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Author Topic: Limits of POW  (Read 463 times)
Aveatrex
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June 07, 2018, 09:54:54 PM
 #1

Hello,
Last year,precisely December-January 2017 when Bitcoin and all cryptocurrency were skyrocketing we clearly saw the limits of POW where there was huge amounts of non-confirmed transactions,fees were outrageous I saw some paying $30-$80 of fees,people who have their transactions not confirmed since 48 hours and in my opinion that what resulted a huge panic sell.We can clearly see that POW has limits so why Satoshi choosed it knowing that it will slow down Bitcoin's progress.
Thanks
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June 07, 2018, 10:33:23 PM
Merited by ETFbitcoin (1)
 #2

Transaction throughput scalability has nothing to do with PoW.

How many transactions a blockchain is able to process depends on 1) the (file)size of each transaction and 2) the amount of decentralization you want to achieve.

As Bitcoin is trying to keep the network as decentralized as possible, the blocksize is kept rather limited as to keep the entry level for running a full node (ie. a node keeping a full copy of the blockchain) as low as possible. As an alternative to on-chain scaling, ie. increasing the blocksize limit, Bitcoin is currently heading towards adding additional protocol levels on top. This allows for scaling beyond the linear limitations of simply increasing the blocksize while keeping a high degree of decentralization. The solution that currently seems to be most viable is Lightning Network, which strives to move the bulk of smaller transactions off-chain using a network of payment channels managed by Bitcoin's smart contract capabilities. While not widely used yet, you can see it in action here: https://lnmainnet.gaben.win/

That being said, when Satoshi created Bitcoin there was nothing else to choose but PoW. PoW was what enabled cryptocurrencies in the first place, solving a problem that was previously believed to be unsolveable.

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June 07, 2018, 10:41:23 PM
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Transaction throughput scalability has nothing to do with PoW.

How many transactions a blockchain is able to process depends on 1) the (file)size of each transaction and 2) the amount of decentralization you want to achieve.

As Bitcoin is trying to keep the network as decentralized as possible, the blocksize is kept rather limited as to keep the entry level for running a full node (ie. a node keeping a full copy of the blockchain) as low as possible. As an alternative to on-chain scaling, ie. increasing the blocksize limit, Bitcoin is currently heading towards adding additional protocol levels on top. This allows for scaling beyond the linear limitations of simply increasing the blocksize while keeping a high degree of decentralization. The solution that currently seems to be most viable is Lightning Network, which strives to move the bulk of smaller transactions off-chain using a network of payment channels managed by Bitcoin's smart contract capabilities. While not widely used yet, you can see it in action here: https://lnmainnet.gaben.win/

That being said, when Satoshi created Bitcoin there was nothing else to choose but PoW. PoW was what enabled cryptocurrencies in the first place, solving a problem that was previously believed to be unsolveable.

I see.That being said,I believe that other Consensus like POS doesn't have such limitations right? So why some coins still use PoW when there is better options? And is it possible to change Bitcoin's system? If yes who decides? I apology for advance for my ignorance.Thanks
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June 07, 2018, 11:58:39 PM
Merited by mocacinno (1)
 #4

I see.That being said,I beleive that other Consensus like POS doesn't have such limitations right? So why some coins still use PoW when there is better options? And is it possible to change Bitcoin's system? If yes who decides? I apology for advance for my ignorance.Thanks

PoS and its variants are nothing more but different consensus algorithms. They make no difference in terms transaction and thus blockchain size. All things being equal, a blockchain based on PoS scales just as bad as a blockchain based on PoW.

Proposed solutions to increasing on-chain transaction throughput by decreasing transaction size exist. Schnorr signatures for example [1]. Ethereum is exploring blockchain sharding [2]. However here too, the type of consensus algorithm is irrelevant.

Case in point: MimbleWimble / Grin [3], should it ever come to fruition, stands to scale incredibly well due to small transaction sizes and a bit of mathematical magic that allows for very effective blockchain pruning without compromising security. With PoW being their consensus algorithm of choice.

[1] https://bitcointechtalk.com/scaling-bitcoin-schnorr-signatures-abe3b5c275d1
[2] https://github.com/ethereum/wiki/wiki/Sharding-FAQ
[3] https://github.com/mimblewimble/grin/blob/master/doc/intro.md

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June 08, 2018, 12:52:50 AM
 #5

Hello,
Last year,precisely December-January 2017 when Bitcoin and all cryptocurrency were skyrocketing we clearly saw the limits of POW where there was huge amounts of non-confirmed transactions,fees were outrageous I saw some paying $30-$80 of fees,people who have their transactions not confirmed since 48 hours and in my opinion that what resulted a huge panic sell.We can clearly see that POW has limits so why Satoshi choosed it knowing that it will slow down Bitcoin's progress.
Thanks

check this out we discussed future oligarchism and monopolisation issues of pow concept

https://bitcointalk.org/index.php?topic=4433000.0

regards

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June 08, 2018, 01:11:39 AM
 #6

<...>
I see.That being said,I beleive that other Consensus like POS doesn't have such limitations right? So why some coins still use PoW when there is better options?
<...>

To date, there's no better POW alternative

I'll quote this, as it also represents my opinion and I'm too lazy to re-type it:

No such thing as "better blockchain consensus protocol" until your so called better blockchain consensus protocol has been through hell and back, namely, attacked by all angles on the technical aspect and attacked by all angles in the social engineering aspect (fork attempts by governments, social media attacks such as the twitter handle taken over by a fork, exchanges against you...) this is what Bitcoin has survived.

So far there is no PoW replacement. PoS has been proven to fail with NXT in the past, it wasn't pretty. We've seen IOTA fail big time as well, so DAG doesn't cut it. Hybrid attempts such as Decred.. no one hasn't even bothered to attack it for real yet.

I don't see realistic reasons for anyone to sell their BTC to get anywhere else.

To date, the only legit blockchain consensus mechanism, as far as I know, is PoW.



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June 08, 2018, 09:03:32 AM
 #7

Sorry but that’s not correct.

As I explained in my analysis of OmniLedger—a technology which shows how sharding can be adapted to Nakamoto proof-of-work—that proof-of-work is fundamentally incompatible with significant sharding because of the huge variance that individual miners would incur if they didn’t participate in pools. OmniLedger is incompatible with pools because it needs a large set of diverse miners that win blocks in order to populate the shards with independent entities so that it can scale decentralized.

I disagree. You're talking about the existing, block based implementations of consensus built around PoW. PoW itself specifies no such limitations, it is simply a tool to use in building consensus designs which may or may not have the limitation you are describing.

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June 08, 2018, 09:31:26 AM
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Transaction throughput scalability has nothing to do with PoW.

Sorry but that’s not correct.

Sorry, but this IS correct.

A consensus algorithm is completely independent from scaling/blockchain itself.
The consensus algorithm basically just describes which block is being accepted/valid. It has no influence on scaling, neither on the amount of transactions.




That being said, when Satoshi created Bitcoin there was nothing else to choose but PoW. PoW was what enabled cryptocurrencies in the first place, solving a problem that was previously believed to be unsolveable.

You’re speculating. So I will too. We don’t know how many technologies the Zionists were aware of when they created Bitcoin.


 Roll Eyes
What do you think could have been chosen except from PoW? PoW definitely was the best option to choose from.



I see.That being said,I beleive that other Consensus like POS doesn't have such limitations right? So why some coins still use PoW when there is better options? And is it possible to change Bitcoin's system? If yes who decides? I apology for advance for my ignorance.Thanks

PoS and its variants are nothing more but different consensus algorithms. They make no difference in terms transaction and thus blockchain size. All things being equal, a blockchain based on PoS scales just as bad as a blockchain based on PoW.

Again that is not necessarily true. And I know for a fact isn’t true...

You seem to misunderstand the utility of the consensus algorithm. The design of the consensus algorithm has NO IMPACT on the transaction-/blockchain- size or the amount of TX's being processed within a timeframe.

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June 08, 2018, 10:21:17 AM
 #9

Transaction throughput scalability has nothing to do with PoW.

Sorry but that’s not correct.

As I explained in my analysis of OmniLedger—a technology which shows how sharding can be adapted to Nakamoto proof-of-work—that proof-of-work is fundamentally incompatible with significant sharding because of the huge variance that individual miners would incur if they didn’t participate in pools. OmniLedger is incompatible with pools because it needs a large set of diverse miners that win blocks in order to populate the shards with independent entities so that it can scale decentralized.

That assumes that sharding is a viable scaling approach for cryptocurrencies. Also, sharding being incompatible with PoW does not automatically mean that it's compatible with PoS.


How many transactions a blockchain is able to process depends on 1) the (file)size of each transaction and 2) the amount of decentralization you want to achieve.

As Bitcoin is trying to keep the network as decentralized as possible, the blocksize is kept rather limited as to keep the entry level for running a full node (ie. a node keeping a full copy of the blockchain) as low as possible. As an alternative to on-chain scaling, ie. increasing the blocksize limit, Bitcoin is currently heading towards adding additional protocol levels on top. This allows for scaling beyond the linear limitations of simply increasing the blocksize while keeping a high degree of decentralization. The solution that currently seems to be most viable is Lightning Network, which strives to move the bulk of smaller transactions off-chain using a network of payment channels managed by Bitcoin's smart contract capabilities. While not widely used yet, you can see it in action here: https://lnmainnet.gaben.win/

Lightning Networks has some serious flaws and limitations, as compared to on-chain scaling. Thus an altcoin which can scale decentralized on-chain would still have a purpose. Yet nobody has fully published such a consensus system yet.

It may be addressed elsewhere, but I see a handful of problems with the section on LN:

1) One assumption seems to be that user collusion allows for the emergence of fractional reserves. Please expand a) how this is supposed to work and b) why people would pass their private keys to third parties when using LN.

2) Regarding routing: The Fyookball article you are referring to is inherently flawed as it is built on faulty assumptions. The other I have yet to read.

3) Running a well-connected node does not require banking-level capital to be locked in various payment channels. Keep in mind that LNs main use case is small, everyday transactions.

4) Trying to steal a counterparty's funds is penalized by the network. The need to actively monitor your payment channels is indeed problematic, however assuming that the majority of people use LN as intended (ie. monitoring their open channels) a thieving strategy becomes a losing strategy.

5) Reducing on-chain transactions on average is already a vast improvement, regardless of spikes that may occur. Bitcoin can handle short bursts of activity rather well. It is also worth noting that the load of on-chain settlements can be alleviated by introducing additional protocol layers:
https://www.tik.ee.ethz.ch/file/a20a865ce40d40c8f942cf206a7cba96/Scalable_Funding_Of_Blockchain_Micropayment_Networks%20(1).pdf

6) Slightly unrelated, your assumption of miners being able to steal P2SH SegWit transactions by forcing a roll-back hard fork does not reflect reality well, as the resulting alt coin is likely to be not well received by the market.


That being said, when Satoshi created Bitcoin there was nothing else to choose but PoW. PoW was what enabled cryptocurrencies in the first place, solving a problem that was previously believed to be unsolveable.

You’re speculating. So I will too. We don’t know how many technologies the Zionists were aware of when they created Bitcoin.

Zionist conspiracy theories aside, we do though. Bitcoin is based on a huge body of work that came before it. All of which is public. Most of which were just separate, seemingly unrelated pieces of puzzle before Satoshi came along:
https://queue.acm.org/detail.cfm?ref=rss&id=3136559

While we do not know who invented Bitcoin, we have a very well understood and documented historical context.


I see.That being said,I beleive that other Consensus like POS doesn't have such limitations right? So why some coins still use PoW when there is better options? And is it possible to change Bitcoin's system? If yes who decides? I apology for advance for my ignorance.Thanks

PoS and its variants are nothing more but different consensus algorithms. They make no difference in terms transaction and thus blockchain size. All things being equal, a blockchain based on PoS scales just as bad as a blockchain based on PoW.

Again that is not necessarily true. And I know for a fact isn’t true because I have a consensus system which scales, but it’s only partially published at this moment.

Let's rephrase it to "a blockchain based on currently known PoS schemes scales just as bad as a blockchain on PoW". And really, that's all we can take into account for the sake of this discussion.


Proposed solutions to increasing on-chain transaction throughput by decreasing transaction size exist. Schnorr signatures for example

Decreasing signature size is not scaling. Scaling is something that continues without bound, e.g. Moore’s Law. A one-time increase in capacity is not a scalability solution. Because it runs into a limit again.

Decreasing signature size enables scaling. Note that I'm not claiming this to be part of a scaling plan. I am pointing out room for optimization that increases transaction throughput while maintaining blocksize limitations.


[1]. Ethereum is exploring blockchain sharding [2]. However here too, the type of consensus algorithm is irrelevant.

The state of Ethereum’s 3 year exploration of sharding is abysmal. And again #2 is incorrect.

Note that I'm merely introducing proposed scaling solutions, not evaluating them. I personally am rather skeptical of sharding, but that is a different matter. As mentioned above, sharding being incompatible with PoW, does not make it more compatible with PoS. Other consensus algorithms may be a better fit for sharding, but this thread so far only compares PoW and PoS.

Also note that these are not statement enumerations, but footnotes referring to the respective sources.


Case in point: MimbleWimble / Grin [3], should it ever come to fruition, stands to scale incredibly well due to small transaction sizes and a bit of mathematical magic that allows for very effective blockchain pruning without compromising security. With PoW being their consensus algorithm of choice.

Pruning is not scalability.

Pruning without loss of security enables scalability while maintaining decentralization. It also worth noting that "pruning" is on oversimplification of what MimbleWimble proposes. I used the term to enable discussion without requiring deeper of knowledge of MimbleWimble as prerequisite.

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June 08, 2018, 08:45:07 PM
 #10

If someone devises a new way to employ Hashcash-like proofs without blocks or something, then we’ll reevaluate. But I have expended 5 years of research, and I haven’t been able to devise any such thing. And I am a very clever, divergent thinker, inventor. And AFAIK, neither has anyone else been able to after so many years since Bitcoin was released.

If you've not read it, I recommend taking a glance at my draft white paper describing Max Kaye's original thinking in this area. You might find it enlightening:

https://github.com/wildbunny/docs/blob/master/T.E.T.O-draft.pdf

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June 09, 2018, 08:04:24 AM
 #11

If someone devises a new way to employ Hashcash-like proofs without blocks or something, then we’ll reevaluate. But I have expended 5 years of research, and I haven’t been able to devise any such thing. And I am a very clever, divergent thinker, inventor. And AFAIK, neither has anyone else been able to after so many years since Bitcoin was released.

If you've not read it, I recommend taking a glance at my draft white paper describing Max Kaye's original thinking in this area. You might find it enlightening:

https://github.com/wildbunny/docs/blob/master/T.E.T.O-draft.pdf

Remember we had discussed that in 2016 in the Decentralization thread. Anyway it looks similar to thought processes I went through, but the real show stopper appears to be who is doing the validation? That’s why it apparently doesn’t solve the scalability issue. Although I didn’t read the paper carefully again now. No time for that.

What you mean by validation? Transaction are validated by nodes on the network. That's not the show stopper, the show stopper is lite nodes. DAG based systems cannot support them without added centralisation.

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June 10, 2018, 12:54:35 AM
 #12

Lightning Networks has some serious flaws and limitations, as compared to on-chain scaling. Thus an altcoin which can scale decentralized on-chain would still have a purpose. Yet nobody has fully published such a consensus system yet.

It may be addressed elsewhere, but I see a handful of problems with the section on LN:

1) One assumption seems to be that user collusion allows for the emergence of fractional reserves. Please expand a) how this is supposed to work and b) why people would pass their private keys to third parties when using LN.

[...] The correct conclusion from Reddit discussion is that Mt. Box hubs will dominate LN and that users tend to prefer fractional reserves as evident by their massive use of exchanges that provide fractional reserves. Thus they will signup for accounts at hubs instead of obtaining on-chain BTC and then making a LN transaction directly. [...]

Some people will store their coins on LN connected exchanges and online wallets, sure. Just how they do now. This doesn't mean that you'll have to rely on said services to use LN. It also doesn't necessarily mean that a badly run exchange going bust is going to take down the whole network.


2) Regarding routing: The Fyookball article you are referring to is inherently flawed as it is built on faulty assumptions. The other I have yet to read.

You can quibble with something his his math or what not (and believe me I have debated him many times in the past and found that he is often incorrect), but the point remains that LN routing is inherently implausible without centralized hubs. If you want to debate that, then please start a thread on LN. I do not want to pollute this thread with tangents about off-chain scaling. AFAIR, his blog was not the only one I linked to about the LN routing issue. So for you to single out only one of the blogs I linked to on the issue, exemplifies to me that you’re trying to manipulate the readers.

Fyookball's premises are flawed, at which point his math doesn't matter. As stated above, I have yet to read the other blog post, hence I have not commented on it.

Regarding LN, I'll skip the rest as not to derail this thread any further. Just know that I don't see LN as "the scaling solution to end all scaling solutions" either, which is why I described it as the "The solution that currently seems to be most viable".


I had even linked you to my recent blog which explains Byteball has 100% asynchronous transaction scalability. The problem is Byteball employs a centralized set of witnesses to do the validation. But the decentralized, scalable solution to this issue obvious (at least to me).

I've yet to read your post about DAG based cryptos, but I'm glad to finally see someone else taking issue with ByteBall's consensus algorithm.


[...]

Also you claimed that proof-of-work could do scalability as well as any other possible consensus system. But you can’t possibly know if that is true for all possibilities. And you were mistaken about proof-of-work being equivalent in its invariants w.r.t. to scalability details.

[...]

Please do not put words into my mouth. I compared PoW to PoS, as per OP. I did not make any claims regarding PoW vs other consensus algorithms.


Decreasing signature size enables scaling. Note that I'm not claiming this to be part of a scaling plan. I am pointing out room for optimization that increases transaction throughput while maintaining blocksize limitations.

That is not a correct definition of scalability from a mathematical context such as complexity theory. I will repeat my definition of scalability, “Scalability is the ability to continue scaling proportional to the number of nodes added, so that it has no upper bound. For example demand, IoT may require billions or trillions of transactions per second.”

Proportional optimization doesn’t change the constant (e.g. O(1)), logarithm (e.g. O(n log n)), polynomial, subexponential, or exponential curve of the complexity invariant (e.g. validation) of the scalability model.

Ah, now I see where you're coming from!

So far approaches at proportional optimization seems to be all that decentralized cryptos have to offer, hence my focus on them. I don't think a network handling billions of transactions per second while still remaining 1) permissionless, 2) secure and 3) reliable is possible. I'd love to be proven wrong though.


I can’t remember all my analysis of MimbleWimble. I didn’t write it down. I need to revisit. But I do remember that at that time, I thought it didn’t really solve anything worthwhile. Do you remember what is the main USP other than pruning? I should probably ask @tromp, as I remember he said he was working on it before.

Compact transactions and inherent privacy.

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June 10, 2018, 01:43:53 AM
 #13

Sorry to interrupt your discussion,you guys seems too professional for me,I struggle to understand what you guys talking about I think I need to learn more how blockchain works but I can't find where.Do you guys have a source of learning for beginners like me?I would appreciate that.Thanks
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June 10, 2018, 10:20:03 AM
 #14

inherent privacy.

Seems like I remember coming to the conclusion that MimbleWimble would not end up being very anonymous in reality against the NSA and powerful adversaries. Maybe privacy against society in general. Anyway, I should not comment on it until I’m ready to really analyze. I’m not so enamored with anonymity as I was before 2016, because it’s so impractical against a powerful adversary. Privacy is probably needed though.

Let's put it like this: In my opinion MimbleWimble's approach at privacy is more straight-forward and elegant than some of the others out there. I personally care less about its privacy implications and more about its approach at keeping a lean blockchain but that's a matter of a different discussion. Do make your own picture though.


Sorry to interrupt your discussion,you guys seems too professional for me,I struggle to understand what you guys talking about I think I need to learn more how blockchain works but I can't find where.Do you guys have a source of learning for beginners like me?I would appreciate that.Thanks

Maybe something like this?

+1 for Andreas M. Antonopoulos. Aveatrex, make sure to check out the rest of Andreas' channel as well, he's pretty good at explaining Bitcoin for a wider audience.

Once you're familiar with the basic concepts, this article may explain the hows and whys further by putting Bitcoin into a historical context:
https://queue.acm.org/detail.cfm?ref=rss&id=3136559


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June 10, 2018, 04:50:16 PM
 #15

I meant that AFAICT in all the transaction DAGs (e.g. Byteball, Hashgraph, and MaidSafe’s PARSEC) every node validate every transaction. That is not true scalability as I have defined up-thread in my reply to @HeRetiK because the systemic validation complexity is O(n2) (assuming every node n communicates n transactions). Another characterization of the validation complexity is that for transaction volume to increase then every node’s validation resources must equivalently increase, which means we can’t scale by adding more nodes. For example (the last time I checked) Byteball centralizes to 12 witnesses which do this validation (and provide the transaction confirmations finality) and then the light nodes which are issuing the transactions should trust those witnesses.

Yes, every node validates every transaction, that's right. Like I say, though, for true decentralisation the bigger problem with DAGs is that they cannot support lite nodes.

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June 10, 2018, 05:21:57 PM
 #16

Pow in Bitcoin. We have seen how the previous Bitcoin consensus algorithm. And already know how it will work safely.
As far as we know so far, the value of the block reward is 25 Bitcoin. At every 210,000 blocks, the reward value will be halved. And it will come down more or less in the next four years. Early on, the block reward is 50 Bitcoin, and has become 25 Bitcoin. And will be reduced by half in the future. Of course, the reduction of this reward will have its own implications later on. We will know the implications and the relationships further.
monsterer2
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June 10, 2018, 05:27:27 PM
 #17

For instance I have recently suggested an alternative variant  which I believe can totally fix the problem of mining high variance.

It was very enlightening  for me tho, actually I'm very excited right now to see such a relationship exists  between my proposal and a crucial scaling proposal like sharding.

You might want to take a look at that whitepaper I posted above. It takes your idea to the n'th degree.

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June 11, 2018, 04:29:44 PM
 #18

@anonymint: You mentioned somewhere that your coins could be stolen during the hypothetical "segwit thief" even if you received them as legacy format transactions, because if these coins had ever been touched by a segwit transaction from that point it becomes susceptible for the attack? I think you also mentioned that the entirety of the wallet could be under risk.  I cant find the quote.

Anyway what im saying is:

legacy->segwit->legacy = your coins are at risk?

I have been accepting some segwit transactions assuming said risk so I will be able to find if they ever magically move myself, but I don't get how the rest of the wallet could be under risk.

if I have addresses pre-segwit fork with bitcoins in it in a wallet.dat, and I generate some segwit addresses and store them there in the same wallet, given that I don't mix inputs when sending transactions (I use the nice "coin control" feature in Bitcoin Core for that) then I don't see how these pre-segwit fork coins could be at risk, since they haven't even moved since then.

What I don't get is how are you supposed to be sure that you are receiving a transaction that has a "clean", no-segwit history. This will be increasingly harder for any moving coins as time goes on, segwit is now 44% and rising. Honestly if that ever happens I have doubts if there would be a recovery from such a clusterfuck.
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July 03, 2018, 07:55:47 AM
 #19

Yes, POW has some limitations like:
1.   It is more time consuming as the participants try to solve mathematical puzzles and verify the transactions.
2.   Investment is more because the participant has to make a lot of trials to find the right solution. Big computational power is required for that
3.   Consumes huge amount of electricity as machines run a very long time.
4.   The machines emit a lot of heat, thus, making the temperature around it warm and hence is not eco-friendly.

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aliashraf
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July 03, 2018, 01:17:35 PM
Merited by anunymint (1)
 #20

@SixOfFive

Consuming energy/resource is not a limitation. It makes PoW based consensus algorithms, objective and secure.

Any protocol that doesn't impose resource consumption on the participants to be qualified for voting on the state of a public ledger, opens doors for a series of attacks if it is permissionless and is not shielded by a centralized authority. Hence it should include unproven and sophisticated mitigations to those attacks like what is happening in PoS systems.

Such a protocol would be considered unreliable because of its complexity in the most optimistic assessment possible.
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