvious example is the existence of pseudonymous digital payments. Given that cryptocurrency already exists, and will continue to exist for all illicit activities even if you ban it, you might as well let people open numbered accounts at a bank.
Do this for any other advantage cryptocurrency has over the existing banking system and there is no more demand for cryptocurrency. And without demand, the price crashes and people stop burning coal to mine it.
A re-distributive carbon tax incentivizes efficiency, doesn't hit stuff like renewables and allows individuals to keep on choosing what they want to do with their life.
Just because you don't find facebook valuable doesn't mean that others feel the same way.
With PoW the state can influence the existing miners, but cannot prevent new independent miners to pop up and counter act.
Bitcoin (the network with the most mining effort) lost 25% of their hashing power due to blackouts in Xinjiang. (Soure: https://twitter.com/nic__carter/status/1384938089748041730?s...) State capture of a majority of Bitcoin miners is comparatively easy.
In addition, independent miners have less hardware and that hardware is generally less efficient when compared to the large ASIC farms. In reality a recovery would probably require social consensus and a hard fork
And other methods introduce the possibility of stake grinding.
BOTH converge to the same energy usage as mining.
OTOH, the legacy financial system is significantly more energy intensive for a given financial network value. You don't think banks and wars in the middle east to maintain the value of the network have an environmental impact?
Many of you in this thread need to read up on how the staking is designed to work.
With PoW you can corrupt many miners, but the other superpowers can spawn new miners to counter act.
Slashing stake is significantly more arbitrary. You basically need to reset the coin's ledger in order for it to make any sense.
It's only possible once, and this move is so obviously predictable any determined attacker is going to have gpus ready.
That isn't relevant to the conversation of stakers having misaligned incentives to change the rules. The most a state level actor can do is censor transactions if they were to take over a chain.
With PoS you'd need to slash the validators stake on a fork; which isn't going to happen because the stakers run the validators everyone is using. You already saw this with the steemit takeover.
In PoW coins, the miners and validating economic nodes are two separate groups. Watch what happens when exchanges slip over to Eth2 nodes and call it Eth.
During the BCHA/BCH split the exchanges were the ones that decided the ticker. Most users have ZERO CLUE about what happened. They went on their with their lives calling the fork the exchanges chose BCH. Once exchanges are validators there is no bulwark against changes.
Which is the exact thing state level actors want to do !
What is the use of crypto if the state can ban me or my country from it ? Isn’t that exactly what decentralisation was supposed to prevent ?
Sorry but I don't see your point here. A fork inherently requires action, it's enough to force a node to follow a different block from some height. At that point the attacker would get penalized for being offline. Outright deletion would require code modification. It's even possible to automate a minority fork in the case of censorship, although this capability doesn't exist yet.
>You already saw this with the steemit takeover.
Steem isn't even PoS, it's dPoS. Even in this case users successfully created a fork called Hive and removed Justin Sun's coins.
PoS is resistant to state attacks because it would require buying up tokens on an impossible scale, and in the case an attack somehow succeeds a fork can be created that deletes the hostile stake. This can be repeated indefinitely. That's impossible in PoW more than once, once a gpu PoW gets attacked it's over.
PoS has no economies of scale, so contrary to PoW it can stay decentralized forever. There's no way to make existing stakers unprofitable by adding more nodes, like it's possible with mining hardware in PoW.
PoW is also vulnerable to takeover of existing miners because mining at scale requires big industrial warehouses with industrial power owned by registered companies. Impossible to hide. PoS can run on anonymous home nodes.
In every single security and decentralization aspect PoW is hopelessly inferior to PoS.
You don't need to buy the tokens. You make laws which the stakers have to follow, otherwise you seize their tokens for breaking the law. You can also use electronic warfare to steal the tokens of stakers outside your juridiction. If you are doing this as a big country such as USA/China, then other stakers might be tempted not to fork because a compromised system that works with those countries might still be more valuable than an uncompromised system that has not access to a large part of the world economy.
>otherwise you seize their tokens for breaking the law.
that's not possible, there's no mechanism to seize eth. What can be trivially seized, though, are physical miners.
Additionally except for eth all have the fundamental problem of extremely centralized distribution. This [1] extreme centralization is representative of new VC coins. That tiny sliver of 'Coinlist (unlocked auction) 4.3%' is the only part that was available to non-insiders.
[1] https://icodrops.com/wp-content/uploads/2018/04/Solano-token...
I'm also wondering about the resiliency of PoS. The PoW used in Bitcoin has demonstrated resiliency against attacks, and none of the attacks have been successful so far, that I know of.
Multiple PoW coins have been successfully attacked, like ETC. Because they are already on GPUs there's no fix - just hope it doesn't repeat. Those successful attacks prove that any attack on PoW is only a question of external resources (sha256 ASICs for btc).
It's also surprisingly hard to profit from a 51% attack on pure speculation coins like btc or etc because next to zero actual economic activity is happening on them, which is why such attacks were rare and small in scope. The best you can actually do is to try to double spend an exchange. If they were actually used for real commerce profit becomes much easier. It could also become a military goal - if Iran relied on a PoW-coin for its economy, blocking their coins would destroy their economy.
This is one of the reasons why ethereum absolutely must switch to PoS - PoW is extremely insecure for smart contracts because there are many more ways to profit from an attack, like censoring price updates for defi.
Seems like you know a lot about PoS, would you be willing to check out my other comments on this post (https://news.ycombinator.com/threads?id=swensel)? I've covered some concerns / questions that I have about PoS that maybe you can answer in more detail.
It's not just miners, it's also full nodes that validate.
Full nodes can disagree with miners: instant fork.
If say Putin would acquire 51% of mining hash rate people would realize (before he gets there) and would fork.
My comment is not in support or against PoW, I'm just stating the fact that PoW isn't inherently unsafer than PoS.
After that, if the fork becomes popular, the attacker moves and attacks it again. Are people supposed to fork once per week? At that point it's not PoW consensus anymore, because the interventions move from emergency to normal, and you're under something else.
Proof of Stake as setup gives all the power to people/companies who have large amounts of liquid assets.
Consider Amazon, they keep a rolling window of cash in-between when an item is sold and when the seller gets paid. This effectively gives them billions in interest-free capital. If this were Etherium, it would translate into huge amounts of voting power.
Likewise, if/when people deposit their etherium into banks, those banks can then leverage that "free" capital to grab huge voting stakes that wouldn't otherwise exist (because no person living paycheck to paycheck has the equivalent of 100k sitting around).
This leverage simply does not exist with proof of work.
All that wasted energy is paid for by the holders, and proof-of-stake is just more financially attractive.
No government intervention is required IMO.
Could you explain me what energy is "wasted" in Proof-of-Work and also how the people currently holding the cryptocurrency is paying for that "waste"?
AFAIK, the same number of blocks are made no matter how many transactions are being made or how many holders there are (or how much each holder "holds"), so the energy consumption of Bitcoin remains more or less the same during an hour, only slowly rising as more miners get on-boarded. But the energy consumption of those brought online remains the same over the lifetime of the miner instance itself.
If that's not the case, how do you propose to enforce that all use cases use less electricity, and how do you punish those who use too much?
The tax avoidance schemes in Europe are well documented for all tech companies.
And what do you mean by employment taxes? Just the employers part of the income tax?
So 21% + 15% to 20% capex on individuals = a tax rate around the same.
Now, if you really want to look at the big picture, look at a company's tax rate of 21% on profits, but they also pay taxes on employees of ~21% of salary in the USA not to mention health care (which in europe would be included as taxes so maybe in Europe 46% to 50%). So if payroll is 40% of your costs that is another 8.4% of taxes added in there. And, you can probably add health care as a tax as well.
Legal tax avoidance is legal. I hate when people bitch about companies doing legal maneuvers. It is very easy to stop that, apply a tax on gross receipts for all income created in the country.
Washington State does that for example if you have a company operating in their state.
And Bitcoin is hardly used for any transactions, and its energy usage will increase linearly with BTC price.
(If someone has a direct source that would be great. Statista is not good)
Update: seems the FB figure is correct, for 2019: https://sustainability.fb.com/report-pages/renewable-energy/
Therefore, if the price of Bitcoin doubles, miners can afford to burn twice as much electricity. (Roughly. This is a simplification of course.)
Proof of stake is a newer way of coming to consensus on one correct chain. It took people a while to figure out how to do it securely and efficiently.
However, in Facebook's defense it's per-user per-transaction energy costs are going to be much lower than Bitcoin.
Did Ye Olde BBS support 1:millions broadcasting, and real-time viewing of high-definition video? Uploading and viewing thousands of high-quality photos?
Calling Facebook 'basically a giant BBS' is a lot like saying 'Oh, I could build Twitter in a weekend'.
Especially when talking about CO2 emissions absolutely everything is included, including plane trips and whatnot.
That comparison ignores the actual value add of Facebook and the fact that people are using it. Most BTC trades happen off blockchain and are powered by the servers of the market places and nobody really knows how much energy they use.
Don't address of any the things that you are proposing need addressing, because they don't need to be addressed in the same law, or really addressed right now at all.
The law doesn't need to try and anticipate the actions that occur in the future, we will still have a legislature in the future capable of addressing the future when it comes about. The law needs to address the actions of today.
Instead, they explained why these questions are (partially) misguided.
That's also an answer.
Because that is what always happens. Every time someone make s a general proposal, for any law at all, there are people making the same old, dumb argument, of "well who decides?!?" Every single time.
Sure you do not believe that all laws ever are wrong, right?
Because the answer to this dumb question is the same as for every law ever. That makes it valid, unless you believe that all laws ever are bad.
There are absolutely many laws, that are very targeted and specific. Were you unaware of this?
For a random example, there are laws that probably say something like "A truck, of this size, must follow these specific environmental regulations".
That would be a specific law, that applies to a truck, and required it to do a specific thing, like have a certain mileage efficiency, and it is not general. It is pretty specific, and it is not a general law that applies to all environmental related things.
The world is full of many specific laws, all over the place.
The question was about how to choose who is using too much and how, and the response was basically "don't think about it, we will exist in the future and can think about it then." But we exist now. And even if we were to wait, it's still a question we can answer now to have enacted later. The response provided was a bypass, a non-answer.
That's an incredibly dangerous idea.
It's good that Ethereum is moving to proof of stake. Not because of some environmental impact though. Mining is just really expensive, it results in huge fees making the coin almost unusable for normal people.
Today you probably consume more energy in a few days than your ancestors whole lives.
Now, we've created distributed, immutable property, something that has never existed before. It turns electricity into value storage. What is the "correct" amount of energy for humans to spend on such a thing?
Perhaps the "correct" amount is less than what it would take to increase planet temperature by 4°C?
You're equating energy usage to carbon emissions, but you should be able to distinguish the difference.
As long as we're using fossil fuels, planet temperature does in fact have something to do with energy consumption. You seem to be arguing that because renewable energy sources exists, Bitcoin has nothing to do with fossil fuel emissions. However, that is false, as 8% of Bitcoin mining happens in Inner Mongolia, which is home to many of China's large coal mines[0].
[0]: https://www.independent.co.uk/life-style/gadgets-and-tech/bi...
So when you call for a ban of Bitcoin in the name in environmental concerns, you've decided to be the arbiter of energy usage, on what is productive and valuable, and what is not.
You're welcome to argue your points, but it would still be far more efficient and productive to addresses the actual core problem: coal fire plants, and energy prices.
Even better, how much energy is wasted per page view due to inefficient frontend web frameworks?
Seems to me that code is speech, and restricting what one can and can't do with silicon that one owns is absolutely ridiculous.
> a bunch of aircraft carriers and planes and bombs and people with big guns, which gives the ability to say (credibly) that it is a crime to forge dollars no matter who you are or where you live
Cryptocurrency offers all this and more for a fraction of the price.
> Current estimates put bitcoin’s energy requirements at around 130 terawatt-hours (TWh) annually, which would rank it in the top 30 electricity consumers worldwide if it were a country.
Source: https://www.independent.co.uk/life-style/gadgets-and-tech/bi...
This concern over the environmental impact of cryptocurrencies is utterly laughable when you figure out the real source of these problems. I guess they're just too powerful to be messed with.
Well, some environmental activists try by turning off oil valves[0], just like environmental activists are upset with Bitcoin.
> You have big entrenched organizations such as the oil industry doing far more damage.
People who criticize Bitcoin for its environmental impact don't give a pass to oil companies. The issues overlap, like in Texas where they plug Bitcoin mining rigs straight into the oil well[1].
But I hear you. All big entrenched organizations must be held accountable. Of course.
[0]: https://abcnews.go.com/International/wireStory/companies-dec...
[1]: https://www.independent.co.uk/climate-change/news/bitcoin-mi...
People who want to see real change need to deal with fossil fuels. Taxing mining operations will do absolutely nothing to solve the actual problems of this world.
there's every incentive for it to keep growing forever, which is what makes it dangerous
vs. there's only so much ice cream people can eat
Subsidized coal mining and untaxed carbon emissions are dangerous ideas.
Why not focus on the source of the electricity rather than what the electricity is used for?
> proof-of-waste
It's Proof of Work. Productive work has value and in this case, it's widely distributed censorship-resistant validation of transactions.
This makes investments in renewable energy infrastructure more profitable and paid off sooner. A solar farm has more demand and higher margin for its products.
On the other hand, it means cheap coal energy is also financially productive.
What is anti-economical is the unfair price competition due to externalities not captured by coal energy's pricing.
once again, you have merely just assumed the role of arbitor. What makes this opinion better than the opposition?
What needs to be addressed isn't energy usage, but the cost of energy in the first place. Why isn't the fix be passing a law to tax carbon properly? Tax the externalities, and the rest would follow. I don't care if people burn up energy for crypto, as long as they pay for the cost properly.
This is literally the role of legislators. What makes "my" opinion better, is in the event that this sort of legislation passed, the majority of the elective representatives in both houses agree we should ban proof of work crytpo currencies, nothing less, nothing more.
> [alternative proposal]
I mean, I happen to like this proposal too, but you haven't given any reason not to do both...
Nothing about the opinion is better than any other. But the only thing we have to achieve is that it is a majority opinion, which frankly doesn’t seem all that hard to me.
So while carbon pricing would be a more ideal solution, OP is suggesting that a targeted ban on POW crypto is a good-enough bandaid that might actually pass.
If we won't legislate it now, it's possible we won't get a chance to do it later thanks to bickering from lobbyists and fossilised laws and practices. See IPv4.
Banning PoW cryptocurrencies is not a big enough priority for anyone that it will be a motivating factor to move past the other issues surrounding the climate debate, especially not anyone on the side of "don't do [thing] to fix the problem". I don't see any other mechanism by which it makes passing other climate legislation harder.
Banning PoW cryptocurrencies removes money that is currently on the side of "don't pass climate legislation because it will harm my PoW cryptocurrency business" from the table. That makes passing future legislation easier.
In general, trying to solve all the worlds problems at once doesn't work. It's too complex, you paralyze the decision making body with too many tradeoffs. When something is obviously bad, banning it immediately not only has the effect of meaning it's gone immediately (and doesn't hang around until you solve the whole problem), but it simplifies the remaining problem for the decision making body. This makes them more likely to come to a consensus on exactly what to do in a finite amount of time.
Does it? And, do you have data that backs this up? It stands to reason to me that PoW miners only want cheap power; they don't really care too much how it gets generated. Considering that the cheapest power source you can build out today is green energy, it sounds like a win-win to me for them to put their money into "advocate for more cheap power."
I don't think this applies to laws. In fact, I'd claim the opposite. Laws are something you REALLY want to get right
But that’s exactly what the law should do...
I'm curious if someone driving an electric would get ticketed as well.
EDIT: Specify the part of the post that bewildered me.
Thanks for the information.
Spinning up cores to do intensive math for the sake of its difficulty is wasting energy by design. PoW's financial incentive is to waste power.
Facebook spends a massive amount of money on compute, and their profit is only as good as the margin they can make over that compute cost. Therefore they have a financial incentive to save power.
Fundamentally it's become too big a waste to ignore, like so many other things. We banned incandescent bulbs, we can ban proof-of-waste, which is basically an incandescent bulb that never illuminates anything.
To paraphrase Alan Watts slightly, do you know of a law that set everything to right? Let's just all sit around twiddling our thumbs eh? Since you obviously didn't really offer a counter solution.
modern politics in a nutshell
unless of course those regulations are about regulating "big tech" for "censorship".
The (counter) solution is not to discuss for what to burn coal, but to finally stop burning coal, oil and gas. USA and EU could do that within a few years. And then stop or tax imports from countries that still do burn coal.
But that is inconvenient for many, so they prefer discussing nerdy Bitcoin PoW instead.
And secondly and most importantly, the government should not decide what products are allowed to be traded: Governments should lift all bans on products currently banned, all drugs, all books, all music, all banned clothing, etc.
Is there a concrete plan for how this would work documented somewhere? The ways I can think of doing this in the USA are all politically nonviable.
Which makes it a self-inflicted injury. Like corruotion in Russia - it can't be adressed by anyone else.
I can think of many things equally or similarly energy wasteful as Bitcoin.
It's a nondescript pollution factory from the Captain Planet cartoons.
Every other wasteful activity has just been overconsumptive, decadent, or externalized, not an actual burning of resources for no reason.
If you spent the same energy used to mine bitcoin on producing Legos or In-N-Out burgers, then you'd have much bigger problems.
I
https://news.climate.columbia.edu/2010/06/04/the-problem-of-...
https://blogs.scientificamerican.com/anthropology-in-practic...
Why not both?
All energy production will have an environmental cost, not just carbon dioxide emitting ones.
As for the carbon side of the issue, that isn't something which is specific to cryptocurrencies or any other kind of energy usage. I support carbon taxes and import taxes on CO2-producing goods/services, including cryptocurrency services, and I am certain that many cryptocurrency believers feel the same way.
Instead what people are doing is advocating for the government to come and point guns at people who don't do what they want -- even if they happen to be wrong. And when they are wrong, there are disastrous consequences as is currently extremely apparent in California. There are all kinds of perverse incentives which have resulted in the severe homelessness and extreme government waste.
The people advocating for this neither listen to the wisdom of Murphy's law, nor do they understand that when regulation impacts the market that regulation becomes what is bought and sold. Have you never heard of regulatory capture? That has worse human-cost impacts than leaving people to their own devices.
Vote with your wallet. Don't like the environmental cost of beef? Don't buy it. This works -- you can see it playing out.
https://ichef.bbci.co.uk/news/976/cpsprodpb/BA65/production/...
As another good counterexample to your "market solutions for everything": I don't want rhinos driven to extinction, so I vote with my wallet by never buying powdered rhino horn or other poached products, and donating to environmental charities to protect them. However, it's very likely that rhinos will be extinct in the wild within our lifetime. Does this mean "the market" has decided to exterminate wild rhinos? Should we eliminate poaching regulations and remove red-tape to stop distorting the free-market price of rhino horn?
Current 'free market' is just fancy name for barbaric ransaking
Sorry, sometimes there are great reasons for regulation.
Fixing the problem is up to you.
~"The reason things things never change is that those who stand to lose by change are the ones who hold all the power" -- Machiavelli
Humans optimise for short term gain, generally perceived gain over others, and rationalise this over large nebulous things like climate change, environmental health etc. They don't count externalities without being made to. And that's individuals. Companies are downright sociopathic and will happily defecate in their own back yard if they can make a dime out of it.
As a result we can already see what happens when people are left to choose themselves or the environment, they choose their own short term relative gain over the long term prospects of the whole species (before we even look at other species).
> Fixing the problem is up to you.
Yes, in a democracy it is, which is why I vote for political parties which will bring in regulations.
Huh? Great newa! I can pollute and create oilspills and its all someone else's problem!
One of those is the assumption of perfect competition. Electricity is far, far from being a market with perfect competition. How many electricity providers are you able to choose from at your house? I'm going to guess 1.
Another assumption that doesn't hold here is the absence of externalities. The full cost of damage to the environment is not included in the price you pay for electricity, so people are going to over-consume it.
You rail against laws and regulations but even in the second sentence of your post you assume their necessity with the phrase "create an economic system..." Laws and regulations are how you create such systems.
Regulatory capture is a real thing, but it's not a good argument against all regulation. Maybe it's an argument for relatively less regulation than we'd have otherwise. It's also an argument for doing regulation better.
That doesn't mean that threads on HN can't take a nosedive and become flame wars. But that's what good moderation is here for, and I believe HN has that.
In this case, tax carbon. Then people will decide what they want to spend their (expensive) energy on.
It is very possible to bring up edge cases in a productive manner. Expand the conversation to include them. there's no need to assume the first solution idea posted is meant to be the final form
By banning that because it uses "too much" energy now - what are we potentially losing? What developments in renewables, energy storage, or grid development simply won't be there, which we won't know we don't have, because we banned the largest for-profit, skin-in-the-game competitive contest for low-cost energy that the world had ever seen 25 years prior?
Banning it outright is short-sighted. Thinking about it from a higher level is a way of addressing the real issue of carbon emissions while allowing a phenomenon that has the potential to massively help, not hurt, to thrive.
The issue is clearly a tragedy of the commons - the cost (higher air pollution/higher energy costs) is socialized, while the profits are centralized. So the maximization function is cheap >>> anything else. Why wouldn't we expect more and larger coal plants versus research into fusion reactors?
Unsubsidized renewables are already the cheapest new source of energy generation. [0] Even if miners wouldn't be doing direct renewable research themselves, their capital investments into renewables in the name of competition and cost-savings would incentivize more efficient technologies.
In this case the immediate marginal profits from mining are centralized, and the larger benefits of more advanced renewable energy are socialized.
Plus - do you believe that the price of Bitcoin will rise forever? If it did, wouldn't that mean to you that it might be doing something important, to constantly have growth and demand for 100 years? Cuz if I thought so then I'd want to preserve it, not throw it away. Sounds important.
[0] https://www.forbes.com/sites/jamesellsmoor/2019/06/15/renewa...
Even if Bitcoin isn't intended to be "growing forever", the ecosystem can and will.
Shameless hijacking here: at what point will the heat consumption/release rate be so great that the Earth becomes unable to support life? I've seen some back of the napkin calculations that estimate a couple hundred years, at our current acceleration.
Don't just sit around making the same useless attacks against other people's arguments.
Instead, offer a different proposal and explain why it is better.
On this particular topic, I particularly hate the amount of fossil fuels getting burned on cryptocurrency. I'm less concerned about the amount of energy getting "wasted" on data centers in general. At least in most cases, there's alignment of interests when it comes to efficiency optimization. Facebook has an incentive to make their servers more power efficient over time, and scale their capacity to the size of their customer base. With proof-of-work, there's also incentive to increase power efficiency, but also incentive to scale up to capacity limits.
I think it is possible that proof-of-work cryptocurrency algorithms could be tuned to the point of striking a sustainable balance long term, but that would require the world economy to converge on one or two of them. The issue with that I think is the speculative nature of the currency's distribution of ownership. With large portions of the currency being held by a small number of anonymous people, and no clear path for the majority of normal folk to exchange their wealth, it's just not going to happen without some sort of societal collapse. I also struggle to have faith in a system meant to disrupt the global economy when its existence depends on global scale internet infrastructure.
https://news.ycombinator.com/newsguidelines.html
Perhaps it's not idle pedantry to observe that many of those who are angry about crypto energy usage couldn't care less about the energy wasted and pollution generated by other endeavors.
It's like an uncle of mine who is outraged that mosques get tax exemptions, but he doesn't care that churches get tax exemptions.
Clearly tax policy isn't a genuine concern for him. He's angry about something else that he won't say out loud.
To your point, though, I'm willing to wager that most of the people whose biggest problem with crypto is energy consumption would happily also support other harsh measures against all manner of pollution generating entities. I know I would.
So long as pollution and carbon are free or cheap, people will find wasteful ways to generate it.
Incentives work, and taxing carbon and pollution will incentive green alternatives.
Yah that's the point and business with less environmental impact will be more competitive. Industries/products with more of an impact will be more expensive, reflecting their true cost.
> Even worse, it just gives more capital to inefficient governments
Most pollution/carbon taxes are proposed to be revenue neutral, i.e. all the proceeds are returned to the tax base. This is also important because like other (non-luxury) consumption taxes, a carbon tax is regressive.
And what are those? District heating?
Solar is taking off not because we banned coal, but because it's cheaper than coal. If coal and natural gas were taxed according to their carbon output, solar would be even more ahead, nuclear may become more attractive as well.
Aluminum is heavily recycled not because it's green, but because it's significantly cheaper than mining new.
Incentives work. The free market responds to incentives, and works around regulations.
Have you observed this, or are you simply speculating?
Personally speaking I find it just as irritating of a pattern here that knee-jerk calls for "regulation" (i.e. bring in the coercive power of the state) or outright banning are so often floated as a/the solution to every problem. When legal coercion is suggested, it is entirely proper to bring up the existence of the dragons that lay down that road.
If cryptocurrencies didn't have the energy footprint, I would find them pretty uninteresting and/or ridiculous for various reasons, but ultimately it wouldn't bother me that people do what they do with them. When they start adding seriously to the global energy load in a time of climate crisis that makes them pretty offensive.
I don't think that's correct. I think that it's possible to care about both, but to be dismissive of misdirecting subject changes, i.e. "whataboutism".
Nicely done, nicely done.
Industrial production of greenhouse gases is nearly an order of magnitude larger than consumer production, but often inordinately the "guilt" burden is pushed to the consumers: Do you have an EV? Have you changed all your light bulbs to more efficient LEDs? Are you Vegan enough?
Here too: Bitcoin alone has risen to an order (or three) of magnitude more energy consumption than Facebook could ever use/do ever use to track people. (Cumulative, the rest of cryptocurrencies only further dwarf Facebook's comparative energy costs.) We can be angry about two things, we can be angry at both, but why can't we discuss the bigger problem first without getting into the weeds of all the smaller problems?
(And of course, the two order of magnitude problems above are inextricably linked: Bitcoin is on track to make many industrial users of electricity look like chumps and dwarf them by an order of magnitude. Nearly all of the consumer-side gains from veganism, LED lightbulbs, EVs has been offset again, if not entirely dwarfed, by cryptocurrency mining.)
People are bad at reasoning things at large enough scales, have a hard time gut understanding order of magnitude problems, so the fallacies keep creeping up, and keep getting weaponized by bad agents (the consumer "green guilt", the consumer "recycling guilt", so many other "demand-side fallacies" that if consumers just bought "smarter", problems would just go away, when really it's the suppliers that are in control).
It seems like you implicitly draw the 'fair' line between FB and BTC.
BTC's market cap is roughly equal to Facebooks. If a POW coin used facebook levels of energy at the same value, would you find that acceptable?
People seem to be intentionally conflating some things. A carbon tax is nice precisely because it avoids getting into weeds and is a general approach that applies equally to everything. Some people are proposing this and others are saying "don't get caught up in the weeds." What? Makes no sense. It just reinforces the poster's point: that some people's real motivation doesn't seem to be environmental, there's a strange focus on crypto specifically that makes it seem like they want it to be reigned in for other reasons.
The raw statistics already tell a story that the difference between "BTC" and "Facebook" is greatly exponential. Wanting to focus first on the (much) bigger exponent isn't necessarily a sign that people's real motivation is "conspiratorial" against crypto.
It is orthogonal to the issue at hand that PoW is using far too much energy per transaction/per capita/per GDP/per most metrics you want to point to. Not using the energy in the first place is always going to be greener, no matter how much PoW systems invest in renewables and their R&D! I can't see that as "misguided". An outright ban would get immediate results versus a carbon output tax would incentivize eventual results, maybe. That's not misguided, that's just a different perspective, and a different preference on an ideal time window to address the situation versus wishful thinking and "golly gee, sure hope the market eventually figures it out someday".
Gold mining uses something like 140 terawatt-hours of energy annually, and produces enormous pollution and environmental destruction in addition to that.
That's greater than Bitcoin's energy usage.
Since gold mining is so much more harmful to the environment, maybe we should outlaw that first before we work on smaller problems.
The most apropos commentary in this entire thread yet.
For now. Gold's been around for centuries, Bitcoin not even for two decades. It's got a momentum that Bitcoin may or may not match in the future.
The "other endeavors" category above was "digital endeavours" and specifically "Bitcoin versus Facebook", which is an order of magnitude difference.
You've introduced an entirely different category from the above discussion. It's maybe an interesting category [1] to discuss elsewhere, but is off topic from the fallacy we were discussing. Thanks for the non-sequitur, though.
[1] Personally, I'm not so sure it's a useful counter-comparison to Bitcoin: Gold is used in electronics and other industrial needs, beyond its service as a value store/commodity of interest to collectors. Gold is also increasingly rarely the "primary" focus of mines. Most of our Gold today comes from Copper mines and very few would argue we are mining Copper as a value store/solely for greed.
Gold mining isn't a fucking edge case if it uses more energy and produces far more environmental damage.
According to the principle you described, Bitcoin is the edge case we should ignore until we solve the gold mining problem.
It's not an edge case of the "electric waste of Digital Services", because it is an entirely different problem. So not only do we have "pedantry pageants" of edge cases, but we get to address the "pedantry pageants" of all the unrelated but seemingly related problems too?
Best i found for Bitcoin was 40-100 TWh per year: https://digiconomist.net/bitcoin-energy-consumption
And for Facebook it appeared that they used 5140 GWh in 2019: https://www.statista.com/statistics/580087/energy-use-of-fac...
So essentially:
Entity Consumption (GWh)
Facebook 5 140
Bitcoin 40 000 - 100 000
Attacking the motive or whatever is not said out loud is responding to a weaker interpretation
OP proposal to ban cryptocurrencies for 'damaging environment' while we have companies who's entire business model is giving their customers cancer and preying on addicts.
2. For all their many flaws, those industries also provide something of value. If they shut down tomorrow, people would miss having cars, pesticides, fuels, medications, etc. but if every cryptocurrency suddenly halted tomorrow nobody outside of a few speculators would find their daily life any different. That doesn’t mean that those externalities aren’t real and don’t require action but they’re widespread because there is some kind of real value to society and you’d need a transition plan to avoid disrupting a lot of processes.
And banning isn't really a proper solution in the first place. It's a literal avenue for tax revenue for countries at this point. The fact that PoS coins like Cardano and L2 solutions like Polygon are bullish despite the crash in Bitcoin shows something about investor sentiment surrounding the whole energy consumption ordeal. Voting with your wallet is a real possible solution and IMHO, people are starting to take the hint.
Here's my issue. There is such a thing as too-late in environmental matters. Once it's too late, it's a fire that sustains itself. Therefore, acting quickly matters. Addressing the source directly is obviously the superior solution. But I just don't see it happening at a fast enough rate. I see nuclear power in the same way. Yes, it's a little bit of trading one problem for the next, but it's a very necessary stop gap to buy us time.
You're presupposing this is a problem that needs a solution. I think myself and the commenter you are replying to would agree that either: A) it's not or B) it does not need to be solved by a regulatory body.
Instead of getting annoyed by people pointing out edge cases, it would be more productive to explain what criteria should be used, or admit this is a half baked solution.
Choose an argument which requires you to offer a viable and compatible alternative and you'll probably get a lot more ears.
In this particular situation, I may not have the solution, but I know that the offered one is a short-sighted knee-jerk reaction which has terrible implications for other things
I will say that given the text based medium of HN, it can be hard to gauge whether one wants to have a mindful discussion or if one is just trying to mindlessly ding a poster.
Be kind. Don't be snarky.
Comments should get more thoughtful and substantive, not less, as a topic gets more divisive.
When disagreeing, please reply to the argument instead of calling names.
Please don't post shallow dismissals
That’s the first time I’ve ever seen someone describe Facebook as an “edge case”.
If $900,000,000,000 of market capitalization counts as an edge case, I’d think you must be hard to please at Christmas - those are some really high standards!
Because it is an incredibly common fallacy to ignore boundary conditions and unintentional consequences when proposing a pie-in-the-sky regulation that is supposed to just fix things.
Any regulatory mechanism is essentially a machine that will need to work with every input and minimize some class of error, be it precision or coverage or some other system level metric. Turns out the most interesting part of such a system is indeed around the edge cases, and the difficulty of handling such cases is essentially the bulk of the difficulty of building such a system to begin with.
It is like saying "why don't we build a system that punishes criminals", which sounds very agreeable and popular at that level of construal, but is incredibly complex and sophisticated at the actual implementation level; e.g. to have a process to minimize false positive convictions rather than maximize conviction rates.
> It's SO trite, predictable, wearisome and boring
Not to sound harsh but HN does not owe anyone their favorite type of entertainment and honestly criticisms on those metrics are more trite, predictable, wearisome and boring themselves than anything else. Many find intellectual stimulation and systemic thinking entertaining and thus those comments enjoyable.
Maybe it's time to grow up and realize that the real world is highly complex and requires sophisticated tools, mathematics, and questions in order to better live in it?
- There are those who are OK with high carbon emissions for various things that are a proven net-negative to the society or the planet - examples being, as I mentioned, social media, user tracking and advertising server farms, plus anything directly related to that. If these things are not a net-negative, then at the very least they could operate at the fraction of their current emissions, were they built with externalities in mind. To be OK with that but not with Bitcoin where it objectively provides some value by directly helping human lives (it is a store of value and a way to transfer money for people whose home currency is unstable or restricted by hostile governments, for instance), is hypocritical.
- Literally all legislation surrounding cryptocurrency (well, anything else too, really) by necessity has to be based on someone's opinions. Whose, is my question. Because that will shape what's allowed and what's not allowed to a great extent. Badly chosen opinion-givers lead to clusterf*cks like Disney, Sony and a few other giants effectively being in charge of worldwide copyright durations, which causes untold damage to the cultural commons.
Without Proof of work, cryptocurrency would have never been established as a novel concept. Proof of work was the only rationale way to decide who should initially own how many units of the currency.
The laws set up the playing field, and the market responds to the incentives. There has never been any such thing as a "free" market, and it's a good thing too.
Always the same fucking slippery slope!
Just tax the carbon sources and ban building new coal power plants or reactivating defunct ones.
Instead of downvoting please give me one other example why would rational market entity build more renewables than to satisfy demand when production peeks. Because to go full renewables without batteries (and we barely have any when compared to our renewables) we need to always meet the demand even when renewable energy production is the lowest. And what should rational market entity do with the power at all other times where production is far higher than demand?
Because "mine cryptocurrencies with it" seems like the only reasonalble answer in the world where cryptocurrencies exist and people with too much money buy them enthusiastically.
Electricity usage has almost no negative externalities. Electricity production does. Attacking people for using their own resources on something that they find to be useful and worthwhile is foolish. Confront the actual problem, and quit harassing innocent third parties.
I see a lot of people replying with a slippery slope argument of this nature, which makes me think I should explain my argument better.
I'm not arguing that burning electricity alone is the problem. I'm arguing that burning electricity for the direct purpose of making a financial product is a problem for society, when 1) the financial product explicitly incentivizes burning up as much as you can to make more money and/or 2) burning up that energy can be alleviated by other technical solutions.
I'm not arguing that mining should be illegal. I'm saying the 'sale' of the results of that mining should be illegal. Using or making incandescent lightbulbs is not illegal, but the sale of them is banned or restricted in large portions of the world [1]. Less harmful alternatives exist, so sale is disincentivized, the world moves on.
This is not the government deciding how you spend energy resources. You can continue to mine all you want. But you shouldn't be rewarded for that.
One thing I should point out is that I recognize that an alternative solution for these incentives is to make electricity always so expensive that it costs more money in electricity spend to mine crypto than you can make money of it. Make electricity price depend on crypto price. Needless to say I don't see that working out :)
[1]: https://en.wikipedia.org/wiki/Phase-out_of_incandescent_ligh...
Congress, courts, Department of Energy.
The legislature and the regulatory agencies it has created, obviously.
The exact same way literally every other environmental regulation has ever been passed.
There are entire divisions of agencies dedicated to drawing the line of "too much" in all sorts of areas, for pollution, poisons, contamination, energy usage, etc. In fact, pretty much everyone but extreme libertarians agrees this is one of the main functions of government.
So while you might not agree on the resulting policy or even the mechanisms that arrived at it, it is a solved problem. You don't need to wonder how we'd accomplish it -- that part is easy.
The difference is that Facebook’s energy use potential is limited and gets better with improved computer tech.
There is a limit to how much analysis you can do. As you get more efficient hardware, the energy use would go down. Facebook also invests a lot of effort in optimizing their code to run more efficiently.
With proof of work crypto, the only limit is the price of crypto. Despite any efficiency gains, you can always expect the energy use to scale with the price of crypto. For example, a 10x more efficient miner, won’t cause 10x less energy use, it may actually increase energy use as more people mine with higher rate electricity.
There is a chance that we develop a situation that the most monetarily efficient thing you could do with electricity is to mine proof of work crypto. If that becomes the case, then even a carbon tax won’t help because proof-of-work crypto can easily pay the tax compared to all the other uses of electricity.
With crypto it's too decentralized to implement either.
> who's the arbiter of what's "too much" power for a use case
Ultimately Mother Nature will be the arbiter. If people spend too much time arguing about politics instead of either lowering power usage or moving to clean energy, those people will be killed sooner or later.
Yep, I hate to say it, but even FB is more useful compared to BTC. No one uses BTC for actual payment but to hold a value. People holding BTC could just switch to MtG cards and saved tons of energy without losing any benefits that they are currently using.
"If there is a clear and obvious better with minimal impact." It's just that simple.
We make choices like this all the time. Here in the US we set CARB rules to slow emissions but we don't just ban old cars even though that would be better for the environment. Grey is okay in laws if the black and white bit behind it is clear! (Reduce emissions if possible with least possible impact on people.) Otherwise you will never be able to improve anything until the harmful methods have grown too much.
The king. The digital crypto king.
The quick google says facebook uses 5 while bitcoin uses 143 terawatt-hours
At some point the shaming would begin, web devs would respond, and then I'd generally get what I'm really after -- much faster page load times!
Regulating the energy consumption/efficiency is more akin to fuel efficiency standards for cars.
Bitcoin is an endless energy pit. The same isn't true of things like Facebook.
You don't need to worry about how much electricity was burned, only that it wasn't done in exchange for a plaque saying "I filled a swimming pool with gasoline, then lit it on fire"
CO2 taxes
Just ban people doing bad things, like all of them.
Problem solved
All problems solved
Rather than deny that reality, you're better off working with it to produce more, but cleaner, energy.
[edit] - downvotes because I used the word "mother" maybe? I don't understand this community.
I think of each community as a game of Civilization. As you progress you unlock higher rungs of the tech ladder. Exporting your raw materials to later import finished products made from them is a waste of resources and stagnates the local industries at the raw material stage.
What industries could be developed in your community if the power was available?
Bitcoin mining creates a price floor for energy. It is a buyer of last resort with infinite appetite. By pushing up the value of energy in the market, it encourages expansion of energy production.
The number of bitcoin addresses with a balance is 30 million. The number of bank accounts is in the billions.
As you said, BTC is two orders of magnitude less efficient than banks assuming mining provides the same value to people as ALL of the services banks provide including loans, savings, and money transfer which IT DOES NOT.
That's where it stops, because what you've said is nonsense.
On the surface this sounds like bitcoin's PoW use will simply stop. It's actually the entire opposite.
When governments ban it, they go after sizeable, identifiable organizations running these operations, that is their only choice. These operations are optimized in their energy usage, because it's only in their interest to reduce their consumption relative to the value of the coin they mine.
The moment these operations are shutdown, there is a massive sink in the hash rate, smaller operations and hobbyists will rush in to fill it. Hash rate gradually climbs back up and instead you have 10x the energy usage because you can no longer run the PoW in a scalable way.
Ever since Dogecoin had a moment, there's now a million coins trying to engineer their own "moonshot".
This is on top of the security issues and of course the energy issues. Cryptocurrency is garbage.
The only answer that works is a carbon tax.
Not really. It wouldn’t stop, but it would decline substantially.
Smaller operations and hobbyists only participate because it’s worth money to do so.
Making Bitcoin illegal would kill the argument that it will eventually displace fiat, and relegate it to being used only for illegal purposes.
The incentive to mine a currency that can only be used for crime as a hobbyist would end up being low.
And if you can't really do anything with your coins but have your coins, why would people rush out to break the law to mine them?
Let people trade cryptocurrency to fiat in person all they want, it's completely insignificant.
BTC's main uses (speculation and laundering) are possible only as long as it can be exchanged into fiat. This can change tomorrow if the right strings are pulled.
It turns out laws do sometimes have effects.
We will see, the trouble with Freakanomics, is that it had quite a few avoidable errors in it, so maybe it's not the best example.
This is false. Miners will spend about the same amount of money they get from block reward to run their operation. Asymptotically, this money is spent to buy electricity. This is the result of competitive pressure from other miners. What you will observe instead is the same amount of electricity burned but with 10x less hash rate.
PoW doesn't scale. It eats up power needlessly and we're only stuck on it because the original BTC was a PoW cryptocoin. Simply banning trading of PoW coins would do mounds of good - the crypto community would be better streamlined to move toward PoS coins of the future and environmentalists wouldn't have to waste their resources lobbying to ban BTC anymore.
This ban needed to be internationally, though. Pretty difficult to enforce on a global scale. And then it would only have a short term influence on the price of, say, Bitcoin, until enough “black” mining power emerges.
I would just relax. Bitcoin is not going to destroy the planet. In the long run it’s going to be a niche financial tool compared to the scale of Ethereum or other competitors (Cardano, Solana or Algorand). It’ll be the PoS enabled DeFi networks that are going to disrupt the banking business.
Maybe there need to be more guidelines around how to use excess energy instead of coal, but to totally disregard that PoW could be mined from excess energy is shortsighted. Flare gas is just one example.
[1] https://oilmanmagazine.com/how-and-why-natural-gas-flaring-i...
That's not only radical, but a grotesque knee jerk reaction.
If you think about renewable energy, there's a problem of mismatched production with consumption and transmission. This causes wasted energy (or energy that is very low value), which makes renewable energy projects less viable.
Sure, one obvious way to address that is to add batteries to store such energy. Now, go mine (and refine) enough lithium to build utility-scale batteries. That's a huge environmental issue that no one wants to talk about, specially Tesla/Elon.
What's a competitor to energy batteries? Proof-of-work mining of bitcoin: it make renewable energy projects economically viable, because the energy of low-usage times can be used to mine bitcoin, which can pay for energy of high-usage times.
If there's an environmental/carbon cost to BTC mining, then attach a carbon tax to it (or something like that).
If one thinks about tracking the carbon cost of a mined BTC (based on the energy source used to mine it) such that a carbon tax can be accurately exacted, the usage of blockchain to track carbon offsets and cost is a pretty obvious thing that comes to mind.
It’s all bullshit and hype — the crypto equivalent of the Chick-Fil-A cows saying “eat more chicken”.
If the government starts arbitrating on what is a judicious use of energy on environmental grounds, then you're a short step away from banning, say, beef production.
There are tons of things that people do that I might deem not worth the environmental impact, like flying a hundred thousand miles a year for business, or eating beef, or driving to work every day, or having bigger houses and lawns than they need. Seems kind of arbitrary to allow most wasteful things that people do but draw a line at being able to participate in a certain kind of blockchain. The per-person impact of holding and transacting with bitcoin is not egregiously high compared to all the other things people do in their day to day life.
And based on ethereum's move here, perhaps people are starting to vote with their wallets anyway and such dramatic limiting measures aren't needed?
Did you mean "the rich"?
You don't necessarily need to ban the coins to fix this aspect however, just make sure they don't get integrated in the financial system too much. They're basically digital gold. Gold was ok until central banks tried to anchor to it which caused the Great Depression and maybe even WWII.
Buy bitcoin.
https://web.archive.org/web/20210116135412/https://taaalk.co...
If you want to encourage other uses of electricity, subsidize them, don't just ban arbitrary forms of consumption.
Well, for one, because that tends to mean "rich folks and large companies can act with impunity, everyone else not so much".
For two, we actually do discriminate quite happily between different uses of things. Maybe it's OK to keep energy prices low for households, as a compromise, but not for crypto mining?
Well, firstly, are we even sure that's really possible?
> Giving each household some amount of free or subsidized power makes sense
Which is basically exactly what I was talking about - we can and do decide that some uses are better than others, and use regulation (some of which may be tax or credit) to achieve that.
We already do this. I'm not sure why people are so aghast that we might do it some more for PoW cryptocurrencies.
Ethereum will drive and that is good - but it solves different problems compared to Bitcoin.
In regards to banning PoW, sounds like the net neutrality discussions honestly... so to me that does not make sense for the same reasons.
And here is the kicker, because its permissionless, it can't be stopped.
That might cause a financial crash of the cryptocurrency market, with the trust issues, etc. It wouldn't be wise.
This is an insane take. Proof of Stake is NOT secure, the stakers can collude to reorganize the chain at almost no cost. This is like the exact system we tried to get away from, the USD system is also a Proof of Stake.
You end up needing to solve the same type of problem that PoW solves in order to enact a PoW ban simultaneously across all countries - how can all parties trust that every other party is being honest and will follow through (Byzantine Generals problem)?
democracy! f yeah!
Jokes aside it's really hard to decide what's reasonable energy usage from waste. Ultimately the real question is who gets to make that decision.
And overall, the idea of government getting to decide what are acceptable uses of energy and what isn't is actually terrifying
I'm a crypto-skeptic, but why would I ever hold a crpytocurrency in that scenario? If governments would ban it for environmental goals, they'll ban it for political goals, too.
The only interesting bit is cryptocurrencies would have to legitimately bring something new to the table that's actually better than the existing financial system in order to be viable.
I think that at some point, PoW will become so economically unfeasible that it'll simply make more sense for miners to ditch those coins and whale up on PoS ones.
To me this illustrates a lack of understanding of the space.
However, some of the biggest plagues to society are rooted in central banking policies that over time devalue a nations currency through excessive money printing backed by nothing, or gambling via derivatives that when a bubble pops requires bailouts. Even worse, where we are now is done via quantitative easing which is a fancy word for more money printing to buy government debts to keep the economy afloat. If Bitcoin or other cryptocurrencies can provide all the same services banks offer (borrowing/lending/saving) and be backed by a finite number ensuring value over time then we, as a society will be less manipulated by politics and therefore experience deflation which will could close wealth gaps.
Bitcoin may have an energy problem but the problems it aims to solve are extremely important as well. “Necessity is the mother of invention.” If Bitcoin can really solve some areas maybe the conversation should be about how can get 100% of BTC energy consumption to be renewable.
Outside of ethereum, proof of stake is no different than a database. The ownership is so centralized that you only have 3-5 people/organizations approving everything.
The whole point of crypto was to be decentralized, proof of stake is not that. Cardano, solana, they all are pointless as a token because the whole supply is largely owned by a few people.
It seems kind of necessary to achieve wide distribution and avoid wealth concentration.
How about continuing research and development of solutions providing cheaper, greener energy instead of sparking righteous war against something that consumes energy based on incompetent social media fart?
The loudest voices against something are typically hypocrites that happily fly on their gas guzzling private jets bitching about people driving their oh so inefficient cars to work.
If you want to target an externality of the free market, do it directly: simply tax emissions. This will guide the market towards greener energy generation and direct capital out of activities that produce emissions without generated value.
* Reduce trade * Reduce value * Reduce carbon use?
Is there a case ever where an illicit market found a price equilibrium which was lower than the licit one? And, if such a ban does cause the price go up, won't the same incentives cause continued mining competition?
Unless you want to also ban servers or services that are using deep learning training, decoding massive videos and livestreams on storage systems that are also burning up the planet.
It's not fine to allow PoW cryptocurrencies to continue to burn the planet but collecting mass amounts of user data and using wasteful deep learning training continuously is fine to burn up the planet on GCP, AWS and Azure?
That is to say, it's self correcting. If the price of energy increases, there is less mining. Alternatively, the miners are also incentivized to find cheaper or develop cheaper alternatives; this spurs innovation.
If prices rise due to mining, innovation will take place and more energy will be developed.
There's nothing wrong with this mechanism, as it corrects itself. In 2050 when you can no longer mine bitcoin we will that have an abundance of cheap power. Which is the single greatest factor in reducing poverty.
Frankly, I think this comment is off base. So far there have been zero negative measurable impacts from power usage related to crypto.
> innovation will take place and more energy will be developed.
This has way too many assumptions baked in. Increased demand will not guarantee a clean supply, nor does it guarantee technological progress in performance of efficiency.
https://bitcoinist.com/bitcoin-mining-energy-consumption-us-...
Videogames run GPUs at full capacity too, we should ban them too. No one NEEDS to pretend to be a cowboy for 100+ hours each across 36 million GPUs.
Actually maybe there should be a ban on computing power above mobile CPUs available to non-government bodies, if this really is so devastating to the environment we need to limit the amount of damage people can cause as individuals, why does a normal person need a GPU anyway when smart phone graphics should be enough.
32 million bought it, takes about 100 hours to complete runs GPU full capacity.
If we're going to say using GPU computing power is bad for the environment then we can't just stop at crypto because it's convenient. We have to look at all computing and videogames isn't something that should be considered essential either.
Miners will move to where is is profitable and will be ultimately incentivized to find cheaper (ultimately cleaner) means to mine.
First it was 'but criminals use it'. Now it's 'think of the environment'. What's the next excuse going to be?
POW is more _government_ proof than any other method. To many the threat of central bank digital currencies is justification enough for POW's energy consumption.
With PoS could you take over all coins by buying 51% of the existing coins? So if the market cap of ETH is 200BB spend 100BB to double your money?
Etherum classic and Bitcoin gold come to mind. They are both in the top 100 still, and both have been 51% attack multiple times.
Like suppose the banking system was running on ETH. Or if Colonial Pipelines used ETH.
1. They would drive the price up way past market price in an attempt to make such a large purchase. The cost of a large, rapid purchase is far, far from market price. Only a fraction of the market is willing to sell at current price.
2. If a country wanted to run on Ethereum, they could clone it, since they are giving up the benefits of a GLOBAL system when they take it over.
Lmk if you have any questions. Pretty interesting topic given the insane ETH valuation atm, in contrast to, say, Algorand. Network and first move effects, I guess.
In most double spent networks, people clamor for the coins so they can have the chance at double spending
In PoW networks that’s combined with renting/deploying hash power
In PoS networks its just taking over validators
Big ole party!
No one would buy those from you, so at best you can burn money to burn other people's money at a premium.
https://www.coindesk.com/crypto-51-attacks-etc
Furthermore it's become pretty clear from the many attacks on value tokens in Etherum & BSC DeFi that the attacker can move faster that the market and drain any liquidity pools/exchanges that have open offers into something that isn't going to collapse.
The theory early on was that the coin cratering b/c of an attack would be an extra deterrent, but the price of coins that have been successfully 51% attacked says otherwise.
Here's another cryptocurrency in the top 100 that has suffered many 51% attacks.
https://cointelegraph.com/news/bitcoin-gold-blockchain-hit-b...
Sometimes people argue that a nation state could "shut down" bitcoin for some amount of money -- say $10B. With that, they could buy enough mining equipment to publish empty blocks and throttle the ability to send transactions.
Part of my skepticism of this idea is that the bitcoin network is already so throttled but it does not seem to affect the value of the coin negatively. What would be hilarious would be if France decided to shut down Bitcoin, and succeeded, but the value of bitcoin then proceeded to increase 100x.
People who control stake can refuse to include (censor) transactions, as there is no market competition for transaction inclusion like in PoW. In PoW, if 51% of network power is censoring transactions, then censored transactions can attach a higher fee, which competing miners will use to buy more equipment and mine the censored transactions.
These are the ones I know about, that I learned in an evening of research.
It uses Verifiable Delay Function as an element of random number generation process. One can look into number of rounds of VDF and treat them just the way they treat proof of work today. It can be compared to determine which chain is the longer one.
My guess would be at some point people would realize a takeover was occurring and panic, but it seems like a 51% buyout would require an ungodly amount of money and time.
These kinds of off-network incentives can disrupt the reward system. It's even possible to incentivize a lot of people to collude in a double spend attack if the rewards can be distributed to the participants.
I don't think the network can figure out an "oops, AWS or Comcast went out; my nodes at home or in the cloud shouldn't get slashed" vs "lets sabotage an ISP or network for enough time to trigger penalties and repeat it".
With PoW, it's all just physics, energy, and math. With PoS it's rich peoples opinions and validation. An attack on PoS will likely be political... and politics tend to slip into war if there's not enough adults in the room.
You can't really double-spend that way, but you can get a disproportionate amount of the shard rewards. In order to defend against this, other participants will also have to mine for a "more fair" alternate reality, so you end up getting a standstill where nobody can get economic advantage as long as the total power being devoted to preventing chain-shopping is greater than the amount spent on chain-shopping.
In the end the energy expenditure would likely be unchanged from the status quo, it would just be hidden behind a facade of inexpensive proof-of-stake validations that conceal the actual work being done to ensure that this is not abused. This way everyone can feel warm and fuzzy because there's no actual way to measure how much work is being done to keep the validation from being monopolized.
There is a reason why most of mining is happening in China, Iran, Libya and other "poor" countries. These countries have big players in mining but not in trading/legislation (except for China).
By creating a PoW crypto, you are able to do something really cool: You can move value (energy) out of a country, without having a connection with any institution either inside or outside. This happens in a permission-less, indirect manner.
Update: it's been fixed
When Ethereum can no longer be mined, the returns on mining the remaining 'altcoins' will fall equal to the level of new mining power that enters.
Which might very well make GPU mining uneconomical across the board.
Can you expand on this?
But, the mining rewards for those other coins are typically static.
So you'll have a dramatically increased number of GPUs chasing the same number of coins - which is going to result in increased mining difficulty and reduced profits, potentially dramatically reduced.
https://arstechnica.com/tech-policy/2021/03/nvidia-accidenta...
Which in the lights of the recent events sounds like: "pump us this time around!"
Makes you question: when would be a good time to address this, if they can't time travel to the day before Elon posted the tweet?
And I don't know the answer to that. Was this too soon? Well if they want to take the ride of Elon controversy, I don't think so. Is that a good thing? Who knows.
The market is wondering what will happen next. So ether published their progress. I just want to know how realistic are they with their schedule.
Nobody tends to mention that in PoS a hostile takeover by a majority stake can just have its staked coins 'forked' out by the community. The goal of PoS is to have actors held responsible for their actions.
In my mind this is much more powerful than PoW because surely hostile majority mining power can't simply be forked away (sure you could change the hashing algorithm but even then the attacker could just move on to a different chain with no real consequences of their actions no?).
Interested to hear what other people think.
however, once the value of those tokens is established (as is true for most of the big cryptocurrencies today), there is really no compelling reason not to emulate the proof of work block lottery with a proof of stake block lottery. there is absolutely no reason why people can't lock up digital currency funds long term in exchange for share in a 10 minute lottery rather than lock up funds in hardware mining investments and associated power supplies for them.
i've been watching ethereum's progress on this with interest, and fully expect with time that bitcoin will follow.
PoS, done right, simply emulates PoW.
what does PoS done right look like?
"miners" lock up funds for 1-2 years. the amount of funds they lock up determines how likely they are to win the block lottery. the block lottery, and locking up funds for entries within it, remain decentralized.
the challenge is running a decentralized lottery with distributed consensus. this is hard, but i don't think impossible.
In Ethereum only "validators" validate transactions - those with more than 32 Eth in their own wallet.
In Nano "representatives" validate transactions - but individual users vote a representative to represent them (with their wallet balance as a weighting).
The difference is that you can have 0.00001 Nano and still have a say over the network. It also removes the need for "stake pools" where lots of people lend Eth to one person to make up 32 Eth together (with the hope you will get your money back).
[1]: https://nano.org
Isn’t that susceptible to sybil (flooding) attacks?
If you’re looking for something that works now, you can take a look at the 3rd most popular cryptocurrency on Coinbase, Stellar Lumens (XLM). It sure is energy efficient.
More details here: https://www.reddit.com/r/Stellar/comments/nbqfey/since_co2_e...
Sources: *Coinbase, Stakewise
The improved energy consumption is still a lot. For reference, a 2019 16" MacBook Pro has a 100 Wh battery. In other words, 3ish transactions would fully drain such a laptop's battery.
Or to rephrase the question: where can I find the "POS for dummies" page?
Whatever, I'm out.
But it inherently makes the system unfair, I have 0 pressure to sell that eth since it didn't really take me any effort to make it and I don't need it to cover life expenses, whereas for someone who has much less money, well that return on their eth (say from pools), they'll probably need to sell it to cover some other costs (rents for example). So for the wealthy, their shares grows while everyone has pressure to sell. There's also a cycle where if you're a staker and few other people sell, price will skyrocket, make it even more unaccessible.
I really hope that we avoid these scenarios in real world, but I'm a bit skeptical.
Let's assume for a second that future developments in the the Ethereum protocol really unlock the widespread use of distributed apps, and herald a new technological era. As far as I understand, Ethereum optimists are betting that then people will be forced to buy Ether to participate in this Internet of distributed apps, driving the price higher.
In this (optimistic) case, wouldn't someone just start a new blockchain with the Ethereum protocol? It's open source, right? To me it seems that a new blockchain that e.g. gives every human a wallet pre-filled with the amount of Ether needed for staking (plus some extra) would appeal more to the vast majority of people than a blockchain where the early adopters are the new rubber barons of the Internet.
Some like ethereum for its maturity and dev team.
Serious question - what does this actually mean? What defi apps are people running to make money besides minting other coins?
Uniswap being another
A more comprehensive lost of ether based defi apps
https://www.blocksocial.com/ethereum-defi-platforms/
There are also other blockchain ecosystems with their own defi projects.
In general, you have some cryto assets, you loan those to someone or some decentralized system that uses those assets to make money(like banks, financial institutions, and market makers).
With Ethereum, every time a new smart contract is added to Ethereum, the whole network becomes more useful, as each contract can communicate with each other. You can assemble new applications based on the building blocks of existing contracts.
Sure, and many have, but they don't have the security, decentralization, dev mindshare, community, tooling, or ecosystem that Ethereum has.
Re: new chain / forking. Just network effect. Ethereum currently secures huge amount of value in DeFi. Any new network will not have those funds in it. There are also stablecoins. If blockchain-native assets (BTC, ETH, DAI etc) can be "doubled" by forking (e.g. BTC to BTC+BCH) it's not possible for fiat-backed assets such as USDC, USDT, EURc etc. Issuing bank has to pick a side of the fork.
The only use of crypto is to get rich by being an early adopter. It's easy to design a new system that doesn't benefit early adopters but no one will care about it.
That sounds awesome. If you can securely deliver a cryptographic key to every human on the planet and teach them to use it, I'd happily invest my life savings towards that ends. Unfortunately due to disparities in education, safety and access to technology, I think this is a near-impossible task in 2021.
Cardano is issuing cryptographic student IDs to 5M students in Ethiopia though! The future is bright!
I realize that is the text from the article, but what they really meant is "will use at most 99% less energy". The reduction will be at least 99%. The future value will be at most 1% of the current value.
VDFs used in Ethereum's hybrid PoS replicate this property to large-enough extent. In case of PoW the resource you MUST spent to replicate the chain is electric energy, lots of it. In case of VDF it's mostly time. So one can imagine launching multiple "fake" chains using stolen/bought private keys, but such chain will get banned via software upgrade immediately after detection. Very hard to pull off, impossible to pull of multiple times.
EDIT: my bad, stolen keys will get banned by the network immediately and automatically. They break "equivocation" rule.
> I do not feel I can trust the majority to be correct every minute or every day forever.
With weak subjectivity, you only have to trust them to be correct on a timeframe of every few months. If consensus is actually broken somehow over such a long period of time, there will be big headlines about it and you'll be able to configure your node accordingly.
Further reading:
https://blog.ethereum.org/2014/11/25/proof-stake-learned-lov...
If the answer is 'we'll trust the majority of users'. How do you know who that majority users are? Is that literally people the hold a lot of the ETH gas? So I know who has ETH based on what software I download and I download software based on who has ETH? And I know I'm in the right cycle of that form because I googled it and found an 'authority'? Risky.
> What if they die or go bankrupt and no one agrees on who owns ETH?
By "owner", do you mean the core developers who own the protocol repositories on github, or do you mean the client software teams who own the software repositories, or the individuals and exchanges who run the nodes and economic services, or the stakers producing blocks, or someone else?
If two reputable factions have a simultaneous claim to be the protocol stewards of the "real ETH", the ETH currency will fork and market forces will decide who the "true" owners are by valuing each side of the fork properly. We've already seen something similar to this with Ethereum vs Ethereum Classic, and with Bitcoin vs Bitcoin Cash.
So we don't need to trust any majority of users like you said, you get to personally choose what fork of the software you want to transact on, based on what version of the client software you personally see as legitimate, and download and run.
> So I know who has ETH based on what software I download and I download software based on who has ETH? And I know I'm in the right cycle of that form because I googled it and found an 'authority'? Risky.
Every cryptocurrency has a cycle of that form, even PoW cryptocurrencies. You could take "the chain with the most accumulated work", but that's not enough, because what you really need is the chain with the most accumulated work that also follows the protocol rules, with the protocol rules being based on which software you choose to download. You always need to trust someone to give you the software, unless you download the source code, personally audit every line of it to understand how it affects the behavior of the protocol's consensus, and compile it yourself.
This would immediately make unproductive energy use (cough POW crypto cough) a lot less profitable, without the government having to come in and set prices and regs for every little thing.
Consider the amount of energy wasted right now and also in similar "industries".
https://bitcoinmagazine.com/business/bitcoin-uses-less-than-...
Assuming HFT/coin mining do indeed contribute in these ways, are there less energy-intensive solutions that could produce the same or a similar effect?
I think it's completely reasonable for there to be regulations that limit the global impact of activities (e.g. emissions, global warming, chip shortage) for the good of the general population, especially in relation to how much tangible good they produce. That's the whole point of governments and regulations to begin with; see also, things like leaded fuels, or asbestos, or trust-busting.
> This would immediately make unproductive energy use (cough POW crypto cough) a lot less profitable,
You seem to have just one target in mind that would get hit. Clearly you haven't analyzed the full extent of a "carbon tax" and your following statement seemed very naive. That said, I'm all FOR carbon taxes, it is actually good for Bitcoin and the world.
I don't think there will be a LOT of PoW cryptos, there will be one (or two at most) winner and the others will use a variation of Proof of Proof (by saving state on a PoW chain). I also think that the energy usage curve will plateau soon-ish and energy usage will be somewhat constant or start trending down gradually (as the rewards are tapering off too).
I have no problem with all carbon intensive industries paying for their pollution. I think it would be silly for governments to go around mandating and regulating every little thing that uses energy. Simply tax at the source.
Will that make my power bill go up? Yeah. Will that mean it costs more to fill my tank? Yeah. Whatever. I'm totally fine with that. If it's revenue neutral I'll be getting most of it back on my income taxes anyway. Bonus, this now lets me reduce my carbon footprint and pay less taxes.
TLDR: Want less carbon? Tax carbon!
And bitcoin cannot offer insurance, or retirement and estate planning, it cannot take my company public or help me raise money on the bond market. It cannot facilitate a repo transaction on my real estate portfolio, and it cannot offer me a mortgage to purchase a home.
Citation needed.
Citation that counters that perception: https://bitcoinmagazine.com/business/bitcoin-uses-less-than-...
> If the bitcoin network were to move quadrillions of dollars per year, it would probably have to use more energy than we are capable of producing
Sigh, this gets spouted like it's the truth by people who don't understand the simple fact that the energy usage in bitcoin is NOT used on transactions! and it DOES NOT scale with the number of transactions!. [1]
> And bitcoin cannot offer insurance, or retirement and estate planning, it cannot take my company public or help me raise money on the bond market. It cannot facilitate a repo transaction on my real estate portfolio, and it cannot offer me a mortgage to purchase a home.
These are the usecases for subsequent layers, and there are services popping up for these already! bitcoin is a relatively young system that is purely community driven.
[1]: https://www.coindesk.com/frustrating-maddening-all-consuming...
I disagree that it would have a significant impact on PoW. PoW is already one of the cleanest energy industries in the world, and it's also entirely price insensistive. PoW is going to consume billions of dollars of electricity per year at any price. An external tax of 50% would cut energy use by nearly a third, but it wouldn't do any more than that.
And I should add, PoW would be absolutely happy with such a fee in place. It really doesn't care how much electricity costs, it only cares that an attacker would also have to pay the same price.
Overworking your engineers will most definitely lead to compromises.
But good to see that Ethereum came to their senses and are serious about reducing the environmental impact they have.
I don't know the technicals of why the migration has been gradual, but the destination has never really been in doubt.
Otherwise, theoretically you can "overwork" i.e. (work more than standard 40 hour weeks or some standard of work hours) whatever without compromise
It makes things more inefficient, but it doesn't compromise final quality assuming issues are found and addressed.
It's fine for a few days, but after that it's a false economy.
https://sw-eng.larc.nasa.gov/supporting-products/archive-of-...
But I feel it fair to consider an organization like NASA as an exemption from the norm. This level of detailed error catching doesn't make sense for, say, a facebook clone startup.
That said, someone should send this comment to a Tesla engineer.
If you ask people to work 12 hour days instead of 8 days, does each day provide 8 hours worth of work, 12 hours worth of work, or another value? Can we reliably say that any problems arising from working over 12 hour days are caught and handled at the same level as they would be if people were working 8 hour days?
That's simply not true. Humans aren't machines. Productivity falls off a cliff after 50 hours, and after 55 you may as well not even be in the office. There are diminishing returns with "overwork"ing.
[0] https://siepr.stanford.edu/research/publications/productivit...
Is it not possible there's good reasons they didn't move to proof of stake sooner? "Came to their senses" seems to imply they had no good reasons.
The Ethereum protocol was designed with PoS in mind and has a built-in difficulty bomb[1] to prove it. In short, this difficulty bomb makes it exponentially harder to mine ETH over time. The goal of this feature was to encourage all participants of the ecosystem to transition to PoS as quickly as possible.
Given that, the implementation has not worked out totally as expected, as the difficulty bomb has been pushed back a few times over the years. However, to answer your question, the reason they did not move faster is because this transition is hard and plays in some uncharted territory.
[1] https://medium.com/fullstacked/the-ice-age-is-coming-ee5ad5f...
> Note that in the future, it is likely that Ethereum will switch to a proof-of-stake model for security, reducing the issuance requirement to somewhere between zero and 0.05X per year.
Unless management is really vigilant, when people are working overtime everyone on the team feels pressure to do the same.
I just wonder what the next criticism will be
It fits the risk profile to let that team attempt to deploy and merge a proof of stake network with sharding
For something specific to bitcoin/blockchain: https://www.youtube.com/watch?v=qrwgYDAoZV0
However, if it does successfully transfer to proof of stake, we're in for a long and exciting ride.
Trust is a valuable commodity these days.
I don't think miners can do anything about this. In the worst case, they coordinate to stop mining on N-1 block. But this requires an amazing level of coordination, plus network can directly bribe/reward next block producer by paying to `coinbase` address (real `coinbase`, not Armstrong's coinbase).
> "The Merge" will introduce catastrophic bugs, 0-days will appear.
This is why you have testnets.
> we're in for a long and exciting ride.
Definitely!
Moving fast and breaking things is great for things of no consequence, but for decentralized money -- I'm not a fan of this philosophy! I like slow, methodical, well tested, well reasoned code from the best minds in the space -- aka Bitcoin.
We agree on that. You misread my comment.
My risk tolerance is just different than yours. I've sold all of my BTC for ETH long time ago. Everyone is building on top of Ethereum, not Bitcoin. Bitcoin's meme about "every worthy usecase will get implemented on top of Bitcoin"... it's short-lived. Flippening is nigh, why would people re-implement something which exist on dominant chain on a chain that is subpar in every possible way?
And I disagree about best minds. Bitcoin hasn't produced anything of interest for a long long time. Most patient? Surely. Best? Not even close. Maxwell has missed zero-knowledge proofs in 2013.
Also, merge testnet is up already, making sure there are no significant issues.
PoW -- wasteful electrical mining, only big entities can build efficient asic farms. And only in low cost of electricity spots.
PoS -- will incentive oligarchal collusion. Basically same as our current financial system.
Ethereum has been talking about PoS for a long time, so until they actually deliver we should be looking at existing decentralized PoS coins.
Still it's very likely that this time the switch to PoS might finally happen unless something unforseen happens.
The development was speed up by a (most likely) failed attempt / pr-stunt of miners to block an unrelated change which will reduce their profitability considerably in July.
In other words if PoS is conceptually sound why don't all cryptocurrencies switch over to it?
https://www.adamsmith.org/blog/the-cantillion-effect
Ethereum is already a system where those who are closest to the money printers benefit the most. At first it was oligarchic just because of its pre-mine and air drops, but PoS just takes that to a new level. You get paid to be rich.
The reason this uses so much less energy is because it's so much closer to a centralized fiat currency. The only value implied by PoS is that some rich people are backing it... a lot like the dollar.
As a payment network? Layer 2 solutions will be in production by the end of this summer which will enable payments that costs 3 cents, regardless of demand or amount transferred. Working alongside with smart contracts. Lookup zkSync 2.0 / zkPorter.
[1] https://bitinfocharts.com/comparison/bitcoin-hashrate.html#3...
[2] https://bitinfocharts.com/comparison/ethereum-hashrate.html
Vitalik and core team wake up sulked and there we go..
Proof of STAKE is where you dedicate your cryptocurrency and are rewarded based on that. Since owning cryptocurrency doesn't take any physical resource, the only expenditure is keeping your staking node (a computer) online so that it can participate in validation.
The transaction fees are absolutely ludicrous. I can’t imagine the dispersion is actually as high as some people seem to think it is.
It's absolutely true that the layers built on top of bitcoin do and will continue to present scale, allowing for more and faster tx per second.
Don't get me wrong, it's great that they are working on becoming more effective but the idea that we should judge new technology purely on it's environmental impact as we see these days is counterproductive to progress. Progress from 0 to 1 will always be less effective than the optimization that follows.
We should be much more focused on how to make sure that any technologies energy usage doesn't become an issue by creating clean technologies with high energy density, which are reliable, plentiful and scaleable and doesn't require backup sources.
The part you're missing is the price. It's my secret, but I'll share it here. You can buy a Dell R12 with one of those cards and, upon receiving it, sell the components for more than the purchase price.
This does not follow. Security level is independent of miner reward value under PoS.
Details at 11.
A lot of the debate seems to be around whether or not it's as secure or viable, or whether the existing Ethereum miners will try to stage a coup or something.
Disclaimer: I don't hold cryptocurrency and I think proof-of-work cryptocurrencies are a tragic waste.
This is true regardless of the environmental impacts of the specific energy source, and while solar and wind are decreasing in price, it is unlikely costs will drop so much to make this issue negligible.
There are far too many blocks being mined not because of volume of transactions that need to be included in them, but because of new block subsidies.
EDIT: Instead of down-voting, maybe prove me wrong?
Just search for "(Posts like this will go away once we turn off pagination.)" is you want to find other occurrences.
Just put the pagination link at the top too if you think that it is an issue instead of sticking your post to the top every time pagination is used? Or just fix the website... how expensive can it be to display 1000 comments with no images.
People motives to get into crypto are clear. They want to subtract themselves from government policy of constantly printing money. BTC takes care of that and it's a 14 years brand which is extremely politically expensive to make illegal
On the other hand people are perfectly satisfied with their experience on Youtube, Amazon, Google, Facebook, Ebay, JPMorgan etc. which are the entities which Ethereum aims to disrupt
From your lips to God's ears. If the price falls steeply there will be a glut of gpus flooding the market and I'll finally be able to build a pc.
The market signals are right there
(X) technical ( ) legislative (X) market-based ( ) vigilante
approach to solving the double-spend problem in a decentralized cryptocurrency. Your idea will not work. Here is why it won't work. (One or more of the following may apply to your particular idea, and it may have other flaws which used to vary from state to state before a bad federal law was passed.)
(X) Scammers can easily use it to defraud users
(X) Smart contracts and other legitimate cryptocurrency uses would be affected
( ) No one will be able to find the guy or collect the money
(X) It is defenseless against network-level attacks
( ) It will stop scams for two weeks and then we'll be stuck with it
( ) Users of cryptocurrencies will not put up with it
( ) Microsoft will not put up with it
(X) The police will not put up with it
(X) Requires too much cooperation from exchanges
( ) Requires immediate total cooperation from everybody at once
( ) Many cryptocurrency users cannot afford to lose business or alienate potential employers
( ) Scammers don't care about invalid addresses in their lists
(X) Anyone could anonymously destroy anyone else's career or business
(X) Replicated state machines do not scale
Specifically, your plan fails to account for
( ) Laws expressly prohibiting it
( ) Lack of centrally controlling authority for cryptocurrencies
( ) Open relays in foreign countries
( ) Ease of searching tiny alphanumeric address space of all private keys
(X) Asshats
( ) Jurisdictional problems
(X) Unpopularity of weird new taxes
(X) Public reluctance to accept weird new forms of money
(X) Huge existing software investment in PoW
(X) Huge existing software investment in composable smart contracts
(X) Susceptibility of protocols other than PoW to cheap fork creation
(X) Willingness of users to install OS patches received by email
(X) Armies of worm riddled broadband-connected Windows boxes
(X) Eternal arms race involved in all network-healing approaches
(X) Extreme profitability of scams
( ) Joe jobs and/or identity theft
(X) Technically illiterate politicians
(X) Extreme stupidity on the part of people who do business with scammers
( ) Dishonesty on the part of scammers themselves
(X) Bandwidth costs that are unaffected by client filtering
(X) Bitcoin already exists
(X) Error states that require manual intervention to fix
and the following philosophical objections may also apply:
(X) Ideas similar to yours are easy to come up with, yet none have ever been shown practical
( ) Any scheme based on opt-out is unacceptable
( ) Block headers should not be the subject of legislation
( ) Blacklists suck
( ) Whitelists suck
( ) Countermeasures should not involve wire fraud or credit card fraud
(X) Countermeasures should not involve sabotage of public networks
(X) Countermeasures must work if phased in gradually
( ) Sending transactions should be free
(X) Why should we have to trust you and your servers?
( ) Incompatiblity with open source or open source licenses
(X) Feel-good measures do nothing to solve the problem
( ) Temporary/one-time addresses are cumbersome
( ) I don't want the government reading my cryptocurrency transactions
( ) Killing them that way is not slow and painful enough
(X) The rich should not get richer
(X) Money and finance are legal constructs, and should not be replaced by undemocratic systems
Furthermore, this is what I think about you:
(X) Sorry dude, but I don't think it would work.
( ) This is a stupid idea, and you're a stupid person for suggesting it.
( ) Nice try, assh0le! I'm going to find out where you live and burn your house down!
I’m not well versed into PoS systems, but just took a look at ethereum’s explanation and it sounded reasonable, but I’m not familiar with the details and trade-offs that are being made.
Care to enlighten me what you’re referring to?
You should first get "well versed into PoS systems", The stakers (and their adjoints) can collude and decide to reorg the chain for a different outcome. This can be done indefinitely at no additional cost.
In a PoW system, you not only have to expend capex for mining equipment, you hare further discouraged by the huge CONTINUED opex (energy) cost. The energy required to change the state of the chain is similar (or greater) than the energy it took to make the first version.
Just think about it, if a protocol layer on the internet changes its protocol parameters based on some trends, is it a good idea? Bitcoin is like another protocol layer on the internet protocol stack, you build other layers on top of the base monetary layer. You reduce the possibility of bugs in a layer disrupting the whole ecosystem and make the layer more maintainable.
No, they can't. As a part of the attack they will have to produce a two different signatures for the same decision (block N has hash X). This is where slashing comes in - anyone can submit those signatures to the chain to slash signers.
Just THINK about the complexity you're introducing, you're just obfuscating the system more and more to just avoid some loopholes, while not eliminating it either.
Anyone who can produce a block with the proof inside. Attack you are describing depends on attackers having not 51% of the stake, but 100% of the stake.
> while not eliminating it either.
You would have to show this, not just claim.
I'm saying the last 0.05% was too
> Ethereum is a decentralized, open-source blockchain with smart contract functionality. Ether (ETH) is the native cryptocurrency of the platform. It is the second-largest cryptocurrency by market capitalization, after Bitcoin. Ethereum is the most actively used blockchain.
It's a blockchain whose token wasn't intended as a cryptocurrency but as a medium for paying for having a program ("smart contract") stored on it run on every node of the network. In practice this can be used for all sorts of things, including bootstrapping the vast majority of other cryptocurrencies currently in existence, but under the current system it can't process transactions effectively enough to be useful in that manner.
As I understand it Ethereum 2, which is a really long term thing they've been doing for years, is meant to gobble up the original Ethereum completely once all stages of deployment are completed (any prior forks that may happen would remain independent, I guess).
https://standardcrypto.wordpress.com/2021/03/31/the-censorsh...
ETH is competing against USD, not against BTC.
Bitcoin is competing against gold.
Different races. different goals.
Different risks.
If true, this means that every argument comparing BTC to fiat is bullshit.
Given that most arguments I see in favor of BTC compare it to fiat, this doesn’t speak well to the understanding of those who hold it.
Given that BTC’s value is predicated purely on the beliefs of those who hold it, a systematic misunderstanding like this suggests problems in store.
Bitcoin will be fine.
But this is neither a fair nor an interesting competition.
Life span of fiat currencies is usually decades.
> To be clear, bitcoin is of course also competing against USD
These can’t both be true.
Eth competing against USD. Bitcoin competing against USD and Gold.
Bitcoin and Eth are also both competing against turkish lira, Tide pods, and zibwawean mortgage bonds.
But only one competes with gold.
You said:
> ETH is competing against USD, not against BTC. Bitcoin is competing against gold
You also said:
> bitcoin is of course also competing against USD
BTC and ETH can’t both be competing with USD without competing with each other.
If your statement that BTC is competing with USD is true, then your statement “ETH is competing against USD, not against BTC” is false.
ETH is competing against BTC.
Doesn't guarantee that my fingernail will win a shooting war.
If so, it seems like it’s just a circular reference to your personal belief in the strength of BTC over ETH, rather than a relevant argument.
Two primary concerns, technical feasibility and political strife:
I have my extreme doubts that you can move a chain like this without causing it to collapse. As yet all we have seen out of the eth camp is more broken proof of concepts -- not a viable model for a potentially trillion dollar economy. How to you replace a jet engine mid flight? (You don't. Unless you like not safely landing).
PoS coin is worthless coin. If you want to have your expensive-to-mine gas coin be worth something, you have to make it hard to acquire. My second concern is that if they do manage to 'migrate', enough folks will ignore this and keep mining. This is a problem today with more contentious PoW hard forks.
Ultimately this behavior will lead to more chain forks, which unlike in the ETC days actually is a big deal today. Whos USDT USDC etc is the real coin? The eth1 PoW 'legacy' network, or the eth2 'pos' chain, or what about the eth1-a/eth1-b fork when the first political staking challenges come up (see all world religion schisms). PoW solves this problem. One truth, enforced by universal energy usage. Not power players arguing over interpretations of religious text.
Irrelevant. Well designed networks are pretty much isolated from whims of miners. Ethereum is one of them, Bitcoin is not. I'm speaking about 2 weeks difficulty re-targeting window vs single block window.
> It replaces it with shell games and chicanery.
Why do you perceive it like that? I would love to hear details.
Ethereum will use hybrid PoS. Where random number generation (deciding who will become next block producer) is separated from deciding who is in the pool of potential producers (anty-sybil defense). First will be decided with commit-reveal scheme unbiased with the use of VDFs, second - with PoS.
Re: shell game. Are you implying that fraud or misdirection is involved? Some bitcoin scientist should be able to point where it is hidden. Or is it just a claim without evidence?
Energy use will always meet demand for coins. This is true even in USD. Bitcoin is actually more efficient than existing financial systems. Bitcoin removes all the labor and expense that goes into running ATMs, Bank buildings, tellers, and so forth. Eth also does this.
The real way to address energy use is to introduce seignorage into the system. (https://en.wikipedia.org/wiki/Seigniorage) in order to do this, you must give some of the new issuance to people who are not part of the system of validation.
Eth2 might work for awhile, and it might make people rich as people put up more and more stake in order to obtain rewards. (The block reward is effectively a risk-free rate of return). However, long term, you end up with a larger and larger percentage of the economy controlled by very few people.
Systems like this dis-incentivize the creation of real value through investment in real-world goods and services. Long term, people will opt out of this nonsense as it produce coins which are not useful in real business transactions due to the deflationary nature of the tokens.
How can you say this in good faith when BTC doesn't do the same things existing financial systems do?
But in PoS there is no mining. More and more people will stake, but will do so with a small single VM, with no GPUs or ASICS mining and using power.
So a PoS system will never ever use as much energy as BTC mining, by many many orders of magnitude.
I think you are wrong. Staker pays in "time-cost of money", which is proportional to the stake size and in energy cost, which is pretty much constant (few watts). Your argument implies that there will be greater amount of stakers. That would be plausible if not for 32ETH minimal stake.