7 ms·

Ahh proof of stake, the nail in the coffin of decentralization. What did you say? the more you have of the capital the more you influence the system? what a no

• xadhominemx 4y ago
  It’s a lot more challenging to run a mining operation that even breaks even over the long run than it is to buy a couple eth and start staking
  • bombcar 4y ago
    Like many decentralized systems, it's not actually decentralized but can have the appearance of such. All these systems have "whales" such that the individual can't do much except align with a whale. Applies to more than just crypto, too.
    • flatline 4y ago
      The internet is this way. The reality is more about peering agreements and CDNs than a neutral decentralized computer network. But it is still decentralized, just primarily among a few big players.
      • bombcar 4y ago
        Yeah, but people hear "decentralized" and think "I can do whatever I want" - not the reality of what it actually is and how it works.
  • cowtools 4y ago
    Why is it necessary to break even? Ordinary users can mine on their home hardware and make a return on their existing hardware before it depreciates.
  • latchkey 4y ago
    Very large ETH miner here. It is less challenging than you think. I'm not saying it is easy, but it is definitely doable with the right team of people.
• bibabaloo 4y ago
  > the more you have of the capital the more you influence the system That's not how PoS works, though?
  • rglullis 4y ago
    Do not feed the troll. Flag and move along...
    • capableweb 4y ago
      Well, the problem with this is that the misinformation stays around, influencing future discussions when it comes up again, when people keep repeating the same thing over and over. It would be more interesting to discuss new flaws in the protocol, or things that generally haven't been discussed before.
      • drdrek 4y ago
        Do you think that I mean direct influence? that they can reprogram contracts? Don't straw man me. Large miners do have power, the power to destabilize the system. The same power large POW syndicates have that delays POS will be there in POS only in a more direct literal way. What do you think will happen if a more decentralized verification system will be proposed once there are people and institutions that will have large sums of invested money and effort? do you think that they will just give away the financial power they have? this is not how any system involving human works and cryptographic technology is not going to change that.
        • rglullis 4y ago
          > this is not how any system involving human works and cryptographic technology is not going to change that. How is a system that allows people with ~$30k to have any type of influence worse than the status quo?
  • haarts 4y ago
    How does it work?
• ETH_start 4y ago
  >>the more you have of the capital the more you influence the system? what a novel concept! That is exactly how Proof of Work works as well. What makes PoW and PoS implementations like Ethereum's capture resistant is that they are governance-free, so capital is NOT used to influence governance. It is only used as a signal that is costly so as to prevent Sybil attacks.
  • drdrek 4y ago
    The "Move" to POS breaks the myth of the system being immutable and "governance-free". The people with a lot of stake in the system can change or prevent change to the system. One of the major reasons that POS takes so long to implement is that individuals and syndicates that have invested a lot of money in to POW infrastructure block it and warn that it "doing it hastily" will harm the stability of the system. And they are right, it will harm the stability of the system because it is centralized and is governed by the individuals and syndicates with the most vested interest.
    • danielschonfeld 4y ago
    • ETH_start 4y ago
      >>The people with a lot of stake in the system can change or prevent change to the system. This is very misinformed. There is no governance by stake vote in Ethereum. The protocol is immutable absent a user willingly updating their node software to run a different protocol. Stake is used exactly the same way hash generation hardware is used in PoW: to determine what share of blocks a person produces. This is safe in both Ethereum PoS and PoW as long as the assumption that 51% of block generation capital (stake, and hashing hardware, respectively) is controlled by honest parties holds true.
• rekoil 4y ago
  Proof of Work is the same, just with more steps.
  • CSMastermind 4y ago
    That's weird, it's almost like the basic premise of cryptocurrency was flawed from the beginning.
    • tekromancr 4y ago
      Wait, you are saying that people with more capital have more power under capitalism?
    • coffeeblack 4y ago
      What would you say “the basic premise” is?
    • yellowapple 4y ago
      Is it? Or are you letting perfect be the enemy of good? Cryptocurrencies might not be perfectly immune to centralization, but even with their problems they're far less prone to centralization than any other sort of currency short of reverting to gold coins or seashells - and you can't exactly use gold coins and seashells for online payments.
  • cowtools 4y ago
    I disagree. If you can design a PoW system where the distinguishing factor between profitable mining and unprofitable mining is the depreciation of generic hardware, then the public will generally have control over the network so long as the public owns most of the world's generic computing power as opposed to some special interest group like ASIC miners.
    • ahnick 4y ago
      This is exactly what Chia (https://www.chia.net https://www.chia.net) has done by using hard drive storage space to hold the proofs. This allows the generic hardware of general purpose computers with hard drives to operate profitable and energy efficient full nodes on the network. Especially if these are existing machines people already own. Also, the computing infrastructure needed to farm (mine) the plot files (files holding the proofs) is minimal enough that it can be run from a Raspberry Pi.
• syzygyhack 4y ago
  The decentralization of PoS depends entirely on initial token distribution.
  • cowtools 4y ago
    How would you distribute tokens fairly? Give 1 to every person in the world? What about the next generation?
    • yellowapple 4y ago
      1. Peg coins to units of land value 2. Mint NFTs representing land parcels and persons 3. Collect land value tax from all holders of parcel NFTs 4. Disburse dividends to all holders of personhood NFTs 5. Bask in the glory of Crypto-Georgism (Disclaimer: I have no idea how practical this is, but it sounds fuckin' rad.)
      • cowtools 4y ago
        Interesting idea but you need someone to enforce land contracts and distribute person-hood contracts, so it becomes centralized. Also it would suck for mennonites who don't want to use technology.
  • deleted 4y ago
    [deleted]
• elif 4y ago
  "machine enforced plutocratic system where early adopters and syndicates have absolute power" Also applies to, e.g. USD spent on amazon, casting votes in bipartisan elections, paying taxes, etc. It is a fundamental aspect of modern capitalist organization of wealth. It is worth assessing the rate at which it is being concentrated, which for USD is a historically unprecedented rate.
  • cowtools 4y ago
    >It is a fundamental aspect of modern capitalist organization of wealth. In a functioning system it's a property that reflects the time-value of money. In cryptocurrency, there is no need for such a property. Any altruistically-designed cryptocurrency would have inflationary tokenomics.
    • elif 4y ago
      Let me know when ETH gives interest-free borrowing, debt forgiveness, bankruptcy bailouts, years of quantitative easing, 10x leveraging of capital etc. but only for the richest 100 or so ETH holders... It's easy to believe in M1 and even M2 USD, but when you look at M3 and FR policy driving continuous unending inflation, I think you'll find proof-of-stake to be Robinhood level egalitarian by comparison. Btw you can stake less than 32 eth on plenty of services.
      • cowtools 4y ago
        I don't know what you are trying to say here, but know this: ETH and USD are not comparable. The US Government secures real-world business operations themselves, while cryptocurrencies merely secure payments. Who pays the price of USD inflation? It's largely not Americans. It's a net transfer of wealth from the satellite economies (that the USA secures through its military presence) to the USA. Not to mention, (an appropriate amount of) inflation promotes actual spending. Cryptocurrencies are not economies, they are merely payment networks. They should be useful as payment systems. They should primarily serve to provide value to those using them as payment systems, not investors, developers, inside traders, stakers, miners, or any other middleman. The moment that it's more favorable to become a middleman than to use cryptocurrency for it's intended purpose is the moment that the dynamics of the system switch from payment network to ponzi scheme. Cryptocurrencies SHOULD NOT favor early investors. They SHOULD have inflation in the form of a block reward, which ensures the security of the network for those that USE cryptocurrency at the cost of those who merely OWN it. You can't escape consequences forever.
• coffeeblack 4y ago
  > the more you have of the capital the more you influence the system? You can influence the payment processing. And if the crypto would allow false payments, it’s value would immediately drop to zero. The more money you have invested, the higher your incentive to keep it’s value stable.
  • cowtools 4y ago
    keep the value stable or keep the value high? two very different things; For example I'd argue Bitcoin's high L1 transaction fees keep the value unstable, but higher. It is not obvious to me that an agent with higher investment should be allowed to notarize the payments. The system should generally work for the benefit of the users, not the HODLers, developers, miners, stakers or any other special interest group. P.S. I think PoS is a major downgrade in decentralization. At that point, you might as well just use classical consensus: it's more secure as your relationships with notaries are explicitly established as opposed to choosing whoever happens to have the most coins.
  • 0xfoobar 4y ago
    Article author here. PoS validators have the power to propose new blocks and attest to the chain head. They cannot change the state transition function to allow false payments, just as BTC miners cannot use their block proposal power to mint arbitrary coin amounts.
    • dragontamer 4y ago
      If it's like BTC, then can't you spend coin, then attest that a different head was the correct chain, thereby undoing the transaction? (Assuming you have enough hashing power / staking power to get people to believe a different head)
      • 0xfoobar 4y ago
        Great question, PoS actually has stronger guarantees against double-spending than PoW does. For PoW you just need to temporarily rent enough hashpower to do a mild reorg. PoS has a concept called "block finality", where once a block has been marked finalized it cannot be reorged without committing to getting slashed for 1/3 of total staked ether (several billion dollars). Blocks typically get finalized after 6 minutes. This is possible because you can explicitly check whether validators have voted (attested) for two separate blocks at the same chain height.