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This is a common misconception. In order for a Proof-of-Work algorithm to be useful, there must be an opportunity cost (penalty) to mining on the wrong chain. I

by VMG 5y ago

This is a common misconception. In order for a Proof-of-Work algorithm to be useful, there must be an opportunity cost (penalty) to mining on the wrong chain. If the mining algorithm pays off anyway it cannot be used.

rytill 5y ago
What if it’s a public good that we generally believe everyone benefits from, like mathematics research? No individual would pay for it, but it’s still more valuable than random noise.
- rsj_hn 5y ago
  Patents allow mathematical research to be excludable and thus not a public good. Now one can argue that mathematical patents provide more costs than benefits, which is a line of debate I am certainly open to. End that, and math research would be a public good. But in the system we have now, a huge amount of mathematical research has generated a significant amount of money for very many people, from the RSA algorithm to Penrose patenting his tilings (and getting money from toilet paper makers that used his aperiodic tilings to make their TP more fluffy [1]) What I think you mean to say is that the market consistently undervalues mathematical research. Unfortunately it's not so easy to actually demonstrate, because given the huge amount of math research produced, only a very small amount of that ends up being useful in the future and often the original discoverer is long dead. This is similar to the situation with other arts and sciences. A small number of people drive the field forward and the vast majority of scientific publications are basically filler. Certainly the world would be better with more effective funding mechanisms that we have on offer, which is basically a game of capture-the-grant. [1]https://apnews.com/article/59354892d1875c277c91afd3fb5ca516 https://apnews.com/article/59354892d1875c277c91afd3fb5ca516
yissp 5y ago
Unless the miners themselves benefit from the work, there would still be an opportunity cost to them, no? If it happens to be useful to someone else that shouldn't matter, right?
- djbebs 5y ago
  That matter because it gives those who it is useful an advantage in attacking the blockchain
- garmaine 5y ago
  If it is useful enough that someone is willing to pay for it as a service, then it fundamentally changes the incentive model and voids the security it provides.
hutrdvnj 5y ago
The penalty is still there you pay the electric bill and it consumes time, but you would donate some cycles for useful scientific computational tasks without any benefit for yourself. If such an algorithm exist, then I don't see why this couldn't be used as Proof-of-Work algorithm.
- lordnacho 5y ago
  PoW works because showing a correctly mined block, ie one with a nonce that satisfies the many-initial-zeroes hash, proves that you on average (you can be short term lucky) have a used a certain amount of computing power. It proves it because with the selected algorithm, there's no known shortcut to just doing a load of hashes, so if you found one it means you did a lot of hashing. What problem would you insert instead that had the same properties? We should also not forget that it gets harder and harder for the same benefit. Any amount of energy can be poured into a PoW system. Invent fusion, use it all in crypto.
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  - needanon 5y ago
    "Rent computational resource" could work with a verification of resource(s) step at the end of a set duration (block) and all of the computations performed using fully homomorphic encryption. If after the beginning of a block a random start time up to some max (~10 min) was selected for which the proving nodes would perform an operation to verify the resources were available and calculate the block hash instead of continuously burning, then at that starting time and for a set proving duration the verification algo would run and at the end the block would be distributed. Given the FHE was either running a paying program utilizing rented resources or the verification algo continuously, then it should not be possible to tell when the verification algo starts and stops. The non-FHE "gas" alternative that incentivizes performing program results to include in the hash has to have enough of an expected value that it would be prioritized over using the time to further calculate a minimal hash and the associated expected value for finding it without those gas incentivized transactions. The question is the FHE option more efficient than gas?
fogof 5y ago
Whether or not there's an opportunity cost does matter, but why should this mean that the mining algorithm "paying off anyway" mean it can't be used? If the mining algorithm has an independent payoff whether or not you mine on the main chain, then there's still the same opportunity cost of the mining rewards.
- VMG 5y ago
  No, it is not the same opportunity cost. With a PoW that has "external rewards", the cost of attacking the chain falls in proportion to the external reward. You are correct that it does not fall to zero.

by VMG 5y ago

rytill 5y ago

What if it’s a public good that we generally believe everyone benefits from, like mathematics research? No individual would pay for it, but it’s still more valuable than random noise.

rsj_hn 5y ago
Patents allow mathematical research to be excludable and thus not a public good. Now one can argue that mathematical patents provide more costs than benefits, which is a line of debate I am certainly open to. End that, and math research would be a public good. But in the system we have now, a huge amount of mathematical research has generated a significant amount of money for very many people, from the RSA algorithm to Penrose patenting his tilings (and getting money from toilet paper makers that used his aperiodic tilings to make their TP more fluffy [1]) What I think you mean to say is that the market consistently undervalues mathematical research. Unfortunately it's not so easy to actually demonstrate, because given the huge amount of math research produced, only a very small amount of that ends up being useful in the future and often the original discoverer is long dead. This is similar to the situation with other arts and sciences. A small number of people drive the field forward and the vast majority of scientific publications are basically filler. Certainly the world would be better with more effective funding mechanisms that we have on offer, which is basically a game of capture-the-grant. [1]https://apnews.com/article/59354892d1875c277c91afd3fb5ca516 https://apnews.com/article/59354892d1875c277c91afd3fb5ca516

yissp 5y ago

Unless the miners themselves benefit from the work, there would still be an opportunity cost to them, no? If it happens to be useful to someone else that shouldn't matter, right?

djbebs 5y ago
That matter because it gives those who it is useful an advantage in attacking the blockchain
garmaine 5y ago
If it is useful enough that someone is willing to pay for it as a service, then it fundamentally changes the incentive model and voids the security it provides.

hutrdvnj 5y ago

The penalty is still there you pay the electric bill and it consumes time, but you would donate some cycles for useful scientific computational tasks without any benefit for yourself. If such an algorithm exist, then I don't see why this couldn't be used as Proof-of-Work algorithm.

lordnacho 5y ago
PoW works because showing a correctly mined block, ie one with a nonce that satisfies the many-initial-zeroes hash, proves that you on average (you can be short term lucky) have a used a certain amount of computing power. It proves it because with the selected algorithm, there's no known shortcut to just doing a load of hashes, so if you found one it means you did a lot of hashing. What problem would you insert instead that had the same properties? We should also not forget that it gets harder and harder for the same benefit. Any amount of energy can be poured into a PoW system. Invent fusion, use it all in crypto.
- deleted 5y ago
  [deleted]
- deleted 5y ago
  [deleted]
- needanon 5y ago
  "Rent computational resource" could work with a verification of resource(s) step at the end of a set duration (block) and all of the computations performed using fully homomorphic encryption. If after the beginning of a block a random start time up to some max (~10 min) was selected for which the proving nodes would perform an operation to verify the resources were available and calculate the block hash instead of continuously burning, then at that starting time and for a set proving duration the verification algo would run and at the end the block would be distributed. Given the FHE was either running a paying program utilizing rented resources or the verification algo continuously, then it should not be possible to tell when the verification algo starts and stops. The non-FHE "gas" alternative that incentivizes performing program results to include in the hash has to have enough of an expected value that it would be prioritized over using the time to further calculate a minimal hash and the associated expected value for finding it without those gas incentivized transactions. The question is the FHE option more efficient than gas?

fogof 5y ago

Whether or not there's an opportunity cost does matter, but why should this mean that the mining algorithm "paying off anyway" mean it can't be used? If the mining algorithm has an independent payoff whether or not you mine on the main chain, then there's still the same opportunity cost of the mining rewards.

VMG 5y ago
No, it is not the same opportunity cost. With a PoW that has "external rewards", the cost of attacking the chain falls in proportion to the external reward. You are correct that it does not fall to zero.