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On the Instability of Bitcoin Without the Block Reward [pdf]

cs.princeton.edu

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Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#71

Post by lottin »

witweb wrote: post #37
elcomet wrote: post #24

Earlier quoted context omitted.

> I honestly hope that it's high enough to deter a nation state sized attacker. What's the point though? Bitcoin has no real use case apart from speculation.

So people living in countries without a stable currency due to hyperinflation don't count as a real use case? It's sometimes the only way they can secure their capital. I think that we need to think outside of our elitist western bubble more often. Not all people live in a stable democracy with (semi-)stable currencies.

BTC isn't a stable currency in case you haven't noticed. Do you actually have evidence of BTC being used as currency in any of these dysfunctional countries you talk about or is it just a supposition that you're making?

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#72

Post by davidgerard »

Paul-E wrote: post #12

One of the assumptions the authors make in this paper is that miners can turn their hardware on and off quickly, and that they will benefit financially for doing so. Mainly by paying lower electricity bills. It turns out the really big miners don't pay for electricity the same way you or I do. Big miners sign long term contracts for continuous consumption of energy, and don't save any money for turning mining hardwar…

Miners do turn their hardware off quickly, we saw this in November 2018. After a long period of profit, suddenly only the top-of-the-line miners were making money, and they just threw out a pile of stuff. Writeup I did at the time: https://davidgerard.co.uk/blockchain/2018/11/27/the-bitcoin-...

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#73

Post by hjorthjort »

0x64 wrote: post #63
cyphertruck wrote: post #28

Earlier quoted context omitted.

There is no such thing as “Proof of stake” to replace proof of work. Proof if work is a solution where you do not have to trust anyone, as the block is won by the person who finds the right math result, essentially a lottery. Proof if stake is either really proof of work that is less secure and obscured, or more often dimply giving the creators of the coin the power and your trust.... which reverses the entire point…

>Proof if work is a solution where you do not have to trust anyone, as the block is won by the person who finds the right math result, essentially a lottery. The same applies to Eth2's PoS network, as block proposers are randomly selected with on-chain randomness. Block rewards are also not a major source of income for a staker on Eth2 — the majority of income (>90%) comes from simply attesting the chain correctly. T…

> and one would need more than half of that total stake to have a chance at attacking the network

Actually 1/3rd to disrupt consensus, and 2/3rds + 1 to take control of the chain like you could with a 51% attack on a PoW chain, only you'd get almost immediate and complete control over the consensus.

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#74

Post by Kbelicius »

antocv wrote: post #50
cyphertruck wrote: post #28

Earlier quoted context omitted.

There is no such thing as “Proof of stake” to replace proof of work. Proof if work is a solution where you do not have to trust anyone, as the block is won by the person who finds the right math result, essentially a lottery. Proof if stake is either really proof of work that is less secure and obscured, or more often dimply giving the creators of the coin the power and your trust.... which reverses the entire point…

The way to understand this, ask if PoS would have been bitgold released in 2009. As bitcoin wasnt valued in 2009-2011, its value in USD was basically zero. Yet the cost of attacking the PoW even during that time was the cost of electricity which was higher than zero. PoS, if it was released in 2009 instead of PoW, the cost to attack it would have been zero, as the price of bitcoin was. There is a solution to this but…

> There is a solution to this but none of the shitcoins have it implemented, instead chosing to give the creators all the power and majority stake.

What is the solution you are thinking about? Interestingly enough, IIRC, the very first PoS coin did not give the creators all the power and majority stake.

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#75

Post by Leherenn »

Nextgrid wrote: post #53
elcomet wrote: post #24

Earlier quoted context omitted.

> I honestly hope that it's high enough to deter a nation state sized attacker. What's the point though? Bitcoin has no real use case apart from speculation.

Besides speculation there is a minority who does use it as an actual currency, often in countries where their domestic currency is unusable (sanctions, inflation, etc). Also, just because there isn't a use-case now doesn't mean it isn't valuable to keep a currency immune to government interference around just in case you end up having a use-case for it later.

There certainly are some valid use cases. But the current usefulness/energy consumption ratio is pretty dreadful, and from my point of view it's future is not looking very good either. If energy was free, then who cares; otherwise I think it's legitimate to question whether the valid use cases of a few thousand people (total shot in the dark here, numbers appreciated) is worth using the same amount of electricity as Argentina, a country with 45M people.

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#76

Post by will_pseudonym »

lottin wrote: post #71
witweb wrote: post #37

Earlier quoted context omitted.

So people living in countries without a stable currency due to hyperinflation don't count as a real use case? It's sometimes the only way they can secure their capital. I think that we need to think outside of our elitist western bubble more often. Not all people live in a stable democracy with (semi-)stable currencies.

BTC isn't a stable currency in case you haven't noticed. Do you actually have evidence of BTC being used as currency in any of these dysfunctional countries you talk about or is it just a supposition that you're making?

https://www.theguardian.com/technology/2016/dec/16/venezuela...

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#77

Post by p_l »

will_pseudonym wrote: post #76
lottin wrote: post #71

Earlier quoted context omitted.

BTC isn't a stable currency in case you haven't noticed. Do you actually have evidence of BTC being used as currency in any of these dysfunctional countries you talk about or is it just a supposition that you're making?

https://www.theguardian.com/technology/2016/dec/16/venezuela...

In Venezuela, BTC is heavily restricted towards friends of the regime, for whom it serves similar experience as having hoards of "hard foreign currency" did in USSR...

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#78

Post by lifty »

steve_gh wrote: post #69
xiphias2 wrote: post #3

This is the first interesting paper I see here on HN about Bitcoin. While many people think that Bitcoin's energy usage is too high, I honestly hope that it's high enough to deter a nation state sized attacker. Many Bitcoiners argue that miner rewards shouldn't decrease more, but at the same time it's too late to change the concensus on it.

Maybe we need a heavy Carbon Tax on Proof of Work cryptocurrencies. Using the energy consumption of Argentina to verify financial transactions does not fit with moving to a Net Zero economy.

We definitely need a heavy carbon tax on any energy production that has negative externalities. I don't care if its cryptocurrency, video gaming, datacenters or dryers, if it consumes a lot of electricity we need to incentivise people to use less of it or use energy from sources that have smaller carbon footprints. Same should be done for cars.

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#79

Post by kybernetikos »

Pungsnigel wrote: post #62
kybernetikos wrote: post #52

Earlier quoted context omitted.

Surely with a deflationary currency, interest rates would need to be significantly higher, making it harder to borrow the capital you need to start a business. As someone with capital the expected rate of return will have to be high to make it worth lending rather than just holding on to it in a deflationary situation.

Yes and no. Higher savings would also mean more capital to load from. Expected return on investment would be higher, which is probably just a good thing. Lots of non-profitable companies today can keep surviving without doing any real good due to money being cheap.

Those savings would be distributed, and difficult to access, especially if they are primarily relying on deflation to increase their value.

Saying that the expected return would be higher is just the other side of saying it would be harder to find capital to start businesses.

> Lots of non-profitable companies today can keep surviving without doing any real good due to money being cheap.

This seems like a huge topic on its own. If there's an 'ideal' availability of money to ensure that companies are providing value, just switching to a supply limited currency is extremely unlikely to luck into selecting the right value. In fact, because it makes it harder to adjust things it makes it pretty much a certainty that at least at some point the wrong value will be selected.

Re: On the Instability of Bitcoin Without the Block Reward [pdf]

#80

Post by lottin »

will_pseudonym wrote: post #76
lottin wrote: post #71

Earlier quoted context omitted.

BTC isn't a stable currency in case you haven't noticed. Do you actually have evidence of BTC being used as currency in any of these dysfunctional countries you talk about or is it just a supposition that you're making?

https://www.theguardian.com/technology/2016/dec/16/venezuela...

They say nobody uses it but a "tiny minority". So basically what we already knew, BTC adoption as a currency is anecdotal even in those dysfunctional places where according to its proponents it's particularly suited for.
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