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

>it would be profitable for Bitcoin miners to burn through over 24 terawatt-hours of electricity annually

So 0.02%[1] of the global per annum energy consumption? I'll gladly trade that to run an economy without violence and bring financial inclusion to 6 billion unbanked people.

[1] 24/109613*100 https://en.wikipedia.org/wiki/World_energy_consumption

>Because you don’t need permission to buy hashing power and participate in Bitcoin, there’s no way a “51% attack” can be stopped, except by outbuying your competitors

Incorrect, this author doesn't understand the minernode relationship. Miners do what users value or else users change the consensus system they value. DoubleSHA256->Script or Equihash etc etc

>In Bitcoin, acceptance of a change is signaled by the miners - once some percent of the miners agree, the change is accepted. This means that hashing power is used as a measure of voting power, and so the political system is essentially plutocratic.

Incorrect again. The author is mistaking how consensus-level changes, that users want, are coordinated among miners. BIP 9 was a method where users said "we'll wait for you all miners to coordinate amongst yourself a consensus change" which was used to delay. In the future Bitcoin will use BIP 8 which is "Miners prepare to have your old consensus rejected at flag point X or else your blocks will be orphaned.

>Bitcoin has been wildly unstable, with controversies and forks happening quarterly.

The bitcoin network is stable as a table. Bitcoin can't deny anyone from creating their own fork from consensus. This is a critical feature not bug, to be able to easily exit from the system. It prevents lock in that plague trusted third parties.

>I’d explain proof-of-stake here, except that I don’t totally understand it yet.

If you don't understand the second most prominent proposal for decentralized consensus, why are you writing a critique about blockchains? PoS is inherently broken from an economic perspective because it is no more "efficient" than PoW. Marginal Cost = Marginal Revenue.

If you have an incentive mechanism that says, "Do X and you get Y money" you're going to spend Xhttp://www.truthcoin.info/blog/pow-cheapest/

PoW = destroy X value in fiat space to gain Y value in Bitcoin space PoS = destroy X value in Ethereum-PoS space (via TVoM, meat-space work) to gain Y value in Ethereum-PoS

The value in PoW is that it's very hard to 'more efficiently' consume electricity than your competitor. All that PoS does is push that wasted work into hidden area or human space.

>Instead of a network of miners, you use a single host. That host maintains a secure ledger which contains the host state and its activity log, including all requests and their results. That ledger is then published for clients to actively sync and monitor.

Ah, So digicash. Which when it went out of business the market died because there was no coordinator any more to check double spends. Let's assume that the business never can go out of business. If I want to destroy the network, I can compromise one system and control the entire state of the database. Ok let's assume the system is uncompromisible. Oops the state just censored your 'secure' ledger because someone did something with it that the political class didn't like. "We'll host it in a country with 'just' laws" There is no such thing as "the public good" where all people benefit from a certain action. There will always be winners and losers in any policy decision. Now value is sapped from the system by constantly having to pay lawyers to defend your rights from encroachment by the state.

The author is right to question if everyone application needs to run on a blockchain (hint: they don't). But if you need trustless, robust, decentralized, uncensorable state to be agreed on by multiple parties, you're gonna need a blockchain

the post is talking about using blockchains as a systems tool to build a distributed ledger, not how to create a new cool crypto currency that will be more 31337 than bitcoin.

I think you're right that handling catastrophic failure is the key question for a hosted ledger. You have to find a way for the network to agree on who will rehydrate the balances, so to speak, into a replacement host, and you need to do it quickly. The whole network has to agree on this.

This isn't impossible to solve. You can establish, in the ledger itself, the process for migration after a catastrophic failure. You can set a party which will mediate the issue and decide on the solution. You set up rules for how to reconfigure the network, and trigger them when a corruption proof is published.

I agree it's less elegant than what decentralized consensus provides for handling bad nodes, but you really have to balance this against the expenditure of proof-of-work. The cost of a handling every ledger failure ever will almost certainly be less than the cost of proof-of-work.

Part of my point is also that it's a gamble, which I find questionable, that Bitcoin will become "the blockchain" in the future, because it still has a political reality, and that political reality has involved plenty of forks. So, my point is, between the cost and the political instability, PoW doesn't sustain it's claim.

> Blockchains specifically solve decentralized consensus.

Wrong. Blockchains specifically timestamp documents. Consensus is a different problem and blockchains don't even touch that.