I appreciate it wasting less precious energy. But this change also means that "Decentralisation" and "Power to the people" are fading away right?
The wealthy actors are the ones dictating the transaction now and they also on top get paid for being rich. This does not sound like a "better financial system" for me. Also, don't forget the DAO Fork[0] where with the "ungovernable Blockhain" it was decided a transaction was not ok and it was removed?!
> But this change also means that "Decentralisation" and "Power to the people" are fading away right?
But it was always like this, also with proof of work. PoS and PoW are both just variations of "proof of resources", which in turn is a convenient substitution for likelihood that one's voting power is independent.
If you want to give "power to the people", you need some way of estimating independent voting power, that is not tied to resources.
With proof of work, you have to spend your pile of money if you want to influence a vote. Whatever the cost of a 51% "attack" would be, the attacker has to actually spend that money to do it.
With proof of stake, having that money is enough to vote and you don't need to spend or waste it. In fact, you get paid for having that money sitting in the account.
The catch is that people will notice 51% attacks. If you have enough voting money and fudge transactions, all that money becomes worthless pretty quickly. The more realistic issue is that the big voter gets to decide the direction of the protocol, but again sufficiently screwing things up only leads to their own demise.
It was worse with PoW in theory. Just because you have tons of mining equipment doesn't mean you have a stake in the future of the cryptocurrency.
>The catch is that people will notice 51% attacks.
The thing about crypto is that the majority hashrate/stake gets to decide what is an "attack" and what isn't. This behavior isn't a bug, it's a feature and it's what separates crypto from fiat.
With PoW, sooner or later the attacker will run out of money. When they stop paying for the hashrate, their votes all goes away, they don't get extra points for being the top miner at one point in time. With PoS, getting a majority means that your majority will actually increase over time unless someone actively decides to burn the cash necessary to stop you. The longer the community waits/debate over it, the harder it will be to remove the "attacker".
Right, the majority decides what is an "attack" in that it decides which chain to use, and the longest chain wins. But that's not the issue. People (or automated systems) can decide on their own what is an attack. They see transactions being reversed after several confirmations and say "the blockchain is compromised, so I won't use it anymore."
Yes with PoS it's harder to remove the attacker. But the attacker also stands to lose far more money than the attack can possibly be worth.
> You also (almost always) try to preserve anonymity in a democracy.
You most definitely do not. When you turn up to vote, you get asked for id.
EDIT: your actual vote is anonymous, yes. But your participation in the voting is not anonymous. Blockchain allows for anonymous participation, so to say.
> Blockchain allows for anonymous participation, so to say.
No, different agents are voting. Democracy could be totally anonymous, in principle- get a secret key, generate a valid public one-time key, and your vote is verifiably valid but nobody has any idea who voted, much less who they voted for. If everyone is registered, you don't even have any useful information about who could have voted. Even in reality, your identity is discarded as soon as possible.
Blockchains are inherently public. Validators are NOT anonymously participating- they may be owned anonymously, but the owner isn't the one with the actual right to vote.
It's not just a semantic difference. In a real election, your ballot comes in a voter envelope. The ballot is anonymous inside the envelope, and the envelope is opened blind, but kept until the election is over. If they get two envelopes from the same person, they know it was a fraudulent vote. Once those envelopes are thrown out, there is nothing tying you to an election at all.
On the blockchain you effectively never throw out the voter envelope. Your vote -and what you voted for- can both be tied back to you via ownership of the voting agent. There is zero inherent protection of that relationship. All protection is done externally and the system does not do anything more than making sure it's not actively impossible to conceal your identity.
The vote is public, yes, but the participation is anonymous. I can easily set up two different miners, both controlled by me, but with different addresses. There is not generally an easy way of looking up agent ownership.
And while participation could in theory be anonymous for democracies, as you've described, I'm not aware of any country that actually does that?
It's not very anonymous in the US. You're required by law to identify yourself if possible*. Your party affiliation, registered mailing address, and registered phone number are all publicly visible. Someone knows your votes too, and they try to keep it secret, but I have little faith in that.
* In all 50 states AFAIK you can register with no ID and no home address, but it's illegal to lie.
IDK democracy is the best way to ensure prosperity and wealth. It's basically the idea that the 51% can rob the 49%. Preservation of wealth arguably can be better preserved if taking from the 49% results in their violent frustration of those efforts, and enabling that may require some constitutional republic, benevolent dictatorship/monarchy, or ancap kind of situation.
I'd always rather the greater than 50% coalition have control than the less than 50% coalition. Just look at it from a numbers standpoint. If the vote is to "kill the other team" giving which group power does the least harm? The Majority.
And just because that vote can happen isn't a mark against the system. The three other forms of government you mentioned are all equally capable of that atrocity.
51% killing the 49% in iteration is 1% killing the 99%.
>The three other forms of government you mentioned are all equally capable of that atrocity.
If you ignore the psychological disadvantage of the killers having a monopoly on 'legitimate' violence. For instance, in some anarchistic type scenario there is at least the upper hand that everyone understands the aggression of others is not granted some philisophical legitimacy over their own, and people frustrating these efforts will know their defensive efforts are not philisophically disadvantaged. Moral is an important component of self defense. It is easier to push many people in the cattle car if they think a legitimate 'authority' of the government has spoken.
I realize now there's been some massive miscommunication. The statement about government and train cars was not meant to be portrayed "instance" of anarchism. It was supposed to convey a counter scenario that was not so possible under an anarchistic scenario, since obviously government is not anarchism.
I didn't (and don't) think my paragraph conveyed that. But perhaps so it does. Either way it appears I'm unable to effectively communicate to you. I apologize for that. I do not think I am an able communicator in conveying my ideas to you, so I will just stop here and apologize for the trouble.
Not so fast. In both networks, the ultimate control is held by those who run end-user nodes. These people create demand for the asset, and creating demand is ultimately the way to control the asset.
An end-user node is like a device, which verifies that bank notes are genuine or that gold coins are pure. If everyone can independently reject bad money and accept good money, the good money will have more demand and therefore be more valuable.
Even if someone is very rich or has resources to mine blocks, they can't dictate demand for other entities. They must abide by the rules which are enforced by end-user nodes.
If there are entities which have power to dictate demand, and the network can't defend itself under pressure, means that the network is not properly decentralized.
Also, the decision between "good money" and "bad money" should probably be a game theoretic focal point, rather than something set by a foundation and large staking entities.
> An end-user node is like a device, which verifies that bank notes are genuine or that gold coins are pure. If everyone can independently reject bad money and accept good money, the good money will have more demand and therefore be more valuable.
The key word there "independently". Proof of resources is one way to tell if an individual node is actually independent.
Proof of resources gives an individual who has more invested in the network more weight in deciding which "bank nodes are genuine". Those individual's votes in theory deserve more weight because proof of resources assumes those individuals are harder to influence (or bribe) and have a stronger incentive to keep the network functioning because they have more at stake. These systems are trying to ensure that the nodes that have the power to accept or reject "money" only accept "good money" and always reject "bad money", and they're using demonstration of resources as a proxy of trustworthiness and independence.
Whether someone ties a bunch of money into specialized ASIC chip that's really only good for mining bitcoin, or they tie a bunch of money into staking eth is an implementation detail.
Miners need not only to spend money on hardware, but also the upkeep of earning money by mining is expensive (electricity, or the cost of electricity generation).
Thus, Proof of Stake let the rich grow their richness for doing nothing. In Proof of Work they need to continue working to make their money grow. Not to mention that they removed the miners from the equation, proving that in ETH system the poor and the people don't have power at all, whereas in BTC no one ever had any such power.
If you're willing to admit a central authority to authenticate who can and cannot vote, cryptocurrency becomes easy.
Really bitcoin is fundamentally trying to solve the problem that its impossible to tell who is a "real" person on the internet. If you dont have that problem everything is trivial.
So what you're saying is, bitcoin was always useless in sufficiently advanced society, like mine, where I routinely verify my identity online through my bank?
Interestingly, the original bitcoin white-paper had a motivating example that basically amounted to side-stepping banks, because banks do not provide fully non-reversible transactions. In essence, bitcoin was a technological solution to a problem which would have been solved more elegantly by changing financial laws, and requiring banks to offer non-reversible transactions. (the problem with that is obviously that it could be used for fraud, but then you get into the whole debate about freedom vs protection)
> In essence, bitcoin was a technological solution to a problem which would have been solved more elegantly by changing financial laws, and requiring banks to offer non-reversible transactions.
Ahh, this may explain why I don't see how cryptocurrency is a good thing. I consider the fact that banks do not allow fully non-reversible transactions as a very strongly desirable feature, not a bug to be done away with.
And I think this is a very valid viewpoint. Clearly, many people think the same, otherwise we'd already have non-reversible transactions in the conventional banking system.
I mean, yes. If you read the bitcoin paper it very clearly talks about what problems it is trying to solve, so this shouldn't come as a surprise.
Whether or not it is useless really depends how much you value independence from a central authority (i was originally going to say anonoyminity, but if you only care about anonoyminity, digicash is a much better solution than bitcoin)
They always rely on scarcity of something: scarcity of processing power, scarcity of being on the ledger of the blockchain and owning an amount of currency, scarcity of hard disk space, etc.
We have a concept called Proof of Authority where we basically went out and picked competent teams that have a vested interest in ensuring the blockchain is successful. They run the infrastructure in a fully decentralized manner, but we work as a group. There are 7 "pools" and we will eventually expand to 11. It's not decentralized as commonly understood, but way better (imo) than just putting whoever is richest in charge.
There isn't any cryptographic basis to human retinas, though, to prove a scam is "real"; so, at the end of the day, this is just a centralized actor in the form of a hardware manufacturer that can forge as many retina scans as they want, with the only limit preventing any of us from doing the same being whatever DRM they can try to pile on their device.
On that note, is there anything we could use as a cryptographic basis? I'm guessing DNA would qualify. We could make everyone's addresses be derived from a content-address of our DNA.
Handing over a copy of my biometrics to a VC-funded-and-ran private company is about the last thing I'd want to do in my life, just below taking said eyeballs out.
Not personally into crypto much, but wouldn’t proof-of-identity for those who want to vote be enough? Those who simply want to use the system (to send/receive) need not disclose themselves, but those participating in the ledger ought to have to unmask themselves so that when something goes horribly wrong there’s a person to point at/sue/whathaveyou…
It should also be said that the biggest entities are staking pools/providers. If one of those act up, people can unstake and leave. It's really not that different from mining pools in PoW.
2. Having a centralized staking pool means that there could be governmental sanctions a la tornado cash coming on such "validators" for facilitating North Korean payments and such. Once again, not a good look.
There is a mechanism to unstake it's controlled to 6 leavers per epoc, reducing if that's an issue: it has been thought out. It's not live yet which is slightly different.
I think it's worth mentioning that a pool large enough to do malicious things on the chain and get away with it is strongly disincentivized from doing so.
It would take billions of dollars worth of ETH to do such a thing, and then doing it would destroy confidence in the coin and absolute tank the price, costing the evil pool hundreds of millions.
> doing it would destroy confidence in the coin and absolute tank the price
People seem to say that but there's no evidence of this in fact. A price will only tank if lots of other holders rush to sell before the thief sells his stolen billions.
I think it's a matter of how quickly the thief could make their profits before people notice.
Of course, keep in mind that for such an attack to work, you need 51% of the total ETH being staked. Again, that's billions of dollars right now. If you stole some coins via double-spend, you couldn't pull the money into usable fiat very quickly. Even dumping a bunch of coins is going to crash the price.
That's like saying "100% of USA controlled by one entity" - except that in the US people are stuck with one president for four years no matter what, and when staking users can go stake with someone else at any time at all.
No doubt about that, people are in the dark about effective centralization of PoW and PoS, but PoS makes it easier to move to a new representative. In PoW, if you wanted to be a part of those centralized services with any return at all, you often had to get a spot on a mining farm, which meant you were locked into that place; even if you left, someone else just took your place, so effectively, it was the computational power that was locked in with that specific centralized mining operation. With PoS, there is no such lock-in, and changing the staking destination is a quick affair.
Transition to proof of stake consensus doesn't make a byzantine fault tolerant system anymore or less accessible to the everyman, it simply replaces depending on electricity to depending on investing directly into the protocol.
One may see the 'wealthy' as getting more 'say' but in reality they could (and did) just buy hardware that produces higher hashrates.
This performative ceremony is gone now to the benefit of all
And it will be the same group of people until the thermal death of the universe, because there are literally no mechanisms to separate those wallets from the tokens. The ultimate feudalism.
Every networked system (eth, btc, usd, the internet itself, trade, an economy) has aspects of centralization and decentralization. USD is decentralized in that if enough people stopped attesting to its value or accepting it for trade, the whole thing folds. That doesn't happen precisely because so many people believe in its value. But many aspects of USD and the banking system are opaque: how it is minted, what players are trusted, how much fractional reserve is allowed, etc.
The big difference is how easy it is to step into the game. I'd probably need millions of dollars, oodles of lawyer-hours, a bunch of employees, and a mountain of paperwork, to start a bank and participate in the banking system as a peer. I just need 32Eth (roughly $50kUSD) and some computers to participate as a validator.
The hard fork only "worked" cause enough people went with it. If enough people said "f it, no fork", then the fork still happens, but loses the social capital and thus the old chain "wins".
The internet struggles with ipv6 because not enough nodes support it. Politics breaks down when parties can't reach agreement. I don't know of any system which is truly tolerant to byzantine / 51% attacks.
But this change also means that "Decentralisation" and "Power to the people" are fading away right?
Don't look now but "decentralization" and "power to the people" are already gone in the crypto market.
Blockchain is a novel accounting system. But has any organization *ever* derived any real power from an accounting system? Are Google and Apple and Amazon market leaders because of a novel accounting system? I don't think so.
In a capitalist system, real power is derived from marketplace control. Accounting is just a way of keeping score.
Likewise, in the crypto market, Binance has now consolidated it's power position as marketplace leader and has effectively become the "central bank" of crypto with the power to mint it's own currency (Tether and BUSD) and use it to manipulate the marketplace at will. In a brazen demonstration of their power, they plan to crush other stable coins by simply replacing them with their own.
To give you an idea how big of an impact this is to miners, my 5700 XT went from making $1.2 / hour (mining Ethereum) to $0.15 / hour (mining Ethereum Classic) Eth classic seems to be currently the most profitable coin to mine and it is barely worth the electricity cost.
The people with actual mining rigs with multiple GPU's will either sell their stuff or start renting them for services like vast.ai. I assume most will end up selling because of the cost of getting a server-grade Motherboard/CPU + lots of RAM isn't exactly cheap and the effort required to set everything up is much higher.
Hm, I went on coinmarketcap.com and filtered by PoW, and it shows Bitcoin (of course) and Dogecoin as being PoW with higher market cap. Next three are Litecoin, Monero, and Bitcoin Cash.
The last one I don't expect to work, because mining is about as profitable as Bitcoin, since both use the same algorithm, and the best relative profitability fluctuates between them, and they're both dominated by ASICs. But Monero deliberately avoids ASIC dominance.
I saw an article yesterday saying that Ethermine (the largest mining pool) is indeed shutting down. I was surprised too! It seems like they're switching their business model to a staking pool.
Over 90% of NFTs flow through one provider, Pinata. OpenSea, GME, and many other exchanges are all powered by Pinata, without which you would have a terrible experience buying and trading NFTs. Of which, NFTs are primarily traded on two platforms.
It's already centralized, all of it, from the blockchain to the "dapps" built on top of them.
Ungovernable doesn’t mean that the people involved can’t decide what to do. “Ungovernable “ meeans an external party can’t force them to do something they don’t want.
The dao fork proves this because some people decided not to roll back and forked the chain instead. The ecosystem decided which fork was the main fork but they both live on.
The wealthy actors are the ones dictating the transaction now and they also on top get paid for being rich. This does not sound like a "better financial system" for me. Also, don't forget the DAO Fork[0] where with the "ungovernable Blockhain" it was decided a transaction was not ok and it was removed?!
[0] https://ethereum.org/en/history/#dao-fork