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But what does that mean? Why does it need to be decentralized? Why can’t one party have the same incentive structure? Listen, I’m all for cryptography and Blo

by RC_ITR 4y ago

But what does that mean? Why does it need to be decentralized? Why can’t one party have the same incentive structure? Listen, I’m all for cryptography and Block-chains, but the whole proof-of thing has never made any sense to me. Maybe to make myself more clear, there are levels of trust, and you 100% “trust” that the miners on your random blockchain will do work for you in exchange for money. We’ve seen examples on even big blockchains like Solana where that trust is broken, even. So why exactly is that sort of trust better?

aftbit 4y ago
> But what does that mean? It means that the GPU-holders are trusted only to make sure that all the other GPU holders are following the rules of the network. > Why does it need to be decentralized? Why can’t one party have the same incentive structure? Because if there's only one party, then who is watching them and ensuring they follow the rules? Furthermore, if there's only a handful of parties, who knows that they are not colluding? This is a major problem for proof-of-X tokens as well, as both mining and staking have centralizing forces.
- RC_ITR 4y ago
  >Because if there's only one party, then who is watching them and ensuring they follow the rules? Who is watching the 100's and making sure they're following the rules (and before you say that there are people monitoring the 100's of miners, then there could be people monitoring the 1 in the same way). Maybe I'll put it this way - decentralization is one way to accomplish what you want, but it's the least efficient way to do that possible. Instead we should focus on ways to make existing centralized systems more transparent, but it's hard to create ponzi schemes off that, so it gets less attention. Thais is actually a core concept of cryptography! The entire RSA algo. is based on the idea that it's way easier to check prime factors that it is to solve for them! So why did we decide to make it so that everyone has to solve for prime factors?
  - jsmith45 4y ago
    Its less about a bunch of people checking for crypto, as it is about designing the protocol to make it such that doing the right thing is inherently in the economic interest of the miners/stakers. Basically, unless you are able to get over 50% of the hashrate (or over 50% of the amount staked) you will be expected to make the most money by properly packing as many transactions into the block as you can (or more accurately packing in the set transactions that will net you the largest transaction fee). If you try to cheat your expected mining income will be less. For example if violate certain protocol rules no other node in the network will consider you block valid, so you get zero for your mining effort. Deliberately trying to mine based on an old block is technically legal. But the odds of your deliberate forked block becoming part of the longest chain is far less than the odds if you mine on top of the latest block, so again, it is in your economic interest to mine on the latest. Deliberately refusing to include valid transactions from specific users in the blocks you mine is possible, but (assuming those transactions have a large enough transaction fee to be sensible to include in the block) you are economically better off to include it, since otherwise one of your competitors will include it in a later block and get that money you lost out on. That is really the whole idea, to make it so that the economically rational thing to do is the correct thing. Now the system isn't perfect. if you can get over half the miners/stakers to collude with you, breaking some of the rules can become the more profitable approach. (and for some systems the relevant attack ratios could be larger or smaller than 50%, but the basic idea stands). The other part of the puzzle is that that collusion is a sort of prisoner's dilemma. Other people are not likely to want to join with you to collude unless they are pretty sure you will be able to get a large enough fraction of the hashrate to join with you, as otherwise they are risking making less money by joining with you. which is to say that the non-colluding case is a Nash Equilibrium. I don't see an obviously way to employ such an economic self interest approach against a single centralized server.
    - RC_ITR 4y ago
      >That is really the whole idea, to make it so that the economically rational thing to do is the correct thing. Why is that not the case for Visa or any other centralized entity? You think there's a world in which they incorrectly process transactions and end up wealthier? Like you can keep re-explaining how proof-of-work functions (and trust me I get that), but why is it better than centralization?
someonewhocar3s 4y ago

by RC_ITR 4y ago

aftbit 4y ago

> But what does that mean? It means that the GPU-holders are trusted only to make sure that all the other GPU holders are following the rules of the network. > Why does it need to be decentralized? Why can’t one party have the same incentive structure? Because if there's only one party, then who is watching them and ensuring they follow the rules? Furthermore, if there's only a handful of parties, who knows that they are not colluding? This is a major problem for proof-of-X tokens as well, as both mining and staking have centralizing forces.

RC_ITR 4y ago
>Because if there's only one party, then who is watching them and ensuring they follow the rules? Who is watching the 100's and making sure they're following the rules (and before you say that there are people monitoring the 100's of miners, then there could be people monitoring the 1 in the same way). Maybe I'll put it this way - decentralization is one way to accomplish what you want, but it's the least efficient way to do that possible. Instead we should focus on ways to make existing centralized systems more transparent, but it's hard to create ponzi schemes off that, so it gets less attention. Thais is actually a core concept of cryptography! The entire RSA algo. is based on the idea that it's way easier to check prime factors that it is to solve for them! So why did we decide to make it so that everyone has to solve for prime factors?
- jsmith45 4y ago
  Its less about a bunch of people checking for crypto, as it is about designing the protocol to make it such that doing the right thing is inherently in the economic interest of the miners/stakers. Basically, unless you are able to get over 50% of the hashrate (or over 50% of the amount staked) you will be expected to make the most money by properly packing as many transactions into the block as you can (or more accurately packing in the set transactions that will net you the largest transaction fee). If you try to cheat your expected mining income will be less. For example if violate certain protocol rules no other node in the network will consider you block valid, so you get zero for your mining effort. Deliberately trying to mine based on an old block is technically legal. But the odds of your deliberate forked block becoming part of the longest chain is far less than the odds if you mine on top of the latest block, so again, it is in your economic interest to mine on the latest. Deliberately refusing to include valid transactions from specific users in the blocks you mine is possible, but (assuming those transactions have a large enough transaction fee to be sensible to include in the block) you are economically better off to include it, since otherwise one of your competitors will include it in a later block and get that money you lost out on. That is really the whole idea, to make it so that the economically rational thing to do is the correct thing. Now the system isn't perfect. if you can get over half the miners/stakers to collude with you, breaking some of the rules can become the more profitable approach. (and for some systems the relevant attack ratios could be larger or smaller than 50%, but the basic idea stands). The other part of the puzzle is that that collusion is a sort of prisoner's dilemma. Other people are not likely to want to join with you to collude unless they are pretty sure you will be able to get a large enough fraction of the hashrate to join with you, as otherwise they are risking making less money by joining with you. which is to say that the non-colluding case is a Nash Equilibrium. I don't see an obviously way to employ such an economic self interest approach against a single centralized server.
  - RC_ITR 4y ago
    >That is really the whole idea, to make it so that the economically rational thing to do is the correct thing. Why is that not the case for Visa or any other centralized entity? You think there's a world in which they incorrectly process transactions and end up wealthier? Like you can keep re-explaining how proof-of-work functions (and trust me I get that), but why is it better than centralization?

someonewhocar3s 4y ago