Comment by cowtools | Hacker News Reader

Comment by cowtools | Hacker News Reader

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>Proof of work plays many roles in the Bitcoin.

No it doesn't. It has one purpose, and one purpose only: to secure the network against double-spending attacks by making it infeasible to reverse transactions.

I won't comment on PoS. I am not familiar with it, but it seems like it bypasses this need simply because it is more of a compromise based on classical consensus.

> With Ethereum, Cardano, Solana, etc, your value is in the hands of where the developers choose to take the protocols. They can and have changed their monetary policies, and they will again.

This is a bad premise because it frames the discussion as a false dichotomy: between Bitcoin and Ethereum/Cardano/Solana/etc. There are PoW cryptocurrencies like Monero, Litecoin, and many others that have community-driven development and institute a less dangerous emission schedule than Bitcoin.

> This person’s real concern appears to be “number go up”. It seems to have infected their thinking. They see a system that decided to engineer for NGU instead of stability and confidence, and thinks that’s “not leaky”. It is extremely short sighted.

This is a misreading of the post. The problem is that (this is an over-generalization) bitcoin's resilience to attacks requires that the price of bitcoin increase twofold every halfening, or the relative hashrate to some outside attacker will be cut in half.

>In the stormy world of crypto, Bitcoin is the port.

This is an idiotic statement. Bitcoin development has completely succumbed to corporate capture at this point by Blockstream and the likes.

> No it doesn't. It has one purpose, and one purpose only: to secure the network against double-spending attacks by making it infeasible to reverse transactions.

I won’t argue with you on this point. A better way to phrase it might be to say “POW has many features or implications for Bitcoin…”

> There are PoW cryptocurrencies like Monero, Litecoin, and many others that have community-driven development and institute a less dangerous emission schedule than Bitcoin.

Disagree that it is dangerous. We don’t have enough information about the future to determine that. It is just as likely that fee markets will be enough, thus implementing some kind of “perpetual emission” would only damage the value of the network.

Nobody will know the answer until it happens.

It's true that nobody knows for certain what will happen. I am skeptical of the idea that bitcoin in particular will be able to scrounge up enough fees on "L1" to keep the network secure, especially given its small throughput.

As the author mentions, the "L2" scaling solutions like LN still require security on "L1". However, to the extent that "L2" is scalable, it will not increase "L1" fees.

> >In the stormy world of crypto, Bitcoin is the port. This is an idiotic statement. Bitcoin development has completely succumbed to corporate capture at this point by Blockstream and the likes.

I disagree. Bitcoin has never had a hard fork. There isn’t a “Bitcoin classic” chain floating around with an old set of consensus rules. Block stream and/or minors can’t force a hard fork like ETH devs can.

Does Bitcoin Cash not count for some reason? Because the original chain is more popular and the fork is smaller?

Yeah I’m far from a expert but I do remember that fork. That sounded awfully similar to the ETH / ETC fork.

Around blocksize if I remember correctly.

No, this was very different than ETH/ETC. Bitcoin cash was a minority of people forking away from the BTC chain to increase the blocksize. ETC was the original chain that was forked away from to reclaim stolen funds because of a smart contract hack.

Generally when people are talking about “hard forking” they are referring to the majority making a backwards incompatible change that leaves little activity or economic value on the original chain. Bitcoin never forks like this, because who would coordinate it?

Bitcoin core maintainers tried to fork it and were not successful (See bitcoinXT).

Miners and community leaders tried to fork it and were not successful (see bitcoin cash).

Bitcoin exchanges and businesses tried to fork it and were not successful (see segwit2x).

And many more will come, I imagine a PoS fork will inevitably come and not be successful.

Every bitcoin fork I've seen forked to make their own change that the main project refused to make. They forked because bitcoin changed too little.

ETC forked because the main project made a change some people disagreed with. They forked because ethereum changed too much.

Sure, but I would argue that blockstream and others control bitcoin not by forcing upgrades, but instead by preventing upgrades to the network and creating commercial solutions to easily fixable problems.

I'm not saying that blocksize, LN, etc are solved problems. But I am saying that the indecision and lack of community involvement is slowly killing bitcoin. It is succumbing to corporate capture. They continue to invent increasingly custodial methods of using bitcoin.

There is a fundamental difference of opinion here. There will always be people pro changes and against. Its conservatism against progressivism. So, while it's useless to even argue (you're either one or the other, and that probably won't change, ever), let me just say that if you want any kind of digital property to exist, it's pretty important for such property to remain constant in regards to it's features, or better say, both it's virtues or flaws. That's why Bitcoin maximalists, as they are called, are very conservative towards bitcoin development.

Because of all that, making a case that someone controls Bitcoin just because they are preventing changes is rather far-fetched. So, while your other points may be valid, this is certanly an invalid one.

Bitcoin has not only had a hard fork, but it reversed a full five hours of chain history after a bug let someone mint extra coins.

https://decrypt.co/39750/184-billion-bitcoin-anonymous-creat...

Bitcoin absolutely has had hard forks.

> There isn’t a “Bitcoin classic” chain floating around with an old set of consensus rules.

Yes, there literally is a Bitcoin Classic, and prior to that was a Bitcoin XT. There's also Bitcoin Cash, and many others.

Even excluding hard forks which were chain splits (so upgrade only), there have been several. There were two hard forks in 2010, one to add OP_NOP and one fixing a critical bug where anyone could spend any Bitcoin. There was a hard fork in 2013 (BIP-50) because a block broke a limit and at least one double spend occurred.

Why comment if you aren't educated on the topic? Or rather, why actively spread misinformation?

> I won't comment on PoS. I am not familiar with it, but it seems like it bypasses this need simply because it is more of a compromise based on classical consensus.

Proof of Work and Proof of Stake round to the same thing.

In PoW you input cash to buy miners and power to obtain coins. Cash > ??? > Coins.

In PoS you input cash to buy coins to obtain coins. Cash > ??? > Coins.

In both PoS and PoS those with the most money get to control the system. PoW adds a layer of indirection by wasting mountains of components and a country worth of power but at the end of the day there's no real difference.

In Proof-of-Work, a large fraction of the money you put into the system is destroyed. There are physicially meaningful economies (and dis-economies) of scale involved. You are generally incentivized to sell your cryptocurrency as fast as possible to cover your real-world costs (lowering the price of the cryptocurrency).

In Proof-of-Stake, you are incentivized to keep your money into the system so you can control more and more of it. It's like a ponzi scheme where you are incentivized to re-invest your winnings. This falls apart when everyone starts to cash out.

The use of bitcoin mining as indoor heating is one such example of a dis-economy of scale (but this is an oversimplification because it does not factor depreciation costs). Also, there are systems like RandomX which encourage CPU-based mining, which has economies of scale for home miners or botnets over larger mining operations.

> you are incentivized to keep your money into the system so you can control more and more of it. It's like a ponzi scheme where you are incentivized to re-invest your winnings.

So you think the stock market is a ponzi scheme? Shares pay dividends, you are insentivised to keep putting money into the system

In the stock market, the money you invest into a company is used to pay for workers, equipment, etc that generates more dividends. Anything you invest in staking is competing in a zero-sum with other stakers.

> In the stock market, the money you invest into a company is used to pay for workers, equipment, etc that generates more dividends.

Only if you invest in the IPO or later stock offerings directly from a company. Otherwise you're just buying in the secondary market and no part of the price you pay goes to the company.

Shares represent voting control in the companies decisions. Even the existence of non-voting shares is still a message about expectations of future profitability - i.e. a companies ability to issue additional stock profitably depends on expectations about the value and future value of presently held stock...which in turn is a signal about confidence in the company's direction, profitability etc.

When you get into non-voting shares, you move closer and closer to "corporate branded" crypto. We'll see when a major company with a lot of non-voting shares really struggles and gets acquired at a discount or moved private, how much value is given to the non-voting shareholders.

You're confusing funding and cash flow. Funding is invested in value generating assets. Just because the money is spent doesn't mean the asset (like a conveyor belt) evaporates. It's essentially the equity holders allowing the firm to use their stuff. Which is an ongoing thing.

Stocks are different because stocks derive intrinsic value from non-investor participants. When a customer buys something at a store, the profit from that is saved in a cash account, re-invested in the business or returned to investors via dividends. Yield through dividends is no different at the limit than that money accruing to intrinsic value in the business.

Crypto only has investor participants. You cannot ever get more money out of a Bitcoin than someone else puts in buying Bitcoin. Less, actually, because you have to pay miners to operate the network.

Stocks as a whole are positive-sum due to the contributions of non-investor participants.

Futures, options and PoS crypto are zero-sum.

PoW cryptos are negative-sum due to the contributions of miners.

Ethereum's PoS also pays only a tenth as much reward as Bitcoin, as a percentage of total supply.

According to whattomine.com, with an electricity cost of $0.03/kWh your cost is about 2/3 of the Bitcoin reward. Combined with a 10X higher reward, that means a Bitcoin miner with that electricity cost gets about three times as much return on investment, as a percentage basis, as an Ethereum staker. That's money they can reinvest in new mining equipment.

> In PoW you input cash to buy miners and power to obtain coins. Cash > ??? > Coins.

In the long run yes but mining equipment is an asset which can be sold or used as collateral for a loan.

I’m not an accountant but I’m sure there are some tax benefits to depreciation. In a bull run the miners even appreciate in value too so I don’t know how that would work out.

A better way of thinking about mining is it’s a way to dollar cost average into Bitcoin if you have access to cheap power.

> In the long run yes but mining equipment is an asset which can be sold or used as collateral for a loan.

Staked coins in PoS can be withdrawn / used to the same effect.

> Staked coins in PoS can be withdrawn / used to the same effect.

AFAIK it's not possible to simultaneously stake a coin and use it as collateral for a loan without giving up custody.

It’s your opinion that what PoW produces is “waste”

The markets disagree with your opinion

Famously, markets can remain irrational longer than (investors) can remain solvent.

It's a fact that PoW involves quite a bit of waste, just like it's a fact that e.g. a coffee shop will waste quite a bit of coffee (by discarding it at close or when it gets too old). That the market dynamics all but require the coffee shop to do this doesn't somehow stop it from being waste.

The market can't disagree with definitions of words. What it can do, is encourage the waste.

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