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False prophets are plenty in crypto, especially when their bags are full and heavy. Fred Wilson has repeatedly supported centralized premined coins, and he was

False prophets are plenty in crypto, especially when their bags are full and heavy. Fred Wilson has repeatedly supported centralized premined coins, and he was the one to claim that "the market cap of ethereum will bypass the market cap of bitcoin by the end of the year." The first step in writing about decentralization is to understand what decentralizaiton means. Premined coins are centralized by desgin--the founders may hold an undisclosed amount of coins that were acquired at no cost. Thus, any fork that threatens the founders can be attacked crushing the incentives of the miners, and thus the security of the network. Linking to websites such as https://arewedecentralizedyet.com/ https://arewedecentralizedyet.com/ is both lazy and meaningless because those metrics are easily gamed, insecure, vulnerable to sybil attacks, and unreliable. Most of the decentralization discussion is a red herring that many use either out of ignorance or in order to distract from fundamental problems such as the distribution of incentives.

avip 8y ago
I agree, but at least he manned up and made a prediction on record, in writing, and about the future.
- throwawaylolx 8y ago
  So did many, many, many others, hoping to convince other people to buy and pump the prices. This is done at no cost, because next time around people will still look up to those figures again, and people like you will commend them for their courage to speak confidently about an inherently unpredictable market. The fact that he ends the post claiming their fund educates the population about decentralization only reassures me that we're unlikely to have such thing anytime soon.
  - drdeca 8y ago
    Perhaps if they would publicly make bets on prediction markets about their claims, that could help? Though, there's the risk of "well, what if they just also purchase an equal amount of the other side of the bet", but perhaps this way they could still have to pay the cost of their money being locked up until the event resolves, which would at least create some sort of cost of falsely signaling that their belief and/or level of confidence?
    - rhizome 8y ago
      Perhaps if they would publicly make bets on prediction markets about their claims, that could help? What would qualify as skin in the game? Refinancing their home to buy bitcoins? That would be something, for sure.
      - drdeca 8y ago
        I would imagine that it is more of a question of degree than a yes/no thing. Also, simply purchasing the coins seem to me to say less than actions in a prediction market could. If someone claims to believe that the price will be above a particular quantity at a particular point in time, buying some of the good doesn't really reflect that exact belief, only that they believe that the price will go up on some timescale. A bet that the price will be above a particularly quantity at a particular time more clearly indicates that they believe that it will be above that quantity at that time, I think.
splintercell 8y ago
> Premined coins are centralized by desgin--the founders may hold an undisclosed amount of coins that were acquired at no cost. This seems like a deep thought, but it isn't. All this is, a shot fired in coin v coin wars (and this one against Ethereum). Bitcoin used to be easily minable from a CPU, and was under a dollar for a large point. Any entity could be holding undisclosed amount of coins that were acquired at no cost either.
- throwawaylolx 8y ago
  No, Bitcoin has always been mineable at the same cost for everyone willing to mine while also enforcing a slow supply release. Premines offer free supply capture only for the central party that sells the premine, and oftentimes provides infinite liquidity allowing any wealthy party to capture the entire supply in a short timeframe. Satoshi understood the importance of fair distribution, while all ICOs compromised their security in their futile greedy attempts to create "a better Bitcoin." You can't expect to improve a system for which you don't even understand the design rationale.
- coralreef 8y ago
  I suppose its a matter of semantics, but 'easily minable' is not the same as 'guaranteed free'. Bitcoin's mining cost was always a function of hash power, hardware and electricity cost (and competition). If it was cheap, it was because you were early. Satoshi mined from day 1, which is how he amassed coins. Some forks however played in a developed crypto space and wanted to guarantee themselves a chunk of coins that would not require them to openly compete for them. Does the difference matter? I dunno.
nosuchthing 8y ago
In “Quantifying Decentralization”, Balaji S. Srinivasan (the CTO of Coinbase) describes the Nakamoto coefficient - a method beyond the Gini coefficient in measuring how centeralized these networks really are. https://news.earn.com/quantifying-decentralization-e39db233c28e https://news.earn.com/quantifying-decentralization-e39db233c... "The basic idea is to: (a) enumerate the essential subsystems of a decentralized system, (b) determine how many entities one would need to be compromised to control each subsystem, and (c) then use the minimum of these as a measure of the effective decentralization of the system. The higher the value of this minimum Nakamoto coefficient, the more decentralized the system is."
- throwawaylolx 8y ago
  These measures only make sense to consider assuming the distribution was fair. Otherwise, the system is unrecoverably compromised from day one as there is no trust-minimised way of telling whether the founders abused their disproportionate privilege to capture enough supply to manipulate the incentives that keep the miners honest and the network secure. If the security of your network is fundamentally based on trust that one central party was honest, then you can't have decentralisation regardless of how many addresses you have, how many miners you have, how many nodes you have, or how many clients you have.

avip 8y ago

I agree, but at least he manned up and made a prediction on record, in writing, and about the future.

throwawaylolx 8y ago
So did many, many, many others, hoping to convince other people to buy and pump the prices. This is done at no cost, because next time around people will still look up to those figures again, and people like you will commend them for their courage to speak confidently about an inherently unpredictable market. The fact that he ends the post claiming their fund educates the population about decentralization only reassures me that we're unlikely to have such thing anytime soon.
- drdeca 8y ago
  Perhaps if they would publicly make bets on prediction markets about their claims, that could help? Though, there's the risk of "well, what if they just also purchase an equal amount of the other side of the bet", but perhaps this way they could still have to pay the cost of their money being locked up until the event resolves, which would at least create some sort of cost of falsely signaling that their belief and/or level of confidence?
  - rhizome 8y ago
    Perhaps if they would publicly make bets on prediction markets about their claims, that could help? What would qualify as skin in the game? Refinancing their home to buy bitcoins? That would be something, for sure.
    - drdeca 8y ago
      I would imagine that it is more of a question of degree than a yes/no thing. Also, simply purchasing the coins seem to me to say less than actions in a prediction market could. If someone claims to believe that the price will be above a particular quantity at a particular point in time, buying some of the good doesn't really reflect that exact belief, only that they believe that the price will go up on some timescale. A bet that the price will be above a particularly quantity at a particular time more clearly indicates that they believe that it will be above that quantity at that time, I think.

splintercell 8y ago

> Premined coins are centralized by desgin--the founders may hold an undisclosed amount of coins that were acquired at no cost. This seems like a deep thought, but it isn't. All this is, a shot fired in coin v coin wars (and this one against Ethereum). Bitcoin used to be easily minable from a CPU, and was under a dollar for a large point. Any entity could be holding undisclosed amount of coins that were acquired at no cost either.

throwawaylolx 8y ago
No, Bitcoin has always been mineable at the same cost for everyone willing to mine while also enforcing a slow supply release. Premines offer free supply capture only for the central party that sells the premine, and oftentimes provides infinite liquidity allowing any wealthy party to capture the entire supply in a short timeframe. Satoshi understood the importance of fair distribution, while all ICOs compromised their security in their futile greedy attempts to create "a better Bitcoin." You can't expect to improve a system for which you don't even understand the design rationale.
coralreef 8y ago
I suppose its a matter of semantics, but 'easily minable' is not the same as 'guaranteed free'. Bitcoin's mining cost was always a function of hash power, hardware and electricity cost (and competition). If it was cheap, it was because you were early. Satoshi mined from day 1, which is how he amassed coins. Some forks however played in a developed crypto space and wanted to guarantee themselves a chunk of coins that would not require them to openly compete for them. Does the difference matter? I dunno.

nosuchthing 8y ago

In “Quantifying Decentralization”, Balaji S. Srinivasan (the CTO of Coinbase) describes the Nakamoto coefficient - a method beyond the Gini coefficient in measuring how centeralized these networks really are. https://news.earn.com/quantifying-decentralization-e39db233c28e https://news.earn.com/quantifying-decentralization-e39db233c... "The basic idea is to: (a) enumerate the essential subsystems of a decentralized system, (b) determine how many entities one would need to be compromised to control each subsystem, and (c) then use the minimum of these as a measure of the effective decentralization of the system. The higher the value of this minimum Nakamoto coefficient, the more decentralized the system is."

throwawaylolx 8y ago
These measures only make sense to consider assuming the distribution was fair. Otherwise, the system is unrecoverably compromised from day one as there is no trust-minimised way of telling whether the founders abused their disproportionate privilege to capture enough supply to manipulate the incentives that keep the miners honest and the network secure. If the security of your network is fundamentally based on trust that one central party was honest, then you can't have decentralisation regardless of how many addresses you have, how many miners you have, how many nodes you have, or how many clients you have.