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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]

#211

Post by DennisP »

tromp wrote: post #27
chrisco255 wrote: post #15

Why can't Bitcoin simply transition to proof of stake after mining dries up? Once there are few or no bitcoins left to mine then PoW is a lot of ceremony for very little security gain at that point (and perhaps opens up risks that this paper points out).

> simply transition to proof As opposed to Proof-of-Work, Proof-of-Stake is not as simple as it sounds. Any implementation faces a myriad of design challenges and potential attacks. Things like "nothing-at-stake", "costless simulation", "stake grinding", and "long-range attacks" [1]. And in the end, there is no objective truth about the state of the chain, as there is with PoW's simple longest chain rule. There is no…

Proof-of-stake has progressed quite a bit since that document was published in 2016. For example, nothing-at-stake is fixed by slashing stake when anyone submits a proof that the staker signed competing branches.

(But I agree that Bitcoin is unlikely to change.)

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

#212

Post by DennisP »

ajkdhcb2 wrote: post #141
intotheabyss wrote: post #95

Earlier quoted context omitted.

The bitcoin community would be wrong.

It seems very simple to me. The network would be controlled by custodians including exchanges and banks. And under an attack the network would be over: the malicious stakers can basically pay themselves and suffer no cost to continue the attack. Conversely with PoW there is a sustained huge expense to continue to perform an attack, and the PoW can be changed by a fork. I would never consider this to be acceptable. No…

Malicious stakers could not reverse transactions without losing their stake. It's as if a 51% attacker in PoW got their mining rig burned down.

Malicious stakers could indefinitely conduct a censorship attack. To address this, the PoS equivalent of changing the hash function would be to fork the chain and leave out the attackers' stake.

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

#213

Post by bouncycastle »

tromp wrote: post #160
uncletammy wrote: post #114

Earlier quoted context omitted.

This is a good point that the authors don't touch on. There are many coins secured by sha256 and I'm sure many more will come along before BTC finishes it's release schedule. Switching to any one of them is likely to provide more revenue than just attacking the network for a little extra transaction fee money. This is one of those times it's really useful to make a distinction between bitcoin the currency and bitcoin…

All other sha256 coins combined only account for less than 2% of bitcoin's hashrate, so this doesn't really change the arguments.

No, this is not what we are discussing. We are discussing using bitcoin's hashrate to mine other coins. No modification to bitcoin is needed, the other coins simply need to be aware of bitcoin and be able to verify bitcoin's blocks. Other coins can have an auxillary mining algorithm too, or even merged mined with other coins besides BTC, doesn't have to be sha256.

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

#214

Post by teslaberry »

moralsupply wrote: post #106
steve_gh wrote: post #69

Earlier quoted context omitted.

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.

Gaming uses more energy than Bitcoin. Shall we place carbon taxes on gaming too? How about a carbon tax on Gold and Silver, and on the whole of the banking system, which also consume more energy than Bitcoin? In any case, feel free to contact the Bitcoin CEO and discuss your ideas on how to implement those taxes.

carbon taxes are the solution for everything. in fact, we should tax the carbon that is consumed in the process of effectuating and collecting carbon taxes themselves. and to get even more meta, carbon tax the effort spent in taxing that effort to collect the tax. it keeps going. infinite carbon taxes!

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

#215

Post by woobilicious »

mumblemumble wrote: post #192
andruby wrote: post #190

Earlier quoted context omitted.

That can’t stay that way, at least not in real terms (taking inflation into account)

Although that would arguably put Bitcoin in the same deflation trap that led to the collapse of the gold standard. A money supply that grows more slowly than the economy that rests on top of it just might be the stuff that Malthusian dreams are made of.

The gold standard was the least of the Bretton Woods Era problems.

I also wouldn't call this new fiat regime with rising property prices and stagnant wages as a "net win" over Bretton-Woods, the gold standard was probably the only thing keeping the federal spending under control, and real wage growth up.

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

#216

Post by woobilicious »

piercebot wrote: post #198
ynik wrote: post #120

Earlier quoted context omitted.

Or maybe there's a foreseen flaw in bitcoin. It's based on public-key cryptography which can be broken by quantum computers. Those don't exist yet (at least not in any form relevant to cryptography in practise), but I think they will by 2140.

People often bring up the Bitcoin algorithm to make arguments against it, but don't seem to acknowledge the fact that the protocol is mutable. If the sha-256 algorithm was cracked such that BTC blocks could be solved instantly, the existing miners would have to choose between: 1. No more income, or 2. Adopt a quantum-resistant protocol. Market economics being what they are, I think it's safe to assume that BTC would…

From my understand, and I'm no expect, but the only known quantum attack against symmetrical crypto like sha-2 is [Grover's](https://en.wikipedia.org/wiki/Grover%27s_algorithm), and the recommended advice is to double the key size, so sha-256 would probably see a huge boost in "hash rate" but not be broken, a move to sha-512 would work probably work.

The problem is that Shor's algorithm breaks asymmetrical crypto used in the wallet signing, that means you can forge ownership of any transaction outputs, which would completely shatter confidence in the coin before they could migrate all ownership of all funds to a new post-quantum signature scheme, this problem is a lot harder to solve compared to a hash algorithm upgrade.

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

#217

Post by tromp »

hulahoof wrote: post #207
tromp wrote: post #155

Earlier quoted context omitted.

One that has a fixed block subsidy. After any amount of time, whether years or decades or centuries, it will have been distributed evenly over all that time. Rather than having 50% distributed in just the first 4 years, and only crumbs in later decades. Gold is much more like the former.

I don't see how that logic follows, if this was a fixed block subsidy over the first 4 years instead of just 50%, surely the situation you are describing would be worse ?

There's a huge difference between fixed forever and fixed for only 4 years and then dropping to 0. Bitcoin is closer to the latter (instead of dropping to 0, it keeps halving every 4 years). Gold is closer to the former.

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

#218

Post by michaelscott »

herodoturtle wrote: post #88
michaelscott wrote: post #86

Earlier quoted context omitted.

A much bigger assumption is that this will even be necessary, considering the last BTC mined will be in 2140. With such a long time horizon any prediction is basically fanciful guesswork; at that time miners might have all moved to renewables after they become cheap enough, we may have new forms of energy generation which make supply both super easy and cost negligible, or Earth may have entered a post-apocalyptic st…

I read this comment with interest, thanks for sharing. Makes good sense to me. If I may ask, do you think the distribution of bitcoin will be somewhat equitable as we approach 2140? And do you you think it will actually become a medium of exchange as originally hoped? Or will it remain a store of wealth only (as things currently seem to indicate)? And if it indeed remains only a store of wealth, will said wealth be d…

Again I can't really say much about what could happen at this point. History "behaves" too bizarrely, especially over such a long time period, and inflection points are usually completely random and unpredictable (black swans), being only obvious in retrospect.

One thing I can be fairly confident won't happen is that BTC will become a medium of exchange. This is because BTC mechanically behaves more like a commodity than a currency, which means that (for various, immutable technical reasons) it's not able to match the speed of settlement, the price stability and the reliability of supply that are required for a good medium of exchange.

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

#219

Post by pjerem »

jki275 wrote: post #195
loceng wrote: post #82

Earlier quoted context omitted.

Someone made a comment the other day stating that a 50%+1 attack is more and more likely as it's becoming only a handful of people doing the mining.

That's technically true. But. A 50% attack has the problem that an attacker with enough hash power to do it has enough hash power to simply mine on chain legitimately and create blocks and get 50% of the block reward and make tons of money that way, while actually doing the attack decreases confidence in the chain and might end up with massive losses in price.

Your point makes sense if your goal is making money.

If what you want is more power over the global economy. As a government, you may have more interest, say, in stopping Tesla rise (if you consider that making BTC a 0.1$ asset would harm them) than making some "tons of money".

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

#220

Post by Mordisquitos »

cwkoss wrote: post #184
Mordisquitos wrote: post #145

Earlier quoted context omitted.

Exactly. To be precise, carbon tax energy , so that everything that uses energy needs to factor carbon emissions in their costs. The whole point of carbon taxes is to internalise the cost of carbon emissions into everything, to put the market to work on better alternatives. Limiting carbon taxes to any particular service or product would be a market distortion and would defeat the purpose. If carbon taxes hurt crypto…

Carbon tax carbon emitting energy. Don't tax solar panels, that would be short sighted and regressive.

Of course, I meant applying a carbon (i.e. "carbon-dependent") tax at the point of energy production, not on energy production itself in abstract. I can see how it could give that impression by how I phrased my second paragraph in terms of energy-intensiveness rather than carbon-intensiveness, but my intention was to abstract away which specific source of energy each industry made use of, assuming a unified and homogeneous electrical grid.

Ironically, much that I am critical of criptocurrencies' energy expenditure, they may be more adaptable to carbon taxation than conventional digital transaction networks (SEPA, Visa, etc.) because they are in fact more centralised in their energy consumption. A cryptocurrency mining outfit could somewhat easily become self-sufficient in terms of energy relying on wind power or solar power, becoming immune to carbon taxation (and innocent in terms of carbon emissions). The energy consumption from conventional payment networks, even though it is not as inherently energy-expensive as cryptocurrencies, is so massively distributed across countries and businesses at multiple levels that they could not simply go non-carbon overnight.

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