DECENTRALIZED crypto currency (including Bitcoin) is a delusion (any solutions?)

[iamnotback]

Here is the rough draft from my white paper about invisible majority hashrate attacks on proof-of-work blockchains:

https://gist.github.com/shelby3/e90a45604969f1ed64395b0b72a56487

Very provocative!

I added 4 authoritative references to add more veracity to my point!

[brekyrself]

Here is the rough draft from my white paper about invisible majority hashrate attacks on proof-of-work blockchains:

https://gist.github.com/shelby3/e90a45604969f1ed64395b0b72a56487

Very provocative!

I added 4 authoritative references to add more veracity to my point!

I would think twice about using Decentralized Economics as a reference, he is a known troll...


That is also referencing the old delegate model of BitShares.  Original had elected delegates that also controlled blockchain parameters.  New version (Graphene) splits it into three.  Witnesses, Workers, Committee members.

Not sure if you have see some of Dan's blogs: http://bytemaster.github.io/all/

[iamnotback]

Not sure if you have see some of Dan's blogs: http://bytemaster.github.io/all/

Yeah I had read some of those and even the one where he had presaged the plan to do the sneaky mine for Steem.

Dan is a reasonably smart guy but sometimes he publishes things which are wrong and the following is an example:

http://bytemaster.github.io/update/2015/09/29/Bitcoin-is-100x-less-secure-than-commonly-believed/

The non-marginal miners which own the ASIC farms are much more profitable than $4200 per day and moreover, they have a huge investment in equipment and lease commitments which they can't repurpose for any other use than Bitcoin. That is why rented "ASIC resistant" PoW blockchains are inherently less secure, because their miners can repurpose their equipment thus aren't as invested in securing the coin. I very much doubt the ASIC farms will allow anyone to rent 51% of the hashrate so they can do a double-spend attack.

That is also referencing the old delegate model of BitShares.  Original had elected delegates that also controlled blockchain parameters.  New version (Graphene) splits it into three.  Witnesses, Workers, Committee members.

I am not sure if that makes any difference for my point about back dealings? I guess your point is his statements can not be trusted because he is an enemy of Dan & Bitshares. I was taking the statements for the summary of what I believe to be true about the politics in any system of voting for representatives.

I cited DE (who has been very nasty to me also in the past) simply because that seemed to the best succinct summary I could quickly find which sort of explained some of the issues that might come about with back dealings and DPoS.

If anyone can provide me a more well reasoned and objective reference for that purpose, I would willing to consider changing to it. It would be much appreciated.

I contemplate removing it because I don't like creating animosity, but I am really overloaded and hate to move backwards.

[iamnotback]

That is also referencing the old delegate model of BitShares.  Original had elected delegates that also controlled blockchain parameters.  New version (Graphene) splits it into three.  Witnesses, Workers, Committee members.

I am not sure if that makes any difference for my point about back dealings? I guess your point is his statements can not be trusted because he is an enemy of Dan & Bitshares. I was taking the statements for the summary of what I believe to be true about the politics in any system of voting for representatives.

I cited DE (who has been very nasty to me also in the past) simply because that seemed to the best succinct summary I could quickly find which sort of explained some of the issues that might come about with back dealings and DPoS.

If anyone can provide me a more well reasoned and objective reference for that purpose, I would willing to consider changing to it. It would be much appreciated.

I contemplate removing it because I don't like creating animosity, but I am really overloaded and hate to move backwards.

I changed the reference as follows:

[47] smoothie, smooth, r0ach, monsterer, DecentralizeEconomics. Bitshares' DPoS "behind-the-scenes" politics. Bitcointalk.org, “The state of crypto - The only serious thread on the subforum” thread, posts #137–155, Sep 9, 2015.

[iamnotback]

"SegWit is also ostensibly the “Trojan horse” for enabling Blockstream (Bitcoin Core) to more easily make any changes they want to scripting with a change to only requiring a versioned softfork instead of the status quo hardfork requirement."

if you have time and energy at some point, could you give a concrete example what harm this could cause if any and why such detrimental scripting change couldn't be (easily) prevented

For example enables them to add Side-chains support to blockchain which can enables all sorts of game theory and activity which is very hard to analyze succinctly and which could potentially cause imbalances, security issues, and favoritism.

I think that is too far off-topic for me to delve into in this white paper.

It looks like I am going to exceed 150 references as it is already.

[r0ach]

@AnonyMint here deconstructing proof-of-work.

Here is the rough draft from my white paper about invisible majority hashrate attacks on proof-of-work blockchains:

https://gist.github.com/shelby3/e90a45604969f1ed64395b0b72a56487

Very provocative!

See also my deconstruction of the scalepocalypse.

Pretty good stuff.  As we discussed in the past, political voting based on external reputation keeps surfacing in these systems like DPoS and PoW as a crutch to allow them to exist in some type of state at all.  We all know that PoW has become entirely centralized, and now the system consists of Chinamen obfuscating who and how many owners of the system there are by strategically allocating hash power in front group pools.  

Smaller entrants to the system are presented with the equivalent of a banana republic election where you can vote on what pool to send your hash rate to, but it's all the same guy or cartel running it anyway.  The reputation system is the crutch to obfuscate or make believe the system isn't currently or temporarily in a state of centralization or monopoly.

That is, UNLESS you acknowledge the fact that confirmations are completely arbitrary in the first place and have no upper limit, and a suggested 6 confirmations might be orders of magnitude wrong for delivering some type of eventual consistency.  Stretch that time limit out to dinosaur age levels of confirmation times and you eventually thermodynamically secure the chain against monopolies from having any effect at all.  Entropy doesn't allow permanent monopolies.  This means you *may* be able to ignore short term actors and just let them obfuscate away their monopolies since they're economically incentivized not to do harm anyway, but the possibility of a long con is obviously always there.

It's a hard idea for the common man (people not on this forum) to wrap their brain around who aren't familiar with Bitcoin and used to instant binary outcomes with their bank account balance.  Soooo, if we ignore things like rough consensus attacks, security all comes down to how short of confirmation time are you willing to risk for forming eventual consistency.  But, ignoring rough consensus attacks are a big fucking "if"!  It's Bitcoin's largest weakness. The system is far more likely to disperse into a million different forks rather than be brute forced out of existence by one party.

[iamnotback]

r0ach, thanks. The most salient threat isn't double-spending and direct theft. Rather it is the insidious debasement tax taken in the form of a winner-takes-all monopoly on transaction fees for PoW and for DPoS that is the level of funding whales vote for themselves for running witnesses.

Both PoW and (D)PoS systems are just central bank printing machines in an obfuscated form.

I will offer a new design. Let's see what y'all think when the juicy part of the white paper with the new design is published.

[iamnotback]

Bitcoin "killer" approaching...

5. Satoshi’s Proof-of-Work


Dictatorship: Exponential or power-law distribution of the control of mining resources is a power-vacuum trending toward a winner-take-all disequilibrium.

Censorship: Permissionless free market to add transaction events and stand up consensus order (i.e. mining) nodes only until the winner-take-all “benevolent dictator who never allows double-spends”^* arrives with 51% concentration of systemic hashrate.

Monopolistic: Insoluble eventual monopoly on transactions fees, regardless of the level of any perpetual minted block reward and any decision or algorithm that could be proposed for block size adjustment.

Synchronous: No asynchronous concurrency of transaction ordering for enhanced scaling and throughput. Only the mining node (possibly a pool) that produces the next block may add transactions during the block period, and all transactions must be propagated to every node. Resiliency and liveness, provided by miners competing to produce the next block, is decreasing on trend to the winner-take-all mining centralization.

Undecidable: Long range retroactive chain forks (aka “long-con attack”) if orders-of-magnitude hashrate increases are lurking, e.g. if quantum computers appear.¹⁷

Aliasing: Applies anti-aliasing filter to partial orders, thus requiring high latency and variance of transaction confirmations, which is inefficient and only probabilistic, never final.

Wasteful: Burns waste heat for security instead employing the positive scaling law of open source for forming a global truth. And burns waste heat as an objective work for issuance instead of funding illiquid knowledge production.


---

^* _{Refers to the plausible outcome of the winner-take-all power vacuum which is described in the Selfish Mining Example sub-section.}

[redacted]

References

[redacted]

¹⁷	Serguei Popov. The tangle. §4.3 Resistance to quantum computations, p. 24, Apr 3, 2016.

[redacted]

Of course the detailed explanations are not shared with you until the paper is published, for reasons of competition from copycoins.

And here is what I have so far for the analogously categorized DPoS attributes:

https://gist.github.com/shelby3/a64bf9f7758265aebfcb9cdce5a44244

[r0ach]

r0ach, thanks. The most salient threat isn't double-spending and direct theft. Rather it is the insidious debasement tax taken in the form of a winner-takes-all monopoly on transaction fees for PoW and for DPoS that is the level of funding whales vote for themselves for running witnesses.

Both PoW and (D)PoS systems are just central bank printing machines in an obfuscated form.

I will offer a new design. Let's see what y'all think when the juicy part of the white paper with the new design is published.

I get the point, but I don't think I would call that debasement, more like rent seeking behavior.  And yea, if anyone actually can form a cartel or monopoly in crypto, you do have a mirror of the rent seeking behavior central bankers use to extract wealth, or essentially skim off the top until they own it all.  This is why they hate serfs using gold and silver, because it's difficult to skim off someone physically holding the currency in their hand and defending it with an AR15.

[iamnotback]

r0ach, thanks. The most salient threat isn't double-spending and direct theft. Rather it is the insidious debasement tax taken in the form of a winner-takes-all monopoly on transaction fees for PoW and for DPoS that is the level of funding whales vote for themselves for running witnesses.

Both PoW and (D)PoS systems are just central bank printing machines in an obfuscated form.

I will offer a new design. Let's see what y'all think when the juicy part of the white paper with the new design is published.

I get the point, but I don't think I would call that debasement, more like rent seeking behavior.  And yea, if anyone actually can form a cartel or monopoly in crypto, you do have a mirror of the rent seeking behavior central bankers use to extract wealth, or essentially skim off the top until they own it all.  This is why they hate serfs using gold and silver, because it's difficult to skim off someone physically holding the currency in their hand and defending it with an AR15.

"Debasing" was more concise and clear than "Leeching". "Renting seeking" is definitely more general. I do state that in the text. I'll try to improve the wording.

I am not against gold and silver, because I do realize they have the quality of being entirely decentralized, but the problem is that no one wants to accept or use them as currency any more. And the people won't be going back because efficient money is preferred by the economy (nature will always choose the system that has more degrees-of-freedom, i.e. higher entropy future[1]). Either things don't get bad enough to require them to, or they get so MadMax that people won't accept anything that can't be traded for food.[2]

But I have a new design to offer that isn't PoW and isn't exactly DPoS.

My design is more like a hybrid of several different things. And in that way, it has new attributes, because the power of each is broken up into separations-of-concerns. Thus each part functions more freely but with less holistic power to do harm.

I am excited to see what the community thinks of my new technology.

My design depends on open source behavior  (not referring to the source code of the software). But open source has the opposite property from politics, in that politics requires all the people to be coordinated. Open source requires only that "given enough eyeballs, all flaws are revealed".

In my design, not everyone has to be coordinated on the same choices. The degrees-of-freedom are unbounded.

There are actual clever technological innovations in my design. It isn't just social engineering. The double-spend security does not depend on open source behavior (economically not any more than PoW does, i.e. that all miners have to validate that which they mine on, lest they may lose their block reward, which really isn't open source behavior because it requires the majority hashrate is monolithically coordinated on validation).


[1]: https://gist.github.com/shelby3/67111f328822a36beb4cad1a5220eb33 <---- Section 5.1 Dictatorship

[2]: Shelby Moore III. Value of currency has historically been public confidence in it as a reliable unit-of-exchange. Bitcointalk.org, “Precious metals are not useful in a collapse scenario!” thread, post #62, Nov 2, 2016

[whale_shark]

1st true Decentralised market will be out of beta soon from Bitbay! Which is why price is rising and will continue to rise

[dwgscale11]

is there another thread for the vaporcoin iamnotback is working on?

[iamnotback]

is there another thread for the vaporcoin iamnotback is working on?

Not yet.

There are old threads which aren't so relevant.

It is not yet time to make a thread for that. There needs to be an actual implementation first.

We are just talking about the theory and the design for now. Mostly I am just revealing the flaws I see in PoW and (D)PoS, because I can't share my exact improvement details until I have an implementation on testnet[1], so that I can launch the open source development phase of it.


[1] Because I refuse to ICO vaporware. And I need to ICO and be near to first beta launch, before letting all the competitors make copies of my technology. I might possibly not ICO and just launch instead, perhaps if I can get enough angel investment behind the scenes once the testnet is ready. Note the vast majority of the money supply will be distributed to users, not premined. But there is a twist that I think will make it very enticing for speculators who want to get in early. I much prefer to deal with only non-USA residents/expats and USA residents/expats who are "qualified investors", so that I don't run afoul of the SEC given I am a USA citizen expat. That is unless I can find a proxy to handle any ICO for me who isn't liable to the SEC. I am only looking to raise ~$1 - 2 million in funding. Only enough to hire best s/w engineers. I am not trying to get rich off an ICO. I will get rich off the appreciation of my tokens. I believe in the fundamental long-term value of this project.

[dwgscale11]

is there another thread for the vaporcoin iamnotback is working on?

Not yet.

There are old threads which aren't so relevant.

It is not yet time to make a thread for that. There needs to be an actual implementation first.

We are just talking about the theory and the design for now. Mostly I am just revealing the flaws I see in PoW and (D)PoS, because I can't share my exact improvement details until I have an implementation on testnet[1], so that I can launch the open source development phase of it.


[1] Because I refuse to ICO vaporware. And I need to ICO and be near to first beta launch, before letting all the competitors make copies of my technology.

Got it, thanks.

[iamnotback]

I expounded a bit on the prior post's [1] footnote. I don't want to repeat that again, because I don't want to be attacked for hyping something. Right now I am just writing about the (economics and technological) theory.

[pereira4]

is there another thread for the vaporcoin iamnotback is working on?

Not yet.

There are old threads which aren't so relevant.

It is not yet time to make a thread for that. There needs to be an actual implementation first.

We are just talking about the theory and the design for now. Mostly I am just revealing the flaws I see in PoW and (D)PoS, because I can't share my exact improvement details until I have an implementation on testnet[1], so that I can launch the open source development phase of it.


[1] Because I refuse to ICO vaporware. And I need to ICO and be near to first beta launch, before letting all the competitors make copies of my technology. I might possibly not ICO and just launch instead, perhaps if I can get enough angel investment behind the scenes once the testnet is ready. Note the vast majority of the money supply will be distributed to users, not premined. But there is a twist that I think will make it very enticing for speculators who want to get in early. I much prefer to deal with only non-USA residents/expats and USA residents/expats who are "qualified investors", so that I don't run afoul of the SEC given I am a USA citizen expat. That is unless I can find a proxy to handle any ICO for me who isn't liable to the SEC. I am only looking to raise ~$1 - 2 million in funding. Only enough to hire best s/w engineers. I am not trying to get rich off an ICO. I will get rich off the appreciation of my tokens. I believe in the fundamental long-term value of this project.

How will your currency behavein terms of coin emission? like is there going to be a curve similar to bitcoin? what is the inflation rate algorithm like at least in term of the time/coins-introduced-into-the-economy? how many coins will ever exist?

This sounds interesting but I am extremely skeptical of any so called "bitcoin killer". For me it would take an alien or a time traveller to solve the problem of massive onchain scaling while maintaining nodes decentralized while maintaining mining decentralized while maintaining bitcoin's robust security... that is the holy grail and right now the best we have is still bitcoin + second layer solutions like LN and hoping mining starts getting increasingly decentralized overtime after we have hit a limit with current ASIC technology... solving this all at once at protocol level seems impossible to me.

[iamnotback]

is there another thread for the vaporcoin iamnotback is working on?

Not yet.

There are old threads which aren't so relevant.

It is not yet time to make a thread for that. There needs to be an actual implementation first.

We are just talking about the theory and the design for now. Mostly I am just revealing the flaws I see in PoW and (D)PoS, because I can't share my exact improvement details until I have an implementation on testnet[1], so that I can launch the open source development phase of it.


[1] Because I refuse to ICO vaporware. And I need to ICO and be near to first beta launch, before letting all the competitors make copies of my technology. I might possibly not ICO and just launch instead, perhaps if I can get enough angel investment behind the scenes once the testnet is ready. Note the vast majority of the money supply will be distributed to users, not premined. But there is a twist that I think will make it very enticing for speculators who want to get in early. I much prefer to deal with only non-USA residents/expats and USA residents/expats who are "qualified investors", so that I don't run afoul of the SEC given I am a USA citizen expat. That is unless I can find a proxy to handle any ICO for me who isn't liable to the SEC. I am only looking to raise ~$1 - 2 million in funding. Only enough to hire best s/w engineers. I am not trying to get rich off an ICO. I will get rich off the appreciation of my tokens. I believe in the fundamental long-term value of this project.

How will your currency behavein terms of coin emission? like is there going to be a curve similar to bitcoin? what is the inflation rate algorithm like at least in term of the time/coins-introduced-into-the-economy? how many coins will ever exist?

This sounds interesting but I am extremely skeptical of any so called "bitcoin killer". For me it would take an alien or a time traveller to solve the problem of massive onchain scaling while maintaining nodes decentralized while maintaining mining decentralized while maintaining bitcoin's robust security... that is the holy grail and right now the best we have is still bitcoin + second layer solutions like LN and hoping mining starts getting increasingly decentralized overtime after we have hit a limit with current ASIC technology... solving this all at once at protocol level seems impossible to me.

You'll get all the answers when it is actually time to make a decision about investing. If I state any more now, I am hyping and also giving my competitors ideas.

But I am not ignoring you. I just have a lot of work to do first.

You should be skeptical. And you'll need to read the final white paper and consult with the experts and everyone will decide whether I actually invented a solution or not.

[alkan]

How did you solve this issue in your version of unprofitable PoW?

I discarded proof-of-work and formulated a consensus ordering design concept different than just proof-of-stake, DPoS, or a DAG.

Yes, I see. You discarded your original plan of using unprofitable PoW, but this is not exactly what I asked. I imply that you don't want to tell us more about your discarded unprofitable PoW scheme, even though it might offer further insights why current systems (that you are critizising so vehemently) are flawed.

Other than rented hashrate double-spend attacks for the PoW coins that don't use ASICs, as I point out in detail in my white paper, the main concern is the 51% attack is not for issuing double-spends (which I agree they won't do) but the majority hashrate can have a monopoly on all the mining rewards in the system by orphaning the other blocks in the system (and in a decentralized minority case, this attack isn't even detectable!). That is an attack and it is insidious (harmless) enough that users of transactions probably won't care, especially given the "benefit" that 1 confirmation becomes a guarantee and can't be orphaned (because the network becomes controlled by a deterministic mining cartel).

This is an interesting attack vector but I don't see how it is applicable to unprofitable PoW schemes like the second one I suggested. If the mining reward is limited to preventing a loss of stake or decreasing the tx fees (which cannot go below 0 %), there's no incentive for 51% miners to orphane other blocks. Such a behaviour would inevitably deter honest stakeholders/miners from using the currency, so that the coin would eventually depreciate and hurt the attacker.

Also, in case of negative interest rates applied to the stake, the power law distribution is counteracted by the fact that small stakeholders could use the idle power of their devices while large stakeholder would need to buy or rent extra hashpower to preserve their stake.

[alkan]

Furthermore, the uneven distribution of hashing power (and hashing costs) is not the only reason for centralization of Bitcoin.

I firmly believe that the lack of scalability with regard to block creation rate is an equally important factor which makes it virtually impossible for low-scale miners to create blocks. If the granularity of blocks was much higher, even hobbyists could buy ASICs and do some hashing. Economy of scale would be reduced considerably.

It is also safe to assume that there are a lot of people out there who would mine at home if they could get at least some reward from it even if it would be economically irrational due to the costs. Theoretically, you could market block rewards as a lottery and get people to do every sort of irrational things, in the hope of hitting the jackpot.

[alkan]

I think that is the big failure of any non-anonymous currency (most of them in fact).  With non-anonymity comes non-fungible coins.  You can decide not to accept coins that come from transactions in certain countries, you can decide not to have coins that have been held by the competition (if that competition is smaller), law makers can impose different taxes as a function of where coins come from (for instance, they could make tax transferrable: if you accept coins from someone who hasn't paid their taxes, YOU should now pay them in their place).

Non-anonymous coins are not fungible.

@iamnotback: I'm curious to know your stance on this. Does your new coin tackle this issue (if it's really one)?