Bitcoin Forum

According to Antony Antonopoulos, Bitcoin isn't a democracy, some people call it cypherpunk or crypto-anarchy, https://youtu.be/TC3Hq76UT5g


Is bitcoin a meritocracy?

It is holding of power by people selected according to merit. They wield the power.


Is bitcoin a plutocracy?

It is the holding of power by the wealthy, elites.

Is bitcoin anarchy?

It is absence of government and absolute freedom of the individual, regarded as a political ideal.

If we say that Bitcoin's direction is achieved through "voting with your hashpower", then:

1. maybe it is an anarchy, and partial democracy at least.

2. It can't be meritocracy since that implies selection based on merit as you mention, (merit meaning talent rather than merit of hashpower). Novak's quote must seem trivial now because shitty code could very well win the day with enough economic resource.

3. sadly, plutocracy does seem to hold sway over Bitcoin the most. We can see the wealthy or the elite classes, battling over Bitcoin's direction, holding the most Bitcoins, the majority pouring scorn and ridicule over the rest, lording over the satoshi holders.

In my view:

Bitcoin is Free Market Capitalism. Which encompasses Meritocracy I guess. And also true Democracy.

All ensured by incorruptible Cryptography. Which is what democracy has always been lacking.

Bitcoin is Bitcoin

For lack of a better term, I guess I would agree with you on this description. Bitcoin is business and the people who can have power over it are of course people who heavily invested on it. That is for sure. Bitcoin, for all of its merits and innovations, is not really destined to change our societal norms and political structures. It can however affect the financial sector. Wishing that Bitcoin can change the world is already punching the moon.

Right now, Bitcoin is becoming like a speculative currency. We all want to make money...and honestly Bitcoin is also exposing the greed of many and which to me can just be fine because Bitcoin is for everybody whatever political spectrum you might belong.

Centralized Capitalism  ;D

Bitcoin is a game.  The original idea of bitcoin was that it was a game that would result in a payment system, according to certain rules.

Now, the whole discussion is: is bitcoin an *immutable* game, that is, the rules are set in stone for ever, or is bitcoin a game where the rules can change ?

The thing with a game is that it has to be played collectively.  That's entirely different for most other software, that doesn't have to be played.  Most open source software is used by users, and those users can change it to their likings, whether others agree with that or not.  Most software is not about collective games.

On top of that, a payment system is an antagonist game (like most games).  It is not something to have fun with.  It is a game that serves to "win over others", and where real material advantages or losses are coupled to how the game evolves.

This makes that bitcoin has nothing to do with "software development", or "open source" or any other community activity: bitcoin is an antagonist game with real world material advantages and disadvantages coupled to it.  As such, *being able to change the rules can have a huge impact on who the winners and the losers are* and changes to the rules are not neutral.  Those who can change the rules, if any, can put a lot of advantages on their side.

This is why *ideally*, bitcoin would have been an immutable game.  The rules are known and immutable, and hence, there's no power to be had to change them.  My idea was that bitcoin had something to it that made modifying the rules, if not impossible, at least very difficult.  Satoshi's biggest invention was a cryptographic game that could, to a certain extend, keep its rules immutable (at least those rules that impact anything on the side of winners and losers, that is, ECONOMICAL rules).

However, bitcoin was ill designed.  A fundamental problem in bitcoin was not only never solved, there was even an explicit barrier to it: scaling, and the block size limit.  So somehow, bitcoin's bad design was the result of an unsolved problem, and a to-be-modified barrier.  The troubles we are witnessing today are the direct consequence of that contradiction in bitcoins' design: a game that can only be honest if it is immutable, no provision for "changing the rules", and the necessity to change them or hit a wall.  Bitcoin was somehow designed to fail long term.

As no explicit provision is made in bitcoin to change the rules, and as immutability will lead to hitting a wall, the game-theoretical outcome of who can change the rules is open to inquiry.

Strictly technically, there are two "sources of power" in bitcoin: there are the mining pools that de facto decide upon bitcoin's rules by "consensus", that is, by building upon other pools' blocks that apply the rules they agree to ; and there is the economic power of the market players that are willing to give value to coins (the speculators and other users).

If consensus breaks down, we get a chain split, and we get different flavours of bitcoin, each with their own speculator valuation, giving a feedback to those miners "voting" for them.   The complex dynamics of short and long term risks, gains, and so on in this game-theoretical setting is complicated, and in fact, a possible outcome is immutability, that is, no miner can decide to "leave existing consensus" because the risks or the losses are too big.

As the first initiative to any change of rules has to come from miners, we can say that the miner pool owners are somehow an oligarchy over bitcoin, but as they are part of a game-theoretical dynamics themselves, I don't know how to call this.  It certainly is not a democracy.  The "speculator/user" part has something of a free market to it.  But only a few people can actually decide to do something, which turns it into an oligarchy, that is, a small set of aristocrats that can potentially change the rules ; however, with a market deciding over their acts.

bitcoin is about business and economy not democracy
so if have much money can dominated and control bitcoin price sample exchanger, but never only one people have over 10% from total suply bitcoin

Actually, I think Bitcoin really is destined to change our societal norms and political structures. I think Bitcoin is a real revolution of the commons.

Also, although I can agree that it's current value holds alot of speculation, the value of Bitcoin is backed by energy. So Bitcoin will always have value to someone as long as someone is wasting energy on it (mining).

I think Bitcoin is past that threshold where there is too much invested to go back. Bitcoin is now here to stay and can fundamentally tip the scales and release us from financial chains, which are the only chains that really matter.

But to understand this, we have to stop thinking of its value against USD, but of its intrinsic utility value.

And even if Bitcoin doesn't succeed, which I can't envision, it planted the idea that it is possible. Bitcoin is not only the technological invention of the Century, but the Social one too.

We now have the tools. We will understand how Sheep or not we are at the end of this.

Its none of the above i voted for that because apart form anarchy remaining words i searched in google and get to know the meaning . There is no need for comparing its just payment mode with revolutionary changes.There is lots of people find job because of bitcoin instead of big banks is holding all the transaction . Now normal people can benefit from that . Its just a revolutionary thing.

Although I follow your reasoning and quite like the definition you gave, I have to argue this conclusion. In a censorship free market, you have no barrier to entry. You yourself can choose to be a Miner. This is much different than Oligarchy.

The fact is, Bitcoin only rewards those who do things efficiently. Not wasting resources in inefficient tasks. This is exactly what a Free Market system does. It directs resources to the most efficient use. Everything else, would just be a subsidy paid by all others.

Bitcoin is also blind, it does not discriminate, and it does not require anything, you can do anything you want. It just punishes inefficiency because it is unregulated. No excuses, no subsidies, no bailouts. This gives users a real choice, this is the democratization of money. Every user matters, and every user votes with their dollars. Also, it makes people actually think and not just wait to be bailed out or told what to do. Puts the responsibility on those who want it.

How many times do you lose value on trivial endeavors because some idiot just wants it done for him? And because of him, everyone has to pay to protect the single case that he might so something stupid on his own and complain about it? In Bitcoin you have a choice. In the real world, not so much. You are taxed in value lost every step of the way just because some of us want someone else to blame.

You don't need any node for that.

The path of Bitcoin as I say, will tell us a lot about ourselves as a species.

I voted for bitcoin is anarchy because of the quoted statement i really agree with that "It is absence of government and absolute freedom of the individual, regarded as a political ideal" Its the odd man out from existing mode of currency it changed the whole concept of currency being rebel.

I think bitcoin is like an anarchy just because miners who has a huge mining power holds the upper hand in terms of bitcoin scaling and whales holds the power in terms of price. Having said that, this two won't have real power if users would not use bitcoin in the first place so it is none of the above. For me bitcoin is just like an anarchy, but it ain't one.

Why was Bitcoin created in the first place?

Going against Bitcoin fundamental is unethical and criminal. Activities of stakeholders MUST revolve around Bitcoin/Blockchain fundamentals.

Anarchy for some places. But according to its function I consider bitcoin is a free thing because we can freely use bitcoin.
Bitcoin can now be used by everyone and everyone is entitled to use bitcoin.

I dont consider bitcoin as fully democracy because government can still seize and regulate it anytime they want. Consider it democracy in terms of sending money wherever you are and whatever you do.

There's no right term to call it though if its not democracy then. But good thing is we enjoyed bitcoins hassle free transactions.

Yes, and no.  On one hand, you are right, in that at first sight, there are no privileged aristocrats that can give the "right to mine", like they give licences to be a pharmacist or a wireless operator, and punish with violence those that try to do that without their agreement.

However, in reality, economies of scale and local subsidized electricity and manufacturing of asics make that there is a *de facto* oligarchy of mining pools, mining producing equipment, and profitable mining business.  Essentially, as a small newcomer, you cannot enter, even though there is no aristocratic RULE with violence that holds you back.  Call that "free market" if you wish.  But if you push this logic to the extreme, then even states are a free market.  After all, how does a state acquire its monopoly of violence over its territory ?  By having an army.  You can then argue that there is no barrier to entry: everybody can set up his own army, compete in the "revolution market", and try to win the de facto violence monopoly, so states are no aristocracies either if you push the logic you advance, to the extreme.

The point is that there is a kind of "winner takes all" system in bitcoin: the block that is won, makes all other competing work on the previous block moot.  Yes, statistically, you can compete with small mining equipment, but in reality, you can't, because there's a collective unique consensus for each block, and there are no "small, local blocks with their own customers".  In fact, that DOES exist, but it is called "alt coins".  Within bitcoin, every block is a winner-takes-all competition.  This is different in a real free decentralized market, where the local bakery can sell bread to the local customer, without a "winner takes all" global competition for each bread that is being sold.

The effective economies of scale that make mining only profitable if it is done in large pools, with large equipment, and with local subsidized electricity and cheap labor, makes that it does lead to a de facto oligarchy, even if that oligarchy is not a "privilege oligarchy" obtained by the direct licensing of the violence monopolist aristocracy.


This is a bit ironic with bitcoin, because bitcoin mining is pure waste.  You get in fact a competition of wasting where the "wasting function" is simply biased.  In bitcoin, you have to abuse the bias in the wasting function to be "efficient" in the way you explain.  Efficient usually means "More utility for the same waste", which is at the basis of the "best allocation of scarce resources".  But in bitcoin, "proof of work" is simply "proof of waste", but the proof is biased.  You can FAKE produce more "proof of waste" in certain circumstances than in others, but the "difficulty attained" is of no economic utility by itself.  Nothing is produced.  You only "proved waste", and some can "prove more waste with less waste" than others, which is the degenerate idea of "efficiency" in this particular case.  If I can get cheaper electricity, and I can build smarter hardware (ASICS), I can fakely "prove" more wasted work than someone else, and I get to win the contest, but nothing more valuable was produced.

This is entirely different from "finding ways to produce cars with less resources".  No, I find "ways to prove more wasted work with less resources", which begs the question.  The proof of wasted work has no utility, contrary to cars that were produced. 

The fact that you can get "economies of scale" and "efficiency advantages" in "proving wasted work" is simply an error in the proof of work function, which only provides a biased proxy to "wasted work", and doesn't prove any direct waste ; if it were, there couldn't be any efficiency differences, by assumption.  Proof of work is (by definition) not useful.  It was only meant as a tool to avoid sybil attacks, and to enhance true decentralization, while it degenerated in exactly the opposite because of the failed design of it.

I think bitcoin is somewhere near being an Anarchy type of currency because it's not under the control of the government and is certainly not a democracy as we witnessed earlier before segwit was activated, it is not really based on our votes in spite having a part to play by influencing the devs . I honestly think these political terms can not define bitcoin it just belongs in its own world.

The thing with trying to compare Bitcoin with concepts like "Democracy" or "Capitalism" is that those are generally poorly defined concepts to begin with and involve so much wishful thinking and doublespeak that it's beyond a joke.  Both are deeply flawed and even downright broken and debauched in their current guises.  Both are murky, contorted shadows of what they should truly be.


If you live in certain parts of the world, many would have you believe that your system of governance is a democracy, but these people are in denial. Democracy can be described as:


In reality, the thing we call democracy is where a bunch of tax-dodging corporations and millionaires throw money at some corrupt puppets who try to enact the policies that prove most profitable for the corporations and the millionaires.  Influence is bought and sold with the intent of redistributing wealth to the top of the pyramid.  The public then vote for the bought crook they detest the least.  It has absolutely nothing to do with representing the interests of the general public and hasn't for decades.  

A more accurate description would be a "Kleptocracy", a form of political and government corruption where the government exists solely to increase the personal wealth and political power of its officials and the ruling class at the expense of the wider population.


If you live in certain parts of the world, many would have you believe that your system of commerce is capitalism, but these people are in denial. Capitalism can be described as:


In reality, the thing we call capitalism is where the businesses that don't even need it receive government tax breaks and are effectively subsidised by the public for no reason, while the failing businesses like banks are bailed out by the government, again at the taxpayer's expense.  The government also generally keeps interest rates artificially low to benefit the financial sector.  It has absolutely nothing to do with a level playing field where the most competitive companies reap the rewards and hasn't for decades.

A more accurate description would be "Growthism", the toxic admixture of capitalism for the poor, who receive no advantages, while it's socialism for the wealthy, who will receive an endless stream of handouts, subsidies, bailouts and lifelines at the expense of the wider population.


Bitcoin is none of these things, and thus, can't be compared with them.  It's something better than democracy or capitalism could ever hope to be.

The concepts themselves are quite clearly defined.  However, they do indeed not apply to our current societies.  Our societies are elective aristocracies.  That is to say, they are aristocracies, but instead of having a hereditary indication of who is part of the aristocracy (= those that can impose their will on others, also called "lawmakers"), there's a voting game that is played.  Voting is a game like any other, and is not a clear expression of own preference.

A true democracy is a system where all subjects subjected to rule, are to decide themselves by vote of majority on every rule and aspect of collectively imposed behaviour.   No place in the world is a democracy.  Probably Switzerland comes close, but no cigar.

In a true democracy, every single decision by the "collectivity" is taken by majority of all those affected by the decision.  It is the pure dictatorship of the majority.  Most systems that call themselves "democracies" are jokes, in that they only give themselves a kind of imposed legitimity by a funny system of pseudo majority of votes over the aristocratic clan that will have the power to decide on all of collective aspects for the next 4-5... years.


From the moment you have "elected agents", you have lost democracy, and you turn those "elected agents" in an aristocracy of some kind.


Yup.  That is the fundamental function of state: to extort the people to keep the power in the hands of an aristocracy.  In the ancient regime, that was explicit, in the new regimes, that is somewhat better hidden with games like elections and so on. 


Yes, but that is the unavoidable outcome of every power monopolist (state) ; it was designed for that purpose by the first Kings.  The first Kings (in Mesopotamia) were actually temporarily put in power by the "council of the wise" in the city-states the time of war and conflict, because war-time needed a leader and one didn't have time to ponder and discuss.  The King soon realized that he would remain in power if he kept war ongoing, which is what happened (the Kings in other city states came to the same conclusion).   As Kings remained in power during never-ending wars, they could impose their own kin as their own successors.... this is how royalty was born.   Nothing fundamentally changed since then.


true.

Given that in "modern democracies" about 70% of the national product goes through the hands of the state in some or other form, we are in reality in state capitalism.  The "capitalist" countries of this world are almost more communist than the USSR was in its initial years.


Bitcoin is no exception.  Bitcoin's power structure will fall in one of the different classes of standard power structures.  The ONLY possible exception would have been if bitcoin were truly immutable.   If bitcoin turned out to be game-theoretically immutable, it would mean that there is not any power structure that can make its rules.  It would be a "theocracy" where the rules are laid out once and for all by a divinity, Satoshi, and nature would be such that no-one would be able to modify the Divine Rules.  However, we all know that the original rules will hit a hard wall, because of the block size limit.

So in as much as Bitcoin is a theocracy, it will have a Final Judgement Day very soon built into it.

And if ever the rules can change, there will be a power structure that will change those rules, and it will be a human power structure, with people having the power to change them, and others, without that power, which is exactly what an aristocracy is about.

It's a Republic.

Each person that owns bitcoin does not get to vote on the future developments of Bitcoin. But bitcoin owners entrust the node owners and miners (bc miners have slightly greater "voting" power) to make the decisions on future Bitcoin developments. And if you don't like how the node owners and miners have "voted" you can sell your bitcoin and choose to you another cryptocurrency or none at all.

The one empowering element is that anyone can run a bitcoin node and thus participate in the "voting" process.

I put voting in quotes because it's not a vote as much as accepting newly created code. Any new code generated needs to be accepted by the nodes and miners and if a majority accept the new code it becomes part of the existing core blockchain (and thus bitcoin).

Bitcoin is following for basic principals of the democracy:
1. Equality. Of course, this ideal is fully presented in the Bitcoin Protocol. Unlike Bank money, which, if desired, can be subjected to censorship (as it was with the banking blockade of Wikileaks), bitcoin payments are completely impossible to censor, since these payments do not require a mediator, and literally consist of cryptographically protected information – pure analogue of freedom of speech if you want.
2. Popular sovereignty. Bitcoin literally exists because of the consent of its users; if they don't agree with the rules of the Protocol, they will simply not use it. And this use, in turn, is what gives value to currency. In the end, users of Bitcoin would be nothing more than a source. Moreover, Bitcoin is not just ruled with our consent – it exists with our consent.
3. Autonomy. It can be argued that the organizational structure of programming open-source is certainly the best way for ordinary people to develop their abilities to organize themselves.

See, this is the part I'm not convinced by.  There are so many people who claim that Bitcoin will either be irreparably damaged or warped beyond recognition if anything at all is allowed to change.  Whether it be something like the blocksize, what they might perceive as the "official" developers suffering a "hostile takeover" or "power grab", or in this instance some sort of sovereign immutability being lost.  But I don't think any of that can change the basic underlying formula that makes Bitcoin what it is.  

The magic formula (IMHO) is as follows:

• Open source code, meaning it doesn't matter who coded it or what their beliefs or motives might be.  As long as the effects of the code are neutral, obvious, stable and bug-free, it doesn't matter where the code originated.
• Users are free to both view the code and to select the code they choose to run based on what rules they believe should be enforced and how that code should govern the network
• The network shouldn't be so resource intensive so as to make it impractical for the average user to run a non-mining full node if they so wish
• The network shouldn't be so congested or have fees so high as to make it impractical for the average user to transact on-chain if they so wish
• The consensus mechanism (and by extension, the alignment of incentives for securing the chain) is never undermined or subverted

There isn't really a single word to describe it yet, but that's what Bitcoin is.  Bitcoin's purpose can be defined as a global network to transfer tamper-proof ownership of digital data without needing a third party.  But what it really is can be defined in those 5 bullet points.

For the duration that all of those five golden rules remain intact, I'm convinced Bitcoin can resist devolving into one of those lesser, "human" archaic and perverted power structures.



Honey Badger Republic.   :D

Bitcoin is undemocratic is a really good thing as most of us can see the case of us how people are treated in the so called democratic country. If it was democratic there would be some vote system and furture development would surely be controlled by those directors while bitcoin is a free agent there is no specific word to what you can call bitcoin

Bitcoin is a monarchy, led by Satoshi and his wife in the shadows.

Bitcoin is not a Government, or some libertarian or anarchist dream - it's just Bitcoin.

I think of Bitcoin as a store of value (the new gold) with the potential (if we get scaling right) to double as a payment system also.

Again, I understand the reasoning. And effectively, it is true Bitcoin could be much more efficiency optimized. But in following your argument to conclusion, efficiency as you define it (only 100% efficiency) will only be reached by monopoly. I might go on a limb and argue that in a perfect efficiency system, there would be no competition, everyone would just specialize in their own thing. This was not what I was trying to convey.

Each miner that shows profit is showing efficient waste of energy, or as I prefer, efficient deployment of his energy. Calculating efficiency cannot be done on the base of a single block. It's probabilistic.

Furthermore, Bitcoin is global, there is no theoretical need for a "local breadstore" (for the purpose of this argument, please ignore country specific circumstances). If a Global breadstore could send you bread through your mobile phone and do it better than your local home made bread, the market would recognize it and reward it. If the local bread is better, it will get more demand and price would reach an equilibrium and both would compete at different scales.

What you are describing is a protectorate. Effective subsidy. But this is done by Consensus. It's why it is so beautiful. If we all rather have Joey Popcorn get money from mining while watching Netflix and not investing anything significant into the system we can have that. If we all want a Central Bank to take over and be Sheep, we can do it. The beauty is that whatever the Consensus, enforcement is guaranteed.

I personally like what we have now. I would be very interested in hearing a case for a Proof of Work that doesn't equate to a subsidy.

Bear in mind, that I am cutting out outside forces from this picture. I thoroughly understand your arguments in a scenario where Bitcoin is in the real world. China could be subsidizing miners with free electricity and whatnot. The US is probably monitoring exchanges as well as taxing us all with bureaucracy. Broad Spectrum Patents bring barrier to entry and tax us all for no added value. And so forth. But this is not a Bitcoin problem in my opinion, nor is it its task to solve.

I myself, look at Bitcoin as what I think it could be.

There is no notion of "efficiency" in "proof of work".  Proof of work is meant to be a proof of wasted economic value.  However, the cryptographic proxy of proof of work used in bitcoin, can let you "prove" wasted economic value with different "fake factors", depending on what you call the "efficiency" of the system: I can give you cryptographic "proof" that I wasted X Big Mac value, while in fact, I only wasted X/10 Big Mac value, because I have more "efficient" proof of work equipment and electricity prices.  So I'm lying.   


But, by definition, there is no "efficient waste of energy".   Think about it.  By definition there's nothing efficient in wasting stuff.  There's no useful product coming out of that waste, contrary to "spending stuff" to "produce value".  Proving waste in itself doesn't produce any value.  It was just a trick to make sybil voting in the consensus protocol somewhat impractical, to keep the consensus protocol decentralized over many users ; and it turned out that this competition in "efficient lying about how much you really waste" actually reduced the consensus protocol deciders to a small oligarchy.


Sure, but then the fungible global bread market would also not be a competitive free market with local inventions, alterations, niches etc... which is the true advantage of the free market: inventivity.  The only "invention" you can do in bitcoin is to "lie somewhat more efficiently about how much proof of waste you can deliver, versus how much actual value you truly have to waste in doing so".  But it is fungible Trabant for all of us.


But this is what you have.

BTW, the aim of mining is NOT to gain money.  It was to get decentralized consensus by the users.  This is why it failed.  Proof of stake is a much better system in that respect, although proof of stake was hard to start with, as the only staker would have been Satoshi (even though he was also almost the only miner).  The "reward" for participating is in fact the biggest error.  The coin creation and the consensus decision should have been separate.  The fact that coin creation was linked to consensus decision, and hence made consensus decision a profitable business, is exactly what turned bitcoin into an oligarchic central bank.


There is no proof of work to be had for consensus.  That was a big mistake.  It is cryptographically stupid, it wastes a lot of resources, and by the erroneous relationship between the work proved, and the value actually wasted (the "efficiency"), it allows for biased competition, leading to centralization.  While it was only introduced to avoid hidden sybil, in introduced "open sybil".  A single mining pool has the "voting rights" in the consensus process of hundreds of thousands of users.  And "proof of work" was introduced to deny sybilled nodes to have any "voting rights" in the consensus decision, so that it would start to be expensive to start up hundreds of thousands of nodes to be able to get, exactly, that voting weight in the hands of a few.  While that is exactly what it accomplished.

The only good use of proof of work is to kill seigniorage and regulate coin emission (instead of a fixed coin number, one could have a fixed proof of work to emit a coin, and hence emit as many coins as people are willing to prove work for it, keeping the value of the coin limited to that wasted value of work and killing all hope for speculation).
But that "printing coins with proof of work" shouldn't give you voting rights in the system, which it does now.  Voting should be done by proof of stake: the stake holders should be the ones voting over the rules, not people  being able to lie over how much value they wasted.

I personally would like to call Bitcoin a FINANCIAL REVOLUTION. Going from centralized to decentralized  is helping the normal Folk get a piece of the money pie that before they could never have a part of. It also is opening the world to better governance and transparency in all affairs and the technology behind Bitcoin can be used for so many different platforms and projects both financial and civil.

Yeah , I agree with you , Since in the current time many of the people who don't know about Bitcoin fully are saying that
Bitcoin is a way of the loss of money and responsible for the black money also but the reality is that the Bitcoin is giving us the democracy to use our own money in any possible ways and everything is open to see for anyone , so how can be the Bitcoin is centralised , this is open source like thing where anyone can use at free of cost and having security like military forces  that is about impossible to hack .
Here I will say that nothing is like Bitcoin becauseamy of the banks system are impressed by Bitcoin and now they want use the Bitcoin technology for banking sector .

You are not lying you are incentivized to come up with a more efficient way to get the desired results. In ancient Egypt, Mining Gold with slave labor did not mean the Gold was fake... This are other issues that do not have place in Bitcoin. That is social responsibility and users should enforce it by voting with their money. It is not an inherent flaw of a system.


Proving waste is a very biased term. Proving Expended Energy in any endeavor is the basis for the decision of the users who vote with their money. If they feel it is best to Expend it elsewhere, they will signal that. This is also not a flaw of the system. It is how a Free System works.

If you want a 100% efficient system, you should try some resource based economy or something of the likes. Where each one specializes in doing only one thing. It doesn't work. People are glad to trade inefficiency for commodity. But this you only discover by pricing.


I fail to grasp why it would not be competitive? Having fewer suppliers does not mean the system is gamed. This conclusion is only valid when there are regulations in place to protect said suppliers. If there is no competition, it is either because the Monopoly is working at a loss for himself, or noone can beat their efficiency.



The goal you mention is only achieved by incentive. Otherwise people would use their computing power for another more profitable endeavor.

Proof of Stake is what we have now in our current debt backed inflationary financial systems. Furthermore, if you untie Bitcoin's value from Energy, or the real world all together, it is none else than a speculative asset. You might as well trade WoW Gold.



This would be a major shift towards what you have in the current financial markets.

You effectively transfer the reward from Energy to Capital. From producing to financing. I do not like it, or I do not understand it. 

Bitcoin is freedom . You can do anything with bitcoin on your own command. You choose what you do with it and control its outcomes.

Bitcoin is a currency, full stop. It is not the tool for political ideals or anti-government sentiments. I agree that some people might think that it can be used to weaken governments or big financial systems, but in all honesty it is just a decentralized currency. You can do with it what you want, but if all the hype is stripped away, you will still be left with a technology that can be used to move or store wealth.

The underlining concept of decision making is based on a democracy, where the majority rule. ^hmmmmmm^

The point is not that change is bad because of the fact that it would "warp bitcoin".  The point is that bitcoin is a collective system with a monopolistic rule set: you cannot have different incompatible rule sets in bitcoin, there has only to be one.  Now everywhere there is a monopolistic rule set that can change, it means that there are people that can dictate the changes to the rule set ("aristocrats") and there are people that can't (the "populace").  Only if the rule set cannot change, and is graved in stone, there cannot be an aristocracy. An aristocracy obtains larger-than-merited gains because of their power to change the rules, which allows them to obtain benefit for different reasons:
1) they know the calendar and the kind of change they will impose, and hence have an unfair advantage in the gambling game of speculation
2) they can tie "courts" to them, trading advantageous rules for allegiance
3) they can of course bend the rules to their specific advantages, directly or indirectly
4) they obtain notoriety and celebrity which can be traded again for advantages

Note that in a direct democracy, the "aristocracy" is the majority, which can still crush a minority and take advantage of them.  So even a "fair vote" is a form of aristocracy.  Only when there's no vote at all, you get a level play field and a truly free market, because the rules of the game are known and fixed.  In all other forms of game, some players are also the arbiters, which is maybe a clearer reason of the bias.  You better be in the team that has the arbiter in it.
 

The big misunderstanding in crypto is to think that it is some form of coding.  The coding is just the technical support of a contractual rule set.  The importance of the code is over-estimated.  Imagine that we are thinking about "voting laws" and that we are quibbling over what is the code to be used for the voting system.  The coding is secondary.  What counts is the exact rule set, the agreed-upon contract between the participants in human terms.  The "smart contract" code-is-law is a failure if the code is too complicated to be read and understood by most participants.  Imagine a politician's campaign projecting lines of code and arguing about it.  Silly.   Crypto is not about code or computers, it is about the rule set of a game, rule set that should be simple enough to be understood by most players.   The actual implementation of that rule set should be manifold (no "reference implementation") and decentralized.  Like there are many e-mail clients that all talk "SMTP", but are written independently.

The raison-d'etre of open source is twofold.  One is that you can inspect it and see that it does what it CLAIMS it does.  This is necessary for all cryptographic software.  But the main reason of open source is that you can take it, modify it, and adapt it to your needs.  This is somewhat problematic in a crypto currency, where there can only be one rule set.  Nevertheless, there should be many diversified implementations of that rule set, so that "coders" have nothing to say and have no power position.  It was a big mistake to have a "reference implementation" unless the goal was to not modify it and keep it immutable.

The network's resource intensivity and the will to use those resources or not are to be decided by the free market.  If you think that you gain advantage in spending those resources, then you invest in them ; if you don't think so, or you can't afford them, then don't invest in them.

But the argument for non-mining full nodes is bogus.  There's no need for single users to have them, they contribute nothing.  There need to be SOME full nodes from which you can download whatever partial information you need, and that's it, because those servers cannot lie.  The headers are linked and can be verified by every simple wallet, and the Merkle tree cannot lie either, and is also checked for the necessary transactions by a user by his simple wallet.  Running a full node is a bit akin to downloading the source software and reading it.  Most linux users, me included, have never read the entire linux kernel.  If I want to, that's a huge investment (in time) on my side.  I won't.  Downloading the entire full block chain to "check" it against a rule set is a fun occupation that you can do if you want to but doesn't serve a big purpose:

1) in any case there's no OTHER block chain out there so this is the only one, if you don't like it, there's no alternative
2) miners check them before applying their consensus decision (building on top of it), and as they are the only consensus deciders, you have to accept their decision in any case
3) there's no cryptographic possibility to serve fake pieces of chain as they are all linked together with hashes (between headers, and in the Merkle tree).  If these are correct, then there's no fake data served.

Democracy, anarchy, plutocracy, meritocracy - it's all political systems, and Bitcoin is not a government or some organization, it's a p2p network, and current political systems do not apply to it with 100% accuracy.

Now, lets look at distribution of power in this network. Miners seem to have the most power, but anyone can become a miner, and miners tend to mine whatever yields the best returns.

Having fiat wealth allows you to influence the price, so this is an element of plutocracy and market capitalism.

Developers dictate the direction of Bitcoin, but anyone can become a developer and release their own fork. This is democracy and meritocracy.

You seem to forget what proof of work was meant for: it was meant to make it EXPENSIVE to do a sybil vote, that is to say, that if "voting entities" (nodes, say) were under the control of one single economic agent, he could only "pretend to be different entities" by suffering more expenses that were truly wasted (that he couldn't recover in any other way, be it useful heat or whatever), so that overwhelming the system with a sybil attack in the consensus voting would become so expensive that it wouldn't be worth it.  Proof of work was hence meant to be a proof of wasted economic value.

Ideally one would have a DIRECT proof of work, in terms of spent value on waste (say, by buying labour at a given salary that is perfectly useless, like digging holes in the morning, and filling them up again in the afternoon).  But bitcoin uses a cryptographic proxy to proof of wasted value, namely the cryptographic proof that one has wasted calculation power.  However, this proxy is of course subject to variable calibration between the actually wanted proof (namely wasted value) and the provided proof (a hash with leading zeros).  The amount of leading zeros is not in a fixed relationship with the amount of wasted economic value.  If you do the calculation with a home PC using domestic electricity, you waste much more resources for a given amount of leading zeros, than if you use large scale installations with specialized hardware, and you use industrial electricity at subsidized prices in specific regions.  So the same "proof of leading zeros" doesn't correspond to the same amount of wasted economic value, and hence, the system breaks down, and fails on its initial premise, which was to make conglomeration of voting power EXPENSIVE ; it actually obtains the inverse result, of making decentralized voting power in the consensus system (which was its AIM) impossibly expensive as compared to conglomerated oligarchic voting in said consensus system.  Where "proof of wasted economic value" was INTENDED to make it difficult for a guy to pretend to be 100 users, we now have only a few guys being able to vote in the name of hundreds of thousands of users and have these hundreds of thousands of users consensus-less.


No, you are forgetting what proof of work was introduced for: to avoid sybilling of consensus voters, so that each one of the users could use their vote (or at most "a few" votes) but would become too expensive to pretend to be 100 voters.

The energy wasted is not essential.  It is the economic value wasted that was to be a brake on the possibility of a few entities taking all the voting power.  Proof of work was simply a (failed, it turns out) way to keep many people voting, and avoid some to pretend to be entitled to many votes.  It actually did the opposite.

Normally, the system should have been largely resource-less.  Proof of stake is waste less.  Your voting weight in the consensus is equal to your stake in the system.  The cryptographic effort to produce a signature is insignificant as compared to the effort needed to break it (proof of work is the opposite: the cryptographic effort to break it is in fact decreasing as compared to the cryptographic effort to secure it: totally stupid cryptography).

But again, one should separate the consensus voting mechanism (which should be largely decentralized) and the "coin creation mechanism" and its inherent seigniorage.  The fact of rewarding voters has been a paramount error in bitcoin (and most crypto).


Of course it is gamed.  You get monopoly-like power, and effective barriers of entry (economies of scale, hierarchies of influence, possibility of cartel formation....).  You only have a true free market when the amount of suppliers is near infinity, and the amount of consumers is also near-infinity.  You also only have a true free market when there is variability in the offer.  In a system like bitcoin or any other "fungible" system, that is impossible.  If all car suppliers have to make exactly the same car, and you get only a few car suppliers in the end, the free market fails for two reasons:
1) the actual design of the car that cannot be modified (needs global consensus) is maybe not the ideal one and could be improved, but there's an essentially impossible barrier to make a different and better car
2) the economies made for the waste of resources in production of said car will be eaten away for power games between the few suppliers, on disinformation, propaganda, customer binding and other things.

It is gamed, not because of laws and violence monopolists, but because the power imbalance between the decentralized large customer base, and the centralized and hence much more powerful suppliers that cannot be challenged by diversity in the offering and are protected behind large effective barriers of economies of scale, and other barriers they will introduce to keep their oligarch status (and on which they will waste the possible economies they could have made).

We can make another post so we can discuss End Game Theory, because it is becoming an interesting discussion.

Anyway, what you say is not correct in my opinion.

A Free Market doesn't mean endless suppliers for the same task. It just means anyone can try and outperform another with no barriers.

This in fact, always tends to a Monopoly or Cartel. Always. We should cherish monopolies in an unregulated business. Meaning, in a non protected endeavor. Not like Microsoft and their 1Billion Patents. That is a foul Monopoly.

A real Free Market Monopoly comes from providing the most efficient services. And is only ever created by user choice. Choice is encompassed and guaranteed in Bitcoin, so it cannot be gamed.

If you ever have a Monopoly, if said Monopoly doesn't want to lose its status, it has to abide by the user base and the economic majority. Because if ever they try to impose, any user can just put together the software to fork it. And if Mining is profitable, for sure there will be volunteers to replace said Monopoly, and for sure the Economic nodes will also be on board. The choice is always with users. They can dump the foul chain for the healthy one. And the Monopoly Miner's only choice is either to abide by the users or buy his own coins back and try and ICO to recoup the losses.

The losses of losing a Monopoly of Bitcoin Mining, are more than the Profit the Monopoly would make. This is why I feel it is so well designed and incetivized. And it is very easy to overthrow a Monopoly.

This is because Bitcoin has real choice, real ownership, and noone is under ransom. Legal Tender bars you from choosing. Otherwise everyone would get paid in Gold.

Bitcoin is an obvious case of plutocracy

Users as such are irrelevant. Those who are just idly sitting on their coins in their personal wallets are irrelevant altogether since these coins are effectively not existing (for decision making and power struggles), and therefore they can be safely discarded. Users who are actively trading their stashes give their voice to exchanges which act on their behalf. The same basically pertains to merchants since they are not involved with Bitcoin in any meaningful degree because they get rid of bitcoins as soon as they get them (via exchanges or payment processors, which are basically the same exchanges). Developers could be counted toward meritocracy (with a lot of reservations) but they are essentially a tool in the hands of those who pay them, so they are out of the equation as well. In this manner, it all comes down to groups representing miners on the one side and exchanges on the other. Note that it is only a conceptual distinction, i.e. it doesn't mean that the miners are enemies of the exchanges (things are obviously more complicated than that). It should pretty evident that between these groups the financial muscle plays the most important role

No, you are thinking again in terms of mixing coin creation and voting consensus.  I'm talking about proof of stake to vote, but without any reward.

BTW, there's nothing wrong with a debt backed inflationary financial system, but that's another discussion.   The problem of our financial system is not so much the fact that it is debt backed, or that it is inflationary, but rather that it is regulated, and that there are privileged actors (that not everyone can be a central bank for instance).


But that is exactly what it is.

It is an error to think that bitcoin is backed by waste.

Amen.  And this is due to the proof of work consensus mechanism.

What is proof of stake to vote other than substituting Work for Capital and how does that equate for less centralization but rather, different centralization? Also, without reward, aka Transaction fees, or punishment, how do you incentivize following consensus?

Furthermore, if you do reward it, does this not decrease the rate at which money is exchanged thus rendering it less useful and less valuable, since all of its value comes from its utility and there is a reward in hoarding?

Please enlighten me. (I am not being ironic).

Your definitions are really heavy, and going by the vote decision every one agrees it's should be looked at an investment, and I really don't understand why you feel like that, I feel you should simply use it like a investment rather than anything else, you are confusing Bitcoin and democracy and I don't think it's right to do so. Maybe you need to look at your concepts

The goal of the consensus voting system is that "the users are to come to consensus to what payments have been done, according to what rules".  After all, a crypto currency is nothing else but a "token game" where two things count:
- the rules of the game
- the ownership of the tokens

which is to be agreed upon collectively and uniquely: the "consensus".  

Given that there is material advantage to be had in the ownership of tokens (given that their ownership is traded against value, which is the use of the system), the consensus decision cannot be in the hands of a few, that could otherwise take advantage of it: the whole trick of cryptocurrencies is that this consensus decision is taken in a decentralized way, in such a way, that each decider keeps the other deciders in check, and no-one can cheat, because the cheater's decisions will not be re-validated by later deciders.  Note that here, "cheating" comes down to "deviating from the rules", which implies somehow immutability: if the decentralized decision system is such, that every decision that deviates from the "rules in place" is discarded by the next deciders, only immutable rules can emerge from this, if there is no explicit "rule changing mechanism" other than all deciders deciding collectively to apply new rules at day X, which is hard or impossible to do in a fully decentralized system.

The decentralization in consensus decision taking is explicitly necessary to avoid all possible collusion between deciders, and hence, to have only the "true rule set" to be recognized by all players in the game.  This is why a mechanism is needed to have this decentralized decision to be kept truly decentralized.  

There are two ways to come to a unique consensus decision amongst entities: "voting" and "random unique decider".   In both cases, there needs to be a "weighting factor" applied to each entity, because the entities being anonymous and permissionless, it is impossible to know how many "declared voting entities" are in fact just sybils of one single economic entity. In "voting" the weight is the weight of the vote ; in "random decider", the weight is the probability to be the next decider.  Voting is difficult, because one never knows who is actively participating at a certain point, and absolute majority is impossible to achieve on a continuous basis.  So bitcoin and most crypto without master nodes comes down to random unique decider, which needs a "probability of being the next one".  Proof of work was supposed to apply this weight.  But if you think about it, stake is a better measure.  After all, the VALUE of the token system in the market will be judged partly by the belief in the correct functioning of the system according to the rules.  Now the bigger stake holders are also the bigger exposed risk takers if the system turns out to fail to work according to rules.   So the bigger stake holders are most prone to want to keep the system honest: they have most to lose if the system is visibly corrupted.  Big stake holders can be trusted to want to keep the system honest, because if the system turns out to be visibly corrupt, their big stake will drop in market value.

As such, big stake holders are not to be incentivized to come to (honest) consensus: their stake is, well, at stake !

The error in most proof of stake systems is that they REWARD stakers.  That is not necessary.  Stake holders are already incentivised by their very stake in the system.   We only need stake holders to come to consensus, not to reward them.  

Of course, if the ownership of coins becomes a small oligarchy of a few big whales that hold 99% of the stake, we would be in the same situation as in bitcoin, but it would also mean that they are also the only OWNERS of the system - so it is somehow normal that they decide on what they do with their own token system !  

And in as much as the coins are distributed over large amounts of economic entities, we get true decentralization of consensus decision, according to the stake owners.

In other words, proof of stake is about the best distribution of consensus decision power, because it are the owners of the system themselves that decide on the workings of the system - no external powers or forces.

But again, I'm talking about "benevolent" consensus decision without any other reward than contributing to the good workings of the system in which one has a lot of stake.  Not about what is usually presented as proof of stake, with rewards, fees and so on.

If it is the Democratic Party there will be several sound systems and developing furture certainly can be controlled by the Director while bitcoin free agent there are certain words for what you can call a bitcoin So btcoin Lo are free without limit but follow the rules if you follow an advertisement. in other words bitcoin not democracy ;) :D

Thank you for the explanation.

I do not understand how "Big Stake Holders" are any different than "Big Mining Pools" in your explanation.

Under the above assumption that the risks presented by both are the same, I predict it is less costly for a Big Stake Holder to attack the system rather than a Big Mining Pool.

Mining Pool has Equipment, Operating and Energy Costs throughout time and it's profit comes also from a continuous service, rather than immediate. So it is a long term plan. I argue they stand much more to lose than an equivalent in size stake holder.

I don't see how proof of stake is better security and more decentralization. But then again, I don't feel Bitcoin is centralized when you can fork it anytime you want. It is effectively impossible to control bar physical coercion. Your argument to defend against a centralized Proof of Stake also stands for Proof of Work. Effectively fork it and let them keep their coin.

A Miner with a long term plan has much more incentive to listen to users and less to deviate than a staker with a big stake.

Right now, we are witnessing that. There is an looming threat to change proof of work. We see Miners, Users all threatening forks and let the economy decide. UASF is effectively banking on the fact that users vote with their money. Only Miners stand to lose here. And if it so happens that Miners win, it is because the users decided their coin was better... Not because the Miners imposed that their coin was better.

It kinda looks that you are not really looking for an explanation

Stake holders are what the system itself is made up of, so you can't possibly exclude or eliminate the possibility of shutting it down by those who essentially own it. This is a natural course of things or events, you either render the system vulnerable from outside (PoW) or leave it vulnerable from inside (PoS), there is no third option available in this world (provided you go for some level of invulnerability, of course). But with the PoS system only the insiders (read owners) can kill it (but that will be their deliberate choice), while with the PoW one, anyone who has enough power can do that (it is just a matter of resources) and you don't need to become a major stake holder as is the case with the PoS system (the latter would be equal to buying and owning it)

I am okay with this explanation as I can't define also to where bitcoin will be input.
Can it be half Anarchy and somehow democracy?
I guess it depends on the usage of every bitcoin user.
The question would be what is bitcoin for you first? What is the purpose of being involved in it.
Then maybe this could be answered.

democracy is nothin mo than dictatorship by the masses....
just my 2 cents

I just feel that if you are looking for less control and a more costly attack, proof of work is better. Also, your reasoning implies that people are rewarded for hoarding stake rather than transact it. This makes sense for company shares. Not for any currency.

As for the insiders killing it, it is irrelevant. What is relevant is the cost to attack. Because an outsider can just buy enough stake at X cost and become an insider. As for Proof of Work, I believe it is more costly.

I think Miners have greater incentive than Stakers honestly. And Miners cannot cashout so easily, and are open to all kinds of attacks from users and economic majorities. Miners are committed to the long haul. Whereas Stakers are not. And the only way to incentivize that is incentivizing hoarding, which is not what you want.

I wasn't trying to literally connect any political ideology with bitcoin, I was just trying to figure out if the working model/base of bitcoin could have any similarities with any political systems and it does have, developers and miners make it meritocracy, elites could disrupt the market if and when they want to, plutocracy, and being decentralized makes it similar to anarchism. Someone even mentioned monarchy ;D That's what most of the people are doing, simply investing without even wondering how it works.

I think you are misusing the terms here

First, what you mean by "the cost to attack" is actually the cost of buying the controlling stake. If you are willing to buy something and then destroy it, more power to you. But don't speak about an attack here since the notion of attack assumes a hostile action, something which is not desired (in the case of PoW system, by the majority of "system" users). If you are an owner of a company and you want to liquidate it, you can't talk about "attack" there. Further, whether it is more costly or not is in fact a matter of belief since (major) stake holders may simply refuse to sell you their stakes at any price, and then you are stuck, as simple as it gets. This is obviously not the case with PoW. I guess that's where the primary, fundamental difference between these two systems lies. In other words, you can't "attack" the PoS system, you can destroy it only via "voluntary" action

I think deisik already answered the essence, but I join him that if the major HOLDERS of the coins decide to blow up their own coin system, that's their affair.  If the holders of the coins want to modify their system, that's their affair.  Nobody NOT holding any coins is affected. 

I would think that if coins are distributed in the same way as hash rate is now distributed amongst mining pools, then IN ANY CASE the game is "gamed".  Currently, in bitcoin, 5 mining pools have more than 50% of all hash rate, and in fact, most probably, these five pools are under the control of FEWER economic agents (read Jihan).  20 mining pools have 99% of the hash rate under their control.  If a coin were for 99% owned by 20 different people, you understand that this coin is a very closed game.  If these 20 people, owning 99% of the coins X, were to decide to blow up coins X, that's their good right and their affair, it wouldn't affect much other people.

A coin with such a centralized ownership is a small club coin.  If they want to shuffle their coins amongst themselves according to other rules, that's their good right.  But such a coin wouldn't have any large scope of usage.  Imagine 99% of bitcoin owned by 20 entities (and maybe less real people).  It would make bitcoin into a club game of these few people and nobody would care about it.  I could make such a coin and use it exclusively in my family, and maybe we would be 20 people too playing the coin game.

The problem is that 20 entities (most probably less) control 99% of the consensus decisions in bitcoin, but bitcoin stake holders are much more distributed, and nevertheless at this quite centralized decision mercy.


I think that a bitcoin stake holder that has 10% of all bitcoin has more to lose than a miner that has 10% of hash rate.  That's quite easy to prove: if the cost of HASH RATE material would equal the same fraction of MARKET CAP, the inflation would be over 100% if mining were to be profitable.  Someone having 10% of bitcoin stake would own 4 billion dollars in coins.  I don't think that a mining equipment representing 10% of the current hash rate costs 4 billion dollars.


Hardforking is indeed the only way to keep bitcoin "decentralized" and "competitive".  However, bitcoin being essentially a brand name, you can't even do that.  This is what refrains all battling parties from hard forking: bitcoin's value is essentially tied up to the special status of bitcoin as first mover - it doesn't have any other technical aspect in favour of it.  As such, forking away into an "alt coin" would lose that "bitcoin brand" which is the essence of its value.

Look at litecoin.  It is technically superior to bitcoin (it has segwit, and is for the rest identical, but has 4 times faster block times, and 4 times more capacity).  Why is litecoin not overtaking bitcoin ?  Simply a matter of brand name.


On the contrary.  A big staker IS a big user.  He will listen to himself, and his financial engagement is way, way stronger than the miner.  In as much as the coin means anything, there are many many more stake holders than there are miner pools.  And all those stake holders will, for sure, listen to themselves.  Nobody else is affected.


None of that big-mouthing means anything.  You don't *threaten* with a fork, you do it if you're serious.  If you "threaten", it means that you won't do it.  This sounds like someone who would threaten to make, say, litecoin.  No, people just went ahead and MADE litecoin.  The only reason why these people threaten, is that they want the bitcoin brand name for their pet modification, and hence CANNOT fork away.

That is like going to Toyota, and tell them that if they don't make cars with, say, 7 gears, you threaten to bring out your own car on the market with the feature.  No, if you think that 7 gears is going to win the market, you bring out your own car.  It is only if you don't think you can manage bringing out your own car, that you play that game with Toyota.

These are political terms and used for types of society not for currency. At least I wouldn't associate these terms to bitcoin. I look at it in pure economical sense and as a decentralized cryptocurrency that represents new alternative in finances. But as such it could be used in any type of society, democracy, autocracy or whatever you can imagine. As long as this society enables you internet access.

You can´t define a political system  for a currency, but the my best shot would be aristocracy, because on popular voting sites you vote with your BTC. One could argue this is democracy, but it is not, it is a vote based on wealth.

On the other hand the core team has a big share so this would be technocracy.

Of course not.  On the contrary.  if you want to do a 51% attack on consensus decisions, you need to own 51% of the market cap.  That's MUCH MUCH more of a cost (in bitcoin, it would amount to having to buy up 20 billion $ of coins, but your cornering of the market would make it still much, much more expensive).... in order to destroy the system for which you just paid 20 billion !  No miner is ever going to invest 20 billion in mining equipment, because he will not mine 50% of the stake in block rewards and fees !

Also, the cost of a 51% attack in PoW is just the cost of 51% of the mining rewards, and you don't need to be stake holder.  From the outside, you simply cannot attack a PoS system, because it is based upon much harder to fake digital signatures.
Currently, ALL of the proof of work ever delivered to bitcoin has a security level of 90 bits.  A simple 256 bit key signature has a bit security level of 128 bits, and only costs a few milliwatts of power and an old laptop (or even a mobile phone).

Cryptographically, PoW is pure BS as a protection. Any digital signature beats it with tens of orders of magnitude in "efficiency" (that is, spent resources versus security obtained).

It has nothing of anarchy, because there are rules which are important to make the Bitcoin system survive and thrive.

I believe it's more about meritocracy, because only who deserves this is able to reach to the primarily source of coins, the mining. It's not anyone who deserves that, only those who prepared themselves with powerful machines and logistic.

Who is in the top of Bitcoin world today it's because they planned well their steps.

Who's 'Efficient' Digital signature am I supposed to be trusting ?

..

POW is Objective. POS is not.

POW accumulates over time. POS does not. ( I can fake POS history using old spent keys )

..

Sure - POW has issues in this current user/miner implementation (I would prefer the users to mine their own txns..), but POS doesn't currently work (and may never fully work) or any one of the uber geniuses working on it would have come up with a viable algorithm by now..  ;)

It's none of the above. Bitcoin stands away from any politics or centralised definition as you depicted. The thing is bitcoin needs to be free and away from such implications. Without this bitcoin will never be able to sustain the market as it had done since its birth. The day it is centralised would be the day it's going under complete destruction. I'm sure then your democracy would not work.

Your arguments are compelling. I do not possess the Cryptography expertise to dismount any of the technical arguments.

I will say this:
 
51% attack in PoW does not only cost 51% of mining rewards. It is not immediate, and it costs all the energy and capital that was put onto it before any ROI.

Furthermore if you consider it is possible to hold a 51% hashpower, if we estimate like a 40% ROI for mining (and I think this is too much considering mining alone), according to current market cap it should cost total about 13.007.185.339,7 USD to achieve a 51% Hashrate. the actual loss of revenue from an attack today would be 2.410.118.399,27 USD Bringing the total to about 15.5 B. 

For a 51% PoS, the cost would be 21.678.642.232,83.

I'd grant you are correct in your reasoning, although it seems pretty obvious to me that none of these actors has any incentive to attack the network. And the bigger the market and the higher its share of the Hashrate or Stake, the lesser the incentive. It works for both.

On another point, as I have been trying to argue, I think Proof of Work is economically more sound than Proof of Stake. You are effectively being backed by Energy. There is only so little a miner is willing to receive for his coins, whereas for Proof of Stake, it is cost of capital. The fact is, a miner is tied for the long haul. Capital not so much. Either you inflate your coin to secure the network, or you guarantee transaction fees sufficiently high enough to prevent capital flight.

Also, for Proof of Stake as a way to mint coins, you are dependent on utility and speculation for your currency to be worth anything. If it is just for consensus, then this last argument doesn't stand.

Am I somewhat being able to convey any part of the argument?

 


 

As I see it, bitcoin is more of a meritocracy since voting power for consensus is done by miners whereas end users can only voice their concerns and thoughts about the said idea. Bitcoin isn't democratic even though consensus is achieved via majority decision; the decision is just from the miners who will use x or y version of the fork to move forward.

This is a misconception, because users vote with their money. A miner gets no money if noone buys his coins, and after all, the miner is invested, he started at a loss. Whereas a User, using double-entry accounting, just changed one asset (FIAT) for another (Bitcoin).

The incentive is for miners to follow the user majority. Not the other way around.

This is where your reasoning ultimately fails

Basically, you roughly divide the current market cap of Bitcoin by 2 and get the cost at today's price (since this is what the market cap shows), implicitly assuming that the price will remain the same when you actually start buying 51% of all Bitcoin monetary supply. Nothing could be more false and farther from reality than that. First, not all coins are being traded, I guess, it is somewhere in the range of a few millions (maybe, 3-4 at most), and when you have bought your first million, you will have to spend like 10 times more money to buy the next million of coins (due to prices flying to the moon). Further, you chose to completely ignore my argument that you may never get there at all, no matter how much money you could have since some stake holders may not be going to sell their stakes at any price

First of all, you mentioned a PoS attack from inside.

This would cost exactly 21.678.642.232,83. A PoS attack from the outside, would cost alot more obviously and might be arguably impossible.

For an outside POW You would need to double the existing Hashrate to acquire 51% of Market Cap.

This would cost 1.793.266,75 USD a day to run based on maintenance rate of Hashing24 or Genesis Mining. The cost to setup, let's consider Antminers S9 selling at 2500 USD on Amazon a piece. Since we would need 5.434.141.693 GH/s, this would mean approximately 388.152 Antminers S9, 970.380.000 USD.

Ignoring Logistics and setup costs this would cost around 1 Billion if we could do this in a day. With nothing to gain. Considering that existing miners already have existing infrastructure, they would also easily increase Hashrate to defend (as the market would for PoS buy-in). An attacker would have not only more cost, but a logistically difficult problem to resolve - immediate supply of Hashing Power. Furthermore, each day it took to get the necessary hashpower would arguably cost around 1M USD considering a 40% ROI.

As opposed, a 51% stake can be acquired virtually hassle free and even "anonimously" using multiple wallets during the course of time.

This considering all participants act in their best interest. Otherwise, a 51% stake always costs market cost. Whereas a 51% hashrate can possibly be bribed for 100 USD depending on the stupidity of the actors involved.

So I grant you are correct in a doomsday scenario where incurring cost to no gain happens. PoS is better security from the outside.

As for the inside all the incentives are there and the Miners can easily defend an outside attack, furthermore, they are logistically invested. It is not easy to divest resources. And their cost to defend is a lot less than that of an outside attacker. Whereas Capital, goes where its most valued pretty easily.

I am still inclined to maintain that I think Proof of Work is economically more sound than Proof of Stake.

There is no one who has bitcoins and is not interested in their existence. Bitcoin has United all people. So I am sure that nothing will happen on 1 August. Bicon intended to establish an entire online economy. This will need to constantly carry out the correction. Democracy can't be punished.

This is a wrong use of the notion of "backed".  An asset cannot be backed by WASTE.  If one says that a currency is backed by gold, it means that one can OBTAIN GOLD (of value) against the currency.  One sometimes talks about 'debt-backed money', but in fact, what one wants to point out, is "promise-backed money".  A promise has value (a debt, not).  A mortgage is not debt-backed, it is real-estate-backed.  The mortgage will be honoured in value, and if not, it will be honoured with a REAL HOUSE.  There is economical value to be obtained by a backing.  However, wasted energy doesn't back anything, not more than dog poop does.


I think the big error in bitcoin, most crypto, including say, peercoin (the prototype PoS coin), is that they still couple consensus decision with reward (mining, minting...).  In PoW you have no choice: nobody is going to WASTE RESOURCES and prove it, without a compensation, just to help the system come to consensus.  But as PoS doesn't demand a proof of wasted economical value, and only a small computational effort, there's no need to reward it, and minting is a bad idea: minting is what renders PoS unstable ("nothing at stake" problem).

The error committed by most crypto (copied from bitcoin) is the link between coin creation, and consensus decision.  There's no link in fact and consensus decision shouldn't be rewarded with coin creation.

Some likevfo think it is a semi-autonomous self governed peer-to-peer system of digital money.
Decentralized and "not governed" are very different things.  Good topic but you have stumped me.  I will watch this topic! 🙂

I think people have decided to vote to see if btcoin should grow or not, which is also part of democracy.But in fact, bitcoin is also defined as a decentralized currency, not controlled and operated in the online world.

You simply can't claim that

Mainly, for two reasons. First, there is almost no chance that it would cost exactly that (or any other number based entirely on current market cap, i.e. price). If we talk about an "attack" originating from inside, it might in fact cost next to nothing simply because someone (e.g. a coin creator) might have premined 51% of coins at no cost at all. And once again (this is second), you can't call it an attack at all if the owner (major stake holder) voluntarily chooses to close the whole shebang. In all other cases, it won't be an insider business

Please. If your coins are worth 21B and you throw them away, no matter how you got them, it costs you 21B. Even if you got them for free it costs you 21B.

The cost has nothing to do with the effect on your Net Worth pre and post coins. It doesn't mean you are poorer. It just means you could be richer.

Heck, what are you talking about?

I guess you should go find out what the term cost actually means. As per dictionary, the cost is "the amount of money that is needed in order to buy, do, or make it". In this case specifically, cost means how much you paid to be able to close the whole business. If you are the creator and premined 51% of all coins, that would likely cost you only electricity consumed and time spent on developing the coin. Honestly, you are now shamelessly twisting your position so that it could somehow look even remotely plausible while in fact it is completely untenable

Your own !  Or another stakeholder's signature (of which you can, of course, check the validity because it is related to his address).   If a lot of stake holders have signed off successively the validity of all the previous blocks (like miners sign off the validity of previous blocks buy mining on top of it), you can say that all these stake holders have come to consensus that THIS is the list of transactions that are valid, according to the consensus protocol - in exactly the same way that you can say that miners having built blocks on top of one another with PoW, have come to consensus that THAT is the list of transactions that are valid, according to the consensus protocol.

The big difference with mining is that you, as a stake holder, with YOUR full node, are also going to be taking part in the consensus decision if you want to, and you are not at the mercy of miners over which you have nothing to say.  So contrary to the PoW system where full nodes have no consensus decision power (and are hence useless in the decentralization), but can only copy the chain that miners make for them, ALL full nodes with some stake participate in the consensus decision protocol, which makes PoS a much more decentralized system than PoW, because there are no "economies of scale" to be had (apart the few resources to run a full node).  The decentralisation in PoS is exactly equal to the decentralization of ownership of the coins themselves in PoS (and the willingness to participate).


I wouldn't know what that means.  In what way is the block a PoW miner adds, is objective, and the block a PoS decider adds, would be subjective ?


PoS accumulates too: the amount of stake that has "signed off" past blocks is accumulating.  You can of course NOT fake PoS with "old spent keys" if the PoS mechanism is defined correctly: only CURRENT stake holders are eligible to be drawn as the "next staker", with probability equal to their stake (or their stake times the coin age since last staking which is better).  In the same way that in PoW, you're supposed to accept the chain with most PoW in it, you're supposed to accept the PoS chain with most accumulated stake in it, which resolves the consensus problem.  Blocks can orphan in the same way they can with PoW, because of network delays.

You are maybe alluding to the "nothing at stake" problem, but that problem goes away if there is no staking reward.  Multiple staking on different branches has an incentive if you want to win minted coins (if ever the branch you didn't multi-stake on, wins in the end, you would have lost a potential minting gain).  But if there's no reward, your ONLY incentive is to keep the system honest, so that your stake doesn't become worthless in the market.  The bigger your stake, the more probable you will be the next staker, and the more you are willing to keep the system honest.  But even if you are dishonest (that is, you orphan other blocks to "reverse transactions" and you are lucky, and are a randomly selected staker at that moment), or you apply different rules in the block), like with PoW, if the NEXT staker (which you can't be with the same stake in any case) wants to be honest, he won't stake on top of YOUR block (in the same way that another miner won't mine on top of an invalid block) because that other staker doesn't want to lose the value of his stake either in the market.   As a staker, you have no incentive to stake on top of a bad block, because there's nothing to win for you in doing so, you can only make the chain dishonest, and have the market of your coins crash.  Why would you ?

Not really. It is simple economic logic. If you build something for 0 that is worth 21B, your earned 21B at no cost. If you then destroy it, you destroyed 21B of your value. Therefore it cost 21B.

I don't see the flaw in this argument

I guess you are thinking about "cost of oportunity". If you use your stake to nuke the coin rather than sell it, you are indeed paying the cost of oportunity. However, do keep in mind that there is no way in Earth that you are actually selling your stash for 51% of the market cap, for the very same reasons that you can't just buy 51% of the coins at market value. The price would drop catastrophically once you start doing it.

Only if you sell your whole stack at once. Which there is no need to.

However, this is not cost of opportunity. The cost of opportunity will actually add to this cost. When you compound the return of other investments that could have catered your 21 B. This is in fact, actual cost.

No, this is nowhere near the case

As I told you before, you are distorting the concepts and twisting the terms so that your "theory" could look somewhat plausible. If you created something for X amount of money (i.e. spent that amount of resources in monetary terms), it cost you exactly that, i.e. X amount of money. If you lose it or intentionally destroy it, your losses would amount only to the costs that you incurred while building or creating it. Your costs simply can't magically turn equal to the current market price of whatever you chose to dispose of. If what you say were even remotely true (i.e. costs would always be equal to market valuation, which is your point), no trade would be possible altogether. Really, why would anyone want to sell anything for no profit at all? In short, stop talking bullshit

What you're talking about is a currency system and a way confirming of the various Network activities  that has nothing to do with voting although consensus does go into the fact of which fork will be used if there's a hard fork. That's really not something that has anything to do with democracy that  I can think of, or any other modal form of government.

You are mixing Unrealized and Realized gains in the mixture.

But through your rationale, if someone gives you 100 BTC today as a present, and then you lose the Private Key, you would say you lost nothing. It didn't cost you anything. This is only true if you consider BTC doesn't have any value, present or future, unless you realize it in FIAT.

You are thinking about Equity here, not a Currency.

I feel bitcoin to be democratic, because this has been decentralized from the beginning. So though it's developed by a particular person altogether now the identity is missing. So it's by the people, Secondly the people are the beneficiaries.

Why are you so consistently trying to distort the meaning of the words?

If someone gave me 100 bitcoins and I lost them all, that would mean only that, i.e. me losing 100 bitcoins, and I would say that I lost 100 bitcoins, as simple as that. But that doesn't in the least mean that they cost me anything in monetary terms (let's assume for simplicity that I just found them to avoid unnecessary complications). Loss and cost are different things, which you seem to be deliberately trying to confuse here, again. Aside from that, costs have nothing to do with either realized or unrealized gains. Open any economic dictionary (or textbook, for that matter) finally and read for yourself. Gain (otherwise known as profit) is the difference between what you received when you sold the coins and what it cost you to obtain them. If this difference is negative it will be a loss. I'm really fascinated that you are still trying to continue this futile argument, or do you really think that having the last word in it will somehow make your point more plausible?

You can keep the last word. Seems pretty straightforward to me where the incentives lie. It can cost 0 Dollars to lose 21 B. So it costs nothing. Seems legit.

Indeed, it could cost nothing

If you didn't spend anything to obtain 21 billion dollars' worth of coins, your costs would be effectively equal to 0, so it is perfectly legit. Imagine that someone has sent you 50% plus 1 coin to your wallet, and now you can either destroy the coin or sell the coins. Destroying the coin would mean that you lose a certain amount of some other currency which you could receive if you chose to sell your stash for that currency. But your costs associated with the acquisition of this stash will be the same in either of these cases (read you could destroy the coin in question without spending anything). I guess that should help somehow at last

I already understood your point, as I am sure you understood mine.

I do not think acquisition costs are the only costs towards incentive to attack or not attack.

In the very least, you are massively misusing or rather confusing the terminology here

And to tell the truth, I don't understand what you refer to here by using the term "cost". Honestly, I'm heavily inclined to think that you don't quite understand yourself what your point is. If you don't talk about costs (expenditures or expenses) involved with buying 50% plus 1 coin of monetary supply (as you said yourself), the closest approximation to what you might mean is opportunity cost, i.e. the cost of choosing a less economically favorable option before a more profitable one. Obviously, the latter would be equal to selling the coins at the market price, but as you have also been told already, you won't be able to sell at exactly that price and, apart from that, you explicitly discarded that option yourself (probably erroneously). So it kinda looks you don't know what you are talking about

I think depending on the possession and use. We work for bitcoin to enjoy the benefits of btc .. i think btc is not democratic. Bitcoin is simply a bitcoin

bitcoin is the digital currency that is being use by all the  countries and it has covered almost all the countries so bitcoin is no doubt contain good cost and the price of bitcoin is also very high soon it will increase some more extent and it will be very good and beneficial for bitcoin users.

Again I don't even understand what you mean by the beginning of this thread. My democracy is a voting or governmental mode of choice and decision making.  so when you make a statement that if it's not a democracy then what is it. it's a form of currency. :)

Whatever the most important term is the benefits, transaction costs no more $ 3 with a time not more than 15 minutes is a remarkable thing when compared with bank transactions.

its not self governed peer to peer system and its not digital money. Democracy says by the people and for the people and so is bitcoin it is for the community and so it is controlled by the community as a whole as is true democracy. One more thing it is not digital money, you can transform it buy it and sell it.

its not self-represented shared framework and its not advanced cash. Vote based system says by the general population and for the general population as is bit coin it is for the group thus it is controlled by the group in general as is genuine popular government. One all the more thing it isn't advanced cash, you can change it get it and offer it.

You can´t define a political system  for a currency, but the my best shot would be aristocracy, because on popular voting sites you vote with your BTC. One could argue this is democracy, but it is not, it is a vote based on wealth.

I agree that a political system is not the same as a monetary system

That said, I guess I still should point out that some monetary systems suit some political systems better. For example, you wouldn't really expect an authoritarian or even dictatorial government to adopt a decentralized monetary system like Bitcoin. How come? For very simple reason really. Authoritarian systems are trying to control everything, and still more so they are trying to control the money that people use since through money they can easily control people. You either obey or die under the bridge, as simple as that. Democratic rules, on the other hand, are more agnostic about a monetary system. That basically explains why we see Bitcoin prohibited, either directly or indirectly, officially or unofficially, in such authoritarian states as Russia, North Korea, Venezuela and China, to a degree

it does no matter what bitcoin is , it make every person whom i know personal wealth ppls so who care if democracy or not at this time today more than 17 thousands dollar for one coin which some ppls collect free from faucet in 2015 bitcoin is currency from god . imagine it that faucet ppl were most poor people in this place now today more money they have evn more than united states ppls