Bitcoin Forum

This is a really interesting article for the debate POW vs POS :)


http://www.truthcoin.info/blog/pow-and-mining/



Reddit
https://www.reddit.com/r/Bitcoin/comments/2miytv/long_live_proofofwork_long_live_mining/

I was under the impression that the fact that PoW is superior has long been the case and that anyone who thinks PoS is better either does not understand the economics behind mining and/or is trying to pump their piece of shit altcoin

https://www.reddit.com/user/vbuterin

::)

The whole point of the 'wasted' energy is because of how difficult it is to mine coins in the first place, just like with precious metals mines are probably having to piss away tons of electricity just to get at a few precious veins deep beneath the earth, this is how Bitcoin simulates it's rarity. I do think though that if people are that conscious about the electricity they should just support coins like Primecoin and Curecoin which are pretty good alternatives. I think donating all that hashing power to scientific projects is probably going to be the way forward, but the main thing to do would be to make it so that electricity isn't so rare to get your hands on in the first place.

energy what? its about price. easy for legendary staff member early adopter who already made his riches and is probably just here for fun now to talk about how wonderful pow is

pow = new fiat goes on absorbing the new coins, failure of new fiat to keep up with coin generation lead to crash after crash

pos = new fiat goes towards buying MY coins at higher prices, i get rich

all i care about

Exactly, PoS is a try to get rich scheme and is a complete failure compared to PoW and its superior security

how many times have pow coins been 51% attacked? hint: plenty of times!

how many times have pos coins been 51% attacked? hint: never!

im not talking about bitcoin or any specific coins. just the different algorithms in general.

dat logic  :D

How many times has pos coins been debased by banks because it isn't as profitable as it once was sending economies into chaos? hint: plenty of times!

I'm aware you're not talking about bitcoin in your 51% comment but bitcoin is the only one you should be worried about, personally it's the only crypto I take seriously.

that makes no sense what so ever? banks? debasing pos coins? i doubt banks even know what PoS is. they can barely understand bitcoin never mind the vastly more complicated PoS.

Nice article.
The cost of mining 1 bitcoin nowadays is greater than the cost of 1 bitcoin itself. Energy is not wasted, but billions of $$ are. The PoW just serves as an emphasis to the rarity of the bitcoin.

if that was true, why the hell would anyone pay more to mine when its cheaper just to directly but bitcoin?

edit: also take note of v.buterins refutation (https://www.reddit.com/r/Bitcoin/comments/2miytv/long_live_proofofwork_long_live_mining/cm4tr3f?context=3) of the article.

I like how you think PoW = Bitcoin and PoS = altcoin, it really shows how much you know about this topic.

This thread is nothing but PoW miner shills trying to hold on to their waning power, as the crypto world is increasingly moving toward the superior PoS system.

i totally agree, but in all honesty i think something further superior to PoS will surpass PoS as the alternative algo that will challenge PoW. 

its simple evolution.

Large mining farms were established from funding by VC or from their own sales of ASICs. They have no choice but to keep mining in hopes the price will recover and they can recoup their investment. If the price doesn't recover, there will be mass bankruptcies in a year or two or when the loans are called by the creditors.

I don't think it's likely, since PoS has reached nearly perfect efficiency in terms of resources. The further variations are subsets of PoS, such as DPoS, TaPoS, they can improve upon PoS, but the core ideas of PoS is unlikely to change.

you should take a look at proof of importance. Its founded on the concept of pos and is as efficeint but the method by which people are chosen to forge blocks is vastly different. Those who are most important to the network are the most likely to forge apposed to who has the most coins. So a merchant that does thousands of transactions but little balance could end up with higher weighting than a hoarder with loads of coins. Its not just how many transactions that are factored in to decide importance but who the transactions are with and their importance, much like a web of trust.

this also plays into things like the asset exchange. with pos, scammers would be listed exactly the same as genuine vendors and therefore have a high chance of scamming, thus assets could not be listed and require users to know the asset ID.

with proof of importance, assets can be listed by importance score, as well as volume, importance gained from or history of past assets among other methods, merchants that do not meet the minimum requirement would not be listed until they meet the minimum requirement which vastly reduces the chances of scammers being listed. PoI will open many doors when it comes to online marketplaces/asset exchange that would not be possible with PoS.

That sounds like another subset of PoS, but with an added layer of determining which stakes are more important. I think that's still PoS at the core.

This is another advantage of PoS, the specific implementation is very flexible, able to fit different needs and easily be improved upon.

no its entirely written from scratch. according to the devs it wouldnt be possible for PoI to be migrated into existing pos algos due to the difference in architecture or something.

Long term, the cost of mining bitcoin will be in advanced chip R&D not power consumption -- and mining may not be Democratic. The company who invested the most in low power / high throughput ASICS may just horde their creation and dominate mining.

The code is written from scratch, sure. But PoS is not a piece of code, it's a concept. If you are using stakes as the proof, then it's PoS. I think it should actually be called IBPoS (Importance Based Proof of Stake) instead of PoI, the "importance" is not the proof, the stake is the proof. The "importance" part is used to determine the weighting of each stake. Calling it PoI is inaccurate.

its not based on stake. it uses importance as proof, thus its proof of importance. the stake an account has is only a (small) part of the calculation, hence why a merchant could have 10 or 100 nem but have a higher weighting than a hoarder with 1,000,000 nem or even 10,000,000 as far as i know at least. because of this it is easy to see that the other calculations in PoI are weighted higher than the stake of an account so it cannot be considered PoS. if the stake an account has was the biggest piece of the puzzle i would agree with you but its not.

what's so secure about a couple of pools run by asic manufacturers controlling the network one having already gained control of 51% just a few months ago

government or anyone with bad intentions could spend a few tens of millions to buy or build enough asics to destroy the bitcoin network for fun but buying 51% of all the coins would take tens of billions

people think pos is a bad idea because they saw some 20 btc market cap ponzi alt get forked , that's all it is

I looked a few months ago and not a whitepaper was published from what I saw.

POI seems quite likely to be sybil attacked.

When you determine POI algorithmically then it can be gamed algorithmically.

no whitepaper yet. i cant comment on the likely hood of nem by sybil attacked as i dont know the tech details havnt been released yet. but the dev team is in a league of its own.. nem is the only 2.0 coin so far thats stable bar nxt of course. crypti, exo, and all the rest are falling apart. if its been a while since you looked at it you should check out the latest beta release.. the pace of development is astounding.

anyway the proof will be in the pudding. launch is soon so whitepaper and open sourcing shouldnt be long after.

develop first, then when stakes are finally sold you release white paper?  How is that supposed to work ?

There is no reason to think the dev team is in a league of their own when they're all anonymous.  What previous projects did they work on?

The release does little for me if the innovation is tied into POI which still has not been explained.  White papers aren't that hard, they don't need to be thoroughly researched.  You just present your idea in a well thought out paper.  Why code it all up first ?   "Someone will steal the idea" ?

I am highly skeptical POI will work without a real life identity tied into this importance metric.

the white paper could not have been written prior to stake registration as the code hadnt even been written.. people signed up for a trivial fee of between free and 700 nxt.. that was back in febuary time.. and stakes wernt sold. there were no stakes at that point. there was nothing. people signed up to the movement for trivial fees and it was done then to give everyone a fair chance at signing up regardless of how much money they had. also it was supposed to be a clone so fewer people bothered to create sock puppets. imagine how many sock accounts would have signed up now if they knew stakes were worth near 1000 dollars?

well.. actually.. yes there is.. they have released cutting edge tech thats insane stable and far beyond what most other coins have months after they have launch. as for previous projects, many of them worked on the nxt source code finding bugs(and found many) including the injected flaws afaik. but a lack of previous projects is no way to determine the quality of the developers. especially in this environment.

they didnt do the white paper first because many things were going to, and have, changed a long the way. what ever they would have put on the white paper back then would probably not be accurate to what is released now. and not to mention they had no intention of coercing people into investing as people were not investing. a trivial fee of a couple nxt is not investing. people signed up "just in case" and it payed off big time.

why would real identities be needed? poi is working and fully functional right now. you can test out the beta software. we are currently preparing a competition with a prize of 1 nem stake. so you can test poi all you like and see it working with out any real identification. (and i think you miss understand PoI if you think real ID is needed.)

I'm not a FUDer,  I'm just stating my opinions.  If you're going to pump POI over POS, then we at least need a white paper.  After everything I've seen I'm impress the market price on NEM is still so high.  You guys have done a good job.  Maybe it will be something new.

there was 3 months of taint analysis that removed 100's of sock puppets and recently another round that was not seen coming so another couple 100 sock master were caught using a different method. fairly certain the vast majority have been caught.

for utopian, it was an easy way out. after the fact and his immediate departure it was quite obvious he set himself up.

as for pat, he was, and still is, in control of hundreds of thousands of dollars worth of stakes.. why would he go through the hassle of creating sock accounts to steal ~3-4k dollars worth when he could dump all the stakes he is in control of and run? that just doesnt add up.. so i would not say #1 and #2 are dirty..

by real identities do you mean passport verification??? sounds like your trying to find excuses to argue against it..

il come back with the whitepaper and source code when its released.. we'll continue then! :)

Good article!
Author obviously gets it.

Mining is not only an initial distribution, but more importantly - control over network.
Keeping that an "ongoing battle" allows future generations to inherit this control on the basis of skills and competition, rather than relying on mere inheritance of wealth within the established bloodlines.

You know why people turn to evil? Because it ain't fun winning in a rigged game.

Remember, freedom requires you to stay vigilant,
and while many people are easily tricked into selling their freedom for a bit of comfort,
at the end of the day it's not important what they do, it's important what you do!

Very nice article, especially this part:

----------------------------------------------------------------------
For Auction: 100 US Dollars

Whatever “it” is, if it creates $100 worth of value, but costs <$100, everyone will be doing it as fast as possible. Applied to blockchains, if X dollars of coins are being released by each new block, then X dollars are going to be spent mining that block.

It really is that simple. It would be obvious to anyone who understood economic rent and opportunity cost (for example, as applied in the Law of Rent).

Why isn’t this widely known in the Bitcoin community? Well, it would seem that prevailing disagreement with today’s FED Policy (a contentious, real world, imperfect attempt to execute on one particular strategy [chosen among many] – a strategy, confined completely to the applied half of the “monetary policy” subset of the “policy” subset of the “macro” discipline of the field of economics) has led to a sort of groupthink-powered, willful ignorance of economic science.

Which is a shame, because just by visiting certain corners of Wikipedia, certain 2.0 “designers” could have saved themselves a lot of time.
----------------------------------------------------------------------

Most of the people's mind of money's value has been twisted by the fiat money that is created out of thin air, thus they think that they could also create some similar money and get its value out of thin air. But they usually forget about one thing: Fiat money's value actually comes from the law that forced people to accept them in payment, and the cost of making that law might be a war or even more, it is not cheap at all if you consider how much energy were wasted in a war

Those energy will not be wasted, they will be used to provide heating in future. I have seen miners build their center heating system based on a closet full of miners

However, once it costs less to produce each coin, the coin price will fall, so those energy MUST be spent in order to maintain bitcoin's value: As long as there is a much cheaper way to get coin, all the demand will go that route thus reduce the buying support and increase the sell pressure on market, until the exchange rate get close to manufacturing cost

Requiring external energy makes PoW a dynamic self-balancing system and at the same time encourages real-world tangible innovation in energy-efficient computation. Further advancements in electronics beyond silicon will make piles of current mining equipment obsolete, so there is hardly any long-term entrenchment in PoW, unlike PoS, where once established entrenchment would be very hard to eradicate.

The debate of PoW vs PoS is somewhat similar to that of gold vs fiat.
If history has anything to teach us, we should be looking very closely at PoW derivatives and stay away.

PoW is grounded in reality, while PoS seems pretty spineless.
Proof of World versus Proof of Snake? :)

It sounds like PoI will essentially centralize the mining of the coin in a way so that certain people will control the network. Granted these people would generally not want to attack the network however the same disincentives of attempting to launch an attack are not there that are there in PoW

I think that PoW is really an interesting idea and experiment in how to secure a blockchain.  But I am not sure if it is the best.  Don't get me wrong, I am still a big fan.

Really PoW comes down to the fact of whoever can waste more computer power and energy is the person that can make the next block.

And the chain is secure because people waste a lot of energy and computational power.  To take over a PoW blockchain, an attacker must be willing to waste even more computational power and electricity than what is already being wasted.  This does actually make the chain secure though. 

It just seems like to me where a system of, "you can't attack my blockchain because you can't waste more electricity than me" might not be the best way. 

It is a pretty interesting proof though and so far it is working, so I am willing to ride it out for a while. 

I still think though there must be other proofs that can be used to protect a blockchain.  Stake is one, but there could be lots of other ways a blockchain might be supported supported and protected by a community.  I think someday some novel ideas will be released. 

As far as I know PoI is only being implemented with an IPO style release of all the coins at once and there won't be any mining.  The PoI is used to determine who will form the next block and collect the fees if there are any.

Also, as far as I know the disincentives to attack a PoI blockchain will be greater.  With PoW a person need to gain 51% of the miners.  In PoS a person needs to gain 51% of the coins.  I don't know very much about PoI but I think a person would have to gain 51% of coins, and be highly active in the network sending and receiving from accounts that have been proven trustworthy via Eigentrust++ peer reputation management.  ( A p2p algo for proving which nodes are trustworthy).

Mining promotes centralization and single point of failure. Right now all the government has to do is to blackmail or hack and take control of two pools and Bitcoin can be destroyed.

Supporters of mining now are mainly those who have already invested in it and have to rely on having this continue to not get broke.

It's quite the opposite actually. Pools are dynamic structures capable of restructuring and splitting in response to any hostile outside action. Owning mining equipment now, doesn't make you eligible to receive the improved mining gear in the future, thus you need to stay vigilant and make decisions over time to either reinvest or skip based on your market assessment. Mining is a game of skills.

With stakes however, once acquired, there is no amount of innovation or competition that would allow outside actors to regain control of the money flow from the established stakeholders, while they can maintain their position indefinitely at virtually no cost. Staking is a game of luck.

EDIT:

Regarding "waste of mining", there is a good analogy - "waste of gaming".
A lot of people would consider shooting aliens in a video game utterly useless and wasteful. With hundreds of millions graphics cards sold annually, humanity likely "wastes" an order of magnitude more energy on gaming than it does on mining. However the result of this gaming endeavor is a new breed of energy-efficient processors or GPUs that are now slowly replacing conventional CPUs in supercomputers and aid to solve scientific challenges.

Now, with Bitcoin ASIC chips reported this summer to be the first to come out on a state of the art 20nm technological process, there is a strong indication that mining will create enough incentive to drive humanity towards breakthrough in electronics beyond silicon as well as development of new energy sources. And if you think gaming has a positive social component to it, then you might consider mining as a way for nerds to socialize.

Thats quite incorrect. If that was the case it would have stopped at vanilla PoS, and there wouldn't have been innovations like TF, DPOS, PoI etc. You are also assuming that rich get richer in case of vanilla PoS, which is not the case in some of the variants.

POS can be superior however most of these alt POS are awful.  Fortunately the very 1st one pee pee coin is the best so far.  However it could have been made better with no inflation.  POS means people want to protect their existing coins.  The bitcoin network today is not really protected by miners, it is protected by the owners of the largest amounts of coins.  POS rewards those who keep their client open.

So have we worked out which is the purple plants yet? POW or  POS?

What prevents other players who feel enthusiastic and competitive from challenging the position of that dominant company? The creative urge for innovation is inherently decentralized.


No, rich-get-richer is not my concern, but once-rich-or-lucky-gain-share-of-control-forever is.
So far I haven't seen proven mechanisms in PoS systems that would prevent that.

PoW, on the other hand, is inherently pro-competition as mining is naturally a break-even game.

To each their own (miners, users) ;)

There are two trains at the station right now and soon leaving:

One will get you to the place, where you can be free if you are willing to take care of yourself (PoW).
Another will take you to a more cosy place, where others take care about you (PoS).

It's not one or the other, they both exist and they are both valid, it's about which one would you ride.

what a bunch of bull, lol

Prove me wrong? :)
I'm particularly interested in this one with PoS:
once-rich-or-lucky-gain-share-of-control-forever

The "forever" part is what I have the most trouble with, getting rich or lucky is ok.

PoS is a joke. So is PoW, but less of a joke.

We will see if PoA or PoI hold any water, they haven't been battle-tested yet on a large scale.
Maybe the ultimate solution is an intricate combination of them all?

I know poi is po-importance but wats poa?

I think it is NodeCoin, but as far as I know it isn't up and running. 

ah proof of activity.. i dont see that getting very far.. iirc they are having serious issues and distribution was a big problem. sock infestation and large whale purchases during the auction. tanked after launch and still no open source/white paper(i think). i dont think they will be any competition for nem's poi.. they launched waaaaaaaaaay to early.

On the Reddit (https://www.reddit.com/r/Bitcoin/comments/2miytv/long_live_proofofwork_long_live_mining/) I read the following comment from SN811 "The PoW concept in relation to digital cash was introduced to solve a certain problem at a certain time (it's really an extension of hashcash in that sense). Anyone who designs a system based on PoW in 2014 does not understand really the purpose in the first place."

Can somebody please elaborate on what he is talking about or at least point me in the right direction?  What exactly was the "certain problem at a certain time" that is being referred to?  It seems vague to me.  

proof-of-upload system

https://crypto.stackexchange.com/questions/15377/is-it-possible-to-create-a-proof-of-upload-system-for-bittorrent-ratio-trackin

Definitely an ongoing debate, thanks for sharing.

Then you need to look at PoI or DPOS. No doubt in the future we will see more and hopefully better variants.
You are all stuck thinking in terms of PPC. The world has moved on.

As I understand, with DPOS the established group of stakeholders with majority vote would be able to maintain total control over the network indefinitely at no cost. It doesn't matter much if control is exerted directly or via delegates, more steps only clutter the mechanics of control and contribute to confusion.

I would not comment on PoI as it is too early. I have concerns if large economic entities would maintain too much importance in the long run (think Facebook, Google), but at least their positions are not set in stone an can potentially be challenged by other players, however social network effects might become a significant barrier to entry. There is no sustainable network effects in mining as hardware is rendered obsolete fairly quickly over time and players need to compete from scratch with every new round of distribution. Also not quite sure if botnets will be able to simulate a lot of activity in PoI by sending random coins back and forth and thus gaining more and more control. It sounds promising, but we will see.

IMO, use POS if you want a private members club, not a currency. Use POI if you want to simulate the introduction of black holes into a stable planetary system.

That's completely wrong.
Satoshi has allegedly the largest amount of coins, but has zero control over transactions.
He might decide to gain that control, but he would need to approach the hardware market and find lucrative deals or develop equipment himself, but so can do outside players with fiat. Even if he approaches the goal of total control over the network, his position will never be unchallenged.

Holding coins in PoW doesn't automatically translate to control, and gaining that control might be challenging.
I like the idea of reward for just using the client in PoS, but it is the control model, where an established inner circle of stakeholders will eventually maintain permanent hold on money flow, that bothers me.


True enough.

have you anything to back that statement on? there is no proof yet to prove poi is safe or that it isnt safe so you cannot make that statement based on proof. the only thing you can base that on is opinion. so dont make a statement like that as if it is factual and provable.

So basically in your view, a bunch of profit crazy, no stake, PoW miners controlling the Bitcoin network is ok. But actual Bitcoin stakeholders controlling the Bitcoin networks is not ok?

I think he refers to what I said in my previous post:


Would you be able to comment?

There is a slight difference, crazy miners don't control, they compete to control the network!
Yes, I believe that those who feel enthusiastic and competitive, should be able to compete without permission

EDIT:

Oops! I just figured my definition of freedom :)

Bullshit, there isn't anyone controlling more than 10% of all Bitcoin. But there are private miner or cloud mining, that currently or used to control more than 20%, or even 30%, 40% of mining power. At some point, there WILL be a person secretly controlling more than 50% of mining power.

The reason is PoW is cheap, it's easy to buy enough hardware to gain 50%+ control, it is especially easy to do this to control PoW altcoins, there are many PoW altcoin got 51% attacked. PoW is an extremely flawed system.

Holders of stakes in a PoS model don't compete? It's the same competition: in PoW - who can afford to buy the best and more hardware, in PoS - who can afford to buy more stake. The difference is hardware wastes electricity and other kinds of waste that come with PoW mining.

You didn't refute my argument.
Any one entity approaching or even controlling 50% of the network doesn't become permanently unchallenged.


Why compete, if they can collude, and then nobody outside can ever challenge them?
Wasting energy, having maintenance cost, making decisions to upgrade or skip is what allows other players to regain a share of control from miners.

EDIT:

If you have freedom, you need to fight to keep it,
If you don't, there is nothing to worry about.

They won't be getting additional profit by colluding, so what's the purpose of that? It works exactly like miners in a pool: if you solo mine, you will get a block occasionally, if you mine in a pool you get regular profit but it's small, and over the long term it works out to what you'd get if you mined solo.

Control?
There are things in this world you cannot buy, you know.

What's the difference with PoW? You spend more on equipment, you control more. You can collude with other large miners.

EDIT: the only difference like I said is waste and inconvenience. In PoS anybody can be a miner by just leaving their wallet opened, so user = miner -> more decentralized network in the long run. In PoW only geeks can be miners -> more centralized network in the long run.

Those who develop new equipment might not sell it to those who are currently at the top.
Not everybody sells their share of control for profit.

So can we expect one company to develop super powerful ASICs and totally hijack the PoW network? Wow, that's scary. In PoS anybody can be a miner with their normal computer, I say it's very attractive to users. Users drive the price and adoption, not miners. Crypto should be user-centric, not miner-centric, to be successful. And that's where PoW fails.

Those weren't hints!   :P

-B-

Yes, it can happen, but the new quality of their product would need to compete with the sheer quantity of the old equipment already available on the market, this will give time for other competitors to come up with their improvements, which might not necessarily be in advanced chip technology, but rather in energy sources or deeper understanding of cryptographic hash functions. The field of competition is fairly diversified and any innovation developed there will eventually find applications in other areas.


The difference is same as with wild-life and those living in a zoo.
The food might be better in a zoo, but you would hardly enjoy it as much as those outside.

Nobody can take your freedom if you already don't have it.

Can you be more technical please? Wild life vs. zoo is picturesque and all, but what makes you think that users care about building all that equipment, dealing with all the troubles, electricity, figuring out mining costs, trying to break even, if they can just turn on their PC, do their normal work or socializing and the PoS wallet will be doing work in the background? Like I said, PoW is for geeks, but geeks don't power wider adoption, and the number of geeks is limited, which leads to issues like centralized network and less actual users of the crypto, it's all revolving around miners in a PoW crypto.

The interesting thing is that trying to explain it to others I actually start to better understand it myself.
I don't know if it's better in a zoo or in the wild, both experiences define and reinforce each other, they are both needed for either one to exist at all.

I find it exciting, though, to discern various models on the market and see what they really offer compared to what they advertise. If you are building a zoo, you don't usually advertise the cage, you advertise the food :)

EDIT:

The yin-yang symbol comes to mind. In a zoo there is this little positive potential to eventually break-free (white circle in the dark half), in the wild there is this little negative potential to eventually end up in a zoo (black circle in the white half). So there are pluses and minuses to both sides of the circle.

That was a factual statement of my opinion, I would like to hear your proposal to prove that it wasn't my opinion.

what information are you basing your opinion on?

This is misleading. In order to mine on a PoS coin, you will first need to "invest" in the coin and to have a larger impact on the network you would need to invest in larger amounts of the coins (and mine from multiple computers - likely from something similar to VMs). This is little different from someone investing in ASIC's and running the ASIC's to secure the network

Don't you need to invest in ASICs and invest a lot to get a lot of ASICs or invest a lot into R&D to get more efficient ASICs, and all that with the same purpose - to have a larger impact on the network? What's the difference with PoS then, besides electricity waste and all the inconvenience that comes with all this ASIC work that only a limited number of geeks can enjoy to do?

You obviously don't know much about mining. The hashing power is not on the pools. If a pool acts bad, people just go to another one. Losing a pool wouldn't change much.  That's far away from "Bitcoin can be destroyed"
Some people on this forum even state, that this would be good, since people would change to p2p pool and the whole centralization problem, would be solved.

difference is your pretty much guaranteed 0.5% annual return with pos with even a trivial investment, you can spend the coins after buying them and they don't have a short life span. You can't spend an asic, they need regular replacement and your pretty much guaranteed a loss unless you invest heavily in mining gear.. And reinvest to keep up with the advancement of technology.

It's not about profit or returns, it's about control.
You will get guaranteed food in a zoo too, but you'll be missing something essential, wouldn't you?
ASICs can be challenged with newer ASICs, stakes (once big enough) can never be challenged.

Would you like control of the money flow to be a competition or would you like it to be in hands of a few forever. If you prefer the latter, just stick to fiat and be done with it.

EDIT:

I wouldn't be a crypto geek if I couldn't read hidden messages in random data.
Take a look at this thread, it's a new song about Bitcoin.
https://bitcointalk.org/index.php?topic=857195.0

Here is a Bitcoin address (I added white spaces for readability)
1C4 iVs2E659ksBK8gVEyQw229 ZoESC oyK1

1C4 - apparently Satoshi needed only one C4 to plant at the perimeter of our fiat zoo some 6 years ago. If you play video games you'd know what it means.

iVs2E659ksBK8gVEyQw229 - time it took before the smoke settled.

ZoESC - we now have a hole in the perimeter and can escape our zoo.

oyK1 - everything is gonna be o k !

Good day! :)

PS: The word "mining" has definitely something to do with perimeter disruption, besides its usual interpretation. Thus "miners" are those who will disrupt every perimeter they encounter on their infinite way out from a zoo within a zoo within a zoo... Hmmm and what if there is no zoo?

p2pool has an issue for small hobbyist miners, you need a certain amount of hash to get shares. Last time I looked a few months back, this was tending toward about 500GH. I'd imagine you'd need a terahash plus for a smooth ride. At the moment, for a reliable "non-evil" pool for small miners I'd most recommend bitminter.

Moores law should guarantee that things get shaken up at least every 18 months.

Why do you think stakes will only be accumulated and never spent? After all, humans are humans, they will spend and cash out to buy stuff (including assets on the asset exchange) or buy stuff directly with the crypto when more merchants accept it. Why do you think the price of NXT hasn't been going anywhere for a year? It's because those stakeholders are cashing out and a lot of coins have already changed hands. Apparently your theory of eternal growth of stakes doesn't work.

actually this very argument is the very reason im so involved in nem. nems proof of importance will allow someone 10 years from now to "challenge" the control of someone who was in the genesis block regardless of the fact that the early adopter has way more coins. there are flaws in both pow and pos and from wha i understand proof of importance solves this. in both pos and pow the early adopters will retain the majority of control over the network for the foreseeable future. to challenge control in pow you need to pay large chunks of money but buy up/develop new asics and in pos you must buy up large chunks of coins to challenge the whales. in poi users must only adopt the currency and use it day to day. a merchant could integrate nem, do lots of transactions with lots of other important people and boom he could have higher importance than an early adopter who doesnt do many transactions but has millions of coins. the new poi algorithm levels he playing field for all users and it will stay level far into the future and possibly forever..

in both pow and pos the control of the money flow/network is in the hands of a few. its plain to see for everyone. how many people have thousands, if not millions to buy up coins or asics? not many and the numbers are getting fewer as the price of coins rise and the number of asics needed to mine rises. poi will mean that joe soap on 200 dollars a month can start using nem and earn as high of an importance as anyone else regardless of the fact that he cannot invest huge amounts of money.

i know you are going to say this is game-able but i dont think so as it is not "how many transactions you make" but rather with who you make them, much like a web of trust. im not advocating that poi is 100% secure or that it is battle tested as code has not been released yet so we wont go into the "it will be suitable to this/that attack" as it would be a pointless discussion, but if it continues to work as it has for the last 4-5-6 months and it is proven to be secure, both pow and pos are going to have a serious competitor on their hands.

and the only ones who are capable of doing any meaningful "shaking up" are those who are already largely in the game or have buckets of money to buy/develop large numbers of the next gen of ASIC's.

A big enough stake would earn enough fees or interest (depending on PoS variant) that would cover all life expenses including yachts and mansions, so it will never need to be spent.

The only way to shake up stakeholders is to have competing PoS systems some of which need to be fraudulent so that stakeholders would risk losing in their diversification process. Would you like to compete in fair game with known rules and develop innovation that would benefit humanity or would you like to play dice and create fraudulent PoS systems to shake up stakeholders?

Haha, before that happens (it would have to be a huge market cap) something more advanced would surely be invented which would make their huge stakes much less valuable, and people would switch to that more advanced system, provided that crypto currencies survive at all. Same way as more people switch to PoS now, leaving those large holdings of Bitcoins less valuable.

See, I don't think PoS is the final step. I only consider it more advanced than PoW. Something better than PoS is possible, I don't doubt it. But PoW miners are dead set that PoW is the blessing and use exactly the same arguments against anything else that bankers use against Bitcoin. This is so funny and hypocritical at the same time.

I think my "game of skills" versus "game of luck" analogy for PoW and PoS is fairly accurate.
I'm not saying that one game is better than the other. Everyone is free to pick one that they prefer.
The paradox is that those in the wild are free to build zoo. Can't change that.

This competition between cryptos and different Proof-of-... is exactly the game of skills, only the fittest will survive.

But it makes sense to review all options available on the market if you're an investor and a user.

If you're a miner, you have no choice but promote PoW to make your living.

I think we can agree on that.
One can be an investor and a miner and play many games on multiple levels, that's exciting!

What games can a miner play?

Well there's the game of "Guess the shipping date" that's always a party favorite.

who can dig them selves into the deepest (financial or reputational) hole before they realise PoW isnt the be and end all :L

Classic. Then there's good old "pump and dump the shitcoin" on Bitcointalk.

Well, there are at least two types of miners, those who are in position to develop hardware and those who buy it from them.

The first-tier miners play their intellect games in designing ASICs targeting various process technology from yield/cost/power perspective. They also need to decide wether to sell or to mine themselves, not all of them are honest, so there is an element of luck in the game.

The second-tier miners play their profit games and make decisions at which pool to mine if they agree or disagree with pool's behavior.

And there are always those, who haven't touched mining yet and are looking for a perfect position for entry either with their piles of fiat or some alien advanced tech, that they need to ramp up volume production of.

There is plenty of fun in the mining land.
Those who are willing to compete can always do that, and there is a zoo for everybody else :)

I disagree. People who purchased miners are essentially investing in bitcoin via their miner. Additionally most miners have a short useful life span so anyone who has invested in a miner could simply decide to cease upgrading their mining farm if they decided to stop believing in PoW in favor of something else.

Choosing to be a developer or user. Sounds like a fun game.

There are so many theme parties where developers come dressed as differing yield/cost/power technologies. The ladies love that.

I want to party with you, cowboy.

Been partying since the beginning of time :)

Obviously.

Actually, I like the sound of it.

I myself thought about something like proof-of-existence and figured PoW was a good approximation to that.
Of course social network effects might become the dominant obstacle to diversity of control in PoI, but maybe they are not that scary and with proper education people would be willing to use only those services that they wish to empower. Like miners with pools, only without hardware requirement.

Will be looking forward towards the launch.

A commodity money is worth what it costs to make. A $20 gold piece has $20 worth of gold in it, less fees. As Bitcoin expansion decreases volatility (as it already has) it will become the value of the cost to make it, less fees. Mining for money has a tradition that goes back thousands of years.

I agree with that.
The PoW mechanism is simple and robust, it's hard to hide some tricks there.
Everyone can understand it.

With PoW only those who explicitly fight for control (miners) get a share of it.
If control is given out for free to all the people who didn't ask for it, they will sell it for profit thus empowering tricksters and charlatans.

You won't easily let go of something that you needed to fight for.
And even if you don't fight for freedom, you might stick to those who do and support them.

True.

Why should early adopters relinquish control to Johnny come latelies??? They've had the vision, foresight and iron hard determination to bring it this far, so why let some ADD instant gratification whiner waltz in and reap the rewards when i) they did not assume the huge risks to get it this far and ii) they might waltz off next week for the next new shiny fad. iii) they can damn well roll up their sleeves and fight for position if they really want to, may take a couple of years and resources and risk, but guess what, that's what everyone else put in.

It might be elitist, but elitism builds awesome shit, communism builds Trabants. http://en.wikipedia.org/wiki/Trabant

Things that are hard to come by, retain and gain value, things that are easy to get, become "as common as dirt", in massive quantities, certain types of dirt may have value, but unless it came from the moon, a handful of it will remain perennially worthless.

So to sum it up:

PoW - control is a fierce competition, only the fittest get to the top

PoS - illusion of control can be bought, the actual control is not for sale

PoI - everyone has control, the future is undetermined

I think we need a proof-of-education, then PoI might have a chance to become a place of peaceful co-existence without wasting too much energy. If no one builds cages while they are free, then no one will ever get into one.

What arguments would those be?  The article in the OP has some very good logical arguments IMO, such as the following:


Just because PoS routes around the issue of ASICs doesn't mean it is more advanced, nor does it mean it is viable.  

Anything to protect their vested interests even though the old technology and/or rules clearly don't cut it any more.

I understand for obvious reasons you want to continue the arms race for hash power and total power over the market but this is soon to be old news as you know deep down, you just need to come to terms with it.
All the energy used and money spent on that is almost funny! When does it end??
Probably when people wake up to the small little fact it's not sustainable  8)
 

The 1970s called. They want their solar panels back for Earth Day.

The arms race ends when the market is saturated.  but obviously the market is still growing.
all this is free market dynamics. I really don't get why the skeptics are so concerned. If it is not sustainable then it will atrophy of its own accord at some point.

I don't understand why you would say the amount of energy "spent" is unsustainable.

The price of the energy used for PoW is purchased at market prices, and in theory the miners will only buy additional hardware if the NPV value of such hardware is positive.

It is all but certain that the difficulty of bitcoin will almost always follow the price of both bitcoin and electricity (and potentially interest rates)

as transaction fees displace subsidies, transaction voulme will become increasingly important instead of price with relation to difficulty.

That's not a problem with PoS, that's a problem with your imagined distribution scheme. Distribution doesn't have to be all at the start, nor does it have to be free.

Wrong, people who purchase miners are essentially investing in the hardware, which they could potentially use to extract value out of a PoW system, it might be Bitcoin, OR something else, maybe Peercoin for example. Miners only care about what's most profitable to mine at the moment, vast majority of miners have ZERO loyalty to any specific coin, this is a very clearly observed phenomenon in the scrypt mining scene. The biggest pools are the auto-switch pools.

If the miner is a SHA-256 ASIC then it is all but certain to be mining bitcoin (it could also be merged mining other coins as well). While you are correct about people switching scrypt based coins is accurate, the same is not true for SHA coins because bitcoin is going to be the most profitable coin to mine. Also the service the miners are providing is securing the network

Its better to have those who have stakes in the system to look after its good, rather than in PoW where the actual holders are out of luck. they have to rely on some cartels to take the right decision.

The worst part with PoW is that they sold the crypto space as decentralized, while its anything but that. The government can simply take 2-3 pools and destroy everything. Such kind of attacks is possible in PoS by blackmailing big exchanges, but its still difficult than PoW, as for the established coins exchanges don't have more than 4-5% at the most.

I do, I used to mine. The miners are just looking for a paycheck and don't care. Thats what happens when the miners and shareholders are separated. The miners don't have much interest in the long term health, just short term profits.

Bitcoin holders are not at the whim of anyone except unregulated markets. Miners work at the pleasure of their customers, not the other way around. Bitcoin is the highest valued not because of government mandate, but because customers value it. Miners are free to mine other cryptocurrencies, but the most competitive miners mine Bitcoin.

Governments or any DOS army can attack a pool, but 2 more will take its place. There are many small pools ready, willing, and able to scale.

No, if you are busy fighting for control in order to break-even profitwise, you don't have all the time and resources needed to conquer the world. The beauty of PoW control model is in its temporal diversity (temporal means along the time axis).

You might have your winner at any given point in time, but they are soon replaced by competition. Remember Deepbit? Where is Deepbit now? Remember Btcguild? Where is Btcguild now? The same goes for Asicminer, Ghash and any other.

I would rather have kings fight each other on the open stage, while people stay relatively free, than the other way around, unless you are Sunny King, of course ;D

You are still caught in your investment/returns/profit loop.
Mining is a control game, profitwise it's about breaking-even, though you do get a monetary reward for getting ahead of the competition. Asicminer did.

The mining battle arena has a little secret - its floor is made out of a sinking sand, so those wannabe kings need to keep running in order to stand still, while those who want to challenge them come refreshed from the solid ground.

Government won't attack directly, they will blackmail a couple and then attack Bitcoin. As the Ghash incident showed, miners are slow to react and don't care about the health of the network, otherwise by now they would've diversified.

Great article.

The last fork was reacted upon very quickly. Pools operate on greed. How do you blackmail thousands of miners? This type of unspecified FUD is the silliest of all. Please be specific about how exactly a person of any authority can do this.

Blackmailing miners is quite difficult. The govts can try to regulate them but thats again something easier to say than done. Targeting the pools and pool owners could work in the beginning but moving a pool server to some other country is quite easy (not to mention that if a big pool goes down there will be hundred new to take over). So I agree, attacking the BTC network is not an easy task.

I think he is saying that miners will not switch pool quickly in the event that a pool operates in a way that is damaging to Bitcoin. He is using the fact that ghash was able to gain 51% of the network hashrate and miners did not leave as an example of this. However this is not a valid example as ghash did not actually attempt to attack the network when they had this hashrate

one Ghash employer did exploit the 51% hashrate...

https://bitcointalk.org/index.php?topic=321630.0

There is no centralization of mining, but rather a clusterization. It's natural and is a reflection of our society. We don't have a flat hierarchy of people on the planet, we have structures and sub-structures and those compete for control and resources. What's important though is that entry to the mining arena is free for everybody, though you need to be well-funded and/or well-skilled to have a good chance at staying afloat there.

I think "permission-less decentralized exchange for energy" is a very good description from the article for what mining really is, apart from the fact that it is also a competition for control. Bad actors are not completely ruled out, but at least they can be challenged and defeated if people care about their money at all. If they don't, they deserve what they get. Also be cautious who you entrust control over the network when you sell it for profit via certain derivative schemes.

PS: Technology cannot change society, but a good technology will serve as a perfect mirror and allow society to see its own reflection and take action to improve it.

will this always be 100% true for any PoS scheme?

PoS designers try to make their system deterministic and hard to game,
yet it seems that they cannot avoid computational competition because
there can always be an endless variety of combinations (people
can create a new transaction, which changes the variables of the system).

But I'm not sure.  what do you think?

There no thousands of miners. There are only a dozen miners, which is the problem with Bitcoin which is supposed to be decentralized.

Only a dozen? List their IPs from the block rewards.

Mining very reliably operates on greed, it's part of the design. All rational miners are now working on an average 6 months "greed horizon" they will do that which gives them best return over 6 months, since they need at least that to cover hardware costs.

The number that will fuck with this are about equal to the number of people who will pre-pay at restaurants and forget they're hungry and wander off.

I have searched the crypto world.  I have in the last year become fascinated with the world of the blockchain.  What I have seen has both delighted and disappointed me.  Both freed up possibilities of the future but also continually frustrated me.  But it is in this world that I see some great potential.
 
I have seen extreme liberals and extreme conservatives and even extremists of upstart third parties buy into Bitcoin and believe in it.  These are people that have little else in common, but when they see the system, it just makes sense.  I think this is because on an intuitive level once people get what a blockchain is, it just makes sense, and it is known deep down inside that this is something that solves a fundamental problem, one that is so deeply ingrained in our history and culture, most people are oblivious that it is even a problem.  This is the fundamental problem that humans cannot trust each other. 

The blockchain is a truly amazing invention and its implications are pretty profound. I have thought about this long and hard. For thousands of years our societies have been built around the fact that humans inherently can't at large trust each other. We have of course at often times trusted those very near to us, those 1-100 people we are close to, but after that the circle of trust breaks apart. It is just too easy for somebody from the next village over or next country over to say "they are not one of us, lets cheat them.”  And this narrative has happened all over for thousands of years, sometimes on a small interpersonal level, but sometimes on a global scale. Whole governments and societies are built knowing that this is one of the fundamental constraints of human nature and therefore must be accounted for. But now a global system of trust can be created, where I can literally trust a 65 year old woman in Brazil, and she can in turn trust a 15 year old boy in Africa and so on.

The implications of how society can be restructured knowing now that there is an open and reliable system of trust is so disruptive that nobody is really acknowledging its importance because things have been the way they have been for so long, that this new invention creates a paradigm shift outside of tradition that goes back all the way to the agricultural revolution; a time when a major concern was what to do with the surplus of grain and who should be trusted to manage it.

I am lucky because I lived in one of the poorest places in the world, a poor village in one of the poorest countries in Africa (no running water no electric no telecommunications and so on). I saw how the village’s social structure was arranged around the chief and trust was put in him as a centralized authority to bring order. All societies everywhere arose out of a system nearly identical. And now because of the blockchain that fundamental precept that we must have a centralized authority to guarantee trust with all our interactions has been thrown out. This allows so much of what we know of today as society to be rewritten from the ground up. I am saying it here. I believe that the repercussions of the blockchain will be extremely disruptive. A few of the old systems that have long proven to be crucial for maintaining order, just simply are not needed anymore. The rest still are of course, but this has the potential to radically shape our narrative concerning these matters.

And while the blockchain has been given to us as a great invention, it was by no means given to us in its final form, and actually wasn’t even given to us in a good model.  It was given to us in the form of proof-of-waste/work championed by Bitcoin.   But honestly, we needed PoW, because if other forms of blockchain were the first version, it wouldn't have ever caught on. People would have thought of it as Monopoly money and laughed it off. It was the miners in Bitcoin that gave some legitimacy to it as they were really working/wasting energy to get the Bitcoins so therefore in the minds of others they should be worth something. And the system worked because the blockchain was secured.  Whoever could work/waste more electricity and computational power would ensure that they were devoting their energy towards the correct chain (longest chain) or otherwise they would be operating at a loss. 

But the inherent value of the blockchain is not in the work/waste used to produce a Bitcoin, but actually what a Bitcoin can stand for and how it can be used as smart programmable money verses simple dumb paper with symbols and numbers on it. I really think Satoshi knew this all along and pulled a fast one over on everybody. He made a purposely flawed mining system, one that would work very well in the short term at protecting the blockchain but all the while knowing it wouldn't work well in the long run, but would draw a lot of attention to the more important invention of the blockchain.  I believe Satoshi didn’t know if Bitcoin would or wouldn’t make it, but that if he could design a system that could just grow large enough and loud enough for the blockchain to gain awareness and support, than his overall project would be a success.

I am talking about the blockchain being a revolution in that it allows trust on a fundamental level that the world doesn’t know. With the blockchain my circle of trust goes from 37 people to 6 billion. With a blockchain a Bitcoin can come not to represent money, but anything of value.  The versatility of colored coins, assets, and records being built into the blockchain is what makes it so powerful and the fact that now I can agree on those representations with billions of other people.  During the agricultural revolution, I could only trust those from my village and the chief was the final authority and stamp of the law.  Later this stamp was written down into constitutions and large governments were formed, but the basic overall structure remained the same.  One centralized authority maintains and enforces the trust.  With the blockchain, the people can now in a decentralized nature maintain the system of trust, and maybe even someday enforce it too. 

Smart contracts on the blockchain will go part of the way towards enforcing the trust of unknown parties.   This means that a blockchain token is now programmable and will only act in certain ways following certain rule sets, and even can be returned back to the sender if certain conditions aren’t met.  There is no need to call the police or the government or lawyer, the blockchain in many instances (not all of course) has removed a need for them to exist in certain manifestations all together. 

Some will argue that Bitcoin and/or all other cryptos are doomed to centralize and will fall down into the same trap of centralization; that sooner or later the centralization authority starts to give advantages to itself because it can; that power unchecked always leads to abuse of that power.  But in reality if trust is facilitated through a centralized or decentralized institution, it doesn’t really matter; the important thing that exists is that it is open, honest, and transparent. The advantage of the decentralized system is it gives a much higher degree of insurance that it is indeed open, honest, and transparent because open decentralization forces this to a greater magnitude. Decentralization essentially acts as a checking system to maintain reputability, but if a centralized system has a different but equally good checking system to ensure the proper outcome, then it too is okay. In the case of Bitcoin becoming centralized, it still to some degree has a checking mechanism built into its core.

Part of that is based off of the belief that Bitcoin is open, honest, and transparent. If there is a way that centralization learns how to cheat Bitcoin, then its purpose has been voided. Now someday Bitcoin might be too big to fail and if it becomes over centralized and actors get an unfair advantage because of it, the world might just have to live with it being a mostly good system but still a little flawed. But as it stands today, if Bitcoin ceases to be 100% open, honest, and transparent, then there is always another blockchain and another proof-of-x waiting to take its place.

This is where other proof-of-x systems come in.  In fact, Bitcoin doesn’t even have to become centralized and fail.  This is because it wasn’t designed well enough in the first place.  Some kind of novel proof-of-x can displace it because it is superior tech all around.  Those that maintain the blockchain should rewarded not by how much they can work/waste, and not by how much they have invested in the system upon foundation (PoS), but how actively they work (not waste) within the system; that basically those using the system stand to gain the most benefits from it.  Pumpers and dumpers and manipulators will ultimately have their influence decreased.  Inactive whales too will eventually be at a disadvantage.  Over the long run, it is those that use the system the most that should be rewarded the most.  A whale who sits back and does nothing gains less for their investment because they are doing nothing within the system; additionally their wealth brings no real world value to themselves other than psychological.  Wealth that is buried in the backyard and not ever once touched is ultimately of no use. 

A proof-of-x system where those most active in the system are also those that maintain it is to me how a blockchain should operate.  Those that are most active should be the creators of tokens.  Where the token comes from and how it is created in the long run is irrelevant.  Even if Bitcoin was to last 10,000 years, then this short time of mining would be irrelevant.  In the end, all blockchains end up on a form of PoS or other proof-of-x.  The blockchain is beautiful and elegant not because of how the token is created, but because of how the token can be programmed and all the things it can represent that couldn’t have been represented before.  The blockchain is beautiful because of the trust billions of people can now put into it, instead of trust in the chief, the mayor, the government, the president and the prime minister.   It is beautiful because it solves a fundamental problem of human nature that goes back to the dawn of the agricultural revolution, that question of how can we make a system of trust to represent and control our surplus so we can be assured it is safe. 

This post was slightly edited from its originally posting here (https://forum.nemcoin.com/general-discussion/open-letter-to-the-nem-devs/).

@jabo38

The beauty of PoW blockchain is that it is so simple!

It also has an interesting property that players with the large amount of coins would likely be the ones who will compete in the mining arena the most to secure control of their stake in the system. If competition is strong enough major players will be doing it even at a loss. The choice major holders of coins will be facing is this: tax themselves by mining at a loss or let the competitors take control over their money. It's quite brilliant if you think of it. I haven't seen any other proof-of-x system that would have a built-in tax on the rich.

All things considered, I don't think Satoshi's design was rushed or is somehow flawed. In fact, it has some interesting hidden aspects that will only start manifesting themselves in the long run. The actual configuration of mining space will of course depend on people's behavior. It might turn out quite peaceful and distributed or heavily concentrated and aggressive. What's certain though is that it will be changing over time as old players are leaving and new ones coming.

I'm interested in other forms of consensus algorithm for blockchain, but simplicity and robustness of PoW will be hard to match. Things that concern me with PoI, that I haven't seen addressed anywhere, are related to long lasting network effects for control concentration. Very popular online services like Google, Facebook, Amazon might eventually gain so much importance in the system, that they will essentially become new central banks, and it's not that they will be getting richer that concerns me, but the fact that they will maintain most of the control over what gets into blockchain and what doesn't.

The other problem is that blockchain doesn't have information on actual delivery of products. It means that real economic activity can be simulated within a large botnet and will be indistinguishable from honest players. The actual impact might not be significant though.

All in all, there are many unknowns in the way this will be unfolding that's why I'm still curious about PoI. I wouldn't write off PoW as inferior or flawed in any way. It is very simple and very robust design that has passed the test of time and survived many attack vectors. It is now securing a market cap of $5 billion, something that other models can only dream of. This song reflects my sentiment the best: https://youtube.com/watch?v=x6LwYmVqzG0

An interesting story. Why do you consider them poor? Is it because they have no good work to earn money? Do you think they would not work for Western wages if they had the opportunity? Work is important. Wages are your Proof of Work. That's how you stop being poor. We all have to work. How can you morally justify someone getting rich without working when there are so many starving children in Africa?

This is very much not true. There may be only ~a dozen pools, however it is not difficult for a miner to switch pools in the event that a pool is not act in a way that consistent that is good for the overall network

I know this argument is long, but stay with me for a minute.

None of them had a car but the guy with a small shop. It was an old pick-up. He sold bags of rice and coke-a-cola, soap, toilet paper, beer, tobacco, and other most basic things.  He had no employees. That was the only western style business within walking distance. Money only comes into the village from people that have left the village to work in one of the cities. They get there by walking to the road and hitching a ride from there (I did this myself so many times).  

The rest of the "economy" is communal. Not communism as taught by Marx, but communal. The houses are built from materials sourced locally; rocks from the field for walls, branches from trees for roof beams and grass from near the river for thatch to finish off the roof, and dung from animals to finish off the walls and floor. The people locally raise animals that are slaughtered for weddings and funerals.  For daily meals they eat food veggies and grains grown locally.

Most of course would work for western wages if they could and there simply aren't jobs within walking distance. (Exception being a small school that is an hour walk away in a different village that has a teacher being paid by the government).  They could of course hitch a ride to the city and try to find work, and a few younger ones do, but most don't. There is a chance for work but the process is psychologically intimidating because it's a world they don't understand well.

The people do work every single day and are not lazy, but a wage is not there proof of work. That is a western concept. For them a good is the product of their work. They literally have fruits from their labor whether it be meat, a house, or a plate of food.  They can exactly look at their labor and judge if the amount of labor is worth the end good.

With Bitcoin the system gets way more complicated. Whereas the African has a simple one to one judgment of asking himself "was today's work worth the fruits?", in Bitcoin there are multiple parties involved asking themselves this question. I'll leave the developers out of the equation and just focus on the miners and the end users.

The case for the miners is quite simple. “If I run this ASIC, will I get a just reword for my work/waste of electricity and computational power?” I say waste because most of the power being used doesn't actually produce an end result. An African farmer might only have a 25% success rate per seed to plant. The other 75% of his effort was wasted in trying to get that 25%. If he could improve efficiency, he would be much better off.  His cost per fruit would be much lower.  How many hashes does a miner waste before finding the productive one?  I think the answer is, “A LOT.” Now when a good hash is found a large reward is given. And so miners can justify whether or not it is profitable to run an ASIC. It is a simple question of work done for reward, just like the farmer. And for the miners it is a system that works well.

But what about for the end user? What are they paying for and is the service they pay for worth the service received. When a person puts a record into the blockchain it costs about $0.04 which all things being considered is pretty cheap. Somebody just recently moved millions of dollars worth of Bitcoin for that small fee. What a great deal! But how much did it cost the whole system. See that exchange only paid four cents to make that transaction, but the real price of that transaction came from me and you. It came via the fact that the miner that made the block was rewarded bitcoins. Those bitcoins diluted the total supply. Effectively taxing me and taxing you a little bit for his transaction. That guy didn't pay the fee for the transaction, we did. The miner didn’t mine that block for the transaction fee, he did it for the block reward, a reward that is a tax me and on my existing bitcoins because they are now worth less because of the dilution.

So the question I need to ask as an end user is, "am I getting a good service for what I'm paying?"  The service I'm getting is trust with a community of people that can see my record of bitcoins. They can trust I have Bitcoins and I can trust that they can trust that and vice versa. Anonymint has some pretty weird ideas but sometimes he comes up with a good point (https://bitcointalk.org/index.php?topic=882071.msg9729785#msg9729785). I don't know if his numbers are right but he said the real cost in miner rewards is $30 per transaction. This comes via dilution of your and mine money. It's easy to figure out. Just figure out how many transactions were processed and divide it from the block reward. That's how much a transaction really costs.

A system where a user only pays $0.04 per transaction but the community as a whole was taxed $30 is simply just not sustainable. When I as an end user pay more for a good or service than its actual value, then a bubble is created.  Right now there is an effective bubble of $29.96 per transaction out of $30.

Now we are in an early stage of Bitcoins development and PoW whether you consider it work or waste is actually a very successful system right now. But will it always be? When the block rewards go down dramatically, then I as an end user am no longer being taxed for the action of others putting a record in the blockchain. It's a big win for me. At that point the miners are working more for the transaction fees, so now we need to ask ourselves "is it worth it for them?" Remember right now the network is currently subsidizing miners at a rate of $29.96 per transaction via taxes on the people. We all know that miners are selfish. If they won't continue to be paid well then they won't work. Just like farmer that can't get a certain crop to grow moves on to a new crop, a miner of PoW will move onto a different chain or just stop being a miner all together. Here in lies the problem with a system of waste to secure the blockchain, in the long run it just feels like to me it can't continue. The end users and miners need to come to an agreement on how the chain will be secured.  With PoW so many hashes are being wasted per transaction.  What we need to find is a way to increase our hash per fruit of labor ratio.  That way the system isn’t being taxed and subsidized so much.  

In different proof-of-x systems this problem is being solved in that the end user is securing the blockchain at the same time they are using it (not the miners). They are not wasting as many hashes and the fruit of labor per hash ratio is more balanced. They are putting their energy and computational power to as good as use and most efficient use as possible. This brings down the cost per transaction to the whole system down much lower.  In a pure proof of stake system, you and I are not taxed at all per transaction of other people. As an end user, this sounds better to me. Why have my money diluted via miner’s fees when I can have my money not diluted at all on a different chain?

I think PoW is and has been an amazing system and I own a lot of Bitcoin, but honesty when a more beautiful blockchain comes around, one in which I'm not getting taxed so heavily for being provided with my network of trust, I will move to that blockchain. See miners aren't the only selfish actors; end users are selfish too. Right now I use Bitcoin because it is the main and only real option to me, but in the future that may or may not always be the case.

You just exactly down to the very word described NXT's version of PoS.  Just as PoW should really be called "proof of waste", PoS should really be called "protection of stake."  People that are running NXT nodes are big whales and are often doing it for no gain.  They do it not to try to get rich, but they do it to protect the blockchain and protect their investment.  

I think like only the top 30 accounts can actually make money paying for their electricity by running a node, and that would be if they only ran one.  But most of those whales are all running multiple nodes, many of which are being run on Amazon.  

The beauty of the NXT system is that they whales are being burdened with maintaining the blockchain.  I as an end user get a network of trust and my money is diluted 0% forever.  In fact the opposite is true.  Occasionally NXT is lost, so effectively my NXT grows interest.   

I am not saying their system is perfect, but I do think for the end user, it is a big improvement over PoW.  

The only ones having the ability to sign a block are the miners. They are the ones with the ability to accept or reject any transaction. There are not thousands of them, around a dozen.

Because it's impossible to prove that any PoS system is not centralized (the metaphysical ontological argument) it boils down to faith. And that's just distribution. Then there's the fact it costs nothing to clone. Then it boils down to marketing. Who's advertising would you trust., some guy on the Internet? Wouldn't it be better if Mastercard creates a PoS debit card? Would you still like Proof of Stake then?

For some miners, yes. For the big guys with low costs, no. We just had a small difficulty drop, indicating even some of the big miners are dropping out.

Today, unless you have a big mining farm, cheap labor, good relationships with an ASIC vendor, and cheap power, you can't make money mining Bitcoins. See the Mining Speculation part of the forum.

There are way more than a dozen p2pool mining nodes, each with the ability to accept or reject any transaction.

Sure the p2pool hash rate is miniscule, but any large home miner willing to run a computer 24/7 can set up a node if they get pissed off with the larger pools.

It is true that if somebody is willing to buy a dozen ASICs, it isn't that much more for them to set up their own node at that point.  If smallish miners don't like the mining pools, the small time miners can do this fairly easily. 

PoS is suitable for shares in the company. It is also compatible with the idea that many PoS systems need to compete between each other to stay robust, while PoW allows competition within the system.

We already have a money system in place owned by snake err... stakeholders, you know how it turned out. We are not yet at the hunger games scenario, but that's where any unchallenged PoS system is eventually headed.

Plus what cbeast said about cloning and marketing.

why are you just cross posting this across different PoS v PoW style threads? in the hope to rise another debate out of someone with you stupid "fit for company shares" "pos leads to hunger games" argument?

quit trolling...

bump

My goal is to find truth and help others see it as well.

I'm interested in the long term evolution for each model, that's why I advocate for continued competition in this space instead of turning one system into another. My concerns about PoI still haven't been answered. My point is not to harm other systems, but simply point out some of their deficiencies that might lead to serious consequences in the future. This allows to better see the problem and take actions to address it.

Not everybody likes trolling, but sometimes it brings nice dynamic to the conversation. In this regard, I will say that PoI might turn quite PoIsonous if not implemented well, no offense :)

With that said, I feel that I have saturated the channel enough, so I will take some rest and let others compete with their ideas. Good luck and have fun!

PS: I am defending Bitcoin on Bitcoin's own turf, so it is other players calling it proof-of-waste that are trolls here. What you put out is what you get back. Also see this thread to understand why PoW is the way it is: https://bitcointalk.org/index.php?topic=855520

Of course, whatever functions longer has more credibility: PoW ~6 years, PoS -1 year, PoI - 0 (still in testing). However, dismissing flaws and vulnerabilities in systems that have run for a long enough time is not constructive. "Good enough" may be not enough for some rare case situations, which can happen under certain conditions, those rare case situations should be foreseen and measures should be applied prior to such events, it's only common sense in engineering.

I absolutely agree with the principle of that statement. However, my objections with PoS is not in its software engineering, but with its social engineering design.

Precisely. Its always good to look at ways to innovate rather than stagnate. PoW has flaws, that can be accepted or a better alternative may be searched for.

PoS itself has evolved from the basic to TF, DPOS, PoI. It will continue to improve so rather than dismissing it as it may represent a threat to some groups, it should be welcomed.

Besides being wrong about there only being a dozen Bitcoin miners when there are hundreds or thousands, what other flaw do you think exists?

I am still wondering about this....


To sum up:  Miners are getting paid the equivalent of $30 per transaction they process.  The sender of the bitcoins only pays $0.04.  That means the miners are being subsidized $29.96 from somewhere else per transaction they process.  That extra money is coming from what is effectively a tax on the prior owners of Bitcoins.  They are not having bitcoins directly taken from their accounts to subsidize the miners, but they instead they are having their current stash of Bitcoins diluted.  On average there are about 144 blocks a day (that is 24 hours times 6 blocks an hour) and each block is releasing 25 bitcoins.  That means each day 3,600 bitcoins are being created to pay miners.  The value of those bitcoins at today's market prices are $1,332,000.  The more than 1 million dollars a day being paid to the miners comes from dilution of mine and your bitcoins, effectively taxing us.  Now the miners love this, because they are getting paid well, more than a million a day.  But what happens when those block rewards keep on halving?  They won't be getting paid nearly as much.  Will they still want to mine then?


At some point when block fees drop, then fees for senders have to go up.  Miners won't mine for free.  To me it just doesn't seem sustainable.  If miners weren't being subsidized today, then each sender would have to pay a $30 fee.  How many people are really going to want to do that?  Western Union actually doesn't look so bad then.

I do think PoW has been a truly amazing system and I am very glad it exists and I own a lot of Bitcoin, but the system as it is right now to me doesn't seem sustainable in the long run. 

Some kind of different system where people processing blocks don't need to be paid so much seems a much better way to maintain the blockchain to me.   

I think you might be slightly confused.

First of all, the "dilution" you speak of happens regardless of the price of Bitcoin, who is mining, how much they are spending on mining, etc.
New bitcoins are being released according to the protocol -- there is a steady, predictable rate of inflation and issuance.

Second, you say it "doesnt seem sustainable", but what are you basing that on?  You have to remember that
supply and demand set the price of Bitcoin, and everything else follows.  Miners are claiming $1.3M/day in
block subsidies (and the same amount is being spent on security)
because that's how much Bitcoin is worth right now.  
Competition is going to make sure that happens.

If the subsidy reward were cut in half today to 12.5 BTC and the price didn't increase,
it would only be $680,000/day.  Competition would force some miners out.  
The network hashrate and difficulty would drop.  
But it would still be enough to secure the network.

Now, if you want to look at the long term and how much the fees would need to be to
support the miners when the block subsidies are gone, then
you need to look at the number of transactions, how big the network will be by
then, and how much security is needed.  But you haven't done that -- you haven't
worked out those figures.

Yes, it is steady and predictable and I can even use that prediction into my evaluation of how much a bitcoin should be worth.  But just because it is steady and predictable doesn't mean it is not a dilution.  It is still a dilution and that dilution which is essentially a tax on all previous bitcoins is still subsidizing miners.  It is just a predictable dilution instead of a random one.


And then what if it halves again to $340,000 and then again ton $170,000 and then again to...... $0.  You are right that a single having of the block reward won't kill bitcoin (thus I still own a lot) but eventually that kind of system catches up.  Do you know about the law of exponential growth?   Well, this is the law of exponential decline.   It is just as equally unsustainable.  


oh yes I have done the numbers, I just didn't post them.  to keep the hash rate the same as today, but have no subsidies for miners then the network will need to process 320 times (32,000%) the amount of transactions per day than it currently is.  That is assuming that the miners and hash rate stay stagnant.  

Now here is where I admit my knowledge is a bit thin.  I don't know if a Bitcoin network with 32,000% more transactions can be maintained well enough with today's hashrate.  If it can be than that is okay.  When it comes to this fact, I readily admit I don't know.  

To be clear, I love Bitcoin and think it is amazing.  I just think a better system where the blockchain is protected by a system that doesn't cost so much would be better if it was just as strong (PoW for my criticisms is definitely strong).  When I look at the long game of Bitcoin far off, it just seems unsustainable to me.  If I am wrong on my numbers, please help me out. I hate being corrected but I hate spouting wrong information even more.

You are not addressing jonald_fookball's point about competition. That is the incentive for mining. It also determines the security. Competition is a function that makes the security predictable. Without cost/benefit analysis of the competition you have nothing to base trust. You would have no mathematically predictable way to establish risk. Trust based on unknowns is called faith.

PoS isn't horrible but the cost to produce coins vs PoW coins is a lot less so the price for PoS coins will always be much much lower.

You can't get something for nothing forever.

I must have missed have missed your mythical hundreds of thousands of miners as I see that only a dozen producing blocks.

A miner is someone with the ability to sign blocks. They decide which transaction to include.

Or not of. Miners are also nodes even when they don't find blocks they relay transactions and keep a blockchain.

I agree with this general observation for what is going on right now.  It very accurately explains why Bitcoin is worth so much per coin and every single PoS coin is worth very little.  But in the long game, I think the cost of maintaining the PoW system (because it requires so much work) will start to tax the system (especially when the subsidies expire).  Where as with a different proof-of-x system in the long game, it will be cheaper to maintain the system, thus making the coins ultimately more valuable.  

Both provide essentially the same utility, but one has hire taxes.

This of course would assume that all things being equal.  When in fact they are not.  Right now Bitcoin has a huge first mover advantage and a better marketing advantage.  Those alone might make it very difficult to disrupt even if a different platform is technically superior.  

When you say "tax the system" you mean the energy supply or what? Why can't miners improve efficiency to near perfect so the current hashrate can run on a car battery? What spinoff benefits would emerge?

I'm cross-posting again. This place is addictive :)

Mining allows players to stay independent by funding their own security operations. It is similar to how large geo-political players fund armies to protect their share of land. Do you think their expenses are justified?

By "tax" the system, I mean just that.  The miners are charging taxes on transactions.  Right now that tax is $0.04.  There are about 100,000 transactions per day give or take.  That is going to mean that about $4000 in fees are being paid to miners by people wanting to have transactions processed.  Yet, the miners are getting paid $1,300,000 a day.  So who is paying for the rest of those miners to run?  They are regularly buying new hardware and electricity. Where does that money come from?  It comes from the rest of the system getting taxed (existing bitcoin holders getting devalued). 

So when I am talking about the system being taxed, I am talking about all the money that it takes to buy new hardware, maintain it, and power it with electricity.  It is taking a ton of work to maintain the Bitcoin blockchain.  That money that those miners are using to pay for electricity and hardware doesn't just magically appear.  Maybe the miners are not cashing in the whole $1.3 million a day, but I am guessing we can safely assume they are cashing out more than a million a day.  That is a million dollar tax (minus $4000) a day to keep the system a float.  If they don't get their million dollars, the whole thing falls apart. 

Now, to your question of "if" miners were able to mysteriously come up with hardware at a cost of near $0 and run it for a cost of near $0, then yes, there would be virtually no tax at all on the system and very small fees would cover the cost of the miners.  In that case the Bitcoin blockchain could be managed and maintained for very cheap.  I am guessing that would be a great thing not just for Bitcoin, but for the whole world.

But if you want to talk about a system where the maintainers of the blockchain are having very little expenses for electricity and very little expenses for hardware to run nodes, then we should talk about some of the current PoS systems, not a hypothetical Bitcoin blockchain of a possible future.  For instance many platforms like NXT and NEM have shown that their nodes can be run off of a $50 Raspi B+.  Those in turn can be outfitted to be solar powered (though at that point it is probably just cheaper to pay for the minimum amount of electricity).   

 

There is no connection between the cost to produce a crypto coin and the price, hence your conclusion is a fantasy.

Price is a function of supply and demand only.

If supply of a PoS is fixed or inflates at a predictable rate comparable to a PoW coin inflation rate, there is no reason for the market cap (and price too if total caps are the same) of a PoS coin to be below the market cap (price) of a PoW coin (Bitcoin has a first mover advantage vs all others, PoW and PoS coins, it shouldn't really be compared here for the purity of this experiment as it clearly wins now just based on the adoption numbers).

You seem to be implying, that there is a way to achieve security without spending any energy/money on it.

It's like going to Russia and China and saying - hey guys all your expenses on army and firearms are futile and not sustainable. It's just cheaper to give it all up already and get your orders from Washington for free ;D

Partially true.  Actually there is a connection, but it is the opposite: price causes the cost because of competition.  That was one of the main points of the article in the OP.  Competition will always rise to spend as much resources as possible while still making a profit.  Maybe that is not the intention if the design of the poS coins, and maybe that isn't happening right now, but so far no one has been able to say why that wouldn't happen if there was a serious Bitcoin contender with a widely distributed stake.

@Jabo38, you are correct that the transaction volume needs to grow by orders of magnitude to maintain the same level of security with no block subsidies.  However, we have decades to get there, and even if the hashing power dropped by a full order of magnitude Bitcoin would still be secure.

The cost to produce a coin is a function of it's price, as if the price declines, the difficulty will decline causing the cost of producing (mining) the coin to decline.

With PoS coins on the other hand, the cost of mining is simply the cost of holding the coins

Right.   Until the stake holders start generating chains to earn more rewards.

Let me rephrase the question since you seemed to just dismiss it. If you invented a miner that uses almost no electricity and is fairly cheap to produce and nobody else had anything close, what would you do?

There is no causal relation between the two. If prices fall miners leave and difficulty goes down, it doesn't happen the other way.

LOL, so we should support resource depletion and wasting resources by "mining" cryptocurrencies when it is not mathematically necessary to do so? That isn't going to help the starving children very much.

Mining doesn't deplete resources. Your argument is nonsense.

Yes, but we discuss what the price depends upon, not what the cost to produce depends upon.

Only miners would be interested in the latter, whereas investors and users are interested to learn what drives the price.

Cost to produce depends on the price, that's correct.

But price depends on supply (supply (increase rate) is predictably stable in cryptos) and demand only.

Price doesn't depend on the cost to produce.

Mining with calculations is not a good idea. Must be invented a new method. For example, mining with bandwidth is a better idea and eco friendly.

lol
What?
How is that supposed to work? Miners are uploading and downloading random data?

Must be from Korea (Stupid high bandwidth connections available compared to most of rest of world)

Anyway, ultimate consequence is, that as much bandwidth will be deployed as energy available for it. Proof of whatever, as much will be deployed as energy available. Memory intensive? Storage intensive? Same shit, different name. Per unit kilowatt, anyone inclined to mine, will run about a terahash of bitcoin ASIC, or half a terabyte of RAM, or ~200 terabytes of disk, or a hundred 10W nodes, VMed to 4 instances each or something.

The fact that POW now REQUIRES specialist hardware is a huge security advantage. Anything that ran on commodity hardware, whether it needs more nodes, more memory or more complex general purpose CPU, is suceptible to botnet, or buying, stealing or subpoenaing of amazon aws or digital ocean cloud datacenters for a period of time.

If the giant US Utah facility, had top end low power i7s, and every milliwatt of power available to them went into bitcoin mining, they'd probably only make the top 10 users list in a 1% of network pool.

Maybe. I don't know.

You would ruin the whole internet with that. That's like a global DOS-attack.

Maybe with a special torrent file.

If I found a way to mine Bitcoin for very cheap, I would mine the hell out of it. :-)  To some extent this is a flaw of the Bitcoin network because sometimes things like this come along; somebody develops a new tech and keeps it to themselves.  This to some extent happened when Bitcoin went from CPU to GPU and then again to ASICs.   The first ASICs were hoarded.  If there is another leap, it will happen again.  

The great thing about PoS is you can't really do this.  For instance with NXT, you can't just come across a bunch of NXT for close to 0.  If it was possible it would have been done by now. (but again things like this do and have happened in the world of mining)

With the ICO coins nobody can find a way to get a bunch of new coins for cheap like can be done with Bitcoin.  All the coins are created at once in the beginning.  The people that maintain the blockchain aren't getting subsidized at $29.96 per transaction.  The people that maintain the blockchain work for a very small transaction fee and these aren't new coins being created but the recycling of old ones.  In systems like PoS or PoI, you can't really make a substantial profit forging because there is no $29.96 subsidy.  

With these next generation coins, you don't get rich maintaining the blockchain, but at the same time it is super easy and light to do so.  You can just leave the program running in the background when using the computer (it doesn't use a lot of resources) or even set up a raspi if you so like and are an enthusiast.  Basically blockchain maintenance is transferred from the likes of greedy miners to cryto believers and enthusiasts.    

In the case that the person that found the new hypothetical hardware was a bad actor, it would be really bad. One of the scary things about Bitcoin is that if somebody amounts a big enough amount of hardware, they can take over the network. (this would be hard to do as things are right now, but a new device for mining maybe could make it happen)

And for NXT a person would need to buy up a ton of NXT.  In doing so the price would shoot up, and then if the person did attack then network then their investment would be destroyed.  It would take something like a cyrpto kamikazi.  

But for NEM a person would have to get a lot of coins like in NXT, and then get a lot of hardware, and then would have to make a lot of transactions with people outside of their network (the key is with people outside of their network).  At this point it becomes really difficult to take over the network.  

That's it! But I disagree with your viewpoint here. Competition is the essence of commerce and capitalism. It gives the edge to innovation. PoS is simply a numbers game that is solvable. Once you have a certain level of stake, nobody can take it away. At least with Bitcoin, if someone manages to get control, it can be taken away competitively.

Alphabet altcoins - copy/pasta from >1000 altcoins.
NXT - I'll wait for the next NXT. It's just another altcoin.
NEM - Claims to not be  coin, yet claims to be coin. Does that ripple a familiar vibe?

Bitcoin requires work. Why do so many people have a problem with work?

I am all for people having to work to get something, but I also want to see it be efficient. 

GPUs were more efficient than CPUs. ASICs more so.

Your talking about an energy per hash ratio.  Yes, ASICs are a lot more efficient at producing hashes than a CPU.  But what is the end game of that?

When I meant more efficient I meant on a network wide scale making the amount of energy consumed per block going down. 

When CPUs were standard some electricity per block was used.  When GPUs became popular the network was consuming more electricity.  And when ASICs came into being the Bitcoin network devoured even more electricity per block than GPUs. 

Why have a network use a lot of energy per block with expensive hardware when you can have a network consume a little per block with cheap hardware?  Somewhere that extra money for extra maintenance for the more resource heavy network has to come from somewhere.  It is an operating cost.   To me the chain with the lower operational cost (all other things being equal) is better.  And that chain is the one that is more efficient. 

Why does operation cost matter to you unless you are a miner?

You'd think it would be obvious. Make it cheaper/less energy intensive for the average joe and it gets also cheaper and less energy intensive for joe the whale.

If it costs average joe just cents, then joe the whale can dilute his efforts 10 Million to 1, getting 9,999,999 payoff for every 1 average joe makes.

Then if by some miracle, some process turns up that makes it highly unscaleable, there will be whining that why would anyone bother because everyone can only make $10 a week maximum.

So the crux of the matter is, average joe just wants to be teleported into joe the whale's shoes, he doesn't really want anything to be fair, but highly biased in favor of him personally.

Amazing how people STILL, after 10 pages of the thread, are missing the point of
the article in the OP.

There is no "lower" operational costs regardless of the security model!   
Security costs will always rise to the level of the rewards being
given, due to competition.

erm.. Actually no.. How do security costs rise in a pos system when rewards are tx fees? Did security costs rise for nxt when the asset exchange came out and transactional fees doubled or quadrupled and in turn rewards doubled or quadrupled? No they didn't so your theory that securty costs rise as rewards rise is wrong..

Because people will game the system -- they will create alternate chains to try to earn more fees.
Why WOULDN'T they, as long as there's money to be made?

well why haven't we seen any increase of multiple nxt forks or any at all for that matter during the period of increased reward? Why? You say why wouldn't they.. But yet no one has done that.. Pretty much of proves your statement wrong..

And even if someone forged on multiple chains, only one is valid so they only get the fees from the valid chain because the rest won't be accepted. they won't earn any extra than if they only forge on the valid chain.. Your theory is pure tripe.

And your response does not address my disagreement with your statement that security costs rise as rewards rise regardless of security model.

Did security costs rise for nxt when fees per block increased? And if your answer is yes, where did the extra cost come from?

Someone forging on a fork does not get included in the security cost for securing the main chain of nxt simply because they are not securing the main chain. They are securing a fork. So even if your claim that people will game the system was true, that still doesn't increase the cost of securing nxt. Your trying to make an argument but it just doesn't stand under further scrutiny.

I would guess its because there's barely any rewards.  What's the daily amount of fees being spent on NXT?  
Also, most of the stake is centralized to a few big players anyway, so they don't need to compete.


Yes, they only get fees on the valid chain, but they spend resources trying all the chains.  That's the point.  That's why resources spent will keep rising until its unprofitable.  

Obviously it won't be both cases at the same time:  There will either be high rewards and competition over them, or there will be little rewards and little competition.
 
As the article explains, if you don't have block rewards, you don't have much to worry about as far
the security costs rising, but then you have other problems relating to the issuance itself.
 
 

so your saying yes the cost would rise.. and the cost "should"/"would"/"could" come from people forging on forks?

why does the cost of forging on a fork get included in the security costs of securing the main chain?

the cost of forging on alternate chains should not be included in the cost of securing the main chain because they are not securing the main chain. the extra cost they incur is the cost of securing a fork. if the main chain costs 100 dollars a month to secure, and someone spends 10 dollars a month on forging on a fork and in turn securing the fork, how does that 10 dollars cost for securing the fork get factored into two different calculations for two different chains? that 10 dollars didnt get spent twice.. so was it spent securing the fork or the main chain? cos it can be both.. it cost him 10 dollars to forge on the fork so that does mean that it cost 10 dollars to secure the fork because hes securing the fork. not the main chain.

securing a chain, forging on it, and earning rewards on a chain are all part and parcel of the same mechanism right?

il repeat that.. 100 dollars is spent to secure the main chain. 10 dollars to secure the fork. that 10 dollars cannot be spent twice.. so which did it get spent on? the main chain or the fork? how much has it cost to secure the main chain in this situation? its pretty simple dont you think?

 if someone decided to fork bitcoin and pump 10 billion dollars into mining the fork, would that be included in the cost of securing bitcoin even though the bitcoins he mines would be worthless? regardless of whether it makes sense to do that(image someone is insane and wants to do it for the heck of it) would that cost be included? (remember we are not debating the economic incentive of mining or forging 2 chains.. we are debating whether the cost to secure a chain rise as rewards rise - your only argument so far is that someone would forge on more than one chain.)

your argument, that the cost of security rises as the reward rises regardless of security model would suggest that it should be included.. if i decided to pump 1 trillion dollars into mining on a fork, would people be saying tomorrow that the cost to secure bitcoin is over 1 trillion dollars? i highly.. HIGHLY.. doubt that..

"the cost of security rises as the reward rises regardless of security model"

that is a false statement.. plain and simple..

That makes as much sense as saying "mining costs shouldnt be counted except when a miner wins a block and it becomes part of the blockchain".

They say they need work to get it done, but they are not doing any work. They are just wasting electricity and giving money to the those companies.

actually it does make sense..

if i forked the nxt blockchain and maintained it on a server and say that cost me 10 dollars a month to do, thats costing me 10 dollars to maintain the fork right? it wont ever get accepted as the main chain and any coins i forge on the fork would be worthless right? but it is still costing me 10 dollars a month to run the server to maintain the fork.

so its costing me 10 dollars a month to maintain that fork. why should the cost of me forging my own little fork on my own little server thats never going to be anything more than an unwanted fork thats worth nothing get included in the cost of maintaining the main chain? and if it does get included in the cost of the main chain, does that mean i didnt spend the 10 dollars running my server to run my fork? im running the server so that i can maintain my fork and spending 10 dollars so i can keep it running thus the cost of THE FORK is 10 dollars.

please explain how that 10 dollars that i spent on the server to run a fork gets included in the cost of maintaining the correct chain?

edit: im done debating with you.. your statement is false.. simple as that and iv proved your are wrong.

The work they are doing is securing transactions. All work in physics is measured in terms of energy. PoS altcoins would rather we give money to them for nothing because they don't want to work.

Backing money with energy is the basis of the petro-dollar. It's good in theory, but Bitcoin does it more efficiently than the US dollar.

LOL.  You don't maintain a child fork endlessly like that, that would be pointless.  You forge multiple chains and some of them are accepted as the main chain.  (duh.)
You constantly spend resources to forge child chains from the current main chain , as long as it is profitable to do so.
 
You can disagree with me, think I'm wrong, that's fine... But all I'm doing is reiterating the very
cogent points of the OP's article.  So, I guess you proved the article wrong according to you.  :-\

If someone else would like to chime in and tell me how I'm wrong, I'm open to listening :)

P.S.  If you take it to the extreme and have a PoS coin with no fees to fight over, then
you have zero sercurity cost, but what incentivizes nodes to even participate in
the network at all?  Well, "stake", one might say.  But the problem with that
is it then makes more sense to attack the network than to participate
in it honestly, since there's no rewards.

Because PoS systems have no capital requirements for security, they depend entirely on marketing and have nothing to benefit from grassroots startup. Fifth Avenue will have a new industry for which to develop advertising markets. The only PoS systems that will see any success will be backed by central banks and large corporations. The network attacks will be the advertisements bombarding every form of media.

It will also require something to back it because there is no incentive to invest in a commodity that cost nothing to produce. Banks will back them with worthless junk derivatives and promissory notes. They will become fiat currencies and as such become politically charged. PoS will become state sponsored and inflatable.

In a nutshell, PoS is little more than a technology to support fiat currency.

They do have capital requirements (stake needs to be purchased first just like ASICs need to be purchased), just not as wasteful as PoW systems (ASICs life is 6 months and then you need to upgrade to new ASICs, not to mention electricity fees, datacenter rent fees, etc. and all that at an increasingly wasteful rate to compete with other miners).

Inflatable PoS is wrong, no doubt about it. Any inflatable PoS crypto should be avoided. Luckily, there are uninflatable PoS crypto 2.0 technologies, which are not wasteful as PoW.

Stake isn't capital. You can base PoS on tokens like travel points. Capital is fixed value hardware or natural resources. Bulldozers, ASICS, oil, and licenses are examples of capital. PoS tokens are speculative vehicles that may or may not have value except as a security token like a Verisign cookie.

Since you consider licenses (intellectual property, not just physical property) an example of capital, think of the stake as a license that you invest into.

As long as you have legal standing to issue the license then fine. Would you then copyright it and keep it closed source? Would you sue people for violating your license? If so, then yes, you have a good statist capital.

Dude, the license here is the stake you purchase, that is your capital investment. The license gives you a right (what do you mean legal, I thought crypto currencies don't require a legal permission to operate?) to take part in the staking process, the stake is your mining rig except it's 'virtual' not physical, these PoS tokens you purchase is now your uninflatable intellectual property that secures the blockchain. Come on, that's easy enough to understand, don't pretend you don't get it ;)

The point of the article isnt that poS could never work, just that theres no point to It because It offers no gain in energy efficiency.

No. The stake does not give you any incentive to promote the long term health of a PoS network. With PoS you can buy a coin, attack the network with it and then sell it. You would suffer no losses (expect potential slippage).

With a PoW coin on the other hand, you are forced to make a long term investment (spanning at least several months) in which you would suffer greatly (financially) in the event that the network was attacked

That's not the definition I was using. You should call it proof of license. I can only presume you are willing and able to sue your PoS users that violate your license. Now we see your motives.

I see you're in the mood of twisting words like lawyers.

Some rigorous research into POS, which includes some findings relating to the so called "Nothing at Stake problem" has been published >>> https://bitcointalk.org/index.php?topic=897488.0

You can play with the models used to get the findings yourself. There is still some questions to answer (which will be done in subsequent papers) but the authors found "it's nearly impossible to attack a proof-of-stake currency with '1% stake even' as stated by Buterin".


Please comment in the thread >>> https://bitcointalk.org/index.php?topic=897488.0 to hopefully get a good quality discussion going for the benefit of the crypto scene, let's leave tribalism at the door.

They didn't find that at all.   Why are you posting a false quote?

They conclude its still a problem!  See my comment in the other thread.

That quote is exactly what they say they have found,  since it is a quote from the OP of the thread you refer to... ::)

And your comment says you haven't taken the time to digest and understand the paper... or even read the OP apparently, before commenting on it. Sheesh...

Listen you muppet...

Open the actual PDF with the white paper,
https://github.com/ConsensusResearch/articles-papers/blob/master/multistrategy/multistrategy.pdf

Nowhere does it say "it's nearly impossible to attack a proof-of-stake currency".
 
But it does say (nothing at stake) "is a real problem" and future work will
try to find  "the ways to avoid N@S attack if any"

Obviously I'm the one who read the white paper, and you did not.

Don't get ruffled jonald, we all make mistakes. The quote is exactly where I said it was.

The reason they say it is because this paper is the first part of their findings. Consider it a teaser. Hence...


"- we have formally defined nothing-at-stake attack(again, using Buterin's informal definition) and made initial simulations. We haven't included their results in paper as they are seems to be too raw, but I can reveal them here: N@S attack could happens only in short-range, e.g. for within 20 blocks for 10% stake, so with 30 confirmations we haven't observed the successful attack. Also please note the attack has pretty unpredictable nature for attacker, so he can hardly enforce it, even in theory(in practice it's even harder to get it done properly). The correlation with stake size is still the open question, but it's nearly impossible to attack a proof-of-stake currency with "1% stake even" as stated by Buterin"



You're welcome.

obviously the quote is wrong and inverting parts of the paper.  do you not agree?

the phrase "with even 1% stake" was actually the paper quoting the ethereum blog
and it says the opposite...says that with even 1% stake you can attack the network.

sorry for the name calling but it is pretty frustrating when people are misquoting
things and throwing their opinions around without even reading the white papers
being referenced.

Where was I misquoting? Which parts are my opinion?

If you want to challenge the authors, I think it would be better done in the other thread.

You're quoting a quote that itself is totally wrong.

THIS:

.

The paper doesn't say that at all, in any way, shape, or form.
(If I'm mistaken, please tell me exactly what page of the white paper
multistrategy.pdf  I can find that on.)

No, instead it quotes the etherum blog and says this:

My reference was the thread. The thread explicitly tells you that that quote isn't in this paper. My post above states the same, results in "subsequent papers".


The only person linking that quote about the results to this paper is you. And then you are attacking me on the grounds that I am the one making the link.

ok whatever...i made my points.  have a nice day.

http://cdn.meme.am/instances/55158085.jpg


Thanks. Have a nice day too.

pow is good enough, it need maybe a better transaction validate, a system that can check if a block is valid, without basing its check on the longest chain

like what? 

man, I read this thread.  it is a bunch of anti-PoS trolls repeating the same worn out arguments.  every time somebody explains coherently why they are wrong, the fudsters just ramble on with a different bogus talking point.  what a waste   :-\

Please link to the post that you felt had the most coherent explanation of why the article in the OP is wrong.
 

The current implementation of PoW already does this. When there are competing blockchains, the one the network accepts as "valid" is the one that has done the most work, although this often happens to be the longest chain, it also prevents people from attacking the network by starting to mine on a blockchain when the network is significantly less then it is now and then building up the blockchain until the block height is the same as it is now