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On blockchains and why secure ledgers don't require proof-of-work

pfrazee.github.io

31–40 of 61 posts

Re: On blockchains and why secure ledgers don't require proof-of-work

#31
It's fun to see this here after I've just spent some of the afternoon 'pitching' 'Centralised Ledger Technology'. Single source of truth, verifiable, secure, permissioned, efficient, scalable, the advertising copy writes itself (or would if you needed it to, rather than just taking any of the copy from hyperledger or simlar and fixing it up a bit). Any of the people selling private block chain solutions will generally tell you that there needs to be a strong political actor within a 'business network' that can insist on the use of the distributed ledger. The truth of course is that Mr Car Loader or Mr Fruit Picker who is lent on to run a node on the distributed ledger really couldn't care less about whether they are verifying other peoples transactions or not, they'd be just as happy with a web site that they fill the details in, or a signed email system. Indeed, they might ask - why should I be expected to run computation to secure bits of the value chain I never see, I just care about confirming what I've received and what I've passed on, and I can do that by digitally signing a transfer note.

I don't particularly think that using a central secure ledger is surprising or new, but I do think that politically the furor around DLT (and who knows, maybe one day CLT too) has provided us with a fantastic political opportunity to actually fix some of the horrendousness in financial software systems.

To my mind, even if the relevant technological change is pretty minor or nonexistent, this is an opportunity for us to replace a bunch of miserable systems duct taped together with more modern systems that have externally accessible APIs baked in from the start.

Re: On blockchains and why secure ledgers don't require proof-of-work

#32
post #24
post #11

Earlier quoted context omitted.

I think this obsession with consensus is a fad. Forks are ok as long as they can be merged in the short term. If something forks for a long time and stays forked, there is hardly any reason to establish a total order during the merge! Think of an IRC netsplit for example. One that happens for a few seconds may attempt to merge back the chats in some fair order they were made, in diff forks. But if the netsplit happen…

In the specific case of currency, practical double spends are a real issue. 'Merging' the state after a double spend requires either forcing the double spender to pony-up, or taking back money from those who received it without being aware of any wrongdoing. That is, unless you are fine with people printing their own currency. This is rather unique to the case of currency though. Specifically, the history of transact…

Everybody prints their own currency all the time. Currency is just promises made. Double spend is when you duplicate somebody else's promises that you are holding as an asset.

Re: On blockchains and why secure ledgers don't require proof-of-work

#33

Ugh. He completely misunderstands what PoW (or PoS) are for. The entire point of PoW is deciding between two valid & correct blockchain states. Alice owns a bitcoin. Alice validly signs a transaction transferring that bitcoin to Bob. Alice also validly signs a transaction transferring that same bitcoin to Charles. WHICH IS CORRECT? Neither is a forgery. Both signatures are valid. If Dave downloads the blockchain, or…

What I do not understand is why we couldn't build this onto a web of trust + proof of stake. It may require some more state during resolution, and might even require falling back to automatic service denial if there is a severe network interruption (say in the event of nuclear war), but I can't figure out why we couldn't have miners just sign a growing dag of transactions and once a subset of the dag is accepted by 51% of the stake that network can prune the excess data (all the signatures). Work timestamps into the signature process and pin the keys used to sign the dag as only those belonging outside the current resolution. If a key is used to sign a transaction that conflicts with it's own "Verified & Locked" signature then it's coins are burned, including for it's own transaction. So in your example, if Alice signs both transactions and she doesn't have the funds to fulfil both of them the transaction causes Alice to lose 100% of her money.

I'm sure there is a reason, and I vaguely recall some people talking about proof of stake a couple years ago, but I'm surprised we're still melting icecaps running ASICs out of China for new coins.

Re: On blockchains and why secure ledgers don't require proof-of-work

#34
post #19

Earlier quoted context omitted.

> Paul's system has no way of addressing this other than "trust the central authority to process transactions in the order they receive them". Thanks, pal, that's called e-cash, and was invented by David Chaum in 1983. Flatly wrong. Decentralized consensus is not a necessity to create trustless operation. Monitoring service operation via a secure ledger provides trustless operation. As I said, the point of PoW is to…

Hi Paul. I'm Brock. I hope we're not talking at past each other, but I read your post as proposing a system where there's a central party that computes transactions "in the open" in a way that third party observers can verify. That's hardly useless, but it's not a replacement for Proof of Work. PoW is for decentralizing the ability to choose between competing valid blockchains. It prevents double-spending by making t…

Hey Brock.

My argument is that decentralized consensus is actually a political solution. It has technical merits -- it makes it easier to deal with a host that breaks the contract, because there are lots of nodes, so you just 'route around' the faulty host's output. But that's a technical solution to a political problem: how do you deal with a bad actor. And we deal with that every day with existing services, by switching away from bad actors. You handle bad behavior politically. If we can lower the cost of a switching, and we can build accountability into the system, then we're getting the same kind of value that decentralized consensus provides at substantially lower system cost.

Re: On blockchains and why secure ledgers don't require proof-of-work

#35
post #20

Ugh. He completely misunderstands what PoW (or PoS) are for. The entire point of PoW is deciding between two valid & correct blockchain states. Alice owns a bitcoin. Alice validly signs a transaction transferring that bitcoin to Bob. Alice also validly signs a transaction transferring that same bitcoin to Charles. WHICH IS CORRECT? Neither is a forgery. Both signatures are valid. If Dave downloads the blockchain, or…

There is value in a blockchain beyond a ledger of currency, and some of that value still remains when using a centralized service. Specifically, if you want to offer a service where you can guarantee non-repudiation a centralized blockchain is a great solution. By non-repudiation, in the scenario of a double-spend whomever signed both transactions is 'on the hook' for both. This doesn't work for currency but works fo…

Where does the blockchain come in? As long as you have a signature from the central authority over two conflicting transactions, you can prove it has defrauded you.

Blockchains specifically solve decentralized consensus. It’s expensive and slow compared to using a central authority, but the advantage is that the system doesn’t suffer from a central point of failure.

Re: On blockchains and why secure ledgers don't require proof-of-work

#36
post #19

Earlier quoted context omitted.

> Paul's system has no way of addressing this other than "trust the central authority to process transactions in the order they receive them". Thanks, pal, that's called e-cash, and was invented by David Chaum in 1983. Flatly wrong. Decentralized consensus is not a necessity to create trustless operation. Monitoring service operation via a secure ledger provides trustless operation. As I said, the point of PoW is to…

Hi Paul. I'm Brock. I hope we're not talking at past each other, but I read your post as proposing a system where there's a central party that computes transactions "in the open" in a way that third party observers can verify. That's hardly useless, but it's not a replacement for Proof of Work. PoW is for decentralizing the ability to choose between competing valid blockchains. It prevents double-spending by making t…

[deleted]

Re: On blockchains and why secure ledgers don't require proof-of-work

#37

Ugh. He completely misunderstands what PoW (or PoS) are for. The entire point of PoW is deciding between two valid & correct blockchain states. Alice owns a bitcoin. Alice validly signs a transaction transferring that bitcoin to Bob. Alice also validly signs a transaction transferring that same bitcoin to Charles. WHICH IS CORRECT? Neither is a forgery. Both signatures are valid. If Dave downloads the blockchain, or…

What I do not understand is why we couldn't build this onto a web of trust + proof of stake. It may require some more state during resolution, and might even require falling back to automatic service denial if there is a severe network interruption (say in the event of nuclear war), but I can't figure out why we couldn't have miners just sign a growing dag of transactions and once a subset of the dag is accepted by 5…

> What I do not understand is why we couldn't build this onto a web of trust + proof of stake.

Because the incentives of nodes in a web of trust is not to tell the truth about how much money they have; their incentive is to prefer whichever chain says they have the most money.

With proof-of-stake, an arbitrary number of valid chains can be created from scratch in no time. How do we decide which is the right one? All nodes will prefer the chain that says they’re the richest, and the nodes that most efficiently can coordinate their lying will end up with all the money.

Proof-of-stake solves the wrong problem: the problem isn’t to decide who gets to extend the chain, the problem is deciding which chain to extend in the first place (there can be millions of valid PoS-chains).

Re: On blockchains and why secure ledgers don't require proof-of-work

#38
post #34

Earlier quoted context omitted.

Hi Paul. I'm Brock. I hope we're not talking at past each other, but I read your post as proposing a system where there's a central party that computes transactions "in the open" in a way that third party observers can verify. That's hardly useless, but it's not a replacement for Proof of Work. PoW is for decentralizing the ability to choose between competing valid blockchains. It prevents double-spending by making t…

Hey Brock. My argument is that decentralized consensus is actually a political solution. It has technical merits -- it makes it easier to deal with a host that breaks the contract, because there are lots of nodes, so you just 'route around' the faulty host's output. But that's a technical solution to a political problem: how do you deal with a bad actor. And we deal with that every day with existing services, by swit…

How do you "switch" from a global shared ledger that everyone uses to a shared ledger that no one uses? I mean, you an, you can fork Bitcoin and start your own, but what does that get you? No one else will use your coin. There will be no market for it and it will have no value.

I mean if you're REALLY lucky you'll start something that's as popular as Litecoin and it will be worth 1% of what your Bitcoins were worth.

Bitcoins are only worth anything because you can go anywhere in the world and people will accept that there is one and only one blockchain, and if you own bitcoins on that blockchain then you own them, period.

Proof of Work allows you to solve bad actors without switching away to a new network and losing all your Bitcoins. Your solution doesn't. If you have a centralized system that centralized party could refuse to honor your bitcoin holdings and wipe out your balance.

This really isn't a new solution. I was serious before when I said David Chaum's ecash (from 25 years ago) was an approximation of this .

Re: On blockchains and why secure ledgers don't require proof-of-work

#39

Ugh. He completely misunderstands what PoW (or PoS) are for. The entire point of PoW is deciding between two valid & correct blockchain states. Alice owns a bitcoin. Alice validly signs a transaction transferring that bitcoin to Bob. Alice also validly signs a transaction transferring that same bitcoin to Charles. WHICH IS CORRECT? Neither is a forgery. Both signatures are valid. If Dave downloads the blockchain, or…

Hey said this about proof of work.. is it wrong? It sounded good to me, but I never got into blockchain stuff.

>What is proof-of-work? Proof-of-work is a system for establishing “decentralized consensus.”

Agreeing about the order of events is very difficult in computer networks, especially if you can’t trust the other computers involved. Unfortunately, it’s also very hard to establish trust in a global network which aims to provide open participation. So, we need a way to agree on the order of events without establishing trust.

Proof-of-work solves that problem by putting the network on a trustworthy clock. It’s a kind of computation which takes a predictable amount of time to run, and which can’t be forged by a bad actor.

With proof-of-work, you can have multiple computers make additions to a blockchain without having them trust each other. That’s decentralized consensus.

Decentralized consensus is intended to mean that one entity can’t control the blockchain network. Any newcomer can participate, and ownership is equally distributed among the participants.

Re: On blockchains and why secure ledgers don't require proof-of-work

#40

Ugh. He completely misunderstands what PoW (or PoS) are for. The entire point of PoW is deciding between two valid & correct blockchain states. Alice owns a bitcoin. Alice validly signs a transaction transferring that bitcoin to Bob. Alice also validly signs a transaction transferring that same bitcoin to Charles. WHICH IS CORRECT? Neither is a forgery. Both signatures are valid. If Dave downloads the blockchain, or…

What I do not understand is why we couldn't build this onto a web of trust + proof of stake. It may require some more state during resolution, and might even require falling back to automatic service denial if there is a severe network interruption (say in the event of nuclear war), but I can't figure out why we couldn't have miners just sign a growing dag of transactions and once a subset of the dag is accepted by 5…

> I can't figure out why we couldn't have miners just sign a growing dag of transactions and once a subset of the dag is accepted by 51% of the stake that network can prune the excess data (all the signatures)

Because of Sybil attacks.

> So in your example, if Alice signs both transactions and she doesn't have the funds to fulfil both of them the transaction causes Alice to lose 100% of her money.

Remember, the goal isn't to punish Alice. She's losing 100% of the bitcoin no matter what happens. The goal is to assure Bob (or Charles) that the transaction they receive will be recognized as valid by the rest of the world.

If you're Bob, and you know that Alice can invalidate the transaction (e.g., burn the bitcoin you just received) by signing a second transaction in the future, why would you ever accept Bitcoin?

Don't punish Alice. Assure Bob.

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