rpietila Altcoin Observer

[dga]

Yes, that's what I meant - in the beginning, as everybody complains about short-term effects on the price of XMR. Long term most sensible CN (excluding Bytecoin and Duckcoin) coins will have the same total supply in circulation, but at the beginning it's different, hence it takes more buying orders to absorb the initially sold supply of XMR.

for some reasons it does not matter at all does it? - the emmission curve of bbr is slower and it is, as well as xmr, a very good project, but its market cap is less than one forth of moneros. maybe it is only important to define in which way and at what speed a coin is produced and the market participants are pricing this in.

coming from the economics perspective and understanding too little of mining - can someone explain the mining mess around xmr?

I don't know about any mess, but as for mining schedule:

...it cannot be too slow, nor too rapid, nor look artificial, and it must provide network security at all times (one reason for ~1% constant yearly inflation). XMR is the best I've seen, BBR is close.

I still haven't found a compelling reason to buy BBR though. Only one of them can win, and currently it seems obvious that XMR has the lead.

First, xmr was mined by amazon spot instances, cpus, perhaps botnets.
Then Claymore released a closed source ATI GPU miner, with openly announced 5% of the cycles reserved as devfee.
Cbuchner again, decided to keep his Nvidia Cudaminer miner private and only mine for himself.

Fast forward a couple of weeks and other people have made a GPU Nvidia miner, and Claymore have put in an option in his ATI miner which makes it slower but also waives his devee, which by some was perceived as hurting the mining scene and being too large.

Mining software simply evolving. Kinda organically. No mess tho imo, but it is a matter of preference on what to consider a mess and what not

You nailed it.  The high-profit private period was longer than a few weeks, but that's in the noise in the lifetime of the coin, and it had a slow enough initial emission that we're not talking 80% like in bytecoin.

It's easy to say whether or not it's a mess:  It's a mess if you didn't make a lot of money during that time, and it's the natural evolution if you did. 

[devphp]

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?

You can follow the 'nothing-at-stake' discussion here with Vitalik Buterin joining it:
https://nxtforum.org/index.php?topic=3343.msg60114#msg60114

[Este Nuno]

Nice timing for this article to come out to add to the discussion: https://blog.ethereum.org/2014/07/05/stake/

Reading things like this tends to me the main reason I'm not quite ready to invest in PoS just yet. I want to see the air cleared and the debates settle down, because right now it's quite heated with some big names on both sides making good arguments.

[devphp]

Nice timing for this article to come out to add to the discussion: https://blog.ethereum.org/2014/07/05/stake/

Reading things like this tends to me the main reason I'm not quite ready to invest in PoS just yet. I want to see the air cleared and the debates settle down, because right now it's quite heated with some big names on both sides making good arguments.

Yes, and see the above link I posted, hopefully it will be discussed and debated the shit out of for everyone to come to conclusions and to make decisions on whether to invest in PoS.

[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.

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.

The difference is an IPO is only available for a Limited amount of Time. For most PoW cryptocoins, you can mine for decades to come...

[Este Nuno]

Nice timing for this article to come out to add to the discussion: https://blog.ethereum.org/2014/07/05/stake/

Reading things like this tends to me the main reason I'm not quite ready to invest in PoS just yet. I want to see the air cleared and the debates settle down, because right now it's quite heated with some big names on both sides making good arguments.

Yes, and see the above link I posted, hopefully it will be discussed and debated the shit out of for everyone to come to conclusions and to make decisions on whether to invest in PoS.

The good thing for NXT is that it sounds like there are viable solutions that can be implemented if it turns out to be a real issue. Also the fact that it's not a problem that affects NXT currently at all, just a theoretical future issue if people were forging with custom wallets that supported dishonest forging.

[AlexGR]

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.

"FPGAs ready at the very launch"?

"More than obvious"?

And then ... "DRK=scam"?

If I asked you the network hashrate for the first two weeks you wouldn't know it.

Let me tell you: It was topping around 100-150MHs with cpu mining instances giving ~600kh each and good OC'ed desktops giving ~400-500kh. I was using my desktop celeron cpu and I had like 1/1000th of the network hashrate! Given the amount of rented instances and free azures mining, a hundred megahashes were peanuts. If there were FPGAs the hashrate would be enormous.

[darkota]

I think now, that there are only 3 coins with working/promising anonymity features that will succeed longterm.

That includes Darkcoin, Monero, and Vertcoin. All 3 represent different types of anonymity and are the Only anonymous/privacy centric coins that are worth considering/looking at.

Darkcoins anonymity comes through the use of Masternodes, which help to strengthen the network, get rewarded for doing so, as well as make it impossble to see the senders and recievers in a transaction.

Moneros anonymity comes through Ring Signatures, which provide the highest known level of anonymity and which makes it impossible to see who the senders and recievers in a transaction.

Vertcoins anonymity comes through the use of Stealth Addresses, which is similar to Ring Signatures in a way, and provides privacy without the need of a mixer.

 

[AlexGR]

Me thinks, the only thing they can really work on together, is some kind of unified I2P network that is REALLY GOOD.

[Peter R]

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?

You'll find the original proof-of-stake thread here, many highly-refined thoughts by DeathAndTaxes (CEO of BitSimple) regarding "nothing-at-stake" here, and Andytoshi's explanation in Section 5 of this document.

[darkota]

Me thinks, the only thing they can really work on together, is some kind of unified I2P network that is REALLY GOOD.

Monero and Darkcoin both plan to add I2P.

[Queeq]

Me thinks, the only thing they can really work on together, is some kind of unified I2P network that is REALLY GOOD.

Monero and Darkcoin both plan to add I2P.

Finally I2P gets some attention. It's a brilliant hidden in the shade of TOR.

[BombaUcigasa]

PoS put to rest:

that mechanism is far less than optimal for many reasons and excludes those who don't have mining gear and favours those with higher powered mining gear. It's no different to "rich getting richer" in nxt. In that respect, pow is elitist

This is the problem with proof of stake: it was invented by people who have no idea what problem mining is supposed to solve and have some agenda other than solving that problem.
Mining is not about allocating the issuance of new coins. The fact that they are tied together in Bitcoin is a temporary coincidence. Mining is about solving the problem of distributed consensus - how do a bunch of independent nodes spread all over the planet agree on a precise ordering of transactions when every node must operate with an incomplete view of the network and anybody might be trying to cheat?
This problem has nothing to do with elitism or notions of fairness or populism. Overlaying those agendas into the solution is a great way to not solve the problem.
As nodes on the network continually work to establish a consistent of narrative of what has happened in the netwowk based on their own incomplete knowledge, there will be times where two nodes disagree. Mining is nothing more than a signalling mechanism which provides an objective basis for choosing which version of history to treat as correct, whenever a conflict occurs such that more than one alternative version exist.
The design criteria for what makes a good mining algorithm comes from signalling theory:

Two individuals have access to different information.
They could both gain if they could honestly share this information.
However, their interests do not coincide entirely, and so each has an incentive to deceive the other.
How can honest communication be ensured?

How can honest communication be ensured despite conflicting interests between a signaller and a signal receiver?
Economists and biologists independently proposed that the costs associated with producing signals can provide a solution to this problem. Loosely paraphrased, the solution typically takes the following form.

Suppose that signals are costly, and that for one reason or another, lies cost more than honest signals.

If telling the truth is cheap enough and telling a lie is costly enough, it may be worthwhile to communicate honestly but not to lie.

There's a reason that when Wei Dai proposed b-money in 1998, he didn't even bother to explain why calculations in a proof of work system, "must be easy to determine how much computing effort it took to solve the problem and the solution must otherwise have no value, either practical or intellectual." He assumed this statement would be so obviously true that no explanation was needed. Apparently this is no longer the case.
The signal sent by proof of work is the amount of opportunity cost the miner has paid in order to produce the block. The fact that mining calculations are completely useless outside the signalling system itself is what makes lies more expensive than telling the truth, thus satisfying the conditions for honest signalling. The opportunity cost the miner pays to produce a block only represents a profitable trade for the miner if the network accepts their block. So when it comes to a node in the network choosing between two valid blocks, choosing to accept the block with the higher PoW means choosing the block which produced by the miner who has the most at stake in terms of opportunity cost paid.
Note that if the miner has to use specialized hardware for which there is no possible use other than mining, the signal is even better than performing otherwise-useless calculations on general purpose hardware. Higher opportunity costs = more reliable signal.
Proof of work is a proof of stake system, the only one that actually works.

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.

Related of the cost of PoS and PoW, two identical blockchains with identical parameters but only one difference, the method used for block generation (and reward generation) will cause the PoS chain to consistently require LESS and less costs to secure.
This might look like it's a good idea, to have more security with less costs, except it's not so. With less costs to secure the chain, someone with a higher budget can execute forks more easily, as time passes even more so.
What's the utility provided by a less secure blockchain compared to a more secure one? Obviously smaller, so it will be used less. A less used blockchain will have a lower price per transaction/coin/reward, it all spirals down into nothingness.
Private keys should not be valued based on their past properties, only current properties (for example the Bitcoin core update to allow redemption of unspendable outputs creates value for previously used but empty private keys that could reclaim those funds in the future). As such, an address that used to have more coins than any other should be valued at 0 if it has 0 coins in it now. Instead PoS values empty private keys above other empty private keys. I didn't even mention the demurrage ideas, where free to use funds are taxed, so you have even less utility for your coins if you intend to store value. It's really messed up, why would you use this shittier lower utility version?!
Bottom line: if your coin is cheaper to mine/distribute (because of PoS), it will have a lower value compared the PoW version. Why would you store and the lower value coin?

Why don't people understand that the goal of a PoS crypto is not to be just an other 'coin'.
The value of Nxt, that I know well, doesn't come from the coins but from the services it provide.
You want to build your business on Nxt, send encrypted message, vote, exchange cryptos on a decentralized exchange, send automated transactions, you want to have your P2P good store on that crypto because it cannot be taken down.

Talking about 'coins coins coins' is pointless.

Moreover, a PoS crypto doesn't fork by itself, it has to be intentional. It is the same as forking a PoW.
So the value of the crypto must come from it use and from it's community, not from pumping 'coins'.

EDIT :
On a PoW, a miner doesn't care about the crypto. He just want to convert is ASAP to FIAT to pay his bills.
On a PoS like Nxt, the people interested want to build something from it.
Every business or service added to a PoS crypto make it more resilient.

Maybe some people are hard-headed. The primary purpose of cryptocurrencies is to provide a means of transfer of value, with much of the individual token value being derived from the value of it's utility and cost to produce. It's quite weird that a bitcoin can be worth more or less than it's cost to issue, depending on whether there is a demand or not for the transfer of said bitcoin. The value of NXT and the value of Bitcoin comes from the services it provides.

Sending messages, voting, exchanging and p2p transactions are all utilitarian purposes, and their cost to offer is proportional to the cost to sustain them. If the price to sustain those activities is lower (lololol PoS = I just sit around doing nothing while a 19$/month PC/VPS keeps my wallet connected), then the value of the transacted tokens is lower. If the demand is higher, then more infrastructure will be added to increase the cost and offer security.

Consider the scenario of cheap altcoins that can be forked or attacked with less than 1000$. How much are you inclined to transfer more than 1000$ using those blockchains? What about creating a contract on the bitcoin blockchain which is sustained by millions of dollars daily?

What you are talking about is hype and marketing. And don't forget about competing hypes. Once people decide to cash out and chase the next hype or use the better service, the previous service is worth nothing, whoever invested loses everything. Also the infrastructure (lololol basic PC/VPS that can be reconfigured for new coin) goes away, it's not like you have multi-thousand ASICs that can't be re-purposed. And again, if you stake value, you can't use it. If you don't stake value, you lose it. As time goes by, costs go down and the value of the service goes down. If a better service appears, everyone jumps ship.

[digitalindustry]

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 shitcin, I'd think it is some automatically generated content.

Meh LTC bagholders. What can you do?

[adhitthana]

I think now, that there are only 3 coins with working/promising anonymity features that will succeed longterm.

That includes Darkcoin, Monero, and Vertcoin. All 3 represent different types of anonymity and are the Only anonymous/privacy centric coins that are worth considering/looking at.

Darkcoins anonymity comes through the use of Masternodes, which help to strengthen the network, get rewarded for doing so, as well as make it impossble to see the senders and recievers in a transaction.

Why do you think Dark will succeed and XC not succeed? If that's what your saying.

Moneros anonymity comes through Ring Signatures, which provide the highest known level of anonymity and which makes it impossible to see who the senders and recievers in a transaction.

Why will Monero succeed and others such as say, XDN (or one of the others) not succeed? If that is what you are saying?

There seems to be some argument that as we don't need more than one coin, or more than one of each kind then that is what will happen. One reason we will get more than one of each IMHO is not merely humans penchant for variety, but also the risk offset of having alternatives.

[superresistant]

Maybe some people are hard-headed. The primary purpose of cryptocurrencies is to provide a means of transfer of value, with much of the individual token value being derived from the value of it's utility and cost to produce. It's quite weird that a bitcoin can be worth more or less than it's cost to issue, depending on whether there is a demand or not for the transfer of said bitcoin. The value of NXT and the value of Bitcoin comes from the services it provides.
Sending messages, voting, exchanging and p2p transactions are all utilitarian purposes, and their cost to offer is proportional to the cost to sustain them. If the price to sustain those activities is lower (lololol PoS = I just sit around doing nothing while a 19$/month PC/VPS keeps my wallet connected), then the value of the transacted tokens is lower. If the demand is higher, then more infrastructure will be added to increase the cost and offer security.
Consider the scenario of cheap altcoins that can be forked or attacked with less than 1000$. How much are you inclined to transfer more than 1000$ using those blockchains? What about creating a contract on the bitcoin blockchain which is sustained by millions of dollars daily?
What you are talking about is hype and marketing. And don't forget about competing hypes. Once people decide to cash out and chase the next hype or use the better service, the previous service is worth nothing, whoever invested loses everything. Also the infrastructure (lololol basic PC/VPS that can be reconfigured for new coin) goes away, it's not like you have multi-thousand ASICs that can't be re-purposed. And again, if you stake value, you can't use it. If you don't stake value, you lose it. As time goes by, costs go down and the value of the service goes down. If a better service appears, everyone jumps ship.

We somehow agree.
The value of a crypto come from services it provide. The first service that is common to all cryptos is to provide a means of transfer of value.
I do not agree that the value of the individual token is derived from the cost to produce. The PoS is the proof but even in PoW, it is not related.
We see everyday people mining at a loss or doing incredible profit for a short time on new altcoins.
If you take the FIAT money, the cost to produce a 500 € bill is no way close to it's value.

The first advantage to lower the cost of the network (PoS) is to lower the fees for services. Lower fees is in fact an added value. The cryptos is able to offer the same services or more than others at a lower cost. In the end, this attract investors, business and activities.

You see the high cost of ASIC and the fact that it cannot be re-purposed as an advantage but I see a disadvantage.
ASIC is very expensive, risked and ultra quick obsolete. It give the control to a small elite that can afford taking risk and be competitive.

I'm not sure I understand the part were you talk about staking = losing... how ?
If you don't stake you use it. Using a token/coin/currency give its value. As long as you don't spend/use it, it remain virtual.

[BombaUcigasa]

I'm not sure I understand the part were you talk about staking = losing... how ?
If you don't stake you use it. Using a token/coin/currency give its value. As long as you don't spend/use it, it remain virtual.

Staking coins = gaining interest. Because this is a default no-cost options, everyone is doing it thus the "value" present on the network will be split across existing stake and new issued coins for the stakes (if the coin is not fully mined). Thus, you are not actually gaining "value" but you spread it across increasingly more coins, something called inflation of monetary mass.

Not staking coins means your value is diminished because the individual tokens are worth less. Or compared to stakers, you don't gain as much. Being a zero sum game without value influx/outflux, not staking coins puts you in a constant loss of value.

Why would you hold a coin that holds it's value like Bitcoin or one that loses value like Peercoin? Oh, you only want to use it when really needed? Why would anyone provide counterparty for your need if they can lose if your demand is lower than expected.

The main argument against PoS is the old "the rich get richer". Not a problem with that, except they do NOTHING but freeze coins, there is no risk involved inside the system. They don't buy hardware, they don't pay utilities, they don't hire people. They just do nothing and get rewarded. You think Bitcoin hodlers are gaining rude profits by doing nothing? PoS makes it even worse. But again, without actual new value added into the system, the existing value is spread around to the existing coins (think stable market cap) and each coin is losing value. There is a difference between theory and application, just like Communism, some things look great on paper but fail the test of reality.

As for providing extra services... what are the benefits of using NXT/MSC/XC?

[dreamspark]

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 shitcin, I'd think it is some automatically generated content.

Meh LTC bagholders. What can you do?

Why would you come to the conclusion that its LTC bagholders and not just people who couldn't care less about you promoting Quark...

[devphp]

@BombaUcigasa,

1) why not stake coins? Everyone can do that, either solo or in pools through Leased Forging (this is what it's called in NXT) feature. That way, everyone's coins bring profits proportional to their stake. If you have 1 000 coins, you get 5 coins per year, if you have 1 000 000, you get 5 000 per year, both work out to 0.5% yearly.

2) If you don't spend or use your coins, well, it's same as any form of money, then you don't get goods and services. Some people are savers, some people are spenders. It all works out to pareto principle in the end, the pareto principle works for money, be it crypto or any other form of money. The pareto principle says that in the end 80% of all money will end up in the hands of 20% of owners, doesn't matter which form of distribution takes place.

[aminorex]

You think Bitcoin hodlers are gaining rude profits by doing nothing? PoS makes it even worse

Well, not really, since in practice btc tends to infinity while all PoS tend to zero. Cool story though.