Hacker News Reader

Comment by FabHK | Hacker News Reader

I wonder whether one can postulate an impossibility theorem (call it SEV, similar to CAP) for public blockchains (at least using PoW, and whether one can overcome it with PoS or similar is an open question):

You can't have a (PoW) public blockchain that is Secure, Efficient (=not planet destroyingly wasteful), and Valuable. Pick any two.

View on HN

Secure and efficient. Money should be a medium of transfer, not a store of value. The fact remains that you can't really get "efficient" with proof of work, and claims about "secure" are dubious with proof of stake.

I think maybe "valuable" meant "scalable" or something? I can't speak for the OP though.

I think there's something to the idea of some proof of an efficiency-security tradeoff or lack thereof though. Seems like something that should be out there in the literature.

With “Valuable” I meant that a lot of value is on-chain (in terms of market cap or transactions - basically whatever makes it worth stealing it).

Nobody would bother mounting an attack on some random shitcoin, so it can be secure (for all practical purposes) without wasting massive amounts of energy.

A public blockchain that carries a lot of value must burn a significant proportion of available hash power to guard against interference, so it’s either wasteful or insecure.

That makes sense, but I still don't think you want "valuable." In practice, most of the value of real economic systems is not held in money, but in assets. In the crypto universe, Bitcoin is more of an asset than a currency (although a valueless one if you don't consider it a currency). All you need now is a good currency.

From my economics training, Money needs to have all 3 of the following characteristics. 1. A medium of transfer 2. A unit of account 3. A store of value

Cryptocurrency generally does well on the first and not at the others.

Modern monetary theory disagrees with the third one, and so do I. I don't think a currency needs to be a store of value, just a medium of exchange. In practice, we store value in a lot of things that are not money (stocks, bonds, commodities, real estate, etc).

For example, if you had a system of money with guaranteed inflation at a certain level, you could produce a synthetic store of value that is not the money.

Someone forgot to read Marx.

Money is both a means of transfer and a store of value. The reason for those conditional properties in crypto (secure and efficient but not valuable) is because currencies have value embedded in them, it is an abstract presentation of value, it abstracts work. In this case, hash power.

Real paper money and its digital representation, like the USD, is also proof of work currency, in this casw, human power. And it's distribution evidences exploitation, not effort.

Agreed; one major reason Bitcoin became so valuable is its capped emission with the majority of supply taken up by early adopters due to Fear Of Missing Out. Tt would be less valuable when undesirable for speculators, which can be achieved with a more equitable emission such as a pure linear one.

Reply on news.ycombinator.com