Topic: BTC Security Broken? (Read 477 times)

Really appreciate the conversation! This is very enlightening for me. I'll continue my research.

There's an academic paper on PoEM I was referring to. I'll PM it to you if I can. One of the authors did a video recently too.

$200 is still no problem for LN, $400-500 may be the limit I'd be comfortable with, or let's say channels with capacity up to $1000. Currently the fees are low enough to do these transactions onchain.

Ideally (for Bitcoin's current security model) the transaction fee would be close to 2-3 cents per vByte (currently about 30-50 sat/vByte), i.e. about $2.50-$10 per transaction (to today's USD purchasing power). This fee level would allow both cheap LN channel creation but also ensure a significant miner income based on transaction fees ($50-100k if block space is fully used). We don't need $100 fees for this.

The "PoW mechanism" itself isn't the problem, as it's not directly related to the "zero-emission" policy from 2140 on.
One could think about a PoW/PoS combination, like Vitalik's original "Slasher" or the ones very common in the altcoin world. But regarding their theoretical security it's not totally clear if these mechanisms are an improvement; for small altcoins however "practically" they seem to be the "salvation" from 51% attacks. But a trillion dollar network is another story. The good thing is that we have a "rabbit" to conduct PoS experiments, Ethereum, which is large enough to be attractive for hackers to discover PoS vulnerabilities

I don't understand what you mean here. L2s like Lightning, Ark or sidechains are for me exactly what "subnetting" in the case of TCP/IP would be.
It is not part of the core protocol, LN uses core features like HTLCs but they were not implemented with LN in mind. LN itself doesn't create problems at Core level, it may need to solve challenges at "subnet level" only. The same is true for sidechains.
The "fragmentation" can partly be hidden from the user. For example, there were ideas in 2017 to let the Bitcoin Core client decide if a transaction uses LN or on-chain, with the user not having to intervene. I don't think I would use this feature but for people not wanting to bother with technical details such a "hidden L2" may be attractive.

Well that description at a first glance looks like pure technobabble, like we're accustomed to in the altcoin world. It doesn't explain how this solves the double spend problem. But yes, for a detailed discussion about this I invite you to create a thread in the altcoin forum.

That's what others though try to portray Bitcoin, and so it could be conflicting for others, but there could be school of thoughts that both are applicable but it will take some time to achieved that, or it might not happen.

And again, this narrative makes what Bitcoin is today, it the beginning it was just a payment scheme and then it evolved to what we call a hedge to economic issues or even wars. So it encompasses every facet that is known to man and so the narrative can take many shapes or forms.

Narratives like these are what people create for themselves to try to explain Bitcoin. Sometimes they go overboard like the second one "replace fiat". The reality is not always the same as the narratives people create.

Bitcoin is just an alternative option for people to choose. It is not supposed to replace anything. And of course Bitcoin has the potential to become money and by definition money does both: is a medium of exchange (can do what fiat does) and at the same time is a store of value (can do what gold does).

So $200 shoe purchases or general mall shopping is still up in the air?

My "BTC Zealot" sentence shouldn't be read into. I'm not a fan of alt-coins or the fragmentation that comes with L2's. I'm re-visiting PoW due to the madness that became of ETH.

I'm just wondering if our current PoW mechanism is as good as it gets or if there might be a better one that unlocks additional scalability without introducing MEV or forcing us into one direction of scaling.

For example; has anyone considered subnetting? If blockchain is a "protocol" and engineered to be the TCP/IP of value... Then perhaps we should spend some more engineering cycles on the underlying protocol instead of taking a game development approach, bolting on features that IMHO creates more problems than they solve.

I've found a paper the other day explaining Proof of Entropy Minima that seems to have a lot of potential, but I don't know if anyone is actually using it. However, that discussion is probably better suited to a separate thread. In fact, I apologize; I seem to have abandoned my OP. 

No, if you limit its scope to the use case it currently already is used for: small payments (up to $100 for example).

It is unsure for me if it will become a solution for larger payments too, but that's why I think sidechains are also a piece in the puzzle.

There are of course possible usability improvements, but the general direction it is heading is the correct one I think. And I have also no problem with some people wanting to using it with a centralized service provider. I don't hear the same questionings from big blockers when people use centralized exchanges

And if the "BTC zealot" sentence is a hint that you favour an altcoin approach, then: all altcoins have the same problems and tradeoffs. If they want continuous/tail emission, then they are less attractive as store of value. If they want big blocks, then they tend towards centralization. PoS maybe is less dependant on market leadership for security, but has centralization and perhaps also undiscovered security problems, and it doesn't achieve the same amount of censorship resistance than PoW. And so on

Good point, in this case it's financial security instead of cryptographic or code/protocol integrity.

You should probably open by defining what you're talking about. When most people talk about security, they are referring to how well defended from an attack they are - the first meaning of your thread title is that some aspect of the mathematical integrity of the blockchain or bitcoin has been broken. Yet the discussion that you link to is not talking about this at all, it is just one persons opinion on whether people are willing to pay for higher transaction fees, which is also not true. I've seen bitcoin transaction fees stay relatively low even when it has been priced even higher than it is now. That is because more computational power is added to the blockchain if it is economical to the local energy prices and there is profitability involved - which is often the case especially with new green energy sources coming online daily.

You are right actually because since miners block rewards are being halved during every halving, the only way they can regain back is basically through the increase in transactions fees and since the price of Bitcoin increases during the bull season, congestion are meant to occur because a lot of people will definitely be withdrawing their Bitcoin which leads to severe congestion in mempool and in order for one transaction to be confirmed earlier than the other it will require high transactions fees before it can be quickly added to the next blocks so it is not new and since halving and increase in the price of Bitcoin will continue till the last blocks are mined, it then means that transaction fees will continue to increase. Just like the whales, high transaction fees means nothing to them so it's only those who are short term hodlers that are worried about high fees but for long term hodlers they don't care since they are hodling for long intervals and must have made huge profits that can still cover for the transaction fees.

Does anyone else think LN introduces more problems than it solves?

I'd like to believe that the underlying technology is a game changer, but probably needs a few more iterations before becoming mature enough to solve for Fiat.

Is being a BTC zealot simply easier than doubling down and trying to solve this problem? Or do we truly believe BTC is as good as it gets?

For now yeah because the price is dumping once again but we already have a solution to this problem, in case it occurs again. You already mentioned a couple of them in fact. Maybe there are only people who are not yet aware of them or they don't feel like using them, for some reasons. There are users who use those new technologies on BTC, no matter what its condition.

It is possible to stop a moving transaction and most of the times it was the exchanges are the ones that has the ability of doing it. Security can be different to that matter and there are no problems with it. The only thing is that, like you said, the future is still unpredictable but we can only hope for the best for the coin.

Good observation indeed.

My take on it is that it can do both, but not as a pure on-chain transaction tool. On-chain mechanisms are far too limited in scale, even as a digital gold it would only be of use for a low number of people, and even with slightly bigger blocks it would still not be enough that the majority of the world population could put their savings into BTC. This means that we need decentralized off-chain methods like LN, sidechains, rollups and so on.

Bitcoin's most important USPs, like censorship resistance, are more related to the "digital cash" use case. If we only pursue the pure digital gold mantra, the value would be probably more volatile over time, as liquidity would be limited to relatively few users. This would in some way contradict the "gold" concept.

If I was harsh I could say that the pure digital gold concept would lead to no value at all: If Bitcoin's main "USP" is that it goes up in value, then altcoins have theoretically a competitive advantage as they can grow much faster. Bitcoin would thus not be able to really benefit from this USP.

Instead, if we focus on censorship resistance and potential global usage also for payments, an ecosystem of different user classes (retail users and savers, merchants, service providers and so on) could be built which would be very difficult to surpass for any altcoin. I think this is already happening on a limited scale, and that's why Bitcoin's dominance stays high, but once the scalability solutions really take off, the competitive advantage of Bitcoin will be enormous and every "flippening" dream would come to an end. (Altcoins would continue to exist, though).

Thus, my opinion is that we need scalability solutions which enable Bitcoin also to be used as a fiat replacement. And this means that we have to accept the above dilemma and try to solve it.

A mix of LN and merged mined sidechains providing the "tail emission" like I outlined above would probably solve the problem.

And both gold and fiat would also only be partially replaced by BTC, I think. Both fiat (dynamic supply according to economic cycles) and gold (visual/haptic quality, industrial use) have use cases I think Bitcoin can't replace entirely.

You can buy Bitcoin as it intended to be, P2P no middle man and you can save it in cold wallet no one will be able to hack it or even tax it.

most of the trading platform now require KYC but those are the one where you can turn your Bitcoins into Cash, if you want to hold it use the P2P method

I think some of the confusion comes from the conflicting narrative:

"BTC is digital gold"

"BTC will replace fiat"

Can BTC do both? Or is the official narrative one or the other?

The thing is, we can do something about it right now: The lightning network (cliché, I know) fees will remain low in the long term, so when anyone wants to make small payments they can create a Lightning channel just for that, but then you'd need something to incentivize moving channel funds the other way - maybe something like "micro-lending"?

Which one? Solana?

Solana is valued only 50% of its ATH in 2021 (about $260). It's network stops working regularly for hours, which is much worse than Bitcoin's congestion moments. Full nodes have to handle a high throughput, forget it to run one of them on relatively cheap consumer hardware. The whole network is based on a principle similar to SPV.

And it's not decentralized. It could be described as distributed as Fastly or Cloudflare are, but entities managed by the founders have a lot of control over the network due to the enormous premine.

Basically Solana is a PoS version of BSV. Same is true for XRP and Tron. And all other "platforms" have either a much smaller "real" data throughput than Bitcoin (coins like LTC, BCH/BSV or Doge) or a similar fee problem than Bitcoin (Ethereum, Avalanche).

By the way, Bitcoin's "dominance" value, even if it's a highly flawed indicator, is steady over 50% according to Coingecko. Thus I don't know what you're talking about.

And yes, scalability is important but all these coins employ basically the "big blocks" paradigm and it doesn't solve scalability as long as all transactions have to be processed by all full nodes. The goal of scalability solutions is to bundle several transactions moving them partly off-chain or to alternative chains (sidechains/rollups) where only a part of the nodes have to process them. And in addition, as written in my previous post, it can solve the long term security problem providing a "tail emission" if implemented intelligently via merged-mining.

Except that's not how it works in the crypto industry, at least as the trend suggests.

Even now bitcoin's slowly losing its grip as the number 1 coin on the ecosystem, with better and more scalable tokens slowly climbing up the ladder to take its place. And for good reason too. Cause why the hell am I gonna stick with a coin that gets congested every tuesdays when I can switch over to another crypto that could basically do everything for me for a buck fifty, including doing my taxes (a bit exaggerated but you get my point).

The concept of "antiques" or scarcity in this industry would only work if that is the intended purpose of the coin/token itself. If it is not, people will switch over to a much better coin that suits their needs and provides what they want. It's just that easy.

Scalability is a massive problem for bitcoin that if left untouched would literally cause its end. Right now we're seeing the signs, we don't need to wait for its dying throes before we actually start doing something.

Hihihi, 16 cents per kwh?
16 cents per kWh was a deal breaker 3 years ago, nobody under 8 cents is actively mining, the sweet spot for making money is around 4 cents after taxes. Phil has done a lot of calculations in the difficulty thread, but it essentially boils to this:

One TH/s of medium efficient gear will burn around half a kilowatt and earn 4.5 cents a day.
You're at 9 cents you might lose money, you're at 6-8 you might never ROI, you pay 2 cents you drink wine waiting for everyone else to go bankrupt.


Of course not $1000, but you have on average 500k tx that need to generate 30 mils a day, so $60. Would you ay twice the pizza for a pizza?
More importantly, are you going to pay $60 to open a LN and $60 to close a LN?
You and me, maybe!
Average Joe and 1 million others, no!


But, but, but...we need to ban dicks pics! 


Doge/LTC miners love it! 

Hype on transaction fee is not what the bitcoin use to come down, neither does it determine what the tax rate is, the security is solely base on the protocols set up with the bitcoin network and as long as any of these does not break it concession, then there's going to be nothing can make it be under attack or experience a bridge in protocols, the security of bitcoin also depends on whether if the Bitcoin nodes could be attacked or not.

No it means 16 cent mining is a loser at the moment.

At 8 cents power costs $6.94 thats a winner

Heck I did a stab with a hoster at ten cents for the next 12 months. cost will be 220x12= 2640 the t21 cost 3500 with mods.

so 6140 for first year. I am pointed at https://pool.laurentiapool.org/#/user/146UJM5kgzLVUV23CXCf33KQKHckoX1gx3

I will see how it does.