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It is a problem. That's a big reason for moving from proof-of-work to proof-of-stake- to more directly make the _holders_ of Ethereum in charge of the chain. I

It is a problem. That's a big reason for moving from proof-of-work to proof-of-stake- to more directly make the _holders_ of Ethereum in charge of the chain. It's a difficult thing to do, though. Hashpower based mining is easier to get going. Proof of stake has issues like the nothing-at-stake problem, where theoretically you could stake-mine on multiple chains: https://ethereum.stackexchange.com/questions/2402/what-exactly-is-the-nothing-at-stake-problem https://ethereum.stackexchange.com/questions/2402/what-exact...

hertzrat 6y ago
Isn’t half of our current money supply controlled by 1% of people? If the asset holders controlled things, why wouldn’t they just demand everyone else hand over their cash? https://www.cbsnews.com/news/richest-1-percent-control-more-than-half-of-all-wealth/ https://www.cbsnews.com/news/richest-1-percent-control-more-...
- drcode 6y ago
  (1) even a 51% attack can't generate fake transactions to transfer that money (2) social power with blockchains (i.e. having people's ears on the social networks) is far more important than $$ power: If nobody wants to install and use your blockchain, no amount of $$ can fix that.
  - akimball 6y ago
    Re (1): True, in that the committed transactions would not be fake. But calling eth “money” is...not accurate. It has value but lacks moneyness.
- belltaco 6y ago
  Because the 1% isn't homogenous and a lot of them will want to keep the system working instead of killing the goose that lays the golden egg. The 1% is about 1.5 million people. Good luck getting most of them organized for a certain cause that will result in destruction of wealth mid term at the latest.
  - carlob 6y ago
    The 1% Is 1.5 millions iff the 100% is 150 millions, which is what population exactly?
    - kubanczyk 6y ago
      Bangladesh? (160 mln actually) I think they could mean a total number of crypto users, recently estimated to be over 100 mln.
    - belltaco 6y ago
      The people that file tax returns in the US https://www.irs.gov/newsroom/filing-season-statistics-for-week-ending-december-27-2019 https://www.irs.gov/newsroom/filing-season-statistics-for-we... I picked that because I didn't think if babies and non-earners were included when calculating the top 1% of highest earners.
- jerf 6y ago
  That's a good question. Imagine what would happen if one person held literally all the money. It may be easier to imagine a 100-person community rather than the whole world. One thing that would have to happen is everyone else would develop their own money/currency, which would turn mean that the one person with all the money is no longer the one person with all the money. A thing quite likely to happen is that everyone would decide that whatever the money is that the one person has, everybody would decide it is not money. It isn't entirely dissimilar from me claiming I have all the Jerfoleans on the world, and what the world is really doing about that currency right now. They're worth a zero so zero-y that even an infinite number of them is still worth a flat zero. Someone who has "all the money" might find themselves in a similar boat.
  - d0mine 6y ago
    More likely the one person would hire some people to convince the rest that it in their best interests that all money belong to the one person or even more likely to provide to the people some distraction, destroy the notion of the facts, so they wouldn't even know to ask inconvenient questions.
    - deleted 6y ago
      [deleted]
  - Dolores12 6y ago
    Money used to represent the value backed up by gold in bank storage. Nowadays its just a paper, so indeed its easy to create new money.
    - jwolfe 6y ago
      Not that gold has a massive magical intrinsic value. That was also arbitrary.
      - gorgoiler 6y ago
        It is hard to mine and hard to find. If you make a fresh piece of gold and show it to the world, you are proving that you have done some known — or at least bounded — amount of work. In gold’s case, that work is gas, electricity, and human labor. If someone shows up with gold that cost less to produce, the price goes down.
- ZephyrBlu 6y ago
  Here's a couple of reasons why it probably wouldn't go this way: 1) Ethereum already has a market cap of $73B [0]. That's a lot of money. 2) Controlling 51% of Ethereum would probably cause the value of it to drop [1]. So you'd spend a lot of money to control Ethereum and then end up with something that's far less valuable than it was before you took control. Not really sure what you'd get out of doing that. [0] https://en.ethereumworldnews.com/ethereums-market-cap-is-bigger-than-spotify-gm-baidu-ferrari-bmw/ https://en.ethereumworldnews.com/ethereums-market-cap-is-big... [1] https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/#proof-of-stake-and-security https://ethereum.org/en/developers/docs/consensus-mechanisms...
  - gruez 6y ago
    >2) Controlling 51% of Ethereum would probably cause the value of it to drop [1]. I think you're misinterpreting the paragraph. It's not that controlling 51% will cause the value to drop (it won't, see bitcoin miner control), it's that controlling 51% and trying to pull off an attack will cause it to drop.
    - ZephyrBlu 6y ago
      > To do so, you'd need to control 51% of the staked ETH. Not only is this a lot of money but it would probably cause ETH's value to drop To me "it" is pretty clearly referring to controlling 51% of staked ETH. I don't know about the economics behind whether that would cause the value of ETH to decrease, but Bitcoin seems like a different situation altogether since miners don't control the the cryptocurrency itself.
      - gruez 6y ago
        And how does the ethereum network differentiate two people with different wallets and one person with two wallets? Short of attaching some sort of real world identity to ethereum wallets it's impossible to tell whether someone controls 51% of staked ETH because it's trivial to split that up.
- bluecalm 6y ago
  The article is about wealth, not money supply. Those are completely different concept. There could theoretically be a lot of wealth and very little money (if no one wants to trade there isn't much needed) or not so much wealth and a lot of money (a lot of people need loans to trade and build wealth). It's convenient to measure wealth in dollars in a "how much you could get if you still it" way and it's possible because dollars are very stable but there is very little reason for the amount of dollars circulating to represent existing wealth.
- gonational 6y ago
  Yeah. That's what they do. That's what inflation is. We work hard and save up $100,000, they (the 1%) turn that into $25,000 in 25 years.
  - incrudible 6y ago
    Nobody forces you to hold cash for 25 years. In fact, you are given many incentives to invest it, inflation being just one.
    - gonational 6y ago
      This is true.
- capableweb 6y ago
  > why wouldn’t they just demand everyone else hand over their cash? Because it's not in their best interest. If the 1% pulled something like that off, the price would drop a lot and therefore their ETH would be worth less. It's one of the core pillars of any blockchain, that the incentives are aligned in a way so the best outcome for people is the one where the gain the most, so it forces them to go for that way.
discardable_dan 6y ago
Imagine if you owned a billion dollars, and that allowed you to say if someone spent 10 dollars at the gas station.
- arbol 6y ago
  Are you suggesting censorship might be an issue?
- gverrilla 6y ago
  can you tell us more? what are you refering to?
DennisP 6y ago
Nothing-at-stake is a solved problem in Ethereum's PoS. The basic idea is that stakers' deposits act as security bonds. If a staker commits to two conflicting chains, any other staker can see that they did so, and get rewarded for publishing a proof of that. Then the cheating staker gets their stake destroyed on both chains.
- jkhdigital 6y ago
  There is a deeper problem with PoS, which is about where the value of the staked token comes from in the first place. PoW ties this to the burning of real-world value, specifically electricity which is about as close to distilled economic value as you can get. Ethereum is trying to bootstrap value with PoW and then switch, but I have strong doubts that this is a sustainable solution.
  - DennisP 6y ago
    Coin value is not based on electricity usage in PoW. Due to difficulty adjustment, electricity usage is an effect of coin value, not a cause. If coin value goes up, mining becomes more profitable, more miners jump in, and electricity usage goes up. If coin value drops, the opposite happens.
    - jkhdigital 6y ago
      Coin value is a social phenomenon anyway, so it’s kind of meaningless to assign cause and effect. My point was that electricity usage in PoW provides an external metric for assigning exchange value to the coin which is not self-referential, unlike in PoS.
  - mratsim 6y ago
    It's the same when currencies around the world stopped using the gold standard and became floating across each other. I'd say the value of currencies is that you have to pay your taxes in one that is legal tender. In that case, the value of Eth is that you have to pay transaction fees in Eth. You decided how valuable those transactions are.

hertzrat 6y ago

Isn’t half of our current money supply controlled by 1% of people? If the asset holders controlled things, why wouldn’t they just demand everyone else hand over their cash? https://www.cbsnews.com/news/richest-1-percent-control-more-than-half-of-all-wealth/ https://www.cbsnews.com/news/richest-1-percent-control-more-...

drcode 6y ago
(1) even a 51% attack can't generate fake transactions to transfer that money (2) social power with blockchains (i.e. having people's ears on the social networks) is far more important than $$ power: If nobody wants to install and use your blockchain, no amount of $$ can fix that.
- akimball 6y ago
  Re (1): True, in that the committed transactions would not be fake. But calling eth “money” is...not accurate. It has value but lacks moneyness.
belltaco 6y ago
Because the 1% isn't homogenous and a lot of them will want to keep the system working instead of killing the goose that lays the golden egg. The 1% is about 1.5 million people. Good luck getting most of them organized for a certain cause that will result in destruction of wealth mid term at the latest.
- carlob 6y ago
  The 1% Is 1.5 millions iff the 100% is 150 millions, which is what population exactly?
  - kubanczyk 6y ago
    Bangladesh? (160 mln actually) I think they could mean a total number of crypto users, recently estimated to be over 100 mln.
  - belltaco 6y ago
    The people that file tax returns in the US https://www.irs.gov/newsroom/filing-season-statistics-for-week-ending-december-27-2019 https://www.irs.gov/newsroom/filing-season-statistics-for-we... I picked that because I didn't think if babies and non-earners were included when calculating the top 1% of highest earners.
jerf 6y ago
That's a good question. Imagine what would happen if one person held literally all the money. It may be easier to imagine a 100-person community rather than the whole world. One thing that would have to happen is everyone else would develop their own money/currency, which would turn mean that the one person with all the money is no longer the one person with all the money. A thing quite likely to happen is that everyone would decide that whatever the money is that the one person has, everybody would decide it is not money. It isn't entirely dissimilar from me claiming I have all the Jerfoleans on the world, and what the world is really doing about that currency right now. They're worth a zero so zero-y that even an infinite number of them is still worth a flat zero. Someone who has "all the money" might find themselves in a similar boat.
- d0mine 6y ago
  More likely the one person would hire some people to convince the rest that it in their best interests that all money belong to the one person or even more likely to provide to the people some distraction, destroy the notion of the facts, so they wouldn't even know to ask inconvenient questions.
  - deleted 6y ago
    [deleted]
- Dolores12 6y ago
  Money used to represent the value backed up by gold in bank storage. Nowadays its just a paper, so indeed its easy to create new money.
  - jwolfe 6y ago
    Not that gold has a massive magical intrinsic value. That was also arbitrary.
    - gorgoiler 6y ago
      It is hard to mine and hard to find. If you make a fresh piece of gold and show it to the world, you are proving that you have done some known — or at least bounded — amount of work. In gold’s case, that work is gas, electricity, and human labor. If someone shows up with gold that cost less to produce, the price goes down.
ZephyrBlu 6y ago
Here's a couple of reasons why it probably wouldn't go this way: 1) Ethereum already has a market cap of $73B [0]. That's a lot of money. 2) Controlling 51% of Ethereum would probably cause the value of it to drop [1]. So you'd spend a lot of money to control Ethereum and then end up with something that's far less valuable than it was before you took control. Not really sure what you'd get out of doing that. [0] https://en.ethereumworldnews.com/ethereums-market-cap-is-bigger-than-spotify-gm-baidu-ferrari-bmw/ https://en.ethereumworldnews.com/ethereums-market-cap-is-big... [1] https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/#proof-of-stake-and-security https://ethereum.org/en/developers/docs/consensus-mechanisms...
- gruez 6y ago
  >2) Controlling 51% of Ethereum would probably cause the value of it to drop [1]. I think you're misinterpreting the paragraph. It's not that controlling 51% will cause the value to drop (it won't, see bitcoin miner control), it's that controlling 51% and trying to pull off an attack will cause it to drop.
  - ZephyrBlu 6y ago
    > To do so, you'd need to control 51% of the staked ETH. Not only is this a lot of money but it would probably cause ETH's value to drop To me "it" is pretty clearly referring to controlling 51% of staked ETH. I don't know about the economics behind whether that would cause the value of ETH to decrease, but Bitcoin seems like a different situation altogether since miners don't control the the cryptocurrency itself.
    - gruez 6y ago
      And how does the ethereum network differentiate two people with different wallets and one person with two wallets? Short of attaching some sort of real world identity to ethereum wallets it's impossible to tell whether someone controls 51% of staked ETH because it's trivial to split that up.
bluecalm 6y ago
The article is about wealth, not money supply. Those are completely different concept. There could theoretically be a lot of wealth and very little money (if no one wants to trade there isn't much needed) or not so much wealth and a lot of money (a lot of people need loans to trade and build wealth). It's convenient to measure wealth in dollars in a "how much you could get if you still it" way and it's possible because dollars are very stable but there is very little reason for the amount of dollars circulating to represent existing wealth.
gonational 6y ago
Yeah. That's what they do. That's what inflation is. We work hard and save up $100,000, they (the 1%) turn that into $25,000 in 25 years.
- incrudible 6y ago
  Nobody forces you to hold cash for 25 years. In fact, you are given many incentives to invest it, inflation being just one.
  - gonational 6y ago
    This is true.
capableweb 6y ago
> why wouldn’t they just demand everyone else hand over their cash? Because it's not in their best interest. If the 1% pulled something like that off, the price would drop a lot and therefore their ETH would be worth less. It's one of the core pillars of any blockchain, that the incentives are aligned in a way so the best outcome for people is the one where the gain the most, so it forces them to go for that way.

discardable_dan 6y ago

Imagine if you owned a billion dollars, and that allowed you to say if someone spent 10 dollars at the gas station.

arbol 6y ago
Are you suggesting censorship might be an issue?
gverrilla 6y ago
can you tell us more? what are you refering to?

DennisP 6y ago

Nothing-at-stake is a solved problem in Ethereum's PoS. The basic idea is that stakers' deposits act as security bonds. If a staker commits to two conflicting chains, any other staker can see that they did so, and get rewarded for publishing a proof of that. Then the cheating staker gets their stake destroyed on both chains.

jkhdigital 6y ago
There is a deeper problem with PoS, which is about where the value of the staked token comes from in the first place. PoW ties this to the burning of real-world value, specifically electricity which is about as close to distilled economic value as you can get. Ethereum is trying to bootstrap value with PoW and then switch, but I have strong doubts that this is a sustainable solution.
- DennisP 6y ago
  Coin value is not based on electricity usage in PoW. Due to difficulty adjustment, electricity usage is an effect of coin value, not a cause. If coin value goes up, mining becomes more profitable, more miners jump in, and electricity usage goes up. If coin value drops, the opposite happens.
  - jkhdigital 6y ago
    Coin value is a social phenomenon anyway, so it’s kind of meaningless to assign cause and effect. My point was that electricity usage in PoW provides an external metric for assigning exchange value to the coin which is not self-referential, unlike in PoS.
- mratsim 6y ago
  It's the same when currencies around the world stopped using the gold standard and became floating across each other. I'd say the value of currencies is that you have to pay your taxes in one that is legal tender. In that case, the value of Eth is that you have to pay transaction fees in Eth. You decided how valuable those transactions are.