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

[g2com]

Bitcoin-NG and Byzcoin seem pretty promising IMO. The 2/3 computing power is required to rewrite the history of the blockchain, as only receiving enough approvals from the committee shall a block pass the verification. The problem of both solutions is that they depend too much on the reliability of the leader node. I'm working on a project that improves upon Bitcoin-NG's security and incentive issues.

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[IadixDev]

smooth also added the very clever point that in the case Proof-of-Stake devolves to a computation contest for computing Nothing-at-Stake game theory, then this is perhaps a Proof-of-Work system in disguise (and I add but it might still also have some of the bad traits of Proof-of-Stake as well)

Pos is weighted proof of work.

[IadixDev]

Maybe also need to remind decentralisation via pow  is a mean to and end, not a finality in itself, unless being into ideology, maybe need to focus more on the actual finality to find another paradigm to get the same finality than trying to be into 100% decentralisation  by principle, as it might as well take another 200 year to find a new solution to byzantine general problem. And pow showed is limit for this already.

[iamnotback]

@dinofelis, I just realized another possible reason why the Chinaman miners have urgency to HF and why the whales want small blocks.

If the 1MB blocks become monopolized by whale transactions (because they can pay higher fees than anyone else), then the whales can become the miners and pay themselves the fees, especially as coinbase reward declines to 0. The miners who don't spend Bitcoins, will not receive any income and be bankrupted. Thus miners are fighting for their existence.

Also the whales have a converse problem. If they don't take control over mining, then the miners could gouge them for fees such as a 5% fee for all transactions (which consumers will pay but whales will not pay that!!!).

Now it is crystal clear. They must fight. They have no choice but to fight.

And now I realize how horridly broken Satoshi's PoW design is.

And so this is possibly why the whales haven't been transparent about their motivation. It reflects very poorly on Satoshi's design.

So I think the whales have perhaps been planning for a PoW hash change at the opportune time. No need for them to have invested in SHA2 ASICS. Those will be deprecated soon. Interesting to note that MP had remarked in 2013 that both the USG and China were getting into ASIC mining. He seemed happy about that. Now I think I understand why.

What you probably don't know already is that a good chunk of the recent hashpower coming online is actually a taxpayer funded adventure. A good chunk of the recent hashpower is split roughly evenly between the Chinese and the US government. There might be a third player in there but I can't discern. I can't tell which of the two is actually ahead, it seems to oscillate on a three week period. But in either case, the race is on : the governments are mining, boys and girls.

We appear to be at a very volatile period for Bitcoin or perhaps the can will be kicked down the road.

@dinofelis, I want to thank you for stimulating this thought provoking discussion. I suspect the community feels the same appreciation.

[dinofelis]

smooth also added the very clever point that in the case Proof-of-Stake devolves to a computation contest for computing Nothing-at-Stake game theory, then this is perhaps a Proof-of-Work system in disguise (and I add but it might still also have some of the bad traits of Proof-of-Stake as well)

Pos is weighted proof of work.

The problem with the current PoS systems is that they hand out rewards (block rewards and fees).  PoS without rewards and a deterministic preference function doesn't suffer from "nothing at stake", because, well, you don't care.

If you have a PoS system where there is no need for a regulation in the speed of blocks, because there is no block reward, and if you have a preference function that is:

1) slightly more than proportional to total coin-age, and proportional to number of transactions included
-> meaning, a chain with a transaction included is always preferred over an otherwise identical chain with a transaction not included
-> meaning that replacing a transaction by an earlier transaction of the same coins ("earlier double spend") is always going to be refused
-> meaning that putting in a later double spend of coins that have already been spend afterwards, is going to eliminate so many transactions that it is going to lose too.

2) has a random order of preference between chains that have identical outcomes for (1) solves the "nothing at stake" problem because one chain is preferred over another one

3) has, at each block, a random order of preference for stake holders to sign the block

I'm pretty sure you have mostly a unique solution to the consensus problem, and those "false variants" that may be propagated have very little chance of coming into existence, because minters don't mind minting, but are not keen on minting either, and are most of the time, not motivated to making false chains: they can only harm the system in which they have a stake.  As there is no rewards, there are no strategies apart from trying to double spend, and the odds that you can do it because you happen to be the preferred staker on the false chain are small.

There can be regular "multi-stake checkpoint signing" events if ever the probability of double spending is not small enough, but I don't even think it is necessary.

[iamnotback]

@dinofelis you've made one correct step towards my design. Congrats.

There are many more details to reach a viable system with the desirable qualities.

My design may not look at all like what you just described, but abstractly it is.

[IadixDev]

For me already the one thing I find bulky with bitcoin is to merge the question of coin emission and block reward with pow. It's cheap trick and still works, but still bulky.

For me most pb of scaling and centralisation come from this. If the coin emission would be independent or at least not completely merged with reward for block emission it can open other paradigm for security.

As coins émission logic is rather simple ans non ambiguous ans 100% deterministic , I dont see why the need to tie it to reward for block emission and the incencitive can be rethought in completely different way.

Id add that the pb with centralisation is not necessarily centralisation itself, but the crteria on which the délégation of authority happen. If the centralisation is based on either ponzi like things that favoris first comers, or decided arbitrary by network operators it's bad. If central node can be selected on more objective crteria within game theory , it's much less of a pb. The only question is to define what are good quality for central node within game theory. Provided the game theory lead to need for central node for better network performance. Like game theory lead to need arbitrer to have fair game. Having game where all player and competitors are also arbirtrer is complex problem.  Game theory never evolve to this naturally.  Especially when rules are too complex to be fully understood by all player.

Having a single arbitrer for huge network like bitcoin is not viable, which is why id lean toward a system of subnetwork with locally selected arbitrer. Divide to reign always crush all game theories. And in the end for most use case not all nodes have to know the status of all other nodes for things to keep functiuning well. As long as what node need to know to validate an operation is well defined , there no real need for total decentralisation & fungibility.

[dinofelis]

@dinofelis you've made one correct step towards my design. Congrats.

There are many more details to reach a viable system with the desirable qualities.

My design may not look at all like what you just described, but abstractly it is.

I was just thinking loudly of how to make a PoS version for bitcoin

[dinofelis]

For me already the one thing I find bulky with bitcoin is to merge the question of coin emission and block reward with pow. It's cheap trick and still works, but still bulky.

Our thoughts seem to be almost parallel.

https://bitcointalk.org/index.php?topic=1837136.msg18344301#msg18344301

[iamnotback]

except for burning seigniorage where it is brilliant

Again, PoW is great for coin creation.  But that's it.

Burning seigniorage (i.e. sending the capital to the electricity costs instead of to any entity involved with the token) doesn't prevent whales from taking a power-law distribution of the money supply. So I fail to see the advantage of having one set of whales or another set of whales.

If the people who take the seigniorage are evangelists and developers of the ecosystem, and if they are sufficient in number, then at least some of your whales are hopefully ardent supporters and not some venomous snakes that appear from the dark shadows of high finance.

OTOH, if the venomous snakes don't want to share the stage with whales who they think are undeserving, they make take their capital else where. So once again whales are back to competing for the other 50% of the wealth which isn't concentrated.

I think it is true though that if the money supply can be distributed competitively then more whales and talented will see it as a level playing field to compete in.

So I think any competitive distribution which doesn't give privilege to any group is acceptable. But even with PoW, it isn't truly competitive because so many people do not know how to mine. So in effect your distribution paradigm is filtering the type of people you want in your ecosystem.

So if you want only geeks, then do a PoW distribution. Maybe geeks are all that matters now and the rest of the world are fodder?

https://urbit.org/docs/about/objections/#-urbit-is-a-total-scamcoin-it-s-100-premined

[alkan]

As there is no rewards, there are no strategies apart from trying to double spend, and the odds that you can do it because you happen to be the preferred staker on the false chain are small.

What about censorship?

@dinofelis you've made one correct step towards my design. Congrats.

There are many more details to reach a viable system with the desirable qualities.

My design may not look at all like what you just described, but abstractly it is.

The problem I see with minimal or no minter rewards is that minters wouldn't lose much by not mining (or only mining on top of selected blocks), which lowers the amount needed to bribe them to perform any action desired by an attacker.

How does your system protect against bribing attacks? (In my proposed model, the big number of anonymous minters guarantees that an attack must be made public before it has started.)

There seems to be a real tradeoff tied to block rewards: They should be as small as possible to avoid selfish mining strategies (and economies-of-scale) and as large as possible to make bribe attacks costly.

[IadixDev]

This issues of seniorage is much more fundemental pb than this.

It's at the hearth of any philosophy or science that knowledge of a system give more power on this system.

Thinking that anyone can be equally qualified to operate a system is silly. It's animal farms syndrome.

But seniorage in the context of bitcoin doesnt necessarily equate with comptency to operate the network if senior are mostly whales holding bitcoins, it doesnt necessarily mean they have competence as network operator.

If all whales were actual bitcoin geeks who are really deeply involve within theorical reasearch and dev, and could form as competent leadership  that wouldnt look that bad to me. But it doesnt seem to be too much the case.

Bitcoin I think is still made to favor computer geeks, and I think most alt coin play ponzi game where the commodity is knowledge of the network and ability to get and use the software in early stage.

But seniorage can also have positive attribute when it equate with knowledge and experience required to operate the network smoothly and it's not based on tech ponzi.

The thing to have bitcoin stack as metric for seniorage and competent leadership smell ponzi.

Hashing power have same pb.

They are still not good measure to determine the legitimity of decision taking for the rest of the network.

It's the same pb with plato and athenian liberal democracy vs republic. The former always lead to collusion of interest and the second lead to ethics and putting wisedom and competency at the center of the game. The two are always in opposition.

Bitcoin is like athenian democracy where selfish material gain prevail and cant lead to ethical fair system.

except for burning seigniorage where it is brilliant

Again, PoW is great for coin creation.  But that's it.

Burning seigniorage (i.e. sending the capital to the electricity costs instead of to any entity involved with the token) doesn't prevent whales from taking a power-law distribution of the money supply. So I fail to see the advantage of having one set of whales or another set of whales.

If the people who take the seigniorage are evangelists and developers of the ecosystem, and if they are sufficient in number, then at least some of your whales are hopefully ardent supporters and not some venomous snakes that appear from the dark shadows of high finance.

OTOH, if the venomous snakes don't want to share the stage with whales who they think are undeserving, they make take their capital else where. So once again whales are back to competing for the other 50% of the wealth which isn't concentrated.

I think it is true though that if the money supply can be distributed competitively then more whales and talented will see it as a level playing field to compete in.

So I think any competitive distribution which doesn't give privilege to any group is acceptable. But even with PoW, it isn't truly competitive because so many people do not know how to mine. So in effect your distribution paradigm is filtering the type of people you want in your ecosystem.

So if you want only geeks, then do a PoW distribution. Maybe geeks are all that matters now and the rest of the world are fodder?

[iamnotback]

There seems to be a real tradeoff tied to block rewards: They should be as small as possible to avoid selfish mining strategies (and economies-of-scale) and as large as possible to make bribe attacks costly.

I said there are still "details".

He made one forward step.

The key is making it non-viable (probabilistically cost weighted) to attack. Realize even PoW has a non-zero probability of being attacked. Nothing absolute can ever work, which is why Byzantine agreement gets stuck if its liveness threshold is exceeded.

[iamnotback]

This issues of seniorage is much more fundemental pb than this.

It's at the hearth of any philosophy or science that knowledge of a system give more power on this system.

Thinking that anyone can be equally qualified to operate a system is silly. It's animal farms syndrome.

But seniorage in the context of bitcoin doesnt necessarily equate with comptency to operate the network if senior are mostly whales holding bitcoins, it doesnt necessarily mean they have competence as network operator.

If all whales were actual bitcoin geeks who are really deeply involve within theorical reasearch and dev, and could form as competent leadership  that wouldnt look that bad to me. But it doesnt seem to be too much the case.

Bitcoin I think is still made to favor computer geeks, and I think most alt coin play ponzi game where the commodity is knowledge of the network and ability to get and use the software in early stage.

But seniorage can also have positive attribute when it equate with knowledge and experience required to operate the network smoothly and it's not based on tech ponzi.

The thing to have bitcoin stack as metric for seniorage and competent leadership smell ponzi.

Hashing power have same pb.

They are still not good measure to determine the legitimity of decision taking for the rest of the network.

It's the same pb with plato and athenian liberal democracy vs republic. The former always lead to collusion of interest and the second lead to ethics and putting wisedom and competency at the center of the game. The two are always in opposition.

https://urbit.org/docs/about/objections/#-urbit-is-a-total-scamcoin-it-s-100-premined

[iamnotback]

But the point was that is not a stable equilibrium because the profits are not accruing proportional to hashrate due to unequal propagation or orphan rates (i.e. wasting more hashrate). Thus over time the hashrate concentrates until there is a 33 - 50% attack and then eventually the cartel can set any block size it wants with a 50% attack.

While it's true that bigger hashrates and better network connectivity might result in centralization (eventually leading to a 33% or 50% concentration), the problem of proportionality isn't specific to the question of unlimited block size or the fee market in general. It also occurs for block rewards (https://blog.ethereum.org/2014/07/11/toward-a-12-second-block-time).

Optionally larger blocks make effects of the disproportionality greater, because those with relative advantages in proportionality can make the larger blocks. As a miner I can start mining on my large block immediately, so why not make it really large. We already discussed that the risk of increase in orphan rate does not offset increase in revenue from doing so.

I don't want re-discuss everything @dinofelis and I already discussed.

Block chain tech is complex. I don't want to write a book.

[iamnotback]

It's the same pb with plato and athenian liberal democracy vs republic. The former always lead to collusion of interest and the second lead to ethics and putting wisedom and competency at the center of the game. The two are always in opposition.

Interesting analogy. Bitcoin is a republic where knowledge is power and the whale MP took control early on by establishing the MPEx stock and options exchange so that all the speculation in the system was feeding back to him and he was able to aggregate a million "Butts". He also become familiar with all the whales via that business. Heck maybe MPEx is Satoshi or knows who Satoshi is.

Bitcoin isn't a democracy because there is no need to fool the n00bs to buy their vote. The whales (aka economic majority) have the only vote in Satoshi's PoW.

What I try to do in my design is balance the power between the democracy and the republic, so that they keep each other in a stalemate. That doesn't prevent the power-law distribution, nor should it. It hopefully makes the system anti-fragile, thus (hopefully) superior to Satoshi's design. And then I make it (I think) implausible to buy the vote of the n00bs, because there is no voting. The result (hopefully) is the nobody controls it and it obeys its protocol in a Nash equilibrium. My design I think quite clever, but we'll have to see what peer review thinks (hopefully it doesn't stink).

[IadixDev]

The thing is as far as i know, bitcoin is based from scratch on this idea of competing selfish interest, and not on idea of participant being incitated to think on the global network scale.

To me seem satoshis swalloed the fallacy that lack of good intentioned leadership lead to fairness and equality. The current situation is another proof of this fallacy. Selfish driven motive never lead to ethics.

Inherently it lead to collusion of interest and tyrany. Not to make godwin point, but it's how the democracy turned to Wehrmacht democracy then turned to full nazism with collusion of selfish interest from big groups. I would say bitcoin is coming not far to the Wehrmacht democracy point.

If the main force driving the network is selfish interest, and the block validation is only based on selfish interest to win the reward, it cannot lead to a fair system. And the fact that 100% of new coin emission go through this doesnt improve the situation.

But I dont come to blockchain from trading perspective, and many things in bitcoin philosophy and most alt coin doesnt totally click with my philosophy

The whole theory that selfish material interest and selfish pleasure seeking is ( or should be) the main driving force behind economics and society rules is what make the world in bad situation today.

It's this sort of stuff that make me think satoshi is far from being utopist idealistic hereoe to save the trouble of financial world. His core philosophy is the same, just like a sort of fresh start with a new system with the same core philosophy of selfish interest driven world. Where people are incitated to think only in term of their own selfish benefits. Which is all based on very truncated view of human relationship. Almost sociopathic.

[iamnotback]

@IadixDev, amen.

[dinofelis]

As there is no rewards, there are no strategies apart from trying to double spend, and the odds that you can do it because you happen to be the preferred staker on the false chain are small.

What about censorship?

I don't see the problem.  Why would an arbitrary minter censor you ?  And if he censors you, the next one probably won't.

The problem I see with minimal or no minter rewards is that minters wouldn't lose much by not mining (or only mining on top of selected blocks), which lowers the amount needed to bribe them to perform any action desired by an attacker.

Who are you going to bribe ?  The guy that just minted a block, but if he changes something, he's not the preferred minter any more, but some other dude ?

The idea is that, if the preferred minter order is a random function, depending on every individual bit in the block, you cannot know who will mint the modified block ! 

As iamnotback said, this is just at high conceptual level and not a "design", but essentially, you take a hash function of the block, and you find the Hamming distance between this hash result and the minter's stake address.  The one with smallest Hamming distance is the preferred minter.  Change one byte in the block, and the preferred minter becomes someone else. Many minters can mint blocks almost simultaneously.  Another function will tell future minters which chain to prefer to mint upon.  This function should be well-designed so that there is almost no way to "orphan" many blocks, by increasing exponentially the preference for the currently longest chain.

I'm not doing anything PROPORTIONAL to stake - you simply have to stake a given amount, somewhat like the master node scheme in DASH - but the amount shouldn't be very high - as there's nothing to WIN in staking, you don't care about your probability to mint, you only do it altruistically to keep the network running.

[dinofelis]

The whole theory that selfish material interest and selfish pleasure seeking is ( or should be) the main driving force behind economics and society rules is what make the world in bad situation today.

This is the essence of living, conscious beings.
Consciousness defining pleasure and suffering, and life defining offspring preference, the obvious behaviour of any conscious, living being is what you just stated.

The negation of this is what I call the social lie.