rpietila Altcoin Observer

[FenixRD]

PoS put to rest:

PoS coins use the number of coins held as the basis for their signalling system. Since coins have an exchange rate, they obviously do not fulfill the criteria of having no value, either practical or intellectual. Thus PoS is not an viable mechanism for honest signalling.

Latter emphasis mine.

Could you provide a practical example where this would actually matter?

Intra- and inter-cellular biological systems like humans, signalling is effectively PoW. When this is circumvented, you get cancer or other cellular malfunctions. We aren't really special. The behavior of a cell is an abstraction of its composite parts. Likewise, we humans are an abstraction of our composition. We interact with each other, and without reliable means of signalling, bad things happen. A global PoW-based signalling network, as set out by S. Nakamoto, is the final primary invention necessary to achieve a Tier 1 society.

Non-PoW signalling mechanisms have uses, but there is always a tradeoff, and they cannot replace PoW. With imperfect signalling, you get the corrupted outsomes of socialist systems, and the corrupted outcomes of capitalist systems. Both work on paper, and the failures of each result from the same cause: failures in signalling. Imperfect information, asymmetric information, or good information but too slowly (which is a form of asymmetry).

As information asymmetry trends to zero, and the propagation time of perfect information trends to zero, the difference between the endgame of a socialist and a capitalist system trends to zero, and we achieve a tier 1 society.

Given two alternative theories of how things might become, theories of identical predictive ability, the simpler one is best, and more often right. This is Solomonoff's Law of Inference. The complement of this is for the same reason, from the same math, and dictates that the more computationally-complex description of the vector toward the past, given merely that it exists alongside a simpler one, is harder to forge by accident or maliciously, and therefore can be assumed true with a given probability weight. These things are all intertwined with the very nature of entropy and causality and the universe itself, and cannot be circumvented, no matter how warm and fuzzy a "greener" (or more frightful still, "fairer") proof system makes one feel. In fact, any time a non-PoW system is used as if it were a PoW system, it will be less "green" in the long run, although it may deceive cells or people in the short run if they are not immune to the deception.

[dunchy]

How is GPU miner a death sentence for XMR? Isn't it good to have it, esp. after the accusations that currently botnets control most of the mining?

(Economically, the added value of mining is in the coin distribution, the network security and the statement of honesty/fairness by the devs. It is not intended to produce profit to the miners, quite the contrary - the marginal miner should be mining at a small loss in normal circumstances.)

I didn't mean that. What I said is that given the immense fire power in GPUs ready to be deployed at any moment, it is mandatory for a new coin to have the GPU miner at very launch. Otherwise you end up in a situtaion like XMR is now, where one guy makes on, at most, a weekly basis amounts bigger than your XMR stash, completely free, eventually destroying one thing XMR has over, for example, BBR and that's wealth distribution.

This is exactly why DRK is such a scam. One has to confess it is in any property better than, e.g.  LTC or for that matter many other shitalts. But it's more than obvious that fpgas were ready at very launch, owned by tiny group of people.

[dunchy]

Intra- and inter-cellular biological systems like humans, signalling is effectively PoW.

I am interested in you view, can you please elaborate this with an example ?

[FenixRD]

Intra- and inter-cellular biological systems like humans, signalling is effectively PoW.

I am interested in you view, can you please elaborate this with an example ?

Work, in Bitcoin and biologically, is a measure of energy expenditure over an amount of time. Proof that work has been done in either system is probabilistic: You might generate a winning hash on your first try, but it's unlikely, and with a longer sampling size, the probability is apparent.

In biological systems, there is just chemistry, specifically receptors and ligands, that kind of thing, but we could just as easily be talking about a solution with two reagents of a specific reactivity. Given a concentration of reagents and their reactivity, at a given temperature their movement results in a predictable reaction speed. Two individual molecules might get "lucky" but on the whole, the rxn speed is probabilistic.

With all other variables held static, the only way to speed or slow the reaction rate, which is dictated by the collision rate of the constituents, which is dictated by the temperature of the solution... you can only vary the temperature, which requires an expenditure of energy over time: Work. Given identical concentrations and amounts of reagents in two separate experiments, where each takes place for a set period of time, but are heated at different but unknown amounts, at any given moment of examination, the one which has reacted further probably has had more work done on it. The shorter the inspection interval, the less confident you can be that a period of luck hasn't occurred, but over time, you are confident.

For simplicity, let us say that at each inspection interval, the precipitate is removed along with a quantity of pure solute such that the concentration of reagents remains the same. This way, we can look at the precipitate formed as a percentage of the total potential precipitate, and we can isolate the change in concentration, which we would normally need to do in real life.

For Solution A, I generated a random integer from 0 to 4, for each time period, simulating that quantity of energy input. (Whatever quantity is necessary to react 2% of the reagent in that inspection period, on average). For B, I generated a random integer from 0 to 3. (Over time, we'd expect to see a 1.5% RoR.)


Time | Sol'n A | Sol'n B
   0       0%        0%
   1       2%        3%
   2       4%        3%
   3       7%        6%
   4      10%        7%
   5      10%        10%
   6      14%        11%
   7      17%        11%
   8      20%        11%
   9      21%        13%
  10      24%        13%
  11      28%        16%
  12      30%        16%
 . . . .
  18      49%        26%
  24      66%        31%
  32      87%        46%
  40      99%        58%
  41     100%        61%
 . . . .
  46     [done]      76%
  52     [done]      81%
 . . . .
  58     [done]      92%
  59     [done]      92%
  60     [done]      94%
  61     [done]      96%
  62     [done]      99%
  63     [done]     100%


These numbers work out nicely to illustrate the point. I just generated them until the point became clear; even here, it wasn't until "block" 6 that B appeared to gain on A. This is analogous, in Bitcoin, to beginning with a block at height N, which here we can just call 0, and seeing how quickly a given hashpower progresses. If the power of A + B is 100%, the power behind "pool" B is about 43% of the total, and A, 57%. For the first few blocks, B was a bit luckier vs. its true power, but A caught up; over the course of the experiment, A ended up "luckier" overall even compared to its true power (progressing at ~2.44% per interval, to B's ~1.59%, also slightly "lucky").

Cellular signalling systems are all dependent on the probabilities of reaction which is governed by energy input. It is no coincidence that blockchained proofs of work proves a precise probabilistic amount of work was performed. PoS systems do something, perhaps, but I am not familiar with a scientific analogue to "stake". It's proof of possession, but I don't know of a way that is useful in a signalling context.

[aminorex]

I am not familiar with a scientific analogue to "stake". It's proof of possession, but I don't know of a way that is useful in a signalling context.

If you are not familiar with sex, then you need to read more.  In fact, most biological signaling is signalling stake rather than work.  A surfeit of factor A, and insufficiency of factor B, etc.  These conditions may be the result of "work" but there is no contract.

Sex to the side, lots of biological signalling has no probative context.  It's only when there is a competitive antagonism that one is even useful.  The function of PoW/PoS is simply and only to increase the inferred probability that a player is not defecting on a contract of mutual interest, i.e. to establish the reliability of the signal.

[JorgeStolfi]

Intra- and inter-cellular biological systems like humans, signalling is effectively PoW. When this is circumvented, you get cancer or other cellular malfunctions. [ ... ] These things are all intertwined with the very nature of entropy and causality and the universe itself, and cannot be circumvented, no matter how warm and fuzzy a "greener" (or more frightful still, "fairer") proof system makes one feel. In fact, any time a non-PoW system is used as if it were a PoW system, it will be less "green" in the long run, although it may deceive cells or people in the short run if they are not immune to the deception.

Very weird conclusion...

But in fact signalling and signal-processing systems, natural and artificial, have always evolved towards using as little energy and matter as possible; and this has often been the most important criterion, more than speed.  Thus we have DNA, an information storage system that uses only a dozen atoms per bit; the nerve fiber, that uses much less energy than a copper wire of the same length, and wastes no energy in the form of external electromagnetic fields; and insect pheromones, that can trigger a response miles away with only one or two molecules. 

A more energy-efficient solution to achieve a needed goal is an obvious advantage in natural selection, and in a free market as well.  For that reason, the necessary waste of energy and resources called for by the PoW crypto protocols is a serious weakness of the concept.

The mutual recognition of individuals and the creation of trust bonds between them is an innate human trait, older than humans themselves.  Getting rid of trusted intermediaries in payments is not a human necessity by itself; it is only a proposed strategy to avoid certain perceived bad consequences of the current intermediaries (banks and governments) under current laws and institutions.  If there is a cheaper way to avoid or diminish those bad consequences, without necessarily junking the trusted intermediaries, society will prefer it to PoW distributed cryptos.  Ditto if those  bad consequences end up being less serious than the cost of the proposed remedy.

[digitalindustry]

"IPO is not a way to distribute currency" is just an opinion.

No, it's not just an opinion.  The person that runs the IPO can create as many fake accounts as they want, send in 10 BTC with all of them, get 90% of the coin issued, then all the BTC money goes back to himself anyway.  So the coin issuer not only gets as much premine as he wants, but also profits from anyone else that sends him money.  You couldn't invest in a more idiotic scam no matter how hard you try.

The only valid form of IPO is maybe proof of burn like Counterparty did.

Sure, the person who runs an IPO can do all that. But there are 2 issues with what you say.

#1. If that person doesn't innovate and develop anything, his scam will fail very quickly, as people will see there is no progress.
#2. If nobody but him invested in the IPO, it means other people don't provide bounties for development and take no part in the life of the community and the coin.

Both of which issues are not true for NXT, as the history of its development shows. So, yeah, 95%-99% of IPOs are probably scam, or if they are not outright scam, they will just fail, because the failure rate of startups is very high due to incompetence among other reasons.

I like the way Counterparty did their proof of burn IPO, I even burned half a bitcoin myself there But Counterparty cannot be extended indefinately as NXT can due to its architecture, and Counterparty runs on a slow network adding Bitcoin's flaws to its own. Hence, Counterparty can only compare to NXT in how it did the IPO.

interesting take on that - you would be talking about the "trust us" system employed by Po$ (Proof of Scam)  - its messily defined here - :

1. (Po$) Proof of Scam, Defining the cryptocurrency exclusive socioeconomic dynamic.

http://kolinevans.wordpress.com/2014/07/02/on-po-proof-of-scam-defining-the-rational-crypto-currency-exclusive-socioeconomic-dynamic/

And why has LTC dropped - its probably simpler than you think:

2. Why has Litecoin decoupled from Bitcoin (and is on a price decline) and why is this important for Quark and other free market Crypto currencies.

http://kolinevans.wordpress.com/2014/07/04/why-has-litecoin-decoupled-from-bitcoin-and-is-on-a-price-decline-and-why-is-this-important-for-quark-and-other-free-market-crypto-currencies/

short story probably just because KnC are about to deliver.

could it be pumped again?
sure thing.

[digitalindustry]

Intra- and inter-cellular biological systems like humans, signalling is effectively PoW.

I am interested in you view, can you please elaborate this with an example ?

Work, in Bitcoin and biologically, is a measure of energy expenditure over an amount of time. Proof that work has been done in either system is probabilistic: You might generate a winning hash on your first try, but it's unlikely, and with a longer sampling size, the probability is apparent.

In biological systems, there is just chemistry, specifically receptors and ligands, that kind of thing, but we could just as easily be talking about a solution with two reagents of a specific reactivity. Given a concentration of reagents and their reactivity, at a given temperature their movement results in a predictable reaction speed. Two individual molecules might get "lucky" but on the whole, the rxn speed is probabilistic.

With all other variables held static, the only way to speed or slow the reaction rate, which is dictated by the collision rate of the constituents, which is dictated by the temperature of the solution... you can only vary the temperature, which requires an expenditure of energy over time: Work. Given identical concentrations and amounts of reagents in two separate experiments, where each takes place for a set period of time, but are heated at different but unknown amounts, at any given moment of examination, the one which has reacted further probably has had more work done on it. The shorter the inspection interval, the less confident you can be that a period of luck hasn't occurred, but over time, you are confident.

For simplicity, let us say that at each inspection interval, the precipitate is removed along with a quantity of pure solute such that the concentration of reagents remains the same. This way, we can look at the precipitate formed as a percentage of the total potential precipitate, and we can isolate the change in concentration, which we would normally need to do in real life.

For Solution A, I generated a random integer from 0 to 4, for each time period, simulating that quantity of energy input. (Whatever quantity is necessary to react 2% of the reagent in that inspection period, on average). For B, I generated a random integer from 0 to 3. (Over time, we'd expect to see a 1.5% RoR.)


Time | Sol'n A | Sol'n B
   0       0%        0%
   1       2%        3%
   2       4%        3%
   3       7%        6%
   4      10%        7%
   5      10%        10%
   6      14%        11%
   7      17%        11%
   8      20%        11%
   9      21%        13%
  10      24%        13%
  11      28%        16%
  12      30%        16%
 . . . .
  18      49%        26%
  24      66%        31%
  32      87%        46%
  40      99%        58%
  41     100%        61%
 . . . .
  46     [done]      76%
  52     [done]      81%
 . . . .
  58     [done]      92%
  59     [done]      92%
  60     [done]      94%
  61     [done]      96%
  62     [done]      99%
  63     [done]     100%


These numbers work out nicely to illustrate the point. I just generated them until the point became clear; even here, it wasn't until "block" 6 that B appeared to gain on A. This is analogous, in Bitcoin, to beginning with a block at height N, which here we can just call 0, and seeing how quickly a given hashpower progresses. If the power of A + B is 100%, the power behind "pool" B is about 43% of the total, and A, 57%. For the first few blocks, B was a bit luckier vs. its true power, but A caught up; over the course of the experiment, A ended up "luckier" overall even compared to its true power (progressing at ~2.44% per interval, to B's ~1.59%, also slightly "lucky").

Cellular signalling systems are all dependent on the probabilities of reaction which is governed by energy input. It is no coincidence that blockchained proofs of work proves a precise probabilistic amount of work was performed. PoS systems do something, perhaps, but I am not familiar with a scientific analogue to "stake". It's proof of possession, but I don't know of a way that is useful in a signalling context.

+1 well put.

PoS i think you will find break some basic laws of energy in a distributed system , but i guess we can only find out?

[aminorex]

http://kolinevans.wordpress.com/2014/07/02/on-po-proof-of-scam-defining-the-rational-crypto-currency-exclusive-socioeconomic-dynamic/
http://kolinevans.wordpress.com/2014/07/04/why-has-litecoin-decoupled-from-bitcoin-and-is-on-a-price-decline-and-why-is-this-important-for-quark-and-other-free-market-crypto-currencies/

Arrgh.  You wasted my time!  Shame on you.

[binaryFate]

http://kolinevans.wordpress.com/2014/07/02/on-po-proof-of-scam-defining-the-rational-crypto-currency-exclusive-socioeconomic-dynamic/
http://kolinevans.wordpress.com/2014/07/04/why-has-litecoin-decoupled-from-bitcoin-and-is-on-a-price-decline-and-why-is-this-important-for-quark-and-other-free-market-crypto-currencies/

Arrgh.  You wasted my time!  Shame on you.

If it wasn't a clear attempt to promote a shitcoin, I'd think it is some automatically generated content.

[HardwarePal]

http://kolinevans.wordpress.com/2014/07/02/on-po-proof-of-scam-defining-the-rational-crypto-currency-exclusive-socioeconomic-dynamic/
http://kolinevans.wordpress.com/2014/07/04/why-has-litecoin-decoupled-from-bitcoin-and-is-on-a-price-decline-and-why-is-this-important-for-quark-and-other-free-market-crypto-currencies/

Arrgh.  You wasted my time!  Shame on you.

If it wasn't a clear attempt to promote a shitcoin, I'd think it is some automatically generated content.

^ That

[Este Nuno]

I find that arguments against PoS remind me of arguments made by people years ago against Bitcoin. A lot of people mainly focus on arguments that boil down to "PoS isn't backed by anything whereas PoW is backed by work".  But that's pretty irrelevant when you look at the bigger picture.

I think PoS is inevitable and as the kinks in the system get worked out it will eventually become the standard in cryptocurrency. That might take a while though. But theoretically it's clearly superior in my opinion. It's even more so likely when you consider the state of PoW now with the problems that have arisen from mining pools. It makes PoS look like a better option without even having to really reach very far.

If the main argument against PoS comes down to the fact that someone could borrow the majority of the coins and attack the network, then that's pretty weak considering it relies something that stakeholders can control - lending their coins. Compare it with the same type of attack on PoW, where a malicious entity gaining majority control over the network is not something any coin holder as control over.

PoW is great for the time period where we don't have the technology to deploy a robust PoS system. Are we still in that time period? Maybe. But it's doubtful that the market will allow an inefficiency like that to last forever.

[darkota]

I find that arguments against PoS remind me of arguments made by people years ago against Bitcoin. A lot of people mainly focus on arguments that boil down to "PoS isn't backed by anything whereas PoW is backed by work".  But that's pretty irrelevant when you look at the bigger picture.

I think PoS is inevitable and as the kinks in the system get worked out it will eventually become the standard in cryptocurrency. That might take a while though. But theoretically it's clearly superior in my opinion. It's even more so likely when you consider the state of PoW now with the problems that have arisen from mining pools. It makes PoS look like a better option without even having to really reach very far.

If the main argument against PoS comes down to the fact that someone could borrow the majority of the coins and attack the network, then that's pretty weak considering it relies something that stakeholders can control - lending their coins. Compare it with the same type of attack on PoW, where a malicious entity gaining majority control over the network is not something any coin holder as control over.

PoW is great for the time period where we don't have the technology to deploy a robust PoS system. Are we still in that time period? Maybe. But it's doubtful that the market will allow an inefficiency like that to last forever.

I agree with those points. The Main, Main, problem is, the distribution of purely PoS coins. No matter how I look at it, even if they distributed to 100,000 people, it's still unfair, simply because everyone else didnt get in on time and gets nothing, unlike PoW, where you can always mine and get coins yourself.

[devphp]

I agree with those points. The Main, Main, problem is, the distribution of purely PoS coins. No matter how I look at it, even if they distributed to 100,000 people, it's still unfair, simply because everyone else didnt get in on time and gets nothing, unlike PoW, where you can always mine and get coins yourself.

Cut the crap, dude. I can't mine any bitcoins with my laptop even if I jumped over my head. I have to spend cash to buy coins, I don't give a damn if it's PoW or PoS, I'll buy what I think is more advanced and more efficient and what I assess will appreciate more in the future. That's the line of thinking most people have or will have if we ever arrive to the era of crypto currencies used by common folks to buy coffee.

[darkota]

I agree with those points. The Main, Main, problem is, the distribution of purely PoS coins. No matter how I look at it, even if they distributed to 100,000 people, it's still unfair, simply because everyone else didnt get in on time and gets nothing, unlike PoW, where you can always mine and get coins yourself.

Cut the crap, dude. I can't mine any bitcoins with my laptop even if I jumped over my head. I have to spend cash to buy coins, I don't give a damn if it's PoW or PoS, I'll buy what I think is more advanced and more efficient and what I assess will appreciate more in the future. That's the line of thinking most people have or will have if we ever arrive to the era of crypto currencies used by common folks to buy coffee.

Do you think I'm talking about Bitcoin? Mine any other PoW coin, their distribution, even Darkcoin's 50% instamine is 10000x more fair than NXT's 100% premine in the hands of a few people. The market doesn't go after "what is more advanced" or "efficient" so fast, or else we would not using.

[devphp]

By the time any PoW coin hits mainstream, most people can't mine any of it, unless they buy special hardware (and even then it's very hard for them to get ROI, it's more profitable to just buy coins). They will find it unfair that someone was able to mine it in its early stages. You can bet the farm on it, they will find it unfair. This issue of (un)fairness is becoming boring already.

[Este Nuno]

I find that arguments against PoS remind me of arguments made by people years ago against Bitcoin. A lot of people mainly focus on arguments that boil down to "PoS isn't backed by anything whereas PoW is backed by work".  But that's pretty irrelevant when you look at the bigger picture.

I think PoS is inevitable and as the kinks in the system get worked out it will eventually become the standard in cryptocurrency. That might take a while though. But theoretically it's clearly superior in my opinion. It's even more so likely when you consider the state of PoW now with the problems that have arisen from mining pools. It makes PoS look like a better option without even having to really reach very far.

If the main argument against PoS comes down to the fact that someone could borrow the majority of the coins and attack the network, then that's pretty weak considering it relies something that stakeholders can control - lending their coins. Compare it with the same type of attack on PoW, where a malicious entity gaining majority control over the network is not something any coin holder as control over.

PoW is great for the time period where we don't have the technology to deploy a robust PoS system. Are we still in that time period? Maybe. But it's doubtful that the market will allow an inefficiency like that to last forever.

I agree with those points. The Main, Main, problem is, the distribution of purely PoS coins. No matter how I look at it, even if they distributed to 100,000 people, it's still unfair, simply because everyone else didnt get in on time and gets nothing, unlike PoW, where you can always mine and get coins yourself.

I don't mine coins so I don't really see how PoW is more fair. Yes, I could buy hash from a 3rd party. But I could also buy coins from an IPO. What's the difference? I just don't  see what's inherently unfair about it. People risk their capital just like they risk their capital mining through hardware and power costs. It's almost like arguing that capitalism is unfair. It's not like you can't buy the coins on the open market. They're available to anyone.

I don't own any PoS coins at the moment either btw.

[devphp]

I don't own any PoS coins at the moment either btw.

I've seen you say that a few times already. Why? Do you prefer to give PoS more time to prove itself?

[Este Nuno]

I don't own any PoS coins at the moment either btw.

I've seen you say that a few times already. Why? Do you prefer to give PoS more time to prove itself?

Well, I guess one reason is that I'm not fully confident in my ability to analyse this generation of PoS coins in a technical sense. I remember PPcoin always had it's obvious problems and that was easy to see, but it's harder now to know for sure whether everything is sound yet. And I guess I just want the dust to settle a little more in the overall debate before I commit to anything. Just in relation to the current era of PoS tech, I definitely believe in it in an overall sense though. But with all these new codebases and new concepts being put in to use I'm a little cautious.

It might be something I regret down the road, but we'll see.

[kbm]

I don't own any PoS coins at the moment either btw.

I've seen you say that a few times already. Why? Do you prefer to give PoS more time to prove itself?

Well, I guess one reason is that I'm not fully confident in my ability to analyse this generation of PoS coins in a technical sense. I remember PPcoin always had it's obvious problems and that was easy to see, but it's harder now to know for sure whether everything is sound yet. And I guess I just want the dust to settle a little more in the overall debate before I commit to anything. Just in relation to the current era of PoS tech, I definitely believe in it in an overall sense though. But with all these new codebases and new concepts being put in to use I'm a little cautious.

It might be something I regret down the road, but we'll see.

I've seen the term 'nothing-at-stake' come up multiple times in this thread. I don't think questions about it have been answered. What is it, is it a problem, and if it is .. is there any way to fix it?

If it's been answered before .. does anyone have good links going over it in depth?