43 ms·

The Merge

102 points by night-rider 4y ago

superb-owl 4y ago
This disclosure should be at the top of the article: > Disclosure: My family and USV have large holdings in ETH and other crypto assets and may continue to add to them in the coming weeks, months, and years.
- camjohnson26 4y ago
  Most of the most knowledgeable people in the space probably have large holdings, since otherwise there’s not much incentive to learn about it.
  - eduction 4y ago
    People don’t need incentives to learn about technologies that solve real problems though. I saw the value in Macs, for example, without ever buying Apple shares, I use AWS without owning Amazon, I learned about Linux without profiting from its spread, etc. Update: My point is simply that if “most knowledgeable people in the space probably have large holdings” as was claimed, this is arguably an indictment of the technology under discussion here. Useful technologies tend to have enthusiasts with no direct financial stake in their success. The fact that people happen to invest in tech companies and do well, or that many have indirect financial incentives to embrace tech, is orthogonal to my point. It is weird if a given tech is entirely or largely carried by people directly invested in it. It raises questions of whether it is generally useful. People who want Fred to front load his disclaimer are probably thinking by along these lines.
    - dotBen 4y ago
      They don't but realistically that is the incentive and motivation for many people - including technologists who ultimately decide to use their understanding of the market to leverage capital rather than code or perform a similar technical function. In your case one could argue that if you saw so much future value in the Mac/Apple ecosystem you missed out significantly by not purchasing Apple stock. Depending on when you made your observation, even a modest investment would have had a significant return over the past 20 years. I actually use the Amazon example when people tell me how worried they are about Amazon becoming all almighty and taking over all commerce - that if they actually believe that then they should probably buy Amazon stock and use the profits to do something to counter whatever negative effect they perceive. As a former software engineer and founder now VC what I personally realized is I could have the greatest impact on the industry from leveraging capital around my own industry thesis rather than continue to build it myself. It's all a layer cake.
    - dataangel 4y ago
      Is your career in a field where learning any of those things is useful? That's still a financial incentive.
    - wanderingbort 4y ago
      I can only speak for myself but I built software in the cryptocurrency/blockchain space for about 5 years before I held any as an investment. For me, the incentive was to learn about the tech for the sake of the tech. I actually wasn’t a believer in cryptocurrency as a long term useful concept. I was building into spaces that would benefit from immutability and transparency where accountability was low (high risk businesses and government transparency) Really, it is something independent of the tech that allowed me to turn a corner on cryptocurrency. I accepted that large groups of believers can “create” value based on nothing but their shared willingness to continue to believe. Bitcoin and Ethereum have such a critical mass of believers IMO. I wasn’t sure that the tech stack would live up to the hype but I was no longer worried that the price would drop to zero.
- gist 4y ago
  Why is it needed at all though? (I know it's the 'style' to disclose like this). Fred is a VC and he is blogging. It's assumed he has some interest or bias and anyone reading should be skeptical. This is not a news story. He could have a bias or an angle even if he doesn't benefit. And what does 'large holdings' even mean anyway? Large to Fred what's large to Fred?
- choppaface 4y ago
  You can trust that any link from avc.com has unstated financial conflict of interest. These links get on the front page because people gawk at “VC said X” not because there’s technical or even truthful discussion of X.
  - pcthrowaway 4y ago
    What unstated financial conflict of interest are you speculating this article has?
kranke155 4y ago
People should really try to understand what’s happening in blockchain. Eventually the computational capacity will reach the levels that virtually any app can be replicated inside of it, with a much lower fee for the developers/owners/users and often having full open source code for the components. The blockchain development environment is fundamentally less terrible than the centralised database world, and eventually the computational differences between the two will be so low that centralised databases will be less desirable just because do the warp in the social contract. Databases encourage centralisation of power to developer/owners, with aggressive bent towards monopoly. Blockchain encouraged opennesss and portability. It’s simply a better social contract.
- jameskilton 4y ago
  - kranke155 4y ago
    Feel free to do a point by point rebuttal.
    - thedufer 4y ago
      > Eventually the computational capacity will reach the levels that virtually any app can be replicated inside of it This only makes sense if blockchains can catch up to traditional methods, because applications in the real world will just continue to get more complex as compute power allows. A defining feature of blockchain computation models is that the same calculation must be run many, many times to verify it. Given that each individual one must run on the hardware that blockchain is competing with direct usage of, there's no plausible story for blockchain to close the gap. > with a much lower fee for the developers/owners/users and often having full open source code for the components. See above - how could running the same calculation many, many times, plus the networking costs to communicate, ever compete on price with just running it once? At least one, and more likely all, of the parties must lose in the blockchain model. > The blockchain development environment is fundamentally less terrible than the centralised database world Terrible in what way? It can't compute on price or compute power/latency/etc. > eventually the computational differences between the two will be so low Again - how? See above. > that centralised databases will be less desirable just because do the warp in the social contract. I can't come up with a way to parse this that has any meaning, so I'm not sure what to say about it. > Databases encourage centralisation of power to developer/owners, with aggressive bent towards monopoly. Blockchain encouraged opennesss and portability. It’s simply a better social contract. This seems to be your only real argument - some vague social benefit. But how do we get there? See above - blockchains are far, far more expensive to run, so why would anyone migrate real applications to them? Even if this benefit were real, which I doubt, you don't seem to have any mechanism for making it work in the face of the very real costs of doing so. Regulation seems like the only plausible way, but anti-regulation and anti-government is a pretty explicit goal of most blockchain folks.
TakeBlaster16 4y ago
No mention of sanctions? It's estimated that ~50% of staked value is held by US companies. These companies are going to have to make an impossible choice. Either: 1. Sign transactions coming from the sanctioned addresses, inviting the wrath of OFAC. or: 2. Refuse to sign these transactions. 2a. If between 33% and 66% of the network refuses, the network will penalize dissenters by slashing their staked coins, until they no longer have a 33% stake. Billions of dollars of customer funds could be lost. 2b. If > 67% of the network refuses, transactions can be successfully censored. Now we no longer have decentralized ETH, we have "USA coin", where the government can censor anyone with a quick email to Brian Armstrong. I don't see a way out. It doesn't look like the network is actually decentralized enough to handle a nation-state attack. This was not an issue with the old proof of work scheme. I'll be amazed if the merge is not delayed while they work on a solution to this. EDIT: If Coinbase does lose that money, you could say the network is operating as designed in the presence of a hostile validator. But a LOT of people are not going to be happy with the result.
- kranke155 4y ago
  “The idea of apolitical money is a fantasy” Yannis Varoufakis, London, circa 2017 Either crypto follows the law or it gets banned. IMO this was inevitable.
  - silentsea90 4y ago
    You present a problem with Proof of Stake as an inevitable run in with the law and/or some folly of the crypto community. That's not very sound logic. I personally believe in apolitical decentralized money winning against fiat which is governed on the whims of central bankers and crony capitalism. Every system where technology brings fairness, power to all, and hard rules wins. This will not be an exception. It is the separation of money and state, not very dissimilar from church and state, monarchy and nationhood etc.
    - HelloNurse 4y ago
      What "hard rules" can compete with actually enforced law? Don't you expect more "whims" (and scams) from private adventurers than from governments?
koolba 4y ago
Assuming a fork is expected and the PoW chain is running alongside the PoS chain, wouldn’t this cause a massive run up in ETH holdings to end up with assets on both chains?
- foepys 4y ago
  This already happened multiple times, e.g. Ethereum Classic and for Bitcoin with Bitcoin Cash a few years back. It created quite a bit of drama when exchanges refused to give customers the respective forked coins.
  - silentsea90 4y ago
    Exchanges refused to give customers forked coins? Why?!
    - wmf 4y ago
      It takes a certain amount of development work for an exchange to support a new coin so sometimes they don't do it.
      - silentsea90 4y ago
        I'm not sure it's that much work if there's something of tangible current value being held from their rightful owners, esp when they keep adding all sorts of coins. There should at least be a way to extract them even if the exchange doesn't support trading them
        baobabKoodaa 4y ago
        I agree that's the way the world should be, but it isn't.
        landemva 4y ago
        Those who care about claiming forks will not use an exchange. People have varying priorities.
thematrixturtle 4y ago
A less starry-eyed take: https://davidgerard.co.uk/blockchain/2022/08/20/proof-of-stake-is-better-than-proof-of-work-but-ethereums-merge-wont-fix-any-other-problem-with-cryptocurrency/ https://davidgerard.co.uk/blockchain/2022/08/20/proof-of-sta...
- nibbleshifter 4y ago
  Oh, that guy. He tends to be technically incorrect regularly and gets rather arsey when you call him on it.
  - seibelj 4y ago
    He is a crank, he does post here sometimes to bicker with you which can be amusing
- Keeeeeeeks 4y ago
  The core axiom is unfalsifiable because it hinges on asserting the intent, and relying on other unfalsifiable questions to try and ascertain intent ("why do decentralization if not to avoid legal risk of doing bad things?"), but the answers proposed by crypto proponents aren't ideals or scenarios that the writer empathizes with, it seems
- baobabKoodaa 4y ago
  I usually judge arguments on their merits, but on this case I'll make an exception and judge by the credibility of the author: that article is not worth reading. David Gerard is a permabear who has been criticizing crypto for about a decade now. Everything that happens in crypto is bad according to him. Ethereum moves to PoS? Bad. Ethereum doesn't move to PoS? Bad. There's no event in crypto that would be positive according to him.
yuan43 4y ago
> Proof of Stake systems (of which they are many in the market already like Solana, Avalanche, etc) are considered more secure because the likelihood of a 51% attack is much lower. I don’t plan to lay out the argument here, but suffice it to say that Ethereum is moving to a consensus mechanism that many consider to be more resistant to attack, making it even more secure than it has been. I don't think so. At best, we can say that the attack surface will have changed. How it has changed will unfold. But to claim that POS is "more resistant to attack" is complete rubbish and a sign the author is clueless about the technological ramifications. It's kind of like saying that traveling 2 miles below the ocean's surface by submarine is safer than traveling by car because you can't get hit by a drunk driver.
- thesausageking 4y ago
  Ever since Fred pumped $Kin, I have a hard time taking anything he says about crypto seriously. Here he seems to be again talking his book, even when the facts don't agree with him.
- silentsea90 4y ago
  +1 two different systems with their own pros and cons. So far PoW seems more resilient, but that may also have to do with Bitcoin treating nation states and centralized entities as adversaries from the start.
- derefr 4y ago
  This wasn't supposed to be an argument about the relative exploitability of the attack-surfaces presented by implementations of the technologies of PoW and PoS consensus systems, though; but rather about the economics inherent in "cornering the market" in PoW vs PoS. PoW and PoS both allow a single party to unilaterally control the network when they're working exactly as intended — just under conditions that are impractical in major networks. That impracticality can be measured in economic terms — as a dollars-and-cents cost to acquire the assets necessary to take control. It's harder to buy out 51% of validation stake of a network of size N, than it is to buy the GPUs and the electricity to power them to do 51% of the mining for a network of size N. GPUs are technically unbounded — you can just build your own fabs, if you really care — and so the marginal cost of acquiring another GPU+electricity is constant. But stake is a pie; the marginal cost of acquiring more of it increases as less of it remains available on the market. (And many people will just never give theirs up, for ideological reasons.) Thus, it's harder to Sybil attack PoS than PoW.
rufusroflpunch 4y ago
The idea that Proof of Stake is more secure against attack is beyond absurd, frankly. However you feel about the energy usage of proof of work consensus mechanisms, they are far more resistant to attack and centralization.
- paulgb 4y ago
  I agree that it's absurd today, but how many bitcoin halvings until it isn't? When people talk about the security of bitcoin, there's a tendency to pretend that the network's security isn't 98% subsidized by a diminishing pool of unminted bitcoin.
  - cowtools 4y ago
    There are cryptocurrencies like monero that have implemented a constant "tail emission" block reward to fight off selfish mining attacks. So that leads me to believe that's a threat specific to bitcoin's tokenomics and not PoW cryptocurrencies in general.
    - rcxdude 4y ago
      Yes, if you don't bound the number of tokens it's not obviously doomed as time goes to infinity, but there's still no particular reason to assume that the rate of mining rewards is either good enough to secure the network or not massively inefficient.
  - rcxdude 4y ago
    Yeah, this is why I think bitcoin is long term not worthwhile. While the vision was a digital currency which would be widely used to transact with, it was plausible that transaction costs would be sufficient to secure the network (though it would still be difficult to actually price them effectively). But as a 'store of value', it will start to become either expensive or insecure as the mining rewards peter out.
    - sph 4y ago
mypastself 4y ago
Can someone clarify the point about expected price action changes for ETH/USD and other pairs? Presumably the author believes a smaller proportion of Ether will be regularly traded than on the PoW system, but will the total staked (i.e. held) amount be sufficient to impact prices significantly? Also, why would we expect stakers to not take their profits on a regular basis? What’s the meaning (and reasoning behind) the following statement: > Ethereum will move from a system that has roughly $20mm a day of structural outflows to a system that has roughly a half a million dollars a day of structural inflows.
- wmf 4y ago
  Also, why would we expect stakers to not take their profits on a regular basis? Currently it's impossible to unstake so the existing stakers are self-selected hodlers. Longer term some stakers will hodl and some will take profits.
seydor 4y ago
i am unsettled by the attention that cryptos receive from VCs . This is supposed to be a new economy, not the old one in sheep's clothing. And now they can buy their way into ETH government. No thanks, i hope it tanks

102 points by night-rider 4y ago

This disclosure should be at the top of the article: > Disclosure: My family and USV have large holdings in ETH and other crypto assets and may continue to add to them in the coming weeks, months, and years.

camjohnson26 4y ago
Most of the most knowledgeable people in the space probably have large holdings, since otherwise there’s not much incentive to learn about it.
- eduction 4y ago
  People don’t need incentives to learn about technologies that solve real problems though. I saw the value in Macs, for example, without ever buying Apple shares, I use AWS without owning Amazon, I learned about Linux without profiting from its spread, etc. Update: My point is simply that if “most knowledgeable people in the space probably have large holdings” as was claimed, this is arguably an indictment of the technology under discussion here. Useful technologies tend to have enthusiasts with no direct financial stake in their success. The fact that people happen to invest in tech companies and do well, or that many have indirect financial incentives to embrace tech, is orthogonal to my point. It is weird if a given tech is entirely or largely carried by people directly invested in it. It raises questions of whether it is generally useful. People who want Fred to front load his disclaimer are probably thinking by along these lines.
  - dotBen 4y ago
    They don't but realistically that is the incentive and motivation for many people - including technologists who ultimately decide to use their understanding of the market to leverage capital rather than code or perform a similar technical function. In your case one could argue that if you saw so much future value in the Mac/Apple ecosystem you missed out significantly by not purchasing Apple stock. Depending on when you made your observation, even a modest investment would have had a significant return over the past 20 years. I actually use the Amazon example when people tell me how worried they are about Amazon becoming all almighty and taking over all commerce - that if they actually believe that then they should probably buy Amazon stock and use the profits to do something to counter whatever negative effect they perceive. As a former software engineer and founder now VC what I personally realized is I could have the greatest impact on the industry from leveraging capital around my own industry thesis rather than continue to build it myself. It's all a layer cake.
  - dataangel 4y ago
    Is your career in a field where learning any of those things is useful? That's still a financial incentive.
  - wanderingbort 4y ago
    I can only speak for myself but I built software in the cryptocurrency/blockchain space for about 5 years before I held any as an investment. For me, the incentive was to learn about the tech for the sake of the tech. I actually wasn’t a believer in cryptocurrency as a long term useful concept. I was building into spaces that would benefit from immutability and transparency where accountability was low (high risk businesses and government transparency) Really, it is something independent of the tech that allowed me to turn a corner on cryptocurrency. I accepted that large groups of believers can “create” value based on nothing but their shared willingness to continue to believe. Bitcoin and Ethereum have such a critical mass of believers IMO. I wasn’t sure that the tech stack would live up to the hype but I was no longer worried that the price would drop to zero.
gist 4y ago
Why is it needed at all though? (I know it's the 'style' to disclose like this). Fred is a VC and he is blogging. It's assumed he has some interest or bias and anyone reading should be skeptical. This is not a news story. He could have a bias or an angle even if he doesn't benefit. And what does 'large holdings' even mean anyway? Large to Fred what's large to Fred?
choppaface 4y ago
You can trust that any link from avc.com has unstated financial conflict of interest. These links get on the front page because people gawk at “VC said X” not because there’s technical or even truthful discussion of X.
- pcthrowaway 4y ago
  What unstated financial conflict of interest are you speculating this article has?

kranke155 4y ago

People should really try to understand what’s happening in blockchain. Eventually the computational capacity will reach the levels that virtually any app can be replicated inside of it, with a much lower fee for the developers/owners/users and often having full open source code for the components. The blockchain development environment is fundamentally less terrible than the centralised database world, and eventually the computational differences between the two will be so low that centralised databases will be less desirable just because do the warp in the social contract. Databases encourage centralisation of power to developer/owners, with aggressive bent towards monopoly. Blockchain encouraged opennesss and portability. It’s simply a better social contract.

jameskilton 4y ago
- kranke155 4y ago
  Feel free to do a point by point rebuttal.
  - thedufer 4y ago
    > Eventually the computational capacity will reach the levels that virtually any app can be replicated inside of it This only makes sense if blockchains can catch up to traditional methods, because applications in the real world will just continue to get more complex as compute power allows. A defining feature of blockchain computation models is that the same calculation must be run many, many times to verify it. Given that each individual one must run on the hardware that blockchain is competing with direct usage of, there's no plausible story for blockchain to close the gap. > with a much lower fee for the developers/owners/users and often having full open source code for the components. See above - how could running the same calculation many, many times, plus the networking costs to communicate, ever compete on price with just running it once? At least one, and more likely all, of the parties must lose in the blockchain model. > The blockchain development environment is fundamentally less terrible than the centralised database world Terrible in what way? It can't compute on price or compute power/latency/etc. > eventually the computational differences between the two will be so low Again - how? See above. > that centralised databases will be less desirable just because do the warp in the social contract. I can't come up with a way to parse this that has any meaning, so I'm not sure what to say about it. > Databases encourage centralisation of power to developer/owners, with aggressive bent towards monopoly. Blockchain encouraged opennesss and portability. It’s simply a better social contract. This seems to be your only real argument - some vague social benefit. But how do we get there? See above - blockchains are far, far more expensive to run, so why would anyone migrate real applications to them? Even if this benefit were real, which I doubt, you don't seem to have any mechanism for making it work in the face of the very real costs of doing so. Regulation seems like the only plausible way, but anti-regulation and anti-government is a pretty explicit goal of most blockchain folks.

TakeBlaster16 4y ago

No mention of sanctions? It's estimated that ~50% of staked value is held by US companies. These companies are going to have to make an impossible choice. Either: 1. Sign transactions coming from the sanctioned addresses, inviting the wrath of OFAC. or: 2. Refuse to sign these transactions. 2a. If between 33% and 66% of the network refuses, the network will penalize dissenters by slashing their staked coins, until they no longer have a 33% stake. Billions of dollars of customer funds could be lost. 2b. If > 67% of the network refuses, transactions can be successfully censored. Now we no longer have decentralized ETH, we have "USA coin", where the government can censor anyone with a quick email to Brian Armstrong. I don't see a way out. It doesn't look like the network is actually decentralized enough to handle a nation-state attack. This was not an issue with the old proof of work scheme. I'll be amazed if the merge is not delayed while they work on a solution to this. EDIT: If Coinbase does lose that money, you could say the network is operating as designed in the presence of a hostile validator. But a LOT of people are not going to be happy with the result.

kranke155 4y ago
“The idea of apolitical money is a fantasy” Yannis Varoufakis, London, circa 2017 Either crypto follows the law or it gets banned. IMO this was inevitable.
- silentsea90 4y ago
  You present a problem with Proof of Stake as an inevitable run in with the law and/or some folly of the crypto community. That's not very sound logic. I personally believe in apolitical decentralized money winning against fiat which is governed on the whims of central bankers and crony capitalism. Every system where technology brings fairness, power to all, and hard rules wins. This will not be an exception. It is the separation of money and state, not very dissimilar from church and state, monarchy and nationhood etc.
  - HelloNurse 4y ago
    What "hard rules" can compete with actually enforced law? Don't you expect more "whims" (and scams) from private adventurers than from governments?

koolba 4y ago

Assuming a fork is expected and the PoW chain is running alongside the PoS chain, wouldn’t this cause a massive run up in ETH holdings to end up with assets on both chains?

foepys 4y ago
This already happened multiple times, e.g. Ethereum Classic and for Bitcoin with Bitcoin Cash a few years back. It created quite a bit of drama when exchanges refused to give customers the respective forked coins.
- silentsea90 4y ago
  Exchanges refused to give customers forked coins? Why?!
  - wmf 4y ago
    It takes a certain amount of development work for an exchange to support a new coin so sometimes they don't do it.
    - silentsea90 4y ago
      I'm not sure it's that much work if there's something of tangible current value being held from their rightful owners, esp when they keep adding all sorts of coins. There should at least be a way to extract them even if the exchange doesn't support trading them
      - baobabKoodaa 4y ago
        I agree that's the way the world should be, but it isn't.
      - landemva 4y ago
        Those who care about claiming forks will not use an exchange. People have varying priorities.

thematrixturtle 4y ago

A less starry-eyed take: https://davidgerard.co.uk/blockchain/2022/08/20/proof-of-stake-is-better-than-proof-of-work-but-ethereums-merge-wont-fix-any-other-problem-with-cryptocurrency/ https://davidgerard.co.uk/blockchain/2022/08/20/proof-of-sta...

nibbleshifter 4y ago
Oh, that guy. He tends to be technically incorrect regularly and gets rather arsey when you call him on it.
- seibelj 4y ago
  He is a crank, he does post here sometimes to bicker with you which can be amusing
Keeeeeeeks 4y ago
The core axiom is unfalsifiable because it hinges on asserting the intent, and relying on other unfalsifiable questions to try and ascertain intent ("why do decentralization if not to avoid legal risk of doing bad things?"), but the answers proposed by crypto proponents aren't ideals or scenarios that the writer empathizes with, it seems
baobabKoodaa 4y ago
I usually judge arguments on their merits, but on this case I'll make an exception and judge by the credibility of the author: that article is not worth reading. David Gerard is a permabear who has been criticizing crypto for about a decade now. Everything that happens in crypto is bad according to him. Ethereum moves to PoS? Bad. Ethereum doesn't move to PoS? Bad. There's no event in crypto that would be positive according to him.

yuan43 4y ago

> Proof of Stake systems (of which they are many in the market already like Solana, Avalanche, etc) are considered more secure because the likelihood of a 51% attack is much lower. I don’t plan to lay out the argument here, but suffice it to say that Ethereum is moving to a consensus mechanism that many consider to be more resistant to attack, making it even more secure than it has been. I don't think so. At best, we can say that the attack surface will have changed. How it has changed will unfold. But to claim that POS is "more resistant to attack" is complete rubbish and a sign the author is clueless about the technological ramifications. It's kind of like saying that traveling 2 miles below the ocean's surface by submarine is safer than traveling by car because you can't get hit by a drunk driver.

thesausageking 4y ago
Ever since Fred pumped $Kin, I have a hard time taking anything he says about crypto seriously. Here he seems to be again talking his book, even when the facts don't agree with him.
silentsea90 4y ago
+1 two different systems with their own pros and cons. So far PoW seems more resilient, but that may also have to do with Bitcoin treating nation states and centralized entities as adversaries from the start.
derefr 4y ago
This wasn't supposed to be an argument about the relative exploitability of the attack-surfaces presented by implementations of the technologies of PoW and PoS consensus systems, though; but rather about the economics inherent in "cornering the market" in PoW vs PoS. PoW and PoS both allow a single party to unilaterally control the network when they're working exactly as intended — just under conditions that are impractical in major networks. That impracticality can be measured in economic terms — as a dollars-and-cents cost to acquire the assets necessary to take control. It's harder to buy out 51% of validation stake of a network of size N, than it is to buy the GPUs and the electricity to power them to do 51% of the mining for a network of size N. GPUs are technically unbounded — you can just build your own fabs, if you really care — and so the marginal cost of acquiring another GPU+electricity is constant. But stake is a pie; the marginal cost of acquiring more of it increases as less of it remains available on the market. (And many people will just never give theirs up, for ideological reasons.) Thus, it's harder to Sybil attack PoS than PoW.

rufusroflpunch 4y ago

The idea that Proof of Stake is more secure against attack is beyond absurd, frankly. However you feel about the energy usage of proof of work consensus mechanisms, they are far more resistant to attack and centralization.

paulgb 4y ago
I agree that it's absurd today, but how many bitcoin halvings until it isn't? When people talk about the security of bitcoin, there's a tendency to pretend that the network's security isn't 98% subsidized by a diminishing pool of unminted bitcoin.
- cowtools 4y ago
  There are cryptocurrencies like monero that have implemented a constant "tail emission" block reward to fight off selfish mining attacks. So that leads me to believe that's a threat specific to bitcoin's tokenomics and not PoW cryptocurrencies in general.
  - rcxdude 4y ago
    Yes, if you don't bound the number of tokens it's not obviously doomed as time goes to infinity, but there's still no particular reason to assume that the rate of mining rewards is either good enough to secure the network or not massively inefficient.
- rcxdude 4y ago
  Yeah, this is why I think bitcoin is long term not worthwhile. While the vision was a digital currency which would be widely used to transact with, it was plausible that transaction costs would be sufficient to secure the network (though it would still be difficult to actually price them effectively). But as a 'store of value', it will start to become either expensive or insecure as the mining rewards peter out.
  - sph 4y ago

mypastself 4y ago

Can someone clarify the point about expected price action changes for ETH/USD and other pairs? Presumably the author believes a smaller proportion of Ether will be regularly traded than on the PoW system, but will the total staked (i.e. held) amount be sufficient to impact prices significantly? Also, why would we expect stakers to not take their profits on a regular basis? What’s the meaning (and reasoning behind) the following statement: > Ethereum will move from a system that has roughly $20mm a day of structural outflows to a system that has roughly a half a million dollars a day of structural inflows.

wmf 4y ago
Also, why would we expect stakers to not take their profits on a regular basis? Currently it's impossible to unstake so the existing stakers are self-selected hodlers. Longer term some stakers will hodl and some will take profits.

seydor 4y ago

i am unsettled by the attention that cryptos receive from VCs . This is supposed to be a new economy, not the old one in sheep's clothing. And now they can buy their way into ETH government. No thanks, i hope it tanks