Before, we discussed about how to decentralize mining using ASIC-resistant algorithm, so that only corridor miners with free electricity and GPU can survice in the long run, and that will hopefully reach a high level of decentralization. But it proved to be unsuccessful, since there will just be large pools collecting and buying those miners hash rate, and those large pools will reach monopol sooner or later. So the centralization of power is always a self-strengthening trend, regardless of what mining mechanism you select. The only way to deal with that is coin competetion, e.g. at least you have 2-3 coins of the same type, so that one of them will not go rogue

But my point is, given same amount of electricity, instead of just burn it to get some coin, if you could first use those electricity to do other useful things, and then use earned money to stake and get same amount of coin, that is much higher efficiency from a pure energy utilization point of view

1. True, for PoW coin, energy is consumed in the mining process. But for PoS coin, energy is not consumed but stayed inside each staking nodes. Why waste it when you can preserve it?

Mining is just a way for fair competetion. Wether the energy input must be in form of electricity and consumed is to be debated. For example, if satoshi designed the bitcoin to have a chemical miner and require people to input petroleum to do the calculation, then it will create another type of synergy around oil industry. And maybe in future, when quantum miner is invented but require a special kind of atom to do the calculation, then this special material will become the core of mining success

So it depends on how you design this fair competetion model. I believe that fiat money is more decentralized than electricity, so using fiat money as energy input will make it more available for everyone



2. It is true that in future, fee income will replace block reward, however, is must be high enough to protect the network. For example, you have only a few million dollars income per block but the network carries transactions of billions of dollars per block, there is a high incentive to compromise the network to invalid some billion dollar transactions, since the cost will be 1/1000 of that. The BCH/BSV fork war just demonstrated that there can be backup hash power moved into a coin just to totally change how the network runs

PoS coin does not have this problem since the security from each staking node are equally higher when coin value is higher.

This is always an very interesting topic

Fundamentally you need to put some valuable resource in exchange for the bitcoin, that's the best thing with cryptocurrency. It is produced at certain cost, not borrowed from GOD, like fiat money

However, there are 2 major problems with mining:

1. mining is not a very effective way to convert energy into bitcoin: Most of the energy is wasted as heat. If ASICs were made of superconductive material and never generate any heat, then there is no inefficiency of the current mining model: The competetion will always push the chip+energy cost to market value of coin, the waste is minimum, and the world climate will not be impacted

2. A forever increasing coin price will lead to a forever increasing energy consumption, which eventually exhaust all the energy supply on the planet and cause the government to ban the mining like IRAN just did. This will put a upper limit for how high a coin's value can be

So, although spend energy to exchange newly created money sounds very fair, but burning energy to exchange coin is not an optimal way.

I think eventually everything that has value should contain some kind of energy, since human are just energy thirsty animals: We use energy to fulfill all our demands: Food, cloth, house, travel, entertainment, etc... Energy is a fundamental part of anything that has value


PoS coin use another logic: Since energy always can be bought by fiat money, why not just use fiat money to exchange cryptocurrency, so that all the inefficiencies and capacity limitations in mining can be avoided.

So the core question for PoS coin is: Does fiat money also contains energy, just like electricity?

Maybe producing fiat money does not take a lot of energy, but to ensure its value takes police, armies and governments, banks etc complicated sovereign organizations. You can easily write a IOU bill, but the acceptance of that bill would need you to back it with valuable assets and contract etc..., lots of energy, especially when that bill is very large. Fiat money has wide acceptance, that ensures it can exchange any kind of energy

Then people don't need to spend huge amount of electricity just to win the game of poping coins, the same electricity can be used to do useful things, like cutting trees or pave roads, and these kind of jobs can receive fiat money as reward, then people use fiat money to buy cryptocurrencies and stake them

Given same amount of energy, PoS coin has much higher efficiency due to that it does not need direct energy input in exchange for the coins. It still takes energy to make money, but those energy will be used on other more meaningful things

Given same amount of fiat money, PoS coin has higher utilization, since PoW coin miners must convert those fiat money to energy first and lose a large part of it as heat in the mining process


Edit: BTW, I discovered in this thought process, that spending money also has different type of efficiency: The best efficiency comes from that your investment ROIed and generated some extra income, and the worst efficiency is that you just buy some fireworks and burn it

Printing money is a simple method but very effective, because the majority of human always believe the value of fiat money, and even use fiat money as a unit of accounting

If you mean dollars value drops slower than gold, than it is possible. To be honest I just don't see why gold still worth that much today, since it has mostly lost its utility

During old times, a war break out and the government can be wiped out if they lose the war, thus their fiat money can become useless. Gold is not affected by a war, so at that time gold worked as the safest money

But nowadays, there is basically no chance of a war that can make US government and their money obsolete. The fear of Mutually Assured Destruction from a nuclear war will prevent a world war from breaking out. In such a relatively peace era, gold become less and less useful, mostly a token for confidence, but almost useless in international trading

I got "Lost connection, reconnecting..." error when I tried to handle a trade, and no matter what browser, pc, mobil phone I tried, it does not work. And when I tried to put ETH in escrow, the browser works so hard that I wonder what it really does out there, so I closed that browser then not able to login again

I had the same issue,  it has been a week with little progress.

This pattern is quite like the time when MTGOX had liquidity problem, the deposit or withdraw can take more than a week, simply because they don't have liquidity in their account to process it, so they are waiting for new customer's money come in to pay the queued previous deposit/withdraw

Once this happens, no matter the excuse they gave, I will stop the deposit to this exchange for at least a month to watch more carefully. This is in general a problem for all the centralized exchanges, there are so many hidden details happening behind that users are not aware of

Anyone can make a soft fork and split the chain with the minimum hash power, no need to ask for anyone's permission, but how high is the chance of surviving?

Short term wise the value will crash to the corresponding hash power cost, due to arbitraging (if it costs $100 to mine one segwitcoin but the market price is $1000, then everyone will borrow coin to sell and mine them back to cash in $900 profit immediately, so I guess before this even happens the price will already crash to the mining cost)

Long term wise the hash rate and value might rise if the demand for this chain is growing. But remember that there is another chain with larger hash power thus higher value existing, and I think most of the demand for bitcoin is investment/value storage, so it is not a guarantee that hash rate will rise on the chain that has less hash power/value

Following your logic, miners can also mine the original chain after a soft fork as well, because phase I is exactly the same as any soft fork

And just like a soft fork, all the miners have to upgrade, otherwise they lose income, but the rest of the nodes are not obliged to upgrade, they can keep running the old version, they just get a function disabled client. This is also similar to a soft fork: old clients can not verify the new transctions. But this is actually safer than a soft fork, since in soft fork, non-upgraded nodes would just let any new format transactions through without check their validity; but in synthetic fork, these non-upgraded nodes would not let them through, they give a clear signal that you must upgrade

Notice that financial system is very different than consumer software. If you don't care about your money by not upgrading, then that is your own problem, no one should take care of your loss

https://doc.co/6rzZ6B

Just made a short PowerPoint presentation of Synthetic fork. It combines the benefit from both soft fork and hard fork, and is a new way to safely upgrade the bitcoin protocol. Welcome with your comments!

The idea is formed over several months, but the latest breakthrough is from this thread:
https://bitcointalk.org/index.php?topic=1649899.0

I have been following the discussions on chinese forums during this year and I can confirm the idea is new

The first proposal was to setting up an mining pool and attack/destroy the minority chain after a hard fork. That was at the end of June, so called "the terminator plan"
http://8btc.com/thread-35645-1-1.html

The second proposal was on 10th Oct, the author was inspirated from Ethereums "hash rate bomb", suggest to raise the difficulty dramatically if the chain has largely reduced hash power, but I don't know how that can be implemented for non-upgraded nodes
http://8btc.com/thread-40576-1-1.html

Then 5 days later, the latest "Terminate the hard/soft fork debate: Safe hard fork is soft fork" proposal by Jiang ZhuoEr
http://8btc.com/thread-40796-1-1.html

This last piece of article fully analyzed the different means to kill the minority chain, he suggested two approach for upgraded majority miners: Merged mine and mine empty blocks for the old chain forever to disable it forever, or mimic segwit, move all the transactions to extended block to disable the original chain's ability to do any transaction

The breakthrough is that this approach changed from social attack to code attack, e.g. attacking the minority chain by codes, not mining pools, so that every upgraded miner will participate in the attack automatically

Then naturally following his thoughts, the most simple real world example of using code to attack minority miners is a soft fork, almost everyone knows. So I suggested to simply use soft fork to attack, instead of other complicated mechanism, it achieves the same result but much easier to implement

The reason core devs knows more about bitcoin protocol is mainly time, if you look at all those guys who started early like Jeff, Gavin, they all familiar with the different aspects of bitcoin. Purely from engineering perspective, core devs demonstrated their lacking of software engineering discipline by pushing out the segwit sf hacky codes. If you talk to anyone that have designed larger software systems, this design is not optimum, it seems the only reason it designed like this is to avoid a chain split

But now we have this two step synthetic forking method that can permanently avoid a chain split, invented by Chinese engineer. Why core has not thought about this simple method before? This is definitely not rocket science, this raised a big doubt about their competence

Of course the idea is forming during several months of debate and many different people jointly contributed to the solution, but you should never underestimate the R&D ability of Chinese, their large IT companies like Huawei have mostly defeated all the western competitors both technically and market wise

Lightning Network is not a registered trade mark, it is only a concept of payment channels. 21inc's LN is the simplest form of payment channel thus also one type of LN

21inc's LN has been launched for 6 months, no one cares. If there is slightest market demand for this kind of service, why is there no one interested in it?

That's why this synthetic fork proposal is a large step towards reaching consensus: It combined the benefit from both soft fork and hard fork, thus will become easier to be accepted by both sides

It seems the most hard core core supporter in Chinese forum has expressed some interest in this proposal

Just got a new name for this kind of fork: A synthetic fork 

Maybe you have not read the whole proposal carefully. Or you don't really know the details about how a soft fork works? Please tell me under which condition a soft fork will create a chain split, so that I can be sure that we are talking about the same thing

It is not a bilateral hard fork, it is a soft fork followed by a hard fork. The purpose of this solution is to avoid chain split, while a bilateral hard fork is to split the chain

It is difficult to argue against this solution because what it does in the first phase is exactly what a soft fork does:  "It is safe precisely because any fraying it causes if it causes any is not lasting, and will automatically heal without human intervention or significant disruption." This automatically healing process is when those old style blocks becomes orphaned and old miners automatically switch to work on the longest chain created by upgraded miners. If your criticize against this method is reasonable, then it will automatically apply to any soft fork


Non-upgraded miners are incurring a huge loss in a soft fork because all their mined blocks are orphaned by the longest chain, and they must follow the longest chain if they use default client behavior (In a soft fork, upgraded nodes with 0.5MB block size limit will reject 1MB non-upgraded blocks, but non-upgraded nodes will not reject 0.5MB blocks generated by upgraded nodes, so all the blocks that is > 0.5MB will be orphaned if the upgraded side have major hash power. The non-upgraded nodes can not split the blockchain because they always regard the upgraded blocks are valid and always reorg to that chain)



Yes, non-upgraded nodes will not see a new chain that does not comply to their rules, however in this solution, they will notice that their own chain stopped growing, they won't have a block for months, it just becomes obsolete

Of course the second phase is still a hard fork, however, after the soft fork, all the miners are already on board the newer version, this is a big step forward if you compare it with a standard hard fork where many different versions are running by miners and nodes. So after all miners have been upgraded to new version, the only inconsistency left are those non-mining nodes. Since all the hash power have switched to the new version, there will never be any old version blocks mined, so for those old nodes, although they can ignore what happens on the new chain, what happens on their own chain becomes strange: It totally stopped growing. They have to upgrade if they want to spend their coins, but since all the transactions on the old chain is disabled, there will not be a loss for anyone running old nodes if they insist to do so

Of course you could always modify your code and create a chain split and adjust the difficulty and extend that chain forever, but if you just upgrade or not upgrade by default, the chain will automatically heal without human intervention

Following your logic, then we should never do any soft fork, because what this method does is exactly the same as what a soft fork does: Orphaning the old style transaction/blocks after major hash power has upgraded, to force miners to reach 100% consensus

Reduce the block size limit to 0.5MB is a simple soft fork since it tightens rules. The result is that original miners/nodes would still accept new blocks but upgraded miners/nodes will reject old blocks that are larger than 0.5MB. So if old miners are still generating 0.7MB blocks, all those blocks will be orphaned, but old miners won't split into their own chain since all the blocks on the longest chain is valid based on their rules (<1MB), so they alway reorg to that longest chain (containing less than 0.5MB blocks)

This is major hash power running newer rules forcing the old nodes to upgrade, otherwise they will lose their mining income

Now in a safe hard fork, upgraded nodes all accept 2MB blocks, but at first they would only accept <0.95 MB blocks. So their blocks are all accepted by the original miners/nodes. However, similar to a soft fork, upgraded nodes will drop transactions/blocks that are generated by the original miners/nodes (by either blocking >0.95MB blocks or filtering on old block/transaction pattern), and minority miners will just find out that most of their mined blocks become orphaned, so they will immediately upgrade to new version

After all the miners have upgraded to the new version, now the upgraded miners could start to produce >1MB blocks, and since every miner already accept the larger blocks by now, there will not be a chain split

Someone on reddit pointed out that this is essentially a two phase soft fork + hard fork, where the first soft fork phase is used to reach a unified status among miners, then the hard fork can be executed relatively safe

Nodes will not be affected at the beginning, if there is a pattern based filtering for old style transactions, they might find out that their transactions will just not confirm, so they also have the motivation to upgrade to the new version. And even if they don't upgrade, they don't lose money, since the old style transactions/blocks would never work, old nodes will just find out that their nodes stops working, and understand it is time to upgrade

I don't go that far away into conspiracy road, but I think core devs should be more flexible and open to different ideas. This solution is so simple but missed by all the core devs, which raises a large question about core devs' competence

If it would be possible to plan hard fork in this way, core would never need to use the segwit sf hacky way to solve the transaction malleability bug and raise the block capacity (they could simply modify the transaction format and raise the block size using a hard fork, save those several thousand lines of bloated codes and greatly reduce the code complexity and attack vector, their time can be spent on more valuable things and the community would not even split)

When it comes to free choice, any one can soft/hard fork any time to have the blockchain split, what you are missing here is that there is a hidden major consensus that the chain should not split, and majority of the community members believe that this consensus is the highest priority. A chain split is bad because it created very confusing scenarios that no one could easily foresee its future development. Although the ETH chain split has mostly resolved by the abandoning of the ETC chain, a major chain split of bitcoin is still considered a highly controversial event