4 ms·

What seems insane to you about using an auction model to efficiently price a scarce resource? (The auction model is the transaction fee bidding market, the scar

What seems insane to you about using an auction model to efficiently price a scarce resource? (The auction model is the transaction fee bidding market, the scarce resource is block space until/unless Ethereum scales.) If you're sidelined by the market because resources are being used by people who feel they have a greater need for them than you (who bid higher), that's an efficient market. It's no different than being priced out of buying corn or wheat - there's not an infinite amount available for everyone to buy at whatever price they please.

Gigachad 4y ago
Ok, I’ll keep using the credit card and traditional banking system where I don’t need to enter an auction and pay $20 to make a transaction.
- everfree 4y ago
  This is such a weird flex, I don't understand what you're trying to say. Continue not purchasing things you don't get value out of, I guess? Good for you.
  - chris_wot 4y ago
    No, he’ll continue paying for things he gets value from using a medium that works for him.
    - everfree 4y ago
      Mediums are themselves services that a consumer decides whether to use based on marginal cost and utility. They are services that are used to purchase products and services. Purchase decisions are made about these services in the same manner as purchase decisions about the end product, at least under the rational choice theory of economics.
      - chris_wot 4y ago
        So under that theory, the medium of Ethereum will increasingly not be chosen.
        everfree 4y ago
        Of course. Once it becomes too expensive because too many people are choosing to use it, then nobody will choose to use it. At that point, nobody will go there anymore because it's too crowded.
        chris_wot 4y ago
        So... the original comment is not a weird flex at all then.
kareemsabri 4y ago
Insane is a strong word. But your description ("efficiently price a scarce resource") is economics textbook language and irrelevant to the end consumer. What's "insane" about a currency where on any given day the effective purchase price of goods can fluctuate by 100x (from $5 gas fee to $500) is that it's not a usable medium of exchange. As a consumer I need price stability. Getting "priced out" of buying a t-shirt, or playing a game, and whatever other thing I want to buy (or sell), is an inconvenience that would cause me to just use a network with sufficient capacity to never be "scarce". The resource I want isn't "block verification". That's Ethereum's problem, not mine. I want the thing I'm trying to buy. So I disagree the market is efficient, there's a tax on goods unrelated to the good in question, and I would use Visa to avoid it, as the other poster said in what you call a "weird flex".
- everfree 4y ago
  > But your description ("efficiently price a scarce resource") is economics textbook language and irrelevant to the end consumer. I don't understand what you mean by this. > What's "insane" about a currency where on any given day the effective purchase price of goods can fluctuate by 100x (from $5 gas fee to $500) is that it's not a usable medium of exchange. I don't consider Ether to be a currency, I consider it to be a commodity. The very fact that people bid the fee market up to high levels, despite the Ethereum network running constantly at its full capacity of a bit over one million transactions per day, is itself proof that the network is a medium of exchange that people choose to use. > As a consumer I need price stability. Getting "priced out" of buying a t-shirt, or playing a game, and whatever other thing I want to buy (or sell), is an inconvenience that would cause me to just use a network with sufficient capacity to never be "scarce". I don't believe that Ethereum is currently very useful for buying t-shirts or playing games. Most of the usage so far has been to run code on the Ethereum Virtual Machine. > The resource I want isn't "block verification". That's Ethereum's problem, not mine. I want the thing I'm trying to buy. So I disagree the market is efficient, there's a tax on goods unrelated to the good in question, and I would use Visa to avoid it, as the other poster said in what you call a "weird flex". The good that Ethereum sells (service really) is the ability to run code on the Ethereum Virtual Machine. If you don't derive value from that service, no one is forcing you to use it. Ethereum wasn't created to dethrone Visa as a payment network for t-shirt purchases at Walmart. It's fine if it isn't used for that. My point remains that pricing a service based on supply and demand (in this case VM execution) is very much sane in an economic sense. When certain customers cease purchasing a service because the price is bid higher than the benefit those customers receive from it, that's market efficiency, not insanity.
chris_wot 4y ago
It’s not in any way a scarce resource. They are cryptokitties.
- everfree 4y ago
  > the scarce resource is block space
  - chris_wot 4y ago
    Artificially created scarcity.
    - everfree 4y ago
      Block space is created from computing power and disk space, both of which are naturally scarce.
      - chris_wot 4y ago
        Only because the algorithm makes it so.
        everfree 4y ago
        I don't understand what this comment means.
        chris_wot 4y ago
        The scarcity is artificial and baked into the algorithm. There’s nothing “natural” about it. It’s by design.
        everfree 4y ago
        VM execution requires computing power and disk space. Those are both naturally scarce, especially in the world's most redundant VM. The same VM instruction is run on more physical CPUs and its result is stored on more SSDs than any other VM setup in history. The overhead required for this kind of redundancy is insane, and it's why the Ethereum VM has such extremely limited throughput. If the VM's cap were lifted and it allowed anybody to use it for free, the demand for VM resources would quickly exceed the clients' ability to host the VM. The Ethereum VM would pin even the beefiest host's CPU at 100% and require each network participant to maintain petabytes of disk space. The way Ethereum works, every client needs to execute every calculation that every other client wants to run on the VM. Every request to run code on the VM is basically an amplification attack against the network, which is why execution is strictly metered and charged for. It's a ballooning On^2 resource problem that is very much limited by the natural scarcity and limitations of the silicon it runs on.

Gigachad 4y ago

Ok, I’ll keep using the credit card and traditional banking system where I don’t need to enter an auction and pay $20 to make a transaction.

everfree 4y ago
This is such a weird flex, I don't understand what you're trying to say. Continue not purchasing things you don't get value out of, I guess? Good for you.
- chris_wot 4y ago
  No, he’ll continue paying for things he gets value from using a medium that works for him.
  - everfree 4y ago
    Mediums are themselves services that a consumer decides whether to use based on marginal cost and utility. They are services that are used to purchase products and services. Purchase decisions are made about these services in the same manner as purchase decisions about the end product, at least under the rational choice theory of economics.
    - chris_wot 4y ago
      So under that theory, the medium of Ethereum will increasingly not be chosen.
      - everfree 4y ago
        Of course. Once it becomes too expensive because too many people are choosing to use it, then nobody will choose to use it. At that point, nobody will go there anymore because it's too crowded.
        chris_wot 4y ago
        So... the original comment is not a weird flex at all then.

kareemsabri 4y ago

Insane is a strong word. But your description ("efficiently price a scarce resource") is economics textbook language and irrelevant to the end consumer. What's "insane" about a currency where on any given day the effective purchase price of goods can fluctuate by 100x (from $5 gas fee to $500) is that it's not a usable medium of exchange. As a consumer I need price stability. Getting "priced out" of buying a t-shirt, or playing a game, and whatever other thing I want to buy (or sell), is an inconvenience that would cause me to just use a network with sufficient capacity to never be "scarce". The resource I want isn't "block verification". That's Ethereum's problem, not mine. I want the thing I'm trying to buy. So I disagree the market is efficient, there's a tax on goods unrelated to the good in question, and I would use Visa to avoid it, as the other poster said in what you call a "weird flex".

everfree 4y ago
> But your description ("efficiently price a scarce resource") is economics textbook language and irrelevant to the end consumer. I don't understand what you mean by this. > What's "insane" about a currency where on any given day the effective purchase price of goods can fluctuate by 100x (from $5 gas fee to $500) is that it's not a usable medium of exchange. I don't consider Ether to be a currency, I consider it to be a commodity. The very fact that people bid the fee market up to high levels, despite the Ethereum network running constantly at its full capacity of a bit over one million transactions per day, is itself proof that the network is a medium of exchange that people choose to use. > As a consumer I need price stability. Getting "priced out" of buying a t-shirt, or playing a game, and whatever other thing I want to buy (or sell), is an inconvenience that would cause me to just use a network with sufficient capacity to never be "scarce". I don't believe that Ethereum is currently very useful for buying t-shirts or playing games. Most of the usage so far has been to run code on the Ethereum Virtual Machine. > The resource I want isn't "block verification". That's Ethereum's problem, not mine. I want the thing I'm trying to buy. So I disagree the market is efficient, there's a tax on goods unrelated to the good in question, and I would use Visa to avoid it, as the other poster said in what you call a "weird flex". The good that Ethereum sells (service really) is the ability to run code on the Ethereum Virtual Machine. If you don't derive value from that service, no one is forcing you to use it. Ethereum wasn't created to dethrone Visa as a payment network for t-shirt purchases at Walmart. It's fine if it isn't used for that. My point remains that pricing a service based on supply and demand (in this case VM execution) is very much sane in an economic sense. When certain customers cease purchasing a service because the price is bid higher than the benefit those customers receive from it, that's market efficiency, not insanity.

chris_wot 4y ago

It’s not in any way a scarce resource. They are cryptokitties.

everfree 4y ago
> the scarce resource is block space
- chris_wot 4y ago
  Artificially created scarcity.
  - everfree 4y ago
    Block space is created from computing power and disk space, both of which are naturally scarce.
    - chris_wot 4y ago
      Only because the algorithm makes it so.
      - everfree 4y ago
        I don't understand what this comment means.
        chris_wot 4y ago
        The scarcity is artificial and baked into the algorithm. There’s nothing “natural” about it. It’s by design.
        everfree 4y ago
        VM execution requires computing power and disk space. Those are both naturally scarce, especially in the world's most redundant VM. The same VM instruction is run on more physical CPUs and its result is stored on more SSDs than any other VM setup in history. The overhead required for this kind of redundancy is insane, and it's why the Ethereum VM has such extremely limited throughput. If the VM's cap were lifted and it allowed anybody to use it for free, the demand for VM resources would quickly exceed the clients' ability to host the VM. The Ethereum VM would pin even the beefiest host's CPU at 100% and require each network participant to maintain petabytes of disk space. The way Ethereum works, every client needs to execute every calculation that every other client wants to run on the VM. Every request to run code on the VM is basically an amplification attack against the network, which is why execution is strictly metered and charged for. It's a ballooning On^2 resource problem that is very much limited by the natural scarcity and limitations of the silicon it runs on.