The Ethereum Paradox

[YarkoL]

Powerlaw distribution of wealth in cryptocoins is a non issue. Wealth will be distributed and re-distributed many times for the simple reason that code can be cloned unlike material wealth like gold. You don't expect in the future one global ledger, one world currency like most nerds here, do you?
Bitcoin is not backed by electrical power consumed to produce blocks, its idea can be copied and re-implemented. Its value is based on faith, we're watching some of this faith evaporating now to competition. Competition is code as well and wealth will be re-distributed to better competition, and so on, ad nauseam.

But you argued that PoW leads to a concentration of ownership
of "means of production". Don't you think you ought to qualify that
pronouncement in the light of what you now stated, as quoted?  

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[r0ach]

Wealth will be distributed and re-distributed many times for the simple reason that code can be cloned unlike material wealth like gold. You don't expect in the future one global ledger, one world currency like most nerds here, do you?

So why don't you go and try to convince people your copper ingot should have the same value as a gold ingot in real life?  The only thing giving value to gold is scarcity and network effect.  You should have no trouble buying up all the cheap copper to corner the market and then presenting your copper as the superior solution to the world.  Try it and tell us how it works out.

[freshman777]

Powerlaw distribution of wealth in cryptocoins is a non issue. Wealth will be distributed and re-distributed many times for the simple reason that code can be cloned unlike material wealth like gold. You don't expect in the future one global ledger, one world currency like most nerds here, do you?
Bitcoin is not backed by electrical power consumed to produce blocks, its idea can be copied and re-implemented. Its value is based on faith, we're watching some of this faith evaporating now to competition. Competition is code as well and wealth will be re-distributed to better competition, and so on, ad nauseam.

But you argued that PoW leads to a concentration of ownership
of "means of production". Don't you think you ought to qualify that
pronouncement in the light of what you now stated, as quoted?  

I am not sure what you ask.

[freshman777]

Wealth will be distributed and re-distributed many times for the simple reason that code can be cloned unlike material wealth like gold. You don't expect in the future one global ledger, one world currency like most nerds here, do you?

So why don't you go and try to convince people your copper ingot should have the same value as a gold ingot in real life?  The only thing giving value to gold is scarcity and network effect.  You should have no trouble buying up all the cheap copper to corner the market and then presenting your copper as the superior solution to the world.  Try it and tell us how it works out.

Bitcoin has no scarcity because it's code, it's not material. Chinese miners can decide tomorrow to change code to produce more than 21 million coins if they think their profit is not enough. Will you switch from this "high security" (in your mind) hashing network to a "low security" fork with a different POW algo or swallow this spit in your face and continue to use Bitcoin?
Network effect is delusioned nerds. 7 billion people in the world don't care and can use whatever their local community adopts to use in the future if it comes to that. You can't compare the network effect and naturally proven scarcity of gold to Bitcoin unless you're a delusioned nerd.

[r0ach]

Chinese miners can decide tomorrow to change code to produce more than 21 million coins if they think their profit is not enough.

Wrong.  People already attempted this at the first Bitcoin halving by trying to fork to a continuous 50 block reward chain and it was a miserable failure.  Even if you temporarily rented all hash power on earth to try and get temporary consensus, the economic majority would stay on the normal chain and miners would be forced to switch back and mine on it after their coup fails.  Miners are forced to go where the economic majority is, not vice versa.

Same reason miners are not mining Borgcoin for profit right now; there is no economic majority there:

Borgcoin has 500,000,000 coins to be minted. 500 million being based on the mass ton of the borg trans warp ship with a maximum rated speed of 29.968 warp factor with advanced trans warp drive. The fastest trans warp drive ship ever to exist. Join the collective now.

[bcmine]

ethereum is all about smart contracts. the problem is that the quality of the contracts is bad, and there are not really alot of usefull public contracts. but i guess eth will be important as a backend solutions for alot of problems, not a frontend gear with alot of dapps like augur or dgb. i see here different approaches more successfull as Lisk or Rise or even IOTA for IoT

[freshman777]

Chinese miners can decide tomorrow to change code to produce more than 21 million coins if they think their profit is not enough.

Wrong.  People already attempted this at the first Bitcoin halving by trying to fork to a continuous 50 block reward chain and it was a miserable failure.  Even if you temporarily rented all hash power on earth to try and get temporary consensus, the economic majority would stay on the normal chain and miners would be forced to switch back and mine on it after their coup fails.  Miners are forced to go where the economic majority is, not vice versa.

I am not aware if there was an attempt to fork to a continuous 50 coin reward. If there was one, the hashing power was not concentrated in 3 mining farms at the time of the first Bitcoin halving, this made all the difference. The strong decentralized fork won.

"Miners will go where the economic majority is" - it's a theory based on what they have done in the early years of Bitcoin. Powerful competition would not matter that much if Bitcoin hashing was dispersed as it was at the time of the first Bitcoin halving. The problem is conditions that define faith in Bitcoin have been changing to notice for anyone paying attention. We can no longer make a clear-cut conclusion that miners haven't turned into dictatorship class. Sure they don't exercise their full power yet, but this is temporary while they are content with profits and there is no competing decentralized Bitcoin fork to challenge them this time.

[YarkoL]

I am not sure what you ask.

You point out that the powerlaw of distribution of wealth is a non-issue since
you have altcoins. Why doesn't the same logic apply to distribution of hashing power?

[freshman777]

I am not sure what you ask.

You point out that the powerlaw of distribution of wealth is a non-issue since
you have altcoins. Why doesn't the same logic apply to distribution of hashing power?

Distribution of hashing power requires capital investment and so tends to centralize. Capital investments to issue proof of stake coins that keep wealth re-distributed are negligible. But please read the next paragraph.

Imagine you live in a small community in the future in a failed state like Venezuela or hyperinflationary environment and fiat currency loses 10% of purchasing power every week. This small community can delegate a local authority to issue a proof of stake currency to service the local economy. Since the number of coins in circulation is known, the local authority can't easily abuse their power issuing more currency than necessary for fear of being thrown out of the office by an angry mob, but this is not the only difference to government moneys. People are not required by law to use this community scrip, remember that fiat is "money by emperor's decree". There is no reason a plumber should want to make miners in China and early adopters rich buying Bitcoin if all he needs to do is keep accounting with a local grocery store. The plumber may save his excess earnings in something else he considers more stable than local scrip if such a thing exists. My point is there will not be one as it's more convenient to use locally issued proof of stake credits to service small local economies, keeping wealth in the local communities because there is no top-down money production scheme imposed on them, whether it be government fiat or chinese Bitcoin miners.

[r0ach]

Capital investments to issue proof of stake coins that keep wealth re-distributed are negligible.

Let me demonstrate why you Eth shills have no idea what you're talking about.

Why proof of stake has no value:

Since Satoshi did not solve the Byzantine generals problem, this means confirmations are completely arbitrary.  So why are two confirmations more useful in Bitcoin (PoW) than one?  Because it's an open entropy system where over a period of time, it's either unlikely or statistically impossible for someone to maintain a monopoly on block validation when there is no upper limit to confirmations.

Recursive systems like proof of stake tend to permanently monopolize block validation by design, with no real fault or state recovery to fix it once it goes off the rails.  The act of introducing interest compounds this problem even more.  This makes a proof of stake confirmation essentially worthless due to being a bounded entropy system.

On top of being worthless, proof of stake is also a permissioned ledger.  The purpose of mining in Bitcoin is to create a permanent decentralized exchange peg, which thus results in a permissionless system.

[YarkoL]

Distribution of hashing power requires capital investment and so tends to centralize. Capital investments to issue proof of stake coins that keep wealth re-distributed are negligible.

What do you mean by centralization? Concentration of ownership of
means of production?

It is a moot point at best, since we have a multiplicity of
cryptocoins that can be mined with consumer-grade equipment. Your
critique makes sense only in the context of Bitcoin maximalism. But
you yourself already invoked the altcoin environment with its many
opportunities.

As for PoS, the difference is only of a degree, since significant returns
can be obtained only by heavy investment. And any perceived
differences in the fairness of the two schemes are, I am afraid, offset by
the flaws in the fundamentals of current  PoS implementations.  

[freshman777]

Distribution of hashing power requires capital investment and so tends to centralize. Capital investments to issue proof of stake coins that keep wealth re-distributed are negligible.

What do you mean by centralization? Concentration of ownership of
means of production?

Both cannot be accepted by populace.

It is a moot point at best, since we have a multiplicity of
cryptocoins that can be mined with consumer-grade equipment. Your
critique makes sense only in the context of Bitcoin maximalism. But
you yourself already invoked the altcoin environment with its many
opportunities.

As for PoS, the difference is only of a degree, since significant returns
can be obtained only by heavy investment. And any perceived
differences in the fairness of the two schemes are, I am afraid, offset by
the flaws in the fundamentals of current  PoS implementations.  

Again, local communities don't have a good reason to invest in existing popular ledgers, they can issue their own POS scrip for local trade. Globally traded cryptocoins will be used but not at the extent some on this forum like to imagine, dreaming about trillions of dollars volume taking over the world is utter nonsense.

you Eth shills

I still don't own 1 Eth and don't create threads on Eth.
I advocate for POS viability and utility in general and don't dismiss POW either by the way. Compared to you, I'm trying to be open-minded and receptive of various ideas.

[r0ach]

Looks like the Ethereum price got just a tad bit ahead of actual value.

Ethereum’s creators acknowledge these concerns, and say that developers are working hard to solve the problem. Lubin said in March that a “scalability solution” might be ready in two to three years.

http://www.marketwatch.com/story/this-bitcoins-challenger-is-up-1100-this-year-but-is-it-ready-for-prime-time-2016-05-18

So much for Bitcoin "scalepocalypse".  Ethereum isn't even a permissionless or decentralized network in the first place while using PoS, but even if they try to trick people into thinking they are, they're now saying a scaling solution (which doesn't exist) will take 2-3 years.

My estimate for what capacity Bitcoin needs to act as a checkbook type device for large value transactions with market penetration in middle/upper middle class first world nations is around 8 MB blocks.  After Segwit + the 2017 hard fork, Bitcoin will have around half of that, but it will also have payment channels due to segwit.  3-4 MB blocks + payment channels will likely give far more capacity than just plain 8 MB blocks, so Bitcoin will already be good enough to do it's job as a worldwide currency.

[r0ach]

No response from the people shilling for this thing that by their own admissions, it wouldn't be useful until 2-3 years from now? (but the solution they claim doesn't even work/exist)

[smooth]

Looks like the Ethereum price got just a tad bit ahead of actual value.

Ethereum’s creators acknowledge these concerns, and say that developers are working hard to solve the problem. Lubin said in March that a “scalability solution” might be ready in two to three years.

http://www.marketwatch.com/story/this-bitcoins-challenger-is-up-1100-this-year-but-is-it-ready-for-prime-time-2016-05-18

So much for Bitcoin "scalepocalypse".  Ethereum isn't even a permissionless or decentralized network in the first place while using PoS, but even if they try to trick people into thinking they are, they're now saying a scaling solution (which doesn't exist) will take 2-3 years.

Ethereum is not "using PoS", it is entirely PoW (except the ICO). Yes they plan to switch to PoS but that is just as much vaporware as the scaling solution. You can't have it both ways.

[r0ach]

Looks like the Ethereum price got just a tad bit ahead of actual value.

Ethereum’s creators acknowledge these concerns, and say that developers are working hard to solve the problem. Lubin said in March that a “scalability solution” might be ready in two to three years.

http://www.marketwatch.com/story/this-bitcoins-challenger-is-up-1100-this-year-but-is-it-ready-for-prime-time-2016-05-18

So much for Bitcoin "scalepocalypse".  Ethereum isn't even a permissionless or decentralized network in the first place while using PoS, but even if they try to trick people into thinking they are, they're now saying a scaling solution (which doesn't exist) will take 2-3 years.

Ethereum is not "using PoS", it is entirely PoW (except the ICO). Yes they plan to switch to PoS but that is just as much vaporware as the scaling solution. You can't have it both ways.

Since when are they not changing to PoS???

Last time I checked, that was their plan with the only resistance possibly being Szabo.  In terms of imploding Eth, staying on PoW would be just as detrimental since they issued an IPO for the entire coin supply.  It's a disaster no matter what path they take.  Investors would flip out if they make an announcement saying they're going to be hyperinflating and leaking mined coins forever.  Vitalik would be the new Bernanke of crypto:

[smooth]

Looks like the Ethereum price got just a tad bit ahead of actual value.

Ethereum’s creators acknowledge these concerns, and say that developers are working hard to solve the problem. Lubin said in March that a “scalability solution” might be ready in two to three years.

http://www.marketwatch.com/story/this-bitcoins-challenger-is-up-1100-this-year-but-is-it-ready-for-prime-time-2016-05-18

So much for Bitcoin "scalepocalypse".  Ethereum isn't even a permissionless or decentralized network in the first place while using PoS, but even if they try to trick people into thinking they are, they're now saying a scaling solution (which doesn't exist) will take 2-3 years.

Ethereum is not "using PoS", it is entirely PoW (except the ICO). Yes they plan to switch to PoS but that is just as much vaporware as the scaling solution. You can't have it both ways.

Since when are they not changing to PoS???

I never said they aren't "planning" to change, in fact I said they are. They are also "planning" to scale.

All I said is you can't criticize them for "using" PoS (which they claim will happen in the future) and at the same time criticize them for not being scalable (which they claim will not be the case in the future). Either pick the current deployed system to criticize, or some imaginary future system at least consistent with their stated plans.

[r0ach]

All I said is you can't criticize them for "using" PoS (which they claim will happen in the future) and at the same time criticize them for not being scalable

I don't know why you're pulling this Orwellian double speak.  We all know proof of stake is not a valid decentralized network and could only be considered a centralized company issuing shares at best.  This is the one thing Larimer is honest about compared to other people attempting to push proof of stake.  Vitalik does not share this honesty and continues to refer to it as a decentralized system, while Larimer said he was basically just trying to compete with companies like Paypal or single point of failure exchanges.

[smooth]

All I said is you can't criticize them for "using" PoS (which they claim will happen in the future) and at the same time criticize them for not being scalable

I don't know why you're pulling this Orwellian double speak.  We all know proof of stake is not a valid decentralized network and could only be considered a centralized company issuing shares at best.  This is the one thing Larimer is honest about compared to other people attempting to push proof of stake.  Vitalik does not share this honesty and continues to refer to it as a decentralized system, while Larimer said he was basically just trying to compete with companies like Paypal or single point of failure exchanges.

I never disagreed about PoS being useless and a bad move for Ethereum (i.e. I agree with Nick Szabo).

Ethereum is not currently a PoS system, so you can't criticize it for that, yet. You can criticize it for being totally non-scalable.

[btctube]

Nice try r0ach. You can find users agreeing you but you'll never know what they exactly do with thier btc. A lot of them putrobably just bought Eth.