Topic: Proposal: An Alternative Currency that doesn't "waste" energy - page 2. (Read 4955 times)

The blockchain holds the coins in escrow. They are not held by an individual. If the chain is extended then they are returned with a reward to the original owner. If the chain is not extended, then the record of them having been escrowed is superceded. In this case, the client would judge that the coins had never been escrowed and they would be returned to the original owner without a reward. These are the only two possibilities. As in the current system, clients will only recognize valid chains and miners will only extend valid chains because of self-interest.

Collusion. People can collude to extend invalid chains. The same arguments applies 100% to the proof of work system. Any group can collude to manipulate the blockchain. They don't do this because it's too expensive to be worthwhile. That's the point of proof-of-work. It forces attackers to spend resources to get their way. Proof-of-stake does the same thing. Control of the blockchain would require accumulation of a majority or near majority of all extant coins. This can be done, but it would be expensive.

Would you really want to spend $10 million to acquire a bunch of bitcoin, fuck bitcoin up, and then try to sell your $10 million of bitcoin back to people? No. For the same reason you wouldn't want to convert a warehouse full of graphics cards and a power plant worth of electricity into bitcoin and fuck up bitcoin. You don't throw a large sum of money into bitcoin in order to make bitcoin worthless. It is a money losing proposition. If you are willing to lose large amounts of money to screw bitcoin, then neither of the two systems can stop you. 

Please, think carefully before asking questions. You are inventing distinctions between proof-of-stake and proof-of-work. If you have a criticism of proof-of-stake, ask yourself whether it applies in the equal measure to proof-of-work. If it does, then there is a problem with your reasoning.

I'm sorry, but this is going to become tiresome very quickly. From now on, I will only respond to critics who employ structured, logical arguments.

Actually, yeah, let me summarize my last post with: what if the largest stakeholders prefer inflation and the power to arbitrarily print more money?

Who or what holds the escrow? And what prevents the largest coin owners from colluding together to create more coins? H they hold the reserves large enough that everyone depends on their confirmation authority, what's to stop them from abusing that power? Don't forget that inflation is VERY beneficial to those dependent on loans/borrowing, so high value stakeholders could still prefer inflation (see governments and central banks)

I'm here to quickly counter FUD from an authority. I won't get into a debate with everyone else.

The innovative concept is validity based on blockchain length. Proof-of-work is a burdensome way of achieving competition for blockchain length . The longest blockchain can win with proof-of-stake just like proof-of work.

Here's a mechanism:

For proof of stake, clients sign blocks with a frequency determined by their coin holdings. Clients can sign a block every t(x) days, where t() is a decreasing function and x is the number of coin-confirmations controlled by the client's private key. Coin-confirmations are the product of the number of coins associated with a private key and the number of confirmations on these coins. Clients demonstrate control over coins by including them in an escrow address within block (k-1). In block (k), escrowed coins are returned along with a 'txn' fee; simultaneously, the signer of block (k) deposits a new set of coins with sufficient coin-confirmations in the escrow address.  

Individuals can't make a long chain without broad participation because acquiring a sufficient number of coin confirmations would be prohibitively expensive.

Ways of improving the mechanism:

Chain reorganizations and information transmission may be troublesome. One solution is to combine proof-of-work with proof-of-stake. (i.e. so that your proof-of-stake provides a subsidy for your proof-of-work)
With lots of coin-confirmations you can accompany your escrowed coins with a proof-of-work of difficulty 123 in block (k-1). With very few coin-confirmations. you can accompany your escrowed coins with a proof-of-work of difficulty of 123456789 (k-1). The scale of the subsidy can be periodically adjusted to keep blocks arriving once every 10 minutes on average. I think this may be the best model.

Benefits in terms of long-run txn fees and security:

Expenditure of scarce resources with alternative uses (electricity) leads to high txn fees and/or weak security (there's a tradeoff). Expenditure of resources without alternative uses (confirmed coins) leads to cheap txn fees and/or better security. High txn fees are far in the future, so no one cares. However, that does not mean that my logic is flawed.

Fundamental to bitcoin's solution to the decentralized attack resistant distributed decision problem? Yes.

The POW proves that a majority of the interested holders of an forgery resistant asset (computing power/energy) have selected a particular transition history, in a way which can be independently verified by anyone without any trust at all.

This was the fundamental problem which prevented decentralized digital money prior to the invention of bitcoin.  Anyone arguing that it's not essential needs to also answer why why didn't have digital cash in the early 1990s— certainly many people were working hard on making it true then.

Good. It's very interesting that there's a game in the mathematical sense that can be constructed called a cryptocurrency, there's all kinds of clever applications of cryptography. However, from there you went directly to how bitcoin et al. is implemented. Are you saying that spinning virtual wheels into heat on a cost basis that is open-ended ( the difficulty level ) and completely arbitrary is a functional requirement? If this was any other kind of system or machine, this would clearly be an area for improvement. What value is added by this property that is actually able to vary so much in cost?

Game wise, I do like what seems to be the increasingly self-defeating endeavor of mining as an enterprise as more and more of it takes place. It brings to mind a donkey led with a carrot on a stick, the optimal solution is to see to it that the donkey only ever gets enough carrot to continue chasing the end of the stick.

Well, I said, "Like water" implying there are others. You're right though, tea and coffee are the go-to drinks of choice in most places.

I think "wasteful" is the wrong term, because it cannot be avoided.  I think "inefficient" is more accurate.  These are problems which must be brute forced, trying every combination.  Verifying that a solution does not work is not a waste, it eliminates one possibility from a great many, but it is also not really a "success" either.

Coordination, like in mining pools, reduce waste by avoiding repeating computation.  Hopefully most @home programs coordinate their volunteers.


There are inherent challenges with using BTC network computation for something useful:

-You don't know when someone succeeds because no one knows the answer.
The way hashing works, it is very hard to find the solution, but the solution can be quickly and easily verified.  I don't know much about the @home projects, but this means a btc-style network will only work for certain types of problems.

-but for the projects that can be quickly verified-
-For a cryptocurrency to remain stable over time, it needs a constant string of problems with new ones every 10 minutes.
Because these problems are unsolved, we don't know how long it will take to solve them.  You can't trust a currency where the blocks could be 10 minutes or 10 months, it would be worthless.

-The entire network needs to be able to start working on the next one whenever a block is found.  If the problems are coming from some centralized research institution (ala Stanford), miners closer to the research would get an advantage, because some would have to wait for the problem to travel through many nodes to reach them.

However, if someone can figure out a good solution to these challenges, it would be wonderful.

not water, water doesn't have caffeine
what they're really competing against is tea and coffee

in fact, they're trying to supplant tea as the drink of choice in other countries by aggressive marketing

Yeah, that's actually not true. If they were to stop advertising tomorrow they would immediately lose market share to such obvious alternatives like, water. The industry has studied this topic to death. If they didn't HAVE to spend it on advertising they would gladly give themselves bonuses.

Marketing is critical to capitalism. It's critical to a lot of things actually.

I'm not sure why you say it being an "artificial construct" changes anything. It's one of the solutions to a problem we have, and other known ones do not cost less. If there is a better solution, then we could switch to it, just like folding@home would. There aren't any mediums of exchange I know of which tackles the same problem, so I didn't get what you meant there. I think the "right" results in each case is valuable enough to justify waste (almost by definition), so I don't think the definition of waste differs.

One thing worth noting is, the computational power assigned to Bitcoin is to create a distributed notary system, and as such it can be, and is, used for anything that requires such a system. So it is essentially a structure that Bitcoin requires, but useful and valuable beyond it.

Having said all this, topic proposal is very interesting. Satoshi's proof-of-work based system solves a lot of issues at once though, I'm eager to see ideas about how they can be addressed with such a system.

a) It's not going to be a huge industry, in relation to the bitcoin economy as a whole, just like gold mining isn't a huge industry. 

b) If you want an example for "a huge industry doing nothing that needs to be done" then look at the marketing industry!  Both Coca-Cola and Pepsi "waste" huge amounts of energy and labor on marketing and all it achieves is to keep their market share approx. constant.    If both of them mutually decided to stop with all the aggressive marketing, they could probably keep their market share and all those resources could be used for something "useful".

Capitalism is suboptimal.  Deal with it.

Yes, a huge industry around doing nothing that actually needs to be done in the most resource intensive way possible makes perfect sense 

+1

This is already happening. Buttefly Labs is bringing out specialized hardware that can mine 1 Gh/s @ 20 W.

Expect energy consumption to decrease as difficulty increases.

5 years from now, most mining will probably take place in specialized complexes in Iceland comprising data centers and geothermal power plants.

The definition of waste is key here. If most of the various trial calculations in a molecular chemistry project only help by excluding non-solutions, they aren't wasted, they are necessary, otherwise they wouldn't be performed at all.

On the other hand, there's bitcoin, where the computational obstacle is an entirely artificial construct of a man-made game theory exercise, and is actually superfluous to the implementation and use of a medium of economic exchange. Various mediums of exchange that do not require such an obstacle are existence proofs of this superfluousness.

Thank you for reminding us this fact.

When you do folding@home, you waste a MASSIVE amount of energy and computational power on useless calculations. Most of the results are wrong and can't be used. Once in a while, someone's computer calculates the problem correctly, and that result is the only one that is useful (possible drug or whatever). With bitcoin, there is massive waste, resulting in one calculation that is useful (transactions between a bunch of people get recorded in the ledger and money can change hands). You could argue about which single correct calculation is more important/beneficial, but other @home distributed computing setups are just as wasteful.

I'd love to hear more on this. I'm still leaning towards believing the use of intrinsically valueless computational intensity as a obstacle/control is a design flaw, maybe even an awkward and artificial hack    I'm also unconvinced that the desired characteristics of a medium of exchange like bitcoin should require it.

Do I have a better idea at a detail level? Not so far, but the way various spin offs of bitcoin all seem to embrace this "feature" as part of the territory makes me wonder if bitcoin itself is a restrictive paradigm calling for the application of some outside-the-box reconsideration.

I've heard that switching around bits in processors uses almost no energy whatsoever, and most of the wattage used is expelled as waste heat. If true, low wattage FPGAs only have an initial fixed cost as the barrier, and long term, people will likely just buy more FPGAs, pushing the difficulty level up, and getting the energy costs (variable cost) of all running FPGAs right back up to where it isn't profitable to mine anymore. So the only effect they will have is higher initial investment and more hardware doing the work, much like the switch from CPU to GPU mining.

Simplest solution to this whole thing is already built in: decreasing reward amounts, and (hopefully) market determined transaction fees.

Lottery, pro-rated universal ROI, and pure deflation would have the same effect. If everyone who owns Bitcoins gets 50% interest, then the supply has moved but demand hasn't. An individual Bitcoin would be worth 66% as much afterwards. 100 / (100 + 50)

Any system that does not introduce coins at the expense of other users is de facto purely deflationary.