Topic: United we stand, divided we fall - the coming rise of cryptofiat - page 6. (Read 16512 times)

PoS is distributed not by random miners competing for a lottery, it is distributed by people (either directly or using an anonymization algorithm) that can choose to take (optionally anonymous) irrevocable capital control. Fiat is also distributed by people that maintain capital controls. So far there is no significant difference between paper money and PoS except that foreign agents can't counterfeit PoS.

I know that people are working on trying to make a fair PoS system, but it is turning out to be a wild goose chase.

There might be a misunderstanding of PoS if one considers it fiat.

This can't be done with PoW. It can only be done with PoS. You can't force anyone to use a PoW because you don't control it. Your little tinpot dictatorship will be outgunned by your superior enemies that will overpower your miners and reverse their transactions. It would be a tactical error to use PoW in an oppressive regime. PoW is for the free man.

Not a all. PoS is a technology, like PoW is.

Making it mandatory to use this particular crypto would make it fiat. Fiat means "let it be done" (like fiat lux) and, on the particular topic of currency, it means that a currency have been established as legal by decree.
Any currency that has value from obligation (decree) instead of actual value is fiat. If a government can hardfork at will and not let users decide if they like it or not, this is fiat. Banknote or cryptographic token, this makes no difference. And the exact protocol (PoW, PoS, PoB, PoI, PoT...) makes no difference.

At least this confirms that PoS is fiat.

Understood. This is what we are doing with HyperStake. It has the highest difficulty of any PoS, by order of magnitudes. Some specific code (read here if interested), just reputable people, good code, good karma, good promotion and no bullshit like "we'll replace BTC". What I mean is: if you have all the population of a country securing the blockchain, you can be pretty sure it will be secure (out of exploit, of course).

I believe corruption scales worse than a full-fledged on-purpose solution. In other words: hijacking SHA256 is good but there a better solutions, especially if you are thinking long-term.

An interesting article about fractional reserve in crypto and why it is a dangerous road to take but could be coming.. And bitcoin.it wiki article on it (did not read, probably interesting, but lazy).

Keyword is allowed

Cryptofiat Law, January 1, 2017. "The only cryptocurrency that can be bought with euros/dollars is CryptoEuro (EUR)/CryptoDollar (USD). Violators will be prosecuted. Natural persons of age 18 or more will be fined of 1260 $/€. Natural persons of less than 18 will have their parents or tutor pay the fine. Officials will be fined 1520 $/€ and businesses will be fined 25,200 $/€." (pure fiction, of course)

"A piece of paper is stronger than any technology" - Agent from the DRCI (France counter-espionage agency)

Voilà!

Cryptofiat would be a double edged sword. One of bitcoin's biggest challenge is bridging between fiat and currencies. If a government were to adopt cryptofiat they would also be establishing a convenient means to leave their fiat for something else.

Nice write up dude.  This cryptofiat term is pretty nifty

Many thanks for your extensive reply!

With my question above, I was alluding to the fact that a blockchain with higher difficulty is more secure, the lock on the safe is harder to pick.

You raise interesting points, especially regarding network setup/maintenance costs and the deep pockets of some groups. Although I still think it would be cheaper to hijack SHA256 miners if a big player wanted a POW system (loyalty dissolves quickly behind closed doors) miners will work for peanuts compared to establishing a centralised body. And also a widely spatially distributed network is far superior to attack resilience.

My prediction is that we will see a fractional reserve system atop POW crypto before fiat. Miners initially sharing the spoils of the debt repayments (and transaction fees).

But for sure, us "hobbyists" must prepare for larger moves in the game, whatever form they take. To think otherwise is naive.

edit:
a truly anonymous blockchain will never be allowed to flourish.

Hi,

First, thank you all for your insightful remarks. This really makes my day.

Can't answer, I don't really understand. Could you reformulate, please?

First, big money can recruit the crème de la crème for the technical part.
If I understood correctly, a large part of Bitcoin protection comes from its peta-hash network. I assume crypto-fiat would have a several order of magnitude higher network, exa-hash or even zetta-hash. Or, since we are talking 100% premine, take the PoS route that I know well with HyperStake (shameless plug here). Mega holders (central banks), major holders (top 500) as well as the long trail of small-time taxpayers would secure the network by stacking.
Speaking of PoS, government would like so much inflation to come back... Cryptofiat with 3% inflation, they'd like it (just joking on this part, I don't know if PoS inflation can be compared with real-life inflation - if presstab comes by, he could give his opinion). In any case, major network security here. Won't protect against exploit, but will make them seriously expensive still.
Finally, still on the PoS idea, there is the whole "protecting the planet" thing. Protection against terrorism is becoming passé. Protecting the planet has (sadly) a bright future. As a famous modern French thinker, Jacques Attali, pointed it, dictature in the name of ecology makes completely sense (not that cryptofiat would necessarily mean dictature, but it would be easier to make "transparent transaction" acceptable for the public opinion if it is "in the name of Mother Earth").

Crème de la crème and bazillion-hash network are just two parts of it. The other part I see it that network WILL be attacked. Cyberwarfare, mon ami.

https://en.bitcoin.it/wiki/Myths#Bitcoin_mining_is_a_waste_of_energy_and_harmful_for_ecology "No more so than the wastefulness of mining gold out of the ground, melting it down and shaping it into bars, and then putting it back underground again. Not to mention the building of big fancy buildings, the waste of energy printing and minting all the various fiat currencies, the transportation thereof in armored cars by no less than two security guards for each who could probably be doing something more productive, etc."
Should apply for more than energy. Plus, the price of computing hardware decreases very fast (an avatar of the Moore Conjecture, a.k.a. Moore's Law). If that was not enough, the price of wetware (organic traditional computers, colloquially called "humans") increases - and the price of brick-and-mortar stuff as whole increases too). Plus, biology-based computer hardware (in its infancy for the moment) promises to decrease even faster (see Juan Enriquez at 6m). Meanwhile, human will still cost as much (or even more, as more and more countries will have crossed the Lewis turning point where employees demand more social right and salaries). I for one, welcome our parabiologic overlords.

Yep. More fun for competing countries terrorist organisations.

Test drive with companies already started (I discussed some ideas for making Monero part of this game too, I expect the future crowdfunding platform to make it a reality). We'll see how it scales, especially considering that some companies, like Disney[/email] or [url=https://plus.google.com/explore/citizensamsung]Samsung are not that different from countries.. Prepare popcorn.

You assume too much Ripple, Stellar, MaidSafe... started as centralised. Now, the issuer cannot control what you are doing with the token once it gives it to you (but he can know what you are doing with it, because transparent blockchain). The same way today a government cannot prevent you from buying a forbidden documentary but can know you did (well, he can freese your bank account and could probably freese your address, especially if freezing could be implemented without hard forking, buy using a "consensus freeze" that 51% peers would follow).

There is one way to prevent such control, it is by using cash (coin, not banknotes). In crypto, cash is ring signature. You know where I'm heading (if  not, check my sig).

You will pardon me to speak about what I know the best: Monero.

First the code. Monero is transparent by default, optionally anonymous and can whitelist inquisitive institutions if you want to (viewkey). This means that you are in control and can exercice you control as much as you want: absolutely for private transactions (this "special package" you really don't want people to know about), moderately for ordinary transactions (buying your daily coffee at Starbucks), lowly for public transaction (a charity receiving a donation, a public company or a governement).
Everyday transaction: mixin count 0
Private transaction: mixin count 2+
Public transactions: viewkey either to everyone (on the website, like we do for Monero), or to specially appointed people (justice, FinSen/SEC...)

Second the initiative. The Monero Economy Workgroup exemplifies the title of this essay: United we stand. To increase adoption, to be better able to speak to institutions, we must unite. So-called "investors" are not enough. We need actors, people willing to actually do something with the technology they have. The best tools is of no use if you don't use.

There is a word for this: empowerment.

To answer your question more directly, Manu92: what concrete actions must be done.
- promote optionally anonymous cryptos (I believe mandatory anonymity is not much better than mandatory transparency)
- do not just buy; also promote, propose, throw yourself into (in French, to invest and to throw yourself into are very similar which leads to confusion: "investir" and "s'investir" are different things)
- always remember the big picture, what is truly at stake

Sincerely,

Time to get out of Bitcoin and invest all my money into Reynolds Wrap.

What do you propose?

Remarkably powerful speech you gave there. I couldn't have said it better myself - I have said this for many years that to continue to survive in this ever-changing world is to evolve to embrace your fellow human. United we stand.

It's all well that we have created bitcoin and altcoins; both of which have a powerful markup against fiat currency, however what's to stop a bank, or the government or even one of the super-rich to buy a shitload of everything and start to manipulate, rise, fall, or even kill the entire market. We forget that if bitcoin or whatevercoin were to render fiat currency useless, the people in charge would have had a lot of notice from their sector advisors and would already have invested x amount of coin as a contingency plan. There would be no shift of power. None whatsoever.

Like you said, working together to achieve common goals is the best way to move forward. And, of course, nothing like a bit of Darwinian evolution amongst the coin Devs to keep competition tough and on top of their game!

 

I've been saying that state issued PoS coins are a good option for governments. I don't think premined PoW coins are ever a good idea. They (PoS) offer everything a centrally planned state needs. There can never be fair exchanges between them because of politics so instead people will use Bitcoin as a currency basket to exchange on decentralized markets.

Brute force a centrally checkpointed blockchain isn't all that effective, especially when checkpoint servers can automatically update the checkpoints.  At least from my own understanding, could be wrong of course.

David, awesome write up. It is refreshing to take a step back from the daily grind of the mechanics of the cryptocurrency community, and put this all in realistic terms.

I like the term cryptofiat.

I dont get why gov would like to create own cryptocurrency. I mean if we agree cryptocurrency = decentralized currency with public ledger nobody is granted to control.

Excelente analysis.


What concrete actions must be done in your opinion about this second point?

Intersting read, and I agree with the whole "bitcoin resting on it's laurels" thing.

RE: crypto-fiat:

Isn't the market capital that you can safely store/transact in a blockchain only proportional to the power (difficulty) of the overall network?

How would a crypto-fiat survive? If any serious capital existed in it then it would make financial (if not ethical) sense to brute force hack the blockchain.

We all know fiat scheme operators like to run their games with minimal overheads, I can't see them investing in or evolving the network hardware too much.

Even if you couldn't extract any capital out of the system (due to traceability issues) it would still be a target for a competing government on the global stage.

I think a premined coin can never hold alot of capital for this reason.

But having said that: I can see SHA256 miners getting lured onto a fractional reserve blockchain for "perks". And agree with your general sentiment.

Super article
Bravo