4 ms·

I’m sorry you don’t see that it has value. It has value to me. In fact, I need a secure, permissionless, censorship resistant, non-state backed value storage sy

I’m sorry you don’t see that it has value. It has value to me. In fact, I need a secure, permissionless, censorship resistant, non-state backed value storage system more than I need hydroponic food or desalinated water. The problem is the disconnect between your wants/needs and the needs of others in the world. Waste is entirely in the eye of the beholder.

JamilD 5y ago
Are the benefits of proof of work worth the additional cost over other consensus algorithms, to you?
- rawtxapp 5y ago
  PoW keeps things fair, you have to spend money on hardware and energy or become irrelevant. In other consensus systems like PoS, whoever has the most capital controls pretty much everything and has 0 incentive to sell what they get since they aren't really spending any energy for their cryptographic signature. It literally says "rich gets richer" in the protocol which is fundamentally broken in my humble opinion.
  - JamilD 5y ago
    Compute power requires money though, no? Whoever has the most capital now controls the BTC blockchain, which happens to be mostly miners in China. It’s a lot easier for me to stake ETH than to buy hundreds of GPUs. And my reward is linear with how much I stake or put down, whereas with economies of scale in mining the reward is more like quadratic. Seems to me that with PoS the rich get richer linearly, with PoW the rich get richer ~quadratically. If I spend 0.01% of what the Chinese miners spend on my mining setup, I’m not getting 0.01% of the rewards.
    - rawtxapp 5y ago
      The thing is, let's say you spend 100M$ on mining equipment today, that equipment is worth a lot less in a year from now and is worth practically nothing in 5+ years, so you can't just sit on it, you have to keep spending. Likewise with electricity, it's not free, you have to source it and spend money on it. So whatever Bitcoin reward you get barely covers your running cost + small profit margin. Imagine like you're running from a monster, you can't stop or you'll become irrelevant. Whereas with ETH, I can buy 100M$ worth of it, I'll get say 5% back which means I'm making 5M$ every year, thing is I don't have any pressure to sell it whereas the poorer stakers will have to sell to cover their cost of living or other reasons, so over time the % of my stake in eth grows. Things get even worse when you include custodians into the mix, exchanges will have much larger wallets and get much larger rewards which they may not share with the actual holders or keep a small % for themselves.
- jerry1979 5y ago
  The other consensus algorithms all follow the same consolidation logic of capitalism. Specifically, power consolidates year after year similar to banks, media companies, communication companies, etc. It looks to me like the PoS systems algorithmically codify this logic, and since the consolidation exists digitally, I would have a hard time coming up with a plan to break up the PoS oligopolies. The reason why the digital consolidation hurts people in the PoS system comes form the fact that consolidation of money in PoS directly relates to consolidation of actual voting power in those systems. PoW on the other hand will lead to consolidation around inexpensive energy: volcanoes in El Salvador, hydro in some northern countries, solar somewhere else, etc. However, those places will have some abstract voting power in the Bitcoin world, but exchanges, people, node operators, and businesses also have abstract voting power to balance against the cheap energy locations. I should mention that the upside of all of this is that we can now choose the option to have accessible digital banking around the world, and people who print money will have less of an impact on world affairs.
  - megameter 5y ago
    I've gradually come around to the side of PoW being important as layer 1, because it's as close as we're likely to get to Lockean labor theory of property being directly manifest rather than built on a legal-deeds-and-titles national framework, and that has an immediate effect of building trust out of speculative value. PoW can be made more efficient along some axes, but not all of them. As such it puts every economy in a Red Queen's race to do things with available energy and computing power that are of more value than speculation. However, PoS has an important role as the layer for specific applications and markets, since it acts more like central banking with the tradeoffs of such.
    - randomhodler84 5y ago
      You got it. PoW is critical for layer 1. Ongoing capital expenditure requirement is critical to prevent ancestral oligarchies. One cannot retain censorship resistance or decentralization with oligarchies.
thehappypm 5y ago
Honestly, why do you need BTC? You can't actually buy a whole lot with it, and you gotta convert to real currencies do anything meaningful anyway, which defeats the whole argument.
- randomhodler84 5y ago
  A) Ensuring the time-value of my labor is not eroded by the state through inflation. Yes, there are day to day risks of fluctuations in value, but one just needs to compare the trend line of where BTC is going vs fiat currencies in the longer term. I’m not worried about 50% draw downs on an asset that appreciates > 100% pa. B) ensuring that third parties like banks are unable to steal my funds. Through fees, charges, unauthorized transfers or just plain theft… C) portability of funds around the globe, independent of foreign or domestic currency. Ever tried to wire funds globally on a weekend? Trade? You are still looking at bitcoin like it’s a dollar bill. It’s not — it’s digital gold with more computational security than any system ever built by humanity.
  - thehappypm 5y ago
    A: Bitcoin has inflated 40% in value in the last month. B: This is probably the strongest argument for Bitcoin and the original vision. C: Sending BTC is immediate but since you can’t really use BTC to buy much (yet) you still need to sell and wait for funds to clear, which takes about as long as just wiring money.
    - zoomgyal 5y ago
      When OP talks about "inflation" they're talking about the amount of money entering the money supply. Bitcoin didnt "inflate" even though it got more expensive. The price did, not the supply. The supply of BTC is algorithmically programmed and there will only ever be 21 million produced. You can't print more Bitcoin at will but a government can print their fiat currency, for better or worse.
      - 1917athrow 5y ago
acjohnson55 5y ago
There are now other cryptocurrencies that provide that without wasteful proof of work.
- randomhodler84 5y ago
  Ok, hold up. Energy usage is a good thing and provides security, actually. You can’t ditch the energy and retain security. I’m sorry, but PoS is a bad and the wrong model for censorship resistant, non-state stores of value.
  - acjohnson55 5y ago
    That's simply not true. Proof of work is nothing but an extremely expensive to randomly select the entity that gets to finalize the next block. The system leaks value like a sieve. Either the miners have to be compensated by printing money--and devaluaing everyone else's holdings--or by the transaction fees of a system that has a hard practical and ideological limits on its transaction capacity. Avalanche already provides a compelling and less wasteful alternative, and it might not even be the last word. This idea that Bitcoin got it all just right has become a quasi-religious belief, fueled by the motivated reasoning of monetary interest and ideological fantasy.
    - randomhodler84 5y ago
      Yes it is true! You still don’t get it, and I don’t think I can convince you. Energy = Security. This is an fundamental axiom. Security of transactional data grows with every block in a PoW chain. PoS finally breaks down to mutant PoW with stake grinding; among other oligarchical concerns. We must spend energy to sustain the hardest money humans have known. Yes, it is a deep ideology that a monetary network must incur ongoing continued capital investment! Everyone looking for a cheap n easy way out with PoS. No free lunch.
      - acjohnson55 5y ago
        You're right that it is an axiom: "a statement or proposition which is regarded as being established, accepted, or self-evidently true." There's nothing "hard" about money that requires a nation's worth of energy simply to continue to exist. Proof of stake isn't fundamentally flawed, and proof of work isn't perfect. They both have many variations, and there's certainly many more to explore yet. The only free lunch I see people pining for is the idea that they can squat on a wasteful, moribund asset, expecting it to be worth much more in the future.
bootlooped 5y ago
I don't think want vs need is as subjective as you say. I could assert that I need a Maserati and no other vehicle will fit my requirements, and it would be pretty easy for others to counter that either my supposed need is really a want, or the requirements are arbitrary and unnecessary. Likewise I think your needs regarding crypto are more of a want. What would be the consequence if you didn't get that? Would you die? Would your quality of life significantly decrease? How did you live most of your life already without Bitcoin?
- randomhodler84 5y ago
  Life without bitcoin: one can watch as the value in the output of ones labor encoded in fiat decreases over time, punishing saving and devaluating our lives work; or One can opt-out of this and store it in something that does not, and rewards saving. It also has the benefit of security, integrity, audit ability, censorship resistance, transferable over arbitrary communication channels, etc. Most folks live paycheck to paycheck, and so don’t feel savings inflation and the cruelty that this implies. This has been invented. If it didn’t exist now for some reason, it would significantly decrease quality of life — I would be powerless to watch my saving erode into nothing. I would be powerless when the state decided it wanted to adjust interest rates to be negative (again, attacking saving). I would be powerless when any state decided that another state should be disconnected from the legacy financial networks. I would be powerless when they payment card networks started enforcing morality de jour. It would be like being arrested - some liberty taken from the individual and make them beholden to the state. They call it being “orange pilled”. Once you get it, there is no other option to avoid growing poor slowly.
  - 1917athrow 5y ago
    > Once you get it, there is no other option to avoid growing poor slowly. So holding stock in companies that, I don't know, actually produce something isn't an alternative? That just doesn't pass the sniff test.
    - randomhodler84 5y ago

JamilD 5y ago

Are the benefits of proof of work worth the additional cost over other consensus algorithms, to you?

rawtxapp 5y ago
PoW keeps things fair, you have to spend money on hardware and energy or become irrelevant. In other consensus systems like PoS, whoever has the most capital controls pretty much everything and has 0 incentive to sell what they get since they aren't really spending any energy for their cryptographic signature. It literally says "rich gets richer" in the protocol which is fundamentally broken in my humble opinion.
- JamilD 5y ago
  Compute power requires money though, no? Whoever has the most capital now controls the BTC blockchain, which happens to be mostly miners in China. It’s a lot easier for me to stake ETH than to buy hundreds of GPUs. And my reward is linear with how much I stake or put down, whereas with economies of scale in mining the reward is more like quadratic. Seems to me that with PoS the rich get richer linearly, with PoW the rich get richer ~quadratically. If I spend 0.01% of what the Chinese miners spend on my mining setup, I’m not getting 0.01% of the rewards.
  - rawtxapp 5y ago
    The thing is, let's say you spend 100M$ on mining equipment today, that equipment is worth a lot less in a year from now and is worth practically nothing in 5+ years, so you can't just sit on it, you have to keep spending. Likewise with electricity, it's not free, you have to source it and spend money on it. So whatever Bitcoin reward you get barely covers your running cost + small profit margin. Imagine like you're running from a monster, you can't stop or you'll become irrelevant. Whereas with ETH, I can buy 100M$ worth of it, I'll get say 5% back which means I'm making 5M$ every year, thing is I don't have any pressure to sell it whereas the poorer stakers will have to sell to cover their cost of living or other reasons, so over time the % of my stake in eth grows. Things get even worse when you include custodians into the mix, exchanges will have much larger wallets and get much larger rewards which they may not share with the actual holders or keep a small % for themselves.
jerry1979 5y ago
The other consensus algorithms all follow the same consolidation logic of capitalism. Specifically, power consolidates year after year similar to banks, media companies, communication companies, etc. It looks to me like the PoS systems algorithmically codify this logic, and since the consolidation exists digitally, I would have a hard time coming up with a plan to break up the PoS oligopolies. The reason why the digital consolidation hurts people in the PoS system comes form the fact that consolidation of money in PoS directly relates to consolidation of actual voting power in those systems. PoW on the other hand will lead to consolidation around inexpensive energy: volcanoes in El Salvador, hydro in some northern countries, solar somewhere else, etc. However, those places will have some abstract voting power in the Bitcoin world, but exchanges, people, node operators, and businesses also have abstract voting power to balance against the cheap energy locations. I should mention that the upside of all of this is that we can now choose the option to have accessible digital banking around the world, and people who print money will have less of an impact on world affairs.
- megameter 5y ago
  I've gradually come around to the side of PoW being important as layer 1, because it's as close as we're likely to get to Lockean labor theory of property being directly manifest rather than built on a legal-deeds-and-titles national framework, and that has an immediate effect of building trust out of speculative value. PoW can be made more efficient along some axes, but not all of them. As such it puts every economy in a Red Queen's race to do things with available energy and computing power that are of more value than speculation. However, PoS has an important role as the layer for specific applications and markets, since it acts more like central banking with the tradeoffs of such.
  - randomhodler84 5y ago
    You got it. PoW is critical for layer 1. Ongoing capital expenditure requirement is critical to prevent ancestral oligarchies. One cannot retain censorship resistance or decentralization with oligarchies.

thehappypm 5y ago

Honestly, why do you need BTC? You can't actually buy a whole lot with it, and you gotta convert to real currencies do anything meaningful anyway, which defeats the whole argument.

randomhodler84 5y ago
A) Ensuring the time-value of my labor is not eroded by the state through inflation. Yes, there are day to day risks of fluctuations in value, but one just needs to compare the trend line of where BTC is going vs fiat currencies in the longer term. I’m not worried about 50% draw downs on an asset that appreciates > 100% pa. B) ensuring that third parties like banks are unable to steal my funds. Through fees, charges, unauthorized transfers or just plain theft… C) portability of funds around the globe, independent of foreign or domestic currency. Ever tried to wire funds globally on a weekend? Trade? You are still looking at bitcoin like it’s a dollar bill. It’s not — it’s digital gold with more computational security than any system ever built by humanity.
- thehappypm 5y ago
  A: Bitcoin has inflated 40% in value in the last month. B: This is probably the strongest argument for Bitcoin and the original vision. C: Sending BTC is immediate but since you can’t really use BTC to buy much (yet) you still need to sell and wait for funds to clear, which takes about as long as just wiring money.
  - zoomgyal 5y ago
    When OP talks about "inflation" they're talking about the amount of money entering the money supply. Bitcoin didnt "inflate" even though it got more expensive. The price did, not the supply. The supply of BTC is algorithmically programmed and there will only ever be 21 million produced. You can't print more Bitcoin at will but a government can print their fiat currency, for better or worse.
    - 1917athrow 5y ago

acjohnson55 5y ago

There are now other cryptocurrencies that provide that without wasteful proof of work.

randomhodler84 5y ago
Ok, hold up. Energy usage is a good thing and provides security, actually. You can’t ditch the energy and retain security. I’m sorry, but PoS is a bad and the wrong model for censorship resistant, non-state stores of value.
- acjohnson55 5y ago
  That's simply not true. Proof of work is nothing but an extremely expensive to randomly select the entity that gets to finalize the next block. The system leaks value like a sieve. Either the miners have to be compensated by printing money--and devaluaing everyone else's holdings--or by the transaction fees of a system that has a hard practical and ideological limits on its transaction capacity. Avalanche already provides a compelling and less wasteful alternative, and it might not even be the last word. This idea that Bitcoin got it all just right has become a quasi-religious belief, fueled by the motivated reasoning of monetary interest and ideological fantasy.
  - randomhodler84 5y ago
    Yes it is true! You still don’t get it, and I don’t think I can convince you. Energy = Security. This is an fundamental axiom. Security of transactional data grows with every block in a PoW chain. PoS finally breaks down to mutant PoW with stake grinding; among other oligarchical concerns. We must spend energy to sustain the hardest money humans have known. Yes, it is a deep ideology that a monetary network must incur ongoing continued capital investment! Everyone looking for a cheap n easy way out with PoS. No free lunch.
    - acjohnson55 5y ago
      You're right that it is an axiom: "a statement or proposition which is regarded as being established, accepted, or self-evidently true." There's nothing "hard" about money that requires a nation's worth of energy simply to continue to exist. Proof of stake isn't fundamentally flawed, and proof of work isn't perfect. They both have many variations, and there's certainly many more to explore yet. The only free lunch I see people pining for is the idea that they can squat on a wasteful, moribund asset, expecting it to be worth much more in the future.

bootlooped 5y ago

I don't think want vs need is as subjective as you say. I could assert that I need a Maserati and no other vehicle will fit my requirements, and it would be pretty easy for others to counter that either my supposed need is really a want, or the requirements are arbitrary and unnecessary. Likewise I think your needs regarding crypto are more of a want. What would be the consequence if you didn't get that? Would you die? Would your quality of life significantly decrease? How did you live most of your life already without Bitcoin?

randomhodler84 5y ago
Life without bitcoin: one can watch as the value in the output of ones labor encoded in fiat decreases over time, punishing saving and devaluating our lives work; or One can opt-out of this and store it in something that does not, and rewards saving. It also has the benefit of security, integrity, audit ability, censorship resistance, transferable over arbitrary communication channels, etc. Most folks live paycheck to paycheck, and so don’t feel savings inflation and the cruelty that this implies. This has been invented. If it didn’t exist now for some reason, it would significantly decrease quality of life — I would be powerless to watch my saving erode into nothing. I would be powerless when the state decided it wanted to adjust interest rates to be negative (again, attacking saving). I would be powerless when any state decided that another state should be disconnected from the legacy financial networks. I would be powerless when they payment card networks started enforcing morality de jour. It would be like being arrested - some liberty taken from the individual and make them beholden to the state. They call it being “orange pilled”. Once you get it, there is no other option to avoid growing poor slowly.
- 1917athrow 5y ago
  > Once you get it, there is no other option to avoid growing poor slowly. So holding stock in companies that, I don't know, actually produce something isn't an alternative? That just doesn't pass the sniff test.
  - randomhodler84 5y ago