Topic: DECENTRALIZED crypto currency (including Bitcoin) is a delusion (any solutions?) - page 43. (Read 91144 times)

I think your hesitation may be wise. If we accept the (admittedly unproven) hypothesis that all potential cryptocurrency designs can be centralized by determined government then the economic factors above may in the end determine the degree to which that centralization actually happens. A superior technical solution will be successful only to the degree it shifts those underlying economic incentives.

Even an unequivocally superior conceptualization may utterly fail if the underlying substructure of the society is not ready to support it. In an primitive age where tribalism is just giving way to dictatorship the man calling out for constitutional democracy is probably wasting his breath.

CoinCube add:

4) A large base of users already using it as a currency and enjoying freedoms it provides. And doing it within my block chain design (or Iota's if you accept the flaws I alleged) where the control over the mining is in the hands of the users, not professional miners.

Which was sort of the point of my prior post. So seems we are in agreement. I am just not sure if I am going to proceed. Not sure if we have enough awareness in the community as to what needs to be done and whether people are excited about it. I am testing the waters now in the Aeon thread to see what people think about actually trying for mass adoption. I am being obnoxious and loud to try to see if people will realize we are not doing anything about mass adoption in the altcoin arena (other than perhaps Dogecoin).

I don't think this is a problem that can be solved but looking entirely at the technical level. All Cryptocurrency designs have a window of time before they can truly be systemically centralized and brought under direct government control. The fragmented nature of nation states gives some breathing room. However, as you mentioned above as crypto gains traction even fragmented government will be forced to consolidate and act in unison to regain control over money.

To succeed, cryptocurrency must retain its critical characteristics you listed above as trustless, redundancy, reliability, and high availability. Can these be maintained if the logic above is correct and all viable cryptocurrency designs are theoretically vulnerable to worldwide government?

The answer may be not technical but economic. Even though government may eventually have the technical ability to force consolidation of cryptocurrency back into centralized fiat equivalents the practical and political economics may make exercising that power impossible.

Cryptocurrency has several factors that may assist it in maintaining such an economic shield. Those that spring immediately to mind are the following.

1) Fiat failure: By the time government has the ability to exercise such control the failure of fiat will be much more obvious to a far larger segment of the population.

2) Development of Alternatives: Should a cryptocurrency be consolidated by the government there is tremendous economic incentives for commerce to move to some other more robust design. From the governments perspective it would be something like a game of wack-a-mole shutting down one currency would just set the stage for the rise of something even harder to control. It would be in the interest of government to act with a softer hand.

3) Vested interest: government is controlled by the oligarchs who need somewhere safe to put their money. Right now that safe place is typically stocks and bonds. Both of these seem like poor long term options if your theses of a coming knowledge age is correct. If crypto becomes a wealth storage device for the elite those elite will restrain government.

I think this is very insightful especially on the math point about perpetual trend to maximum entropy (Second Law of Thermodynamics) by getting more individuals to participate. Think of all the billions of people in the world who have no access to a bank account and thus can't transact on the internet.

Except your lack of formal training in computer science means you missed the major monkey wrench in your statement of the ideal goal at least as pertains to crypto currency. That is the technological fact that centralization of databases is the antithesis of trustless, redundancy, reliability, and high availability.

Any ideas on where to go from there?

My idea is the centralization increasing is the possibility we could have one money for the entire world instead of many national currencies. This makes it easier for a global village of financial exchange. The centralization should not come in the mining because that would be subject to failures and sabotage.

So I think you were correct but misapplied the point. I am aiming for balance of decentralization in the mining, but the currency itself becomes centralizing because it replaces the many national currencies which are barriers to global participation.

Very inspiring!

The problem TBTB is that it appears to me you have set yourself a goal that is impossible to achieve. You are trying to create a cryptocurrency that does not centralize over time and I think this is impossible. I do not claim to be an expert on cryptocurrency but the challenge you seek to solve appears to me to be the same as the dynamic we discussed extensively over in the Economic Devastation thread.
 
Essentially the give and take between consensus and decentralization appears strikingly similar to the social balance between collectivism and anarchism. Complete decentralization appears doomed to fail for the same reason complete anarchism fails it simply does not converge. The goal with cryptocurrency is thus identical to the goal of an evolving social contract, progression to higher energy states and overall increased degrees of freedom.


You are of course correct when you state that bitcoin weakens the nation-states and traditional banks, which must fight back by cooperating with a world governance regulation of the internet and Bitcoin mining. This is obviously going to happen. However, the more important question is whether the subsequent system that results is one of higher potential energy and overall higher degrees of freedom.

When warlords first emerged in ancient times and united area previously under the control of feuding tribes was that progress? I would argue that it was for it led to top down imposed order over large area that was previously ruled by competing and often warring tribes. This opened up the possibility to safely travel and trade over large areas as well as increasing the population of humans able to economically interact. It was certainly not all good but it was a net good.

Similarly with cryptocurrency the goal is not to create a currency that is immune to centralization but to create a currency that is resistant to centralization. All viable cryptocurrency models will probably centralize so the winning model will be the one that maximizes the degrees of freedom in an economy and minimizes government control despite this centralization.

I just remembered something you posted a long time ago about debasement likely being needed in a currency.  You seem to understand the fact that for all intents and purposes, inflation and deflation work like this:

Contrary to what Helicopter Todd said about subjectivity of the word "evil" in finance, I think if you define slavery as evil, then most monetary instruments that defer the need to barter might fit that category.
One man's inflation by central bank is another man's centrally administered slavery system.  Another man's increased purchasing power by trying to corner the market on a finite commodity used as currency is a decentralized slavery system.

You seemed to favor inflation as the lesser evil.  There's only one problem with that choice.  Stocks, for all intents and purposes, usually act as a finite, Austrian currency in nature (but not always).  Yes, nobody is using them directly to buy pizzas, but with modern technology, they could be if they wanted to.  The dominant, world currency could even be digital tokens representing legal ownership of stock indices (would probably fit well with your whole knowledge age thing).  

Gresham's law currently places stocks entirely into a store of value.  When you talked about debasement being the better necessary evil for currency (my own words), this is really just an attempt at social engineering, but it can't work because the rich can always just store wealth entirely in stocks instead, bypassing the social engineering.

The TLDR conclusion of all this is basically that Bitcoin has to be deflationary or the value will all just go to stocks.  We're currently in a limbo right now because, yes, gold exists that could also fill this function, but gold has failed as a currency due to lack of granularity and high friction in use.  You said Satoshi was even smarter than most people give him credit for, and this is one area I think he has outsmarted you.

More on that topic below.  

Quote from: r0ach on January 11, 2016, 07:13:48 AM

But you tend to act like Bitcoin is "poisoned" by manipulators and that other markets aren't.  It's pretty much the same wherever you go.  You're always going to be in one of the following three categories:

1)  Market Maker - can move markets

2)  Momentum Trader - make money riding on the back of whale trends

3)  Gambler - buys when there is no obvious trend

That's probably the biggest scam element of the stock market, is that there's a permanently, artificially manufactured uptrend due to continus QE since the beginning of time.  One might be able to make the claim that it's a conspiracy to make a forced corporatocracy since the majority of the time you're going to be on the positive side of momentum trade due to inflation (#2 in the list above).  Therefore, you're forced to hand your money over to make big corporations even bigger and powerful.  

The other side effect is that due to this artificial, mostly permanent, positive market indicator, there's too many people making money on the stock market when they shouldn't be.  Anything that's a zero sum game, which any currency is, since one man's trillionaire is another man's slave plantation owner via having monopoly over everything, should be far more risky to try and profit in or it's not a rational market.

The final conclusion is, if you believe that only big business/companies create things of value, then it looks like not only did the Ayn Randians of Atlas Shrugged win, but that system is actually forced upon you.  Companies need customers, and since this system is designed to fleece all the customers of everything eventually, either every customer becomes a part of some corporation themselves via stock ownership and/or employment, or the system collapses.  All resulting from the prime mover of inflation.

I edited the prior two posts several times because I was in such a rush when I wrote them that some of my statements were too rash and didn't convey my level-headed intention. I was also multitasking when I woke up on some discussions not on the forum. Also I was frustrated to wake up and see the sort of responses that I saw from CfB and monsterer, as if they were trying to be disingenuous or not doing their best to be objective and non-obfuscating. Nevertheless I think all are trying to be fair in the end and I want to remain objective and ethical in my analysis (anything less won't serve me well).

My take away from this is that Iota advances decentralization but with a risk of falling to centralization due to potential attack vectors, but for example the attack vector I described and the risk in the general case I alleged needs more peer review. Although I very much doubt I will be proven wrong (it appears to be fundamental), the implications may not be as severe or risky for one reason or another. For me unbounded is unbounded risk, but perhaps there is some way to show that the risk to unknowns is small (again I doubt it but I must be cautious when the peer review is lacking).

The main point for me personally from my perspective is that if I produce a decentralized design, I want to be able to state the unequivocal math of the security is the same as in or better than Bitcoin, and with the advantages I enumerated upthread. Iota has many of those same advantages I enumerated, but they can't claim Satoshi's security model. For me personally, I would not want to feel responsible for the security failing in unexpected ways and users losing funds due to unanticipated game theories. I wouldn't want to build some magnificent effort and then have it collapse in one moment. I want to work on something I can feel confident about for the longer-term. I realize there is no perfect, but I see a major qualitative distinction in potential reliability of security between a model I can unequivocally state with math (e.g. Bitcoin and my design) and one where the math can't embody all possible game theory models (e.g. Iota, any DAG, and POS system).

Also I want to admit r0ach could possibly end up being correct in the end that all consensus systems have a flaw which resolves to centralization. I haven't found that yet in my design, but it doesn't mean I won't find such a flaw. It seems to be the case that all decentralized consensus designs have a centralization flaw, but my hope is that my design escapes this by both putting the PoW in the hands of the payers by making mining unprofitable (as Iota has also done) and by avoiding flaws in the security model that would drive the need for centralized servers to overcome a Tragedy of the Commons (which is what I fear for Iota). I know that my design requires some centralization in order to achieve the instant transactions, but I argue this remains decentralization because payers can switch intrablock partitions at-will. And because since the mining isn't controlled by professional miners then creating a minority break-away fork isn't at threat of being attacked by the mining hashrate of the majority fork. Thus any malfeasance can be routed around and decentralization remains. Note forking is not a problem in this context. However there is one flaw in this, which is the majority can spend on both forks, but if the minority is forking to escape censorship then it can only spend on its own fork. However the more likely scenario is the majority fork is changing the protocol and so the minority can spend on both forks as well, retaining the preferred protocol on its fork. So no harm, because no value is created nor destroyed (100% inflation for everyone proportionally is a net 0 effect). And it may be possible for the minority fork to monitor the majority fork (and all forks) and not allow double-spending on both (but I need to think through the implications of this).

Also I think it is very interesting how a DAG is able to reorder the tradeoffs within the CAP theorem. It is a new category within CAP for crypto. I don't like the tradeoff choice, but it is still interesting from that technical perspective.

Apologies for bumping the thread again. I will take a break from posting.

I did remember over the past days (and often it pops into my mind) your thread from earlier this year, but you were arguing that capitulation to something similar to Bitshare's DPOS would be the ultimate outcome of Bitcoin's failure on scaling.


This is why we need to make the block chain orthogonal to the variants of transaction data structures, so that we only design the block chain once and set it in stone. That is one reason I've expended so much effort looking at every possible way a consensus design could work (and am still awaiting Fuserleer's design), so that we know from the launch the trade offs and what we have chosen to lock into stone within some year or so after launch (after all bugs have been identified and fixed). This is another reason to K.I.S.S. as much as possible on the design.

But there is another new development. The design I am contemplating means the users in theory hold all the PoW power, so they can vote on adopting new hard forks. And the minority can even choose to leave and adopt their own fork. The world will decide if it needs more than one fork for money.

For block 2.0 features, I am confident there will be many forks (variants) of block chains.

One can argue that if the users can vote directly by running a client, then that is centralization again due to politics and follow-the-herd masses. But the key distinction in my mind is that if the users can create a minority fork without it being attacked then we always have decentralization. And one of the key design parameters is to make mining unprofitable so there aren't these miners with huge investments who we rely on to vote for us!!! That is why Bitcoin can never be truly decentralized because as I explained upthread, the professional miners are beholden to the society-at-large.

This is the End-to-End Principle. Bitcoin doesn't have it with the economics of mining. I claim my contemplated design does (but this design is not yet disclosed).

Note that Iota also fulfills this attribute for decentralization, except on the downside I claimed/explained that it has unbounded game theory of the security rule. I have already shown one conceptual (not vetted) attack and I expect there will be other attacks found such that Iota ends up being essentially centralized with trusted servers to try to enforce some holistic policies. That is my personal expectation but I might be wrong about that outcome. I base that expectation on my claim of unbounded game theory risk and the what I argue upthread is an unbounded potential for unknowns.

I prefer a design which instead has a bound on security rule (the single longest chain rule), and can accommodate multiple partitions by forking same as for Satoshi's design (which Btw is what Iota's models would simulate any way and yet they don't gain the bounded security guarantees) but with the advantages of the users control the PoW vote, instant transactions, and the other advantages I mentioned upthread such as cutting the electricity cost to something miniscule sam as for Iota.


Disagree entirely. Be prepared to suffer a shift in your perspective. Centralized will hopefully give way over time to new designs we are discussing in this thread.


Your pessimistic assumptions are not holding. We are innovating.

Let me say that I find a DAG amazing. I also find the math in Iota's paper is creative and very well done. They did everything technically to a high class level (I am not commenting on the IPO!). It is hard to not respect what they have done technically and the programming is I assume up to CfB's high standards (but I haven't looked at the code).

The problem for me is I need to be sure the security is provable.

I am thinking here that something like the Principle of Least Power applies. It says that if your programming language is too general, then you can't extract semantics from it easily. I want to improve the definition of that principle, to be more precise. Too much generality means unbounded complexity.

A DAG is more powerful in the sense that it doesn't hard-code the payment and acceptance model and allows unlimited partitions. But the cost of this generality is that the semantics of the Consistency can't be unequivocally provably extracted.

I applaud the research, and even I can stand aside for the proponents to get their return-on-investment. It furthers ideas about crypto and it even influenced my design. But personally I would not have expended my effort on something that I have shown (for those who agree with my upthread arguments) chooses the tradeoff of less Consistency within the CAP theorem and PLP. I respect the work, but I see an egregious flaw which makes it unsuitable for my goals.

We all know that CAP is a tradeoff. Iota/DAG makes a tradeoff off unequivocally provable Consistency of the security (which is important with money), but they may be able to make the argument this depends on what the community of users does in terms of the selection algorithm widely employed. They may be able to make a convincing argument that this is the same as the community voting with its PoW shares to route away from any malfeasance in my design. I will of course be able to make some counter arguments (and I expect my arguments to be more mathematically convincing because unbounded is infinitely worse than bounded).

EDIT: for n00bs, the issues discussed upthread about a DAG are fundamental. Iota will not be able to change the fundamental trade offs mentioned above no matter what they do. So pleeeassseee don't make the excuse that "they can improve it later". We get what we get when it comes to fundamentals.

Edit#2: Iota is shipping now or soon. Often availability is more important than the most idealistic vaporware.

Edit#3: Or the simpler argument Iota has been making is that users don't care. But will the Consistency issue bite users eventually? I heard something about Iota using some centralized policy in the launch phase so I guess users will be protected from unknowns in Consistency during this phase?

OT but figured I'd point out FF is Netscape.

In a DAG yes, I agree.

I'd like to talk about trees at some point, because I believe you can have deterministic ordering for a tree, which allows all the advantages of a DAG without the probabilistic confirmation which is hard to model AND still using the LCR without blocks.

Thanks. I hope you understand now that it is impossible to have security across multiple partitions without the analogous probabilistic model of a DAG. This is why I can assure that without a single LCR, any design will suffer the same fate.

The CAP theorem is holding just as I expect it to for a DAG, because the Consistency is now unprovable in the general case. A DAG tolerates Partitions and maintains Access, but sacrifices the unequivocal proof of Consistency. It can be proven it is Consistent (within certain computational scenarios) with a particular probabilistic model, but it can't be proven that model is enforceable.

Remember I was early on in this discussion on Iota emphasizing the distinction between the word "MUST" and "incentive".

I edited the following:

Nothing stops. But it's not a problem if only part of the people do that.

It's no attempt to save face, I have no problem admitting when I'm wrong. I made the mistake of assuming the way Iota and DAGs in general worked was the same as for trees, when it is not.

Apologies I saw this just now after composing my prior posts.

Even if a tree was a relevant discussion in a decentralized block chain thread (which I am fairly certain it is not relevant), this is not an adequate excuse for introducing incongruent data structures/models when discussing a DAG, because it is just a way you attempt to save face for loading up the thread with irrelevant noise.

I urged you upthread to go take some time to think first. My PM box is available to you to ask me questions. This thread is supposed to be something that readers could digest, not some 1000 page crap of noise that no one can possibly digest.

My question is, why doesn't referencing a historical transaction change the DAG weighting at that location?

Damn it monsterer. If you are too lazy to understand and you continue to ignore what I am trying to teach you, then you are really pissing me off. You are rapidly losing the respect I had for you.

You can only see things one way and you can't change your perspective to the probabilistic model. This is a sign of a lower IQ.

You already know that there is no way to insert a transaction into an existing DAG chain. And yes a given selection rule can choose to reference an old transaction, but that creates a new tip (a new chain). But asking it the way you did shows that you are still thinking about irrelevant structure and not thinking about the model of the security as it is HOLISTICALLY probabilistic not locally deterministic to any given chain structure. The only deterministic rule is that transactions may not reference tips that would put a double-spend into the merged chains.

You need to invoke math here, not just analyzing a chain structure. I believe this is beyond your comprehension.

Understood. So, what stops people from inserting transactions into past history by referencing really old transactions in order to change historical  ordering?