It's about time to turn off PoW mining

[digitalindustry]

My reasoning:
* Each transaction in Bitcoin costs hundreds of time more than a credit card transaction to process. (currently this is subsidized by inflow of capital into the eco-system, so users haven't felt the full effect).

* Hundreds of millions of dollars are paid to mining hardware vendor and electricity company. This will continue year after year, and only will grow more and more as Bitcoin grows bigger. The Bitcoin community is being bled dry. The price action this year shows that even with massive amount of big name adoption and good news, the inflow of capital is having trouble to keep up with the insane surge of mining cost.

* There are better ways to secure the network, for example Bitshares's DPoS system. Money is re-invested into the eco-system and community, instead of paid to hardware vendor and electric company.

* If Bitcoin doesn't drop PoW and embrace the much more efficient DPoS system. I can see Bitshares eventually overtake Bitcoin. Simply because Bitcoin eco-system is bleeding hundreds of millions of dollars each year, and the DPoS re-invests the money and grows the eco-system/community each year.

Btw, you can hold BTC in Bitshares 

finally the voice of reason -:

if the original monopoly owners can't produce the rest of the supply then unfortunately Bitcoin is doomed to the free market.

this would buy much more time to get the "Public" to "buy in" at the agreed price of the monopoly.

it would also eliminate the possibility of  51% attack by free market actors.

[Meuh6879]

profit /vs security

bitcoin ... can't make profit to solo-mining ... OK, but it's the ultimate securised network on earth.
PoW want to decrease security to pay solo-mining.
I can't agree with this !

[HELP.org]

Finally, what's the correct level of security that Bitcoin needs?  A 51% attack would be detrimental, but it wouldn't mean the end of Bitcoin.  There are ways to counter and mitigate it, and the worst that would happen is a suspension of transactions until the attack is resolved.  So, what's to say that $10M of attack prevention isn't enough?  Currently it would cost somewhere in the hundreds of millions, but is that really necessary?  I'd be interested to see some analysis in that regard.

A 51% attack is not just a mining pool getting 51%.  If some entity got 51% and mined secretly all past transactions could be wiped out from the block they started mining.  It could mean weeks or months of transactions could be wiped out.  If someone wiped out the last 6 months of Bitcoin transactions I think that would kill it.  The cost analysis that I have seen calculated a price based on buying equipment from vendors.  A 51% attack like this would mean the entity would make their own hardware.  If they had control of places that manufacture chips that would make a big difference with the cost.  I don't think it would happen but it is not completely out of the question.

The key to this scenario is that they would need to activity attack the network by secretly mining and then reverse the past transactions (or perform some other attack). If they simply have 51% of the hashpower and do not launch an attack then nothing would happen.

You give a good example of how it would be cheaper for someone to launch an attack, but you fail to mention the fact that if the attack was not launched then the would-be attacker could use their equipment to mine legitimately and earn a lot of bitcoin.

Right, the attacker could not profit from the case I am discussing.  it would be an attacker who wanted to destroy Bitcoin without concern for the cost.  A government who had chip manufacturers under their control could do it if they really wanted to do it.  He asked about the worst case and I think the worst case is some entity who wanted to attack and destroy without any incentive to earn money from it.

[johnyj]

PoW is the only way to have a fair entry for everyone. When competition is getting higher, people will put more resources into the production of the currency, thus lift the mining cost. It does not matter what kind of method you adopt, as long as it is free entry for everyone, the production cost will go up due to the result of increased competition

The only way to have low cost while still maintain the value of the currency is through centralized authority, be it a central bank or the majority stake holder in POS currency. And as soon as it become centralized, it is not free entry anymore, the fairness principle is destroyed and new people will not join unless forced

[Ektra]

OK. On the subject of the sustainability of mining if there was no block reward, just transaction fees. Currently we have something like 10BTC/day in transaction fees, which is roughly 100k transaction/day if all the fees are just 0.0001 coins.

Visa apparently has 2k/second transactions, so say 5-10k across major card companies. If bitcoin were to have zero block reward, but capture that level of activity (let's assume current coin prices and transaction fees for simplicity) then we would have around 0.5-1.0 BTC per second released in transaction fees alone. I think it's pretty obvious without even doing the calculation that transaction fees in this scenario would be >>>>> block rewards. So it would seem to me that we could sustain a high level of mining activity on transaction fees alone, as long as we have high adoption.


I just saw SgtSpike's post which goes into the same thing with a lot of detail. What we don't know is how transaction fees will have to change with increased BTC adoption. Obviously they have to be decreased to smaller fractions of a coin to keep bitcoin cheaper to use than legacy payments.

[johnyj]

Actually the mining cost of the whole network is what backs bitcoin's value.  Since digital currency is not backed by any government or physical assets, the only thing that can baseline its value is the cost, no cost = no value. I can not think of anything that has value without a cost

Of course the cost means the lowest possible cost, which is already very energy efficient today. If you do those hashes using CPU you will cost millions of times more electricity

[Soros Shorts]

In a PoS currency how do you guarantee that a 51+% stake holder remains a benign actor?

[CIYAM]

In a PoS currency how do you guarantee that a 51+% stake holder remains a benign actor?

This is very hard and in fact the biggest issue with the approach (how do you know that a group of "large stake holders" haven't decided to collude?).

I think PoW is not going to die any time soon and that PoS approaches can be used to create "other chains" which will probably be "less secure" (but much more energy efficient).

[digitalindustry]

In a PoS currency how do you guarantee that a 51+% stake holder remains a benign actor?

This is very hard and in fact the biggest issue with the approach (how do you know that a group of "large stake holders" haven't decided to collude?).

I think PoW is not going to die any time soon and that PoS approaches can be used to create "other chains" which will probably be "less secure" (but much more energy efficient).

global verification system. (its all coming together)

[X-Laboratories]

My reasoning:
* Each transaction in Bitcoin costs hundreds of time more than a credit card transaction to process. (currently this is subsidized by inflow of capital into the eco-system, so users haven't felt the full effect).

* Hundreds of millions of dollars are paid to mining hardware vendor and electricity company. This will continue year after year, and only will grow more and more as Bitcoin grows bigger. The Bitcoin community is being bled dry. The price action this year shows that even with massive amount of big name adoption and good news, the inflow of capital is having trouble to keep up with the insane surge of mining cost.

* There are better ways to secure the network, for example Bitshares's DPoS system. Money is re-invested into the eco-system and community, instead of paid to hardware vendor and electric company.

* If Bitcoin doesn't drop PoW and embrace the much more efficient DPoS system. I can see Bitshares eventually overtake Bitcoin. Simply because Bitcoin eco-system is bleeding hundreds of millions of dollars each year, and the DPoS re-invests the money and grows the eco-system/community each year.

Btw, you can hold BTC in Bitshares 

1) I'm assuming you're including the block reward as part of the transaction "cost".  That's not a valid comparison, since that is money injected into the network.  Even if it was, upon reduction to negligibility of the block reward, that number will drop dramatically.  The free market will eventually settle on what makes a fair transaction cost is in absence of a block reward.

2) So hundreds of millions of dollars is better paid to people who hoard Bitcoins?  Won't PoS this only increase the problem of hoarding?  And honestly, I don't care if miners have to sell 100% of their coins to make a buck.  So be it - the market will settle on an appropriate price for Bitcoin with the increase of Bitcoin supply on the exchanges, and that will be that.  There's no such thing as "The Bitcoin community is being bled dry", as you would like to suggest.  The price is being held down, perhaps, but is that the only stick with which we should measure success?  To me, it is an excellent thing, because a lower price means a better distribution of Bitcoins among people.  More people holding Bitcoin = better long term success of Bitcoin.  PoS would encourage fewer people to hold Bitcoin (because fewer people would want to sell) = lower long term success.

3) I disagree, for the reasons listed in #2.

4) If Bitshares proves itself to be a better system, then so be it.  The free market will decide.  I don't see any reason to fork Bitcoin away from what it is not to match another system that already exists.  Let each system with its unique variables stand on its own, and we'll see which is the better system simply by watching what the free market decides.

can t write it better than this.
/respect

[BTCTIME247]

My reasoning:
* Each transaction in Bitcoin costs hundreds of time more than a credit card transaction to process. (currently this is subsidized by inflow of capital into the eco-system, so users haven't felt the full effect).

* Hundreds of millions of dollars are paid to mining hardware vendor and electricity company. This will continue year after year, and only will grow more and more as Bitcoin grows bigger. The Bitcoin community is being bled dry. The price action this year shows that even with massive amount of big name adoption and good news, the inflow of capital is having trouble to keep up with the insane surge of mining cost.

* There are better ways to secure the network, for example Bitshares's DPoS system. Money is re-invested into the eco-system and community, instead of paid to hardware vendor and electric company.

* If Bitcoin doesn't drop PoW and embrace the much more efficient DPoS system. I can see Bitshares eventually overtake Bitcoin. Simply because Bitcoin eco-system is bleeding hundreds of millions of dollars each year, and the DPoS re-invests the money and grows the eco-system/community each year.

Btw, you can hold BTC in Bitshares 

And then there is this:

The cost of a bitcoin attack - Some governments who will go unnamed have a history of printing currency on demand.
The cost of a 51% attack to them is $0.

Bitcoin POW has other issues. Anybody remember the energy spike in 2008. Or how about 1972? If the world finds
itself in an "energy shortage" that last for an extended period of time (which is highly possible at some point if you
consider the fundamentals of Geopolitics and energy) the cost of power for POW mining could make POW mining impractical.

On a side note, the BRICS are staging the equivalent of a 51% attack on the US dollar now. They could destroy it over night
if they wanted. We are just watching the slow motion version.

[dankkk]

Actually the mining cost of the whole network is what backs bitcoin's value.  Since digital currency is not backed by any government or physical assets, the only thing that can baseline its value is the cost, no cost = no value. I can not think of anything that has value without a cost

Of course the cost means the lowest possible cost, which is already very energy efficient today. If you do those hashes using CPU you will cost millions of times more electricity

I would disagree with this rationale. The profitability of mining has varied widely since bitcoin was born. Sometimes it would be vastly profitable to invest in a machine that is capable of mining bitcoin and the electricity to run it while other times it has not. I would argue that the fact that the network is secure is what gives bitcoin it's value. 

[cambda]

A 51% attack is not just a mining pool getting 51%.  If some entity got 51% and mined secretly all past transactions could be wiped out from the block they started mining.  It could mean weeks or months of transactions could be wiped out.  If someone wiped out the last 6 months of Bitcoin transactions I think that would kill it.  The cost analysis that I have seen calculated a price based on buying equipment from vendors.  A 51% attack like this would mean the entity would make their own hardware.  If they had control of places that manufacture chips that would make a big difference with the cost.  I don't think it would happen but it is not completely out of the question.

Satoshi client have checkpoints, (9.3.1rc at block 295.000 I guess) so you cannot publish 6 months old longest blockchain, most Bitcoin clients will simply reject it.

Do you have more info on this?  Are checkpoints made every so often?  If someone had a 51% starting today how long could they go before a checkpoint?

I noticed the checkpoints are added in every major version of satoshi client, but even at release the checkpoint is about 1-2 months old from most recent block.

[kokojie]

In a PoS currency how do you guarantee that a 51+% stake holder remains a benign actor?

It's only logical that the 51% group of holders will not have bad intentions against a currency that they themselves have a majority stake in.

You have no guarantee in a PoW system neither, since it only needs about 10% of the value of the eco-system to 51% attack. Also the other problem is you don't even need to own the currency to attack it, therefore the attacker have no stake in the system.

To 51% attack a PoS eco-system, you yourself must be an extremely large stake holder in the eco-system, which means you are basically attacking yourself. Not to mention you need extremely large amount of resources, at least several times the value of the eco-system, to achieve 51% in the first place.

[aigeezer]

In a PoS currency how do you guarantee that a 51+% stake holder remains a benign actor?

It's only logical that the 51% group of holders will not have bad intentions against a currency that they themselves have a majority stake in.

For individuals behaving rationally in a closed system that is true. With entities that may have some overarching agenda, such as, hypothetically, the dominance of a competing currency, then the cost may be well worth while, despite "collateral damage", as it were.

[cbeast]

In a PoS currency how do you guarantee that a 51+% stake holder remains a benign actor?

It's only logical that the 51% group of holders will not have bad intentions against a currency that they themselves have a majority stake in.

You have no guarantee in a PoW system neither, since it only needs about 10% of the value of the eco-system to 51% attack. Also the other problem is you don't even need to own the currency to attack it, therefore the attacker have no stake in the system.

To 51% attack a PoS eco-system, you yourself must be an extremely large stake holder in the eco-system, which means you are basically attacking yourself. Not to mention you need extremely large amount of resources, at least several times the value of the eco-system, to achieve 51% in the first place.

Just plain wrong on all accounts.

51% PoS stakeholders have every reason to reverse transactions. Because they use TOR, nobody knows they even have 51%. They can attack transactions to grow their wealth. When they are rich enough, they can sell their stake. With PoW, they have to invest in equipment that is traceable so they can't attack anonymously. When they want to cash out, their equipment is obsolete and worth much less. As far as the value of the ecosystem, 51% is 51%. That means just over half, not "several times the value."

[delulo]

In a PoS currency how do you guarantee that a 51+% stake holder remains a benign actor?

It's only logical that the 51% group of holders will not have bad intentions against a currency that they themselves have a majority stake in.

You have no guarantee in a PoW system neither, since it only needs about 10% of the value of the eco-system to 51% attack. Also the other problem is you don't even need to own the currency to attack it, therefore the attacker have no stake in the system.

To 51% attack a PoS eco-system, you yourself must be an extremely large stake holder in the eco-system, which means you are basically attacking yourself. Not to mention you need extremely large amount of resources, at least several times the value of the eco-system, to achieve 51% in the first place.

Just plain wrong on all accounts.

51% PoS stakeholders have every reason to reverse transactions. Because they use TOR, nobody knows they even have 51%. They can attack transactions to grow their wealth. When they are rich enough, they can sell their stake. With PoW, they have to invest in equipment that is traceable so they can't attack anonymously. When they want to cash out, their equipment is obsolete and worth much less. As far as the value of the ecosystem, 51% is 51%. That means just over half, not "several times the value."

In DPOS it is not the stakeholders who generate block but delegates (comparable to pools in Bitcoin except that the DPOS delegates/pools can be voted in and out) which makes your argument invalid.

[cbeast]

In a PoS currency how do you guarantee that a 51+% stake holder remains a benign actor?

It's only logical that the 51% group of holders will not have bad intentions against a currency that they themselves have a majority stake in.

You have no guarantee in a PoW system neither, since it only needs about 10% of the value of the eco-system to 51% attack. Also the other problem is you don't even need to own the currency to attack it, therefore the attacker have no stake in the system.

To 51% attack a PoS eco-system, you yourself must be an extremely large stake holder in the eco-system, which means you are basically attacking yourself. Not to mention you need extremely large amount of resources, at least several times the value of the eco-system, to achieve 51% in the first place.

Just plain wrong on all accounts.

51% PoS stakeholders have every reason to reverse transactions. Because they use TOR, nobody knows they even have 51%. They can attack transactions to grow their wealth. When they are rich enough, they can sell their stake. With PoW, they have to invest in equipment that is traceable so they can't attack anonymously. When they want to cash out, their equipment is obsolete and worth much less. As far as the value of the ecosystem, 51% is 51%. That means just over half, not "several times the value."

In DPOS it is not the stakeholders who generate block but delegates (comparable to pools in Bitcoin except that the DPOS delegates/pools can be voted in and out) which makes your argument invalid.

Who guarantees the stakeholders and delegates are not colluding?

[delulo]

In a PoS currency how do you guarantee that a 51+% stake holder remains a benign actor?

It's only logical that the 51% group of holders will not have bad intentions against a currency that they themselves have a majority stake in.

You have no guarantee in a PoW system neither, since it only needs about 10% of the value of the eco-system to 51% attack. Also the other problem is you don't even need to own the currency to attack it, therefore the attacker have no stake in the system.

To 51% attack a PoS eco-system, you yourself must be an extremely large stake holder in the eco-system, which means you are basically attacking yourself. Not to mention you need extremely large amount of resources, at least several times the value of the eco-system, to achieve 51% in the first place.

Just plain wrong on all accounts.

51% PoS stakeholders have every reason to reverse transactions. Because they use TOR, nobody knows they even have 51%. They can attack transactions to grow their wealth. When they are rich enough, they can sell their stake. With PoW, they have to invest in equipment that is traceable so they can't attack anonymously. When they want to cash out, their equipment is obsolete and worth much less. As far as the value of the ecosystem, 51% is 51%. That means just over half, not "several times the value."

In DPOS it is not the stakeholders who generate block but delegates (comparable to pools in Bitcoin except that the DPOS delegates/pools can be voted in and out) which makes your argument invalid.

Who guarantees the stakeholders and delegates are not colluding?

No guarantee but it is highly unlikely (way more unlikely than with Bitcoin) since block producers are more decentralized (~ 60 individuals (delegates) all with the same block production capacity than with Bitcoin's 2 or 3 pools which control 50% of the block production capabilities) and because stakeholders who vote for delegates have a stake in the network whereas with POW there is no way that the coin holders can choose who is securing their network.

[Ardenyham]

Even with PoS you need to distribute the coins with PoW or you end up with horrible distribution of coins. The longer the PoW stage and more people having a coin, the fairer distribution. Hard to beat Bitcoin imo