5 ms·

> Gas fees are based on price This is not correct. Gas fees are essentially an auction for blockspace, the basefee is adjusted dynamically via EIP-1559 but the

by pa7x1 5y ago

> Gas fees are based on price This is not correct. Gas fees are essentially an auction for blockspace, the basefee is adjusted dynamically via EIP-1559 but the tip is essentially an auction (highest bidders go first). If demand outstrips blockspace gas fees go up, independently of ETH price. If supply of blockspace is greater than demand, then gas fees go down irrespectively of ETH price. EDIT: To clarify. What you say would be the case if gas fees were a set amount of ETH. Then, of course, gas fees denominated in $ would be totally correlated with ETH price. But this is not the case. Gas fees work as explained above and thus are, in principle, decoupled from ETH price. Although some correlation might occur due to market dynamics (bull markets bring network activity, bear markets take away network activity) but is not built-in into the gas price mechanism. > - As price increases it's more attractive to mine. This is correct. > That means devs will increase the mining difficulty. The mining difficulty adjusts itself, the devs do not need to modify. Same as in Bitcoin, it's designed to adjust to maintain an even block production. You might be thinking of the difficulty bomb that needs to be defused once in a while but it has nothing to do with this topic. > It also makes Ethereum Visa, so what's the point? Not following.

sanderjd 5y ago
Bitcoin maximalists believe that PoS is definitionally centralized and therefore pointless. This does not make much sense, especially since PoW has always devolved into a small number of large mining pools.
- camgunz 5y ago
  I'm not a Bitcoin maximalist, and I agree with your point about mining pools. I just think PoS is centralization with extra steps with fewer steps than PoW.
  - sanderjd 5y ago
    I didn't totally mean that you personally are a Bitcoin maximalist, just that this is one of their arguments. Did you mean extra steps or fewer? Either way, I think it mostly remains to be seen on the centralization question. The newer-fangled PoS chains are certainly more centralized than Bitcoin or Ethereum, but nobody has actually tried distributing tokens broadly through a bunch of years of PoW and only then switching to PoS. It could plausibly end up being quite a bit more decentralized than Bitcoin.
    - camgunz 5y ago
      > Did you mean extra steps or fewer? Eh I was trying to be extra clever but, that's practically a synonym for being opaque. To zoom out a little, I just think these systems have a kind of reverse entropy. Think about all the "decentralized" systems we started off with: email, newsgroups, payments, web apps, State government in the US. They kind of congeal into walled gardens, one and all, and that's probably because frog boiling is very easy (give up an imperceptible amount of control for a hugely perceptible amount of convenience) and the end goal is very profitable. Like, any company would love to be able to scan every Gmail user's email for ad leads. Holy shit. And we let that happen because of... idk search, anti-spam and storage so large you never have to think about it. Maybe a good deal, honestly, I don't know. And we're seeing this happen in crypto right? The pitch of literally every crypto service is "simple and you'll get rich". Well this is the same thing: people are giving up imperceptible levels of control for super perceptible levels of convenience. And sure, that's their choice. And we can laugh in people's faces when they get rug pulled saying "not your keys not your crypto" but that's not gonna win us any friends. And we'll be laughing while the blockchains centralize (as they are already doing, right now). So I think PoW is centralization with extra steps. I think PoS is also centralization with extra steps, but the huge buy-in bakes centralization in right at the beginning, so it's fewer steps than PoW. Crypto was supposed to democratize money and payments! Why is there a $130k entrance fee? And then for those who can't afford that, how many of them will really band together to buy stake shares? How much of that will be a scam? How much of that will be big conglomerates who actually run the nodes, give you your 2% return, but meanwhile they've seized control of the Ethereum network, all while you funded it! So if we're taking crypto's values earnestly, I really do think we have to see PoS as an acceleration towards centralization and a big step backwards. ~~~ I can't even get excited about some potential positive outcomes (PoS happening, energy use declining, centralization also happening, crypto dying, switches to PoS causing schisms, crypto dying, nations banning crypto mining, crypto dying) because so many good, honest people have been hoodwinked into this bonkers scheme and they'll lose so, so much money. And honestly, for what? So banks can't stop you from making an ACH transfer for weed? Seriously, just get out there and vote already. ~~~ Broadly I think this a problem with the fundamental libertarian underpinnings of blockchain currencies. They sort of presuppose that everyone starts from the same place, and then you're rewarded in line with what you contribute to the network. But in the world we live in, there's huge inequality--we absolutely do not start from the same place. So unless your protocol has some mechanism to even things out, it'll just reproduce that inequality. And that inequality has a lot of second order effects. Rich people can buy a lot of mining or a lot of stake. They can afford to start businesses like exchanges or crypto news websites (or buy them after they get popular). They can afford to buy ads pumping their coin, or astroturf campaigns against changes they don't like. They can build services on the chain and collect rent. Same as it ever was. There's this whole conundrum in progressive politics about why some people so consistently vote against their own self interest. There's a lot of reasons, but one I thought was just absolutely wrong was "well, everyone thinks they'll be rich someday"--so they vote against taxes and regulation and such. But that is 100% the dynamic in crypto right now. I honestly don't see any positive outcome from any of this, I really don't.
camgunz 5y ago
Gas fees are gwei, which is ETH, which has a varying price relative to fiat. Isn't that true? I might be misunderstanding. Also I didn't know the network would automatically set the difficulty, but yeah good to know. PoS centralizes to the rich, which is the existing payments system, e.g. Visa.
- pa7x1 5y ago
  Gas fees are denominated in GWei but they are not fixed in a set amount of GWei. What you are implying is like saying that because someone paid 3903 ETH for a Banksy painting [0], then when ETH price goes up the price of the Banksy goes up. We don't think of it this way, right? We think the Banksy has a worth set independently of the price of ETH even if it was sold for certain amount denominated in ETH. Same thing happens with blockspace (the resource sold by the Ethereum network), it's paid in ETH but its worth is whatever the market is willing to pay for it, ETH is just a unit of account. In particular, if you want to do a transfer to pay for a coffee and the gas prices of the last few blocks would mean you would pay more than the coffee is worth, you wouldn't make the transaction, right? So you are priced out of the network because you are implicitly thinking of the worth of your transaction in USD terms and the transaction fees in USD terms. Most people think like you, they have a value they are willing to pay for the network fees and thus the market as a whole finds a value for the available blockspace. PoS is not more centralizing than PoW. I explained this in detail in another post: https://news.ycombinator.com/item?id=29390152 https://news.ycombinator.com/item?id=29390152 Feel free to counter the points made there. [0] https://www.coindesk.com/business/2021/11/19/banksy-paintings-sell-for-3093-eth-in-auction-house-first/ https://www.coindesk.com/business/2021/11/19/banksy-painting...
  - camgunz 5y ago
    Yeah, to distill what you're saying (lmk if I'm still misunderstanding), GWei is ETH, but looking at it relative to USD (or whatever fiat) is wrong. That's where I disagree, because electricity and equipment is denominated in fiat, and the whole system is an electricity/equipment (in fiat) -> ETH conversion system, so the relative price of ETH to fiat is beyond relevant, it's the whole idea. No one would do this if ETH were worth less than the fiat needed to make it (promise of future worth aside). And yeah, I do think probably most people still think in fiat, so if you kind of elide all of the ETH/GWei steps and say: > Hey, buy a mining rig for $2k, you'll make $60/day after electricity costs, you'll make your investment back in a month and after that it's pure profit That's all people care about, and rightly so. If, on the other hand you say: > Hey, buy a mining rig for $2k, you'll lose $10/day after electricity costs... that's it That's not super appetizing right. And the only way the system makes fiat is if ETH is worth fiat. You can't abstract it out of the system, it's the only reason the system is relevant at all.

by pa7x1 5y ago

sanderjd 5y ago

Bitcoin maximalists believe that PoS is definitionally centralized and therefore pointless. This does not make much sense, especially since PoW has always devolved into a small number of large mining pools.

camgunz 5y ago
I'm not a Bitcoin maximalist, and I agree with your point about mining pools. I just think PoS is centralization with extra steps with fewer steps than PoW.
- sanderjd 5y ago
  I didn't totally mean that you personally are a Bitcoin maximalist, just that this is one of their arguments. Did you mean extra steps or fewer? Either way, I think it mostly remains to be seen on the centralization question. The newer-fangled PoS chains are certainly more centralized than Bitcoin or Ethereum, but nobody has actually tried distributing tokens broadly through a bunch of years of PoW and only then switching to PoS. It could plausibly end up being quite a bit more decentralized than Bitcoin.
  - camgunz 5y ago
    > Did you mean extra steps or fewer? Eh I was trying to be extra clever but, that's practically a synonym for being opaque. To zoom out a little, I just think these systems have a kind of reverse entropy. Think about all the "decentralized" systems we started off with: email, newsgroups, payments, web apps, State government in the US. They kind of congeal into walled gardens, one and all, and that's probably because frog boiling is very easy (give up an imperceptible amount of control for a hugely perceptible amount of convenience) and the end goal is very profitable. Like, any company would love to be able to scan every Gmail user's email for ad leads. Holy shit. And we let that happen because of... idk search, anti-spam and storage so large you never have to think about it. Maybe a good deal, honestly, I don't know. And we're seeing this happen in crypto right? The pitch of literally every crypto service is "simple and you'll get rich". Well this is the same thing: people are giving up imperceptible levels of control for super perceptible levels of convenience. And sure, that's their choice. And we can laugh in people's faces when they get rug pulled saying "not your keys not your crypto" but that's not gonna win us any friends. And we'll be laughing while the blockchains centralize (as they are already doing, right now). So I think PoW is centralization with extra steps. I think PoS is also centralization with extra steps, but the huge buy-in bakes centralization in right at the beginning, so it's fewer steps than PoW. Crypto was supposed to democratize money and payments! Why is there a $130k entrance fee? And then for those who can't afford that, how many of them will really band together to buy stake shares? How much of that will be a scam? How much of that will be big conglomerates who actually run the nodes, give you your 2% return, but meanwhile they've seized control of the Ethereum network, all while you funded it! So if we're taking crypto's values earnestly, I really do think we have to see PoS as an acceleration towards centralization and a big step backwards. ~~~ I can't even get excited about some potential positive outcomes (PoS happening, energy use declining, centralization also happening, crypto dying, switches to PoS causing schisms, crypto dying, nations banning crypto mining, crypto dying) because so many good, honest people have been hoodwinked into this bonkers scheme and they'll lose so, so much money. And honestly, for what? So banks can't stop you from making an ACH transfer for weed? Seriously, just get out there and vote already. ~~~ Broadly I think this a problem with the fundamental libertarian underpinnings of blockchain currencies. They sort of presuppose that everyone starts from the same place, and then you're rewarded in line with what you contribute to the network. But in the world we live in, there's huge inequality--we absolutely do not start from the same place. So unless your protocol has some mechanism to even things out, it'll just reproduce that inequality. And that inequality has a lot of second order effects. Rich people can buy a lot of mining or a lot of stake. They can afford to start businesses like exchanges or crypto news websites (or buy them after they get popular). They can afford to buy ads pumping their coin, or astroturf campaigns against changes they don't like. They can build services on the chain and collect rent. Same as it ever was. There's this whole conundrum in progressive politics about why some people so consistently vote against their own self interest. There's a lot of reasons, but one I thought was just absolutely wrong was "well, everyone thinks they'll be rich someday"--so they vote against taxes and regulation and such. But that is 100% the dynamic in crypto right now. I honestly don't see any positive outcome from any of this, I really don't.

camgunz 5y ago

Gas fees are gwei, which is ETH, which has a varying price relative to fiat. Isn't that true? I might be misunderstanding. Also I didn't know the network would automatically set the difficulty, but yeah good to know. PoS centralizes to the rich, which is the existing payments system, e.g. Visa.

pa7x1 5y ago
Gas fees are denominated in GWei but they are not fixed in a set amount of GWei. What you are implying is like saying that because someone paid 3903 ETH for a Banksy painting [0], then when ETH price goes up the price of the Banksy goes up. We don't think of it this way, right? We think the Banksy has a worth set independently of the price of ETH even if it was sold for certain amount denominated in ETH. Same thing happens with blockspace (the resource sold by the Ethereum network), it's paid in ETH but its worth is whatever the market is willing to pay for it, ETH is just a unit of account. In particular, if you want to do a transfer to pay for a coffee and the gas prices of the last few blocks would mean you would pay more than the coffee is worth, you wouldn't make the transaction, right? So you are priced out of the network because you are implicitly thinking of the worth of your transaction in USD terms and the transaction fees in USD terms. Most people think like you, they have a value they are willing to pay for the network fees and thus the market as a whole finds a value for the available blockspace. PoS is not more centralizing than PoW. I explained this in detail in another post: https://news.ycombinator.com/item?id=29390152 https://news.ycombinator.com/item?id=29390152 Feel free to counter the points made there. [0] https://www.coindesk.com/business/2021/11/19/banksy-paintings-sell-for-3093-eth-in-auction-house-first/ https://www.coindesk.com/business/2021/11/19/banksy-painting...
- camgunz 5y ago
  Yeah, to distill what you're saying (lmk if I'm still misunderstanding), GWei is ETH, but looking at it relative to USD (or whatever fiat) is wrong. That's where I disagree, because electricity and equipment is denominated in fiat, and the whole system is an electricity/equipment (in fiat) -> ETH conversion system, so the relative price of ETH to fiat is beyond relevant, it's the whole idea. No one would do this if ETH were worth less than the fiat needed to make it (promise of future worth aside). And yeah, I do think probably most people still think in fiat, so if you kind of elide all of the ETH/GWei steps and say: > Hey, buy a mining rig for $2k, you'll make $60/day after electricity costs, you'll make your investment back in a month and after that it's pure profit That's all people care about, and rightly so. If, on the other hand you say: > Hey, buy a mining rig for $2k, you'll lose $10/day after electricity costs... that's it That's not super appetizing right. And the only way the system makes fiat is if ETH is worth fiat. You can't abstract it out of the system, it's the only reason the system is relevant at all.