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Answer (12 yr crypto dev & veteran): Number of nodes is a poor metric that is easily gamified (pumped up), presenting an artificial picture. If a blockchain's

Answer (12 yr crypto dev & veteran): Number of nodes is a poor metric that is easily gamified (pumped up), presenting an artificial picture. If a blockchain's economics purposefully incentivizes nodes, then number-of-nodes is entirely subsidized, in one common example. Further, the "Sybil" factor - which one party controls many nodes - and other centralizing factors - e.g. 90% of nodes are on Big Cloud - also complicates the number-of-nodes use as a simple metric and useful comparator.

mbesto 4y ago
Answer (0 yr crypto dev & veteran): I start a new coin call $FOO. I release 1,000,000 coins. I sell one coin to a friend for $1,0000, and keep the remaining 999,999 coins for myself. The market cap is now $100M. > Number of nodes is a poor metric that is easily gamified (pumped up), presenting an artificial picture. You can game either one.
- mgraczyk 4y ago
  If there's a public order book, it's very easy to see through this. Harder to do that with nodes.
  - vlovich123 4y ago
    And yet so many instances of crypto coins that did this. I’m pretty sure they all had public books. The challenge isn’t I sell one coin. It’s wash trading. You create sufficient volume from multiple different anonymous accounts continuously. That’s impossible to decipher because ownership is impossible to untangle.
    - mgraczyk 4y ago
      This only works if the exchange is in on it. That has happened many times but it's much harder to do than faking node activity.
      - mbesto 4y ago
        It's much easier to fake the initial activity, then start to have "real" users pile on. The only value I created in my ICO was that I created fake demand and the lemmings followed.
      - giaour 4y ago
        Why does the exchange need to be in on it? If it’s not a KYC exchange, they would have no way of knowing all the Sybil accounts doing the wash trading were being run by the same individual.
        mgraczyk 4y ago
        Almost all limit order books required posting the assets on the book and take a fee on trades. You can read off the amount paid to generate the fictional market cap and judge for yourself if it's likely to be fake activity. For thinly traded books with low liquidity, it's cheap. For thick books with high volume, it's expensive. Also exchanges that are not participating in scams, actively or passively, will attempt to detect wash trading and stop it.
  - jkaptur 4y ago
    Is there a metric that quantifies this? Some sort of market cap * daily liquidity or something?
  - SilverBirch 4y ago
    A public ledger only ensures that you can see through this if you can verify ownershp of wallets, because as we've seen repeatedly, you can programmatically create an entire eco-system of fake wallets trading back and forth. What's the cost? I can trivially create a series of bots that just trade their coins back and forth with each other forever. It'll create huge volumes. Now the reason you don't do this on real chains is because the transaction costs will cripple you. But transaction costs aren't real if the currency you're paying them in was entirely fictional to start with. From the outside there is no way of verifying that any chain has any real activity without verifying ownership of the wallets.
    - mgraczyk 4y ago
      Your counterargument here only applies when exchanges participate in the scam. Of course that does happen, and for a long time you could even pay OKeX to do this for you. But it's much less common than obscure coins faking volume off-exchange or faking node activity.
- fogof 4y ago
  This is why I think network fees are a good metric. As long as anyone can become a block creator, you can’t pump it without losing money.
  - meltedcapacitor 4y ago
    Only works on congested networks, or those that burn fees: in original bitcoin style, without congestion, generating dummy transactions is free for miners (the fees come back in block reward).
- throw101010 4y ago
  Firstly I don't understand who you are "answering" to, the GP didn't talk about Market Cap as a relevant metric. Secondly, Market Cap is only relevant when reported by popular metrics websites which vet their data sources a little... nobody relevant is listing your coin anywhere, sorry if it disappoints you. Thirdly, I'm sure that in your first year as a veteran you will learn to care for coins/token which have liquidity/volume either on reputable CEXs or in tokens/networks with a good track record on DEXs. You can't really game liquidity for long without risking your capital. I know this is HN, so I would expect less low brow criticism... but who am I kidding this is about cryptocurrencies, rules don't apply.
  - deleted 4y ago
    [deleted]
  - mbesto 4y ago
    > Firstly I don't understand who you are "answering" to, the GP didn't talk about Market Cap as a relevant metric. No but they were clearly refuting the alternative suggestion (nodes) was game-able. That was my point. > Market Cap is only relevant when reported by popular metrics websites which vet their data sources a little > you will learn to care for coins/token which have liquidity/volume either on reputable CEXs or in tokens/networks with a good track record on DEXs. This is hilarious, because your idea is that: - It's a popular metrics website - You believe they are vetted by a centralized web site, is the exact antithesis of cryptocurrencies. What happened to decentralization? > You can't really game liquidity for long without risking your capital. Sure, but why is that relevant here? We're not talking about liquidity as being the relevant metrics, we're talking about market cap. Market cap is such a hilarious concept for cryptocurrencies because it converts everything to a fiat, which, again, is the antithesis of cryptocurrency. > I know this is HN, so I would expect less low brow criticism... but who am I kidding this is about cryptocurrencies, rules don't apply. Meeting low brow comments with low brow comments, chapeau!
    - once_inc 4y ago
      Not OP, but: > by a centralized web site, is the exact antithesis of cryptocurrencies. What happened to decentralization? A centralized cryptocurrency is an antithesis. I don't care if any of the products or websites in the surrounding ecosystem are centralized: all I care about is that bitcoin remains decentralized. Decentralization is a force that limits usefullness. Bitcoin is useful only as a base layer; digital gold that higher layer (more centralized) systems can use to settle down to. Being more centralized offers features Bitcoin doesn't have (high throughput, easy onboarding, etc) at a cost of new risks (counterparty risk, etc). Settling down at the behest of the user allows those users to mitigate that risk, and get the best of both worlds.
- NavinF 4y ago
  > 0 yr crypto dev & veteran 0yr experience with all investments? > The market cap is now $100M. Look up "closely-held shares" vs "floating stock" and how free-float market cap is calculated. Btw your comment has nothing to do with the one you're replying to. Why derail the thread instead of starting your own?
- yarky 4y ago
  > The market cap is now $100M. In your dreams only. Good luck finding any serious (aka "smart") money willing to take your valuation seriously. With such due diligence you're likely to be the only one hodling $FOO ;)
  - arcticbull 4y ago
    Thats exactly why market cap is a bad metric - it does not encode market depth (how much you can actually sell before the price moves) or velocity (how many units are changing hands in the wild in a given period). Worst of all, currencies do not have market caps - equities do. Market caps are measured in currencies.
    - mbesto 4y ago
      Ding ding. You found the point.
- wavefunction 4y ago
  It doesn't work that way. Market cap depends on circulating coins/tokens. This is an opportunity for you to learn some more though, which is always good!
lawn 4y ago
It's funny because the whole point of proof-of-work (and proof-of-stake etc) is because the number of nodes is a completely untrustworthy. If a there are very few nodes then that's a sign the crypto isn't very popular/decentralized, but other than that there's not much to say.
SilasX 4y ago
>Number of nodes is a poor metric that is easily gamified (pumped up), presenting an artificial picture. If a blockchain's economics purposefully incentivizes nodes, then number-of-nodes is entirely subsidized, in one common example. I'm not sure that this dynamic would compromise the metric's usefulness. A cryptocurrency can only offer such incentives in-protocol if it's made the currency have real-world, persistent value. So any ability to bribe users to run nodes would itself be a validation of the cryptocurrency's success/influence/etc. (That is, being paid 1000 ScamCoins a week to run a node won't be much of an incentive if they're only worth trillionths of a penny each.) I do agree your next paragraph identifies a real problem though: >Further, the "Sybil" factor - which one party controls many nodes - and other centralizing factors - e.g. 90% of nodes are on Big Cloud - also complicates the number-of-nodes use as a simple metric and useful comparator. It's definitely hard to identify how truly independent the nodes are.
- cowtools 4y ago
  Even if the nodes are independent, I don't think it really matters as much as the distribution of the hash-power. The non-mining nodes will not be able to resist a re-org by antagonistic miners.
  - landemva 4y ago
    Is this true for validating full nodes on a proof of work chain? >> The non-mining nodes will not be able to resist a re-org by antagonistic miners. A full node can pick whatever block it wants as the tip of the chain. Many nodes choosing the same would be a UASF. That would resist, by ignoring, the antagonistic miners.
    - cowtools 4y ago
      It does not matter because any new node joining would only need to connect to a single node that doesn't do the USAF in order to be converted against the USAF. The default behavior is to resist the USAF unless otherwise programmed. Additionally, different nodes could receive different blocks at different times, meaning they will decide to do a USAF at different block heights. The idea that non-mining/staking nodes do anything for decentralization or network security is basically cope for cryptocurrencies in which it is difficult for regular users to actually participate in mining/staking. "The current system where every user is a network node is not the intended configuration for large scale. That would be like every Usenet user runs their own NNTP server. The design supports letting users just be users. The more burden it is to run a node, the fewer nodes there will be. Those few nodes will be big server farms. The rest will be client nodes that only do transactions and don't generate." -Satoshi https://bitcointalk.org/index.php?topic=532.msg6306#msg6306 https://bitcointalk.org/index.php?topic=532.msg6306#msg6306
jsemrau 4y ago
Also from a service provider / architecture view there is a huge concentration on AWS [1]. So while the nodes might appear large in numbers, if AWS goes down (which is not entirely unheard of), the nodes go down with it. [1] https://app.finclout.io/t/O0kvaxm https://app.finclout.io/t/O0kvaxm
- once_inc 4y ago
baby 4y ago
I mean to me the problem is how do you define a node? A node participating in consensus or any node? And if it's participating in consensus, is it counting only the nodes that participated in consensus since genesis or since some time in the past? All of these technologies are completely different.
- ibz 4y ago
  The problem, if you go that route, is how you define participating in consensus. Say I have a fully synced and always up to date Bitcoin node, running on a Pi in my closet, that I only use to make and receive payments, which I very rarely do. Then yes, that node did participate in consensus for those payments but it was practically asleep for all the other transactions happening in the network (it did validate all blocks, but it didn't have anything meaningful to say to the network). I think a better metric is nodes that are economic actors, but that is hard to measure, since, like my example above, my node could be sitting in the closet and very rarely being used for actual transactions. So maybe a even better metric then is potential economic actors? How many nodes that could, if needed, be practically used by people in carrying out actual useful transactions. But how do we measure that?
  - baby 4y ago
    To participate in consensus in Bitcoin you'd have to mine a block, otherwise that doesn't count and I think most people would agree with that.
  - once_inc 4y ago
    > it did validate all blocks, but it didn't have anything meaningful to say to the network That is a bit of an understatement of its function. If a miner produced a bad block (with, say, 51 btc block subsidy), and it pushed that block onto the network to my node, it would reject it and not propagate that block to others. This is a meaningful feature that is often overlooked. Looking at metrics like Realized Price and Illiquid Supply helps far more than looking at how many nodes are online.
    - 4y ago
olalonde 4y ago
I feel like you are a bit understating your role here... jgarzik was one of the early Bitcoin core developers.
- nope96 4y ago
  I think he burned his rep pumping "United Bitcoin", a strange Chinese scam coin https://bitcoinmagazine.com/business/garzik-forks-unitedbitcoin-away-maximalists-support-altcoin-communities https://bitcoinmagazine.com/business/garzik-forks-unitedbitc...
  - once_inc 4y ago
    And his involvement in SegWit2X, which was dead in the water because of an off-by-one error by his hand. Had that code been run in production, the entire bitcoin ecosystem would have ground to a halt. So yeah, bit of a burned reputation.

mbesto 4y ago

Answer (0 yr crypto dev & veteran): I start a new coin call $FOO. I release 1,000,000 coins. I sell one coin to a friend for $1,0000, and keep the remaining 999,999 coins for myself. The market cap is now $100M. > Number of nodes is a poor metric that is easily gamified (pumped up), presenting an artificial picture. You can game either one.

mgraczyk 4y ago
If there's a public order book, it's very easy to see through this. Harder to do that with nodes.
- vlovich123 4y ago
  And yet so many instances of crypto coins that did this. I’m pretty sure they all had public books. The challenge isn’t I sell one coin. It’s wash trading. You create sufficient volume from multiple different anonymous accounts continuously. That’s impossible to decipher because ownership is impossible to untangle.
  - mgraczyk 4y ago
    This only works if the exchange is in on it. That has happened many times but it's much harder to do than faking node activity.
    - mbesto 4y ago
      It's much easier to fake the initial activity, then start to have "real" users pile on. The only value I created in my ICO was that I created fake demand and the lemmings followed.
    - giaour 4y ago
      Why does the exchange need to be in on it? If it’s not a KYC exchange, they would have no way of knowing all the Sybil accounts doing the wash trading were being run by the same individual.
      - mgraczyk 4y ago
        Almost all limit order books required posting the assets on the book and take a fee on trades. You can read off the amount paid to generate the fictional market cap and judge for yourself if it's likely to be fake activity. For thinly traded books with low liquidity, it's cheap. For thick books with high volume, it's expensive. Also exchanges that are not participating in scams, actively or passively, will attempt to detect wash trading and stop it.
- jkaptur 4y ago
  Is there a metric that quantifies this? Some sort of market cap * daily liquidity or something?
- SilverBirch 4y ago
  A public ledger only ensures that you can see through this if you can verify ownershp of wallets, because as we've seen repeatedly, you can programmatically create an entire eco-system of fake wallets trading back and forth. What's the cost? I can trivially create a series of bots that just trade their coins back and forth with each other forever. It'll create huge volumes. Now the reason you don't do this on real chains is because the transaction costs will cripple you. But transaction costs aren't real if the currency you're paying them in was entirely fictional to start with. From the outside there is no way of verifying that any chain has any real activity without verifying ownership of the wallets.
  - mgraczyk 4y ago
    Your counterargument here only applies when exchanges participate in the scam. Of course that does happen, and for a long time you could even pay OKeX to do this for you. But it's much less common than obscure coins faking volume off-exchange or faking node activity.
fogof 4y ago
This is why I think network fees are a good metric. As long as anyone can become a block creator, you can’t pump it without losing money.
- meltedcapacitor 4y ago
  Only works on congested networks, or those that burn fees: in original bitcoin style, without congestion, generating dummy transactions is free for miners (the fees come back in block reward).
throw101010 4y ago
Firstly I don't understand who you are "answering" to, the GP didn't talk about Market Cap as a relevant metric. Secondly, Market Cap is only relevant when reported by popular metrics websites which vet their data sources a little... nobody relevant is listing your coin anywhere, sorry if it disappoints you. Thirdly, I'm sure that in your first year as a veteran you will learn to care for coins/token which have liquidity/volume either on reputable CEXs or in tokens/networks with a good track record on DEXs. You can't really game liquidity for long without risking your capital. I know this is HN, so I would expect less low brow criticism... but who am I kidding this is about cryptocurrencies, rules don't apply.
- deleted 4y ago
  [deleted]
- mbesto 4y ago
  > Firstly I don't understand who you are "answering" to, the GP didn't talk about Market Cap as a relevant metric. No but they were clearly refuting the alternative suggestion (nodes) was game-able. That was my point. > Market Cap is only relevant when reported by popular metrics websites which vet their data sources a little > you will learn to care for coins/token which have liquidity/volume either on reputable CEXs or in tokens/networks with a good track record on DEXs. This is hilarious, because your idea is that: - It's a popular metrics website - You believe they are vetted by a centralized web site, is the exact antithesis of cryptocurrencies. What happened to decentralization? > You can't really game liquidity for long without risking your capital. Sure, but why is that relevant here? We're not talking about liquidity as being the relevant metrics, we're talking about market cap. Market cap is such a hilarious concept for cryptocurrencies because it converts everything to a fiat, which, again, is the antithesis of cryptocurrency. > I know this is HN, so I would expect less low brow criticism... but who am I kidding this is about cryptocurrencies, rules don't apply. Meeting low brow comments with low brow comments, chapeau!
  - once_inc 4y ago
    Not OP, but: > by a centralized web site, is the exact antithesis of cryptocurrencies. What happened to decentralization? A centralized cryptocurrency is an antithesis. I don't care if any of the products or websites in the surrounding ecosystem are centralized: all I care about is that bitcoin remains decentralized. Decentralization is a force that limits usefullness. Bitcoin is useful only as a base layer; digital gold that higher layer (more centralized) systems can use to settle down to. Being more centralized offers features Bitcoin doesn't have (high throughput, easy onboarding, etc) at a cost of new risks (counterparty risk, etc). Settling down at the behest of the user allows those users to mitigate that risk, and get the best of both worlds.
NavinF 4y ago
> 0 yr crypto dev & veteran 0yr experience with all investments? > The market cap is now $100M. Look up "closely-held shares" vs "floating stock" and how free-float market cap is calculated. Btw your comment has nothing to do with the one you're replying to. Why derail the thread instead of starting your own?
yarky 4y ago
> The market cap is now $100M. In your dreams only. Good luck finding any serious (aka "smart") money willing to take your valuation seriously. With such due diligence you're likely to be the only one hodling $FOO ;)
- arcticbull 4y ago
  Thats exactly why market cap is a bad metric - it does not encode market depth (how much you can actually sell before the price moves) or velocity (how many units are changing hands in the wild in a given period). Worst of all, currencies do not have market caps - equities do. Market caps are measured in currencies.
  - mbesto 4y ago
    Ding ding. You found the point.
wavefunction 4y ago
It doesn't work that way. Market cap depends on circulating coins/tokens. This is an opportunity for you to learn some more though, which is always good!

lawn 4y ago

It's funny because the whole point of proof-of-work (and proof-of-stake etc) is because the number of nodes is a completely untrustworthy. If a there are very few nodes then that's a sign the crypto isn't very popular/decentralized, but other than that there's not much to say.

SilasX 4y ago

>Number of nodes is a poor metric that is easily gamified (pumped up), presenting an artificial picture. If a blockchain's economics purposefully incentivizes nodes, then number-of-nodes is entirely subsidized, in one common example. I'm not sure that this dynamic would compromise the metric's usefulness. A cryptocurrency can only offer such incentives in-protocol if it's made the currency have real-world, persistent value. So any ability to bribe users to run nodes would itself be a validation of the cryptocurrency's success/influence/etc. (That is, being paid 1000 ScamCoins a week to run a node won't be much of an incentive if they're only worth trillionths of a penny each.) I do agree your next paragraph identifies a real problem though: >Further, the "Sybil" factor - which one party controls many nodes - and other centralizing factors - e.g. 90% of nodes are on Big Cloud - also complicates the number-of-nodes use as a simple metric and useful comparator. It's definitely hard to identify how truly independent the nodes are.

cowtools 4y ago
Even if the nodes are independent, I don't think it really matters as much as the distribution of the hash-power. The non-mining nodes will not be able to resist a re-org by antagonistic miners.
- landemva 4y ago
  Is this true for validating full nodes on a proof of work chain? >> The non-mining nodes will not be able to resist a re-org by antagonistic miners. A full node can pick whatever block it wants as the tip of the chain. Many nodes choosing the same would be a UASF. That would resist, by ignoring, the antagonistic miners.
  - cowtools 4y ago
    It does not matter because any new node joining would only need to connect to a single node that doesn't do the USAF in order to be converted against the USAF. The default behavior is to resist the USAF unless otherwise programmed. Additionally, different nodes could receive different blocks at different times, meaning they will decide to do a USAF at different block heights. The idea that non-mining/staking nodes do anything for decentralization or network security is basically cope for cryptocurrencies in which it is difficult for regular users to actually participate in mining/staking. "The current system where every user is a network node is not the intended configuration for large scale. That would be like every Usenet user runs their own NNTP server. The design supports letting users just be users. The more burden it is to run a node, the fewer nodes there will be. Those few nodes will be big server farms. The rest will be client nodes that only do transactions and don't generate." -Satoshi https://bitcointalk.org/index.php?topic=532.msg6306#msg6306 https://bitcointalk.org/index.php?topic=532.msg6306#msg6306

jsemrau 4y ago

Also from a service provider / architecture view there is a huge concentration on AWS [1]. So while the nodes might appear large in numbers, if AWS goes down (which is not entirely unheard of), the nodes go down with it. [1] https://app.finclout.io/t/O0kvaxm https://app.finclout.io/t/O0kvaxm

once_inc 4y ago

baby 4y ago

I mean to me the problem is how do you define a node? A node participating in consensus or any node? And if it's participating in consensus, is it counting only the nodes that participated in consensus since genesis or since some time in the past? All of these technologies are completely different.

ibz 4y ago
The problem, if you go that route, is how you define participating in consensus. Say I have a fully synced and always up to date Bitcoin node, running on a Pi in my closet, that I only use to make and receive payments, which I very rarely do. Then yes, that node did participate in consensus for those payments but it was practically asleep for all the other transactions happening in the network (it did validate all blocks, but it didn't have anything meaningful to say to the network). I think a better metric is nodes that are economic actors, but that is hard to measure, since, like my example above, my node could be sitting in the closet and very rarely being used for actual transactions. So maybe a even better metric then is potential economic actors? How many nodes that could, if needed, be practically used by people in carrying out actual useful transactions. But how do we measure that?
- baby 4y ago
  To participate in consensus in Bitcoin you'd have to mine a block, otherwise that doesn't count and I think most people would agree with that.
- once_inc 4y ago
  > it did validate all blocks, but it didn't have anything meaningful to say to the network That is a bit of an understatement of its function. If a miner produced a bad block (with, say, 51 btc block subsidy), and it pushed that block onto the network to my node, it would reject it and not propagate that block to others. This is a meaningful feature that is often overlooked. Looking at metrics like Realized Price and Illiquid Supply helps far more than looking at how many nodes are online.
  - 4y ago

olalonde 4y ago

I feel like you are a bit understating your role here... jgarzik was one of the early Bitcoin core developers.

nope96 4y ago
I think he burned his rep pumping "United Bitcoin", a strange Chinese scam coin https://bitcoinmagazine.com/business/garzik-forks-unitedbitcoin-away-maximalists-support-altcoin-communities https://bitcoinmagazine.com/business/garzik-forks-unitedbitc...
- once_inc 4y ago
  And his involvement in SegWit2X, which was dead in the water because of an off-by-one error by his hand. Had that code been run in production, the entire bitcoin ecosystem would have ground to a halt. So yeah, bit of a burned reputation.