Thanks for that explanation, but I am still somewhat confused why that would be. In the case of mining multiple chains with PoC, there is not a "Nothing at Stake" problem that I can see.  If you mine on 2 chains, you have to devote capacity resources to 2 chains, splitting how much you can earn. Only 1 of these chains will eventually win, and then all the value you earned on the second chain is lost. Had you devoted twice the capacity to the winning chain, you'd be much better off.  It is completely different than the PoS model, where there is absolutely no resource usage required.

What I am trying to figure out is if there is any reason why resource usage in a non competitive environment such as PoC (or indeed an Proof of Useful Work algorithm) is any different than resource usage in a competitive environment, such as the existing SHA-256 PoW, that allocates rewards statistically rather than on a guaranteed basis.  They seem to be identical to me from a mathematical point of view, but there is a group of people who insist they are not. The N@S problem is strictly a PoS issue, and does not enter into this particular question.

I am doing a deep dive into the psychology behind PoW algorithms. You make a very interesting assumption here, but I would really like to analyze this more in depth, because I think it is more complex than what you have implicitly assumed.

Can you expand on exactly "why" risk of loss is important during block generation? What do you think the result would be if PoW was not a competition, and instead everyone was guaranteed to be allocated a reward for doing work, rather than only a statistically probable percentage of a larger reward, which effectively acts as a proxy for the same thing?  Seems to me those would be mathematically equal in the limit, and I am trying to understand the underlying psychology for this belief?

You are not the only one who has it obviously, so I really want to figure out if there is merit to it which I do not yet understand, or if it is simply a value choice because that is how it has always been done?

Re: your second sentence. The difference between PoC and PoS, is that capacity requires you to expend resources outside of the system you are securing. With PoS, nothing in the world could make an oligarchy give up control if they did not want to.  Thus, 51% of a PoC system would always be a temporary condition in the presence of a determined outside force, where as 51% of PoS would be permanent and entirely subject to the whims of those who control it.

I don't see where "risk of loss" really enters into the equation.

Would anyone care to expand on this and help me out?

The specifics of every PoS algorithm are unique, but as a general rule, PoS algorithms require you to take "turns", and the more you stake, the more validation "turns" you get. If you try to validate when it is not your "turn", you are A) ignored. and B) will lose your stake if it is done fraudulently. There is no need for a difficulty level in PoS, because everyone is only allowed to participate up to the amount of money they invest. When it is your "turn", and a sufficient interval has passed from the last block, you get to validate.

"Turn" is defined loosely here, as there are usually multiple validators and complex algorithms to stipulate when you are allowed to validate. But a turn is a good metaphor for what happens.

Tell me one good thing that ever came from voting?  All it does is give some corrupt politician an appearance of legitimacy that he doesn't deserve. The best thing anyone could do is not vote and encourage everyone else to reject the system as well.

As I often joke about with regard to employee recommendation letters:

"Nobody would be a better option than this candidate."

Tether didn't prove anything other than they have $1.8 billion in an account. There is no guarantee from the bank that the money will stay in the account for any length of time or where it came from. It could be a short term loan for all we know. There is also no guarantee that the money is not encumbered by some other financial derivative.

In short, it is an interesting data point, but it is far from proof. The only thing that would truly prove the money is there to back Tether is a complete audit, and that is something Tether is still steadfastly refusing.  Most people are still wondering why, bank letter or no bank letter. This will likely change the narrative though, and may stop the bleeding for a short while.

Don't expect it to do anything about the rest of the crypto market though. I'm not even sure it will help Tether. It is still too sketchy.

CPU like instruction counts have very little to do with designing an ASIC. ASICs are designed using an RTL language. RTL stands for register transfer level, and is totally unrelated to CPU style sequential instructions. Essentially, an ASIC design means setting up a gate pipeline that has a certain delay to produce the first output, but after that short delay the circuit spits out 1 solution every clock cycle.

It is like turning on a hose. There is a delay for the water to move from the faucet to the spout, but once water starts coming out, it comes out in a continuous stream.

Nobody does SHA256 hashing with computer like instructions. It is all fully unrolled pipelines, with as many of them crammed onto a piece of silicon as possible. It is not done as a sequential operation in the way you are thinking of it. What you need to do if you want it to be interesting to ASIC manufacturers is to come up with a way to significantly reduce the number of transistors in a fully pipelined circuit.

Bitmain is a Chinese company. They operate on different cultural principles than other global companies. Relationships to a Chinese company are everything. It would be considered an insult if they didn't offer the first, early versions of their miners to their friends and others with whom they have a close relationship. So unless you are Chinese, you will never see anyone with an early version. That doesn't mean it doesn't happen. This is a very normal practice for Chinese manufacturers. Relationships are even more important than money to them in many ways.

That said, I spoke with some techs at WDMS summit in Georgia last month. Bitmain definitely has 7nm engineering samples back from TSMC already, and may already have the first production run. That doesn't mean you or I can buy them yet, but I would be shocked if the Chinese are not already mining with them.

I would consider finding a partner instead, and then going to your local power company and asking for a cheaper rate for offpeak service. You are probably going to need more volume for this however. If you can get your usage high enough, you can get very good deals for offpeak power, which is incidentally also when temperatures are the coolest.

By doing this, you can conceivably get your average power cost down, and then the ROI will be much better. There are stories of people in Texas being able to get free power in many cases during the wee hours of the morning, when the power companies would otherwise have to pay surrounding states to take it off their grid. I know that sounds counter intuitive, but shutting down baseload generators can be very expensive, so power companies are occasionally put in the position of needing to pay in order to keep the grid functioning above minimum.

So my advice would be to think bigger. Raising money is never fun, but it can make the difference between being profitable and just losing money.

Hi mgoz,

Thank you for your comment. Unfortunately we are in Thailand and there are no such things as small business loans here. As much as I would like to fund this out of my own pocket, we really do need a small amount of seed funding to get moving. It is of course true that everyone wants to see something. Getting the first bit is always the hardest, because by definition there is very little to show.

Which is also why seed funding always carries the biggest rewards. In this case, we need seed funding to begin. Later, we will need additional funding to scale.

Hi Witrebel,

Thank you for your comment. I understand the previous history with scams and vaporware. The only real way to overcome this is on the strength of the team members involved. One reason many people have been burned is because, generally, the people getting involved in crypto tend to be younger and don't have a track record of doing significant commercial projects, or they outsource the development to a team that is not dedicated to the cause. That won't be the case here.

One of the reason I asked about money is exactly because of this problem.  Yes, people have been burned with presales, and this will make everyone suspicious. In this case, I am simply trying to find the best way through this minefield.  How do you fund raise for seed money when it is so easy to simply say "scam" and walk away?

I think the technical issues can be discussed at length if anyone is really serious.  Too much to write up in a post, but I'd be happy to have a conference call.

A good friend and I have been hashing out a plan for a while. We are both very experienced Silicon Valley engineers, and would like to provide an alternative to the ASIC mining companies that are currently monopolizing the industry. As most of you know, Bitmain and Canaan are nearly the entire industry. (Together they make up nearly 90%) Both of these companies are Chinese, and neither one of them is completely trustworthy. Bitmain in particular is considered to be evil.

With GDDR6 RAM finally becoming available in short order, there is going to be a mad scramble to upgrade mining equipment. Bitmain is now selling its old stock of ASIC miners that are obsolete in order to prepare for this new generation, and the rest of us can only react. As long as the Chinese have a monopoly on mining, there is going to continue to be a bias in how this industry develops. We would like to break that monopoly.

I know many feel that mining is going to be discontinued shortly in favor of PoS chains, but most from the developed world don't understand how mining is actually used in Asia. In countries such as China, India, and even here in Thailand where we currently are, there are restrictions on sending currency out of the country. A workaround to this, and the reason mining has become so concentrated in China, is that mining can be used to bypass currency controls. Chinese can buy equipment in Yuan, they can pay for power in Yuan, and then generate cryptocurrency that can be deposited overseas for USD. With foreign currency overseas, they can make investments that the Bank of China would not ordinarily allow. Mining isn't going anywhere as long there is such a strong use case for it.

In order to keep this post short I will stop here and just say that we have a team of silicon valley natives who have been designing chips for 20+ years. Some past projects include things like lead designer of the Sparcstation. This is a real project with actual people who know what they are doing.

I would like to know if anyone would like to offer feedback on this industry, specifically the following:

   1. Given that we are planning to do this as an ICO, who would you approach first for seed funding? We probably only need about $100k to start. After that there are dozens of syndicate investors who would probably jump in at later stages. Only the first one is really hard. (Contact me privately if you want to discuss specifics.)

   2.What are the pain points of this project? I can speak for the advantages, but I am hoping to hear some of the disadvantages that I would need to overcome in any presentation. What would a potential investor, either syndicate or smaller investor during an ICO, look at critically?

   3.Strong community support will be essential for this project. As time is of the essence, what is the fastest way to build a sizeable community behind the concept?

Any thoughts are appreciated. This is an open discussion. We are going to proceed with the idea anyway, but thoughtful, constructive criticism is always helpful.