If that is what he is suggesting than it is odd statement to make as it is trivial to design an algorithm which forces or encourages decentralization, even with PoS. What is tricky is combining the right security and incentives as well into the consensus mechanism.

I.E.. having Bitcoin incorporate a hybrid PoW /TaPoS algo where either some of the transaction fees or mining rewards aren paid to full nodes/or p2p miners would both encourage decentralization and make Bitcoin more robust.

I already have some concerns with Vitalik's proposal and am adding more concerns as I review it further but would like to hear more specific concerns rather than knee jerk reactions and generalizations(not coming from you BTW)

It is indeed possible that PoW is superior to everything else and Satoshi got it right the first time. What I find interesting and concerning is that many people aren't even willing to test or study new consensus designs. I have a long history of attacking PoS and many alts in general and am making a very reasonable suggestion of entertaining an idea and studying Vitalik's proposals followed by a very conservative approach of incorporating this algo into an alt or sidechain so it can be tested over the course of years before even thinking about discussing a hardfork and this is the reaction I get.

There appears to be a sense of protectionism, reverence and faith towards Satoshi's original code, which is silly because most of his code has already been thrown out or changed.

Of course.  But if you adhere to the S-curve adoption, the bending point (the middle of the S) will be somewhere in the not-too-far future according to that viewpoint (which is based upon theories of good money drives out bad ones, and so on).

Now, if the S-curve comes in before 2017, we are at 10% inflation.  If the S-curve comes in before 2021, we are at 5% inflation.  If the S-curve comes in before something like 2025, we are at 2.5% inflation.

So if "general adoption in the world" happens before 2017, ALL of the world's electricity will go to mining  
If "general adoption in the world" happens before 2021, more than HALF OF THE WORLD's electricity will go to mining.
And if it happens before 2025, about a third of the world electricity production will go to mining.

Simply because the reward is SO HIGH, that it is beneficial to consume more electricity to mine.

If the full world economy runs on bitcoin (S curve, remember) a coin should have the value of what is now about $3 million.  That's namely the amount of M2 fiat that circulates in the world right now if all coins become liquid.  If there are still hodlers at that moment, coins will even be worth more under total adoption, because a smaller amount of coins than the full supply will have to carry all of the current M2 fiat worth.

If you mine before 2017, you'll obtain 3600 coins a day, which is the worth of 10 billion dollars of right now.  More than the price of a nuclear power plant A DAY.  The incentive to mine is HUGE.

So, if you adhere to the S-curve theory and "good money drives out bad money", there's no escaping of huge power consumption for mining if it happens before 2025.

So what logical options do you take ?

A) the S-curve is wrong

B) good money doesn't drive out bad money

C) it will happen after 2025 (then how will it keep up until then ?)

D) yes, miners will use up a large chunk of all electricity in the world !


The reward is given by the coin price, and hence by the market cap.  If a day of mining brings in the equivalent value of 10 billion, you are going to be willing to use up a lot of electricity to get that value  in your pocket, no ?

If you run p2pool (with your own local node) then pretty much anyone can retain control.  Although some hardware has problems with stales.

>...I myself might not be in position to fight for control over the system, the rules of the game are such that other players always will...

That's like the bleakest thing ever.  What, exactly, is worth looking forward to here?  Sounds no different than fiat at its worst.
...

Nvrmnd, keep bein' rebel

Now we're getting to the root of your misunderstanding.
If you can predict that Bitcoin will be worth more in the future, you should simply buy it at current price [below $300 in my example], and not mine it [at substantially more than $300 in my example].
Because math.

Unless you're a pool operator or a megamine [solo mining], it's the pool that has control, not you.  You're just providing the hashpower & getting paid when a block is solved.

Bitcoin is no more freedom than BTCeanie BTCabies.  Stop gulping that Kool Aid.
...

Still not sure what you're trying to say.
Maybe if you could start by answering my question: "Would you spend $300 to mine a coin worth substantially less than $300?"

No, mining has everything to do with market cap, see above.  Bitcoin's market cap is simply (price of BTC) * (total BTC in existence).
Lower market cap means that each bitcoin is worth less.  Would you spend $300 to mine a coin worth substantially less than $300?
Sure mining depends on market cap.

...
According to satoshi and common sense, the cost of mining should approach the price of the coins mined.
This year, approximately 10% of the total Bitcoin in existence has been mined.  In other words, if satoshi is correct, the total cost of maintaining Bitcoin network at the present level of security is 10% of the total market cap.
Few will argue that the lion's share of that cost is electricity.  There are online mining calculators which will give you a relatively accurate number, the only guesswork on your part would need to be the the breakdown (by brand and model, and, thus, efficiency) of the gear being used.  

Right now, Bitcoin's market cap is small enough for this to be almost inconsequential.  But if Bitcoin does succeed as the new world currency, this implies that 10% of the world's wealth will be consumed each year.  Most of it in electrical costs.  That's staggering, and supplying that much energy is likely unfeasible.  Certainly not too eco friendly


But that's all irrelevant.  We're starting off with the assumption that running a Bitcoin network is the right way to do money.  It's not.
Presupposing that blockchain must be maintained is as justified as specifying mice as the prime mover in the next space shuttle design.  Sure, it could be done by introducing some truly Goldbergian complications, but ... see where I'm going with this?

...
If I understand something of the macro economics of bitcoin, you can say that the cost of the mining is of the order of the value of the inflation (somewhat less because miners want to make a profit).  Now, the cost of mining is in part the hardware, and in part the energy.  I don't know the ratio, but let's say half-half. 

At the current inflation rate, which is 10%, the energy cost of mining per year would then be of the order of 5% of the market cap.
At a current market cap of $5 billion, the mining energy cost would then be $250 million per year.  Let's put the price of a KWhr to $0.1 (in China and USA), then we have 2.5 billion KWhr per year, which comes down (there are 8760 Hrs in a year) to an average power consumption of 300 MW.  That is still reasonable.  A third of a big power plant for bitcoin to be mined.

However, imagine that bitcoin price goes up with a factor of 10.  Then all the mining in the world would go to something like 3 GW - 3 nuclear power plants.   If bitcoin takes over the world economy, and the market cap of bitcoin becomes the world fiat market cap, we arrive at 3000 GW.  Now that's embarrassing.    That's more than the world's electricity production !

Interesting point re. all the graphic cards sold.
It would be a great point if those graphic cards were running at maximum energy consumption 24/7 during their lifetime, and if that energy consumption was anywhere close to today's ASICSs.

And if those graphic cards were used to fill giant aircraft hangers, like so:



And yes, energy is never wasted, only transformed.  Because first law of thermodynamics.  Good one

This is in fact a very intelligent point.  I have to say that I was first attracted in principle to such things as primecoin, because they solve at least some obscure mathematical problems during mining.  But you are right that what constitutes "useful work" is part of what the market has to decide, and will change over time, so it would be silly to cast it in stone in any successful cryptocurrency.

That said, there is indeed a fundamental difficulty with PoW.  In order for it to make the blockchain safe, a lot of work has to be done.  On the other hand, that is a cost for the use of the currency (a kind of tax on its usage if you want to).  During the early mining phase, that tax is essentially paid for by inflation (the phase we are in).  Later, the tax will be the fees that have to be paid.
If it is true that the cost of PoW is comparable to the inflation right now, that is, 10%, now that would be terribly huge.  As long as bitcoin adoption is growing, that's not so much of an issue, but imagine that the whole world economy is taken over by bitcoin.  It would mean that 10% of the world economic resources would go into PoW ?  It is what I touched upon in that other thread https://bitcointalk.org/index.php?topic=865870.0

I have no idea how much world resources are spent today to the fiat banking sector (I don't mean, how much money the banking sector is handling, but how much the banking sector's functioning is costing: salaries, real estate .... of banking and financial institutions).  The cost of the fiat banking sector is the fiat equivalent of the economic cost of PoW for cryptos.

This is a REALLY good point.  Even if PoS could "save energy",
do we really that kind of system?

I set out to delineate the difference between Bitcoin and the stock market, not the value of Bitcoin.  But I'll follow your tangent.

"Proof of work" is not proof of useful work.  It's proof that an amazing amounts of electricity was wasted on what amounts to little more than digital thumb twiddling.  Useful to ASIC manufacturers?  Sure.  Useful to mining contract resellers?  Yeah.  But useful to society as a whole?  Not really.

How useful is a currency that consumes 10% of its market cap, each year, to secure?  Well, if Satoshi is right, and price of mining does approach the price of mined coins, then Bitcoin is costing just that:  ~10% of all the coins in existence were mined this year

Sure.  The point I'm trying to make is a BTC represents nothing external to itself.
The value it represents is purely speculative--not even a potted plant in reception.

how will hoarding add value?

if everyone sat on their coins the pump and dumpers will dictate the price

spending adds value

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.

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.

The only thing we have to fear is fear itself.

This is gentelmen.

Whether bitcoin goes to moon. or goes to dump I  ain't going anywhere..becoz the truth is I am a Nerd and it feels home!, will hang around for life

That's not the point. Of course it's worth it. But what if you didn't need to waste it in PoW? what if you could use it to aid your fight in other way? I say that would be better.