The Problem With Altcoins

[R160K]

If the altcoin has sufficient demand (not even any where near Bitcoin) to generate a liquid exchange, then the altcoin can be converted on the fly to pay those who accept only Bitcoin.

So an altcoin doesn't need ANYONE to switch from Bitcoin, it only needs to grab a small percent of the market of new users. Bitcoin only has 350,000 users. There is a long way to go to 7 billion.

The key though is the altcoin needs to present something truly useful that Bitcoin can't copy. So it has staying power.

Agreed. The success of an altcoin is very unlikely to depend on it beating bitcoin (something most late-to-the-party altcoin peddlars don't seem to appreciate). If liquid exchanges exist for a coin then it is usable in every context bitcoin is.

Friction always imposes costs. No how matter how good you make your exchange, it will always be more expensive than not needing to make an exchange. A line is the shortest distance between two points.

This is only true when there is a dual-price bid/offer spread. Traders will be willing to pay the par value of the currency they're buying, plus a little bit extra for the added value they perceive in holding one currency rather than another. In a fee-less exchange, if there is more demand for one currency than another then costs will only be imposed one way (from the less desirable to the more desirable), with savings made in the other direction. Now in most cases it is natural to assume that demand for bitcoin will be higher than demand for any particular altcoin and therefore the cost of friction will always fall upon the shoulders of the person trying to spend altcoins on bitcoin services - but this is not necessarily the case. In some cases the friction will be negligible, making truly liquid exchanges a (pseudo-)reality for some alt-coins.

The issue then is whether there will be liquid exchanges for a coin, which depends on whether or not there is any incentive to hold the coin. Anonymint says that for there to be any incentive to hold an alt-coin then:

then the altcoin has to be appreciating faster than Bitcoin, else there will be a pernicious downward spiral.

This is not true. Faster appreciation of value of a coin is what will encourage purely speculative investors to hold/ditch the coin. But there are other reasons for holding certain coins, depending on the features they offer.

Simply offering something that bitcoin can't do however is not sufficient to imply that there is a good reason to hold the coin, because people might prefer to trade out of bitcoin just to use that feature then trade back into bitcoin afterwards, making adequate liquid exchanges unviable.


Let's consider then some current and possible future features of alt-coins:

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Quicker transaction times - if coins with quicker transaction times were only purchased when needed, i.e. bitcoins were exchanged for them, then the wait for the exchange transaction would negate the gain in efficiency - thus people would hold onto coins if quicker transaction times (with the associated orphan-risk) was thought a desirable enough feature.

Smaller blockchain - the point of wanting a smaller blockchain is so that coins can be stored locally rather than having to trust a centralised service. If someone only exhanged bitcoins for this alt-coin when they wanted to use it, they would either have to store those coins centrally or store them locally with a large or else a centralised blockchain, defeating the point of having a smaller blockchain - thus people would hold onto coins if a smaller blockchain (with the associated risks of a likely smaller network) was thought a desirable enough feature.

In these two cases, if the feature was a desirable one there would be a reason to hold on to alt-coins and thus liquid exchanges. However, I personally do not feel either is enough of an improvement to produce a large enough demand.

Coloured coins - there is little difference between switching between coins of different colours within an alt-coin and just buying coins of a certain colour directly with bitcoin. Therefore there is no reason to hold them IN GENERAL: however if there is a particular colour of coin that is worth holding for reasons of usability and/or appreciating value, particularly one that doesn't have its own blockchain/distribution system, then there will be a reason to hold the alt-coin and thus liquid exchanges.

Anonymity - this is likely to (and WILL) be a very attractive feature of some alt-coin (the only reason bitcoin would even dream of implementing it would be if not implementing it would cost them SIGNIFICANT market share and threaten its future dominace, which is unlikely due to the network effect and the fact that most bitcoin users nowadays don't feel the need for ABSOLUTE anonymity). Many services which rely on or prefer anonymity would accept this currency directly, and users only using crypto for those services would hold the currency directly rather than buying bitcoins. Liquid exchanges would be very likely - decentralised, anonymous exchanges would make users of the anonymous currency even more confident.

Proof-of-stake - this provides its own incentive for holding coins, if and only if the growth rate of the held balance * the appreciation rate of the coin's value is greater than the appreciation rate of bitcoin (or some other coin or commodity). Whether the coins will find any significant direct use beyond being an occasional speculative opportunity for bitcoin investors is doubtful, but this alone is sufficient for liquid exchanges and therefore makes them spendable on bitcoin-enabled services.

Stable value - a coin with some sort of built-in automatic monetary policy that adjusts the amount of coins in circulation to keep the price stable would I think be able to attract a modest market share of risk-averse individuals who want a reliable, decentralised store of value. Also, having a stable price will give merchants/service providers an alternative currency to hedge their prices in. They could still use bitcoin as their primary mode of payment, but rather than calculating the bitcoin price based on a fixed dollar/euro price, they could set a fixed "stablecoin (e.g.)" price. Such a coin would function more like a currency than a commodity (which arguably is how bitcoin is behaving right now), though this is unlikely to make it topple bitcoin as people will still generally think in "dollars/euros" and see even a stable cryptocurrency as a medium of exchange. There is still an incentive to hold it as a store of value however.

Different inflationary principles - (demurrage, interest, different/no volume ceiling). There may be some limited situations where a coin with different inflationary principles from bitcoin is desirable, however this is extremely unlikely for the simple reason that any digital currency that doesn't automatically stabilise it's value or else sufficiently peg its value to some commodities/services will be seen as a secondary medium of exchange for other currencies rather than as a true currency in its own right. The article pointed out the flaw with currencies that provide a disincentive to hold on to them - people won't buy them in the first place. What about a currency that provides an incentive to hold on to coins, such as paying exponentially increasing interest (a flat rate of interest would increase the money supply uniformly accross all balances, leaving everyone in the same position value-wise)?. Provided it could gain some initial value, and interest was earned at a decent rate, there would be more demand to buy than to sell so liquid exchanges would be likely (and frictionless in the altcoin-to-bitcoin direction). How much of a userbase something like this could get in order to establish a value however (competing not just against bitcoin but also proof-of-stake coins) I'm unsure. When the supply of bitcoins (eventually) reaches its limit, then perhaps some less scarce altcoin (LTC for example) will become useful for sub-satoshi price differentiation (though even if bitcoin reached 1000x its current value 1 satoshi would be worth only $0.03 so the need for this will likely be very limited).

Name/value pairs (i.e. Namecoin) - obvious: if you want to keep the name/value pair (which is why you bought Namecoin in the first place), you have to hold the coin.

New features (e.g. messaging layer, completely re-imagined contracts) - a new coin built from the ground up, using the principles of bitcoins but offering completely new services, would function like an extension to the bitcoin protocol thus it is likely people would only trade out of bitcoin and hold these coins if they had an immediate need for one of these extended services. Thus liquid exchanges are less likely.

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Of course, all of these features will likely appeal only to informed users who keep abreast of developments, know what they want and consider their options - there is not going to be any massive pull for "ignorant" users (meant in a non-condescending way).

Any feature that is so heavily demanded will be added to Bitcoin, because that is the most economically valuable solution.

The other factor that determines whether a feature is sufficient to make an alt-coin viable is whether it is easily integrated into bitcoin. Factors that can be implemented on a client level (and don't require changes to the protocol), such as coloured coins and smaller blockchains, are never going to give an alt-coin a unique advantage. In general, most new features which work well enough on alt-coins will likely be integrated into bitcoin, but there are four exceptions. Ideas that are controversial (like ZeroCoin/anonymity), impossible (like changing the reward system to proof-of-stake), involve a trade-off (like quicker transaction times at the expense of more orphan blocks), or aim to achieve something at odds with one of bitcoin's core principles (like different inflationary or distribution principles).

TL;DR:
In order for an altcoin to have long term success, it needs to offer unique features which a) bitcoin will not replicate and b) provide in-and-of-themselves an incentive to hold onto coins.

[Apologies for the length of the post.]

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[R160K]

My guess is because people fundamentally understand that getting something for doing nothing (i.e. redistributing the new coins based on share of the collective) is communism. But let me hear the logic of others, because I want to understand this better.

  By this logic, keeping money in an interest-paying savings account, investing in dividend-paying shares or government bonds, or owning a property in a period of rising house prices is communism. Also, the fundamental principle of communism is distributing wealth to match the distribution of labour rather than investment, the OPPOSITE of getting something for nothing (apart of course from the needy and infirm).

Seriously though, I doubt anyone is turning their nose up at free money for reasons of ideological taste.

[AnonyMint]

Disclosure: I have a bias and vested interest against PoS since I want to see a CPU-only PoW. I don't want any reader to take my comments as meaning PoS is not viable, because different people think differently and value different things. So PoS can have a value to those who value it. And it is not entirely impossible that I might someday be convinced to support PoS. I don't have a strong desire to bash PoS, I am just sharing my logic.

My guess is because people fundamentally understand that getting something for doing nothing (i.e. redistributing the new coins based on share of the collective) is communism. But let me hear the logic of others, because I want to understand this better.

Communism isn't the right way to describe it. It could be seen very capitalistic, you get paid for helping the blockchain. Bitcoin isn't different since there the miners get paid to secure the chain. The only difference is that miners have to waste resources while POS is wasteless. I rather see someone getting rewards for free than to just to waste stuff.

How does PoS help secure the blockchain? See I don't think PoS is secure. How do we decide who gets to choose what goes in the next block? One way is we all vote with our share. The other way is each share gets a turn with frequency proportional to share. The former suffers the Tragedy of the Commons effect as well as the Logic of Collective Action power vacuum and the latter suffers from the fact the ordering is not fed from an external random entropy (as in PoW) thus can be manipulated.

How does PoW waste resources? I actually believe it will increase resources! You see energy is abundant (probably practically limitless), yet finding it requires innovation. How do you spur innovation? You increase demand!

The malthusian peak oil tree hugging environmentalism that has been programmed into western brains by Rockefeller/Rothschilds manipulation of media is just amazing. Most westerners believe this nonsense now, even though it has failed to be true over and over in history.

I once did a calculation on how much oil the world uses and it is approximately the same as the flow of a medium size river, e.g. nothing like the Mississippi. And now we see we are finding abundant new oil and natural gas in Australia, USA, etc.. Btw, Honda sells a car that runs on LPG.

The AGW (Anthropogenic Global Warming) folks forget that Time Magazine had on its cover in the 1970s the dire threat of Man-made Global Ice Age.

Some where in this bitcointalk.org I ran a poll on PoW when I was arguing a point with bytemaster, and my position got 82% of the votes. I explained that microhydropower (small stream) is nearly free energy and readily available to any one who applies some effort.

I would rather people actually innovate than think laziness actually helps anything. Having digits sit in a wallet adds very insignificant new knowledge. Very minimal risk was applied, simply the decision to hold for the appreciation of the coin.

Whereas, finding and bringing online new sources of energy adds knowledge, because this will leads to more outcomes.

There is no redistribution of wealth, so the rich stay rich and the poor stay poor. Everyone has all chances so it's the way capitalism should be. It's the redistribution that kills any eco system. We now have redistribution to the rich and it will destroy capitalism in the same way than communism got killed by redistribution in the other direction.

Actually the rich always get richer if we only sit on our money with a constant rate of return, because they spend a smaller portion of their income and gains.

We don't have capitalism now in the mainstream economy (we do in the tech economy), we have socialism because the money is all fiat debt thus controlled by fascism.

My guess is because people fundamentally understand that getting something for doing nothing (i.e. redistributing the new coins based on share of the collective) is communism.

People actually do something to get new coins. As Sunny King has said if my understanding is correct, keeping coins to get coins is actually "saving". You lose the ability to spend your coins in exchange for having more coins in the future.

Yes but that is very lazy and adds very little individualized innovation. Refer upthread to my point about individual inertia versus centralized inertia and the fact that the former has exponentially higher potential energy.

Fitness and degrees-of-freedom are economics. I urge readers to study what I explained upthread.

Well, if that is communism, then I'd rather have that than see unproductive capitalism. Imagine a third world country entrenched with capitalism spending resources on mining hardware and energy rather than agriculture, infrastructure, or whatever just because it is more profitable. It just doesn't make the world any better.

Malthusian myopia.

Microhydropower would contribute to making that third world country the most innovative on new energy sources. And lift it past the G20 in wealth, freedom, and capitalism.

I am re-educating you. Try to forget everything that has been put into your brain by the mass media. It is all shit.

Also PoS does nothing to help you get your initial coins without a fiat exchange. And you can't increase your share by being more proactive, innovative, and risking your capital on mining.

Without risk, no new knowledge is created. Ponder that.

You could always trade physical goods get your initial coins. It brings REAL world innovation.

Agreed becoming a merchant is one way and it applies to PoW coins also. And agreed it is individualized innovation! Yeah!

But this puts the cart before the horse somewhat, since my point is how do new coins get distributed and get millions of people into the coin. We need more customers than merchants.

[R160K]

I appreciate this whole PoS discussion is going a little off topic, but I didn't start it so I've no guilt joining in.

I think the main advantage of PoS (and one that many people neglect when considering it from a purely speculative investment perspective) is the fact that producing coins does not waste oodles of (irrecoverable) real world resources. This is what would make it attractive to miners (especially later on) - yet because current PoS coins (like PPCoin) are scrypt-hybrids, which are not easily ASIC mined, there is little incentive for new miners with lots of start-up capital but no PPCoin "stake" to start large mining operations, which would then provide an incentive for these companies to advertise/lobby on behalf of the coin; so it could take a while to really kick off, in particular it will require both the mining difficulty of bitcoin to increase much further and mining other coins to be less profitable.

The fear I have about proof-of-stake coins is this: imagine a miner holds a 10% stake of the entire economy, but the company has huge debts and needs to liquidate its coins to fiat in order to pay its creditors, so sells them off cheap, flooding the market with cheap coins and crashing the economy. This is of course a theoretical fear, and the in practice the larger and more distributed the network, the less likely this is to happen.

I think PoS coins haven't caught up yet because people aren't aware of it yet. I feel that the transition would be mainstream fiat currency to BTC then in the long run BTC to PoS coins but I may be mistaken.

Given that PoS will likely take a long time to come into its own (decades), there is a chance it could (possibly) challenge bitcoin - by that time bitcoin will be far more ubiquitous, thousands (millions) of services will be accepting it as a payment method and millions of people will be familiar with it (and the notion of digital currency), and with enough co-ordinated impetus behind another coin it should not be too difficult to get merchants/service providers to directly accept payments in that currency, especially if it becomes significantly more cost-effective for miners that they take action to actively promote it. But this is nothing like certain and the network effect of bitcoin could very easily prove too strong for a very similar crypto with no real difference in usability - and I shall remain sceptical until I see some real signs. If there is to be a transition, it will first require the wide-scale success of bitcoin.

[AnonyMint]

Anonymity - this is likely to (and WILL) be a very attractive feature of some alt-coin (the only reason bitcoin would even dream of implementing it would be if not implementing it would cost them SIGNIFICANT market share and threaten its future dominace, which is unlikely due to the network effect and the fact that most bitcoin users nowadays don't feel the need for ABSOLUTE anonymity). Many services which rely on or prefer anonymity would accept this currency directly, and users only using crypto for those services would hold the currency directly rather than buying bitcoins. Liquid exchanges would be very likely - decentralised, anonymous exchanges would make users of the anonymous currency even more confident.

Thanks for the confirmation of the logic I presented upthread on the value of anonymity. Won't be for everyone, but some want it.

[R160K]

How does PoW waste resources? I actually believe it will increase resources! You see energy is abundant (probably practically limitless), yet finding it requires innovation. How do you spur innovation? You increase demand!

While this does make some sense theoretically, I think that the increase in demand for energy even by the entire bitcoin economy is insignificant compared to the increased demand for energy in general and therefore will contribute very little in-and-of-itself to spurring on innovation in that sector. The main way that I feel PoW wastes resources is in terms of individuals - the electricity, hardware, floor space, time etc. they have invested in bitcoin could be being used more innovatively with the same return were they using PoS instead of PoW.

[AnonyMint]

How does PoW waste resources? I actually believe it will increase resources! You see energy is abundant (probably practically limitless), yet finding it requires innovation. How do you spur innovation? You increase demand!

While this does make some sense theoretically, I think that the increase in demand for energy even by the entire bitcoin economy is insignificant compared to the increased demand for energy in general and therefore will contribute very little in-and-of-itself to spurring on innovation in that sector. The main way that I feel PoW wastes resources is in terms of individuals - the electricity, hardware, floor space, time etc. they have invested in bitcoin could be being used more innovatively with the same return were they using PoS instead of PoW.

See upthread in my first post why I expect CPU-only PoW to be dominated by hobbiests running their PC at night while they sleep. The serious miners will likely have to go microhydropower. It is not the level of demand, yet that all the serious demand goes to some new technology that once the locals see it applied, can spread like wildfire and be applied to powering local communities.

I want to send westerners out into the hinterlands. Ready to live in Machu Picchu?

P.S. This benefit can't come from Bitcoin as mining will be dominated by corporations behemoths, due to the ever expanding blockchain and the ASICs economy-of-scale.

[St.Bit]

How does PoW waste resources?

Securing the network with a technology that has to use lot's of electricity insead of POS that doesn't require any is a good example of wasting resources. It isn't innovative to use a expensive way to do it if you already knew a better one to do it for free.

Your argument is invalid, since it basically says it's impossible to waste resources at all.
Remember we are talking about securing the network, not distributing new coins to anyone willing to work for it. Once blockrewards decline POW won't do that anymore and it's 100% wasteful while POS doesn't cost anything at all.


When looking at POS you seem to miss the point that there is no new wealth generation. If we would add a zero to every dollar bill, bank account,wages, etc nothing would change. Noone would be richer or poorer, in fact nothing changes. Even a 10-fold wouldn't make a difference, so 1% per year isn't even worth mentioning in term of costs.

People sending funds loose fees and interrest, but it's these people that need a safe and non reverseable network. Someone holding a wallet doesn't need that once it's in the blockchain. Why should someone else or all pay for them the efford to do the work.

[AnonyMint]

How does PoW waste resources?

Securing the network with a technology that has to use lot's of electricity insead of POS that doesn't require any is a good example of wasting resources. It isn't innovative to use a expensive way to do it if you already knew a better one to do it for free.

Walking to work gets you there, but using energy to get you there is much more efficient and leads to more production overall for society. Creating a demand for that use of energy leads to all sorts of new technologies and innovations and causes the economy to expand.

Energy is not a finite resource. The more innovation we do, the more energy we produce.

The only limit of mankind is our knowledge.

Try to lose that Malthusian zero-sum nonsense that mass media has brainwashed into the people.

The elitists want you to believe that nonsense. Refer to the stated goals on Ted Turner's (CNN) Georgia Guidestones.

Maintain humanity under 500,000,000 in perpetual balance with nature.
Guide reproduction wisely — improving fitness and diversity.
Unite humanity with a living new language.
Rule passion — faith — tradition — and all things with tempered reason.
Protect people and nations with fair laws and just courts.
Let all nations rule internally resolving external disputes in a world court.
Avoid petty laws and useless officials.
Balance personal rights with social duties.
Prize truth — beauty — love — seeking harmony with the infinite.
Be not a cancer on the earth — Leave room for nature — Leave room for nature.

Your argument is invalid, since it basically says it's impossible to waste resources at all.

No.

Waste is where there is no return. Efficiency is output divided by input.

Remember we are talking about securing the network, not distributing new coins to anyone willing to work for it. Once blockrewards decline POW won't do that anymore

Debasement should continue forever. It is good for economics and the middle class. I've already had that debate in the Mini-blockchain thread. Refer to it there if you want to refute it. I don't want to repeat that debate again here in this thread. Getting too far off topic.

and it's 100% wasteful while POS doesn't cost anything at all.

PoS has a huge cost in laziness and lost innovation.

You are valuing hardware (energy) more than knowledge! Big mistake!

When looking at POS you seem to miss the point that there is no new wealth generation.

Correct, there is wealth destruction. But I doubt you see why.

First of all, the laborers (knowledge workers) spend a higher percent of their income and gains and savings, thus they fall behind the rich. Yet the rich can't innovate, because innovation requires small capital and thus fitness. The rich can only replicate. Mass production is coming to an end with the 3D printer.

Secondly, it encourages laziness, which is the epitome of capital destruction. Remember capital is not money, money is a claim on future knowledge production. If you stop producing knowledge, then the capital (the value of the money) declines w.r.t. to knowledge that has utility. The utility of the money declines.

If we would add a zero to every dollar bill, bank account,wages, etc nothing would change. Noone would be richer or poorer, in fact nothing changes. Even a 10-fold wouldn't make a difference, so 1% per year isn't even worth mentioning in term of costs.

Don't conflate that with the motivation the system has on the participants.

People sending funds loose fees and interrest, but it's these people that need a safe and non reverseable network. Someone holding a wallet doesn't need that once it's in the blockchain. Why should someone else or all pay for them the efford to do the work.

You could try to rewrite this last paragraph so I can understand your point.

[lumierre]

Interesting arguments.  

But I and most probably many people want is to have the cryptocurrency that has the least risk of destabilization and manipulation. Mining just brings in too much physical factors that may affect bitcoin's stability. Innovation may even bring bitcoin's demise. Let's say some people developed new mining hardware that is superior to the current ones. Who knows the future right? I fear that it may go to the wrong hands and manipulate the block chain. Or, what if suddenly a big enough corporation starts hoarding mining hardware? Heck, bitcoin's current market cap is nothing to mainstream companies. By innovation, what if a country is suddenly capable of producing unprecedented amounts of energy? They would be capable of manipulating the block chain and do attacks because the costs of trying so is lesser. But if you put that same country with a PoS coin economy, that country may acquire, hoard and then dump coins. However, that would inflate the value of the coins and inject more purchasing power for the free market before the dump. The value would decrease and so it defeats the purpose of hoarding. I'm not aware of any other risks of having a PoS system in an economic perspective.

[AnonyMint]

Insurance is guaranteed failure. Fearing competition is fearing life.

You reinforce my thought that a CPU-only PoW algorithm needs to be provably so.

I think PoS isn't secure (explained upthread) and if I am correct, you have similar risks then.

Your points stand and my points stand. Thanks for the discussion. Any way, we can have both. That is the point of this thread. Let the market decide.

[St.Bit]

I think PoS isn't secure (explained upthread) and if I am correct, you have similar risks then.

Your points stand and my points stand. Thanks for the discussion. Any way, we can have both. That is the point of this thread. Let the market decide.

I agree.
You might see security issued with PoS that I don't see, but you fail to see that there are security issues with PoW aswell. It's pointless to discuss which one is better on it's own, but a combination beats them both. That's something bitcoin will never be able to implement, even if there were no PoS rewards.

PoS is a way to get a decentralized "central authority" that validates a block chain. PoW will never be decentralized since only the strong have enough hashing power, on PoS everyone can participate and noone can be forced to stop doing it.

Your argument is invalid, since it basically says it's impossible to waste resources at all.

No.

Waste is where there is no return. Efficiency is output divided by input.

That's an akward definition of wasting.

If I have 2 ways to finish a job and one takes 1000 times the resources than the other it is wasteful to go with anything but the efficient method. We don't have unlimited energy so we have to use it efficiently.

People sending funds loose fees and interrest, but it's these people that need a safe and non reverseable network. Someone holding a wallet doesn't need that once it's in the blockchain. Why should someone else or all pay for them the efford to do the work.

You could try to rewrite this last paragraph so I can understand your point.

Once my funds are in the blockchain burried after a few 100 blocks I don't care about the network beeing safe and non reversable. It's expensive to keep it that way so people loosing the PoS rewards pay for that. Fees alone aren't enough in a late state. People rather loose profits than money, altough it's the very same.

[AnonyMint]

I think PoS isn't secure (explained upthread) and if I am correct, you have similar risks then.

Your points stand and my points stand. Thanks for the discussion. Any way, we can have both. That is the point of this thread. Let the market decide.

I agree.

100% consensus requires bickering and war. Competition allows peace and coexistence.

I think we have concluded that There Is No Problem With Altcoins and have refuted the OP.

You might see security issued with PoS that I don't see, but you fail to see that there are security issues with PoW aswell.

I see both as imperfect. Chocolate and vanilla. Choose one. Yes I lean towards CPU-only PoW (not Bitcoin's PoW!) as superior in my analysis so far. I am not claiming omniscience. I'll let the market decide.

It's pointless to discuss which one is better on it's own, but a combination beats them both.

I have no opinion nor analysis on that at this time. I did some reading on that coin which has that, but have forgotten if I concluded anything.

That's something bitcoin will never be able to implement, even if there were no PoS rewards.

Bitcoin won't be able to implement most everything without losing current consensus.

PoS is a way to get a decentralized "central authority" that validates a block chain. PoW will never be decentralized since only the strong have enough hashing power, on PoS everyone can participate and noone can be forced to stop doing it.

CPU-only PoW won't have that problem (if someone ever successfully creates such a coin), as I explained upthread.

Your argument is invalid, since it basically says it's impossible to waste resources at all.

No.

Waste is where there is no return. Efficiency is output divided by input.

That's an akward definition of wasting.

If I have 2 ways to finish a job and one takes 1000 times the resources than the other it is wasteful to go with anything but the efficient method. We don't have unlimited energy so we have to use it efficiently.

Agreed but you need to count all the downstream outputs, and I explained upthread how for example innovation on microhydropower has potential cascading benefits that were not in your calculation.

And the nature of free markets and knowledge creation, is that none of us can be omniscient and see all benefits from innovation.

We can't calculate what we can't see and measure. And I already provided at least one example of cascading benefits that refutes the claim of total waste, and that same innovation wouldn't be incentivized in PoS.

I am not asserting forcing people to expend resources creates innovation. First there is choice here whether to mine or not. It is a free market. Second note that innovation on energy has the potential to create more energy than was consumed by what caused the innovation.

People sending funds loose fees and interrest, but it's these people that need a safe and non reverseable network. Someone holding a wallet doesn't need that once it's in the blockchain. Why should someone else or all pay for them the efford to do the work.

You could try to rewrite this last paragraph so I can understand your point.

Once my funds are in the blockchain burried after a few 100 blocks I don't care about the network beeing safe and non reversable. It's expensive to keep it that way so people loosing the PoS rewards pay for that. Fees alone aren't enough in a late state. People rather loose profits than money, altough it's the very same.

I still don't understand. We have to pay for mining agreed. What does this have to do with PoS vs. PoW?

Blockchains don't have to be bloated. The mini-blockchain design solves that.

[Rassah]

The issue I have with PoS is that a bank that has the most amount of money will have the biggest stake, and we already have that system, and examples of the results.

Why is anonymity being brought up as an argument against bitcoin? Anonymity is a feature, which can simply be built on top of the underlying bitcoin protocol. We already have a few propozals, like zericoin and coinjoin. And if a "cryptocurrency" is built that implements anonymity, but the only use it has it to be used in conjunction with bitcoin to add anonymity, then I wouldn't even call it a separate currency, but simply a Bitcoin plug-in.

Someone also mentioned that there are many coins that are more secure than bitcoin. That is patently false, since to be more secure than bitcoin you have to have a bigger network that secures your system, and more higher-skilled developers that work in your code. There aren't any currencies that have either of those be better than what bitcoin has.

[AnonyMint]

I am posting so much in this thread because this is rather important to me at the moment, as understanding the correct logic affects some big decisions I need to make pronto.

The issue I have with PoS is that a bank that has the most amount of money will have the biggest stake, and we already have that system, and examples of the results.

Include variants of that under my Mancur Olsen's Logic of Collective Action weakness of PoS upthread.

Why is anonymity being brought up as an argument against bitcoin? Anonymity is a feature, which can simply be built on top of the underlying bitcoin protocol.

I thought I already explained why upthread. But in case I didn't or wasn't clear and thorough, I will reiterate.

There are two aspects to anonymity. The first is to anonymize your IP, so that no one knows who spent that coin. The second is to use a coin mixer to break links between identities of spends that derive in making change for each transaction in the same coin tree.

We already have a few propozals, like zericoin and coinjoin. And if a "cryptocurrency" is built that implements anonymity, but the only use it has it to be used in conjunction with bitcoin to add anonymity, then I wouldn't even call it a separate currency, but simply a Bitcoin plug-in.

Problem is that if everyone is not doing IP anonymity correctly, then the mixers aka tumblrs or laundries (you mentioned a few) are useless, because the degree of uncertainty about who owns a coin that comes out the mixer is proportional to the number of coins that don't reveal their identity on any spend downstream.

Also mixers can be honeypotted, employ timing analysis, etc..

Mixers just don't really provide anonymity and amazing that so many people naively think they can rely on them.

So the point I just made is that IP anonymity needs to be built into the coin.

Also note that Tor, I2P darknet, etc are all low latency mix-nets for anonymizing your IP. Yet these are all subject to timing analysis by an entity which can see the all encrypted packets, e.g. the NSA. Read here at Tails (a bootable OS with Tor) to confirm:

https://tails.boum.org/doc/about/warning/index.en.html#index7h1

Thus there is no adequate IP anonymity available for use with Bitcoin.

If you trust a VPN, you surely can't prove it is not a honeypot.

Someone also mentioned that there are many coins that are more secure than bitcoin. That is patently false, since to be more secure than bitcoin you have to have a bigger network that secures your system, and more higher-skilled developers that work in your code. There aren't any currencies that have either of those be better than what bitcoin has.

Agreed. They may have been talking about the potential for Bitcoin to become cartelized in the future, which is a form of future insecurity. If they were implying that PoS is not subject to 50+% attack, my analysis says they are mistaken,  but I really don't want to revisit that because PoS algorithms are very complicated to describe and discuss.

[Rassah]

Problem is that if everyone is not doing IP anonymity correctly, then the mixers aka tumblrs or laundries (you mentioned a few) are useless, because the degree of uncertainty about who owns a coin that comes out the mixer is proportional to the number of coins that don't reveal their identity on any spend downstream.

Also mixers can be honeypotted, employ timing analysis, etc..

Mixers just don't really provide anonymity and amazing that so many people naively think they can rely on them.

I think my concluding point was that if we create an altcoin that does allow for anonymity, it will just end up being used as a mixer for bitcoin.

[theonewhowaskazu]

The issue I have with PoS is that a bank that has the most amount of money will have the biggest stake, and we already have that system, and examples of the results.

Why is anonymity being brought up as an argument against bitcoin? Anonymity is a feature, which can simply be built on top of the underlying bitcoin protocol. We already have a few propozals, like zericoin and coinjoin. And if a "cryptocurrency" is built that implements anonymity, but the only use it has it to be used in conjunction with bitcoin to add anonymity, then I wouldn't even call it a separate currency, but simply a Bitcoin plug-in.

Someone also mentioned that there are many coins that are more secure than bitcoin. That is patently false, since to be more secure than bitcoin you have to have a bigger network that secures your system, and more higher-skilled developers that work in your code. There aren't any currencies that have either of those be better than what bitcoin has.

Thats very different than proof of stake.

The main problem with proof of stake is the very first person can effectively turn into a centralized entity if there is any premining whatsoever.

[AnonyMint]

Problem is that if everyone is not doing IP anonymity correctly, then the mixers aka tumblrs or laundries (you mentioned a few) are useless, because the degree of uncertainty about who owns a coin that comes out the mixer is proportional to the number of coins that don't reveal their identity on any spend downstream.

Also mixers can be honeypotted, employ timing analysis, etc..

Mixers just don't really provide anonymity and amazing that so many people naively think they can rely on them.

I think my concluding point was that if we create an altcoin that does allow for anonymity, it will just end up being used as a mixer for bitcoin.

But the Bitcoin <-> altcoin FX is a mixer, so once they spend on Bitcoin without IP anonymity, then the same points still apply.

They must spend on the altcoin to be safer.

Bitcoin will become known as the government's coin, due to the cartelization of mining and the lack of safe anonymity. It will be the government approved coin. The anonymous altcoin will be the freedom coin.

Speculation follows.

Don't you see the media pushing Bitcoin? This doesn't happen without the permission of the ruling elite. It is my speculation, "they" (rockefeller/rothschilds/kissinger) created Bitcoin. Not the underlings such a Obama and Geithner. Compartmentalization of the underlings.

The government will continue to pretend to be somewhat against it, well for one thing the underlings don't know it is intended to be the next one-world digital currency. The elite don't want us to wake up too soon and realize we've unknowingly handed them the 666 control they want. They are hoping for the "there can only be one" outcome. That is why this thread is so important to me.

[St.Bit]

The government will continue to pretend to be somewhat against it, well for one thing the underlings don't know it is intended to be the next one-world digital currency. The elite don't want us to wake up too soon and realize we've unknowingly handed them the 666 control they want. They are hoping for the "there can only be one" outcome. That is why this thread is so important to me.

Damm, you seem to be even more paranoid than me ... 

What's actually your position on bitcoin/alts? What alts do you find interresting to invest in now?

[AnonyMint]

I am most interested in using an altcoin, and none have IP anonymity. Anoncoin uses I2P darknet, which is low-latency thus not what I am willing to trust with large quantity of money.

What are these Bitcoin holders thinking? They have capital gains and if they are not reporting them to the tax authorities, yet they are not anonymous and it is all being recorded!!!

I will invest in what I can use, which is why I want to use it (for investment and shielding capital from the coming wave of confiscation), i.e. they are inseparable from my perspective.

So thus I haven't looked at other altcoins to evaluate them for investment, only to evaluate if their PoW is CPU-only and to make some analysis of PoS as a concept.

I arrived late to the party Spring of this year, because I was formerly investing in silver and I had ignored Tom Szabo's (of silveraxis.com) email discussions attempting to turn me on to Bitcoin back in 2010, 2011, or when ever it was.

Or maybe my memory is foggy and I am conflating him with Nick Szabo and perhaps someone had emailed his writings.

I also knew rpietila from Finland from my silver investing and he now publicizes that he owns 10,000 bitcoins. He raised my awareness again this past Spring.

I had been trying to think of how to decentralize gold and silver transactions, and eventually gave up around 2010 or 2011. So many emails and posts were flying around my world, but I had sort of shut it all off, after burning out given I entered that education process learning about how the world really works starting about 2005 when I could sense that something was wrong (I guess it really started 9/11/2001 but took a while to really sink in)

As early as 2006, I was thinking about P2P, given I am a programmer and computer scientist.

P.S. I turned against silver and liquidated. Entirely useless and hassles, if you aren't in the liquid markets of USA or say Hong Kong. I think one of my frustrated posts in 2010 or 2011 was "how can you travel with this shit".