How is this thesis working out so far?

It's easiest to get paid in bitcoin if you're an independent contractor rather than an employee.

You can use services that let you invoice in fiat and receive bitcoins so that your customers don't need to know anything about it: https://coinvoice.com/

Proof of work would still work even if new coins were being minted (it had better work, because within a few decades minting will drop to insignificant levels).

Imagine all the Bitcoin were premined and distributed by some other mechanism. You'd still need an objective way to determine transaction ordering.

Proof of work would function the same way as I described above - whomever proves the highest expenditure of opportunity cost will have their version of the ordering preferred over another miner who has expended less opportunity cost.

Without issuing new coins, you wouldn't even need a specific difficulty target to have a working system - the highest PoW would win each block. Difficulty is only needed to keep block creation near a constant rate because mining combines ledger updates with minting and having a deterministic schedule for minting is desirable.

Looks like Hashcash came out the year before b-money.

Figuring out that kind of chronology is why it takes longer to write articles than making forum posts.

There's a lot of information to rescue from the memory hole.

The reason I had the energy is that I was already working on that explanation because it's part of an article I want to write in the near future. It just so happened that kodtycoon's post was a great opportunity to create a preview/summary.

This is the problem with proof of stake: it was invented by people who have no idea what problem mining is supposed to solve and have some agenda other than solving that problem.

Mining is not about allocating the issuance of new coins. The fact that they are tied together in Bitcoin is a temporary coincidence. Mining is about solving the problem of distributed consensus - how do a bunch of independent nodes spread all over the planet agree on a precise ordering of transactions when every node must operate with an incomplete view of the network and anybody might be trying to cheat?

This problem has nothing to do with elitism or notions of fairness or populism. Overlaying those agendas into the solution is a great way to not solve the problem.

As nodes on the network continually work to establish a consistent of narrative of what has happened in the netwowk based on their own incomplete knowledge, there will be times where two nodes disagree. Mining is nothing more than a signalling mechanism which provides an objective basis for choosing which version of history to treat as correct, whenever a conflict occurs such that more than one alternative version exist.

The design criteria for what makes a good mining algorithm comes from signalling theory:

There's a reason that when Wei Dai proposed b-money in 1998, he didn't even bother to explain why calculations in a proof of work system, "must be easy to determine how much computing effort it took to solve the problem and the solution must otherwise have no value, either practical or intellectual." He assumed this statement would be so obviously true that no explanation was needed. Apparently this is no longer the case.

The signal sent by proof of work is the amount of opportunity cost the miner has paid in order to produce the block. The fact that mining calculations are completely useless outside the signalling system itself is what makes lies more expensive than telling the truth, thus satisfying the conditions for honest signalling. The opportunity cost the miner pays to produce a block only represents a profitable trade for the miner if the network accepts their block. So when it comes to a node in the network choosing between two valid blocks, choosing to accept the block with the higher PoW means choosing the block which produced by the miner who has the most at stake in terms of opportunity cost paid.

Note that if the miner has to use specialized hardware for which there is no possible use other than mining, the signal is even better than performing otherwise-useless calculations on general purpose hardware. Higher opportunity costs = more reliable signal.

Proof of work is a proof of stake system, the only one that actually works.

PoS coins use the number of coins held as the basis for their signalling system. Since coins have an exchange rate, they obviously do not fulfill the criteria of having no value, either practical or intellectual. Thus PoS is not an viable mechanism for honest signalling.

Bitcoin did not appear in a vacuum. It's always been part of a greater agenda, one that is opposed to that the authors of this paper adhere.

http://nakamotoinstitute.org/b-money/

It's impossible to secure against all possible non-economically driven attacks.

At the extreme end of the spectrum, the US military could defeat Bitcoin by using nuclear weapons to end all human life on the planet.
At the other end of the spectrum, there is an adversary who is willing to lose a maximum of 1 Satoshi in order to attack the network.

Somewhere between those two extremes there's a boundary between the attacks which we can successfully defend against, and the attacks we shouldn't even bother defending against.

Speaking of BitFury, they are the real reason for the mining centralization uproar. The idea that Allaire/Hearn are concerned about decentralization is laughable. Seriously, a Goldman Sachs veteran and a Google veteran?

This is all a propaganda campaign necessitated by the fact that the single largest holder of hashing power is Russian, and all the hardware is manufactured in China.

They've successfully created a Pavlovian reaction associated with the word "decentralized" and now intend to use it to convince the community to switch over to a mining network more easily controlled by the vampire squid.

What you need to know about Ghash is they are just one part of a vertically-integrated operation.

BitFury is the manufacturer who builds the ASICs.
CEX is the retail side, selling shares of the hashing power and creating a commodity exchange for trading those shares.
Ghash.io is the pool where CEX points their hashing power. They constitute about half of the total Ghash.io network, with independent miners making up the rest.

The underlined portion is why the BitFury/CEX/Ghash conglomerate is doing better than everybody else. They get greater access to capital because they offer a commodity exchange which is  apparently what mining investors want.

The reason no one else does this is because the operators of CEX are in Ukraine, one of the few places where the SEC/CFTC can't easily get to them.

2013-04-08

That's indeed the best way to accumulate more bitcoins.

Nope.

Feels a bit like 2011 (post mania) - early 2013.

Two years of an almost uninterrupted stream of good news, with little price movement.

Where were all these people when the cypherpunks were doing the hard work of figuring out what money is, and how to make it better?

http://nakamotoinstitute.org/b-money/