Bitcoin Is Not A Democracy. Then What It Is?

[Juggy777]

According to Antony Antonopoulos, Bitcoin isn't a democracy, some people call it cypherpunk or crypto-anarchy, https://youtu.be/TC3Hq76UT5g

I don't think Bitcoin is a democracy - rather it is a flat, network-based, collaborative system of super-majority consensus among five constituencies (users, developers, exchanges, merchants, miners), which makes change very difficult. It is a radical decentralization of power. Some people call the politics of this system "cypherpunk," "crypto-anarchy," and other words we don't yet have.

Is bitcoin a meritocracy?

It is holding of power by people selected according to merit. They wield the power.

Rodolfo Novak: Bitcoin is a true technical meritocracy. Cry/Kick/Scream as much as you like, but if your shitty code & ideas aren't good they wont make it

Is bitcoin a plutocracy?

It is the holding of power by the wealthy, elites.

Is bitcoin anarchy?

It is absence of government and absolute freedom of the individuals al, regarded as a political ideal.

Your definitions are really heavy, and going by the vote decision every one agrees it's should be looked at an investment, and I really don't understand why you feel like that, I feel you should simply use it like a investment rather than anything else, you are confusing Bitcoin and democracy and I don't think it's right to do so. Maybe you need to look at your concepts

[dinofelis]

What is proof of stake to vote other than substituting Work for Capital and how does that equate for less centralization but rather, different centralization? Also, without reward, aka Transaction fees, or punishment, how do you incentivize following consensus?

The goal of the consensus voting system is that "the users are to come to consensus to what payments have been done, according to what rules".  After all, a crypto currency is nothing else but a "token game" where two things count:
- the rules of the game
- the ownership of the tokens

which is to be agreed upon collectively and uniquely: the "consensus".  

Given that there is material advantage to be had in the ownership of tokens (given that their ownership is traded against value, which is the use of the system), the consensus decision cannot be in the hands of a few, that could otherwise take advantage of it: the whole trick of cryptocurrencies is that this consensus decision is taken in a decentralized way, in such a way, that each decider keeps the other deciders in check, and no-one can cheat, because the cheater's decisions will not be re-validated by later deciders.  Note that here, "cheating" comes down to "deviating from the rules", which implies somehow immutability: if the decentralized decision system is such, that every decision that deviates from the "rules in place" is discarded by the next deciders, only immutable rules can emerge from this, if there is no explicit "rule changing mechanism" other than all deciders deciding collectively to apply new rules at day X, which is hard or impossible to do in a fully decentralized system.

The decentralization in consensus decision taking is explicitly necessary to avoid all possible collusion between deciders, and hence, to have only the "true rule set" to be recognized by all players in the game.  This is why a mechanism is needed to have this decentralized decision to be kept truly decentralized.  

There are two ways to come to a unique consensus decision amongst entities: "voting" and "random unique decider".   In both cases, there needs to be a "weighting factor" applied to each entity, because the entities being anonymous and permissionless, it is impossible to know how many "declared voting entities" are in fact just sybils of one single economic entity. In "voting" the weight is the weight of the vote ; in "random decider", the weight is the probability to be the next decider.  Voting is difficult, because one never knows who is actively participating at a certain point, and absolute majority is impossible to achieve on a continuous basis.  So bitcoin and most crypto without master nodes comes down to random unique decider, which needs a "probability of being the next one".  Proof of work was supposed to apply this weight.  But if you think about it, stake is a better measure.  After all, the VALUE of the token system in the market will be judged partly by the belief in the correct functioning of the system according to the rules.  Now the bigger stake holders are also the bigger exposed risk takers if the system turns out to fail to work according to rules.   So the bigger stake holders are most prone to want to keep the system honest: they have most to lose if the system is visibly corrupted.  Big stake holders can be trusted to want to keep the system honest, because if the system turns out to be visibly corrupt, their big stake will drop in market value.

As such, big stake holders are not to be incentivized to come to (honest) consensus: their stake is, well, at stake !

The error in most proof of stake systems is that they REWARD stakers.  That is not necessary.  Stake holders are already incentivised by their very stake in the system.   We only need stake holders to come to consensus, not to reward them.  

Of course, if the ownership of coins becomes a small oligarchy of a few big whales that hold 99% of the stake, we would be in the same situation as in bitcoin, but it would also mean that they are also the only OWNERS of the system - so it is somehow normal that they decide on what they do with their own token system !  

And in as much as the coins are distributed over large amounts of economic entities, we get true decentralization of consensus decision, according to the stake owners.

In other words, proof of stake is about the best distribution of consensus decision power, because it are the owners of the system themselves that decide on the workings of the system - no external powers or forces.

But again, I'm talking about "benevolent" consensus decision without any other reward than contributing to the good workings of the system in which one has a lot of stake.  Not about what is usually presented as proof of stake, with rewards, fees and so on.

[djtas bitbit]

If it is the Democratic Party there will be several sound systems and developing furture certainly can be controlled by the Director while bitcoin free agent there are certain words for what you can call a bitcoin So btcoin Lo are free without limit but follow the rules if you follow an advertisement. in other words bitcoin not democracy

[Cuber Krypton]

Thank you for the explanation.

I do not understand how "Big Stake Holders" are any different than "Big Mining Pools" in your explanation.

Under the above assumption that the risks presented by both are the same, I predict it is less costly for a Big Stake Holder to attack the system rather than a Big Mining Pool.

Mining Pool has Equipment, Operating and Energy Costs throughout time and it's profit comes also from a continuous service, rather than immediate. So it is a long term plan. I argue they stand much more to lose than an equivalent in size stake holder.

I don't see how proof of stake is better security and more decentralization. But then again, I don't feel Bitcoin is centralized when you can fork it anytime you want. It is effectively impossible to control bar physical coercion. Your argument to defend against a centralized Proof of Stake also stands for Proof of Work. Effectively fork it and let them keep their coin.

A Miner with a long term plan has much more incentive to listen to users and less to deviate than a staker with a big stake.

Right now, we are witnessing that. There is an looming threat to change proof of work. We see Miners, Users all threatening forks and let the economy decide. UASF is effectively banking on the fact that users vote with their money. Only Miners stand to lose here. And if it so happens that Miners win, it is because the users decided their coin was better... Not because the Miners imposed that their coin was better.

[deisik]

Under the above assumption that the risks presented by both are the same, I predict it is less costly for a Big Stake Holder to attack the system rather than a Big Mining Pool

[...]

I don't see how proof of stake is better security and more decentralization. But then again, I don't feel Bitcoin is centralized when you can fork it anytime you want. It is effectively impossible to control bar physical coercion. Your argument to defend against a centralized Proof of Stake also stands for Proof of Work. Effectively fork it and let them keep their coin

It kinda looks that you are not really looking for an explanation

Stake holders are what the system itself is made up of, so you can't possibly exclude or eliminate the possibility of shutting it down by those who essentially own it. This is a natural course of things or events, you either render the system vulnerable from outside (PoW) or leave it vulnerable from inside (PoS), there is no third option available in this world (provided you go for some level of invulnerability, of course). But with the PoS system only the insiders (read owners) can kill it (but that will be their deliberate choice), while with the PoW one, anyone who has enough power can do that (it is just a matter of resources) and you don't need to become a major stake holder as is the case with the PoS system (the latter would be equal to buying and owning it)

[Reid]

That heavily depends on how people use bitcoin, but i think bitcoin is Crypto-Anarchy since plutocracy meritocracy doesn't fit because miners/pools wield bigger power and Plutocracy doesn't fit either since they only have control over bitcoin market price while miners still wield bigger power for bitcoin scaling.
CMIIW.

I am okay with this explanation as I can't define also to where bitcoin will be input.
Can it be half Anarchy and somehow democracy?
I guess it depends on the usage of every bitcoin user.
The question would be what is bitcoin for you first? What is the purpose of being involved in it.
Then maybe this could be answered.

[minime]

democracy is nothin mo than dictatorship by the masses....
just my 2 cents

[Cuber Krypton]

Under the above assumption that the risks presented by both are the same, I predict it is less costly for a Big Stake Holder to attack the system rather than a Big Mining Pool

[...]

I don't see how proof of stake is better security and more decentralization. But then again, I don't feel Bitcoin is centralized when you can fork it anytime you want. It is effectively impossible to control bar physical coercion. Your argument to defend against a centralized Proof of Stake also stands for Proof of Work. Effectively fork it and let them keep their coin

It kinda looks that you are not really looking for an explanation

Stake holders are what the system itself is made up of, so you can't possibly exclude or eliminate the possibility of shutting it down by those who essentially own it. This is a natural course of things or events, you either render the system vulnerable from outside (PoW) or leave it vulnerable from inside (PoS), there is no third option available in this world (provided you go for some level of invulnerability, of course). But with the PoS system only the insiders can kill it (but that will be their deliberate choice), while with the PoW one, anyone who has enough power can do that (it is just a matter of resources) and you don't need to become a major stake holder as is the case with the PoS system (the latter would be equal to buying and owning it)

I just feel that if you are looking for less control and a more costly attack, proof of work is better. Also, your reasoning implies that people are rewarded for hoarding stake rather than transact it. This makes sense for company shares. Not for any currency.

As for the insiders killing it, it is irrelevant. What is relevant is the cost to attack. Because an outsider can just buy enough stake at X cost and become an insider. As for Proof of Work, I believe it is more costly.

I think Miners have greater incentive than Stakers honestly. And Miners cannot cashout so easily, and are open to all kinds of attacks from users and economic majorities. Miners are committed to the long haul. Whereas Stakers are not. And the only way to incentivize that is incentivizing hoarding, which is not what you want.

[krishnapramod]

According to Antony Antonopoulos, Bitcoin isn't a democracy, some people call it cypherpunk or crypto-anarchy, https://youtu.be/TC3Hq76UT5g

I don't think Bitcoin is a democracy - rather it is a flat, network-based, collaborative system of super-majority consensus among five constituencies (users, developers, exchanges, merchants, miners), which makes change very difficult. It is a radical decentralization of power. Some people call the politics of this system "cypherpunk," "crypto-anarchy," and other words we don't yet have.

Is bitcoin a meritocracy?

It is holding of power by people selected according to merit. They wield the power.

Rodolfo Novak: Bitcoin is a true technical meritocracy. Cry/Kick/Scream as much as you like, but if your shitty code & ideas aren't good they wont make it

Is bitcoin a plutocracy?

It is the holding of power by the wealthy, elites.

Is bitcoin anarchy?

It is absence of government and absolute freedom of the individuals al, regarded as a political ideal.

Your definitions are really heavy, and going by the vote decision every one agrees it's should be looked at an investment, and I really don't understand why you feel like that, I feel you should simply use it like a investment rather than anything else, you are confusing Bitcoin and democracy and I don't think it's right to do so. Maybe you need to look at your concepts

I wasn't trying to literally connect any political ideology with bitcoin, I was just trying to figure out if the working model/base of bitcoin could have any similarities with any political systems and it does have, developers and miners make it meritocracy, elites could disrupt the market if and when they want to, plutocracy, and being decentralized makes it similar to anarchism. Someone even mentioned monarchy That's what most of the people are doing, simply investing without even wondering how it works.

[deisik]

Under the above assumption that the risks presented by both are the same, I predict it is less costly for a Big Stake Holder to attack the system rather than a Big Mining Pool

[...]

I don't see how proof of stake is better security and more decentralization. But then again, I don't feel Bitcoin is centralized when you can fork it anytime you want. It is effectively impossible to control bar physical coercion. Your argument to defend against a centralized Proof of Stake also stands for Proof of Work. Effectively fork it and let them keep their coin

It kinda looks that you are not really looking for an explanation

Stake holders are what the system itself is made up of, so you can't possibly exclude or eliminate the possibility of shutting it down by those who essentially own it. This is a natural course of things or events, you either render the system vulnerable from outside (PoW) or leave it vulnerable from inside (PoS), there is no third option available in this world (provided you go for some level of invulnerability, of course). But with the PoS system only the insiders can kill it (but that will be their deliberate choice), while with the PoW one, anyone who has enough power can do that (it is just a matter of resources) and you don't need to become a major stake holder as is the case with the PoS system (the latter would be equal to buying and owning it)

I just feel that if you are looking for less control and a more costly attack, proof of work is better. Also, your reasoning implies that people are rewarded for hoarding stake rather than transact it. This makes sense for company shares. Not for any currency.

As for the insiders killing it, it is irrelevant. What is relevant is the cost to attack. Because an outsider can just buy enough stake at X cost and become an insider. As for Proof of Work, I believe it is more costly

I think you are misusing the terms here

First, what you mean by "the cost to attack" is actually the cost of buying the controlling stake. If you are willing to buy something and then destroy it, more power to you. But don't speak about an attack here since the notion of attack assumes a hostile action, something which is not desired (in the case of PoW system, by the majority of "system" users). If you are an owner of a company and you want to liquidate it, you can't talk about "attack" there. Further, whether it is more costly or not is in fact a matter of belief since (major) stake holders may simply refuse to sell you their stakes at any price, and then you are stuck, as simple as it gets. This is obviously not the case with PoW. I guess that's where the primary, fundamental difference between these two systems lies. In other words, you can't "attack" the PoS system, you can destroy it only via "voluntary" action

[dinofelis]

Thank you for the explanation.

I do not understand how "Big Stake Holders" are any different than "Big Mining Pools" in your explanation.

Under the above assumption that the risks presented by both are the same, I predict it is less costly for a Big Stake Holder to attack the system rather than a Big Mining Pool.

I think deisik already answered the essence, but I join him that if the major HOLDERS of the coins decide to blow up their own coin system, that's their affair.  If the holders of the coins want to modify their system, that's their affair.  Nobody NOT holding any coins is affected. 

I would think that if coins are distributed in the same way as hash rate is now distributed amongst mining pools, then IN ANY CASE the game is "gamed".  Currently, in bitcoin, 5 mining pools have more than 50% of all hash rate, and in fact, most probably, these five pools are under the control of FEWER economic agents (read Jihan).  20 mining pools have 99% of the hash rate under their control.  If a coin were for 99% owned by 20 different people, you understand that this coin is a very closed game.  If these 20 people, owning 99% of the coins X, were to decide to blow up coins X, that's their good right and their affair, it wouldn't affect much other people.

A coin with such a centralized ownership is a small club coin.  If they want to shuffle their coins amongst themselves according to other rules, that's their good right.  But such a coin wouldn't have any large scope of usage.  Imagine 99% of bitcoin owned by 20 entities (and maybe less real people).  It would make bitcoin into a club game of these few people and nobody would care about it.  I could make such a coin and use it exclusively in my family, and maybe we would be 20 people too playing the coin game.

The problem is that 20 entities (most probably less) control 99% of the consensus decisions in bitcoin, but bitcoin stake holders are much more distributed, and nevertheless at this quite centralized decision mercy.

Mining Pool has Equipment, Operating and Energy Costs throughout time and it's profit comes also from a continuous service, rather than immediate. So it is a long term plan. I argue they stand much more to lose than an equivalent in size stake holder.

I think that a bitcoin stake holder that has 10% of all bitcoin has more to lose than a miner that has 10% of hash rate.  That's quite easy to prove: if the cost of HASH RATE material would equal the same fraction of MARKET CAP, the inflation would be over 100% if mining were to be profitable.  Someone having 10% of bitcoin stake would own 4 billion dollars in coins.  I don't think that a mining equipment representing 10% of the current hash rate costs 4 billion dollars.

I don't see how proof of stake is better security and more decentralization. But then again, I don't feel Bitcoin is centralized when you can fork it anytime you want.

Hardforking is indeed the only way to keep bitcoin "decentralized" and "competitive".  However, bitcoin being essentially a brand name, you can't even do that.  This is what refrains all battling parties from hard forking: bitcoin's value is essentially tied up to the special status of bitcoin as first mover - it doesn't have any other technical aspect in favour of it.  As such, forking away into an "alt coin" would lose that "bitcoin brand" which is the essence of its value.

Look at litecoin.  It is technically superior to bitcoin (it has segwit, and is for the rest identical, but has 4 times faster block times, and 4 times more capacity).  Why is litecoin not overtaking bitcoin ?  Simply a matter of brand name.

A Miner with a long term plan has much more incentive to listen to users and less to deviate than a staker with a big stake.

On the contrary.  A big staker IS a big user.  He will listen to himself, and his financial engagement is way, way stronger than the miner.  In as much as the coin means anything, there are many many more stake holders than there are miner pools.  And all those stake holders will, for sure, listen to themselves.  Nobody else is affected.

Right now, we are witnessing that. There is an looming threat to change proof of work. We see Miners, Users all threatening forks and let the economy decide.

None of that big-mouthing means anything.  You don't *threaten* with a fork, you do it if you're serious.  If you "threaten", it means that you won't do it.  This sounds like someone who would threaten to make, say, litecoin.  No, people just went ahead and MADE litecoin.  The only reason why these people threaten, is that they want the bitcoin brand name for their pet modification, and hence CANNOT fork away.

That is like going to Toyota, and tell them that if they don't make cars with, say, 7 gears, you threaten to bring out your own car on the market with the feature.  No, if you think that 7 gears is going to win the market, you bring out your own car.  It is only if you don't think you can manage bringing out your own car, that you play that game with Toyota.

[BingoDog]

These are political terms and used for types of society not for currency. At least I wouldn't associate these terms to bitcoin. I look at it in pure economical sense and as a decentralized cryptocurrency that represents new alternative in finances. But as such it could be used in any type of society, democracy, autocracy or whatever you can imagine. As long as this society enables you internet access.

[User365]

You can´t define a political system  for a currency, but the my best shot would be aristocracy, because on popular voting sites you vote with your BTC. One could argue this is democracy, but it is not, it is a vote based on wealth.

On the other hand the core team has a big share so this would be technocracy.

[dinofelis]

As for the insiders killing it, it is irrelevant. What is relevant is the cost to attack. Because an outsider can just buy enough stake at X cost and become an insider. As for Proof of Work, I believe it is more costly.

Of course not.  On the contrary.  if you want to do a 51% attack on consensus decisions, you need to own 51% of the market cap.  That's MUCH MUCH more of a cost (in bitcoin, it would amount to having to buy up 20 billion $ of coins, but your cornering of the market would make it still much, much more expensive).... in order to destroy the system for which you just paid 20 billion !  No miner is ever going to invest 20 billion in mining equipment, because he will not mine 50% of the stake in block rewards and fees !

Also, the cost of a 51% attack in PoW is just the cost of 51% of the mining rewards, and you don't need to be stake holder.  From the outside, you simply cannot attack a PoS system, because it is based upon much harder to fake digital signatures.
Currently, ALL of the proof of work ever delivered to bitcoin has a security level of 90 bits.  A simple 256 bit key signature has a bit security level of 128 bits, and only costs a few milliwatts of power and an old laptop (or even a mobile phone).

Cryptographically, PoW is pure BS as a protection. Any digital signature beats it with tens of orders of magnitude in "efficiency" (that is, spent resources versus security obtained).

[mrcash02]

It has nothing of anarchy, because there are rules which are important to make the Bitcoin system survive and thrive.

I believe it's more about meritocracy, because only who deserves this is able to reach to the primarily source of coins, the mining. It's not anyone who deserves that, only those who prepared themselves with powerful machines and logistic.

Who is in the top of Bitcoin world today it's because they planned well their steps.

[spartacusrex]

Cryptographically, PoW is pure BS as a protection. Any digital signature beats it with tens of orders of magnitude in "efficiency" (that is, spent resources versus security obtained).

Who's 'Efficient' Digital signature am I supposed to be trusting ?

..

POW is Objective. POS is not.

POW accumulates over time. POS does not. ( I can fake POS history using old spent keys )

..

Sure - POW has issues in this current user/miner implementation (I would prefer the users to mine their own txns..), but POS doesn't currently work (and may never fully work) or any one of the uber geniuses working on it would have come up with a viable algorithm by now.. 

[frowsiter]

It's none of the above. Bitcoin stands away from any politics or centralised definition as you depicted. The thing is bitcoin needs to be free and away from such implications. Without this bitcoin will never be able to sustain the market as it had done since its birth. The day it is centralised would be the day it's going under complete destruction. I'm sure then your democracy would not work.

[Cuber Krypton]

As for the insiders killing it, it is irrelevant. What is relevant is the cost to attack. Because an outsider can just buy enough stake at X cost and become an insider. As for Proof of Work, I believe it is more costly.

Of course not.  On the contrary.  if you want to do a 51% attack on consensus decisions, you need to own 51% of the market cap.  That's MUCH MUCH more of a cost (in bitcoin, it would amount to having to buy up 20 billion $ of coins, but your cornering of the market would make it still much, much more expensive).... in order to destroy the system for which you just paid 20 billion !  No miner is ever going to invest 20 billion in mining equipment, because he will not mine 50% of the stake in block rewards and fees !

Also, the cost of a 51% attack in PoW is just the cost of 51% of the mining rewards, and you don't need to be stake holder.  From the outside, you simply cannot attack a PoS system, because it is based upon much harder to fake digital signatures.
Currently, ALL of the proof of work ever delivered to bitcoin has a security level of 90 bits.  A simple 256 bit key signature has a bit security level of 128 bits, and only costs a few milliwatts of power and an old laptop (or even a mobile phone).

Cryptographically, PoW is pure BS as a protection. Any digital signature beats it with tens of orders of magnitude in "efficiency" (that is, spent resources versus security obtained).

Your arguments are compelling. I do not possess the Cryptography expertise to dismount any of the technical arguments.

I will say this:
 
51% attack in PoW does not only cost 51% of mining rewards. It is not immediate, and it costs all the energy and capital that was put onto it before any ROI.

Furthermore if you consider it is possible to hold a 51% hashpower, if we estimate like a 40% ROI for mining (and I think this is too much considering mining alone), according to current market cap it should cost total about 13.007.185.339,7 USD to achieve a 51% Hashrate. the actual loss of revenue from an attack today would be 2.410.118.399,27 USD Bringing the total to about 15.5 B. 

For a 51% PoS, the cost would be 21.678.642.232,83.

I'd grant you are correct in your reasoning, although it seems pretty obvious to me that none of these actors has any incentive to attack the network. And the bigger the market and the higher its share of the Hashrate or Stake, the lesser the incentive. It works for both.

On another point, as I have been trying to argue, I think Proof of Work is economically more sound than Proof of Stake. You are effectively being backed by Energy. There is only so little a miner is willing to receive for his coins, whereas for Proof of Stake, it is cost of capital. The fact is, a miner is tied for the long haul. Capital not so much. Either you inflate your coin to secure the network, or you guarantee transaction fees sufficiently high enough to prevent capital flight.

Also, for Proof of Stake as a way to mint coins, you are dependent on utility and speculation for your currency to be worth anything. If it is just for consensus, then this last argument doesn't stand.

Am I somewhat being able to convey any part of the argument?

 


 

[dothebeats]

As I see it, bitcoin is more of a meritocracy since voting power for consensus is done by miners whereas end users can only voice their concerns and thoughts about the said idea. Bitcoin isn't democratic even though consensus is achieved via majority decision; the decision is just from the miners who will use x or y version of the fork to move forward.

[Cuber Krypton]

As I see it, bitcoin is more of a meritocracy since voting power for consensus is done by miners whereas end users can only voice their concerns and thoughts about the said idea. Bitcoin isn't democratic even though consensus is achieved via majority decision; the decision is just from the miners who will use x or y version of the fork to move forward.

This is a misconception, because users vote with their money. A miner gets no money if noone buys his coins, and after all, the miner is invested, he started at a loss. Whereas a User, using double-entry accounting, just changed one asset (FIAT) for another (Bitcoin).

The incentive is for miners to follow the user majority. Not the other way around.