Proof-of-work should be banned(stopburncoins.medium.com)
stopburncoins.medium.com
Proof-of-work should be banned
https://stopburncoins.medium.com/cryptocoins-proof-of-work-should-be-banned-1cb49c91682c
110 comments
> invariably brought to you by someone holding a proof-of-stake bag.
Heavens forbid that anyone who doesn't own cryptocurrency should have a studied opinion about it and its massive reliance on Proof-Of-Converting-Absurd-Amounts-Of-Power-Into-Waste-Heat.
Heavens forbid that anyone who does own cryptocurrency and have concerns about said massive reliance on PoCAAoPIWH should put their money where their mouth is regarding those concerns. An absolute scandal.
Heavens forbid that anyone who does own cryptocurrency and have concerns about said massive reliance on PoCAAoPIWH should put their money where their mouth is regarding those concerns. An absolute scandal.
Then put your name where your mouth is instead of hiding behind anonymity. Hardly a necessity in this case.
Just because I don't want to participate in your Ponzi scheme doesn't mean I cannot point out how idiotic it is.
My ponzi scheme?
Clearly this person does want to participate in the "ponzi scheme", they just want people to ignore the PoW schemes they're not holding a bag for and instead participate in the PoS schemes which they are.
Clearly this person does want to participate in the "ponzi scheme", they just want people to ignore the PoW schemes they're not holding a bag for and instead participate in the PoS schemes which they are.
Who are you quoting? Not the article as far as I can tell
That's my take here as well. It's hard to take this seriously and I refuse to back this when it's posted anonymously, although I agree with the sentiment behind it.
Is this really the type of thing where an anonymous author can't have any credibility? It's an analysis of bitcoin and its energy use not a claim about personal experience.
Weak ad hominem. Attack the argument, not imaginary attributes of the author.
That'd be me.
Yep, a total of < 1$, on an single, unknown and not even traded, but old coin (which I won't even mention) that is not going anywhere. Basically for fun.
Yep, a total of < 1$, on an single, unknown and not even traded, but old coin (which I won't even mention) that is not going anywhere. Basically for fun.
"How dare they put their money where their mouth is?!"
"How dare they invest in what they think is a less harmful alternative?!"
"How dare they question our ponzi scheme!?"
"How dare they invest in what they think is a less harmful alternative?!"
"How dare they question our ponzi scheme!?"
As long as we are making large unilateral changes:
We should have a re-distributive carbon tax.
We should have a re-distributive carbon tax.
An issue with a carbon tax as it relates to bitcoin is that it would simply force mining into more lax countries. The only way to discourage what miners are doing would be to lower the value of bitcoin.
This prisoner's dilemma comes up so much in global politics, it should have it's own name.
This prisoner's dilemma comes up so much in global politics, it should have it's own name.
Agreed, it'd also push any mining that happens in places that adopt it to use clean energy.
The issue of who gets to produce carbon, how much and for how long is really huge and is not dominated by any singular issue.
The issue of who gets to produce carbon, how much and for how long is really huge and is not dominated by any singular issue.
Good idea.
We should also abolish private landlords and immediately provide housing to everyone who is unhoused.
Yes, we should modify our social support systems in the direction of just providing housing. It won't solve all the problems, but for many people, it's a cheaper, more effective form of support than the things we do now.
What I want to get at is: let us have world peace.
Yeah, this is a much better solution.
You can't really ban proof-of-work practically anyway, but you can make quite easily make dirty electricity more expensive than clean electricity.
You can't really ban proof-of-work practically anyway, but you can make quite easily make dirty electricity more expensive than clean electricity.
Yes, let perfect be the enemy of the good.
A carbon tax isn't some pie in the sky thing, most developed countries have implemented it.
For those wondering wikipedia has a list of places that have implemented some form of carbon tax: https://en.wikipedia.org/wiki/Carbon_tax#Implementation
"We ask that the use and possession of Proof-Of-Work cryptocurrencies be banned, with a one year max wait period to let the various projects transition to other technologies, like Proof-Of-Stake (so that nobody loses money, and this is already happening in Ethereum)". Ugh, I think that says it all.
Nobody has any right to tell me what kind of math I can on processors I own powered by electricity that I bought.
Would you make the same argument for driving a gasoline-guzzling truck? People have the right to tell you whatever you want, but you also have the right not to listen. In this case, I don't think the onus is on you, the individual consumer, to turn down their mining operation. It's problematic when something so wasteful is done on such a massive scale, as is the case with large corporate/state mining operations that are behind significant emissions..
Yes, I would. If there's some negative externality caused by activity X, put a price on that externality and let the market decide whether X is still worth it. Top-down bans and mandates and price controls and all sorts of other clumsy interventions in society destroy value and cause endless misery to humanity. What works is letting people decide on their own how to live their lives.
https://www.amazon.com/Seeing-like-State-Certain-Condition/d...
https://www.amazon.com/Seeing-like-State-Certain-Condition/d...
How does this work then? If you raise electricity prices people who need it for everyday living won't be able to afford it
Where I am, and in many places in the US and Canada (not sure about the rest of the world), part of the agreement for residential electricity hookup (and the rates that you get billed at) is that you won't be using the power for commercial use.
You might have already waived your "right" to do whatever you want with the electricity you buy.
You might have already waived your "right" to do whatever you want with the electricity you buy.
Yes, we do.
We regulate all sorts of things, and this would be a smart thing to regulate.
Electricity distribution and often production is partly to fully socialized almost everywhere, meaning 'it affects us all'.
If you live on an island, disconnected from everyone else, then you can do whatever you want.
We regulate all sorts of things, and this would be a smart thing to regulate.
Electricity distribution and often production is partly to fully socialized almost everywhere, meaning 'it affects us all'.
If you live on an island, disconnected from everyone else, then you can do whatever you want.
>If you live on an island, disconnected from everyone else, then you can do whatever you want.
I think you're unaware how isolated and segmented some of the global electrical grids are (even in well populated areas) that create the very off-peak idle production that allows mining to exist.
This is certainly the case in parts of China (rainy season hydro) and the US that must maintain capacity for instant peak usage but otherwise goes to waste.
I think you're unaware how isolated and segmented some of the global electrical grids are (even in well populated areas) that create the very off-peak idle production that allows mining to exist.
This is certainly the case in parts of China (rainy season hydro) and the US that must maintain capacity for instant peak usage but otherwise goes to waste.
My statement has nothing to do with electricity isolation.
It has to do with the fact that systems within a nation are integrated at an economic level, especially those that are socialized.
You can dig holes and fill them in your back yard to your heart's content, but you can't do something that impacts watersheds.
You can use electricity, but for certain uses it might be regulated, because in many instances the electricity production and distribution is socialized.
We invest billion in electricity generation to support industry and infrastructure, not to support wasteful speculation.
If someone wants to put up solar panels, or generate their electricity independently with no externalizations i.e. no pollution then go ahead. But otherwise, it's a giant waste.
People are literally paying slightly higher electricity bills to support speculation, not good.
It has to do with the fact that systems within a nation are integrated at an economic level, especially those that are socialized.
You can dig holes and fill them in your back yard to your heart's content, but you can't do something that impacts watersheds.
You can use electricity, but for certain uses it might be regulated, because in many instances the electricity production and distribution is socialized.
We invest billion in electricity generation to support industry and infrastructure, not to support wasteful speculation.
If someone wants to put up solar panels, or generate their electricity independently with no externalizations i.e. no pollution then go ahead. But otherwise, it's a giant waste.
People are literally paying slightly higher electricity bills to support speculation, not good.
This is tempting to think, but we already ban the math that provides, say, serving of child exploitation content.
[deleted]
and it's not working
https://www.bbc.com/news/education-53417284
https://www.bbc.com/news/education-53417284
Technically they do but I agree that these calls for banning Bitcoin because it consumes energy are anti-freedom when considering that its consumption of energy is a drop in the bucket in grand scheme of things.
It's not a drop in the bucket. If bitcoin were a country it would be in the top 30 energy users worldwide.
https://www.bbc.co.uk/news/technology-56012952
https://www.bbc.co.uk/news/technology-56012952
It is a drop in the bucket. As expected the distribution of energy usage among distinct countries follows a power law distribution. Of the percentage of the highest consumer (China), it’s less than 1%.
Comparing the usage to China makes sense because each country’s consumption of energy for the purposes of mining Bitcoin also follows a similar power law distribution. We find that the vast majority of Bitcoin mining happens in China.
These types of arguments are based on bad reasoning and misuse of statistics. If you compare the usage of any small industry in the largest consumer country, it will likely dwarf the total energy usage of many smaller countries. I see similar tendencies in activist pieces that make population policy arguments without using per-capita analysis.
Comparing the usage to China makes sense because each country’s consumption of energy for the purposes of mining Bitcoin also follows a similar power law distribution. We find that the vast majority of Bitcoin mining happens in China.
These types of arguments are based on bad reasoning and misuse of statistics. If you compare the usage of any small industry in the largest consumer country, it will likely dwarf the total energy usage of many smaller countries. I see similar tendencies in activist pieces that make population policy arguments without using per-capita analysis.
Well said. I may refer back to your excellent point when this argument comes up again......and again.........and again.
[deleted]
The anti-Bitcoin mental gymnastics get more and more hilarious every cycle.
You don’t have to feel this bad, just buy Bitcoin!
You don’t have to feel this bad, just buy Bitcoin!
It's unlikely that there will be any real attempt to regulate bitcoin while it enables the circumvention of capital controls and reliably brings wealth and investment into rich countries.
because governments love "the circumvention of capital controls" ?
Do you think the United States objects to Chinese nationals buying up property in the US and sending their kids to school there?
I think that this - of course - within the remit of The Chinese government.
And should they object to it, being a large and powerful state, they have a large number of ways to curb it, starting with, but not limited to:
Insisting on international treaties that act against the flows of dark money over borders in any direction (at which point, yes, other countries are obliged to object).
Then moving on to acting directly and legally against Chinese citizens who do things that their state does not allow.
Also, I am told that a lot of bitcoin "mining" occurs within the borders of China.
other countries are already moving to do this kind of thing with cryptocurrency: https://www.reuters.com/article/uk-india-cryptocurrency-ban-...
Insisting on international treaties that act against the flows of dark money over borders in any direction (at which point, yes, other countries are obliged to object).
Then moving on to acting directly and legally against Chinese citizens who do things that their state does not allow.
Also, I am told that a lot of bitcoin "mining" occurs within the borders of China.
other countries are already moving to do this kind of thing with cryptocurrency: https://www.reuters.com/article/uk-india-cryptocurrency-ban-...
This is like saying incandescent light bulbs should be banned. Sure, it’s a sensible thing to say once you have unilaterally-better bulbs already fully commercialized and in mass production. (And this happened with CFLs and then LED bulbs; and then we did ban incandescents, here in Canada and in many other places.)
But we’re not at that “fully commercialized and in mass production” inflection point yet with Proof-of-Stake networks. They exist, but none have the transaction load (and thus the network build-out to absorb the transaction load) that Bitcoin has.
Forcing a switch to PoS now, would be like trying to force a switch to CFLs or LED bulbs only a year or two after they were invented. What would you imagine would happen as a result? The incandescent manufacturers would go out of business, and the CFL/LED manufacturers wouldn’t yet have been able to absorb the demand. Nobody would be able to buy lightbulbs. This kind of a ban is effectively just demanding to kill the sector as a whole.
Once an old technology is on its way out in the market anyway — and it’s only stubborn locked-in enterprise hold-outs, rather than greenfield adoption, continuing the relevance of the old tech — then it can be banned, to force those enterprise hold-outs to switch over to the new tech. That’s entirely appropriate. But the market knows when tech is mature, and the market itself switches over when that happens. Trying to force the market is just acting without the same distributed knowledge the market represents. It’s central top-down allocation trying to solve distributed problems, like the failure of the USSR.
To be clear, I’m a developer for Proof-of-Stake ecosystem tooling myself. But I think all PoS developers would agree that there’s no Proof-of-Stake mainnet network that yet has the capacity to absorb all of Bitcoin’s transaction flow—and there’s no reason that one or more governments saying “you have a year to transition to PoS” would change this.
The existing PoS chains are at the level of infrastructure development now, that the CFL+LED bulb industries were at around the year 1990. Do you think they could have suddenly achieved their 2014 (= the year Canada banned incandescents) level of infrastructure development in one year, if people just threw money at them? Technology—its productization, its operationalization, and ecosystem tooling adaptation—takes time.
But we’re not at that “fully commercialized and in mass production” inflection point yet with Proof-of-Stake networks. They exist, but none have the transaction load (and thus the network build-out to absorb the transaction load) that Bitcoin has.
Forcing a switch to PoS now, would be like trying to force a switch to CFLs or LED bulbs only a year or two after they were invented. What would you imagine would happen as a result? The incandescent manufacturers would go out of business, and the CFL/LED manufacturers wouldn’t yet have been able to absorb the demand. Nobody would be able to buy lightbulbs. This kind of a ban is effectively just demanding to kill the sector as a whole.
Once an old technology is on its way out in the market anyway — and it’s only stubborn locked-in enterprise hold-outs, rather than greenfield adoption, continuing the relevance of the old tech — then it can be banned, to force those enterprise hold-outs to switch over to the new tech. That’s entirely appropriate. But the market knows when tech is mature, and the market itself switches over when that happens. Trying to force the market is just acting without the same distributed knowledge the market represents. It’s central top-down allocation trying to solve distributed problems, like the failure of the USSR.
To be clear, I’m a developer for Proof-of-Stake ecosystem tooling myself. But I think all PoS developers would agree that there’s no Proof-of-Stake mainnet network that yet has the capacity to absorb all of Bitcoin’s transaction flow—and there’s no reason that one or more governments saying “you have a year to transition to PoS” would change this.
The existing PoS chains are at the level of infrastructure development now, that the CFL+LED bulb industries were at around the year 1990. Do you think they could have suddenly achieved their 2014 (= the year Canada banned incandescents) level of infrastructure development in one year, if people just threw money at them? Technology—its productization, its operationalization, and ecosystem tooling adaptation—takes time.
> This is like saying incandescent light bulbs should be banned
They are banned in the EU, and are slowly being banned in the US.
They are banned in the EU, and are slowly being banned in the US.
Did you read the parenthetical after that sentence? My point was that we waited until after we had practical alternatives to ban them. We didn’t ban them in order to magically force practical alternatives into existence.
The practical alternative for most blockchain applications is just a public ledger
There's no digital currency or methods to transact that are more efficient than Bitcoin?
Like ACH, Venmo, wire transfers, etc?
Bitcoin is like CFL bulbs. An unfortunate ecological misstep while trying to improve what was available. I'll agree the parallel is clunky since CFLs still saved energy, bit bitcoin burns through it.
Like ACH, Venmo, wire transfers, etc?
Bitcoin is like CFL bulbs. An unfortunate ecological misstep while trying to improve what was available. I'll agree the parallel is clunky since CFLs still saved energy, bit bitcoin burns through it.
Those other methods (ACH, Venmo, wire transfers) are owned by companies/banks and thus censorable. The whole thing Bitcoin is doing that everyone is spending all this money/electricity on, is allowing the global market to route around market inefficiencies introduced by government control (e.g. trade sanctions, tariffs, “capital flight” export controls, taxation double-binds [like for dual US/somewhere-else citizens], AML laws, etc.) That’s the base cryptocurrency “value prop” — before you add on the smart-contract programmable-financial-instrument stuff.
There are also other PoW chains, like Monero, that are “cheaper for now” — but if everyone using Bitcoin switched to those, they’d be just as expensive as Bitcoin is.
PoS chains (including maybe PoS state-channels for PoW base chains) are the good alternative — everyone in the space can see that. But they’re not ready yet.
> Bitcoin is like CFL bulbs.
I agree: like CFLs, Bitcoin is better than what we had before in some ways, but worse in others, and we can clearly see that we’re going to need to replace it. (The bad-actor analogy even holds up: both CFLs and PoW chains have externalized consequences. CFLs put mercury into the environment; Bitcoin contributes to climate change.)
But we didn’t try to muscle CFLs out of the ecosystem. They just disappeared from relevance — and production went to 1/1000th of peak — once we got good, cheap LED bulbs into the market. Until then, the market concentrated on CFL bulbs, because they really were a (rational-selfish-economic-actor) “better” option than incandescent. It made economic sense for property developers and other mass-buyers to fill their lighting neeeds with CFLs. And then — once LEDs were good and cheap — it didn’t.
There are also other PoW chains, like Monero, that are “cheaper for now” — but if everyone using Bitcoin switched to those, they’d be just as expensive as Bitcoin is.
PoS chains (including maybe PoS state-channels for PoW base chains) are the good alternative — everyone in the space can see that. But they’re not ready yet.
> Bitcoin is like CFL bulbs.
I agree: like CFLs, Bitcoin is better than what we had before in some ways, but worse in others, and we can clearly see that we’re going to need to replace it. (The bad-actor analogy even holds up: both CFLs and PoW chains have externalized consequences. CFLs put mercury into the environment; Bitcoin contributes to climate change.)
But we didn’t try to muscle CFLs out of the ecosystem. They just disappeared from relevance — and production went to 1/1000th of peak — once we got good, cheap LED bulbs into the market. Until then, the market concentrated on CFL bulbs, because they really were a (rational-selfish-economic-actor) “better” option than incandescent. It made economic sense for property developers and other mass-buyers to fill their lighting neeeds with CFLs. And then — once LEDs were good and cheap — it didn’t.
As someone who used to believe in bitcoin, the way it's used today is a net loss for society. So banning proof of work wouldn't be a bad idea.
> This is like saying incandescent light bulbs should be banned.
Yes, and they are being banned, in many places: https://en.wikipedia.org/wiki/Phase-out_of_incandescent_ligh...
Yes, and they are being banned, in many places: https://en.wikipedia.org/wiki/Phase-out_of_incandescent_ligh...
Lighting serves a basic human need. Bitcoin does not.
Alternative, non-state-controlled currencies serve a basic human need under authoritarian regimes.
They also enable trade to continue between nations that trade-sanction/blockade one-another, which is usually seen as a global-economic net good (in the sense that a trade-sanction/blockade is essentially an infinity% tariff, and economists have analyzed to death how tariffs hurt both the target and source economies.)
(Some countries accomplish this by just using some other country’s physical currency — e.g. Venezuela using USD. But in really authoritarian [and technologically-modern] countries, any type of movement of physical currency exchange is heavily tracked, so this isn’t usually an option.)
They also enable trade to continue between nations that trade-sanction/blockade one-another, which is usually seen as a global-economic net good (in the sense that a trade-sanction/blockade is essentially an infinity% tariff, and economists have analyzed to death how tariffs hurt both the target and source economies.)
(Some countries accomplish this by just using some other country’s physical currency — e.g. Venezuela using USD. But in really authoritarian [and technologically-modern] countries, any type of movement of physical currency exchange is heavily tracked, so this isn’t usually an option.)
Other ledgers are better than bitcoin. Less energy use, faster, cheaper, better failure modes for users, etc.
Incandescent light bulbs are already banned in California. People there are still able to see in the dark.
so... we have Proof of Stake, in various forms.
And we can say "it will be banned in 1-2 years, you have the time to change the underlying tech.
With those premises the value will not change much, and the global advantages are big.
And we can say "it will be banned in 1-2 years, you have the time to change the underlying tech.
With those premises the value will not change much, and the global advantages are big.
> so... we have Proof of Stake, in various forms.
And which one of those Proof-of-Stake forms are you already heavily invested in?
And which one of those Proof-of-Stake forms are you already heavily invested in?
Not only is BTC not a replacement for anything - there's no real reason for it it use so much energy. It's an absurd idea. There are 1000 ways to print money and give it out. Making people spend effort wasting energy is just an arbitrary and bad way to do it.
While the energy consumption of proof-of-work is indeed an issue, for many trust-critical crypto projects (including effectively all cryptocurrencies) proof-of-stake has even bigger problems, as was demonstrated a decade ago when BTC was still under 10 USD:
https://bitcointalk.org/index.php?topic=897488.msg10182752#m...
>I will formulate the attack: The "Second Pirate Savings and Trust" attack on Proof-of-Stake
>1. The attacker creates the "Second Pirate Savings and Trust" modelled after the "First Pirate Savings and Trust" later called "Bitcoin Savings and Trust" https://bitcointalk.org/index.php?topic=50822.msg605957#msg6.... This is done in a falling market.
>2. The "trust" offers a very attractive rate of interest payable in the POS coin. This rate is significantly higher than the stake rate
>3. The "trust" allows investors to leave the interest in the "trust" and roll over the investment.
>4. The "trust specifically disclaims that it is a HYIP / Ponzi scam https://bitcointalk.org/index.php?topic=50822.msg605981#msg6...
>5. The attacker sells a portion of the borrowed POS coin say 50% for XBT, another POW alt-coin, one or more fiat currencies etc. This will becomes the attackers profit at the end. This will also depress the price by short selling creating the "bear raid"
>6. A portion of the received POS coins is used to repay interest to those investors that do not reinvest their interest. This is the "ponzi" component; however see below.
>7. The rest of the borrowed POS coin is kept by the attacker, accumulated and staked.
>At this point this is no different from any bear raid on a stock, fiat currency POW currency etc. If the market exchange rate falls faster than 2x the interest rate less the stake rate then in the 50% example above, the attacker is actually in the black and there is no ponzi. In the normal bear raid the attacker, if the attacker can depress the price enough and cover the short, can actually walk away with a profit. The problem with the simple bear raid is that in covering the short the exchange rate can rise sharply. This converts the bear raid into a ponzi and the scheme collapses in a rising market. This is what happened to "First Pirate Savings and Trust". It collapsed during a rise in the Bitcoin price.
>It is at this point where the specific to Proof-of-Stake part of the attack comes into play.
>8. The attacker continues the ponzi until he has accumulated enough stake to launch a network attack.
>9. The attacker is also accumulating a greater debt in the POS coin and can even continue selling 50% of the borrowed coin to increase his profit.
>10. The attacker launches the attack on the coin causing its value to fall to zero. This wipes out the attacker's stake, but more importantly also wipes out the attacker's debt. The specifics of the attack will of course depend on the particular POS coin.
>11. The attacker is left with is profit in some other currency, a worthless amount of the POS coin and a debt denominated in the now worthless POS currency.
>Countermeasure:
>The only known countermeasure is the intervention of the state.
And to quote the same poster's thoughts as of a few months ago:
https://www.reddit.com/r/Monero/comments/hpfjk8/could_monero...
>Proof of stake is ultimately based upon the premise that the holder of the staked coins has a financial incentive to act in the best interest of the crypto currency, in order to protect her stake. In other words she is net long the crypto currency. The trouble is that the network has no way of knowing if she is short or long, is acting as a dishonest custodian of somebody else's coins while staking them, has borrowed and sold a much larger number of coins creating net short position, has take a massive short position using leveraged derivatives, etc. In fact the network cannot even tell if she is a beneficial owner of the staked coins or just a nominee.
>Based upon this I formulated The Second Pirate Savings and Trust attack on Proof-of-Stake over 5 years ago. https://bitcointalk.org/index.php?topic=897488.msg10182752#m... Those who were around Bitcoin in 2011 - 2012 may remember the The First Pirate Savings and Trust, where a massive short position in Bitcoin was created, it then evolved into a ponzi scheme as the price of 1 BTC started to rise above 2 USD towards ~15 USD. At this point that whole thing blew up in default. Then the US SEC got to work fitting its promoter for an orange jumpsuit. Bitcoin survived because it is POW. If Bitcoin had been POS, then the promoter could have used the BTC under his control to wreck havoc on the Bitcoin network, causing the price to crash effectively making his debts worthless and very likely avoiding prosecution.
https://bitcointalk.org/index.php?topic=897488.msg10182752#m...
>I will formulate the attack: The "Second Pirate Savings and Trust" attack on Proof-of-Stake
>1. The attacker creates the "Second Pirate Savings and Trust" modelled after the "First Pirate Savings and Trust" later called "Bitcoin Savings and Trust" https://bitcointalk.org/index.php?topic=50822.msg605957#msg6.... This is done in a falling market.
>2. The "trust" offers a very attractive rate of interest payable in the POS coin. This rate is significantly higher than the stake rate
>3. The "trust" allows investors to leave the interest in the "trust" and roll over the investment.
>4. The "trust specifically disclaims that it is a HYIP / Ponzi scam https://bitcointalk.org/index.php?topic=50822.msg605981#msg6...
>5. The attacker sells a portion of the borrowed POS coin say 50% for XBT, another POW alt-coin, one or more fiat currencies etc. This will becomes the attackers profit at the end. This will also depress the price by short selling creating the "bear raid"
>6. A portion of the received POS coins is used to repay interest to those investors that do not reinvest their interest. This is the "ponzi" component; however see below.
>7. The rest of the borrowed POS coin is kept by the attacker, accumulated and staked.
>At this point this is no different from any bear raid on a stock, fiat currency POW currency etc. If the market exchange rate falls faster than 2x the interest rate less the stake rate then in the 50% example above, the attacker is actually in the black and there is no ponzi. In the normal bear raid the attacker, if the attacker can depress the price enough and cover the short, can actually walk away with a profit. The problem with the simple bear raid is that in covering the short the exchange rate can rise sharply. This converts the bear raid into a ponzi and the scheme collapses in a rising market. This is what happened to "First Pirate Savings and Trust". It collapsed during a rise in the Bitcoin price.
>It is at this point where the specific to Proof-of-Stake part of the attack comes into play.
>8. The attacker continues the ponzi until he has accumulated enough stake to launch a network attack.
>9. The attacker is also accumulating a greater debt in the POS coin and can even continue selling 50% of the borrowed coin to increase his profit.
>10. The attacker launches the attack on the coin causing its value to fall to zero. This wipes out the attacker's stake, but more importantly also wipes out the attacker's debt. The specifics of the attack will of course depend on the particular POS coin.
>11. The attacker is left with is profit in some other currency, a worthless amount of the POS coin and a debt denominated in the now worthless POS currency.
>Countermeasure:
>The only known countermeasure is the intervention of the state.
And to quote the same poster's thoughts as of a few months ago:
https://www.reddit.com/r/Monero/comments/hpfjk8/could_monero...
>Proof of stake is ultimately based upon the premise that the holder of the staked coins has a financial incentive to act in the best interest of the crypto currency, in order to protect her stake. In other words she is net long the crypto currency. The trouble is that the network has no way of knowing if she is short or long, is acting as a dishonest custodian of somebody else's coins while staking them, has borrowed and sold a much larger number of coins creating net short position, has take a massive short position using leveraged derivatives, etc. In fact the network cannot even tell if she is a beneficial owner of the staked coins or just a nominee.
>Based upon this I formulated The Second Pirate Savings and Trust attack on Proof-of-Stake over 5 years ago. https://bitcointalk.org/index.php?topic=897488.msg10182752#m... Those who were around Bitcoin in 2011 - 2012 may remember the The First Pirate Savings and Trust, where a massive short position in Bitcoin was created, it then evolved into a ponzi scheme as the price of 1 BTC started to rise above 2 USD towards ~15 USD. At this point that whole thing blew up in default. Then the US SEC got to work fitting its promoter for an orange jumpsuit. Bitcoin survived because it is POW. If Bitcoin had been POS, then the promoter could have used the BTC under his control to wreck havoc on the Bitcoin network, causing the price to crash effectively making his debts worthless and very likely avoiding prosecution.
Actual question as I’m not too familiar with proof of stake. As described in the article, all that matters is how much is in your wallet...
Doesn’t that seem ripe for hyper capitalist abuse? I realize the article is just offering a simplified explanation, but the idea that whoever has the most money directly controls the money supply itself seems... well, not ideal?
So could anyone elaborate on what else about proof of stake leads to decentralization and fairness as opposed to just more incentives for centralization?
Doesn’t that seem ripe for hyper capitalist abuse? I realize the article is just offering a simplified explanation, but the idea that whoever has the most money directly controls the money supply itself seems... well, not ideal?
So could anyone elaborate on what else about proof of stake leads to decentralization and fairness as opposed to just more incentives for centralization?
Proof of Stake doesn't just have a problem with rich get richer effects, it's fundamentally logically unsound and is inherently insecure as a decenteralized consensus mechanism.
Schemes which claim to have 'proven' the security of POS do so by assuming that you externally have a secure consensus mechanism (or one in disguise, e.g. a network which delivers all messages in the same order to all users), resulting in a completely tautological "proof".
For more info on the unsoundness of POS: https://download.wpsoftware.net/bitcoin/pos.pdf
The reason you see it as part of the plans of some altcoins is that the creators of these coins wrote into their ledgers enormous numbers of coins for themselves, and are now stuck with largely illiquid billion dollar "investments" that they can't substantially sell without collapsing their markets and which aren't earning interest-- using POS gives them an excuse to guarantee themselves a return. The fact that it locks others out of the consensus or undermines the security is just collateral damage.
As a bonus it also creates a new avenue to pump their systems vs alternatives which are actually trying to remain secure and decentralized. I expect to see HN and other venues flooded with more anonymously authored articles promoting this stuff in the coming years.
Schemes which claim to have 'proven' the security of POS do so by assuming that you externally have a secure consensus mechanism (or one in disguise, e.g. a network which delivers all messages in the same order to all users), resulting in a completely tautological "proof".
For more info on the unsoundness of POS: https://download.wpsoftware.net/bitcoin/pos.pdf
The reason you see it as part of the plans of some altcoins is that the creators of these coins wrote into their ledgers enormous numbers of coins for themselves, and are now stuck with largely illiquid billion dollar "investments" that they can't substantially sell without collapsing their markets and which aren't earning interest-- using POS gives them an excuse to guarantee themselves a return. The fact that it locks others out of the consensus or undermines the security is just collateral damage.
As a bonus it also creates a new avenue to pump their systems vs alternatives which are actually trying to remain secure and decentralized. I expect to see HN and other venues flooded with more anonymously authored articles promoting this stuff in the coming years.
This is helpful, thanks!
The pro-proof-of-stake argument is that every other system is inherently already like that: For example with proof-of-work, the richest can already afford the most hardware which gets them the most earnings. But actually with proof-of-work it's even worse, because it is a non-linear relationship as to what kind of mining hardware you can afford (richer can afford exponentially more efficient hardware). So proof-of-stake is actually better, because at least it's linear.
For proof of work the cost of the hardware is substantially irrelevant, it's eclipsed by energy costs after a month or two of operation.
POS proposals all have participatory floors. E.g. the ethereum proposal requires participants lock up about $60,000 worth of ethereum to participate.
POS proposals all have participatory floors. E.g. the ethereum proposal requires participants lock up about $60,000 worth of ethereum to participate.
True, but staking pools might help mitigate the latter issue.
That's equivalent to saying that you can invest in a cloud mining operation or pool funds with friends to by a larger mining device than you otherwise would alone-- in both cases you lose control of your influence in the consensus and essentially end up paying someone else to centralize the system more on your behalf.
Talking way outside of my understanding of POW, blockchain, etc, but what if POW was something with intrinsic value? Say for instance protein unfolding, physics number crunching, weather prediction, etc. And as a result this became the value of the ledger.
Surely the amount of energy consumed by this valuable POW would make it potentially worth it when the returns would benefit society, the environment, etc...
Surely the amount of energy consumed by this valuable POW would make it potentially worth it when the returns would benefit society, the environment, etc...
> Just ask that bitcoin and other switch to PoS! It will not be immediate, so the current investments in hardware can be repaid, and there will be no value lost.
Miners almost certainly won't see it that way. "Oh so now you say that I can recoup my capital investment until 12/31/2024? Great, I will happily sign blocks that mark a transition to proof-of-stake." Miners would fork the coin at best. Or, rather, this new proof-of-stake coin would be considered the 'fork'.
Serious design changes should be proposed via the process. For bitcoin, that's BIP [1]. This is just wishful thinking. Someone who proposes a 'ban' and not a design change is not genuinely motivated to supporting a decentralized currency.
Why transition bitcoin at all? Just endorse PoS coins and if they're truly superior then they will take on more value and people will naturally transition. Metcalfe's law is difficult to overcome. However, the value should be apparent in an overall decrease of the network's CAPEX+OPEX.
[1] https://github.com/bitcoin/bips/blob/master/README.mediawiki
Miners almost certainly won't see it that way. "Oh so now you say that I can recoup my capital investment until 12/31/2024? Great, I will happily sign blocks that mark a transition to proof-of-stake." Miners would fork the coin at best. Or, rather, this new proof-of-stake coin would be considered the 'fork'.
Serious design changes should be proposed via the process. For bitcoin, that's BIP [1]. This is just wishful thinking. Someone who proposes a 'ban' and not a design change is not genuinely motivated to supporting a decentralized currency.
Why transition bitcoin at all? Just endorse PoS coins and if they're truly superior then they will take on more value and people will naturally transition. Metcalfe's law is difficult to overcome. However, the value should be apparent in an overall decrease of the network's CAPEX+OPEX.
[1] https://github.com/bitcoin/bips/blob/master/README.mediawiki
Cannabis (for example) has been banned since 1928, yet it hasn't gone away. When things make money, legislation is not an effective way to eliminate them.
Cannabis is inherently valuable. A proof-of-work blockchain is not; it's an implementation detail. A better example might be banning CFCs from aerosol spray cans.
Proof-of-stake coins lack one of proof-of-work coins most important properties: censorship resistance.
In both consensus systems, a censor is someone that has amassed 51% of the currently available stake (in PoW stake is mining machines, in PoS it is outstanding tokens).
In proof-of-work systems, a censor can be unseated by censored parties allocating more capital to mining machines until non-censoring parties own 51% of all machines.
In proof-of-stake systems, it is impossible to unseat a censor: since it owns 51% of tokens, it will also owns 51% of newly minted units in perpetuity (assuming it doesn't stop censoring and doesn't run into issues that would end up slashing some of their stake).
In both consensus systems, a censor is someone that has amassed 51% of the currently available stake (in PoW stake is mining machines, in PoS it is outstanding tokens).
In proof-of-work systems, a censor can be unseated by censored parties allocating more capital to mining machines until non-censoring parties own 51% of all machines.
In proof-of-stake systems, it is impossible to unseat a censor: since it owns 51% of tokens, it will also owns 51% of newly minted units in perpetuity (assuming it doesn't stop censoring and doesn't run into issues that would end up slashing some of their stake).
The math in this article makes it sound trivial for any major government to destroy bitcoin.
https://joekelly100.medium.com/how-to-kill-bitcoin-part-2-no...
It points out that "But we can spend more on hardware then they could." is false. Once it was outlawed, they can just seize the mining hardware.
So PoS may actually be more resistant. Instead of acquiring physical hardware governments would have to start acquiring the currency. If they have to purchase it, it will drive the price up. While they maybe able to seize it in this scenario as well, it would seem the virtual crypto world would have better protection than the physical world.
So PoS may actually be more resistant. Instead of acquiring physical hardware governments would have to start acquiring the currency. If they have to purchase it, it will drive the price up. While they maybe able to seize it in this scenario as well, it would seem the virtual crypto world would have better protection than the physical world.
We should ban articles like this from HN, I only want to see math, science and engineering not these opinion peaces about blockchain, ai ethics or visionary vc shit
The article provides the links to the math you're looking for.
Well said
I would a Bitcoin that this anonymous account holds a lot of proof stake tokens.
I really don’t understand this attack on Bitcoin. It seems to be all the rage nowadays to lament the effects of Bitcoin’s electricity usage on the environment but a couple things seem true to me.
1) Any civilization sufficiently progressing will use more and more energy. Bitcoin could definitely be more energy efficient but even without it our society would still increase our energy usage over time.
2) The issue people have with electricity usage isn’t the actual usage of the electricity but how it’s generated. Why are we attacking Bitcoin for using electricity instead of simply pushing for more renewable energy sources?
3) For Bitcoin miners to maximize profit they need the cheapest elictricity and now that solar provides the cheapest energ per watt in history miners are actually incentivized to build out more solar.
At the end of the day it seems to me that any free society that supplies energy as a service shouldn’t be dictating what individuals do with that electricity as long as they pay for it. If you’re concerned that electricity doesn’t properly price externalities then your issue is with the electricity provider, not Bitcoin miners.
1) Any civilization sufficiently progressing will use more and more energy. Bitcoin could definitely be more energy efficient but even without it our society would still increase our energy usage over time.
2) The issue people have with electricity usage isn’t the actual usage of the electricity but how it’s generated. Why are we attacking Bitcoin for using electricity instead of simply pushing for more renewable energy sources?
3) For Bitcoin miners to maximize profit they need the cheapest elictricity and now that solar provides the cheapest energ per watt in history miners are actually incentivized to build out more solar.
At the end of the day it seems to me that any free society that supplies energy as a service shouldn’t be dictating what individuals do with that electricity as long as they pay for it. If you’re concerned that electricity doesn’t properly price externalities then your issue is with the electricity provider, not Bitcoin miners.
>Any civilization sufficiently progressing will use more and more energy
Efficiency is still a net good. Even if you don't believe that CO2 in the atmosphere causes climate change, every form of electricity generation has negative side effects for society, including renewables.
Normally the benefits greatly outweigh the costs, but that's not true for proof-of-work systems when considered in light of the alternatives.
>Bitcoin could definitely be more energy efficient
Exactly. One way to do that would be to use something other than proof of work.
>Why are we attacking Bitcoin for using electricity instead of simply pushing for more renewable energy sources?
Because increasing the demand for electricity more than necessary increases the cost to all of us––both the direct economic cost in our electricity bills and the environmental and societal costs. This is true whether the energy is renewable or not.
>At the end of the day it seems to me that any free society that supplies energy as a service shouldn’t be dictating what individuals do with that electricity as long as they pay for it
Wasteful energy use causes problems that society as a whole has to bear. Think about what would happen if we said things like "any free society that permits land ownership should permit nuclear waste disposal on any private property." It just doesn't work out, because society as a whole ends up paying the cost.
Efficiency is still a net good. Even if you don't believe that CO2 in the atmosphere causes climate change, every form of electricity generation has negative side effects for society, including renewables.
Normally the benefits greatly outweigh the costs, but that's not true for proof-of-work systems when considered in light of the alternatives.
>Bitcoin could definitely be more energy efficient
Exactly. One way to do that would be to use something other than proof of work.
>Why are we attacking Bitcoin for using electricity instead of simply pushing for more renewable energy sources?
Because increasing the demand for electricity more than necessary increases the cost to all of us––both the direct economic cost in our electricity bills and the environmental and societal costs. This is true whether the energy is renewable or not.
>At the end of the day it seems to me that any free society that supplies energy as a service shouldn’t be dictating what individuals do with that electricity as long as they pay for it
Wasteful energy use causes problems that society as a whole has to bear. Think about what would happen if we said things like "any free society that permits land ownership should permit nuclear waste disposal on any private property." It just doesn't work out, because society as a whole ends up paying the cost.
> Because increasing the demand for electricity more than necessary increases the cost to all of us––both the direct economic cost in our electricity bills and the environmental and societal costs. This is true whether the energy is renewable or not.
If my mining operation is completely disconnected from the grid, how will that have any impact on grid supply pricing? (not focused on the upfront capital or operational costs, just the mining energy itself)
If my mining operation is completely disconnected from the grid, how will that have any impact on grid supply pricing? (not focused on the upfront capital or operational costs, just the mining energy itself)
I wouldn't be worried about off-grid systems personally. That seems like a fair way to reduce the negative side effects.
But, to answer your question, even if 100% of mining were off-grid:
1) Setting up and maintaining a cryptocurrency mining operation still takes up tons of resources, resulting in scarcity and higher prices (see, e.g.: many gamers can't buy GPUs right now)
2) This is likely minor, but the land taken up by your cryptocurrency mining operation could be put to more productive use, even if unmaintained (acting as a carbon sink).
3) Even an off-grid solar operation has many environmental impacts, including all of the on-grid energy that went into making that equipment, all of the pollution caused by manufacture, and all of the use of society's infrastructure that the manufacturing tied up.
But, to answer your question, even if 100% of mining were off-grid:
1) Setting up and maintaining a cryptocurrency mining operation still takes up tons of resources, resulting in scarcity and higher prices (see, e.g.: many gamers can't buy GPUs right now)
2) This is likely minor, but the land taken up by your cryptocurrency mining operation could be put to more productive use, even if unmaintained (acting as a carbon sink).
3) Even an off-grid solar operation has many environmental impacts, including all of the on-grid energy that went into making that equipment, all of the pollution caused by manufacture, and all of the use of society's infrastructure that the manufacturing tied up.
> At the end of the day it seems to me that any free society that supplies energy as a service shouldn’t be dictating what individuals do with that electricity as long as they pay for it.
This doesn't compute for me. We can (and do) have a free society that still has regulation. In fact, it's probably necessary for keeping it free.
Regulating resources is also critical---e.g., overfishing, mining, logging, etc.
Finally, I would say it's not the particular usage of electricity that should be banned here, but rather a particular action which currently has a negative* effect on society with no known positives beyond enriching a small number.
* If you want to argue that bitcoin currently has a positive effect on society then that's a separate argument. I'll actually concede if you show proof that its usage is driving solar up to a point that would not have been achievable otherwise, considering that fossil fuels are still predominantly used.
This doesn't compute for me. We can (and do) have a free society that still has regulation. In fact, it's probably necessary for keeping it free.
Regulating resources is also critical---e.g., overfishing, mining, logging, etc.
Finally, I would say it's not the particular usage of electricity that should be banned here, but rather a particular action which currently has a negative* effect on society with no known positives beyond enriching a small number.
* If you want to argue that bitcoin currently has a positive effect on society then that's a separate argument. I'll actually concede if you show proof that its usage is driving solar up to a point that would not have been achievable otherwise, considering that fossil fuels are still predominantly used.
But Bitcoin is not needed. It currently provides little to no positive value to society and a lot of negative value so it is hard to classify it as society progressing.
I could say the same thing about Twitter. The thing is, who gets to decide what types of power usage are "needed" and "not needed?" Clearly you and I have different opinions on the matter.
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The positive value is that it protects from inflation.
Many things protect from inflation. Any fiat currency can be made completely proof against inflation.
We've just made a judgment as a society that a small amount of inflation is good, in part because it drives economic growth.
We've just made a judgment as a society that a small amount of inflation is good, in part because it drives economic growth.
I didn't say that there were no alternatives, but just that bitcoin does provide value.
If you are part of the "we", then you got what you wanted I suppose. Everybody who didn't want the inflation were left out.
If you are part of the "we", then you got what you wanted I suppose. Everybody who didn't want the inflation were left out.
Inflation is highly important to productive economies. Countries can default when there is no control over their money supply and inflation is needed to avoid stagnation.
All economies eventually fail due to inflation and central planning.
I'm not saying we don't need national currencies, but bitcoin is the perfect hedge against central banking.
I'm not saying we don't need national currencies, but bitcoin is the perfect hedge against central banking.
Wait how can you make that claim?
Just look back at all of the fallen economies. They fall from inflation.
"Although the Emperor Constantine (reigned AD 306-337) is considered by many to be among the greatest of the later Roman emperors, he was unable to fix the failing Roman economy. The inflation persisted for nearly two hundred more years, during which time taxes were massively increased. Internal problems were further compounded by the economic situation, such as the concentration of wealth in fewer and fewer hands, which often led to mob riots. Eventually, the Roman government was unable to pay its armies, which then often turned their swords on Rome itself. In the end, it was primarily Germanic tribes, such as the Goths and Vandals, who dealt the final death blows to Rome, but that would not have been possible if Rome’s economy were not weakened by a particularly excessive and long lasting inflationary cycle."
https://dailyhistory.org/What_Role_Did_Inflation_Play_in_the...
"The Ottoman economy was disrupted by inflation, caused by the influx of precious metals into Europe from the Americas and by an increasing imbalance of trade between East and West. As the treasury lost more of its revenues to the depredations of the devşirme, it began to meet its obligations by debasing the coinage, sharply increasing taxes, and resorting to confiscations, all of which only worsened the situation."
https://www.britannica.com/place/Ottoman-Empire/The-decline-...
"Wampum is a traditional shell bead of the Eastern Woodlands tribes of Native Americans... Eventually, the Colonists applied their technologies to more efficiently produce wampum, which caused inflation and ultimately its obsolescence as currency."
https://en.wikipedia.org/wiki/Wampum
"The Nazis planned to bomb Britain with clouds of forged bank notes."
https://www.smithsonianmag.com/smithsonianmag/nazis-planned-...
I could go on and on..
"Although the Emperor Constantine (reigned AD 306-337) is considered by many to be among the greatest of the later Roman emperors, he was unable to fix the failing Roman economy. The inflation persisted for nearly two hundred more years, during which time taxes were massively increased. Internal problems were further compounded by the economic situation, such as the concentration of wealth in fewer and fewer hands, which often led to mob riots. Eventually, the Roman government was unable to pay its armies, which then often turned their swords on Rome itself. In the end, it was primarily Germanic tribes, such as the Goths and Vandals, who dealt the final death blows to Rome, but that would not have been possible if Rome’s economy were not weakened by a particularly excessive and long lasting inflationary cycle."
https://dailyhistory.org/What_Role_Did_Inflation_Play_in_the...
"The Ottoman economy was disrupted by inflation, caused by the influx of precious metals into Europe from the Americas and by an increasing imbalance of trade between East and West. As the treasury lost more of its revenues to the depredations of the devşirme, it began to meet its obligations by debasing the coinage, sharply increasing taxes, and resorting to confiscations, all of which only worsened the situation."
https://www.britannica.com/place/Ottoman-Empire/The-decline-...
"Wampum is a traditional shell bead of the Eastern Woodlands tribes of Native Americans... Eventually, the Colonists applied their technologies to more efficiently produce wampum, which caused inflation and ultimately its obsolescence as currency."
https://en.wikipedia.org/wiki/Wampum
"The Nazis planned to bomb Britain with clouds of forged bank notes."
https://www.smithsonianmag.com/smithsonianmag/nazis-planned-...
I could go on and on..
This is the claim.
Unfortunately, macroeconomic theories are more religion than science.
Unfortunately, macroeconomic theories are more religion than science.
#2 Is the big one to me. I understand why people attack bitcoin here, but attacking both bitcoin and dirty energy creation is double accounting. People expending that electricity are paying for it. And if they aren't paying for it, we should be fixing that issue, not choosing what they can use with said electricity.
#1, correct. Nothing wrong with energy consumption. In fact, there is a relationship between GDP growth and energy consumption growth, in general. That's not to say we don't need more efficient energy usage, though, but bitcoin has been and always will be driving that forward.
#2, yeah, bitcoin is driving renewable energy innovation. bitcoin demands renewable energy, and the industry must supply it. It's great for the industry. Renewable companies need to embrace it or they will miss out on great growth opportunities.
#3, yes. Bitcoin is moving towards the edge of the grid, looking for the cleanest, cheapest, and most abundant sources of energy.
#2, yeah, bitcoin is driving renewable energy innovation. bitcoin demands renewable energy, and the industry must supply it. It's great for the industry. Renewable companies need to embrace it or they will miss out on great growth opportunities.
#3, yes. Bitcoin is moving towards the edge of the grid, looking for the cleanest, cheapest, and most abundant sources of energy.
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Decentralized 'currency' with wholly unregulated asset transfer incentivizes violence and needs to banned.
I'd love for my mind to be changed, but if governments and other parties with grievances can't freeze or compel control over assets that leaves violence. Just the world we live in.
I'd love for my mind to be changed, but if governments and other parties with grievances can't freeze or compel control over assets that leaves violence. Just the world we live in.
IDK about PoS, but PoW should absolutely be banned. It's a tremendous waste of precious resources.
100% sure this anonymous article writer is somehow vested in a proof-of-stake shitcoin.
Or, just maybe, it's someone who truly cares about the ramifications of a cryptocurrency that requires the cumulative power of a medium size nation to run?
Except that it's not true and been debunked continuously the past few months over and over.
Most of this electricity is idle peak going to waste already and up to 60% has been via renewables that cannot be distributed globally like in my country of Iceland. Where we mine 11% of the Bitcoin network.
But sure, align with whatever anonymous author you think best suits your narrative by all means.
Most of this electricity is idle peak going to waste already and up to 60% has been via renewables that cannot be distributed globally like in my country of Iceland. Where we mine 11% of the Bitcoin network.
But sure, align with whatever anonymous author you think best suits your narrative by all means.
>If we could push for legislation to ban PoW, then projects would take the time to switch to PoS, and everyone will go on like before. Still distributed. Still decentralized.
How would this even work, if in the same article you mention China mines 65% of the Bitcoin network (I don't believe this is true btw).
All you'll do is centralize the network to non-western democratic countries.
How would this even work, if in the same article you mention China mines 65% of the Bitcoin network (I don't believe this is true btw).
All you'll do is centralize the network to non-western democratic countries.
"Nano is digital money for the modern world. Try out a fee-less, eco-friendly and instant currency that is easy to use, accept and integrate with."
"EOS is a cryptocurrency designed to support large-scale applications. There are no fees to send or receive EOS. Instead, the protocol rewards the entities that run the network periodically with new EOS, effectively substituting inflation for transaction fees." but EOS has inflation.
"EOS is a cryptocurrency designed to support large-scale applications. There are no fees to send or receive EOS. Instead, the protocol rewards the entities that run the network periodically with new EOS, effectively substituting inflation for transaction fees." but EOS has inflation.