Bitcoin Forum

pools/miners/asic hardware vendor are not outside the bitcoin ecosystem in my eyes, they are part of it.

Can you elaborate on your $500 million figure? How is it derived, what assumptions are used, ect...

PoW mining currently transfers $500 million USD worth of wealth out of the Bitcoin eco-system, into the pockets of pools/miners/asic hardware vendor/electricity company.

What do you mean?

If person A sells BTC to person B, are the money (USD) coming in or out the "bitcoin eco-system"?

No mining incentive; no miners; no network security; no bitcoin.

OP doesn't understand how this technology works.

No mining incentive; no miners; no network security; no bitcoin.

OP doesn't understand how this technology works.

LOL basic economics fail OP.  POW mining is exactly what gives bitcoin its value.  Miners have to expend real resources and fiat (or other value) to buy mining equipment and to run it, which they won't do unless they and other miners value those costs as lower than the amount of bitcoins they mine with them.  POW mining sets a base value for bitcoin.  That money you think "leaves the ecosystem" doesn't leave, it *sets the price*.

<snip> SHA512 <snip> SHA512 <snip> SHA512 ....

This is a very well known figure from previous discussions here:
https://bitcointalk.org/index.php?topic=770591.msg8690432#msg8690432

It's basically a function of Bitcoin marketcap, the PoW mining expense is roughly maintained at 10% Bitcoin marketcap at annualized rate. This is why I call it charging Bitcoin holders a 10% tax

Of course not, that is just a transaction in Bitcoin.

PoW mining on the other hand, by nature will transfer value out of an eco-system. They use hash rate to process transactions, and obtain transaction fee (and possibly
new coins), then they sell these back to the eco-system. So basically, the eco-system is paying a fee for them to process transactions, and also possibly create new coins.
Then the miners use these fee to buy hardware, pay electricity bill, pay pool fee etc... These are money permanently transferred out of the eco-system.

They are not, they are part of a SHA512 mining eco-system. For example, were the scrypt miners part of the Litecoin eco-system? or Dogecoin eco-system?

As shown by the scrypt mining scene, the miners only care about profits (or we could call it extracting value out of an eco-system), the most popular pools are the "auto-switch" pools, they will mine ANY coin that is profitable.

Due to the lack of viable SHA512 altcoins (ironically, this is due to PoW mining being so insecure, any SHA512 altcoin is easily attacked by the massive amount of ASIC available), the SHA512 miners mostly mine Bitcoin, but that does NOT make them part of the Bitcoin eco-system. They will switch to ANY profitable SHA512 eco-system, as long as they could extract value out of it. If mining Peercoin was more profitable than Bitcoin today, you can be pretty sure majority of miners will switch to mining peercoin.

What if they sell to the 'new' people (outside the "eco-system" whatever that is)? Or if they sell to existing bitcoinholders who then sell back 'outside'? Why did you assume that entire $500m is paid by eco-system? That would only be true assuming that bitcoin doesn't expand at all.

Nevertheless, mining community is part of the cryptocurrency community, every dollar they invested in equipment purchasing or electricity power is a dollar invested in cryptocurrency ecosystem. Bitcoin happens to be the biggest part of this ecosystem.

Whether the miners eventually  "cash out" by selling the mined coins is a different issue, because same argument can be made to speculators and hodlers.

PoW mining currently transfers $500 million USD worth of wealth out of the Bitcoin eco-system, into the pockets of pools/miners/asic hardware vendor/electricity company.

This wealth transfer will go on, perpetually, as long as PoW mining exists. Because, as long as Bitcoin relies on PoW mining to secure the network, the expense will exist, and it can
not be cheap (otherwise attack on the network will be cheap and easy too).

In order for Bitcoin price to rise, there has to be at least more than $500 million of new money to enter the eco-system, every year, just to maintain the current price.

All Bitcoin holders are essentially charged a 10% tax per year, perpetually, by the PoW mining network. How can this be sustainable?

Now a days getting 500 is quite hard then 5000 looks like a dream.

LOL basic economics fail OP.  POW mining is exactly what gives bitcoin its value.  Miners have to expend real resources and fiat (or other value) to buy mining equipment and to run it, which they won't do unless they and other miners value those costs as lower than the amount of bitcoins they mine with them.  POW mining sets a base value for bitcoin.  That money you think "leaves the ecosystem" doesn't leave, it *sets the price*.

Not really true.  The same thing is said of gold miners, in that the "set the price of gold" and that "gold can never fall below the costs of mining it", but time and again this 'rule' is violated.  The OP has it right.

They are an unnecessary and damaging part of the community. They extract value from cryptocurrency eco-systems and transfer them to pools/hardware vendor/electric company.

PoS eco-systems has proven that PoW mining is not needed.

I've been thinking about PoS, just couldn't figure out the difference between PoS and a would-be digital dollar issued by the Fed.

#kokojie
So did you think the PoW system ( at the moment) is an error ? Which is the better algorithm for you ?

pools/miners/asic hardware vendor are not outside the bitcoin ecosystem in my eyes, they are part of it.

It is not an error, but just a system that is behind the times. Would you be still using VHS tapes, when netflix streaming is available?

If Bitcoin switch to PoS system, all its rules and function will still be the same, just that it will no longer expend $500 million USD in value every year, to pay miners/pools/hardware vendors/electricity companies. All that money will stay in the Bitcoin eco-system, for the benefit of the eco-system.

It sounds like you are just saying that the $500 million figure is roughly the current value of coins mined in one year and that miners will spend an amount slightly less then that on mining. However, there is no explanation on why you keep saying this money is "leaving the Bitcoin eco-system". Are you trying to say that if Bitcoin used POS, then this $500 million would instead be used to purchase coins?

I think you are confused, PoS is just another way to secure the network, there's basically no difference from how PoW secure the network, except PoS uses stake instead of ASIC, and stake doesn't expend resources, that's all.

on point, with out any of the pools/miners/ hardware ext there will not be any bit coins!

Thinking the bigger picture, making network secure is just a technical annoyance we need to deal with.  The perceived fairness of money creation & distribution is many times more important.  

Similarly, nowadays even though rich people can invest in gold mines to acquire more gold, mining gold is still considered much more honest than printing paper dollars by most people.

Again, you are confused if you think PoW distribution is fair, and PoS must be unfair. I admit PoW distribution is "easy", but it might not be fair. PoS distribution requires more thought and design, but a properly designed distribution can be made more "fair" than a PoW distribution.

Your thinking is correct , but if the bitcoin will lose the PoW part I think it will lose all  its (actual) "price" and ( I don't hope this) its value il drop to $ 100/150.

This will be an hard fork and I think not all the users/miners will accept this fork.

Please show me a PoS distribution model that you consider more "fair" than Bitcoin/Litecoin/Dogecoin...

Don't kid yourself, Bitcoin development is very much centralized, the users will accept whatever client distributed by Gavin Andressen, just like they will accept the upcoming block size hard fork, without realizing there are better solutions available to solve the problem.

The current system where every user is a network node is not the intended configuration for large scale.  That would be like every Usenet user runs their own NNTP server.  The design supports letting users just be users.  The more burden it is to run a node, the fewer nodes there will be.  Those few nodes will be big server farms.  The rest will be client nodes that only do transactions and don't generate.

It sounds like you are just saying that the $500 million figure is roughly the current value of coins mined in one year and that miners will spend an amount slightly less then that on mining. However, there is no explanation on why you keep saying this money is "leaving the Bitcoin eco-system". Are you trying to say that if Bitcoin used POS, then this $500 million would instead be used to purchase coins?

Edit: It may help if you define the "Bitcoin eco-system".

I could think of a number of distribution models better than Bitcoin. For example, distribution by donation to development effort and bounties. So instead of paying $500 million to miners/pools/hardware/electricty company. These money can be used to:
1. fund Bitcoin development and propel it fast forward
2. pay for people to build more Bitcoin infrastructure to benefit the Bitcoin eco-system.
3. pay the PoS miners for running a full node and processing transactions (ok I realize they are still miners, but they are by definition stakeholders of the eco-system)

I'm sure there are much more talented people who can think of new ideas better than these.

That is not how the discussions work within Github and you are conveniently ignoring the other implementations.

I agree with some of your statements of the weaknesses and limitations of PoW and the inherent costs. What you fail to disclose are all the benefits.

Take for example another solution. Bitshares using DPoS. I was told by several active proponents that it is more secure and decentralized than Bitcoin and PoW and BTSX was a "True" deflationary currency because it would never grow beyond 1,999,883,512 coins. One month latter a one developer is able to leverage his time between a competing DAC to influence most of the delegates into a merger to create a capital infusion to help pay for development costs or his salary. So it looks like 2.5 billion will be the new number. I wonder how long that will remain true?

Good luck, raising the 21 million cap within bitcoin sir.

Just tell me, if not the Bitcoin eco-system, who is paying for miner profit, pool fee, asic hardware cost/profit, electricity? are these money not leaving the eco-system? I'm pretty sure they are sitting in the bank accounts of the above, and not benefiting the eco-system.

and Yes, I am saying these money that are used to pay the above, will be instead used for the benefit of the Bitcoin eco-system.

Miners are obviously paying for the costs you mention, but we do not know if they would spend the same amount on buying coins (or whatever else may benefit the eco-system) if Bitcoin was POS. Surely this number is not 100%, correct? I would imagine that not all miners care about Bitcoin, but some are solely interested in dollar profit.

The bitshares merger is overwhelmingly approved by users and delegates. When was the last time Bitcoin development direction were put up for a vote by all users?

Sounds like you are describing Bitshares DPOS ... nice experiment but unfortunately any newcomers will feel the system setup is wildly unfair against them.

Yes, you are proving my point on how one person can quickly influence all the delegates within DPoS.

Your suggestions seem to be well intentioned but clearly show you are unfamiliar with developing open source software. If you try and mandate developers with majority voting you will simply scare them away and they will just work on other projects. Developers either are being paid to develop features by companies or donate their time because they enjoy supporting the ecosystem. Open source software is mainly based upon meritocracy not by majority opinion. If you feel strongly about implementing a certain feature than contribute code yourself , request a pull on github, or pay a developer to do so for you. Their are multiple stacks or implementations of bitcoin that interacts with the blockchain as well. You are encouraged to contribute to those if you don't agree with the direction the Bitcoin core developers are taking bitcoin. In fact, many of the Bitcoin core developers would welcome more development in various other implementations or stacks.

Open source development isn't about democracy, but more closely related to a form of anarchistic meritocracy.

The bitshares merger is overwhelmingly approved by users and delegates. When was the last time Bitcoin development direction were put up for a vote by all users? was the blocksize hardfork put up for a vote by all Bitcoin users?

do you think the Bitcoin cap can't be raised if there's a need for it and users overwhelmingly approve? How is this even related to PoW vs PoS at all? in both system, the cap CAN be raised period

I don't see how Bitshares is unfair against newcomers, if anything, Bitcoin is currently wildly unfair against newcomers, there's a gigantic difference in buy price between early adopters and new comers. There goes your "fair" PoW distribution.

One man's trash is another man's treasure, I sold my stake of Bitshares every time there's a rule change (PoW to PoS, invention of PTS/AGS, proposed merge /dilution), which reflect the trust and confidence I have in the system.

I am not predicting the failure of Bitshares, I just don't feel like playing a game that rules constantly change.  

It's SHA256D.

Ohh, come one. It is well known that PoW provides a good mechanism for distribution. Even Daniel created protoshares to take advantage of this fact. Lets be a bit more honest here. You are right to correct some misstatements made by Bitcoin PoW proponents but you don't need to stretch the truth in the opposite direction to get your point across.

do you think the Bitcoin cap can't be raised if there's a need for it and users overwhelmingly approve? How is this even related to PoW vs PoS at all? in both system, the cap CAN be raised period

Don't kid yourself, Bitcoin development is very much centralized, the users will accept whatever client distributed by Gavin Andressen, just like they will accept the upcoming block size hard fork, without realizing there are better solutions available to solve the problem.

Within Bitcoin PoW the delegates are also in control of the protocol itself. the power dynamics are split between the miners, asic manufactures, users and nodes, and developers. Additionally, Bitcoin has a very large network effect where a critical mass has been created to introduce many competing interests and involvement unlike with many alts.

Within DPoS you have a mixture of the users/stakeholders and delegates/developers controlling the power with a very dangerous arrangement of only a few developers controlling most of the direction compared to Bitcoin.

Would people stop saying that somehow PoW imputes value into the coin because of it's costs? That reflects about 12th century economic thinking and is embarrassing to read.

http://en.wikipedia.org/wiki/Labor_theory_of_value

This is  only my personal opinion , the  actual value/price of bitcoin is correlated to the PoW system ;) That's sure .

Would people stop saying that somehow PoW imputes value into the coin because of it's costs? That reflects about 12th century economic thinking and is embarrassing to read.

http://en.wikipedia.org/wiki/Labor_theory_of_value

Don't kid yourself, the users, since they are overwhelmingly in favor of the change, will accept the cap raise. The miners will do nothing and also accept the cap raise, because the miners will usually do whatever the users are in favor of. Also, since it's actually beneficial to the miners to raise the cap, why would they oppose it. So there, your Bitcoin cap raise, done!

So you are suggesting the users are incentivized to lower the value of their savings and damage the credibility of one of the foundational principles of bitcoin that is considered a Prohibited change (Requiring unanimous consent where even 1 user objection will block the switch) ?
https://en.bitcoin.it/wiki/Prohibited_changes#Require_unanimous_consent

Lets lay the cards out on the table.

Why are many of the delegates within Bitshares motivated to merge but not all the users?
How would this change be much more difficult to accomplish with Bitcoin than Bitshares?

Btw, bitshare users also overwhelmingly approved the merge, why are you saying they aren't? there's a vote thread in bitshares forum, go read it.

You were saying PoS system can change the cap, PoW system can't. I'm just proving the PoW system can also change the cap, just as easily.

Not only that, the miner shills are insulting everyone else, by claiming their useless PoW mining is the sole reason Bitcoin has any value.

Where did I make this claim? I am agreeing with you that a majority approve and a minority disapprove. That is the problem. Democracy is the first 51% attack! The minority investors who disagree are being fleeced.



Assertion, with no evidence supporting. There are differences to Bitcoin and Bitshares that make changing the 21 million dollar limit far less likely, if not impossible. Can you think of them?

A huge part of the utility of Bitcoin is that it attains Distributed Consensus among hostile parties. This Distributed Consensus has only been successfully achieved with the use of Proof of Work. All Proof of Stake coins to date must be closely monitored and maintained by it's developers or they fall apart.

Without Proof of Work, and therefore Distributed Consensus, Bitcoin has no feature that makes it competitive among existing currencies.

A huge part of Bitcoin's success is thanks to PoW.

OP can't see the forest for the trees.

OP should fork Bitcoin to proof-of-whatever and let it compete with Bitcoin. Someone, for the love of all things holy, please fork Bitcoin to proof-of-whatever and release it so we can put these endless debates to bed.

Nope, just the contrary, PoW systems are proven to be easily attacked. PoS systems are proven to be very difficult to attack, in fact zero PoS system has been successfully 51% attacked so far.

A huge part of Bitcoin's success is thanks to PoW.

OP can't see the forest for the trees.

OP should fork Bitcoin to proof-of-whatever and let it compete with Bitcoin. Someone, for the love of all things holy, please fork Bitcoin to proof-of-whatever and release it so we can put these endless debates to bed.

I could write a program that could never be successfully attacked. In fact this is done all the time for banking institutions. If it fails you just roll it back and reimburse any trouble it caused. Have you had any problems with your USD bank account being hacked? I haven't.

What have we proven exactly? That you don't even need PoS or PoW to have an excellent cryptocurrency?  ::)

cryptocurrency can't use the bank model for distributed consensus. But both PoW and PoS can be used for consensus, with just one difference, Bitcoin PoW spends $500 million USD per year to do it, and PoS won't.

+1. Couldn't be said better.

OP has made it clear that he's a big fan of DPoS, BTSX. The competition is already there, just let the free market decide which one is better.

But for you is it a real problem these 500 million usd /year ?

cryptocurrency can't use the bank model for distributed consensus. But both PoW and PoS can be used for consensus, with just one difference, Bitcoin PoW spends $500 million USD per year to do it, and PoS won't.

Well, I am Bitcoin stakeholder, and I disagree with the blocksize hard fork. Am I being fleeced? Don't be ridiculous.

This would be news to a lot of people. Could you explain how PoS has dealt with the Nothing-at-Stake problem?

This would be news to a lot of people. Could you explain how PoS has dealt with the Nothing-at-Stake problem?

Way to sidestep the discussion and not address the questions honestly. What does the blocksize hardfork being proposal have anything to do with direct dilution for capital infusion to pay the salaries of developers?

They ignore it and claim it doesn't exist.

Of course it's a problem, I'm being charged 10% tax on my Bitcoin holding, for something that is easily replaceable and useless.

Why would I address something you made up? there is no dilution to pay the salaries of developers, it's a merger of multiple eco-systems into one. Maybe you could provide me a non-existent link to back up your claim, like the last time you made up something from your imagination? I know you have a very vivid imagination. Do you need me to post our PMs to show your non-existent claims?

It is interesting to study Bitshares as a DPoS test case example where a social 51% attack is stealing funds from the minority dissenters:

https://bitsharestalk.org/index.php?topic=10214.0

Reasons delegates mostly approve the merger:

1) Conflict between BTSX and VOTE. ( One developer was able to leverage his time creating a competing DAC betraying what investors paid him to focus on. This is than used to motivate stakeholders and other delegates into accepting a dilution in hopes of not introducing competition. )

2) Complexity. Invictus created a clusterfuck with multiple tokens PTS/AGS/BTSX/ and multiple DACs. The merger is a hope to clean up this confusion

3) Need for capital infusion.  Invictus and developers are blowing through their IPO cash and will soon run out. Additionally, they realize they are so far behind and competition is so fierce they need a ton of capital to not get squashed with a big marketing campaign

Please do yourself a favor and let your actions match your convictions. Sell us your bitcoins and invest in Bitshares completely since you have so much faith in DPoS and so little trust in PoW. Why don't you invest in BTSX now before the big marketing push that is coming in a couple months! If you are smart you can even take those profits and re-buy into BTC right before the halfing to profit again and than sell those profits for BTSX.

The fact that you don't sell your bitcoins tells the whole story.

You must be so busy typing out propaganda that you missed the fact that I already did provide the evidence:

Please do yourself a favor and let your actions match your convictions. Sell us your bitcoins and invest in Bitshares completely since you have so much faith in DPoS and so little trust in PoW. Why don't you invest in BTSX now before the big marketing push that is coming in a couple months! If you are smart you can even take those profits and re-buy into BTC right before the halfing to profit again and than sell those profits for BTSX.

The fact that you don't sell your bitcoins tells the whole story.

We could both make unsubstantiated claims all day long. Just fork the code and let them compete. I fully support forking Bitcoin to PoX.

Why would I do that? if I have a leech sucking my blood on my leg, do I cut off my leg? or do I kill/remove the leech from my leg? I guess by your logic, you should cut off your leg to remove a leech.

Why would I do that? if I have a leech sucking my blood on my leg, do I cut off my leg? or do I kill/remove the leech from my leg? I guess by your logic, you should cut off your leg to remove a leech.

Can you allowe me to say you one thing ? If you don't like the PoW  system -btc :: you can always leave ( or you can try to contact one  of the btc devs ;) ).

But then, even if you accept that PoW is necessary, the OP's larger point is still very true: BTC is an unstable system, due to high mining costs, that requires a constant influx of new money or equivalently, fees to be paid by existing users, in order to keep the system going.  It's an ongoing tax on users.  As such, Bitcoin is unstable and not necessarily an improvement over PayPal (except for the anonymity, which IMO is going away within the next five to ten years).  I see in the end Bitcoin becoming like PayPal, nothing special.

Poor Analogy. The "Leech" is the PoW wasteful mining. I am suggesting you remove the leech and take your beautiful leg and cloth it with some shiny new DPoS Bitcoin 2.0 goodness.

Or did you buy all your coins above 400 and need to wait as not to harm your investments?

What are you proposing if it isn't a fork?

What evidence, you posted something that is similarly made up, just like your own. I want to see something posted by the dev team, saying there will be a portion extra paid to the developers within the merger proposal.

You are in serious denial buddy. I gave you a post created by delegates and stickied by the head moderators.

this is another example where I am privy to more information about Bitshares than you. If you don't trust that post than simply read these posts from    bytemaster


https://bitsharestalk.org/index.php?action=profile;area=showposts;u=5


Don't you trust that source at least?

Ok, try another analogy then, if you don't like Obama as President, do you try to vote him out? or do you pack up your family, quit your job and permanently move out of the US?

Official? Call it whatever you want, you can't force me to installed the forked software. Thus, they will compete. I don't particularly care who approves and distributes it!

I did the former actually and moved out of the US, as anyone with a little historical background would soon realize that voting for the lesser of two evils is still voting for evil.

Yes, but the part you quoted, is a speculation, therefore it's made up, just like your speculation. If you going to convince anyone, you'll need to post something written by the dev team.

Sure, no one can force you, but then you will lose value on all your Bitcoin. Any sane user will choose the client and network distributed by Gavin Andressen, as long as he's the leader developer for Bitcoin.

Good for you, but the hundreds of millions of people that voted against Obama, certainly didn't move out of the US, therefore the majority of the people agree with my logic instead of yours.

kokojie, you have a few decent points, but I agree with inBitweTrust you have overplayed your hand here.

First, the main thing working against the price right now is the monetary supply inflation rate.  It is currently between 10% and 15% per year right now depending on how many coins, if any, are assumed to be lost.  And regardless of the total available supply, we know there are at least 1.3 million coins set to be issues per year right now.  At $400 per coin that is over $500 million in new wealth that would have to come in to buy up all those coins.

So what if was some sort of proof of state, and those 1.3 million coins went to existing holders?  You have a good point that us existing holders wouldn’t be under the same finical pressure to sell coins as the miners, as ostensibly we wouldn’t have such large expenses to cover.  But make no mistake: many of those new coins would still hit the market, and there would still be massive downward price pressure due to 1.3 million new coins hitting the market.

Proof of work is ingenious.  It doesn’t solve all problems though, and I think the community would be wise to always consider adapting the bitcoin security system if better solutions are proven.  Economic efficiency will be part of the security calculation, and I would not be at all surprised to see a PoS / PoW hybrid system in the future.

You keep saying PoW mining transfers value out of the ecosystem.  I don’t think that is the appropriate way to view it.  I see it as more helpful to look at all of the mining hardware as an investment the community is making in its own security system.  How much do we invest in such a system?  The current incentives suggest the investment be equal to the expected value of all the un-mined coins + expected transaction fees.  I will agree that this incentive could be leading us astray, that we could be over-investing in ASIC hardware and electricity costs.  So the question is, what should we be investing in instead?  Perhaps more code development?  More legal work?  More bitcoin education?  What if we, as a community, could figure out a way to steer 20% of mining revenues towards other goals?  That would be $100,000,000 per year at current prices.  It wouldn’t appreciably change the investment in hash power (okay, it would reduce it by 20%), but we would be expanding by 30-fold the amount invested in software development and etc.

I think the way this would be most likely to happen would be someone presenting a plan to all the mining pools, and getting them all to agree to turn over some percentage of mined coins to some representative body that would transparently reinvest the coins into aspects of the ecosystem other than hashing data centers.  The miners could like this proposal because they could realize that through collective effort, and “giving up” a fraction of their proceeds, they could actually boost the value of bitcoin by far more in the long run.

And you wouldn’t actually need all miners to go along with the plan, just 70% - 80% of the hash power.  The remaining ones could be forced to comply :).  Miners getting together and planning:  you can call it a cartel, collusion, or cooperating.  It really just depends on your perspective.

Bitcoin talk threads that turn into rants are not going to solve the problem though, and there is just no way that proof-of-work mining is going to be abandoned outright or suddenly in any way.  Nor should it be.  It has gotten us this far already, so there is certainly something to it.  What can help is if someone wants to put in the work of building consensus amongst the mining pools to diverting a small fraction of new coins to other bitcoin projects.

Think multi-sig.  The whole endeavor could be done in a transparent, cryptographically audible fashion.

Daniel isn't part of the dev team? Are you even aware of what the merger entails?

Good post, but you need to re-think inflation/coin supply's role in the whole thing. For example, when coin supply run out, zero. Do you think PoW mining would have no expense? of course not, it still needs to be very expensive, in order to secure the network (so that it's not cheap/easy to attack Bitcoin network). Therefore, coin supply really has no influence on the PoW expense. In fact, after the first halving, the PoW expense grew significantly more expensive than before.

As I have explained previously, PoW expense is a function of Bitcoin marketcap, it's roughly maintained at 10%. It has nothing to do with coin supply or inflation.

It actually has everything to do with inflation. An ongoing discussion is happening right now where core developers are trying to figure out how to increase block sizes accurately without destroying all the hash-power in the network.

Mining is literally paid for through inflation, and eventually it will need to be paid for through transaction fees. Keeping fees high enough to reasonably cover hashing expenses is actually a very difficult problem to solve.

So you seem to be very misinformed about these costs, where they come from, what they achieve, and what's going to happen to them in the future.

Only one thing is certain, PoW mining expense will always exist, and it is perpetual.

So? I'd rather pay that cost rather than have a central authority. Your mileage may vary.

Where do you see a pay to the dev team in the merger? point it out

I already gave you the links with the data. Your post itself has the answer within as well of where the capital infusion is coming from.

https://bitsharestalk.org/index.php?topic=10057.0
https://bitsharestalk.org/index.php?topic=10118.0

Do you need everything spoonfed to you?

Of course it's a problem, I'm being charged 10% tax on my Bitcoin holding, for something that is easily replaceable and useless.

Yes do explain how does VOTE have anything to do with paying extra to the dev team. Stop avoiding answering the question.

We are still all early adopters. The selling pressure ensures that new users can still buy Bitcoins at reasonable prices.

Bitcoin works at any price. If Bitcoin was $5000/coin, I am not sure the network would handle the resulting transaction volume. (Which is why we are looking at a hard-fork to raise the maximum block size.)

PoW solves the initial coin distribution problem. In PoS, banks with unlimited money can easily take over the currency. With PoW, banks can not simply inflate the price in order to buy up all the currency. If they do that, miners would scramble to generate new coins with anything they can find.

https://bitsharestalk.org/index.php?topic=10057.0
https://bitsharestalk.org/index.php?topic=10118.0

So BTSX will increase from under 2 billion to ~2.5 billion with vote taking 3% of this new "redistribution"

 As explained in the summary that delegates and the global moderator stickied:

https://bitsharestalk.org/index.php?topic=10214.0

You'll have to explain what you mean by central authority. PoS and PoW are just two methods to process transactions, PoS is actually much more distributed than PoW, since there can be no pools.

Because PoS cannot achieve distributed consensus, it will always be necessary for some central authorities to step in from time to time to decide how the blockchain ought to have behaved.

If you don't want distributed consensus, then why bother with all this nonsense? Go trade gold/silver, or use fiat.

Sure, Bitcoin developers have clout to make changes, but the last time they needed to actually fix a hard fork was because a mistake of the developers last year. Otherwise there's no intrinsic reason why a hard fork should happen, like there is with PoS.

I wonder how long the NXT boat will float once the developers walk away? Or any other PoS coin.

You keep posting links, but not answering question, stop posting links, just answer the question, how is this an extra pay to the dev team?? Why shouldn't vote take 3%?

I am criticized for explaining it and than criticized for posting the evidence, huh?
I will repeat, please read my explanations this time:
 
https://bitsharestalk.org/index.php?topic=10214.0

Reasons delegates mostly approve the merger:

1) Conflict between BTSX and VOTE. ( One developer was able to leverage his time creating a competing DAC betraying what investors paid him to focus on. This is than used to motivate stakeholders and other delegates into accepting a dilution in hopes of not introducing competition. )

2) Complexity. Invictus created a clusterfuck with multiple tokens PTS/AGS/BTSX/ and multiple DACs. The merger is a hope to clean up this confusion

3) Need for capital infusion.  Invictus and developers are blowing through their IPO cash and will soon run out. Additionally, they realize they are so far behind and competition is so fierce they need a ton of capital to not get squashed with a big marketing campaign
-----------------------------------------------------------------------
Or in other words:
VOTE is a new DAC that Daniel created that would otherwise compete with BTSX. Rather than VOTE compete as an IPO against other DAC's this porposal is being pushed through and VOTE is automatically taking in 3% of 2.5 billion. If you read through the threads on the bitshares forum you will see that that this redistribution will negatively effect  many people but overall most are in favor because of the current clusterfuck and they don't want to compete against their key developer and are desperate for money for a big marketing push.

Bitcoin checkpointing does not have anything to do with avoiding hard forks.

Whatever they are used for, it's manually hardcoded by developers, YES? case closed, thank you

Gold also works the same at any price, doesn't mean if as a gold holder, I like being charged 10% annual tax perpetually, I would definitely also try to remove that tax if it existed on gold.

In PoS, sure banks with money can buy up the currency (and enriching all the previous stakeholders in the process). I don't see how they can't do that with PoW system, they could do it much cheaper and easier, by buying up existing miners. I don't really see your argument here.

Governments have noticed it, powerful people have noticed it, *banks* have noticed it. Right now we are in a perfect storm of the aftermath of a huge overshoot on the purchase of mining equipment - this is *fact* as evidence by the hash rate/difficulty.

This will take time to unravel. It surely will though, as irrational as people are, they will eventually stop flushing money down the mining drain. That money will turn towards the supply. As it becomes obvious the bottom is in, that is when people will start the next run up. Only this time it isn't going to be just neckbeards, redditors, hipsters and anonymous, it will be institutions. That have pretty much unlimited buying power by virtue of them essentially being able to print their own money, because they are TBTF and will just keep bankrolling each other whilst nuzzling the teat of QE washing away their toxic assets.

So the move will be unprecedented.

Unprecedented to you and I and all the other peons around here. To those behind the move, they just spent a few hundred millions to acquire assets they can now assign book values of billions. Selling into this only makes you weaker in the end game, and selling is what they want you to do because those dollars you are acquiring get more worthless the more bitcoin they have. Who here though has the constitution to hold as they see the price double repeatedly. We are still at the end of the day all hardwired for fiat. As much as anyone pretends they are not.

So the number I have picked is probably not that accurate. The magnitude, and the colossal unbeleivableness of it, is what is important. That's the black swan that nobody sees coming. That 90% of the people in the world will miss 90% of the bitcoin.

Um no. The point is specifically about Distributed Consensus, which has to do with hard forks. Because of the Nothing-at-Stake problem, PoS always runs the risk of hard forking. I'm not particularly comfortable with that.

I still don't understand what are you saying, are you saying VOTE's 3% is entirely paid to the dev team? because that's certainly not the case. You'll need to show me where are the "extra pay" to dev team coming from. Not just regurgitating things that I already know.

The merger is very clear,
80% existing BTSX
7% PTS
7% AGS
3% DNS
3% VOTE

Bitcoin has had no accidental hardfork? don't be ridiculous. As I explained before, NAS is fictional. Actually, when I think about it, I haven't seen any accidental hardfork in a PoS system. It must be due to the non-existent NAS problem. lol

The information is already available for you to figure out. You are very frustrating to talk to because you are resisting every step of the way and I have to keep re-explaining it and proving more and more evidence. I don't think you are stupid but certainly have some sort of psychological block on negative information concerning Bitshares and thus have an inability to think critically about this topic.

I will help you a bit more:
Take BTSX,PTS,AGS, DNS current market caps /divided by the amount of shares and log that into account.

Investors should than determine the current value of their assets before the merger.

Now take the total market cap of BTSX,PTS,AGS, DNS and divide it by 2.5 billion to determine the new value of all these tokens post merger. Using your own values :


Determine the current valuation of everones stake.

The bottom line is the developers and invictus has designed the ratio distribution in relation to inflating the monetary supply where their current holdings will increase in value and others will lose value.

You don't need me to do the basic math for you too, do you?

That's ridiculous. You are using some small inefficiencies in the valuation of the merger, to manufacture a rumor that the dev team is somehow "paying extra" to themselves? well first you'll have to prove that what are their "current holdings"? it's BTSX or AGS or PTS or what? the dev team have a stake in all of them.

Also the fact that the dev team has offered to pay DNS holders extra, out of dev funds, has basically proved your theory is wrong. Why would they do that if their aim is to pay themselves?

You keep saying PoW mining transfers value out of the ecosystem.  I don’t think that is the appropriate way to view it.  I see it as more helpful to look at all of the mining hardware as an investment the community is making in its own security system.  How much do we invest in such a system?  The current incentives suggest the investment be equal to the expected value of all the un-mined coins + expected transaction fees.  I will agree that this incentive could be leading us astray, that we could be over-investing in ASIC hardware and electricity costs.  So the question is, what should we be investing in instead?  Perhaps more code development?  More legal work?  More bitcoin education?  What if we, as a community, could figure out a way to steer 20% of mining revenues towards other goals?  That would be $100,000,000 per year at current prices.  It wouldn’t appreciably change the investment in hash power (okay, it would reduce it by 20%), but we would be expanding by 30-fold the amount invested in software development and etc.

I think the way this would be most likely to happen would be someone presenting a plan to all the mining pools, and getting them all to agree to turn over some percentage of mined coins to some representative body that would transparently reinvest the coins into aspects of the ecosystem other than hashing data centers.  The miners could like this proposal because they could realize that through collective effort, and “giving up” a fraction of their proceeds, they could actually boost the value of bitcoin by far more in the long run.

You understand that the VOTE DAC doesn't exist pre merger and that development by Daniel is being paid for by 3% of 2.5 Billion shares of the total market cap of BTSX,PTS,AGS, DNS. So yes, the DNS holders can get a speck paid back out of the large capital infusion.

Its not as if VOTE has its own IPO where people can buy into it with BTC, it is automatically getting a share distribution.

What is so complicated about this?

You don't have to go by my word, why don't you ask the question to other delegates and moderators within this thread if you assume that I and they are wrong:

https://bitsharestalk.org/index.php?topic=10214.0

The proposed solution:

To resolve this conflict, Bytemaster proposed merging BTSX, PTS, and AGS back together into a new entity called Bitshares (BTS).  The new entity would be able to create new shares to be sold to new investors for a capital infusion, by shareholder vote, for purposes of funding the marketing campaign. Proposal was made in this thread:
https://bitsharestalk.org/index.php?topic=10148.msg132495#msg132495
This is the thread you will want to read closely and think about the implications of such as written by Daniel himself.

You have so much faith in Bitshares that you don't even trust the hard facts explained by developers, moderators , and the creator in their very own forum.

There is no need to 'save' bitcoin from those evil PoW taxing miners. If you don't like it, take your money and your time somewhere else.

The reason why they don't do it is because secretly or subconsciously they believe in Bitcoin long term and merely want to simultaneously pump their alt they invested into and/or get Bitcoin to mutate into behaving like their alt so they win either way. They also may fear that they can make a quick buck on their early IPO investment with some initial mommentum but ultimately it is a very risky bet because of Bitcoins network effect and thus are keeping most or a portion of holdings in bitcoin.

Their fears are correct, and ultimately it is likely they will be crushed by Bitcoin.

It appears all you know about Bitcoin is from staying too much in the altcoin section too long. You definitely do not know the economics, finance, legal issues and mining facts involved with Bitcoin. Posts like yours reminds us all how far we have made it in this Revolution. You should really learn some basic facts about what's really going on here and you may finally get it.

Since this is probably really all about altcoins, here's the speech:(2nd times a charm)

Bitcoin itself had in the past been vulnerable to very similar things that you said happened and now see happen with altcoins these days, but fortunately THAT WINDOW IS NOW CLOSED.

Part of the definition of the bitcoin protocol includes the checking of the proof of work put into various block chains, and then choosing the one with the most work. Bitcoin has more proof-of-work in its blockchain than any other competing cryptocurrency, and so by definition it must be the one chosen, and all others ignored.

Altcoins are all very similar to Bitcoin: there is a block chain to store transactions, a consensus mechanism to build the block chain, and a cryptographic protocol to register transactions. Some prominent examples are PPCoin, Primecoin, Litecoin, and Freicoin.

Some altcoins incorporate interesting new ideas, but there is an essential feature of Bitcoin which they all lack. It is not a matter of its technology, but rather of history and community. Quite simply, a medium of exchange that is more widely accepted on the market is more useful than one which is not. This is known as the network effect. An initial imbalance between two nearly equal media of exchange will benefit whichever is more widely accepted until a single one overwhelms the rest. There is no limit to this effect: ultimately one would always expect a single currency to overcome all its competitors.

Because it was started earlier and has had a greater opportunity to grow and attract users, Bitcoin has a market larger by a wide margin than all the markets of all the altcoins put together, and this makes it vastly more useful as a currency. To defeat Bitcoin, an altcoin would require not just superior technology, but such vastly superior technology as to be an advance over Bitcoin comparable to the advance Bitcoin represents over fiat currency. Furthermore, a truly great innovation would much better serve people by being incorporated into future versions of Bitcoin rather than by requiring them to switch to something else. Indeed, the people who have proposed new ideas that are actually good, such as Zerocoin and mini-blockchain, did not develop their own currencies around them, but have simply described their usefulness as features.

The Bitcoin community is not just overwhelmingly larger but of overwhelmingly better quality as well. Bitcoin is surrounded by real entrepreneurs working hard to create new and useful services for Bitcoin. Altcoins are surrounded by loud-mouthed pretenders with irrational hopes of duplicating Nakamoto's success. This does not mean that there is anything intrinsically wrong with altcoins: the problem is simply that once Bitcoin exists, then there is no additional value, from a monetary standpoint, of creating knock-offs. Can anyone really expect to create something of value by rereleasing Bitcoin under a new name and with a few tiny changes to its source code? What makes Bitcoin great cannot easily be duplicated. Thus, while the Bitcoin community matures and grows as more and more entrepreneurs are attracted to its potential, the altcoin communities can only whine for attention.

For a new currency to take bitcoins place it would have to represent a significant improvement over bitcoin, or bitcoin would have to first FAIL before this could happen. So the question is not will bitcoin become obsolete, but will (your proposed new coin) overtake bitcoin? I don’t see any reason to believe that Altcoins represents a fundamental new innovation with meaningful improved functionality.

In physics, we learn about the concept of entropy. Entropy is often described as “chaos”, “randomness”, or “disorder”. To simplify quantum mechanics as much as possible, imagine a basket with a line drawn down the middle, and throw some balls into the basket. If all the balls are on one side of the line, that is an ordered state and has low entropy. If the balls are spread across both sides then it has higher entropy.

Now, let us take the concept of entropy and apply it to cryptocurrencies. We can imagine each cryptocurrency created has a possibility that some value can be placed within it. If all possible value is placed in bitcoin, and none in litecoin or altcoin, then this is a low entropy state. The laws of thermodynamics dictate that entropy in a system should always increase. So we should expect the total cryptocurrency value to be spread among all the possible altcoins.

Going back to our example of balls in a basket, one can easily get all the balls onto one side of the line simply by tilting the basket. This represents the concept of enthalpy, or energy within the system. Just as gravity pulls the balls onto one side of the basket, enthalpy can pull things into a higher entropic state. The most proof-of-work has been put into bitcoin, and so it takes higher energy to put any value into an altcoin.

From an entropy standpoint, there will always be alternate currencies, and the value assigned to them will always be greater than zero. But from an enthalpy standpoint, bitcoin is favored over altcoins, so the total value of each altcoin will remain very low compared to bitcoins.

No, I don't trust your vivid imagination and manufactured rumors. You are dead wrong that the 3% VOTE is entirely paid to the dev team, I hold a stake in VOTE snapshot, I'd be pretty unhappy if I don't get that stake as part of the 3%. I'm not sure how you arrived at the conclusion that 3% VOTE is entirely paid to the dev team.

I'm providing the proof with all the links. If you don't trust me and think that other delegates, Daniel, and moderators are lying in the links I provided just post a question and ask them directly or are you too scared to get clarification on what is clearly written.

You just linked entire threads, you expecting me to find proof for you in those thread, there's nothing specifically mentioning 3% VOTE is all paid to the dev team. If this is true, then link to the post that specifically states that this is true, and I will definitely be very unhappy and post my disagreement. I see no such post by the dev team so far, so please do link that post for me.

Simple answer to author of this topic. Coins mined ale halved every 5 (?) years. So price must go up simply because of that. Secondly, in 2021 which is not far from now, mining new coins will stop. With your theory price will skyrocket then.
Simple as that.

I see no such post by the dev team so far, so please do link that post for me.

1) We don't want to compete with ourselves and divide our network effect.
5) I don't want to have divided loyalties... I cannot serve two masters.

4) Add stake holder approved dilution without limit to BitShares X.

7) Our team will focus on no other DACs other than BitShares in general and work to make it the most robust and *FLEXIBLE* DAC out there.

Who do you think is going to get paid for these marketing and development projects in the future as well?

If it was just a merger, why do the ratios get adjusted and the quantity of tokens change? Why couldn't  consolidation happen keeping 2 billion and take a snapshot of everyone's ratio?

All you have to do is read the Initial post that I already linked to in the thread.You have great fears about reading documentation from the bitshares forum for some odd reason. Here I will copy it over for you:

There are many problems we need to resolve as a community:

1) We don't want to compete with ourselves and divide our network effect.
2) We don't want to confuse users with a million brands.
3) We want to have 1 BitUSD for everything rather than many different BitUSDs
4) We need to recognize those who have helped fund development after Feb 28th so they don't compete with us.
5) I don't want to have divided loyalties... I cannot serve two masters.
6) We need to provide for long term funding and growth.
7) We need to resolve the consensus problem once and for all.

As a community effort we are stronger if we can agree on changes using proof of stake and we should agree once and for all that the majority will rule here.   Those that want a stable money will use BitGold or BitSilver because those are not subject to change, only supply and demand.    If you cannot trust the community of stakeholders to act wisely then create a rigid system with no rule changes and attempt to compete.

My Proposal:

1) Drop all other BitShares brands.... rename BitShares X to just BitShares
2) End PTS...  BitShares will evolve to incorporate every possible feature that stakeholders vote on.
3) If there is a clone then it should start out with stakeholders it thinks are best... because BitShares holders are uniting.
4) Add stake holder approved dilution without limit to BitShares X.
5) Bring in all AGS holders and given them a stake in BitShares X that cannot be moved for 6 months... the ratio that this stake should be given should be equal to PTS market cap... so $5 million or 10% dilution of BTSX allocated to these individuals.    This is effectively BTSX buying out our competition.
6) Bring in one last PTS snapshot also valued at $5 million for another 10% dilution of BTSX... 6 months until funds could be spent... buy out this competition and end PTS.
7) Our team will focus on no other DACs other than BitShares in general and work to make it the most robust and *FLEXIBLE* DAC out there.

There will still be other DACs based upon our toolkit  (Music, Gaming, DNS, etc) but those clones will not be dividing my loyalty because they have their own teams and are already known and operating independently of us.  Those who have joined those DACs can attempt to grow them how they see fit and BitShares will be competing with them where we can.

Our goal will be to scale BitShares to handle the transaction volume and users... to solve the scaling problem while still remaining decentralized and allowing 0 barriers to entry for competition except our network effect.

At the risk of calling BitShares one DAC to rule them all... I think we can worry about that after we have achieved critical mass, until then someone else may come along and build one DAC to rule them all and we don't want them to get there if we can get there first.

Why do you fear posting a question of clarification on your own forum? Do you fear the answer will back up what I'm saying?


This is pure gold! It was Daniel that created VOTE to compete with BTSX when investors paid him to maintain BTSX! He is literally talking about competing with himself!



Mechanism to keep diluting supply continuously!


So here he is reassuring investors that he won't pull this stunt again by creating a competing DAC.

Well this is ridiculous. It's not like we can just push a hardfork tomorrow and force everyone to adopt it. Removing PoW mining right now is virtually impossible. Attempting to remove it in a year or two will be impossible!
This is what coin halving is all about. Why are you so impatient? Do we need Year 1 5000$, year 2 10 000$, year 3 100 000$??

But I don't like you spreading rumors such as all 3% VOTE going to the dev team, this is simply not true. Or else you would have provided me with a specific proof post by now, I have asked you about 10 times already.

That is not how it works, and not how I explained it. 3% VOTE is the share distribution everyone gets upon the merger. The reason why VOTE is critical is because it is a important mechanism to incentive and coerce existing stakeholders into making such changes. Funds for the dev team are will be supported by votes with this new mechanism which will allow for more crowdfunding means and ways to further dilute supply in order to maintain payroll for dev and marketing.

How many different ways do I have to explain this very simple concept?

Getting back to the actual topic, why do you think PoW would prevent bitcoin from reaching $5000?

From what I understand, you seem to think that a currency is like a big pile of money, and the overhead drains away all the money until the currency isn't worth anything anymore. Is that about right?

Then your claim is wrong, there is no extra pay to the developer in the merger itself, YES?

I am well aware that, with community approval, VOTE can be used to pay the dev team for ongoing development, and I already previously stated I support it:
"I have no problem with sensible ongoing funding to the dev team, Bitcoin is paying $500 million each year to miners/pools/hardware vendor/electric company. Why would I object funding the Bitshare dev team? I could tell you right now, it's costs way less than $500 million for sure."

1) We don't want to compete with ourselves and divide our network effect.
5) I don't want to have divided loyalties... I cannot serve two masters.
7) Our team will focus on no other DACs other than BitShares in general and work to make it the most robust and *FLEXIBLE* DAC out there.

Your "big pile of money" analogy is actually pretty accurate. PoW mining drains away $500 million of that money each year, therefore $500 million new money must be added, in order to just maintain the size of the "pile" (Bitcoin price).

For some odd reason you cannot grasp the concept that VOTE is not only the mechanism to insure the devs get paid but also the leverage used to insure that the merger goes through. As daniel said himself:


If Vote was not implemented to insure dilution to pay for future development costs it would compete against BTSX as a separate DAC.

The merger itself is more about marketing and development funding through the existing stakeholder userbase and far less about confusion.

Now that you have conceded to a longterm and constant payout to support Bitshares dev and marketing how do you compare the costs of mining to your costs of constant dilution to support dev and marketing?

Your "big pile of money" analogy is actually pretty accurate. PoW mining drains away $500 million of that money each year, therefore $500 million new money must be added, in order to just maintain the size of the "pile" (Bitcoin price).

Also even when large amount of new money is added, PoW mining grows with it, like I explained, PoW expense is a function of Bitcoin marketcap. When Bitcoin price rises, PoW expense will grow and drag it down.

PoS is fully capable of processing transactions for nearly no cost.

So basically, your entire point is since Bitcoin is the biggest currently, therefore Bitcoin can do no wrong, and what's existing must be good. Or Bitcoin holders can just wait until a "vastly superior" altcoin come along to obliterate them.

That's your choice, but as a Bitcoin holder myself, I prefer to adopt any proven superior system, instead of waiting for them to obliterate the value of my Bitcoin.

PoW mining is transferring value to outside of the eco-system, with ZERO benefit to the eco-system. PoS is fully capable of processing transactions for nearly no cost.

Paying dev team to support development, is directly benefiting the eco-system. Also it's a rather static cost, it doesn't grow as a function of the marketcap, like PoW mining expense does.

There's your comparison.

Your "big pile of money" analogy is actually pretty accurate. PoW mining drains away $500 million of that money each year, therefore $500 million new money must be added, in order to just maintain the size of the "pile" (Bitcoin price).

Also even when large amount of new money is added, PoW mining grows with it, like I explained, PoW expense is a function of Bitcoin marketcap. When Bitcoin price rises, PoW expense will grow and drag it down.

PoW mining is transferring value to outside of the eco-system, with ZERO benefit to the eco-system. PoS is fully capable of processing transactions for nearly no cost.

All Bitcoin holders are essentially charged a 10% tax per year, perpetually, by the PoW mining network. How can this be sustainable?

The free market will adjust as necessary.

PoW mining is transferring value to outside of the eco-system, with ZERO benefit to the eco-system. PoS is fully capable of processing transactions for nearly no cost.

Community voting to pay dev team to support development, is directly benefiting the eco-system. Also it's a rather static cost, it doesn't grow as a function of the marketcap, like PoW mining expense does.

There's your comparison.

+1

And.... kokojie... I don't see how you can possibly think the cost of mining will be 10% per year.  It will soon be 5% per year, then 2% etc. etc., as far as the block subsidy.  And as for fees... no one knows how that will play out.  Not you, not me, not anyone.

I kinda feel like I shouldn't even be posting in this thread.  I don't like to dignify trolling.

Halving does nothing to the PoW expense, I have explained the PoW expense is a function of Bitcoin marketcap.

After the 1st halving, the PoW expense actually increased significantly. Therefore, your theory is invalid.

I don't want any crazy Bitcoin price, but I legitimately think without PoW, we would be most likely close to $5000 per coin now. We have spent a lot of money on PoW in the past 5 years.

It does not reduce the expense?
You're saying it costs Bitcoin $500 million a year right now. If the block reward were to halve tomorrow.
It would not cost Bitcoin $250 million a year afterwards (to sustain price)?

No, you don't understand there are superior functioning alternatives available.

If Bitcoin switch to PoS system, all its rules and function will still be the same, just that it will no longer expend $500 million USD in value every year, to pay miners/pools/hardware vendors/electricity companies. All that money will stay in the Bitcoin eco-system, for the benefit of the eco-system.

The price of Bitcoin has to increase for the network to remain as strong as it is.  Otherwise, it's likely for it to become unprofitable after halving until the hashrates come down.

A PoS coin on the other hand costs nothing to attack, so anyone who wants to attack such a coin is able to do so without any cost/risk.

Somebody please attack NXT and finish off its 11-month run, I am sure it will be no more difficult that taking a morning crap.

You're so clueless and a parrot of myths, it's embarrassing. Somebody please attack NXT and finish off its 11-month run, I am sure it will be no more difficult that taking a morning crap.

I suppose you consider all Vitalik Buterin research mythological too, right?

Vitalik actually signed up on nxtforum.org a couple of months ago to learn how NXT solves the N@S issue (https://nxtforum.org/general-discussion/bounty-for-successful-nothing-at-stake-attack/msg60166/#msg60166) and found the brief desciption of the approach NXT takes "reasonable". Of course, he can't use someone else's idea and is working to implement his own.

So basically you use transactions-as-proof-of-stake. That sounds reasonable; it's as good as I can think of at this point, although it has the moderately-serious-but-not-fatal flaws that I described in my On Stake article. I eagerly await a full whitepaper description and open source code of your complete protocol so both myself and more formal academics can properly whack at the specifics.

So are you admitting that Nxt has some yet to be resolved security flaws?

NXT's security in the bootstrapping phase (before Transparent Forging is implemented) is similar to Bitcoin's, it can be 51% attacked. Transparent Forging is supposed to fix this flaw in NXT. However, in Bitcoin this flaw will remain unfixed forever, as miners will never agree to change status quo and will keep things running as they are now until Bitcoin becomes obsolete with other systems that actually move on with development. Not necessarily NXT, it could be something else, Ethereum or whatever.

NXT's security in the bootstrapping phase (before Transparent Forging is implemented) is similar to Bitcoin's, it can be 51% attacked. Transparent Forging is supposed to fix this flaw in NXT. However, in Bitcoin this flaw will remain unfixed forever, as miners will never agree to change status quo and will keep things running as they are now until Bitcoin becomes obsolete with other systems that actually move on with development. Not necessarily NXT, it could be something else, Ethereum or whatever.

Stop claiming its a Myth then. You should at least wait for a completed whitepaper and release of source code that is properly digested by security researchers before even suggesting Nxt is secure. To not do this is misleading and dishonest.

The most you should claim is that perhaps in the future some PoS algorithm can solve the NaS problems.

If you don't want to attain a decentralized consensus, then why bother with cryptocurrency at all?

Source code of NXT has been available since February or March, can't remember exactly.
Some bugs were found by researchers and fixed by developers since then, no fatal bugs though which may be a promise of a robust design. Bugs exist in any other software, that's normal. As long as they are not fatal design bugs, they are fixed and software only gets better. Bitcoin itself had a serious forking bug as late as beginning of 2013, does that make it insecure? The point is software has to be improved or it gets replaced by more advanced software.

Lets say John have 100$ and he buys 0.3 bitcoin from miner and miner uses that 100$ to pay his debts and also buys new pair of jeans. So this is money "going out" of bitcoin ecosystem?

And when John have 100$ and he buys 0.3 bitcoin from whale who bouht his 1K bitcoins 1$ each few years back, and this whale uses this 100$ on hookers, thats money "staying in" bitcoin ecosystem?

I'm talking about the source code on the final adjustments of how transparent forging will function. The details on the whitepaper hasn't even been released let alone the source code for these changes.

So you agree that there are some security flaw within Nxt and NaS isn't a myth?

You're right that the source code of TF is not available yet. I meant the source code of the current version 1.3.1 is available for anyone's review.

The N@S security flaw you're referring to is only a theoretical flaw, orders of magnitude more theoretical than powerful entities coercing large Bitcoin mining pools to fulfill their agendas. In particular if you hope to get private keys to a few large balances in the past and forge a chain that others would have to accept, you will be in for a big surprise. If you need details on that protection, please visit nxtforum.org, this is bitcoin's forum after all.

Thank you for finally admitting NaS is a theoretical flaw and not only a myth. The role of security analysts to find all theoretical security flaws and patch them before an attack occurs. To simply ignore the problem by calling it a myth because it hasn't been witnessed be executed before is just irresponsible.

What I called a myth here (https://bitcointalk.org/index.php?topic=832666.msg9313865#msg9313865) is not so much the N@S itself, which theoretically does exist, but theories are just that, theories. This N@S theory for NXT is less probable than the theory of all governments switching off internet in unison to block crypto currencies, which can be thought of as a conspiracy theory, and it's still a good theory for some folks.

What I called a myth there is the whole idea of someone attacking with ease after drinking their morning coffee and at no cost no less, that user apparently was quoting someone else's biased words, and that's double face palm :)

So you are suggesting that a couple large stake holders credentials being stolen is less probable than all networking devices stop working worldwide ?

Explain to me how you could possibly rationalize this?

You will need 51% of actual balances with NXT in them to successfully do damage

You will need 51% of actual online balances with NXT in them to successfully do damage.
See the difference.

NXT has been running in decentralized consensus for 11 months. That's a fact of life, deal with it.

Yes, and that's still much more than you believe it is you can get access to.

Yes, and that's still much more than you believe it is you can get access to.

Correct for today.
Tomorrow the situation will change.
There will be no reasons for typical holder to be online 24/365
As in bitcoin there are no reasons to have a full-node on desktop PC

This shows that between 7-15 individuals own over 80% of the stake. This means that all one would have to do is compromise a few of these accounts and that can be done by compromising 1-2 of them first and than using those credentials to compromise their friends and fellow developers.

1. How many mining pools' operators own 80% of Bitcoin hashrate? 3-5?
2. How do you compromise those accounts exactly, accounts are not bound to IPs/identities (but Bitcoin mining pools are easily identified and can be tinkered with)?

If compromising was that easy, then you'd need to only compromise your friend's computer and then hack into Bill Gates' mailbox armed with just a Six degrees of separation (http://en.wikipedia.org/wiki/Six_degrees_of_separation) theory.

What I called a myth here (https://bitcointalk.org/index.php?topic=832666.msg9313865#msg9313865) is not so much the N@S itself, which theoretically does exist, but theories are just that, theories. This N@S theory for NXT is less probable than the theory of all governments switching off internet in unison to block crypto currencies, which can be thought of as a conspiracy theory, and it's still a good theory for some folks.

What I called a myth there is the whole idea of someone attacking with ease after drinking their morning coffee and at no cost no less, that user apparently was quoting someone else's biased words, and that's double face palm :)

So you are suggesting that a few large stake holders credentials being stolen is less probable than all networking devices stop working worldwide ?

Explain to me how you could possibly rationalize this?

1. How many mining pools' operators own 80% of Bitcoin hashrate? 3-5?
https://nxtblocks.info/#section/blockexplorer_distribution
142 NXT accounts own 77.81% of NXT.

What I called a myth here (https://bitcointalk.org/index.php?topic=832666.msg9313865#msg9313865) is not so much the N@S itself, which theoretically does exist, but theories are just that, theories. This N@S theory for NXT is less probable than the theory of all governments switching off internet in unison to block crypto currencies, which can be thought of as a conspiracy theory, and it's still a good theory for some folks.

Why does this

https://nxtblocks.info/#section/blockexplorer_distribution

 not match this :

http://charts.nxt.org/cDistribution.aspx

This is a huge discrepancy!

Additionally, can you at least admit that this comment was hysterically fallacious:

No idea, I usually use this one:

https://nxtblocks.info/#section/blockexplorer_accounts

sort by account balance descending order with 100 records per page, and you'll see all you need to see.

On the contrary, it was a comment said with a cold mind, I can repeat it any time again if need be.

Why does this

https://nxtblocks.info/#section/blockexplorer_distribution

 not match this :

http://charts.nxt.org/cDistribution.aspx

This is a huge discrepancy!

Additionally, can you at least admit that this comment was hysterically fallacious:

Time has proven centralization of currency issuing power is inevitable whether it is fiat or bitcoin, the only different is the players.

Might as well change the protocol and switch it to PoS system.

Time has proven centralization of currency issuing power is inevitable whether it is fiat or bitcoin, the only different is the players.

Might as well change the protocol and switch it to PoS system.

because they use different steps , e.g. 1,000,000-1,000,000,000  instead of 10,000,000-1,000,000,000100,000,000

The only way to make a POW sustainable is to block yearly inflation at a certain level (3% ?? who knows) and never drop below that
Otherwise Bitcoin business model will slowly become flawed as the costs of security of the network will gradually switch from inflation to transactions fees in the future.

Inflation is not the only way to fix this problem. Transaction fees can also take over if the block-size is limited. The question then becomes "how fast should the block-size increase?"
Gavin speculates 50%/yr increase is about right to keep up with technology. However, we don't want capacity to precisely fit demand, otherwise there are no funds going toward mining. Therefore, whatever the increase in block-size, it must be less than ideal.

If Gavin is correct, then we only know that the increase should be less than 50%/yr.

There is no perfect answer under the current system because any answer requires foreknowledge that cannot be known.

Fiat money does not have a production cost, but they are forced into circulation and take the chance that normal people don't understand how money works, once people realized a money without cost is just a scam, they will act

Decentralized currencies are not forced into circulation, thus people will voluntarily select the money which have a cost close to its face value, that is the spirit of fair trading. A cryptocurrency without production cost worth very little, since you can always duplicate and generate hundreds of copy of them, means endless supply

So, for $5000 coin, the coin's production cost must reach $5000, and currently it is far away from that

The business model that imposes costs of network security to users who make transactions is completely flawed and will never work even with widespread adoption.

Network security of a proof of work coin MUST be paid by stakeholders via inflation.

This is a very strong claim. Why "MUST" it be so? There are all kinds of ways I can think of to pay for PoW, though they all have tradeoffs.

Because security is not free.
If you pay nothing - you receive nothing

That's true, but again, it doesn't necessarily need to be paid for through inflation.

You're so clueless and a parrot of myths, it's embarrassing. Somebody please attack NXT and finish off its 11-month run, I am sure it will be no more difficult that taking a morning crap.

(Double face-palm snipped)

Toll roads impose the cost of their upkeep on everyone that uses them, is that completely flawed too?

This is a very strong claim. Why "MUST" it be so? There are all kinds of ways I can think of to pay for PoW, though they all have tradeoffs.

You can do this now. Please sell all your bitcoin and buy a PoS alt sir. Why haven't you already done this?

He has not done so since he is speculating with BTC, same as you, hoping for a pop in price.  But he's quite right:  as outlined in the academic study cited in Coindesk by an Austrian computer scientist, Google this, the transaction fees of BTC are set to rise, and will in 10 years time if not sooner become close to what is charged now by Western Union, PayPal, or your local bank for wires.

Bitcoin = Paypal.  BTC is a short term buy but a long term sell.

No, it isn't flawed. Those who use and consume the road must to pay for the road maintenance.
In bitcoin those who store value in the protocol should pay for the security of the blockchain proportionally to the amount of time they hold their bitcoins.
Inflation is perfect for that purpose, as long as you hold your bitcoins your stake is constantly devalued to pay for security (miners).

It is very important for a POW currency to be stable, that the money someone has to spend to attack it, is strictly proportional to the market cap of the coin.
This condition can be achieved only with a stable and moderate inflation rate.
Bitcoin will never be able to work properly with 0% inflation and revenues from transaction fees only, i think 2% inflation is also too low, the 21 million coins cap will one day be broken or bitcoin will die.

PoW mining currently transfers $500 million USD worth of wealth out of the Bitcoin eco-system, into the pockets of pools/miners/asic hardware vendor/electricity company.

This wealth transfer will go on, perpetually, as long as PoW mining exists. Because, as long as Bitcoin relies on PoW mining to secure the network, the expense will exist, and it can
not be cheap (otherwise attack on the network will be cheap and easy too).

In order for Bitcoin price to rise, there has to be at least more than $500 million of new money to enter the eco-system, every year, just to maintain the current price.

All Bitcoin holders are essentially charged a 10% tax per year, perpetually, by the PoW mining network. How can this be sustainable?

PoW mining will continue until someone comes up with a way to distribute wealth as fairly as PoW, so far PoS is not even a candidate.

PoW mining will continue until someone comes up with a way to distribute wealth as fairly as PoW, so far PoS is not even a candidate.

Another major issue is that under PoS is that it will essentially cost zero to attack the network.

Sorry to tell you that in PoW the attack costs zero too. No future for all cryptos exists.

This is not true. In order to attack a PoW network, you will need to prove that you have done work which means that you would actually need to do work which means you would need to spend money on electricity which means that such attack is not free

Another major issue is that under PoS is that it will essentially cost zero to attack the network.

Shhhh... Nothing-at-stake doesn't exist!
https://download.wpsoftware.net/bitcoin/pos.pdf

I'm sure that many companies don't keep their wealth in BTC, they just exchange it for $. Am I the only one who thinks that ASIC companies will be the first ones to leave if bitcoin collapses?

PoW mining will continue until someone comes up with a way to distribute wealth as fairly as PoW, so far PoS is not even a candidate.

Another major issue is that under PoS is that it will essentially cost zero to attack the network.

Please show me how you attack PPC or NXT or BTSX without spending 1$, don't tell me how you would do that, just do that.

Not today, man.
There is no reason to attack any PoS currency today.
But times are going to change.

Please show me how you attack PPC or NXT or BTSX without spending 1$, don't tell me how you would do that, just do that.

All Bitcoin holders are essentially charged a 10% tax per year, perpetually, by the PoW mining network. How can this be sustainable?

So, you mean there is a chance for BTC to reach $5000? No really, really?

Don't ask, model it yourself: http://worldbitcoinnetwork.com/BitcoinPriceModel-Alpha.html

How did you come with perpetual annual 10% tax? I think this is quite a pessimistic expectation.

But even it it is correct, don't forget that global economy grows.

Let's say it grows ~5% per year and this growth is not absorbed by monetary emission, so the tax becomes ~5%, that is much, much better than in many countries. Do you feel it is sustainable?

Oh, and don't forget about few percents you implicitly pay everytime you use your credit card (even when you pay in cash, it is priced in!)

Btw, at these early days bitcoin economy is supposed to grow much faster than 10%/year, so it is not inflationary, it is deflationary by nature.

Current price ignores it though because it is driven by speculators' expectations and it will continue to do so until Bitcoin becomes mature or vanishes.