IMO, economics is an area that will continually be hampered by models that don't fit, and increasing complexity.
Any model that predicts things simply and well, will be gamed; thus requiring a more complex model.
Or as Goodhart's Law[1] has it: "When a measure becomes a target, it ceases to be a good measure."
That's presuming we never reach some economic state so perfect, that even with an accurate model, no one can find an extra advantage, nor can it be disrupted by natural events.
Deploying via IPFS might also work? Though it'd require having a trustworthy backend storing state ... or I suppose auditing to ensure backend can't inject anything malicious into client layer.
From what I understand, some cryptocurrency DApps like Uniswap[0] are using this route.
To clarify: I don't think proof of stake is perfect.
I think the original pie in the sky dream, as hinted at in the Bitcoin white paper, was for decentralization through anyone (all the way to students in their dorms) being able to participate in consensus.
I don't think proof of stake gets things all the way there, but I think it does get closer to a linear ROI curve, compared to how proof of work is right now.
Except under mining, increased investment opens up access to better equipment like ASICs, access to cheaper energy agreements, etc. But no amount of $ unlocks the ability to validate faster (per unit staked).
Thank you! That's... well, beautiful isn't the right word, given nature of example... But I was hoping to find a simple non-ergodic example.
The situation the article explores was interesting, but made the jump to something mathematically complex before I sunk my teeth into the fundamental bit.
Ethereum is working to address a lot of those points. When it switches to Proof of Stake (beacon chain is already live), energy costs will drop significantly (talking < 100 watts / node)... Just doing minimum to process blocks, no wasteful mining.
That means network has to pay less in block reward under PoS, so inflation drops to 1% or less.
Eip-1559 upgrade this summer will also start "burning" a portion of fees. Estimates have this around 0.5% - 1.5% deflation.
Combine those features together, and Ethereum should have long term issuance at around 0% indefinitely, while still paying for validators to secure it.
It's a feedback mechanism too... If usage goes down, burn drops, supply inflates slightly, stimulating use, increasing burn again.
The idea is to make an elastic self-securing system.
I don't understand where the pyramid scheme is in that... The money being paid out to validators will by nature barely cover costs (otherwise more people will validate, reducing margins to match). Since anyone can join, and the network punishes correlated misbehavior, that incentivizes decentralization and wide disbursement of block rewards.
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In the case of topic here, spare CPU cycles will no longer be valuable to exploit under PoS. The valuble qualities will be availability and uptime... Which won't be had by exploring in-broswer mining scripts, or CI exploits.
Not to find a solution, it was already found. The roadmap plan was always to switch to PoS, the miners and PoW were always temporary until it was developed / ready. Now the beacon chain (core of PoS) is live, with around $6 billion staked. Some of the miners (not all of them by far) are complaining they're no longer going to be needed, going so far as to make a show of "force". Others (like f2pool) have calmly been preparing with rest of Ethereum community, and are transitioning to staking themselves.
I've had the Droid48 app on my android phone for years. It's a little unstable, hope author updates it. But it's so awesome to have a 48GX available whenever, while my real one sits safely on the shelf at home.
When I first got that thing as kid, nearly returned it, RPN seemed so bizarre. So glad I didn't... Really love that language, would never have understood stack based VMs as deeply if it weren't for the things I coded on that calculator.
My understanding was that malicious validator has to publish votes for two different blocks in one round; which then can be used to slash them. Unlike PoW they can't "sit" on their second vote, because voters are known ahead of time, and once vote is done, opportunity is gone.
They also can't choose transactions to go into block unless they're the proposer, so that's only time they can control whether attack will even benefit them.
So they'll have to wait to get randomly assigned as proposer, in a committee where they control enough of the other randomly selected validators, and have pending txns at the ready to double spend (while receiving party has been sitting waiting for funds).
And even then, won't that just create a fork where the minority of the validators recognize the double vote, and slash them anyways? And what users / services will stay w original fork given that proof?
That's pretty much describing Ethereum (once it finishes switching to PoS in the next year or so). Popularity wise it's already doing way more than others in txn or $ volume.
It's NFT market for asset ownership (mainly artwork right now) is huge, there was literally a Christie's auction for an NFT token (and the art it represents) this week.
There aren't official stocks/commodities yet (I think) but a bunch of sythetic derivatives already. A couple of banks have even done test runs of bond issuance.
ETH itself is does have "store of value" qualities in background, but a trick was developed of using it as collateral to back on-chain stablecoins like DAI. That allows on-chain token markets/contracts to rely on USD-valuations for liquidity and baseline reference, independent of general "crypto" speculative fluctuations.
There's also Earnst & Young's "Nightfall" project that trying to bring b2b accounting on-chain using Eth's zero knowledge tools to retain privacy.
Going a bit further, once an object has been confirmed as alien, then it's not really "Unidentified" anymore, now is it?
Almost a linguistic catch-22 version of the "ATM Machine" phrase. Not redundant, but guaranteed to be either colloquially misinterpreted, or technically incorrect.
It's kinda weird how words can just get coopted by popular use. Take calling someone a "Nimrod" -- before Loony Tunes, that would have been a compliment that meant "mighty hunter". But kids growing up in the 50s and on first heard it in when Bugs Bunny used it as an insult, contextually meaning idiot or bumbler or something -- which due to Loony Tunes' cultural influence is now the dominant meaning, supplanting the original biblical origin (https://en.wikipedia.org/wiki/Nimrod#Idiom)
I'm not an expert at the mechanism design, but yeah, that's my understanding. The network's goal is to have a block every X seconds; and the difficulty periodically adjusts if blocks come in too fast / too slow (due to hashpower coming on/off line).
(Ethereum & Bitcoin both add some other year-decade timeframe factors to the difficulty, but don't think it affects this basic principle, which acts on week-to-minute timeframes).
I view it as a race to the margins. Anyone who can do it cheaper, or benefit from economy of scale, will get a larger slice of the pie, but at smaller margins... creating a cycle of consolidation.
I think original assumption was that folks running PoW at home on their GPUs would be able to compete, but due to efficiencies of specialized hardware and regional differences in electricity costs, that's just not the case.
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Others might disagree, but my personal opinion is that this isn't a sustainable way to maintain decentralization, since it seems to obviously trend towards a few large "just turning a profit" players.
There might be some ways to adjust mining incentives to make it work, but this fundmental issue is why I think Proof of Stake has a much more viable future, as it sidesteps this (and the environmental) issues.
Ethereum's Proof of Stake "beacon chain" is already live, with around $6 billion staked (since launch in december 2020). Next year is just formalizing and testing it taking over from the miners. So despite timeframe, there's little uncertainty about the outcome.
I sorta see this as Nvidia trying to create some market segmentation not for the miners, but so gamers can actually get their cards before Nvidia loses mindshare. (Not that I think that's likely)
I think right now biggest earner for GPU mining is Ethereum. And (I think) it's aiming to move to Proof of Stake sometime in next 12-24 months, which kinda time limits the utility of both Eth-specific mining chips, and large investments in GPU mining (unless mining burns GPUs out really fast?).
Regardless, most proof of work algorithms are already being optimized with ASICs (ala bitcoin)... Or, like Ethereum's ETHASH alg, they have a step requiring high throughput random access to large amounts of memory, ala scrypt or argon (5gb or so for ETHASH right now, and slowly increasing). That's what's kept ASICs from being profitable for Eth, and is probably limiting factor for FPGAs as well. Though maybe there are FPAGs with dedicated memory on par with a modern GPU?
While Tether's bank accounts being private is a problem for auditing, even if that were removed, you'd still have to somehow "snapshot" all the bank accounts an transactions, freezing things in time so you could ensure there wasn't a shell game going on while you audited.
This just isn't feasible with a federated system where each bank has their own ledger, and asynchronously tries to align it with a bunch of other ledgers.
Blockchains overall reduce throughput compared to this model, because they enforce a single ledger. But they do this while still preserving decentralized control, resulting in a tradeoff where you lose some scalability, but also remove need for a trusted mediator(s), and now anyone can audit a snapshot of the state at their leisure.
I think economists are well aware of the nature of the beast they're studying.
And even if doing the task is daunting, and the landscape changing as it's described, it's still worth it.
Especially if anyone finds fixed points which do have the property that describing them doesn't invalidate them.