Topic: Bitcoin Is Not A Democracy. Then What It Is? - page 2. (Read 2739 times)

Not really. It is simple economic logic. If you build something for 0 that is worth 21B, your earned 21B at no cost. If you then destroy it, you destroyed 21B of your value. Therefore it cost 21B.

I don't see the flaw in this argument

Your own !  Or another stakeholder's signature (of which you can, of course, check the validity because it is related to his address).   If a lot of stake holders have signed off successively the validity of all the previous blocks (like miners sign off the validity of previous blocks buy mining on top of it), you can say that all these stake holders have come to consensus that THIS is the list of transactions that are valid, according to the consensus protocol - in exactly the same way that you can say that miners having built blocks on top of one another with PoW, have come to consensus that THAT is the list of transactions that are valid, according to the consensus protocol.

The big difference with mining is that you, as a stake holder, with YOUR full node, are also going to be taking part in the consensus decision if you want to, and you are not at the mercy of miners over which you have nothing to say.  So contrary to the PoW system where full nodes have no consensus decision power (and are hence useless in the decentralization), but can only copy the chain that miners make for them, ALL full nodes with some stake participate in the consensus decision protocol, which makes PoS a much more decentralized system than PoW, because there are no "economies of scale" to be had (apart the few resources to run a full node).  The decentralisation in PoS is exactly equal to the decentralization of ownership of the coins themselves in PoS (and the willingness to participate).


I wouldn't know what that means.  In what way is the block a PoW miner adds, is objective, and the block a PoS decider adds, would be subjective ?


PoS accumulates too: the amount of stake that has "signed off" past blocks is accumulating.  You can of course NOT fake PoS with "old spent keys" if the PoS mechanism is defined correctly: only CURRENT stake holders are eligible to be drawn as the "next staker", with probability equal to their stake (or their stake times the coin age since last staking which is better).  In the same way that in PoW, you're supposed to accept the chain with most PoW in it, you're supposed to accept the PoS chain with most accumulated stake in it, which resolves the consensus problem.  Blocks can orphan in the same way they can with PoW, because of network delays.

You are maybe alluding to the "nothing at stake" problem, but that problem goes away if there is no staking reward.  Multiple staking on different branches has an incentive if you want to win minted coins (if ever the branch you didn't multi-stake on, wins in the end, you would have lost a potential minting gain).  But if there's no reward, your ONLY incentive is to keep the system honest, so that your stake doesn't become worthless in the market.  The bigger your stake, the more probable you will be the next staker, and the more you are willing to keep the system honest.  But even if you are dishonest (that is, you orphan other blocks to "reverse transactions" and you are lucky, and are a randomly selected staker at that moment), or you apply different rules in the block), like with PoW, if the NEXT staker (which you can't be with the same stake in any case) wants to be honest, he won't stake on top of YOUR block (in the same way that another miner won't mine on top of an invalid block) because that other staker doesn't want to lose the value of his stake either in the market.   As a staker, you have no incentive to stake on top of a bad block, because there's nothing to win for you in doing so, you can only make the chain dishonest, and have the market of your coins crash.  Why would you ?

Heck, what are you talking about?

I guess you should go find out what the term cost actually means. As per dictionary, the cost is "the amount of money that is needed in order to buy, do, or make it". In this case specifically, cost means how much you paid to be able to close the whole business. If you are the creator and premined 51% of all coins, that would likely cost you only electricity consumed and time spent on developing the coin. Honestly, you are now shamelessly twisting your position so that it could somehow look even remotely plausible while in fact it is completely untenable

Please. If your coins are worth 21B and you throw them away, no matter how you got them, it costs you 21B. Even if you got them for free it costs you 21B.

The cost has nothing to do with the effect on your Net Worth pre and post coins. It doesn't mean you are poorer. It just means you could be richer.

You simply can't claim that

Mainly, for two reasons. First, there is almost no chance that it would cost exactly that (or any other number based entirely on current market cap, i.e. price). If we talk about an "attack" originating from inside, it might in fact cost next to nothing simply because someone (e.g. a coin creator) might have premined 51% of coins at no cost at all. And once again (this is second), you can't call it an attack at all if the owner (major stake holder) voluntarily chooses to close the whole shebang. In all other cases, it won't be an insider business

I think people have decided to vote to see if btcoin should grow or not, which is also part of democracy.But in fact, bitcoin is also defined as a decentralized currency, not controlled and operated in the online world.

Some likevfo think it is a semi-autonomous self governed peer-to-peer system of digital money.
Decentralized and "not governed" are very different things.  Good topic but you have stumped me.  I will watch this topic! 🙂

This is a wrong use of the notion of "backed".  An asset cannot be backed by WASTE.  If one says that a currency is backed by gold, it means that one can OBTAIN GOLD (of value) against the currency.  One sometimes talks about 'debt-backed money', but in fact, what one wants to point out, is "promise-backed money".  A promise has value (a debt, not).  A mortgage is not debt-backed, it is real-estate-backed.  The mortgage will be honoured in value, and if not, it will be honoured with a REAL HOUSE.  There is economical value to be obtained by a backing.  However, wasted energy doesn't back anything, not more than dog poop does.


I think the big error in bitcoin, most crypto, including say, peercoin (the prototype PoS coin), is that they still couple consensus decision with reward (mining, minting...).  In PoW you have no choice: nobody is going to WASTE RESOURCES and prove it, without a compensation, just to help the system come to consensus.  But as PoS doesn't demand a proof of wasted economical value, and only a small computational effort, there's no need to reward it, and minting is a bad idea: minting is what renders PoS unstable ("nothing at stake" problem).

The error committed by most crypto (copied from bitcoin) is the link between coin creation, and consensus decision.  There's no link in fact and consensus decision shouldn't be rewarded with coin creation.

There is no one who has bitcoins and is not interested in their existence. Bitcoin has United all people. So I am sure that nothing will happen on 1 August. Bicon intended to establish an entire online economy. This will need to constantly carry out the correction. Democracy can't be punished.

First of all, you mentioned a PoS attack from inside.

This would cost exactly 21.678.642.232,83. A PoS attack from the outside, would cost alot more obviously and might be arguably impossible.

For an outside POW You would need to double the existing Hashrate to acquire 51% of Market Cap.

This would cost 1.793.266,75 USD a day to run based on maintenance rate of Hashing24 or Genesis Mining. The cost to setup, let's consider Antminers S9 selling at 2500 USD on Amazon a piece. Since we would need 5.434.141.693 GH/s, this would mean approximately 388.152 Antminers S9, 970.380.000 USD.

Ignoring Logistics and setup costs this would cost around 1 Billion if we could do this in a day. With nothing to gain. Considering that existing miners already have existing infrastructure, they would also easily increase Hashrate to defend (as the market would for PoS buy-in). An attacker would have not only more cost, but a logistically difficult problem to resolve - immediate supply of Hashing Power. Furthermore, each day it took to get the necessary hashpower would arguably cost around 1M USD considering a 40% ROI.

As opposed, a 51% stake can be acquired virtually hassle free and even "anonimously" using multiple wallets during the course of time.

This considering all participants act in their best interest. Otherwise, a 51% stake always costs market cost. Whereas a 51% hashrate can possibly be bribed for 100 USD depending on the stupidity of the actors involved.

So I grant you are correct in a doomsday scenario where incurring cost to no gain happens. PoS is better security from the outside.

As for the inside all the incentives are there and the Miners can easily defend an outside attack, furthermore, they are logistically invested. It is not easy to divest resources. And their cost to defend is a lot less than that of an outside attacker. Whereas Capital, goes where its most valued pretty easily.

I am still inclined to maintain that I think Proof of Work is economically more sound than Proof of Stake.

This is where your reasoning ultimately fails

Basically, you roughly divide the current market cap of Bitcoin by 2 and get the cost at today's price (since this is what the market cap shows), implicitly assuming that the price will remain the same when you actually start buying 51% of all Bitcoin monetary supply. Nothing could be more false and farther from reality than that. First, not all coins are being traded, I guess, it is somewhere in the range of a few millions (maybe, 3-4 at most), and when you have bought your first million, you will have to spend like 10 times more money to buy the next million of coins (due to prices flying to the moon). Further, you chose to completely ignore my argument that you may never get there at all, no matter how much money you could have since some stake holders may not be going to sell their stakes at any price

This is a misconception, because users vote with their money. A miner gets no money if noone buys his coins, and after all, the miner is invested, he started at a loss. Whereas a User, using double-entry accounting, just changed one asset (FIAT) for another (Bitcoin).

The incentive is for miners to follow the user majority. Not the other way around.

As I see it, bitcoin is more of a meritocracy since voting power for consensus is done by miners whereas end users can only voice their concerns and thoughts about the said idea. Bitcoin isn't democratic even though consensus is achieved via majority decision; the decision is just from the miners who will use x or y version of the fork to move forward.

Your arguments are compelling. I do not possess the Cryptography expertise to dismount any of the technical arguments.

I will say this:
 
51% attack in PoW does not only cost 51% of mining rewards. It is not immediate, and it costs all the energy and capital that was put onto it before any ROI.

Furthermore if you consider it is possible to hold a 51% hashpower, if we estimate like a 40% ROI for mining (and I think this is too much considering mining alone), according to current market cap it should cost total about 13.007.185.339,7 USD to achieve a 51% Hashrate. the actual loss of revenue from an attack today would be 2.410.118.399,27 USD Bringing the total to about 15.5 B. 

For a 51% PoS, the cost would be 21.678.642.232,83.

I'd grant you are correct in your reasoning, although it seems pretty obvious to me that none of these actors has any incentive to attack the network. And the bigger the market and the higher its share of the Hashrate or Stake, the lesser the incentive. It works for both.

On another point, as I have been trying to argue, I think Proof of Work is economically more sound than Proof of Stake. You are effectively being backed by Energy. There is only so little a miner is willing to receive for his coins, whereas for Proof of Stake, it is cost of capital. The fact is, a miner is tied for the long haul. Capital not so much. Either you inflate your coin to secure the network, or you guarantee transaction fees sufficiently high enough to prevent capital flight.

Also, for Proof of Stake as a way to mint coins, you are dependent on utility and speculation for your currency to be worth anything. If it is just for consensus, then this last argument doesn't stand.

Am I somewhat being able to convey any part of the argument?

 


 

It's none of the above. Bitcoin stands away from any politics or centralised definition as you depicted. The thing is bitcoin needs to be free and away from such implications. Without this bitcoin will never be able to sustain the market as it had done since its birth. The day it is centralised would be the day it's going under complete destruction. I'm sure then your democracy would not work.

Who's 'Efficient' Digital signature am I supposed to be trusting ?

..

POW is Objective. POS is not.

POW accumulates over time. POS does not. ( I can fake POS history using old spent keys )

..

Sure - POW has issues in this current user/miner implementation (I would prefer the users to mine their own txns..), but POS doesn't currently work (and may never fully work) or any one of the uber geniuses working on it would have come up with a viable algorithm by now.. 

It has nothing of anarchy, because there are rules which are important to make the Bitcoin system survive and thrive.

I believe it's more about meritocracy, because only who deserves this is able to reach to the primarily source of coins, the mining. It's not anyone who deserves that, only those who prepared themselves with powerful machines and logistic.

Who is in the top of Bitcoin world today it's because they planned well their steps.

Of course not.  On the contrary.  if you want to do a 51% attack on consensus decisions, you need to own 51% of the market cap.  That's MUCH MUCH more of a cost (in bitcoin, it would amount to having to buy up 20 billion $ of coins, but your cornering of the market would make it still much, much more expensive).... in order to destroy the system for which you just paid 20 billion !  No miner is ever going to invest 20 billion in mining equipment, because he will not mine 50% of the stake in block rewards and fees !

Also, the cost of a 51% attack in PoW is just the cost of 51% of the mining rewards, and you don't need to be stake holder.  From the outside, you simply cannot attack a PoS system, because it is based upon much harder to fake digital signatures.
Currently, ALL of the proof of work ever delivered to bitcoin has a security level of 90 bits.  A simple 256 bit key signature has a bit security level of 128 bits, and only costs a few milliwatts of power and an old laptop (or even a mobile phone).

Cryptographically, PoW is pure BS as a protection. Any digital signature beats it with tens of orders of magnitude in "efficiency" (that is, spent resources versus security obtained).

You can´t define a political system  for a currency, but the my best shot would be aristocracy, because on popular voting sites you vote with your BTC. One could argue this is democracy, but it is not, it is a vote based on wealth.

On the other hand the core team has a big share so this would be technocracy.

These are political terms and used for types of society not for currency. At least I wouldn't associate these terms to bitcoin. I look at it in pure economical sense and as a decentralized cryptocurrency that represents new alternative in finances. But as such it could be used in any type of society, democracy, autocracy or whatever you can imagine. As long as this society enables you internet access.