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Cryptocurrency Blockchains Don’t Need to Be Energy Intensive

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

#161
post #144
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…

What I fail to understand, and thanks to your explanation, is why not use a central trusted ledger which would synchronize all transactions. It could surely work at the current speed of bitcoin and relieve the entire planet of the energy cost of bitcoin, providing the same safety that no double spend could happen. All you'd need is a small private army, a few lawyers, an historically accepted jurisdiction, and you'd…

This is called the state backed banking system.

Eventually they will make all your money digital. They will track everything you buy.

Then at the very least they will sell your information to advertisers, and at worst retain totalitarian control over all your purchasing power.

Its already happening in China - the state has the power to prevent people from travelling etc. based on their "social credit"

The US is making a CBDC (central bank digital currency). No matter how pure the intentions of creating a government backed digital currency are, it will degenerate into a means of control

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

#162
post #88

No matter how many non-PoW shitcoins you make, the main one (BTC) is not going to change and remains the dominant one . You can't solve the problem by creating more shitcoins, only by crashing the whole field into the ground.

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.

Bitcoin is like the digital gold. We can all agree on that. I don’t understand why the maxis can’t be happy with that and have to sully any other competitor in the space that are actually trying to be a currency or dozens of other potentially useful things. Bitcoin is obviously not good for small and fast transactions for example.

Designing a new blockchain that is good at that is innovation. Not a “shitcoin”.

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

#163
post #40

Earlier quoted context omitted.

Bitcoin is far from #1 in terms of transactions per day which seems like the only important measurement of adoption.

The absolute number of transactions is of little importance. Bitcoin moves around a billion+ dollars an hour. Ethereum is 1/10 of that. So Bitcoin is definitely #1 in terms of transacted value per day, which is the only important measure of adoption.

Not true. Ethereum moves about 10 billion a day while Bitcoin moves about 9 billion a day. https://money-movers.info/

This is just comparing the base assets, adding in stablecoins makes the gap even larger with Ethereum moving 27 billion and Bitcoin moving 9 billion.

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

#164
post #53

Earlier quoted context omitted.

Bitcoin will eventually fade away, since the only significant thing that's actually happening in crypto space is actually smart contracts, and BTC will never implement that. In 10 years it it will be a historical curiosity. Also - shitcoins? So DOT, ALGO are shitcoins? You seem out of the loop.

Smart contracts don't need to be implemented at the base layer, you can have other layers and protocols and still transact in Bitcoin. There is rsk, sovryn and rgb on lightning and you can still use Bitcoin with ethereum or other smart contract platforms.

All of those are custodial solutions which defeats the purpose of blockchains.

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

#165

Earlier quoted context omitted.

PoS is a pretty broken system imo, it essentially codefies "rich gets richer" into the protocol. The biggest holders now control both the supply on the exchanges and the protocol itself. It creates all kinds of weird issues (for example, what happens if an attacker gets a hold of a significant percentage of the coins, now they also have a great control over the network). Stakers don't have the same pressure to sell t…

PoW empirically isn't secure. Attacks already happened, most notably on ethereum classic. If it was possible to rent enough hashpower all PoW blockchains would already be attacked because daily mining rewards are trivial compared to potential gains. The actual security relies on obfuscated proof of stake - how hard it is to attain enough mining hardware. Even so, attacking bitcoin is relatively cheap - even starting…

> Such an attack is impossible in PoS, because unlike mining chips, acquiring enough staking tokens is simply impossible for sufficiently distributed coins - there isn't enough for sale and most owners are anonymous, making sanctions unenforceable.

This is only true in the absence of software bugs. In the presence of buggy node software, a worm can spread through the network, compromising all the private staking keys. In this way the whole network can be subverted by gaining access to secret information (private keys). This attack is not possible with PoW.

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

#166
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 a…

There are a bunch of ways in which you're not exactly correct here.

First, you're describing a very particular implementation of PoS. Not all PoS implementations include slashing. This isn't a mere technicality: the most popular implementation of PoS (as measured by market cap) is Cardano's and it doesn't include slashing. And not all PoS implementations involve randomly choosing a validator.

The bigger problem here is that proof of stake is actually a misnomer because doesn't actually provide proof, period--it's a consensus algorithm, not a proof algorithm. That's fine if you're actively connected to a bunch of nodes, because you can resolve double spends by polling the network to find out the consensus. But if you're only connected to two nodes and those two nodes are showing you two different spends of the same balance, you have no way to resolve that conflict. In PoW (a real proof algorithm) you simply look at the longer chain. In PoS, there's no way to actually enforce the longer chain, because there's no cost to producing a longer chain. This is a problem which occurs in practice when nodes newly connect to a network or reconnect after a long absence.

Slashing does nothing to address this issue. If I'm running a PoS validator node, I can stake coins, unstake them, and then spend the coins. Now I've got a free license to mine blocks without risk of slashing. I can mine blocks by simply validating blocks that say that I never unstaked. And I'm at no risk of slashing because I've already spent the coins: there's no balance to slash.

You alluded to an attempted solution with "it is solved by randomly choosing which validator will create the next block according to an algorithm that all the nodes follow" but that doesn't work: a provable random function can choose a validator which creates artificial scarcity, but there has to be a fallback in case validators drop offline, otherwise a downed node would grind the entire chain to a halt as soon as it was chosen as a validator and doesn't validate a block when it's supposed to. The malicious validator can use this because there's no temporality stored on-chain: you just find a situation where your staking address is the fallback node and claim that the validators who were chosen by the random function validated late, and nobody can prove you wrong. This may sound suspicious, but in fact these fallbacks happen in practice. To create a believable chain after this, you have to create a situation where a lot of validators drop off and are replaced by nodes you control. This also looks suspicious, but again this also happens in practice: for example if AWS S3 US East VA goes down, there will be a huge number of validators that drop offline.

Probably the most thorough explanation of this type of attack and the theory behind it can be found in On Stake and Consensus[1].

There's some debate on the importance of this attack--Vitalik Buterin calls this "weak subjectivity" and has written about it in length[2]. But to say he's not concerned about it would be inaccurate; he says, "actually implementing a proof of stake algorithm that is effective is proving to be surprisingly complex"[3]. That sentence was written in 2014 and Ethereum still does not rely on proof of stake in 2021--be assured that if in seven years Vitalik Buterin has not satisfactorily solved the problem, it's not trivial. I would caution anyone extolling the virtues of Proof of Stake from overstating their case--PoS is not a panacea and presents many challenges of its own.

[1] https://download.wpsoftware.net/bitcoin/pos.pdf

[2] https://blog.ethereum.org/2014/11/25/proof-stake-learned-lov...

[3] https://blog.ethereum.org/2014/10/03/slasher-ghost-developme...

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

#167

Earlier quoted context omitted.

Another way to describe this is that PoW is a Cybil resistance measure.

Although just saying that doesn't really tell anyone much, who doesn't already know. A Sybil attack is the creation of a bunch of identities to subvert a system that is attempting to distribute power amongst a bunch of participants. The Sybil resistance of these schemes comes from allocating power in proportion to some form of commitment of a scarce resource, which could be indigenous to the system (e.g. proof of sta…

https://en.wikipedia.org/wiki/Sybil_attack

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

#168
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…

> The problem proof-of-work solves is double spending,

That doesn't seem to be my understanding. In my mind the problem proof of work solves is how quickly new blocks can be generated, thus limiting the supply of new blocks and giving an incentive to move the head pointer to an agreed upon next value (by granting coins to the miner who was able to compute the value).

Double spend is solved due to the single branch tree nature of the chain, since that block can validate that the coin hasn't been spent within that one block, nor in previous blocks (and side blocks can be ignored).

Proof of work has nothing to do with that, any system that can encourage everyone to agree on the next block does the same prevention of double spend.

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

#169
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…

There are two solutions you're proposing, each of which has problems:

1. You're introducing a requirement that all parties who wish to participate in the network must have diverse connections to the network. In practice many nodes do not meet this requirement. If a new node connects to only a few nodes, those nodes may return conflicting chains. With PoW, a longer chain has significantly more computational effort behind it even if it's only ahead by one or two blocks, so it's easy to prove that the longer chain is the valid one. On PoS, there's no such limitation, and a time limitation doesn't really address the issue (see On Stake and Consensus[1] for a more detailed explanation). Vitalik Buterin calls this "weak subjectivity"[2].

2. Introducing a concept of "dis-trusting". The implementation of this in practice is "slashing", but it doesn't work: I can participate as a legitimate actor in the network, transfer my coins to another address, and then use my original, "trusted" address to validate a chain of blocks which include spends not included in the consensus chain. A new entrant to the network, having no knowledge of the consensus chain, might receive the consensus chain and my malicious chain, and have no way of ascertaining which chain is valid: the consensus chain shows me unstaking and spending my coins, but my chain shows me continuing to stake and holding on to my coins.

[1] https://download.wpsoftware.net/bitcoin/pos.pdf

[2] https://vitalik.ca/general/2020/11/06/pos2020.html

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

#170
post #71

Earlier quoted context omitted.

PoW also codifies "rich gets richer" - mining begets return on invested capital in exactly the same way that PoS does. In fact, arguably PoW is worse, because it has economies of scale that PoS does not have, so the rich truly do have an edge in PoW.

A PoW miner has to spend to cover their costs, a staker doesn't have any cost to cover, providing a cryptographic signature requires no energy on an ongoing basis, just an initial investment. PoW requires constant investment or you'll be left behind.

That isn't a counter argument to the rich get richer. POW is still a race to the bottom that favors the well funded.
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