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Topic: Satoshi didn't solve the Byzantine generals problem (Read 13675 times)

legendary
Activity: 1260
Merit: 1000
Yea, I'm locking this thread now that the Shamwow Zeitcoin salesmen has shown up.  It will just turn into 10 pages of jibberish with him trying to sell you his $20,000 market cap PoS coin.  That and the fact that we have no better alternative to the current PoW implementation so this topic is kind of pointless until we do.
member
Activity: 72
Merit: 10
Any good news causes the price up?
legendary
Activity: 1092
Merit: 1000

Agreed one of the major reasons PoS(hit) is insecure— there is no ongoing expenditure.


Hmm,  disagree with that for the following reasons, (Especially your cute (hit) slander)
Just because PoS is Substantially cheaper to run than PoW does not mean their is not an increasing expenditure required.

There is always an increasing expenditure of required Disk Space as the Blockchain expands.
Additionally also an increasing requirement of Ram , as the Memory requirements grow.
As the Number of Wallets increase competition for Stakes, there is an increasing Time requirement to be online and staking.
(And with the above increased requirements, a slight increase in the electricity draw on the PCs.)  Smiley

 Cool
sr. member
Activity: 420
Merit: 262
The better retort would be to argue that the as the adoption increases, the price will rise so the fixed size (in coins) tail reward has an adaptive valuation.

But I will retort that the value of shorting also scales up accordingly.

Shorting can't erase the cost due to PoW (burning energy). It can only erase a cost from loss of value of a holdings (PoS and other methods that claim to turn holding coins into "virtual miners").

If attacking a coin causes its price to decline, shorting can return a profit. If that profit exceeds the cost due to PoW, then it erased it. Cover the short, stop the attack. Repeat if the price rises again.

Yes but if the attack doesn't succeed, the energy burn cost is still there (i.e. risk of failure)

Agreed, I also acknowledged that in the past, that the market might simply ignore the attack since it knows if the price doesn't drop there may be no way to sufficiently monetize the attack to offset the hashrate cost.

However there are other more certain ways to profit on an attack of PoW, and that is to do the attack on behalf of the world government and charge the cost to the collective (i.e. to the people of the world). This is essentially my greatest fear for the future of Satoshi's design if it doesn't otherwise fail due to being a cartel:

Regarding the future of Bitcoin and its Tragedy of the Commons economic design:

At best one would see the type of cartel that TPTB_need_war  has suggested; however my take is that this kind of cartel would only last for a short time before collapsing. Just witness what is currently happening in the crude oil market.

Cartels form in power vacuums. They must align with the greater power vacuums in order to sustain their market inefficiency (top-down control can't anneal maximum fitness). So the only way such a cartel would not fail, would be to become a fiat of the world government and be sustained by the Iron Law on Political Economics which is the perennial, inimitable power vacuum.



If, by contrast, you try to attack a coin almost costlessly via PoS exploits and if your attack doesn't succeed then your your coins nor your short loses value. Then you can just try again, until you succeed...

Agreed one of the major reasons PoS(hit) is insecure— there is no ongoing expenditure.

I agree that "coins will go down in value" does not enhance the security of PoW; that would attempting to impute a some sort of stake-based incentive to mining, as some do, and that is flat out wrong, or at best, very weak security.

Agreed.

Security of a coin will be very tied to its transaction rate × average transaction size, i.e. velocity adoption and wealth of the velocity. The problem I have with the fixed size tail reward as compared to the design I am contemplating is that tail reward only captures those metrics indirectly through exchange price appreciation. I am not sure if the two models are equally powerful. I will need to think more deeply about it. My design also has an orthogonal tail reward.

Edit: some aspects of Monero's tail reward and block size adjustment algorithm are analogous to aspects of my design. There are some other things I didn't mention. I will need to really take the time to distil this into a carefully written white paper. So I would caution readers not to form any concrete conclusions (either for or against any design mentioned here) from these vague discussions.
legendary
Activity: 2142
Merit: 1010
Newbie
Please, spare me the garbage.  If anyone has a bad reputation it's all you IPO scammers.

So, ad hominem is the only counterargument you have? Or you are saying that it's acceptable to post nonsensical phrases (that you refuse to support with money) without getting your reputation ruined? The latter is not a rhetorical question...
legendary
Activity: 1260
Merit: 1000
Which I do not see as a solution due to my criticism of IOTA...

"Criticism"? After you ruined your reputation by producing tons of bullshit (which you admitted by refusing to put your money where your mouth was) it's not longer a criticism, you behave like a kid who knows that thing he did were wrong but he can't stop doing them because others will see that he regrets of doing them in the past. "Criticism" haha, keep playing the role of joker blabbing words you don't understand.

Please, spare me the garbage.  If anyone has a bad reputation it's all you IPO scammers.  Lol, you think I have a bad reputation beause I didn't want to send 50 btc to some random Russian mafia member so he can escrow an ambiguous terms bet you wanted that no 3rd party could possibly even fairly decide the outcome of.  Then need to trust that the escrow is not only a cryptocurrency expert, but also non-biased at the same time.
legendary
Activity: 2142
Merit: 1010
Newbie
Which I do not see as a solution due to my criticism of IOTA...

"Criticism"? After you ruined your reputation by producing tons of bullshit (which you admitted by refusing to put your money where your mouth was) it's not longer a criticism, you behave like a kid who knows that thing he did were wrong but he can't stop doing them because others will see that he regrets of doing them in the past. "Criticism" haha, keep playing the role of joker blabbing words you don't understand.
legendary
Activity: 1092
Merit: 1000
The better retort would be to argue that the as the adoption increases, the price will rise so the fixed size (in coins) tail reward has an adaptive valuation.

But I will retort that the value of shorting also scales up accordingly.

Shorting can't erase the cost due to PoW (burning energy). It can only erase a cost from loss of value of a holdings (PoS and other methods that claim to turn holding coins into "virtual miners").

If attacking a coin causes its price to decline, shorting can return a profit. If that profit exceeds the cost due to PoW, then it erased it. Cover the short, stop the attack. Repeat if the price rises again.

Yes but if the attack doesn't succeed, the energy burn cost is still there (i.e. risk of failure)

If, by contrast, you try to attack a coin almost costlessly via PoS exploits and if your attack doesn't succeed then your your coins nor your short loses value. Then you can just try again, until you succeed...

I agree that "coins will go down in value" does not enhance the security of PoW; that would attempting to impute a some sort of stake-based incentive to mining, as some do, and that is flat out wrong, or at best, very weak security.


Your Term costlessly is exaggerated , IMO.

Quote
The usual way to short a currency is to use a currency pair—something like EUR/USD, the value of a euro denominated in dollars—which trades as a single unit. For example, if the euro was trading at $1.3000, you would “borrow” a currency pair from your broker, which you have to return within a certain period of time, and sell it on the open market, pocketing $1.30. If after an hour EUR/USD is trading at $1.2950, you can buy the currency pair at that price and return it to your broker, making a profit of $0.0050. (If you’re wrong, you lose out.)

1.  If Shorting is so Easy as you guys like to pretend, why are'nt all of you rich from Shorting Coins & Stocks? Cheesy
You Have to Fund Your Margin Account which holds Collateral used to Secure Loans used in Margin Trading.

Quote
But if you have a short position, there’s no limit to how much money you can lose if the shares rise. If the share price increases soon after you place a short position, you could quickly “cover” by buying back the shares and returning them to the investor you borrowed them from. If you’re lucky, you might not lose very much.

But an investor named Joe Campbell was not so lucky when he placed a $37,000 short position on KaloBios Pharmaceuticals Inc. US:KBIO  earlier this month, only to find out a day later that the shares had shot up about 800% after Turing Pharmaceuticals CEO Martin Shkreli gained control of a majority of KaloBios’ shares.

If you have not received insider info (which is illegal by the way),
then you are a sucker and will learn the below term very quickly.
Quote
What Is a Forced Liquidation?

A forced liquidation is when all or part of your positions are closed automatically to prevent further loss and ensure you do not default on your loans. Forced liquidations are executed using one or more market orders; as such, order book liquidity at the time of these orders will affect the extent of the losses you incur from the liquidation. Forced liquidations occur when your Current Margin dips below your Maintenance Margin. It is strongly advised that you check the markets and your open positions regularly, mitigating your risk as necessary by reducing the size of your positions or transferring additional collateral into your margin account. Markets can change very quickly, and no guarantee can be made that you will receive a Margin Call warning in time for you to prevent a forced liquidation.

https://bitsharestalk.org/index.php?topic=17141.0
Quote
Hey guys,
Just have an interesting case study of my trading experience on Poloniex last week.  I traded on Poloniex's margin trading platform and was margin called on June 15th 17:15 when the prices went from .000029 BTC per BTS to .000014 BTC per BTS back to .000028 BTC per BTS in a ten minute span. (Down 50% in less than 10 minutes!) I didn't realize the liquidity was so low on Poloniex, but it's interesting to know what can happen.  I lost a chunk of money.
I think someone or some bot just ran down the book on all the buy orders and got the price really low to trigger all the margin calls and bought back at low prices, but not sure of the exact mechanics.

2. Even your claims of creating Online Wallets will have a cost involved , VPS & Internet & Marketing costs .
Plus the fact is that your amount of coins will fluctuate , and in no way guarantee your staking power stays high, and that is only if you actually get alot of coins, which will be doubtful as most PoS users distrust online wallets.

3. Buy or Create an Exchange , do I really need to point out the costs there.  Cheesy


 Cool
legendary
Activity: 1260
Merit: 1000
It doesn't matter if mining profit trends towards zero, it happens in the real metals market all the time yet miners don't cease to exist.  The function of mining in that case is solely futures market.  The function of mining in Bitcoin is identical, solely a futures market with no guarantees about profit.
legendary
Activity: 2968
Merit: 1198
The better retort would be to argue that the as the adoption increases, the price will rise so the fixed size (in coins) tail reward has an adaptive valuation.

But I will retort that the value of shorting also scales up accordingly.

Shorting can't erase the cost due to PoW (burning energy). It can only erase a cost from loss of value of a holdings (PoS and other methods that claim to turn holding coins into "virtual miners").

If attacking a coin causes its price to decline, shorting can return a profit. If that profit exceeds the cost due to PoW, then it erased it. Cover the short, stop the attack. Repeat if the price rises again.

Yes but if the attack doesn't succeed, the energy burn cost is still there (i.e. risk of failure)

If, by contrast, you try to attack a coin almost costlessly via PoS exploits and if your attack doesn't succeed then your your coins nor your short loses value. Then you can just try again, until you succeed...

I agree that "coins will go down in value" does not enhance the security of PoW; that would attempting to impute a some sort of stake-based incentive to mining, as some do, and that is flat out wrong, or at best, very weak security.
sr. member
Activity: 420
Merit: 262
The amount of inflation you can slop onto a system before it compromises my above statement is far too arbitrary and unknown

So is the unknown of China's pools controlling 67% of Bitcoin's hashrate, and the potential of the Bitcoin money supply not only inflating like crazy the past years, but inflating more than the originally promised 21 million coin limit.

Also the tail reward is usually designed to be much smaller than initial distribution, so if you are worried about inflation, you should be really worried now. If the tail reward is less than the population and economic growth rates, then it is still deflationary.

Additionally if Bitcoin has no tail reward and due to the Tragedy of the Commons (if it remains decentralized) then transaction fees decline to costs, then it becomes a permissioned block chain as you alleged with no circulating coins passing back through mining.

I'll make these points much more well explained and convincing in a future white paper.
sr. member
Activity: 420
Merit: 262
The better retort would be to argue that the as the adoption increases, the price will rise so the fixed size (in coins) tail reward has an adaptive valuation.

But I will retort that the value of shorting also scales up accordingly.

Shorting can't erase the cost due to PoW (burning energy). It can only erase a cost from loss of value of a holdings (PoS and other methods that claim to turn holding coins into "virtual miners").

If attacking a coin causes its price to decline, shorting can return a profit. If that profit exceeds the cost due to PoW, then that cost was erased. Cover the short, stop the attack. Repeat if the price rises again.

BTW, I would suggest that Tragedy of the Commons is an ineffective analogy for explaining whatever it is you are trying to explain because obviously-intelligent people such as ArticMine don't understand it. It may be that you are entirely correct, but if you want to communicate effectively you need a differently-worded explanation.

Agreed at the appropriate time. I deem it necessary to be vague since I am months (or moar!) away from implementing my design.
legendary
Activity: 1260
Merit: 1000
I edited one of my above posts to articulate the problem with inflation...aka "tail reward"

It (0 inflation) has further benefit due to the fact that Bitcoin mining profit trends towards zero, but with a deflationary system with no inflation involved, there is still incentive to mine it anyway due mining acting as futures market with a time opportunity cost that allows for forward profits

The amount of inflation you can slop onto a system before it compromises my above statement is far too arbitrary and unknown, to the point where it should just be a taboo subject in the first place changing it to anything but zero.  Anyone arguing for inflation should be looked upon with great suspicion (even though I've made the mistake of considering it possibly useful in the past)
legendary
Activity: 2968
Merit: 1198
[1] Note this means the tail reward security of Monero will be very weak and insufficient.

"Insufficient" is unclear because there is no unambiguous definition of how much is sufficient.

In large part it depends on the decentralization of mining. If mining is decentralized then you only need a small (but still nonzero) incentive because any miner can't really do anything other than follow the longest chain rule. While raw hash rate attacks are possible (i.e. temporarily centralizing mining by incurring a cost), in a larger system they will have significant cost and will only succeed as long as the ongoing cost is paid.

If mining is highly concentrated by nature then you are really only relying on the weak linear security of the block reward itself, and maybe not even that, because miners (e.g., hypothesized Chinese cartels) have all sorts of perverse incentives.

Your statement would be correct if you added ", assuming mining becomes centralized as I have claimed it will."

I will argue my statement was correct as stated, because there are other parties with significant resources and incentives who may not be mining normally but once the hashrate declines to the tail reward cost, they can then decide it is easier to attack the coin.

It is still ambiguous what is "sufficient".

Quote
The better retort would be to argue that the as the adoption increases, the price will rise so the fixed size (in coins) tail reward has an adaptive valuation.

But I will retort that the value of shorting also scales up accordingly.

Shorting can't erase the cost due to PoW (burning energy). It can only erase a cost from loss of value of a holdings (PoS and other methods that claim to turn holding coins into "virtual miners").

BTW, I would suggest that Tragedy of the Commons is an ineffective analogy for explaining whatever it is you are trying to explain because obviously-intelligent people such as ArticMine don't understand it. It may be that you are entirely correct, but if you want to communicate effectively you need a differently-worded explanation.
sr. member
Activity: 420
Merit: 262
There is a permanent tail reward turnover in my design. And it is still unprofitable.

I'm honestly not ready to throw in the towel on inflation due to being a completely arbitrary number that opens an enormous slippery slope for alteration by succesors.  Inflation also just being a form of social engineering that people will always attempt to bypass by utilizing other systems.  Also due to the fact stated below:

Transaction fee as block reward with zero inflation being the far lesser of evils to the point where it can only be considered a work of art.

There is no inflation with a tail reward.

Any smallish level of inflation will result in a constant spendable money supply (click the quoted link for the math):

[...]Monero's perpetual tail reward which is necessarily a fixed # of coins[...]
legendary
Activity: 1260
Merit: 1000
There is a permanent tail reward turnover in my design. And it is still unprofitable.

I'm honestly not ready to throw in the towel on inflation due to being a completely arbitrary number that opens an enormous slippery slope for alteration by succesors.  Inflation also just being a form of social engineering that people will always attempt to bypass by utilizing other systems.  It has further benefit due to the fact that Bitcoin mining profit trends towards zero, but with a deflationary system with no inflation involved, there is still incentive to mine it anyway due mining acting as futures market with a time opportunity cost that allows for forward profits.  Also due to the fact stated below:

Transaction fee as block reward with zero inflation being the far lesser of evils to the point where it can only be considered a work of art.
sr. member
Activity: 420
Merit: 262
I have a solution, but it is a very radical change to the proof-of-work design that relies on unprofitable mining by payers.

Which I do not see as a solution due to my criticism of IOTA where abstracting block reward from the external entropy process defeats the purpose of the external entropy process from existing in the first place, giving you something that's functionally equivalent to a closed loop proof of stake system.  Or to put it more simply for people who didn't read the IOTA thread, without permanent coin turnover via either transaction fee as block reward or permanent inflation, you technically have a permissioned ledger and not a decentralized system.  Transaction fee as block reward being the far lesser of evils to the point where it can only be considered a work of art.  I believe unprofitable mining is therefore pointless mining.

My, to borrow a slightly overused Anonymint term, "holistic" grasp of all cryptocurrency elements was not where it is now when I originally made this thread, and Satoshi indeed did not implement any Sybil prevention due to pools acting as an unforeseen abstraction layer, but Bitcoin is otherwise a work of art that no alternative systems have been able to improve upon yet.

There is a permanent tail reward turnover in my design. And it is still unprofitable.
legendary
Activity: 1260
Merit: 1000
I have a solution, but it is a very radical change to the proof-of-work design that relies on unprofitable mining by payers.

Which I do not see as a solution due to my criticism of IOTA where abstracting block reward from the external entropy process defeats the purpose of the external entropy process from existing in the first place, giving you something that's functionally equivalent to a closed loop proof of stake system.  Or to put it more simply for people who didn't read the IOTA thread, without permanent coin turnover via either transaction fee as block reward or permanent inflation, you technically have a permissioned ledger and not a decentralized system.  Transaction fee as block reward with zero inflation being the far lesser of evils to the point where it can only be considered a work of art.  I believe unprofitable mining is therefore pointless mining.

My, to borrow a slightly overused Anonymint term, "holistic" grasp of all cryptocurrency elements was not where it is now when I originally made this thread, and Satoshi indeed did not implement any Sybil prevention due to pools acting as an unforeseen abstraction layer, but Bitcoin is otherwise a work of art that no alternative systems have been able to improve upon yet.  Even the supposed negatives the media likes to push such as being "a waste of power" aren't true, when in the future, it's entirely plausible you'll be mining Bitcoinis as a byproduct of doing things like turning on central heating in your house.
sr. member
Activity: 420
Merit: 262
[1] Note this means the tail reward security of Monero will be very weak and insufficient.

"Insufficient" is unclear because there is no unambiguous definition of how much is sufficient.

In large part it depends on the decentralization of mining. If mining is decentralized then you only need a small (but still nonzero) incentive because any miner can't really do anything other than follow the longest chain rule. While raw hash rate attacks are possible (i.e. temporarily centralizing mining by incurring a cost), in a larger system they will have significant cost and will only succeed as long as the ongoing cost is paid.

If mining is highly concentrated by nature then you are really only relying on the weak linear security of the block reward itself, and maybe not even that, because miners (e.g., hypothesized Chinese cartels) have all sorts of perverse incentives.

Your statement would be correct if you added ", assuming mining becomes centralized as I have claimed it will."

I will argue my statement was correct as stated, because there are other parties with significant resources and incentives who may not be mining normally but once the hashrate declines to the tail reward cost, they can then decide it is easier to attack the coin.

The better retort would be to argue that the as the adoption increases, the price will rise so the fixed size (in coins) tail reward has an adaptive valuation.

But I will retort that the value of shorting also scales up accordingly.

Rather what I do in my improved design, is to set the cost of mining to the reasonable fraction of the transaction value.

That is why I say the only way to solve the block chain Tragedy of the Commons is to require what is effectively a minimum transaction fee in the protocol. But then there is the problem of miners competing with each other to rebate the fee to the payer/payee so how to enforce a minimum transaction fee?

There is only one way to do that, which is to burn the fees. But if you burn them then the money supply declines to 0. So the only way is to burn hashrate. And that is why only my design which makes mining unprofitable will solve the problem.
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