5 ms·

It isn't a core tenant of PoW that the resources needed to participate are hard to get, it just so happens that if it is profitable to 'mine', the hardware need

It isn't a core tenant of PoW that the resources needed to participate are hard to get, it just so happens that if it is profitable to 'mine', the hardware needed will become scarce. That actually creates a problem, much like in the Bitcoin PoW algorithm, that its easy for the hardware production and ownership to become centralized. PoW also requires large energy consumption as participants will inevitably enter a race to compute the fastest. PoS has the benefit that you still lock away capital, much like in PoW, but rather than backing that capital by money put into hardware and electricity, you cut out the middle man and base the capital off of the value of the network token. Pos also has added security benefits. Vitalik Buterin explains this very well: If someone attacks a PoW blockchain by getting 51+% of the hashing power, the network's only response to recover from the attack is to change the hashing algorithm. This will likely force the network to abandon ASICs since hardware wouldn't exist, and move (at least temporarily) to general-purpose CPUs/GPUs. As soon as the hashing can be done with general purpose computers, the game is over, and the attacker can attack forever without any extra loss of capital, other than electricity. PoS has the benefit that the network can simply cause the attacker to lose their funds and no longer have a stake. If the attacker wants to continue the attack, they have to buy more of the network token to be equal to 51% of the staked value. This will cause a price increase. Each time the attacker attacks, the network will force them to lose their stake, and their money. The attacker won't be able to keep this going forever.

castratikron 9y ago
Couldn't another response to someone attacking with 51% mining be to physically destroy their hardware? The Kuwait oil fires were a result of someone wanting to limit control of wealth production.
- Mtinie 9y ago
  > Couldn't another response to someone attacking with 51% mining be to physically destroy their hardware? Sure, if you can identify the location of the hardware and you happen to be a sovereign nation that can field the matériel required, who also doesn't have a problem instigating an international incident. Now, if you're a single entity or a cartel of entities with the financial and technical resources to launch a majority of hash rate attack, you'll have considered what vectors a counter-attacker would attempt to come at you with. For example, I expect the (simplistic) response to the hypothetical risk vector of "a physical assault on our mining hardware" to be migrated by distributing hardware across a number of data centers and pooling mining computations. Solved blocks are then propagated to the network through a single, obfuscated network node.
  - tuxxy 9y ago
    The idea of a dystopian government/force performing search and destroy operations on cryptocurrency miners sounds like a refreshingly novel idea for cyberpunk/sci-fi fiction writers.
toolz 9y ago
Who gets to choose who is an attacker? Are there limits in place that ensure only once someone owns 51% the can steal their funds? Who gets to decide what a single entity is? Sounds like a pretty huge centralized point of failure in my mind, but I'm admittedly pretty ignorant on the subject.
- RoboTeddy 9y ago
  You're hitting on a critical point about cryptocurrencies that isn't widely understood yet. Ultimately, the community of users and businesses at large decides. Cryptocurrencies are social contracts that are encoded in software. If everyone agrees that a rule should change, and updates their software in concert, then the rule de-facto changes. In the absence of total agreement, the decision is made by whoever wins the political fight for user/business mindshare. It's also possible for the question to be answered two different ways (a longstanding fork occurs).
  - konschubert 9y ago
    > Ultimately, the community of users and businesses at large decides. Cryptocurrencies are social contracts that are encoded in software. If everyone agrees that a rule should change, and updates their software in concert, then the rule de-facto changes. That's called a chain split, isn't it? Usually there are people who follow the new protocol and people who follow the old protocol, so the currency splits into two. Bitcoin Cash is an example.
    - RoboTeddy 9y ago
      If everyone updates, then there isn't a longstanding chain split (e.g. https://en.bitcoin.it/wiki/Value_overflow_incident https://en.bitcoin.it/wiki/Value_overflow_incident). But yeah if there's longstanding disagreement, there are two ways for it to go: * Peaceable fork with replay protection, like Bitcoin Cash * Fork that seriously fights for the same brand/userbase --- we haven't seen one of these in Bitcoin. Segwit2x would've worked that way, but was canceled
gruez 9y ago
>As soon as the hashing can be done with general purpose computers, the game is over, and the attacker can attack forever without any extra loss of capital, other than electricity. acquiring that hardware (whether through direct buying or buying hacked machines) still costs money. it's just that it's easier to liquidate (compared to ASICs) when you're done the attack.
- mrep 9y ago
  Or the cloud. Here is some math i did on it the other day: digiconomist [0] estimates that current etherum mining cost is 1.3 billion a year, or 3.6 million a day, or 151,000 an hour, or 2,500 a minute. Multiply by 5 for cloud on demand premiums and you could dominate the etherum network for an entire day for 18 million. You could also do it for free if you can manage to do it with stolen credit cards. I'm amazed it hasn't happened already. https://digiconomist.net/ethereum-energy-consumption https://digiconomist.net/ethereum-energy-consumption
inimino 9y ago
"tenet" (principle), not "tenant" (occupant of a dwelling)
mycall 9y ago
> This will cause a price increase. Lost confidence might negate this price increase.
runeks 9y ago
> PoS has the benefit that the network can simply cause the attacker to lose their funds and no longer have a stake. How will the network reach consensus on this? Why is it assumed that a well-coordinated network of decentralized nodes will exist independently of the attacker, and that this honest network partition will be able to reach consensus on which chain to follow? > Each time the attacker attacks, the network will force them to lose their stake, and their money. Again, how will this honest network partition coordinate their efforts to reach consensus on which chain to follow? It seems like in all these scenarios, coordination by honest nodes is assumed, without giving any explanation as to how the nodes are able to reach consensus on which chain to follow of the many valid chains in existence.

castratikron 9y ago

Couldn't another response to someone attacking with 51% mining be to physically destroy their hardware? The Kuwait oil fires were a result of someone wanting to limit control of wealth production.

Mtinie 9y ago
> Couldn't another response to someone attacking with 51% mining be to physically destroy their hardware? Sure, if you can identify the location of the hardware and you happen to be a sovereign nation that can field the matériel required, who also doesn't have a problem instigating an international incident. Now, if you're a single entity or a cartel of entities with the financial and technical resources to launch a majority of hash rate attack, you'll have considered what vectors a counter-attacker would attempt to come at you with. For example, I expect the (simplistic) response to the hypothetical risk vector of "a physical assault on our mining hardware" to be migrated by distributing hardware across a number of data centers and pooling mining computations. Solved blocks are then propagated to the network through a single, obfuscated network node.
- tuxxy 9y ago
  The idea of a dystopian government/force performing search and destroy operations on cryptocurrency miners sounds like a refreshingly novel idea for cyberpunk/sci-fi fiction writers.

toolz 9y ago

Who gets to choose who is an attacker? Are there limits in place that ensure only once someone owns 51% the can steal their funds? Who gets to decide what a single entity is? Sounds like a pretty huge centralized point of failure in my mind, but I'm admittedly pretty ignorant on the subject.

RoboTeddy 9y ago
You're hitting on a critical point about cryptocurrencies that isn't widely understood yet. Ultimately, the community of users and businesses at large decides. Cryptocurrencies are social contracts that are encoded in software. If everyone agrees that a rule should change, and updates their software in concert, then the rule de-facto changes. In the absence of total agreement, the decision is made by whoever wins the political fight for user/business mindshare. It's also possible for the question to be answered two different ways (a longstanding fork occurs).
- konschubert 9y ago
  > Ultimately, the community of users and businesses at large decides. Cryptocurrencies are social contracts that are encoded in software. If everyone agrees that a rule should change, and updates their software in concert, then the rule de-facto changes. That's called a chain split, isn't it? Usually there are people who follow the new protocol and people who follow the old protocol, so the currency splits into two. Bitcoin Cash is an example.
  - RoboTeddy 9y ago
    If everyone updates, then there isn't a longstanding chain split (e.g. https://en.bitcoin.it/wiki/Value_overflow_incident https://en.bitcoin.it/wiki/Value_overflow_incident). But yeah if there's longstanding disagreement, there are two ways for it to go: * Peaceable fork with replay protection, like Bitcoin Cash * Fork that seriously fights for the same brand/userbase --- we haven't seen one of these in Bitcoin. Segwit2x would've worked that way, but was canceled

gruez 9y ago

>As soon as the hashing can be done with general purpose computers, the game is over, and the attacker can attack forever without any extra loss of capital, other than electricity. acquiring that hardware (whether through direct buying or buying hacked machines) still costs money. it's just that it's easier to liquidate (compared to ASICs) when you're done the attack.

mrep 9y ago
Or the cloud. Here is some math i did on it the other day: digiconomist [0] estimates that current etherum mining cost is 1.3 billion a year, or 3.6 million a day, or 151,000 an hour, or 2,500 a minute. Multiply by 5 for cloud on demand premiums and you could dominate the etherum network for an entire day for 18 million. You could also do it for free if you can manage to do it with stolen credit cards. I'm amazed it hasn't happened already. https://digiconomist.net/ethereum-energy-consumption https://digiconomist.net/ethereum-energy-consumption

inimino 9y ago

"tenet" (principle), not "tenant" (occupant of a dwelling)

mycall 9y ago

> This will cause a price increase. Lost confidence might negate this price increase.

runeks 9y ago

> PoS has the benefit that the network can simply cause the attacker to lose their funds and no longer have a stake. How will the network reach consensus on this? Why is it assumed that a well-coordinated network of decentralized nodes will exist independently of the attacker, and that this honest network partition will be able to reach consensus on which chain to follow? > Each time the attacker attacks, the network will force them to lose their stake, and their money. Again, how will this honest network partition coordinate their efforts to reach consensus on which chain to follow? It seems like in all these scenarios, coordination by honest nodes is assumed, without giving any explanation as to how the nodes are able to reach consensus on which chain to follow of the many valid chains in existence.