Cryptocurrency Blockchains Don’t Need to Be Energy Intensive • Hacker News Board

Re: Cryptocurrency Blockchains Don’t Need to Be Energy Intensive

#131

Post by fleddr » Mon, Jul 05, 2021, 2:37 PM UTC

pinkybanana wrote: post #105

fleddr wrote: post #93

Earlier quoted context omitted.

No, they are far from the same. It's true that BTC mining is capital intensive, yet it is highly competitive and risky, and most miners get a decent profit, yet need to sell the vast majority of mined coins to run their operation. Miners can never move on some parabolic increase of wealth as the very protocol itself prevents this. Rather, we should look at holders. Bitcoin is fair in the sense that it does not have r…

I wouldn't say BTC is fair, but it is clearly fairer. With PoS coins, it is clear that minting new coins will heavily centralize for exchanges and big holders. With BTC, miners are clearly categorized as separate economic actor, where the skillset and capital needed to mint new coins is very different from let's say operating an exchange.

I have a feeling that there's far too much emphasis on mining from a wealth perspective. The vast majority of Bitcoin is owned by a few thousand whales combined with many millions of smaller holders.

There seems to be this narrative where some people believe miners are minting and then holding all the coins, getting ever richer, but this is plain false.

It would be true with PoS though, so agree.

Re: Cryptocurrency Blockchains Don’t Need to Be Energy Intensive

#132

Post by shawnz » Mon, Jul 05, 2021, 2:40 PM UTC

fleddr wrote: post #117

shawnz wrote: post #106

Earlier quoted context omitted.

With PoW, you do nothing except maintain your mining hardware and burn electricity. With PoS, you do nothing except maintain your staking hardware and burn the time value of the money you are staking. From that perspective there is no difference. The difference is that with PoW, the richest participants can afford the most efficient hardware, giving them a super-linear advantage. In PoS, it's still true that the "ric…

Are you serious? You equate running a complicated, deeply competitive business with highly variable yields (can even be negative) with just parking money, and call both "doing nothing"? If you reason like that, I suppose in your world fireworks is the same thing as a rocket bringing us to Mars? Is running Amazon and making a profit the same thing as just milking interest from a bank account? These differences aren't…

> You equate running a complicated, deeply competitive business with highly variable yields (can even be negative) with just parking money, and call both "doing nothing"?

No, what I am really saying is that PoW mining and PoS staking aren't so dramatically different in complexity like you are saying. They are actually both complicated businesses with variable yields. The only difference is that with PoW, the benchmark is electricity cost, whereas with PoS the benchmark is the other investments which you could have invested your staking money into.

Re: Cryptocurrency Blockchains Don’t Need to Be Energy Intensive

#133

Post by bombcar » Mon, Jul 05, 2021, 2:42 PM UTC

cryptica wrote: post #114

erdos4d wrote: post #88

Earlier quoted context omitted.

This is only because crypto is still a curiosity. Once a coin gains enough mass adoption to actually function as digital cash by normal people, it will leave Bitcoin in the dust. My bet is on Monero for that, but whether I am right or not, I'm 100% certain that coin won't be Bitcoin.

I think this conclusion is correct. I can think of two reasons why no other token has been able to surpass Bitcoin: - Network effects arising as a result of having many crypto markets which use BTC as the base currency. This gives BTC a lot of exposure on trading platforms. BTC is therefore a gateway to the crypto ecosystem; kind of like a reserve currency. - Most big mainstream investors don't have any interest in a…

Much of the BTC as base currency isn’t actually BTC on the blockchain - but “BTC” held by the exchange and transferred between customers via a database and NOT on chain.

Re: Cryptocurrency Blockchains Don’t Need to Be Energy Intensive

#134

Post by sktrdie » Mon, Jul 05, 2021, 2:46 PM UTC

fleddr wrote: post #93

Slartie wrote: post #70

Earlier quoted context omitted.

> nobody can just become richer because they started rich Right. In PoW, they need access to limited semiconductor supplies and cheap electricity. Which are two things that can be bought with...what was that stuff called...? Ah, yes: money! So PoW does just the same - the rich tend to get richer - but it adds the necessity to cause unnecessary environmental pollution on the scale of an entire country to it. Oh, and a…

No, they are far from the same. It's true that BTC mining is capital intensive, yet it is highly competitive and risky, and most miners get a decent profit, yet need to sell the vast majority of mined coins to run their operation. Miners can never move on some parabolic increase of wealth as the very protocol itself prevents this. Rather, we should look at holders. Bitcoin is fair in the sense that it does not have r…

But with 1,000 BTC you can get more coins from within the system by buying lots of rigs with those 1,000 coins & hence mine more coins. So PoS and PoW are quite similar in that regard.

I think the problem with PoS is not "rich get richer" but the lack of fair redestribution. In PoW miners are economically forced to sell their mined coins to pay for energy bills. This redistribution is fair as it happens on the free market (exchanges). This doesn't really happen in PoS.

Re: Cryptocurrency Blockchains Don’t Need to Be Energy Intensive

#135

Post by hypertele-Xii » Mon, Jul 05, 2021, 2:48 PM UTC

aazaa wrote: post #107

> The granddaddy of all consensus mechanisms—behind Bitcoin, Litecoin, Monero, and (for the time being at least) Ethereum—is called proof of work. Essentially, PoW makes adding transactions to the blockchain computationally—and therefore financially—very expensive, so as to discourage fraudulent activity. ... This passage reflects a deep-seated, widespread misunderstanding of how/why Bitcoin works. I suspect the auth…

I don't get it.

Suppose a bad actor tries to double spend. They have to cryptographically sign both transactions, so the whole network will eventually receive knowledge of both transactions.

Why can't the network simply wait for some duration of time before accepting a transaction, to verify that no double-spends propagate from elsewhere?

If double spending is ever detected from a party, that party is dis-trusted by the network. The network will de-prioritize processing transactions from dis-trusted parties. Problem solved?

Re: Cryptocurrency Blockchains Don’t Need to Be Energy Intensive

#136

Post by fleddr » Mon, Jul 05, 2021, 2:48 PM UTC

shawnz wrote: post #122

username90 wrote: post #116

Earlier quoted context omitted.

Mining coins is a risky business, you can very easily lose money there. Proof of stake isn't, you have codified it into the inner workings of the coin that the rich gets richer. Not through interest or banking or investment returns, its just the fundamental law that the rich get richer. That is a significant difference. It is like, imagine if USA had written in the constitution that the rich should get richer? Would…

You can lose money staking too, in exactly the same way. The staking reward needs to be greater than the return of whatever else you could have invested your money in instead. If the staking reward ends up being lower, then you are effectively losing money. Just like how when mining in a PoW coin, you are effectively losing money if the coin reward becomes less than the electricity cost. It's no different from that p…

You have a very odd grasp of reality.

If I invest in Bitcoin and its price increased by 10%, I did not lose money if it turned out that real estate would have gained by 20%. I still gained 10%. Actually, only if I sold it.

That's not "losing money", it's not maximizing returns.

Further, you're still missing the double effect of staking. With staking your portfolio value will depend on the price of the token, yet since you staked it (it's locked up), it's a paper win/loss. Further, regardless of that, you get NEW coins for free.

Further, it's not linear at all. It's whatever the token does, which can be linear, parabolic, anything.

Re: Cryptocurrency Blockchains Don’t Need to Be Energy Intensive

#137

Post by fogof » Mon, Jul 05, 2021, 2:49 PM UTC

aazaa wrote: post #107

> The granddaddy of all consensus mechanisms—behind Bitcoin, Litecoin, Monero, and (for the time being at least) Ethereum—is called proof of work. Essentially, PoW makes adding transactions to the blockchain computationally—and therefore financially—very expensive, so as to discourage fraudulent activity. ... This passage reflects a deep-seated, widespread misunderstanding of how/why Bitcoin works. I suspect the auth…

To include the whole passage you are talking about:

> The granddaddy of all consensus mechanisms—behind Bitcoin, Litecoin, Monero, and (for the time being at least) Ethereum—is called proof of work. Essentially, PoW makes adding transactions to the blockchain computationally—and therefore financially—very expensive, so as to discourage fraudulent activity. At the same time, users who go to the trouble of creating valid blocks, known as mining, are rewarded with cryptocurrency.

I would say this passage gets the facts totally correct. The author doesn't say that Proof-of-work has to do with the validity of transactions, they say it has to do with the validity of blocks.

Indeed, it can't be easy to make valid blocks or double spending would become a problem as you say. Not sure why you think this reflects the misunderstanding of the inherent costs of consensus systems.

Re: Cryptocurrency Blockchains Don’t Need to Be Energy Intensive

#138

Post by shawnz » Mon, Jul 05, 2021, 2:51 PM UTC

fleddr wrote: post #136

shawnz wrote: post #122

Earlier quoted context omitted.

You can lose money staking too, in exactly the same way. The staking reward needs to be greater than the return of whatever else you could have invested your money in instead. If the staking reward ends up being lower, then you are effectively losing money. Just like how when mining in a PoW coin, you are effectively losing money if the coin reward becomes less than the electricity cost. It's no different from that p…

You have a very odd grasp of reality. If I invest in Bitcoin and its price increased by 10%, I did not lose money if it turned out that real estate would have gained by 20%. I still gained 10%. Actually, only if I sold it. That's not "losing money", it's not maximizing returns. Further, you're still missing the double effect of staking. With staking your portfolio value will depend on the price of the token, yet sinc…

That aspect is the same as PoW. PoW rewards also depend on what the value of the coin does.

You are right that you wouldn't normally consider alternate investments like that. But with PoS, where the only cost is the time value of the money staked, it is the only thing to compare.

Re: Cryptocurrency Blockchains Don’t Need to Be Energy Intensive

#139

Post by [deleted] » Mon, Jul 05, 2021, 2:57 PM UTC

fleddr wrote: post #93

Slartie wrote: post #70

Earlier quoted context omitted.

> nobody can just become richer because they started rich Right. In PoW, they need access to limited semiconductor supplies and cheap electricity. Which are two things that can be bought with...what was that stuff called...? Ah, yes: money! So PoW does just the same - the rich tend to get richer - but it adds the necessity to cause unnecessary environmental pollution on the scale of an entire country to it. Oh, and a…

No, they are far from the same. It's true that BTC mining is capital intensive, yet it is highly competitive and risky, and most miners get a decent profit, yet need to sell the vast majority of mined coins to run their operation. Miners can never move on some parabolic increase of wealth as the very protocol itself prevents this. Rather, we should look at holders. Bitcoin is fair in the sense that it does not have r…

[deleted]

Re: Cryptocurrency Blockchains Don’t Need to Be Energy Intensive

#140

Post by bouncycastle » Mon, Jul 05, 2021, 2:59 PM UTC

aazaa wrote: post #107

> The granddaddy of all consensus mechanisms—behind Bitcoin, Litecoin, Monero, and (for the time being at least) Ethereum—is called proof of work. Essentially, PoW makes adding transactions to the blockchain computationally—and therefore financially—very expensive, so as to discourage fraudulent activity. ... This passage reflects a deep-seated, widespread misunderstanding of how/why Bitcoin works. I suspect the auth…

PoW is not the only way to solve double spending (and make sure that the blocks are ordered in a particular timeline), in PoS it is solved by randomly choosing which validator will create the next block according to an algorithm that all the nodes follow. So there's no race to find the next block, the block producer is known in advance.

What's more, in PoS, you have guaranteed finality, meaning that after a certain amount of blocks, you can be sure that the order will not change. This is superior to the probabilistic finality offered by PoW.

> loses everything spent if the attack fails

They don't lose everything, they still get to keep the mining hardware and can retry the attack again. They can also use a "selfish mining" strategy and earn block rewards that subsidize their attack (by earning more than their fair share).

In PoS on the other hand, the attacker loses everything after an attack and cannot try again. This is because attackers get slashed (their stacked coins are destroyed). If they want to try again, they need to acquire more coins.