Proof of Useful Work?

[BlackHatCoiner]

I recently received a message about a(nother) cryptocurrency that has implemented/will implement a new type of mechanism called “Proof of Useful Work”. The paper explains that PoUW aims to achieve usefulness during mining which can be used in artificial intelligence and in treatment of patients.

However, I can't seem understanding how can this work and because I didn't bother much, is there anyone who has heard of it and understood it so they can share their thoughts here? It sounds nice in theory, but in practice I'm sure it'll just lead to the creation of another pump & dump crypto.

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[odolvlobo]

After looking at the paper, I feel that I have a limited understanding of what is presented. It presents a formal methodology for adapting mathematical problems to proof-of-work and presents one such problem as an example. Whether or not solutions to the problem presented are actually useful is not clear to me. Other than my criticism below, the paper looks solid, but it is outside of my area of expertise, so I'll let someone else do the real analysis.

My general criticism of PoUW relates to the potential economic flaws in the concept, which is something that I don't see addressed in this paper.

First, PoW is necessary to the security of the Bitcoin protocol through the rule that the "true" chain is the one that required the most work. In Bitcoin, that work is not actually measured in hashes or joules. It is measured in time. The difficulty adjustment mechanism ensures that no matter how much effort is spent on mining, a block always takes 10 minutes of work on average. Thus, the difficulty adjustment mechanism is also a necessary component of the protocol, at least for Bitcoin.

Second, miners are incentivized to increase (or decrease) their mining capacities until the cost of mining approaches the revenue.

Now, I believe that the idea that converting wasted work into useful work would reduce the overall net cost of mining (or increase the overall net benefit) is flawed. If the result of mining provides additional value from useful work, then miners would be incentivized to increase their mining capacities until the cost of mining again approaches the revenue plus the additional value of the useful work. In the end, the overall cost of mining would be equal to the cost of the wasted work plus the value of the useful work. Thus, nothing has been gained.

Furthermore, if the value of the useful work is greater than the cost of wasted work, then the mining incentives would be dominated by the value of the useful work. Though I haven't thoroughly examined the result of this scenario, I suspect that it could also result in the failure of the protocol.

There is a potential way to resolve these flaws. If the useful work is a public good, then the miners would gain no value from it and there would be no incentive to increase mining capacity based on the value of the useful work. The problem is that it is not clear that a true public good can exist. The protocol would be a failure if miners discovered a way to exploit the value of the useful work that was originally thought to be a public good.

One of the most commonly used PoWs, such as in Bitcoin, is simply to find a value s so that hashing it together with the given challenge (e.g. with SHA-256) maps to anything with a certain amount of leading 0’s.

I like to point out this misconception whenever it comes up. That is not how Bitcoin (or any other PoW coin that I am aware of) actually works.

[BlackHatCoiner]

[...]

Thanks for your time checking and writing this!

Yeah, I felt this limited understanding too. I couldn't go on after the second page. There must be economic flaws in this mechanism as it sounds really promising. The paper was written in February this year and I have a feeling it will be recognized by the market.

And then I ask myself:  Shouldn't they break it down for the rest of the people to understand it? Isn't the purpose of such mechanism to be understood from a decent percentage of its users? How will it be evaluated?

[NotATether]

I'm just glossing over this topic but my first guess is that they are getting rid of the "useless" work such as the hashes which do not ultimately result in a block being mined, right?

How do you even do that without assigning the PoW problem to a predetermined set of nodes?

[ir.hn]

It is just another proof of work.  Proof of works can be useful if there is some group of people trying to find all solutions to a problem.  For example odolvlobo is referring to a public good.  One public good can be a list of all prime numbers.  If you need a prime number of a certain length as a proof of work, a byproduct of this would be recording a lot of prime numbers.  Prime numbers can be useful.

Another way to create useful proof of work is to make the problem incentivize coming up with solutions that are otherwise useful.  For example I could make the proof of work hash large amounts of data so that technology is invented that can hash large datasets faster.  Or I could make a cpu-only hashing algorithm so that more CPUs are produced, and those could be repurposed after their useful life to make laptops for struggling countries. Or if I make every hash hash the entire blockchain instead of   just the block  I incentivize more full nodes.  Using this endpoint bitcoin is already useful because it provides a financial reward to try to crack cryptography.  If cryptography is ever cracked we will know about it because we will see bitcoin moving when it shouldn't.

So anyway this paper is just another proof of work using orthogonal vector problem to solve problems that some people care about.

[Wind_FURY]

I recently received a message about a(nother) cryptocurrency that has implemented/will implement a new type of mechanism called “Proof of Useful Work”. The paper explains that PoUW aims to achieve usefulness during mining which can be used in artificial intelligence and in treatment of patients.

However, I can't seem understanding how can this work and because I didn't bother much, is there anyone who has heard of it and understood it so they can share their thoughts here? It sounds nice in theory, but in practice I'm sure it'll just lead to the creation of another pump & dump crypto.

It sounds like another idea from the Space Ghost MEME who just discovered Bitcoin, and he’s here to “fix it”.

The truth is POW makes the incentive structure possible, which is the structure that keeps everything in the network to stick together. It solves the Byzantine General’s Problem, it’s protecting it from being Sybillized and it’s responsible for the issuance of the currency. Bitcoin is a closed working loop because of POW.

POW as implemented in Bitcoin is useful.

[PawGo]

Just a small thought. What if we only change the task, from current one (non productive) to something productive?
I would think about something like SETI or (of which I am member) Biggest prime search - mersenne.org
Computer may receive some tasks to compute and I believe it is still possible to estimate their difficulty and expected time to process - so rule of 10 minutes may be kept.

[PawGo]

Just a small thought. What if we only change the task, from current one (non productive) to something productive?...

Did you read past the title? No? I didn't think so.

Yes, I did, even the paper. I am sorry if I didn’t write clearly enough- I think that ir.hn described well what I wanted to say - that work should be seen as a useful, if there is so much waste of energy just to calculate hash, many people feel uncomfortable with that. Especially that from time to time we see comparisons in newspapers “bitcoin is using as much energy as Paraguay” or so. And then argument that it is cost of keeping the system alive is not enough.

[Wind_FURY]

Just a small thought. What if we only change the task, from current one (non productive) to something productive?...

Did you read past the title? No? I didn't think so.

Yes, I did, even the paper. I am sorry if I didn’t write clearly enough- I think that ir.hn described well what I wanted to say - that work should be seen as a useful, if there is so much waste of energy just to calculate hash, many people feel uncomfortable with that. Especially that from time to time we see comparisons in newspapers “bitcoin is using as much energy as Paraguay” or so. And then argument that it is cost of keeping the system alive is not enough.

“Should be seen as useful”? For what, and whose benefit? If people cannot, or do not want to understand how the protocol works, then the ignorance is on them. POW doesn’t need to change just “to be seen as useful”.

[BlackHatCoiner]

“Should be seen as useful”? For what, and whose benefit? If people cannot, or do not want to understand how the protocol works, then the ignorance is on them. POW doesn’t need to change just “to be seen as useful”.

No mechanism needs to be changed from any crypto. The point of this thread is to examine if Proof of Useful work can actually work in practise.

[PrimeNumber7]

Furthermore, if the value of the useful work is greater than the cost of wasted work, then the mining incentives would be dominated by the value of the useful work. Though I haven't thoroughly examined the result of this scenario, I suspect that it could also result in the failure of the protocol.

Any kind of "work" is going to have value.

With bitcoin's current incentive structure, a miner will perform PoW "for" bitcoin users, who in turn "pay" the miner in the form of the block subsidy. Miners will also confirm transactions for a specific subset of bitcoin users, who will also pay the miners in the form of transaction fees. ASICs used to mine bitcoin cannot be used to perform any other valuable work that comes close to the value of performing PoW "for" bitcoin users (performing PoW with the hopes of finding a block), so if the miners as a whole were to do something detrimental such as routinely accept double-spend transactions in a block race, or perform a 51% attack against bitcoin, the value of the ASIC mining equipment will decline to nearly zero.

On the other hand, if a bitcoin miner were performing some kind of PoW to try to find a bitcoin block (for the purpose of receiving the block reward -- that is the block subsidy plus tx fees), in addition to performing additional "useful" work that is valuable to someone else, the miners will not have the same incentives to not attack bitcoin. If the value of the other work is far in excess of the value of the EV of the block reward, a miner may seek short-term profit in attacking bitcoin, or they may not even bother with mining bitcoin. If the miners were to attack bitcoin, the value of their equipment would not drop to near zero because revenue could still be obtained via performing the other "useful" work.

There is a potential way to resolve these flaws. If the useful work is a public good, then the miners would gain no value from it and there would be no incentive to increase mining capacity based on the value of the useful work. The problem is that it is not clear that a true public good can exist. The protocol would be a failure if miners discovered a way to exploit the value of the useful work that was originally thought to be a public good.

A public good is typically paid for by the government. If a government cannot obtain a public good via its own resources (for example, a country that does not have the manufacturing capacity to produce tanks), will seek to exchange its abundant resources (which may include money) for resources that will produce said public good. Further, if a government cannot provide a public good period, its wealthy citizens will seek to use their own resources to obtain said public good amongst themselves (for example, a neighborhood building a security wall and hiring private security when the local government cannot handle crime). So there will always be someone willing to pay for a public good, and if you can provide a public good, you should expect to receive compensation for providing this service.

[zbig001]

It is not possible that an oracle could be truly random and decentralized at the same time.

And the concerns raised in the comments seem to be right. If solving mathematical problems is profitable here, is PoUW not merged mining to some extent? Allowing consequently "zero cost attacks", or something very similar to zero cost attacks?

The Bitcoin protocol is not very well suited to the needs of merged mining. Much more than just the algo would have to be changed, and even then the current level of security is unlikely to be maintained.

Merged mining (the real one at least) can be and is a great solution, but for other coins with a different purpose than Bitcoin.

[uchegod-21]

“Proof of Useful Work”.

I have feeling that the people that wrote this paper are hiding some loopholes under technicality. It is an excellent idea but the road map is the same thing as the PoW. Where it was suppose to find another route it did not do it clearly.
I expected to see a clear computing steps which will convert the inputs to useful outputs by maintaining hardness and usefulness.
I saw in the document where they said.

Unfortunately, existing
PoW schemes are often disconnected from the task they are attached to so that the work expended
is not actually useful in accomplishing that task. More importantly, the work and energy expended
is generally not useful for anything except proving that work had in fact been done.

Does the above correctly describe bitcoin PoW?

[n0nce]

I recently received a message about a(nother) cryptocurrency that has implemented/will implement a new type of mechanism called “Proof of Useful Work”. The paper explains that PoUW aims to achieve usefulness during mining which can be used in artificial intelligence and in treatment of patients.

However, I can't seem understanding how can this work and because I didn't bother much, is there anyone who has heard of it and understood it so they can share their thoughts here? It sounds nice in theory, but in practice I'm sure it'll just lead to the creation of another pump & dump crypto.

This is a topic that comes up again and again over the years: algorithms that 'mine' and at the same time find large prime numbers, hardware made to heat your home while mining; all sorts of ideas.
In the end, you can attach a monetary value to everything, so what you're doing with 'useful work' ideas is just increasing the miner's efficiency.

For example, if you can extract $100 of heat and $100 of BTC opposed to just the BTC reward, you've essentially just doubled the device's efficiency. Same goes for finding a $100 worth large prime and $100 worth of BTC. Sounds great. However, this is not where the story ends. The network will have one (or many - others will start doing this same thing) way more efficient miner, which will cause shorter block times and a difficulty adjustment proportional to the efficiency increase.

In the long run, the primes or heat costs will get cheaper (for example) and together with the diff adjustment, in theory you will end up with $100 worth of revenue again, just like it started before all those efficiency optimizations.

[Wind_FURY]

“Should be seen as useful”? For what, and whose benefit? If people cannot, or do not want to understand how the protocol works, then the ignorance is on them. POW doesn’t need to change just “to be seen as useful”.

No mechanism needs to be changed from any crypto. The point of this thread is to examine if Proof of Useful work can actually work in practise.

It’s going to work if the “work” is also used as a Sybil Attack prevention mechanism for the network. Because what would be the actual point of POW for the network? I have seen posts about Primecoin as “useful POW” when I was doing research on different mining algorithms.

[PrimeNumber7]

Unfortunately, existing
PoW schemes are often disconnected from the task they are attached to so that the work expended
is not actually useful in accomplishing that task. More importantly, the work and energy expended
is generally not useful for anything except proving that work had in fact been done.

Does the above correctly describe bitcoin PoW?

Work performed via bitcoin's PoW does not accomplish the task of inserting a transaction into a block.

The work performed via bitcoin's PoW guarantees the order of blocks. If someone wanted to create a block that competes with the most recent block, assuming they have the necessary equipment, they would have to "pay" in the form of the excess energy expanded required to create a competing block. So the PoW essentially guarantees the security of a bitcoin transaction.

[uchegod-21]

<snip>So the PoW essentially guarantees the security of a bitcoin transaction.

Thank you for response. So it means that the energy expended is not used to add transaction to the next block but to secure the transaction. So, all the miners commit energy to the system to secure it. If the system fails their cost of energy will waste.

[PrimeNumber7]

<snip>So the PoW essentially guarantees the security of a bitcoin transaction.

Thank you for response. So it means that the energy expended is not used to add transaction to the next block but to secure the transaction. So, all the miners commit energy to the system to secure it. If the system fails their cost of energy will waste.

You are correct in your understanding.

There are methods of mining, other than PoW. One of which is Proof of Stake (PoS). From a security standpoint, it is my belief that PoW is more secure because PoW has a more extensive incentive structure. For example, PoS requires the "miners" to hold a certain amount of the coin they are mining, and the frequency any particular miner will produce a block is proportional to the amount of coin the miner is holding. It is trivial for someone to acquire an arbitrary amount of a PoS coin on the open market. However, with bitcoin's PoW, someone who wants to mine bitcoin will need to purchase an ASIC from a mining manufacturer (or from someone who currently owns an ASIC on the secondary market, with the owner ultimately purchased the ASIC from the manufacturer). The mining manufactures have large upfront R&D costs associated with manufacturing ASICs. So the mining manufacturers have an incentive to not sell large quantities of miners to a single entity who could potentially do harm to the bitcoin network, or else they are risking their R&D investments.

[IadixDev]

I thought about a system based on solving neural network i think all these sort of solution will have the same kind of issue.

With a neural network you could have this principale of pow with a learning set and shorter testing set the goal of solving the problem would be finding a network configuration that have lower error ratio than the previous on the testing set. Then the one who found the solution gain the reward. You could probably even make in sort that an identifer associated with a public key is "laced" into the computation in sort that you cant "steal" the work.

Seem the algorithm in the paper would use zero knowledge proof for this.

But the first problem is there will not neccesarily be a match between the demand for a particular problem solving and the amount of computation required to match a constant block time with a given amount of computational power.

In that case you have a reward for solving a particular problem and thats the economy of it.

If it takes two month to find the useful solution, there will not be any reward emitted for 2 month. But in this context of problem solving its fine, the economic value of the network is based on the amount of problem it can solve, so if there is a reward if 1000$ to solve this particular problem, and it take 2 month with the available computing power, then after the two month the network has increased its value of 1000$.

But its a completely different economy than emitting a currency in a p2p network. It an economy of decentralised cloud computing.

Beside this the only kind of work that can really be fit optimally for the purpose of emitting a coin is something approaching a random computation because it can evenly dustribute reward among all participant based on pure computing power.

It seems the paper address the issue of bounded time computation but to me it seems its more in that the ratio of verifier vs solver is always going to be low, more than to garantee a maximum time boundary for solving the problem ( doesnt seem very clear to me ).

But in the economy of cloud computing for solving problem its not really the same constraint.

To me it seem a bit pointless to try to mix the two because its very unlikely you will always have a perfect match between the demand for computation in problem solving and the problematic for a distributed cash system.

Energy expanditure is universal enough to be a good economic marker, computational problem solving much less.

[uchegod-21]

<snip>So the PoW essentially guarantees the security of a bitcoin transaction.

Thank you for response. So it means that the energy expended is not used to add transaction to the next block but to secure the transaction. So, all the miners commit energy to the system to secure it. If the system fails their cost of energy will waste.

You are correct in your understanding.

Thank you.

The mining manufactures have large upfront R&D costs associated with manufacturing ASICs. So the mining manufacturers have an incentive to not sell large quantities of miners to a single entity who could potentially do harm to the bitcoin network, or else they are risking their R&D investments.

Good one to know. So it is correct to say that the manufacturers of ASICs are the people indirectly preventing 51% attack.