Prior to the merge ethereum’s trust was controlled by the organizations with the most money who bought/built massive data centers to mine it.
With the merge & staking that abstraction layer has disappeared and it’s still the organizations with the most money who control it.
Sure it’s great that non-productive math problems no longer need to be solved & consume so much energy and hardware to make it all work. And it may be an incremental improvement over traditional global finance because there is a much greater ability to publicly scrutinize what goes on.
But no one should consider this a fundamental paradigm shift & democratization compare to traditional financial systems controlled by a a very small number of big players. Their influence still can override the mining process that’s supposed to be the final word on transactions.
Although I’ll clarify a bit: I’m actually a proponent of having a layer of human judgement that can fix a problem when things go off the rails. The issue is that in crypto this layer is even less accessible to smaller players than in traditional finance. The DAO was able to throw its weight around and get a hard fork, but how many other groups with much less influence have suffered from similar problems and exploits without that same benefit?
Yes, even in traditional finance there are some types of irreversible fraud. But for every day transactions, for using money as a daily part of transactions necessary to live your life and not just as a speculative investment, crypto falls far short.
If a criminal spies on my credit card # as I make a purchase and uses that to go on a spending spree I can fix it with the credit card company with little cost but a few hours of time and frustration. If my wallet is pick pocketed or I simply lose it by accident I have a similar recourse to mitigate the fallout. Crypto? No. It may, eventually, have some other benefits though that’s yet to be seen. But as a major change & liberation of people from massively powerful banks and governments there seems to be nothing more that shouted rhetoric and wishful thinking.
Not using up a goat load of electricity is like 99% of why this change is great. Let people speculate on their funny money without harming everyone. A lateral move on the other details is rather unsurprising.
Agreed. My top concern with cryptocurrency is the huge waste of energy inherent to PoW. It's really, really good to see ETH pull this off. There are a pile of other problems in crypto, but it's fantastic to see this biggest (IMO) issue addressed by the #2 cryptocurrency. I actually thought it might never happen. It's a day to celebrate for sure.
Honestly, PoW seems like a big problem but the reality is that miners have been boosting the solar companies. Solar is cheaper than most other power sources and any miner will tell you that the cheaper the power the more profit they make.
What does it help to build solar power plants only to use up all of that capacity on useless computations?
All else being equal, building solar panels is a negative; producing and transporting solar panels consumes materials and produces CO2. The reason building solar power plants is usually good is that they reduce the need for even worse forms of energy production. If you build a solar farm, just to waste all or most of the energy it generates, what you have done is a net negative for the environment.
This is in addition to the fact that a whole lot of mining uses existing infrastructure, which negates the gains from building out clean energy and keeps demand high enough to require dirty energy, as /u/oofbey covered.
> What does it help to build solar power plants only to use up all of that capacity on useless computations?
> All else being equal, building solar panels is a negative; producing and transporting solar panels consumes materials and produces CO2. The reason building solar power plants is usually good is that they reduce the need for even worse forms of energy production. If you build a solar farm, just to waste all or most of the energy it generates, what you have done is a net negative for the environment.
I agree with this in the short term, but my argument is more about economies of scale: The more people want large amounts of solar, the better companies get at producing it and the cheaper it gets. Because of that cheapness fossil fuels could be taken off the table completely resulting in a short-term downside (losing resources and producing CO2 for unnecessary computations), but a long-term win (a world free from fossil fuels)
> This is in addition to the fact that a whole lot of mining uses existing infrastructure, which negates the gains from building out clean energy and keeps demand high enough to require dirty energy, as /u/oofbey covered.
Fair. Just because miners in general are ravenous for solar does not mean that all individual miners are able or willing to use solar “off the grid”. I’m not saying it’s perfect or that PoW is the right direction, I’m only pointing out that it’s not the absolute evil that it’s been painted as.
Another way to look at it is that by using solar for mining, other forms of capacity are not wasted in the same way. The waste is then in using up of materials and manufacturing that would go to "ordinary" use otherwise.
1. We build 1TW of solar panels, PoW mining uses that 1TW to do useless work.
2. We don't build 1TW of solar panels, and don't do that additional 1TW of useless work.
Worlds 1 and 2 have the same impact on the electricity grid. But in world 1, we're emitting a whole lot of CO2 and consuming a whole lot of rare materials to build solar farms and electronics, while in world 2 we don't. Clearly world 2 is better for the environment?
Unless some very serious technical breakthroughs happens in more efficient manufacture, energy capture efficiency and energy storage, by the point that around 1% of Earth is covered in solar panels, Earth probably ran out of "useless" land space and materials to make solar panels and the associated infrastructure to actually use said energy to something useful.
That's rather the point; tech breakthroughs happen when there is a drive to achieve something, increased demand for solar causes that pressure to strive and thus increases the likelihood of innovation. The more panels that are built, the better we get at building them, innovate, repeat.
The answer to your question is simply Halvings, every four year the quantity of energy used halves in bitcoin terms but the infrastructure remain and can be repurposed to more profitable uses.
Miners are turning back on shuttered fossil fuel burning power stations. Pumping carbon into the air for zero public benefit. of course they’d prefer cheaper power if they could get it - everybody does. But just because they prefer clean power in no way excuses the huge waste of carbon that powers most mining.
Imagine trying to quantify the amount of energy that goes into the current financial system with all its inefficiencies and manpower, time and energy that it takes.
I would love to see this number compared to the amount of energy PoW consumes.
While I can’t compare “manpower” energy, someone did the math comparing ethereum to ec2 - ethereum was 1 million times less efficient in processing power, network costs, and storage.
Those numbers were obviously from the POW network, so unknown how they will change post merge, but arguing that current systems waste energy too seems a bit biased.
You got downvoted because “PoW is bad for the environment” is a strong mainstream argument.
PoS is pure oligarchy but people loves it because “it saves the planet!!1”
Eventually, people will understand differences.
PoW is worse w.r.t power concentration. PoW is just PoS with additional steps. Such as having connections with energy providers, being able to buy newest bitmain ASICs early, etc.
Using electricity isn't the problem. Anyone could use vast amounts of electricity as long as they are willing to pay the price for it. The problem is carbon emissions.
The switch to PoS is a non-issue from my perspective: a centralized system changed from using method A to method B, I don't understand why I should care.
Bitcoin mining is increasingly being used to prevent methane emissions in stranded gas reserves. Having an economic incentive to not flare or emit methane but instead using it for generating bitcoin allows Bitcoin mining to become net carbon negative.
Reducing methane emissions is vastly more effective at preventing climate change than reducing co2 emissions.
> The switch to PoS is a non-issue from my perspective: a centralized system changed from using method A to method B, I don't understand why I should care.
Because every bitcoin transaction costs $60 in electricity. That is a monumentally stupid amount to pay. It's $125 per kB.
Proof of stake incentivizes capital directly. Proof of work incentivizes capital via the ability to find prime numbers, which limits you to people who are willing to spend $1000s to millions of dollars to do it efficiently. Limiting the validators like that drives up costs massively.
> Bitcoin mining is increasingly being used to prevent methane emissions in stranded gas reserves. Having an economic incentive to not flare or emit methane but instead using it for generating bitcoin allows Bitcoin mining to become net carbon negative.
No, it is not. Projects like that may be branded with bitcoin, but bitcoin miners are buying the same electricity as everyone else. The rising cost of electricity is causing new sources of power to be exploited.
Instead of being used for something useful, that electricity is being turned into waste heat.
«Because every bitcoin transaction costs $60 in electricity.»
A common misconception. Only a fraction (about 1% at the moment) of Bitcoin's electricity consumption is derived from transactions, because transaction fees account for only about 1% of miners revenues. The average transaction fee is about $1 at the moment, so a transaction "costs" only $1 in electricity because it provides $1 of extra revenue to miners who can subsequently spend it on opex (electricity).
I haven't computed it, but you need to take into account the energy it takes to mine a block and the number of transactions in that block.
The transaction fee is irrelevant, as the fees being paid were mined in the past and already "paid for" with electicity.
In the end, transactions drive the chain forward. You don't need (a lot of?) them to continue mining, but they are the only "useful" part of the blockchain.
I have no idea if bitcoin operates at max capacity, but I think it does. If so, I think it's perfectly fair to attach mining energy use to transactions.
«I haven't computed it, but you need to take into account the energy it takes to mine a block»
No, because the energy consumption is the same regardless if a block contains zero or a thousand transactions. Therefore it is misleading to attribute mining energy as the "cost" of transactions. And Bitcoin doesn't operate at max capacity: its lightning network is very under-used at the moment.
As to the transaction fee, it is relevant: even though it was already "paid for", it is being redistributed to miners again, therefore drives energy consumption further up than if it was not being redistributed.
Also worth considering: Proof of Transfer consensus mechanisms like Stacks allow entire networks to run in paralleled with Bitcoin by piggybacking on Bitcoin's consensus mechanism. That's a whole big pile of transactions happening that go entirely unaccounted for by folks who just count the number of transactions in a block.
It is intellectually dishonest to use marginal cost here and not average cost.
A transactions costs $60, in the sense that all transactions together over some period, say N, cost $60*N over that period.
That is invisible to the user insofar as it is financed through an increase in money supply [1] which accrues to the miners at the expense of all other BTC holders.
[1] Increase in money supply is sometimes, particularly by Austrian economists and crypto acolytes, identified with inflation. The irony...
It would be intellectually dishonest, if the foundations of your reasoning were sound.
The increase in the money supply, aka block subsidy, is a value transfer from BTC holders to miners compensating them for enforcing the consensus rules of the ledger. Very similar to if you were paying fees to a mega secure vault company, though no vault company can provide decentralised value storage; value storage without any single point of failure. Considering the unprecedented level of security on offer, the value for money is astonishing.
The miners job is to construct a block.
They're paid via a special transaction called a coinbase (a large American exchange named their company after this special transaction), which they can make payable to whomever they wish.
They take incoming transactions and may include a certain number of those; the limit is 4 million weight units, as opposed to a certain number of kB as is commonly believed.
Each transaction they include will usually include in addition to fixed recipients, a special "spend to anyone" transaction output, this is to encourage a miner to include your transaction preferentially as they can make this portion payable to themselves.
They may attempt to include multiple transactions spending the same funds to different recipients, or to insert a coinbase transaction wherein they have made payable to themselves any number of bitcoin, or include more than 4 million weight units worth of transactions, or make some other attempt to break the rules of consensus that any block they published will be tested against by thousands of other computers who will then choose to store locally the new block as the new strongest valid chain tip, or disregard.
Before publishing the transaction though, the miner must also solve the double spending problem, by providing proof of work.
They do this by going back to that block they're constructing, and firstly putting a random number in the nonce field of the header. Then, they pass the blocks bits into a sha256 hash function, take the resulting hash and hash it again with the sha256 function.
The result must meet the current block height difficulty, for example to just happen to start with 18 leading zeroes.
If it doesn't, the nonce is incremented in the header and the block is hashed again.
Without an appropriately difficult proof, first of all you wouldn't know which valid block had come first, and so would have double spend problems where after receiving payment, the block containing your payment was dropped and replaced with another, or outside of bitcoin, anyone can for example send you a transaction receipt via e-mail stating you have been paid, on its own it's worthless though, you will have to rely on PayPal or a bank to ultimately tell you if you have received a payment, and PayPal or bank payments are reversible in a way Bitcoin transactions are not so even then, you don't have the same degree of certainty (furthermore your funds are not in your custody, instead you have lent your money to the bank; they owe you it).
I hope this clears up the difference between these different fees and what they are in payment for, please DYOR next time before speaking on a subject as though you have some knowledge of it, much of the confusion around Bitcoin results from people who have not studied it wanting to sound knowledgeable.
I don't know much about cryptocurrency, but I'm not sure I understand how your response relates to the question of whether, on average, bitcoin transactions use about $60 worth of electricity.
Thanks for this summary of the basics of mining (that most people here are familiar with). None of it presents a challenge to my two arguments:
1. BTC holders pay a fee of around 1.7% p.a. of their holdings (until the next halving) to miners (through an increase in money supply),
2. which amounts to around $60 per transaction currently. (Higher if BTCUSD rises or the number of transactions falls; lower if BTCUSD falls or the number of transaction increases, which it cannot much because BTC operates not too far from the limit.)
> please DYOR next time before speaking on a subject as though you have some knowledge of it,
Ah, the old "you just don't understand crypto" chestnut...
The time taken to refute bs is much greater than the time it takes to generate bs. Your argument is at best mistaken and at worst intentionally misleading. My summary of mining is better than most you will find online and, only lacking in mention that the previous blocks hash is also included in each new proposed block to ensure each builds upon the chain tip.
Even if I hadn't studied the source code and game theory myself, I think I trust the technical analysis of the Steve Wozniak's of the world over yours.
A simple way to see through this argument that transactions cost $60 would be to say, that being the case, why can I currently pay $1-2 for a transaction. And if no transactions occur, why would miners still be able to continue creating blocks?
I think it's very likely you simply dislike Bitcoin and want to mislead people about it, for personal reasons.
$60 (or, more currently, ~$83) is the block reward, at the current price, divided by the average number of transactions per block. It does not even include the added incentives from fees.
The value you try to compute is currently exactly $79, including fees (which are about $1). If the number of transactions were to double (or halve) tomorrow, that value would halve (or double). You are just dividing fixed ongoing rewards by a variable metric unrelated to the rewards (transactions). You are propagating a misconception that somehow this represents the cost of a transaction.
Yes, and the block reward can be claimed without any transactions in the block.
On BTC this never happens, on other chains it's quite common, since no one uses them.
That $60 in electricity 'per transaction' is simply not correct, the value of the block reward doesn't come from transactions. The transaction fee does.
> Because every bitcoin transaction costs $60 in electricity. That is a monumentally stupid amount to pay. It's $125 per kB.
Its incredibly fallacious to measure the cost of electricity per transaction on Bitcoin. Blocks can be completely full or utterly empty and still use the amount of power. You're also missing the point of the power consumption. Its not used to move capital from one person to another, its used to secure the network from attacks and preserve its integrity. Measuring the cost of electricity per transaction is like measuring the amount of energy bank vaults and the US army use per dollar transaction. Stats like the one you quoted don't take into account the number of Lightning network transactions happening off-chain but is secured by a past on-chain transaction.
> No, it is not. Projects like that may be branded with bitcoin, but bitcoin miners are buying the same electricity as everyone else. The rising cost of electricity is causing new sources of power to be exploited.
> Instead of being used for something useful, that electricity is being turned into waste heat.
One, value and usefulness is subjective. Because something is "useless" for someone like you doesn't mean its useless to others. I, and many people around the world, find Bitcoin to be incredibly useful and worth the electricity. Secondly, if oil and gas companies could profitably monetize flared methane, they would have already. They don't because trapping and transporting the methane would lose them money. Its an industry standard to simply release or burn the methane instead. So Bitcoin IS useful in that respect.
> Blocks can be completely full or utterly empty and still use the amount of power.
It has been steady around 1500 tx/block for years.
> You're also missing the point of the power consumption. Its not used to move capital from one person to another, its used to secure the network from attacks and preserve its integrity.
I'm not. That's a completely insane amount of money to pay for that service. It's totally unnecessary.
> Stats like the one you quoted don't take into account the number of Lightning network transactions happening off-chain but is secured by a past on-chain transaction.
They don't have to. All those techniques are equally applicable to POW, but POW doesn't spend $18 million daily on electricity to do it.
> Secondly, if oil and gas companies could profitably monetize flared methane, they would have already.
Oil and gas companies sell oil and gas, not electricity. Bitcoin miners are not running methane gas turbines. Electricity companies are.
>>It has been steady around 1500 tx/block for years.
>>That's a completely insane amount of money to pay for that service. It's totally unnecessary.
You cant know exactly how many transactions are processed per bitcoin block. The introduction of the lightning network and other 2nd layers mean any one of the ~1500txs per block could in reality be a batch of a 1,000,000 or more transactions being settled. There could easily be 15,000,000,000,000,000 txs per block, think about what that does to any $/tx calculation.
Bitcoin is cheaper than visa because it is designed to process infinite transactions for a fixed security cost.
The energy is not used to handle the transactions, the energy is used to secure the network.
> Instead of being used for something useful
Bitcoin uses less energy than YouTube. Wether you think having a decentralized, global monetary system that gives everyone an opportunity to own sound money that the government cannot take away is more or less useful than YouTube is of course something everyone is entitled to have an opinion on.
It might be that you are correct, it is too early to tell, but you are no the final judge of what is useful in the world or not, so this quote is just your personal opinion and nothing more.
I believe this is totally wrong - I think Bitcoin uses significantly more than YouTube. Where did you get your numbers?
The 2020 Google Environmental Report [1] lists the total energy consumption of all Google/Alphabet data centers as ~12.2 TWh/year in 2019 and growing at about 2 TWh/year. (See page 32.) So in 2022 the approximate usage for all Google/Alphabet properties, not just YouTube, would be about 18.2 TWh.
Meanwhile, Statista estimates Bitcoin as consuming about 177 TWh/year [2].
So this means Bitcoin consumes about 10x as much as not just YouTube but all Google/Alphabet data centers combined!
There are some urban legends about YouTube using much more energy than it does; some of those urban legends are refuted here: [3]
Whether Bitcoin uses less energy today than YouTube is immaterial. (As is whether Bitcoin counts as "sound money", which I'll leave to the side.) What's important is the energy use per transaction, the total of which -- if scaled up to match what's handled by traditional banking -- would be absolutely staggering.
My lifestyle of keeping my high-end PC running all the time, cranking the AC down to 68, turning all the lights on, and so on, would of course use less energy than YouTube. But if everyone behaved as I do it'd be a bad thing (don't tell Kant).
"If scaled up" presumes incorrectly that the costs are somehow linearly bound to the number of transactions, they are not, so that whole line of reasoning is flawed.
Let's add up the carbon footprint of the traditional financial ecosystem, in whole. I think once all the externalities are factored in (including things like minting and handling physical cash and coin), doing it all on a computer makes more sense even if POW is energy intensive.
Converting energy into economic value is the opposite of waste. That is what mining does.
> I think once all the externalities are factored in, doing it all on a computer makes more sense even if POW is energy intensive.
No, it's not even close. Bitcoin currently uses as much electricity as 31 million US residents. One transaction uses more than two months of average residential usage.
> (including things like minting and handling physical cash and coin)
Why would you include that? Do you think people won't want to carry money? Do you think bitcoin makes cards, POS processors, and cash obsolete? Do physical wallets not take energy to make and run?
Regardless, the amount of energy used to make and use physical money is very small:
1. coins are irrelevant; the most expensive coins are cents, which cost about a cent to make. The total amount of coins made is much smaller than the amount of paper dollars made, so the value of energy used is small compared to the total cash made.
2. The US spends 1 billion annually to mint currency. Bitcoin spends 6.5 billion USD on electricity directly.
Transactions do not have an energy cost unto themselves, blocks do. If the entire world were to stop sending Bitcoin transactions for one hour, it would make almost no difference in the power consumption of the world's miners. Roughly 7 to 10 empty blocks would be produced. The mining process provides network security all on its own, transactions or no transactions.
>Why would you include that?
Because I said "all externalities". Bitcoin competes with the traditional financial system, including all the people and infrastructure involved in cash handling. That includes not just minting, but distributing it, collecting it, counting it, securing it, and so forth. And that is a cost borne not just by the United States federal government, but every government with physical currency and every bank on the planet. The idea that doing all this with physical objects is less power consuming than doing it with data is ridiculous.
If you want to make an honest apples to apples comparison, you include everything. Mining power usage is the single largest driver of bitcoin energy footprint granted, but it has a lot less other stuff attached.
You're telling us that since mining costs don't vary with the number of transactions processed, they don't count. Production costs that don't depend on the level of output are called fixed costs. [1] They're still costs. Pretending that a cost doesn't exist doesn't make it cease to exist.
And I'm telling you that the production cost is tied up in blocks, not transactions. This is not up for debate, it is intrinsic to how bitcoin works. If you send a transaction, the only power consumption involved in that act is involved in the transmission of the data and its broadcast to the network.
The monstrous energy usage comes from trying to brute force a single hash. It is entirely decoupled from transaction volume.
> production cost is tied up in blocks, not transactions
Fixed costs are amortized. The block's footprint is spread across transactions. Arguing otherwise is like someone taking the power bill of a bank to infer the cost per teller-window transaction, and the manager arguing that teller-window transactions don't burn energy, branches do. Yes, sure. But also irrelevant.
And yes, if the branch tripled in size its energy use would reduce the per-teller energy footprint. (Assuming constant transaction volume.) But that's a hypothetical.
>You can still amortize the cost of the block across its transactions
Sure, if you're more interested in talking points then useful metrics. Increasing or decreasing the block size limit would lower or increase the "cost of a transaction" (since blocks are generated on a schedule commensurate with difficulty, which is roughly a function of how many miners there are) without actually changing the amount of power consumed.
What you're doing is basically correlating the world's average temperature versus the number of pirates and declaring that pirates are responsible for global warming. In reality, the two variables are unrelated and not even correlated.
Are you really arguing that the number of blocks and the number of transactions in BitCoin are two variables that are “unrelated and not even correlated“?
> the block size limit would lower or increase the "cost of a transaction"
Assuming constant transaction volume and other factors related to difficulty. You have a point. But it's far from a panacea for proof of work, and certainly not at the threshold to derail coming taxes and regulation. (Though one might find a way to structure the taxes such that they reward a productive increase in the block size.)
But what do you amortize the fixed cost over? Refugees can use bitcoin to hold money while fleeing dangerous situations. Not being forced to do a transaction is the value in such a case.
You can't send a transaction without mining a block. Therefore all the costs that are incurred mining a block are costs that are incurred sending transactions.
Changing the maximum block size would change the "energy used by a transaction" since block production is a factor of fixed time, not transaction volume, so the comparison is absurd on its face.
It's not a comparison. The fact is that the costs of processing bitcoin transactions are predominantly fixed. This tells us that bitcoin doesn't have economies of scale. The average cost of a bitcoin transaction doesn't decrease as the number of transactions increases. This makes bitcoin uncompetitive in relation to pretty much any other transaction processing technology.
And once that block size changes, the energy used per transaction will go down. It's really very simple, stop making it complicated. Blocks are there to hold transactions - that's their whole purpose. The fact that technically you can mine an empty block is an irrelevant detail of the protocol: bitcoin would not keep getting mined if there were no more transactions.
> The mining process provides network security all on its own, transactions or no transactions.
The mining process provides a fixed amount of network security. $125,000 per 15000 transactions. The fact that it would still cost that much money even with zero transactions is not a feature. It's not a good thing.
Each individual block is secured. You can't just add more and more transactions to each block without reducing security.
> Bitcoin competes with the traditional financial system, including all the people and infrastructure involved in cash handling.
Right now bitcoin competes with practically nothing. How much pizza is bought with bitcoin vs cash? You're effectively assuming that all those other functions are either irrelevant or that bitcoin can somehow do them for zero cost. Neither is true.
> And that is a cost borne not just by the United States federal government, but every government with physical currency and every bank on the planet.
60% of global federal reserves are in dollars. Dollars are the world's dominant currency. Compared to the massive disparity in energy use, it doesn't matter if even only 10% of global currency is in dollars. Dollars win.
Plus, if you're trying to compare with the places where cash really matters -where they can't use VISA or cell phones to transfer money- then bitcoin is certainly at a huge disadvantage after you have to buy computers for all those people.
> The idea that doing all this with physical objects is less power consuming than doing it with data is ridiculous.
Again, you're not replacing coins with data. You're replacing coins with USB sticks.
But you're right! It IS ridiculous, because it's completely insane how pathetically inefficient bitcoin is.
>The mining process provides a fixed amount of network security. $125,000 per 15000 transactions. The fact that it would still cost that much money even with zero transactions is not a feature. It's not a good thing.
Completely wrong, you cant know exactly how many transactions are processed per bitcoin block. The introduction of the lightning network and other 2nd layers mean any one of the ~1500txs per block could in reality be a batch of a 1,000,000 or more transactions being settled. There could easily be 15,000,000,000,000,000 txs per block, think about what that does to any $/tx calculation.
Bitcoin is cheaper than visa because it is designed to process infinite transactions for a fixed security cost.
Lightning network and other Layer 2 solutions are a joke. Those are only created because the Bitcoin network was intentionally designed to be slow and congested, to make it artificially expensive, and waste ridiculous amounts of electricity in the process. If those things actually worked then someone could make them work with anything else as a settlement layer, even traditional currencies. There is no actual reason for them to use Bitcoin.
So, the reason these systems use something like Bitcoin (or Ethereum, whatever) is because the goal is to build programmatic money, and you can build that on Ethereum and you simply can't directly build that on a "traditional currency" without first writing an adapter (such as some stable coin, as either a centralized regulated entity or as a decentralized protocol) to some decentralized programmatic system that you can then piggy-back on top of as a settlement layer.
The way that then, for example, (and this is really glossing) Lightning works is to provide a number of hypothetical signed Bitcoin transactions that rely on each other in a way where, if someone attempts to screw you over, you can put down one of the other transactions and move to a different state. You make it sound like Bitcoin is purposefully crippled to prevent this kind of performance enhancement, but one of the few and subtle big changes to Bitcoin was to support this!
> The mining process provides network security all on its own, transactions or no transactions.
It seems to me that if nobody transacted, nobody would be able to sell Bitcoin, mining rewards would be rendered worthless, and mining would stop.
Sure, you can't point at any given transaction and blame any particular emissions on it, but surely it's reasonable to amortize it and assign a fraction of the emissions during each block to each transaction, considering that Bitcoin has no value without them.
No, because there is no relation between transaction volume and block production times, and this is a protocol level constraint. The network aims to produce a constant number of blocks per hour, which happens no matter how many transactions are available to be included in that block.
Here's an example: If, say, the maximum block size was doubled so they could hold twice as many transactions, this would cut your energy usage figure in half, but actual energy consumption by miners would barely change at all. Similarly, if the maximum block size was halved, your figure would double, but the energy consumed would not. If there were no such thing as a maximum block size, your value then scales linearly with the amount of transactions that can be crammed into 10-ish minutes of time.
I dunno, isn't that like saying "if planes were all half-empty, the carbon emissions of the plane would barely change, so you can't blame the carbon emissions on any of the passengers"? Yes, the "marginal carbon emissions" of a single transaction is ~0, much like the marginal carbon emission of taking an empty seat on an airplane is ~0, but by this logic nobody on the plane is responsible for any carbon emissions, which is obviously silly, so in lieu of any better accounting method, you just amortize the carbon emission of the plane across the passengers.
If the block size was reduced to, say, one transaction, then the economic value of the Bitcoin network would surely drop, mining rewards would be worth less, miners would quit, and the electricity use would fall. It's the economic value of the transactions that end up rewarding miners; I can't see how people transacting on the chain aren't partly responsible for the miners' emissions.
I can't think of any obviously better way to assign a number to that than just amortizing it across the number of transactions. It's a meaningful number that explains something about how much usefulness the network produces per unit of electricity. Doubling that by doubling the block size (or, halving it by halving the block size) would be a meaningful change!
>But by this logic nobody on the plane is responsible for any carbon emissions
That is strictly true. This is why the concept of a personal carbon footprint (something dreamed up by a British Petroleum marketing team) is inherently inane.
>Doubling that by doubling the block size (or, halving it by halving the block size) would be a meaningful change!
How and why? It would change your metric, but it wouldn't make the network consume one single watt less or more power. Its efficiency is unchanged.
A machine that spits out one widget per watt is less efficient than a machine that spits out 10 widgets per watt. Even if there is exactly one widget machine in the world, it is always turned on and always draws the same amount of energy, one type of machine would produce more widgets than the other. That machine is more efficient. It is more useful for the same energy input. It's a totally reasonable metric to compare widget-producing machines by!
If the bitcoin network is a transaction-producing machine, the more energy it takes to produce the same number of transactions, the less efficient it is. All else being equal, spending more money and energy for the same result is worse than spending less money and energy.
> If the entire world were to stop sending Bitcoin transactions for one hour, it would make almost no difference in the power consumption of the world's miners. Roughly 7 to 10 empty blocks would be produced
Yes, and then the average cost of a transaction would be even higher than the ridiculously high amount it already is.
> Let's add up the carbon footprint of the traditional financial ecosystem, in whole. I think once all the externalities are factored in (including things like minting and handling physical cash and coin), doing it all on a computer makes more sense even if POW is energy intensive.
Cryptocurrency didn't event the idea of using computer ledgers instead of physical cash and doesn't get to take credit for it. There are dozens of ways to pay by computer that don't involve wasteful PoW.
> Converting energy into economic value is the opposite of waste.
Agreed, but I still don't see the value being produced by the cryptocurrency system. The value (not price, but value) that it delivers compared to traditional visa/mastercard/etc. seems marginal at best (and perhaps even negative once you account for the externalities that cryptocurrency-enabled crime imposes).
PoW crypto was using over 1.2 percent of the world's electricity. That's an insane waste irrespective of any kind of comparison to whatever other industries.
I looked into your statement about bitcoin mining preventing methane emissions and it doesn't add up to me. Oil drillers already flare the methane, which turns it into carbon dioxide. The solution these bitcoin miners are implementing is to burn the methane in a controlled manner so they can harness the energy produced for electricity to mine bitcoin. The same chemical reaction occurs, converting methane into carbon dioxide. The companies internal research claims this reduces carbon dioxide equivalent units, but I'm pretty skeptical. Of course, they would want their research to show they are doing something good. Sure, I guess it is more useful to harness the energy than to just burn it fruitlessly, but I don't see how it reduces emissions. Is there something I'm missing as to why this would make sense?
I have been on oil and gas pads and drill sites. Flares have significant incomplete combustion. A financial incentive (lots outside north America) to pipe it into a generator encourages those with troublesome gas leaks to fix it.
If you release the CO2 into the atmosphere, it doesn't really reduce emissions. However, because miners can harness the energy in a profitable way, they could afford to sequester or scrub the CO2. That would make oil and gas companies look a little greener, which is even more of an incentive. I believe some miners are doing this already.
They may or may not be able to afford to sequester the carbon. Even if they do that (and I have never heard before that they do), in the long run would surely be out-competed by other miners who don't bother.
I agree Bitcoin probably won't be carbon negative any time soon if ever. But electricity is definitely not fungible as production is not always in the same place as demand.
If something is not 100% fungible, it can still be fungible to some extent. Given the size of our electricity grids and to a lesser extent the capacity to store energy, electricity is definitely fungible at some level. I don’t have the numbers but I’d say this level is pretty high.
OP didn't say there were no goods as fungible, they said few. Fossil fuels can be more fungible without them being wrong.
Arguably, "fossil fuels" are not as fungible as electricity anyway. I can take electricity from any outlet and, with the right adapter, use it to power any electric appliance. I cannot take gasoline intended for my car and use it in a grill, or in the furnace, or in a jet, no matter what equipment I buy.
It’s the other way around. You can transport barrels of oil overseas and use for trading but sending electricity requires infrastructure that may take some time to deploy. It’s the same problem with gas pipelines.
Genuinely curious: how does burning methane to generate electricity make an organization carbon negative? Do you have a reference for this?
I understand that methane is orders of magnitude more significant from a greenhouse effect point of view than CO2, but I don't see how it would be economically viable to burn methane "in stranded gas reserves" to generate electricity for Bitcoin mining but somehow it's not viable for other electrical consumption purposes.
The methane gas has already been burned for decades, adding bitcoin to the equation just made you look
No other use case has been profitable for the gas by products so the sites pump it directly into the atmosphere
Bitcoin mining is profitable and so the methane is not burned into the atmosphere, the molecules are stripped for electricity in simple catalytic converters and energy used on the spot (some sites are completely disconnected from the grid, these are the best use cases of this. others are connected to the grid which gets the most debate. in both cases no other solution exists in bitcoin mining’s absence and there was no political will to meet climate goals ever)
So the solution solves itself simply because it is an environmental solution that is profitable
I asked my question because I doubted the assertion being made without any math to back it up. It seems unlikely that
1) this could ever be a significant enough amount of Bitcoin mining energy to make Bitcoin "carbon neutral", and
2) if it ever did become a significant source of energy for Bitcoin, it would likely also be viable for other uses, eliminating the carbon offset argument
I'm not doubting that you can put a cheap and inefficient boiler generator on top of a methane flare and label it "green energy."
1) North America has lots of this kind of energy. Gigawatts/hr being spewed into the atmosphere as an unprofitable waste byproduct as is.
2) Transporting this energy is a cost. Storing and then transporting the energy is a cost. And other kinds of computation on site requires much greater infrastructure, like internet and big box data centers, which these remote sites do not have. Bitcoin mining barely needs any internet bandwidth and doesn't need a low latency connection either. It creates an asset that can be easily sold to people willing to buy that asset at a price far greater than the costs to create it.
Its important to understand that these are partnerships between two companies.
The existing energy producer who is taking a risk on a dangerous operation, largely technophobic and takes far too long to understand how it benefits them. And a separate crypto mining company searching for cheap energy, driven purely by the market.
The mining company sees the energy. The energy producer needs to reduce their waste byproducts.
Its semantics and pure coincidence about whether “less hydrocarbons billowing directly into the atmosphere” meets your criteria for “carbon offset” or “green energy”, its also what happens
Interesting framing. I'd frame it as Bitcoin having a local unexpected environmental positive externality. (As opposed to negative, which it has most other places without an unplugged methane leak.)
It's not negative or unexpected. Bitcoin naturally uses the cheapest energy it can find (arbitrage), which usually ends up being stranded energy. Something like a third of all electricity generated is wasted. So the idea that Bitcoin is unique compared to any other arbitrary & subjective use of energy is just anti-Bitcoin propaganda & green dis-information.
Whereas it may be difficult for one reason or another to transmit energy from where it's most abundant (a desert, or other remote areas), it's not hard to co-locate miners in those places & incentivize further development & utilization of that energy resource.
Does the expression "perverse incentives" mean anything?
This argument is like energy incentives in the world were mostly fine, except that some energy was stranded and could only be picked up by Bitcoin.
For something that is supposed to "change the System" it for sure is often pitched like the System can never change. That missing (enforcement of) regulation makes it economically beneficial to just vent methane without even flaring, is not something to celebrate. It's nice that the incentives lined up decently, this time. We should work on fixing the incentives so the methane can stay in the ground where it belongs. Don't dig that well.
Say, you have access to cheap hydro power somewhere. The powerlines are not yet completed to export the electricity to where it could be more useful. Along comes a Bitcoin factory and sets up shop. Suddenly, the incentives are not in favour of ever completing that powerline, for benefits amortized over decades, when you can sell that sweet, sweet Bitcoin today.
Of course, the owners of the Bitcoin factory would never try to exert their influence and try to keep their cheap source of hydro power, or keep the methane flowing. /s
I will make sure to bring popcorn for the future culture wars between ETH and BTC, now that their incentives are so divorced.
> For something that is supposed to "change the System" it for sure is often pitched like the System can never change. That missing (enforcement of) regulation makes it economically beneficial to just vent methane without even flaring, is not something to celebrate. It's nice that the incentives lined up decently, this time. We should work on fixing the incentives so the methane can stay in the ground where it belongs. Don't dig that well.
Bitcoin was never billed to change that system, and yet it is anyway.
You're trying to let perfect get in the way of good, failing all modes of consensus until the world is uninhabitable, while this just works and fulfills the goals of all political parties at the moment: reducing emissions and being economical.
Bitcoin mining on existing fracking sites is a stop-gap solution at best, right now nobody is making new wells with the perk of adding miners or renting space to mining firms. Right now, the fracking operations are just meeting their climate goals, the captured state regulator no longer needs to be in the awkward position to rubber stamp emissions exemptions, the governor no longer needs to run interference for the whole fracking industry. Its only a stop gap solution because if 10x more wells were made after a 90% drop in emissions, then we're at the same place we were, so if you begin seeing that then be vigilant about that. But thats really not a bitcoin issue, thats a fracking issue that you're putting on bitcoin because you've had zero influence your entire life on the oil and gas sector, the separate higher standard doesn't make sense though, as - for now - this stop-gap solution is here and working. "oh no but its bitcoin, that other thing I spent so much of my energy hating" cope, my guy. this is working.
> Of course, the owners of the Bitcoin factory would never try to exert their influence and try to keep their cheap source of hydro power, or keep the methane flowing. /s
You see how you just substantiated my argument that Bitcoin naturally ends up favoring renewables, linking up the most efficient use of energy?
It’s not like there is (or should be) a limit on renewable energy production.
In order to argue that wicked corporations are wasting massive amounts energy for profit, yes this requires the idea of finding very cheap power, i.e. something like off-peak or excess.
miners are driven purely by the market to find cheap energy sources
its not altruism by any means and it doesn't matter
this is what happens, frame it any way you prefer, it doesn’t really matter as the constant is that North America is the best market for this
all levels of government are noticing and investors are noticing and they all need the sustainability framing, I don’t think I had made any framing in my reply
Articles that talk about the “amount” of energy bitcoin mining uses are going to keep coming out, if you’re more familiar with that framing, the source of energy has been more important than the amount for a very long time, to convey environmental impact, and this is just one example
I don't think I get your point. To me, any renewable power going into bitcoin mining, is contributing nothing except "securing the blockchain".
I don't even have a stake in this game, except living on the same planet as everyone else. And it's getting warmer. Any power spent on bitcoin is power not spent solving more practical problems elsewhere.
As I wrote in my other reply to your other comment
You're trying to let perfect get in the way of good
The power is never ever ever going to be spent on anything else, the energy used would be purely hydrocarbons in the atmosphere. This is what is happening for decades. Absolutely zero sentiment and protest has or would change that.
Bitcoin mining has changed that. If that is what makes you think of a solution that nobody else has thought of for decades, just because bitcoin makes your tummy ache, be our guest.
> To me, any renewable power going into bitcoin mining, is contributing nothing
I also think it will be helpful for you to get the terms accurate, this benefit comes from stranded energy, using this energy is more sustainable. This doesn't necessarily mean renewable or clean, it can though. Since we are talking about reducing methane emission, this isn't a renewable or clean source, it just has 90% drop in methane and hydrocarbons going into the atmosphere while stripping them apart in catalytic converters just like cars do. This is good!
> Reducing methane emissions is vastly more effective at preventing climate change than reducing co2 emissions.
This statement caused me to do some light research. I discovered that methane is 25 times as potent as carbon dioxide at trapping heat in the atmosphere.
> Methane emissions decay gradually, with an average lifetime of about 12 years (“perturbation lifetime”, which is what matters for climate purposes).
> This will increase by roughly 35% if methane concentrations double, or decrease roughly 25% if concentrations return to pre-industrial levels.
Methane is actually 150x-ish worse than CO2, but it breaks down over time. Ameliorated over a long time it's 25-30x worse.
Rough part is that breaking down methane depends on OH radicals in the air, of which there are a fixed amount. The more methane there is, the slower methane is broken down. If there were a sudden massive release of methane, it would stay at that 150x potency for a very long time. Fun!
> OH radicals in the air, of which there are a fixed amount
To make the complexity really mind-blowing, no, the amount is not fixed. It varies, and temperature is one of the largest factors. But it's not a simple relation, because air currents are also very important, and temperature also changes those.
Which is why oil production without a gas connection tends to flare the methane. With the renewable transition we will in a not too distant future just leave the oil in the ground instead.
Messaging and information on actual greenhouse gas emissions and impact have long been god awful, often to the point of borderline misinformation. It's a source of tremendous frustration, in part because spending enormous political capital solving the wrong problems is actively counter-productive
I hope you’re not reading any paper books - the environmental impact of paperbacks is phenomenal when compared to eReaders.
And of course, you would never waste energy by purchasing a hardcover, that would be morally reprehensible.
Honestly wouldn’t surprise me if a kid playing minecraft on an old computer had drastically less impact on the environment than your average book snob - especially the “I buy paper for the experience” kind.
Here’s one analysis that takes those factors into account, and eReaders still come out massively on top on average.
Paper isn’t the problem, it’s the fact that’s books are heavy and bulky, so the transportation and storage have massive carbon implications.
On top of that, most books end up in landfill as a result of not selling in stores. If you care about the environment and read books an eReader is a worthy investment.
Do they have an API for refusing to accept ETH mined via proof of work? This is a start, but personally I'm still never going to accept BTC or ETH as payment; their history taints them forever. The real value burned in the mining of these currencies is lost forever, and the people who did the burning should absolutely not be rewarded.
The thing is, most "crypto haters" on HN are just regretful no-coiners. Crypto is exactly the type of thing you would except HN to love, it ticks the box in so many ways, except for the one where... They forgot to buy some and are forever resentful.
I honestly struggle to believe this group of people truly care that much about crypto's effects on the environment; from the people I've spoken about this with personally, they always come across as hyperbolic and dishonest.
To some degree I believe it is their brain subconsciously trying to justify their hared because they were "left out," the same way some people, for example, irrationally hate The Avengers because they never saw it and got sick of hearing people talk so much about it around its release. Each reminder of being left out burns you just that little bit more, and it's hard to be objective and come around to something once you feel that way about it.
I'm not surprised this "ya but, crypto still bad" comment is the top comment here on HN. It's pretty funny to me.
I made money on crypto, and still believe it's just a Ponzi scheme that's wretched for carbon emissions. I'm certain that I'm not alone.
The fact is that crypto doesn't really solve any pressing problems for normal people. Fiat currency and related digital networks work just fine, all of the time.
People working on cutting edge technology are all speculators in one way or another even if they don't realize or can't quantify the opportunity cost.
The one thing I will agree with the OP about is, HN had some of the earliest posts about Bitcoin and it was generally poo pood by the audience potentially due to an inadequate analysis. The long term HN readers that missed the boat may suffer from some forms of regret which can surface as disdain or hatred.
I mean, how many assets that come across this site have 20,000,000% to 69,000,000% returns and just require you to pay attention to benefit?
Do I wish I'd invested in Bitcoin early? Sure! I'd love to be a millionaire (or billionaire). Who wouldn't?
Using that as an excuse to dismiss criticisms out of hand isn't particularly sporting, though. I feel like my criticisms of crypto (such as they are) are independent of whether I'd prefer to have been a millionaire.
My view is that crypto's goals (e.g. decentralized, deflationary, no transaction reversals) are non-goals, but even if those non-goals were goals, both PoW and PoS fail to effectively solve them, especially the decentralized part. PoS sucks more than PoW on this axis: PoS encourages centralization within the system (those with more ETH control the chain), and PoW encourages centralization outside the system (those who command more assets to buy GPUs and energy controls the system), so it's really silly and funny and pathetic both fail at the same thing, with PoS moving the needle in the wrong direction, but also, it was a non-goal to begin with so who cares I'll just go with the one that doesn't set the planet on fire please.
As in with PoW I can migrate once the ecosystem is damaged (i.e. just mine something else, sell the hardware, w/e) with PoS I need that ecosystem to thrive to profit or to even exit it.
> liberation of people from massively powerful banks and governments
The difference between business and governments is that in business every dollar has a vote, whereas in a democracy every adult has a vote.
"liberation of people" can only happen by having a working democracy. And a working democracy can only exist when there is (democratically elected) government. So it's not like people should be liberated from government, people should be the government.
Therefore I think the best situation is where government controls the money, and we the people control the government.
No it wouldn't. There is no definition of democracy where 51% of the people enslaving the 49% would constitute a democracy. Except the one you just imagined for the purposes of "winning" an argument on the internet.
This is why people who give a shit about Democracy talk about minority rights, and free media, and non-discrimination. These are the core tenets of democracy.
replace “enslave” with gradually weaker words until you find the statement you, personally, agree with.
51% decide that 49% shouldn’t be allowed to drink alcohol. that’s a comparatively minor example of “tyranny of the majority” (which happened within living memory). now explore all battles you’ve been on the losing side of. abortion access? funding of overseas wars? legality of drugs?
i find it incomprehensible that if you look at things honestly you won’t find at least some instance when you’ve felt repressed by the democratic rule of the majority. “enslavement” is simply that repression exaggerated for the purpose of making you see it.
> This is why people who give a shit about Democracy talk about minority rights, and free media, and non-discrimination. These are the core tenets of democracy.
no, these are the core tenets of egalitarianism. democracy is merely one process by which we may approximate egalitarian ends. if you care about egalitarian ideals (or above, “liberation of the people”), you should be open to other processes which achieve them — not just the one you were raised to know.
As long as I'm still free to try to persuade the 51% that I was right in the last election I lost and I have a chance to win next time, then it sounds like a perfectly good system to me.
Just because sometimes you lose in a democracy doesn't make it tyranny. Quite the reverse. If you can't accept a political system that doesn't always let you get your way, then you're the tyrant.
WWII Japanese-American internment camps: though done by executive order, polls show 59-93% support, so it would have passed even through ordinary processes. is it good that this extremely non-egalitarian outcome is legitimate within a democratic political system?
if “yes”, we have radically different views that probably can’t be reconciled on a HN thread (could talk about them on a different platform — check my bio).
if “no”, then i’m not sure i understand your argument.
That argument essentially boils down to "democracy is illegitimate because sometimes majorities vote for awful things." There are many formulations of that argument. It gets repeated over and over.
But I've never seen a satisfactory answer to the followup question which is what political system do you envision can prevent such bad outcomes? Surely non-democratic societies produce similar bad outcomes more often.
That's why these arguments frequently reduce to one person saying "democracy is illegitimate because sometimes majorities vote for awful things" and the other person replying "democracy is the worst form of government, except for all the others."
In a democratic system I believe the majority of people would vote for a constitution that says no group can enslave another group and that such a "constitution" then can not be changed by 51% majority. In other words protect the rights of minorities.
That's how all democracies work, 51% can't just make any enslavement-law they want. It is still democracy because the constitution that says so was approved democratically.
Democracy is not a single "thing". It is an adjective describing societies. Some have more of it, some less. Not so long ago women couldn't vote, nor blacks. A clear dividing line in current-day politics is that some people seem to think we should have less of it.
i think we're on the same page then. thanks for summarizing the conflict so clearly.
earlier in the thread we touched on (literal) slavery, and it was pointed out that it's basically irrelevant to modern, established states.
but how much of this is political, v.s. social and economic/technological? to state the obvious, slaves didn't gain legal rights by voting or participating in the political system. but moreover: if you took a democracy today, picked one race within it, excluded them from the political process and let everyone else vote on whether to enslave that race or not, would they do it?
i can't really imagine it. social norms have shifted so much that the politics just play a substantially more minor role here.
now take the WWII internment camps. if this replayed today, how would it be different? we didn't have RVs in the 40's, but today anyone with one could reasonably escape to the hills and live in only mild discomfort for at least a few months. information flows are generally faster, so anyone at risk of being interned would probably have more time to react. on the downside, surveillance means your bank account might be frozen, and your employment -- even if remote -- jeopardized. who really knows exactly what would happen -- more importantly technology plays a huge role in shaping what at first looks to be a strictly political outcome.
to get to the point: social norms and technology are inextricably linked to the same outcomes which political processes seek to control. to ask "what political system ... can prevent such bad outcomes" is incomplete: because that's only one of three large systems which drive these outcomes.
an extremely simplified view of these systems is something like this:
- social norms: the informal ways we relate to and interact with each other.
- political systems: formal process for legitimizing large-scale power relations between individuals and groups. underpinned -- especially in democracies -- by social norms or myths (widespread belief in a founding body of law like a constitution).
- technology: tools which change the specific dependencies between individuals. often they supplement the ways people relate to each other: in the past if i wanted to read a book i had to purchase it through a bookstore; now i have the choice to print it myself at home.
while political systems are about taking powers which are presumed to be necessary and deciding exactly how they should be distributed across the citizenry, technology uniquely offers a path toward diminishing if not altogether escaping those power relations.
> what political system do you envision can prevent such bad outcomes?
none. in both senses of the word. democracy gets us further along than any other political system we've explored by distributing power, and choice.
to bring choice where there was none before, at this point, technology is the remaining lever.
a generation from today, that person with the RV in the hills can manufacture their supplies on some 3d printer. they can purchase food through Bitcoin over some P2P internet link, maybe pick it up without exposing themselves with a drone. a generation from then, they can just grow food lab-style. utopian, dystopian, it's not a panacea, but it's better than being locked in a camp. it's better to have the choice.
if "liberation" means choice, and increasing choice means decreasing order, then infinite choice would imply anarchy in the political sense. not as a goal but as a side effect of pursuing desirable social outcomes. that's not to say people wouldn't self-organize into groups within this environment, some of which might have hierarchy and even formal decision making systems (even the most unconstrained successful non-profits leverage such systems) -- just that these would always be escapable: the risks would be minimal whenever those structures turn against you.
now that's a very distant, hypothetical future. we need a state to ensure the negative rights that protect choice in the first place: i don't see that changing in my lifetime. my point is just that we're at the point where the fruitful thing to do is gradually decrease the powers we hold over each other via political systems.
so what kind of political system allows itself to shrink over time? over the last century, the borders between democracies have been largely stable, most of the growth has been inward. in the US, i don't think we'd see any internal warring if we got rid of our central federal government. i think the path forward in my lifetime is just toward smaller democracies, connected by trade and treaties. during covid, here on the west coast CA, OR and WA were already coordinating outside of federal processes. distribute the powers held by the federal government back to the states, and from there on to the metro regions. in the political sphere, that seems the easy/low-risk direction to proliferating choice.
i'm arguing politics in a cryptocurrency thread. so to bring it back: now is our opportunity to remove one of the political levers we wield over each other. OP is right that Ethereum isn't democratic. head-to-head it might not be better than a democratic state's currency. but the coexistence of the two insulates against some possibility of "the majority voting for something awful". if the tyrannical majority vote me out of my home during WWIII, at least it's that much harder for them to vote away my ability to buy an RV and retreat to the hills.
That is because it is a business, not a government elected by people. And I'm fine with that. It's not too different from credit card companies. Problem of course is if it becomes a monopoly.
Nope, you are using a definition of democracy that is "all the things I like". Democracy is widely understood as voting-based mechanism for conflict resolution, it's just the implications that are not widely appreciated - if you take out "doing all the things I support", what remains under "democracy" is "doing all the things I don't support but the majority does". For every person, democracy IS just the ugly parts - the rest is "what I'd do anyway in my personal dictatorship utopia".
On a completely separate track, what is described above is just an extreme example of what is actually happening. Some proxy of majority voting forced me to finance, in addition to the things I would gladly finance out of necessity like police and roads; or even unnecessary things I'd gladly donate to like NASA or National Parks; such things as e.g. the continuation of the war in Afghanistan, student loan forgiveness, healthcare subsidies, TSA security theater, etc. They did it by taking some part of my earnings, i.e. forcing me to work extra instead of having more free time for the same salary. Then they used the money to bomb a foreign wedding or give some deadbeat a chance at grievance studies. I guess it's good it is only a part-time enslavement.
You should look up the definition of “democracy” in a dictionary before accusing others of making up a definition.
Im not just trying to “win an argument”, like you accuse me of, I’m pointing out an inaccuracy of your statement. Through your childish outburst I can see that you’re defining democracy to include other aspects of what you deem to be “good governance” — fine, but that’s confusing given the well known definition which doesn’t necessarily include those things.
The government is no longer democratic if it is attempting to enslave it's own people. Your example is just one of a democracy voting to no longer be a democracy. This does not mean that the people of the democracy were never free or empowered.
51% of people being able to enslave the other 49% of people is terrible, and there absolutely should be measures in a democracy to protect minorities against majorities.
But what's usually left out when people bring out that argument, is that the alternative is worse. If the 51% can enslave the 49% in a democracy, then the 1% can enslave the 99% in a system where people vote with their money. In both versions, you need to protect groups with less power, but democracies distribute power much, much better than "capitalocracies" where 1 dollar = 1 vote.
Well the course we are on will result in the poor 99 percent murderinging the 1 percent which I am curious about, and my tone is neutral and I am steelmanning the 1 percent
If you have a society where there is that clear distinction in between the 51% and 49%, then you dont have one country. You have two countries. Its not applicable.
Very good point and scenario. The 49& would revolt and form their own "country" and government.
And then the 51% of the other country would perhaps try to enslave the original 49%. But that would not be democratic any more. That would be juts one country starting a war against another.
This is correct. Look towards "proof-of-personhood" protocols and other crypto projects that ensure one-person-one-vote voting - popping up now. Online democracy is coming and has only in the last couple years been doable safely, anonymously (and frankly, I'd like a few more years/decades of that being proven out in the wild before I'd trust it). We needed zero knowledge proofs to do it anonymously. We still need a somewhat-better proof-of-identity system but just passports and networks of people vouching for each other should carry us pretty far to start.
That's a tough combination. If it's powerful, how does it remain accountable. Sure, maybe a few election cycles are fine, but eventually it will degrade.
I want a weak government. I'd rather have warlords compete for my allegiance than be subject to one all powerful warlord who has no powerful enemies to worry about. A capitalism of polycentric governance, if you will.
Warlords typically 'compete' for your allegiance by conscripting you to fight for them, and killing you and your family when you refuse.
Or, if you and nobody in your family is of 'military age', they 'compete' for it, by rolling into your town, and stealing half of what you own. The 'competing' warlord that rolls in next week will, of course, steal the other half. If you're lucky, they won't make an example out of your town for 'supporting' the first warlord.
I'll take a strong, stable government over that horror-show any day of the week, but if you'd like to give it a try, much of Mexico has quite a bit of that sort of thing going on right now. Anyone who moves to the right parts of it can enjoy life amid 'competing' cartels.
Meh I fought alongside the YPG in Syria, under a rather weak government. They let me come in or leave as I pleased. They didn't steal from me. We fought against the other 'warlord' ISIS and all in all it was nice having a pretty diverse pick of militias to choose from.
All in all it was definitely a more freeing environment than a lot of life in the US.
------------
>Why do you live in the US, then? That should make you think a bit harder about failed states.
If the government wants to leave the territory I'm in, I'm all good with that. I've never demanded the government stay here.
Why does anyone live somewhere under a government they're not happy with? Why do women live in states with abortion laws they disagree with, is it because they're edgy teens? Why don't you personally live somewhere else that is closer to your goals of governance, surely US is not the most ideal for what you seek?
I don't really think you want to go down the road that presumes someone isn't thinking hard enough if they don't run away from where they're currently living. Personally when I did leave the US I did it to help the Kurds, not to abandon my own family, and without the permission of the mother of my child to expatriate it isn't exactly proof I'm not thinking 'harder' because I live here right now. Regardless of how fucked up the US government is I have certain obligations to my family who happen to be here more for logistical reasons than political reasons.
If it were just about me, or if I had permission from the mother to expatriate our child, sure I'd likely not be where I am right now.
> If a criminal spies on my credit card # as I make a purchase and uses that to go on a spending spree I can fix it with the credit card company with little cost but a few hours of time and frustration.
I'll take this one step further.
My credit card company has caught every instance of fraud on my card. So I've had zero hours of frustration yet multiple instances of people trying to use my credit card number. One time they even had the card - they had stolen it that night and tried to use it at a local gas station. A fraud alert woke me up.
This is not a shining example of the security of credit cards, but an example of how insecure they are. We regularly carry passwords into our bank accounts in our pockets, and punch them into random ATM machines on the street in a foreign country, say them over the phone, or type them in while using the coffee shop WiFi. It is no wonder our cards are frequently compromised and the total cost of card fraud is many dozens of billions of dollars per year.
Usually, the credit card company is the one absorbing the cost of this fraud - the food or physical goods that the fraudster purchased doesn't just magically leave their possession.
It is entirely possible to build a company that holds custody of your crypto, extracts rent on transactions or borrows with your deposits, and uses their profits to give you some financial protection up to a certain limit. Most likely within 10+ years your local bank will have some account that will custodially hold some limited amount of funds in crypto that are FDIC insured. But not everybody in the world wants this system, and not everybody wants all of their assets to be held in this way.
Perhaps, but it IS a good example of a system that protects the end user from monetary loss in the event of fraud due to leaked credentials (in this case the card number + CVV + exp date). In my opinion, any system that seeks to replace credit cards needs to have a similar ability to recover user funds in the case of inevitable security leaks, which is something many crypto systems struggle with.
> due to leaked credentials (in this case the card number + CVV + exp date)
That information is practically public already, since you have to provide it to everyone you purchase from online with your card. If you regularly buy things online with your credit or debit card it's less a matter of if the credentials will leak than when. Regular checking and savings accounts are at least as bad given the existence of Direct Debit, a system where practically anyone can take money out of any account just by knowing the routing number (public information) and account number (printed on every check).
Cryptocurrency aside, just compare that to something like PayPal, where the authorization happens directly between you and the payment processor: the merchant never gets your credentials and can't take money out of your account without your express permission. The traditional banking system has the worst security procedures; the design is reminiscent of the early days of the Internet where plaintext passwords were commonplace in protocols like rlogin, FTP, SMTP, and unencrypted HTTP, when authentication was used at all. The only thing keeping it from complete collapse is the absolute fortune they spend on statistical anti-fraud analysis, which completely coincidentally requires them to have deep insight into every transaction passing through their network. Not that they would ever think of using that immensely valuable data for their own gain, of course. Perish the thought.
In any case, Bitcoin and most other cryptocurrencies weren't built to replace credit cards, but rather to replace cash. If someone steals your cash or you somehow manage to hand it to the wrong person or simply destroy it you can't just call up the U.S. Treasury and expect them to put things right. Holding cash and transacting in cash has its downsides, and yet those same risky properties can be extremely useful if proper care is taken. Escrow and human-mediated reversible payments can be implemented on top of a system of irreversible transactions. The reverse doesn't work; you can't very well run an escrow service where the payer can reverse their payment into the escrow account without following the escrow procedures after getting the goods.
Compared to physical cash, as a digital good crypto has several advantages and a few disadvantages. In the latter category you have the obvious risk of hackers compromising the wallet; IMHO a separate, secure, hardware wallet is mandatory if you keep any significant amount of self-custodial crypto. On the flip side, however, it's not all that difficult or expensive to make your crypto more secure against would-be thieves than the gold in Fort Knox if you're willing to put in a modicum of effort, and the possibility of geographically-distributed encrypted backups makes it much harder to separate you from your money if you plan ahead a bit.
That's because they're far more convenient and user friendly, and the fraud detection makes up for that compromise in security. As far as user experience goes, it's a win-win and a superior experience to paying with cryptocurrency.
There can't be fraud of the sort that you get with credit cards on a blockchain unless you leak your private keys.
The fact that security is built around a 16 digit number and 3 digit pin that you share with everyone and can be reused is embarrassing for credit card companies, not a win. Amazing.
good luck building a good UX for a financial system where a small OpsSec error can wipe out your family's fortune.
And you need the private keys to conduct business so obvi they can exit the HSM
And if my 1M USD bitcoin is in some hardware wallet, won't that just incentivize someone to kidnap my kids until i send bitcoin, much like bitcoin breathed new life into ransonware economy after banks mostly shut it down?
Perhaps, despite the examples of ICOs, EVM smart contracts, NFT rugs, and the general flood of fake discords and so on, people assume the central banks and retail banks are a bigger threat than the criminal minds attracted to untraceable and unreversable payment methods?
> And you need the private keys to conduct business so obvi they can exit the HSM
While I agree with you in general, this is false; the whole point is that the HSM can sign transactions using the keys inside it but will never expose them to outside.
Touché on the use, but you propose a non transferable wallet? Or will it replicate to other HSMs with certain credentials? Will the car dealership owner people them replicated cross availability zones or to diverse geolocations? And will the HSM replicate the keys to a hacked HSM if I get the signing keys from an employee of the HSM with a promise of 10% of the winnings?
I'm not proposing anything, and I think these are hard problems. Potentially there are solutions to some of the things you say, but ultimately it's hard to escape the choice between trusting some entity and being able to lose your keys.
My point is that for large important financial amounts, irrevocable transactions are terrible UX.
For instance, my retirement now such as it is, remains pretty safe. I would have to read some financial meme (in the old sense of reproductive ideas) online and go thru a number of complex paper work steps to remove it from the boring fiat place it is now and send it to a much riskier place. The massive too big to fail institution could fail and not have 401ks bailed out, or society could collapse.
If it were some digital wallet, I could loose it just by signing something unrelated to “take all my money” with my private key and boom my wife and my self and my kids and other dependents are SOL.
Given that I have to trust society not to fail anyways to enjoy “stored value” where all value is embodied in and protected by society, i can’t find a way in which the irrevocable transactions benefit me more than the risk of my own laxness and occasional errors endangers the well being of my loved ones.
I don't understand your response. I wasn't debating the intricacies of self-sovereignty. I was pointing out that your understanding of hardware wallets is wrong.
> good luck building a good UX for a financial system where a small OpsSec error can wipe out your family's fortune
You are correct that the key need not leave the HSM to transact, touché. However it is an essential property of valuable keys that they can be extracted for backup or replacement of the HSM, and often for availability. At least the various HSM systems I have worked with.
As I understand it, people have lost their wallet contents due to trusting email, Discord, DNS and SSL protected websites. So if there is no basis for trusting the other parties in an online transaction, it seems any action whatsoever could lead to financial ruin. Even moving my assets to cold storage makes the scenario that my heirs forget how multiparty sig recovery works or just some eager relative throwing away the box of USB drives away.
Mine are minimal; I pay no annual fee and no interest if I pay off in time. So they're effectively just the transaction overhead, which debit demands as well.
Minimal in terms of direct costs to you, but merchants pay 2-3% on EVERY transaction, and I can guarantee you that does end up baked into the prices you pay.
> And it may be an incremental improvement over traditional global finance because there is a much greater ability to publicly scrutinize what goes on.
The flip side is that it’s creating new opportunities for massive privacy problems which would be irrecoverable. People who are trying to hide their activity will take precautions like using shell companies but normal people won’t think to do that or realize that they’re making that level of trust by using a wallet, exchange, etc.
There are some obvious big problems (“do voters know you paid for this porn site 15 years ago?”) but also more personal ones: imagine if employers, insurers, dating apps, etc. started data mining? Again, there are possible ways to mitigate that risk but I’d hesitate to make a lifetime commitment on those being effective and perfectly operated.
How i see it, when a group of powerful people wanted to control ETH to some direction or block a party, they needed to do some physical work , which acted as a time-delay lock. Now all they need to do is think about it. I m not sure why the second case has the same level of trust as the first.
I think this begins the search for another trustless transaction system that is neither PoW nor PoS.
With pow, the cash you burn on that mining farm is gone after you give up on your vote or your attack. With PoS, the simple act of being rich means you get more vote, you don't need to burn it or spend it. You even get richer while you do it
If the existing miners don't want to rent to you, you can build your own mining hardware. But if a cartel owns all the ETH and don't want to sell to you, you're SOL.
A cartel that owns all the ETH and doesn't want to let anyone have any? That sort of behavior would quickly reduce the value of the cartel's ETH to zero, on account of it destroying the network. This seems about as likely as you building your own specialized ASIC hardware that could produce within even a order of magnitude of the hashing power per dollar spent that the main mining cartels enjoy.
This argument is straining so hard to find a way in which these two things are different but PoS and PoW are absolutely the same thing, just one of them is cheaper, more decentralized, and cleaner. PoW doesn't imply greater decentralization, in fact it implies the opposite. I can go build a $100 computer right now, load it up with 32 ETH, and begin validating transactions in minutes. I am on an even footing with every other participant investing a similar level of resources. If I want to mine some PoW BTC, for example, i first need the industry alliances to get the latest greatest mining ASICs (which are mostly not available, because the manufacturers are strongly incentivized to use them for themselves and a small group of allies) or I had to get a team of engineers to design one and contract a custom silicon foundry to produce one, wait a year or two, and then plug in my new miners with an enormous capital investment.
It sure seems like one of these is more decentralized, and I don't think it's the one you want it to be.
>If a criminal spies on my credit card # as I make a purchase and uses that to go on a spending spree I can fix it with the credit card company with little cost but a few hours of time and frustration.
However, if a much more powerful criminal spies on your credit card # as you send money to Wikileaks or a bunch of truckers who drive to Ottowa for a protest you can never fix it when your card is cancelled and your bank account is seized. Or when you face a variety of other sanctions and persecutions for spending or donating your own hard-earned money.
>Crypto? No. It may, eventually, have some other benefits though that’s yet to be seen.
These benefits have already been seen and realized by people targeted by authoritarian governments and banking cabals all over the globe.
That argument could be made for anything if you are the one targeted. I mean, prison is authoritarian an oppressive. There are innocent people in them. Do we make it so that it is not possible to track crimes and put people in prison?
It is all about motives. If you think that the government is doing something wrong, change that, don't make it impossible for anyone to enforce laws at all.
I disagree completely. Motive is completely irrelevant. Mass surveillance and government spying (among other things) on people who have done nothing to suggest they are engaged in criminal activity is absolutely wrong and a violation of human rights and human dignity no matter what the motive.
>If you think that the government is doing something wrong, change that, don't make it impossible for anyone to enforce laws at all.
The issue is that people with morality and dignity believe that the government is doing something wrong by violating the privacy and human dignity of every citizen (by spying on their communications and tapping their phones), while those who don't see the value of privacy or human dignity don't believe the government is doing anything wrong. That is the crux of the issue. Trying to explain the importance of privacy and human dignity who people who don't believe that privacy and human dignity have any value is like trying to explain what blue looks like to someone who has been blind since birth.
>I mean, prison is authoritarian an oppressive. There are innocent people in them. Do we make it so that it is not possible to track crimes and put people in prison?
We have a Constitution that theoretically prevents the government from violating the rights of every person so that it may catch those few people who are committing crimes. Unfortunately the system of checks and balances that is supposed to be in place to stop the government from violating our privacy, rights and human dignity is entirely broken (if not non-existent) as abundantly chronicled for everyone who has paid attention.
I was speaking of the motives of the institution with the power. In the crypto case, the people with the power are motivated by greed. In the government's case, it could be anything, but at least they are theoretically accountable in a representative democracy.
> The issue is that people with morality and dignity believe that the government is doing something wrong by violating the privacy and human dignity...
What does this have to do with reversibility of financial transactions? If you think there is some government conspiracy with the 'bankers' against you or your group, what is taking away basic consumer protections going to do to help you?
>what is taking away basic consumer protections going to do to help you?
You define centralized control over wealth and the ability of an individual to send and receive payments to whomever they choose, without sanction, as "basic consumer protection", while I define it as unacceptable authoritarianism. Yes, it is true, an all-powerful governing entity that has complete control over how everyone sends, receives and stores their own money has the power to reverse fraudulent transactions, which is desirable in some circumstances. It also has the power to monitor, regulate, control and prevent individuals from sending and receiving their own money, as well as punishing them for sending, receiving, or trying to send or receive, money from those who are frowned upon by the controlling authority - which is incredibly undesirable.
>If you think there is some government conspiracy with the 'bankers' against you or your group
There's no conspiracy - this is happening right out in the open - and the powers-that-be are happy to brag about their unfettered power.
> You define centralized control over wealth and the ability of an individual to send and receive payments to whomever they choose
No, I define that as 'oversight' which is necessary for a functioning macroeconomic system. If we can't do that then we can't collect taxes. If you are opposed to all taxation then we have a fundamental disagreement on the function of society.
> There's no conspiracy - this is happening right out in the open - and the powers-that-be are happy to brag about their unfettered power.
You linked to two things from the past that were proposed and never occurred. What does that prove? The government is working as intended and bad ideas are usually stopped in their tracts. The difference is that if money is the be-all-end-all of power, then any rich person can just make their own laws, and I fail to see how that is a better option than a government accountable to its citizens.
> If you are opposed to all taxation then we have a fundamental disagreement on the function of society.
If you think that the government should have the power to monitor every transaction, communication and movement of everyone, all the time, so that they can make sure people aren't cheating on their taxes, then we have a fundamental disagreement on the function of government and society. If the government can't figure out how to raise revenue without violating the privacy and human dignity of every American then that government should not exist.
> The government is working as intended and bad ideas are usually stopped in their tracts.
We clearly live in two different realities. In my reality, people have had their ability to send and receive funds to a wide variety of locales and causes blocked by the government. In my reality, the credit card companies blocked the ability of individuals to send donations to Wikileaks just after they were publicly threatened by Senator Joe Lieberman (but before the founder of Wikileaks was thrown in a dungeon at the behest of the US government).
>The difference is that if money is the be-all-end-all of power, then any rich person can just make their own laws
Money isn't the be-all-end-all, but centralized control of money comes very close. It is very different to be a rich person with a lot of money and to be a government entity that decides, at the point of a gun, who is allowed to have and/or spend money and what they are allowed to spend it on. The right to privacy, the right to human dignity, the right to autonomy, and the right to send your hard-earned money to whoever you want to send it to is all part of the same struggle for human rights and freedom. The push to eliminate privacy, to eliminate cash, to consolidate the power of government to control every facet of your personal, medical and financial life are all inextricably linked, and are all leading to an incredibly dystopian future that in many respects has already arrived.
You have pivoted the conversation completely from crypto lacking certain abilities consumers find crucial, specifically reversing transactions and protection from fraud, into a conversation about state surveillance. I am not going to defend police states or mass surveillance.
>You have pivoted the conversation completely from crypto lacking certain abilities consumers find crucial, specifically reversing transactions and protection from fraud, into a conversation about state surveillance. I am not going to defend police states or mass surveillance.
A conversation about the power of the government to have real-time, granular information about every dollar you spend, send or receive and total control over whether to allow or prevent your transactions is a conversation about state surveillance.
Almost no one is going to give up the benefits of consumer protections because of the possibility that their government is out to get them. Thus I don't see how any of this is relevant.
Your concerns are valid. And you're free to commit to projects that align with your values.
To me, the immutability of an actual blockchain is non-negotiable. I've given up on Ethereum after the DAO fork out of principle.
But that's the beauty. Unlike our current financial system, you're not bound to use Ethereum. You have sovereignty and can make your own choices (and drive change).
-- (I only discuss part of your comment, don't have time for the rest)
Just FYI, the biggest problem for crypto fraud is phishing, not theft. A thief can't get your private keys from a hardware wallet. And there are many, many, MANY strategies you can use against phishing.
I'm not talking about tampering, not in the sense of a 51% double spend or anything. I'm talking about off-chain real world human influence. I'm talking about things like The DAO, an organization that was such a huge player in ethereum at the time that when they suffered an exploit like so many others have over the years ethereum did a hard fork for just them to fix things.
How many smaller players in the crypto scene have received that kind white glove treatment, going against the "code is law" principle, when they've lost huge sums of money? Code was law right up until The DAO massively screwed up and was deemed Too Big to Fail. No different than traditional financial institutions.
As the mining resources of the various trustless Proof of $X models needed to makes crypto work are increasingly centralized into the hands of massive players in the field the principle of crypto democratizing control of money & finance is becoming an Emperor With [increasingly] No Clothes.
If all the large entities band together and frame the issue as something negative that needs to be prevented/reverted, then nobody will care enough to attempt punishment. We've seen this when ETH and ETC split after Vitalik used ETH in the premine to vote for a split, then framed it as "the majority wants to split".
"Majority" doesn't mean anything better than traditional finance when the majority is increasingly a small handful of massive players using their control to avoid the consequences of massive screwups. Instead they make a hard turn towards the same exact "too big to fail" dynamics in traditional finance.
With proof of stake there will be no more abstraction layer to hide this fact any more either. Majority will mean the very small number of organizations holding a majority of ethereum, not the majority of __people__ holding ethereum.
Very roughly by eyeballing the numbers here [1] about 450 walled own about 51% of ethereum. Out of about 0.000225% of ethereum wallets in control of 51%, and that's not even taking into account whales that may control multiple of those largest wallets.
So your what's your definition of "majority" here when it comes to future governance issues, the 450 or the 200,000,000 other holders?
True democratization of crypto would have it be the latter, but that's not where I see things going.
Ethereum, like any financial instrument, has always been valued by willingness to pay. It is unavoidable that willingness to pay is impacted more by those with more wealth. You cannot sell an asset if nobody wants to buy it and people with money can buy things.
If someone told you otherwise, I am sorry that you were misled.
My ability to address screwups or fraud on an individual level with banks is significantly higher than anything I'd have with crypto.
All your statement does is agree with my sentiment that crypto like ethereum is controlled by a very small number of very large players in the field. It is not the democratization of money & finance that proponents & crypto idealists use in their rhetoric to promote a supposed revolution in the field. It's substantially similar to traditional systems with a few minor (relative to the proposed revolution) features that might offer improvements on the traditional systems.
And yes, lots of people have told me otherwise-- that crypto will put the the aggregated power of traditional financial systems into the hands of the people and all sorts of things along those lines. It's not hard to find such crypto evangelicals. But no I have __never__ been misled by them.
It's always been obvious to me that any actual promise that crypto may have in improving financial systems falls massively short of promises made.
> My ability to address screwups or fraud on an individual level with banks is significantly higher than anything I'd have with crypto.
Yes, nobody ever suggested that irreversible transactions would make it easier to address fraud. You don't have a central entity to appeal to.
> All your statement does is agree with my sentiment that crypto like ethereum is controlled by a very small number of very large players in the field.
No, it does not agree with that. But the value of ethereum is determined by willingness to pay. There are not a "very small number" of actors with willingness to pay for ethereum.
Crypto is explicitly anti-democratic in that you cannot democratically (ie. by vote) decide to take away someone's asset.
It sounds like your chief concerns are around transacting on and storing all your money on a layer 1. It would be very similar to walking around with your life savings in cash in a briefcase. But just like cash has banks, custodians, and settlement layers so can (for example) bitcoin.
If all services sitting on top of bitcoin were equal to the USD (settlement, fraud protection, PayPal/Venmo, etcetc) then you’d really need to compare the “tokenomics” of the currencies. With bitcoin, you have complete predictability in terms of when new bitcoins are created (inflation). With USD it’s purely up to the government.
You do fractional reserve banking with BTC the same way you do it with any other currency: You only keep enough BTC on hand to cover the projected worst-case withdrawals, and take the risk of needing to shut down or possibly declare bankruptcy in the event of a bank run. There is no "lender of last resort" to bail you out, but banks were doing fractional reserve banking long before the creation of the FDIC. It wasn't quite so extreme in the Free Banking era, of course, compared to the state today where no bank holds much more than the legally-mandated bare minimum of reserves.
Of course you also have the option of running an honest bank, one which simply holds its customers money (for a fee) without lending it out, and perhaps offering separate investment products for those who are interested with full disclosure of the risk involved should the investments fail.
It's an open secret that money "in your bank account" isn't actually in your account waiting to be withdrawn—the banks will openly acknowledge that if asked, though it's not something they like to draw attention to in their advertising or when you're opening an account—but they aren't so open about the fact that this practice comes with investment risk, including the possibility of losing any money you've deposited with them, or at least being forced to wait longer than usual to get it back because the bank is having cash-flow issues. (Which, naturally, causes even more severe cash-flow issues for the depositors.) They have the mandatory insurance, of course, but the FDIC is more of a placebo to prevent bank runs than actual protection against systemic issues affecting many banks at the same time. The FDIC can bail out any one bank easily, but if everyone wanted their deposits back there wouldn't be nearly enough to cover the banks' obligations. The only way to avoid bank failures in that scenario would be to print more money, which would drive inflation and penalize those who put their money in less risk-prone, higher-reserve banks.
At the very least it makes something that is the world's problem -- massive energy waste due to PoW -- into an economic problem that is self-contained to the Ethereum block chain.
That defeats the point. People keep forgetting that the single innovative aspect of cryptocurrencies was the invention of a way to do completely anonymous and trustless transactions. That's it. The second you wrap that in a layer that eliminates that, you're better off just skipping the blockchain altogether since it's an otherwise extremely awful performing persistence.
I'm not sure what makes you think that is the 'single innovative aspect' (besides, unless we're talking about Monero, most crypto transactions are not anonymous). One of the reasons I'm excited is for truly borderless transactions with friends and family overseas without every bank in the middle taking their (unknown ahead of time) cut. Even Wise incurs extra costs, as it doesn't support their native currency and USD/SWIFT is the only option. I'm absolutely sick of the unfairness built into the financial system and I get the feeling that much of the cynicism around crypto comes from a position of privilege.
Anyway, back to your point. Why should a layer on top 'eliminate' the layer underneath? Card companies did not eliminate cash.
> I'm not sure what makes you think that is the 'single innovative aspect'
Because that is the single innovative aspect of crypto: circumventing regulation (by virtue of not having a central authority). Every single other thing can be done better by a non-decentralised system.
> much of the cynicism around crypto comes from a position of privilege.
Boo-hoo. I would think that more rich people are circumventing capital controls in China, Korea, and Argentina using crypto than poor, unbanked people are using crypto.
You talk like cryptocurrencies are a valid alternative, even though they have a terrible UX that makes their adoption in the real world near non-existent. Hell, losing or getting your private keys stolen could also nuke your business. Yes, every option comes with its issues, and so far cryptocurrency's issues far exceed other options for businesses.
It will be a solution for everyone running a legal business (i.e. one that doesn't impose significant negative externalities on others). Making life harder for criminals is a feature not a bug.
As a business you'd have to pay taxes, deal with customer support, accept multiple currencies, etc, so even when accepting cryptocurrency payments it's likely you would use a payment processor. Those payment processors would probably be just as reliable as the fiat ones... (hell they'll probably be the same companies)
Remember, Stripe is not known to be reliable, just convenient. People will go for the convenience with cryptocurrency as well, there is no reason to believe otherwise.
Why bother paying more for a slow database if you’re not going to rely on the one feature which can’t be done faster, cheaper, and more reliably than the current financial system?
Everything gives people options: the question of whether those options actually increase competition comes down to what a particular option does better than the alternatives. For example, if I'm not in the business of selling blockchain services I don't care about Visa's backend infrastructure. I care about things like how much overhead I'm paying on each transaction, how hard it is for my customers to use, how quickly transactions go through (especially in retail settings – I don't want someone blocking the line while they wait for a miner to approve a block), and the cost / risk of fraud.
Currently, it's by far easier for everyone to use Visa: most people have access to that system, services are widely available for businesses of all sizes, etc. The primary drawbacks are transaction costs and businesses being on the hook for most fraudulent transactions.
Switching to Ethereum would make things slower, but that could improve. Since it's not tied to a hard currency, however, there's a much bigger problem cost management: I know exactly how much a Visa transaction will cost but gas fees are unpredictable and volatile, and the exchange rates for ETH vary both independently and more than most currencies. Similarly, there's a real appeal to not automatically being on the hook for a disputed transaction but that's significantly undercut if you have to worry about being one mistake away from irrecoverably losing everything in your account and so far customers have not been jumping to take on more personal risk either.
The big question here is also what competitive businesses do in response: for example, if at some point in the future Ethereum actually became cost-competitive what happens when Visa simply lowers their transaction fees until that's no longer the case again? They have a lot of margin to do that and the merchants don't need to change anything about how they do business. Similarly, Ethereum is nowhere near the speed of a traditional credit card transaction but even if it hit that speed it'd be playing catch-up with Apple/Google Pay – businesses care a lot about things like that since it's often highly visible to customers and can affect things like retail lines, so the question is whether that can be improved faster than companies like Apple/Google, Stripe, Square, etc. can improve their services.
I think most of those problems are being worked on and have a very real chance of being solved.
Right now, on layer 2, you can transact for a $0.01 fee no matter the size of the transaction. I’m not a Visa expert but from what I understand they take a percentage of the transaction. Visa could lower their fees but I see that as a win-win. They faced competition and either way consumers win.
Granted if Eth exploded in popularity the fees would go up potentially 10x. However there are upgrades on the way to lower fees even further. Namely danksharding (excuse the silly name).
Things like UX, and fraudulent transactions are much harder. However UX can get better and there are actually things we can do about fraudulent transactions. A Visa competitor could build their own smart wallet where the financial institution has keys to the wallet as well as users. This would allow them to administer the wallet for the user similarly to current bank accounts.
A competitors could also create their own layer 2 which would only confirm transactions on the main ethereum network after X amount of time. This would allow the company to revert fraudulent transactions within that time window.
> on layer 2, you can transact for a $0.01 fee no matter the size of the transaction. I’m not a Visa expert but from what I understand they take a percentage of the transaction. Visa could lower their fees but I see that as a win-win
The competition is P2P interbank transfers, which are being rolled out to be free in the U.S. (And are free in Europe.) Credit card transactions come with additional perks for the consumer, like anti-fraud and rewards, which bias the coin. Someone not caring for those protections can, again, use interbank transfer.
Now try sending that money overseas. Depending on the countries and currencies involved you may be in for a world of pain (personal experience). It's great if you don't have that problem, but once you do you start to really see how arcane, bloated, and inefficient the current systems are.
Sure, anything is potentially possible but notice how often you had to describe things in uncertain future terms. If you are running a business, that sounds like “call me back when you can do this” — and in particular, consider that while Ethereum-based companies are spending large amounts of effort working around the architectural drawbacks of using a blockchain, everyone else is working on user-visible features.
Sure, by all means wait until these features are ready.
They’re not as uncertain as I made it sound though. Smart wallets already exist and layer 2’s exist where users can submit proof of fraud. Danksharding isn't going to take 8 years like proof of stake.
The biggest issue I see is building trust, which takes a lot of time. A smart wallet is great but it’s going to take years before the community trusts the builder of the wallet.
With that said, I do think crypto has a chance of offering things that the current financial institutions will find very difficult to compete with. I’d love to see Visa reduce their fees to a flat $0.01 per transaction but that that would massively reduce their profits.
Also, with a standardized financial API it opens the door to more competition in other areas. For example, a fairer and more transparent alternative to credit scores. Current credit score providers rely on the fact that their system is opaque. Competing with a transparent credit score would be very difficult.
The reason I’m so interested in crypto is the possibility of taking away power from these large institutions.
> With that said, I do think crypto has a chance of offering things that the current financial institutions will find very difficult to compete with. I’d love to see Visa reduce their fees to a flat $0.01 per transaction but that that would massively reduce their profits.
That's 60 times lower than Ethereum's transaction fee. Now, an L2 service could go lower but then they're taking on more risk which they'll want to be paid for and it's basically reinventing Venmo or Square Cash.
> Also, with a standardized financial API it opens the door to more competition in other areas. For example, a fairer and more transparent alternative to credit scores. Current credit score providers rely on the fact that their system is opaque. Competing with a transparent credit score would be very difficult.
There are two problems here. The most obvious is that it's at cross-purposes with privacy but the more subtle one is that as people build layers on top of the Ethereum network to compensate for design deficiencies, that transparency evaporates and you're left with the same need for individual companies to share data with each other and near-certainty that in the absence of regulation they will do so even when it's not in their customers' best interest.
I think it's important to understand that L2 is considered the future of Ethereum. So when we are talking about fees it's important to use the numbers that people will actually be paying in the future. Right now those are hovering around $0.10 and it's expected that danksharding will reduce those by a couple orders of magnitude in the near/mid term future.
IMO L2's are fundamentally better than Venmo and Square Cash. Firstly, they are much more transparent to the user. Switching to a different L2 is usually as simple as selecting an option from a dropdown in your wallet app. There are also protocols for allowing users to buy crypto straight on L2 without paying L1 fees and transferring from one L2 to another (for a small fee). Additionally, if an L2 goes down there are escape hatches that allow users to pull money out onto L1. The same cannot be said for Venmo or Square. This transparency also means users are less tied to a single provider. If I want to accept money on Venmo I have to sign up for a whole new app, vs selecting an L2 from a dropdown like I mentioned before.
Regarding credit scores and privacy, there is strong reason to believe that zero-knowledge proofs will be very useful here. These are much more cutting edge but zk-proofs allow people to prove things about themselves without giving away their private info. This could allow a privacy-respecting credit score where users can prove certain things about their financial history without giving everything away.
I will admit privacy is still very much a concern. The recent controversy over Tornado Cash proves that governments are not comfortable with total privacy. However, I will say that this isn't the first time the government has tried to stop cryptography. Originally, there were legal battles over public-key encryption when it was first invented but now we use it every day.
> Now, an L2 service could go lower but then they're taking on more risk which they'll want to be paid for and it's basically reinventing Venmo or Square Cash.
It feels like there is a subtle misunderstanding here: Credit cards are at least L2 systems, not L1. Physical cash, the foundational raw-unit-of-account layer most comparable to Bitcoin or Etherium, is the L1. Something like Venmo or Square Cash would be L3, built on top of the credit networks or electronic bank transfers which are themselves a layer of abstraction over transacting in cash.
You may not realize this, but credit bureaus are a way for lenders, who compete, to share anonyminized customer data amongst themselves. I don't see why the lenders would be willing to share this very valuable data to the whole world.
The bureaus are regulated because of their power but they were not created by the government but by the value to lenders to having a trusted third party to merge and reshare the customer data in a safe fashion.
And I would have to guess most people can master "understand your credit score" better than we can master "good ops sec for a 100K dollar private key"
Also those over 40, but that still doesn’t mean everything advertised as the solution is actually the right answer. This is especially true when the sales pitch is “buy now, you’ll make a killing!” but all of the real problems get a response along the lines of “we’re working on that but it was harder than we thought”.
>Prior to the merge ethereum’s trust was controlled by the organizations with the most money who bought/built massive data centers to mine it.
>With the merge & staking that abstraction layer has disappeared and it’s still the organizations with the most money who control it.
In the prior state, the folks with control were the ones willing to invest in it. In the after state, the folks with control are the ones willing to invest, OR the ones willing to get others to invest - i.e. coinbase.
> If a criminal spies on my credit card # as I make a purchase and uses that to go on a spending spree I can fix it with the credit card company with little cost but a few hours of time and frustration.
No, you can't.
It if someone hacks you mobile bank and transfers money to another country, all you can do is go to police, which can do fuck off.
Prior to this merge at least theoretically you could have a consortium of people collaborate to combat centralization.
Now, all big players have to do to print money is nothing. It is now actually impossible to ever overcome the mechanisms.
My young son the other day said “I’ll get money from the store and buy what ever I want”.
I explained you had to exchange work for money. So you can work for the store, then they give you money to buy things.
Then I thought about how banks or large lenders just give people money. They magically create a loan, which people have to pay back with interest. The bank assesses the risk they won’t and profit they want and that’s the interest rate. The FED works the same way, just handing out money. Those people don’t work for their money. They just get free labor for controlling the money.
Here it’s like the store printing money at 5-8% a year or what ever just for having money in the bank. They can then spend 4% or what ever of that and still always guarantee growth in their money supply. It’s the exact same.
Theoretically, someone can make something the store finds valuable enough in the real world to trade their reserves. However, they’d have to find it more valuable than the static growth rate.
The difference in POW is that anyone can enter the market. And large lenders won’t have an advantage. Sure they could PAY for more processing power, but they have no advantage of printing money over the next guy.
the basic point of crypto is to protect us from human judgment yes, this means the individual is responsible for their own security, privacy etc. but when this responsibility is taken away for the sake of convenience we all lose
Well, currently it looks like it will be more centralized, because before one could mine with just a single GPU, now one has to have a bunch of ETH to start.
If you keep posting this sort of low-value flamewar comment we are going to have to ban you. We have cut you miles of slack for years, but the slack is not infinite.
I still feel like absolutely bonkers stuff is posted about crypto and they get a pass - extremely low-effort lies and drivel - then I post my counterpoint hot take and it’s “You flame bait moron!”
Similarly I am passionate about China and communism given… the murders in my family… but again, we are supposed to call out certain topics but not others.
My defense, but noted on I’m on my final final warning.
Thanks. I know it always feels like the other side started it and did worse [1]. There are always datapoints around to support that idea, since we don't come close to seeing everything that gets posted here [2].
But if people feel like that makes it ok to break the rules themselves, we end up with a downward spiral [3], so that can't be right. The solution is to stick to the site guidelines no matter what other people do, and let us know about the other cases by flagging them or emailing us.
>If you keep posting this sort of low-value flamewar comment we are going to have to ban you. We have cut you miles of slack for years, but the slack is not infinite.
Turnabout should be fair play here. Dang's continual low-value abuse of users to enforce suppression of seibelj and others' speech should be met with flagging and every possible option to reduce the effect of these threats.
If it is possible to ban dang, we need to be finding ways to do so. If not, consider his abuse behavior like the payment processor 'Stripe.' Robust alternatives must be used to minimize the deterretive effect of threats.
Either way, we should stop cutting slack to Dang's efforts and focus on how to ensure adjusting of behavior is bilateral. Our slack for Dang is not infinite. If Dang does not enjoy the comments of others perhaps he should move to another platform :)
If you’re gonna make wild prophecies about how crypto is going to completely democratize control of the money supply - and crypto boosters love to rant about stuff like that - then yeah, people are going to keep on finding fault with it until someone comes up with a new replacement for “proof of turning a fuckton of energy into waste heat” that isn’t “proof of having a fuckton of money invested in the coin”.
The number two crypto left Proof of Waste and that’s good, yay! But the whole scene is still in the shadow of Bitcoin’s Proof of Waste, and until that does the same, or shrinks to an irreverent shitcoin, people are gonna hate on all crypto for its energy usage.
This has never been an issue that can be discussed in such an abbreviated form. So you're criticizing earlier simplistic dismissals of crypto because of their over simplifications. Yet now you're also trying to dismiss a more detailed bit of thinking on crypto when it tries to correct the exact faults you found in those simplistic criticism precisely because it is more detailed. You can't have it both ways.
I think it's hilarious that you call this moving the goalposts. As if the critiques about country-sized energy waste were the only issue raised until this moment. When that was actually a later-stage critique as "mining" grew and grew.
"If a criminal spies on my credit card # as I make a purchase and uses that to go on a spending spree I can fix it with the credit card company with little cost but a few hours of time and frustration."
You just made a great case for why crypto as a backend for balance transfer that's abstracted by centralized payment options built on top of the transfer network for funding balances but directly interfaces with POS outside the crypto network will almost certainly continue to grow into a thing as crypto grows.
Get rid of bank accounts, and then firewall balances behind 3rd party abstractions powered by your crypto wallet.
By all means charge my vendors 3.25% of the transaction to firewall and insure my wallet against theft.
Give me 1-2% cash back and I'll be even more excited about the prospect.
You are saying two contradictory things. First that those with the most money control Ethereum, and then that transactions can't be controls be reversed, indicating that you want a human layer of control that is currently missing. This is a conflating of layers and evidence of a fundamental misunderstanding of of how it works.
The fact that these types of get off my lawn comments get voted to the top of HN that make me wonder if I'm on a ship of fools that is no longer the center of gravity of interesting and creative tech thought.
Crypto has been around for over a decade and isn't going away, and it's an complex technology that has massive depth and a lot of interest. These sorts of negative superficial comments that get repeated ad infinitum are tiring and provide no value.
If you prefer credit cards then use them. No one is taking that away from you. That isn't the main use case that Ethereum is going after.
>You are saying two contradictory things. First that those with the most money control Ethereum, and then that transactions can't be controls be reversed
No, absolutely not. I'm saying it's controlled by those with the most money, and history has show as that transactions __can__ be reversed when those large players throw their weight around in a too-big-to-fail sort of way.
I'm also saying that I don't mind there being a human layer of judgment, but also that it goes very much against the trustless ethos of crypto. And also that the currently layer of human judgement is vastly less accessible to the average crypto hold than it is in traditional banking & finance.
The reversal was not great, but also just a one time thing that still required the concensus of many entities and widespread code change and deployment distributed across countless nodes. If it was a bad call then it wouldn't have been adopted or would have forked the network in a more serious fashion than ETC. If reversals a regular occurance, then ETH would not be trusted and it would lose traction. It's like comparing an asteroid strike with a car accident. The DAO reversal is a single event and says almost nothing about the general reversibility of individual small transactions. Future reversals are very unlikely now and would have to be some huge event and gather concensus like any other change to the protocol.
A singular huge change is just not comparable to credit card chargebacks that can be executed by anyone. Not comparable at all. Chargebacks are part of the CC protocol. Eth has no such mechanism.
(1) in both traditional finance and crypto, a relatively small group of big players control the rules of the game
(2) in traditional finance, there are established ways for small players (Eg consumers) to appeal to big players (eg retail bank) to make exceptions and provide redress
(3) in crypto, there are not yet established pathways for small players to petition big players for redress in this way.
This makes a false equivalency. Petition in traditional finance is with regards to individual transactions. In crypto, petition would be how the protocol works. The equivalent in traditional finance would be the credit card EULA, rules and conditions. Small players definitely have no redress here.
> It's like Finland has suddenly shut off its power grid
So, have we observed global energy usage go down by about one Finland?
Shouldn't that be observable somehow? Shouldn't there be some power stations reducing their output as a reaction to reduced demand?
Anyone know how this would be visible, and on what kind of time frame we expect it to become visible?
I'm not claiming it hasn't happened. I just feel surprised to not see more coverage of that in this article, nor here in the comments. Energy efficiency is largely the point of this major change. Shouldn't there be graphs of the power grids everywhere showing a big drop? Maybe my expectations are just off on that.
The entire world generates about 25,000 TWh of electricity every year.
Finland consumes about 87 TWh of electricity every year.
An entire Finland of electricity use thinly distributed over the entire planet disappearing is a negligible rounding error on the grand scheme of things. It's about a ~0.3% change.
News media uses word imagery like "an entire Finland of electricity use" because it sounds huge and scary to the average person who doesn't understand that absolute numbers are meaningless out of context. Zooming out, you realize that while Finland is big from an individual human scale, it barely exists in the wider cacophony of human civilization.
And that's just looking at electricity, which is a percentage total human energy use. Much more energy use comes from transportation, industry, and heating, which is much more carbon intensive than electricity generation, since much of our electricity comes from hydro, nuclear, and increasingly solar and wind.
The thing is, in the wider cacophony of human civilization, Ethereum and cryptocurrencies also don't exist.
If I and my grandma and everyone's grandma would use Proof of Work cryptocurrencies to buy peanuts at the supermarket, PoW energy usage would probably rival that of China.
Now it's just used for speculation by a bunch of rich folks, crooks and marks. Probably only a few thousand transactions per second, I imagine.
> If I and my grandma and everyone's grandma would use Proof of Work cryptocurrencies to buy peanuts at the supermarket, PoW energy usage would probably rival that of China.
I can't speak for all PoW cryptocurrencies, but this is a common misunderstanding about Bitcoin. Energy usage does not scale with the number of users. The transactions per second is largely fixed due to the block size limit. If your grandma is using Bitcoin, she will probably be transacting on a second layer, e.g. Lightning or Coinbase.
No, but you don't have to. The point of blockchains is to allow people to opt out when they want to. If you don't want to or need to, you have that option.
It's actually a worse situation that bitcoin synergy usage scales with its price.
So same number of people could be using bitcoin but if the price jumps up by 10X, then over a period a few months it's energy usage would also go up by 10X.
This is exactly what you’d expect to see with market manipulation. It’s the pump before the dump. Or less cynically, it’s just herd mentality seen through data.
Using the words "centralized" or "decentralized" when describing crypto (and probably many other tech things) is perhaps frequently the worst oversimplifications one can engage in.
I think what you want to discuss when using these words is the extent to which it is either likely or possible that a small number of players can unduly influence a thing, but there are frequently MANY MORE FACTORS at work here than "that number." You have to look at how the thing is set up, what governance looks like, what technical limitations there are, and -- perhaps most importantly -- what incentives are there in place for the players to do so.
A lot of the "centralization" fears are bad because they're the sort of thing, that -- if executed -- would destroy the value of the thing to the centralizers themselves, and thus they would literally never do it.
None of it is truly decentralized. Most Bitcoin mining comes from three corporations. You could replicate the whole network by setting up a cross-cloud system that's balanced between AWS, Azure, and GCP.
Wealth always concentrates to few entities in all forms of free market capitalism.
You cannot have decentralized money without distributed wealth that is not concentrated . This usually means a successful form of socialism ( none have proven successful, or looks likely to do so today)
This merge to PoS is just exposing that people with wealth always have a say on how the system works, whether it is miners or stakers it was and is always controlled by few .
> This merge to PoS is just exposing that people with wealth always have a say on how the system works, whether it is miners or stakers it was and is always controlled by few .
Miners nor stakers can decide how the system works, Ethereum does not have on-chain governance. 51% of miners/stakers can't just post invalid blocks crediting them with free money nor can they force anyone else's wallet to do anything that wasn't signed by the private key. The worst you can really do is refuse to include transactions in your blocks for as long as you are controlling the network, all it takes is one honest actor to include your transaction and it will finalize.
Couple of hundred years?[2] Many models look sustainable[1] in the short term - few decades is short for any economic model to show its weaknesses. The soviet model did survive for 5-6 decades years quite well after all.
[1] Sustainable does not mean good or that I (or any else) condone it, just that it can work and survive .
[2] That is the number to make it comparable to modern American Econo-political system that has survived largely intact in pretty much same form from the early years of the revolution. Historically feudal monarchies or other systems like the Tokugawa Shogunate had survived much longer for variety of reasons however that are difficult to compare in the modern techno Geo-political era .
They're brown and 'marginalized' and occupy a small slice of Mexico. You and I may know about them because we probably monitor anarchist/leftist circles. I'm quite anti-socialist myself but I readily admit the Zapitistas have proven 'successful' about as well as they could hope for their situation. But few outside of a few circles wants to acknowledge it as it goes against the conventional thought that democratic or pseudodemocratic society can be trumped by a bunch of fucking 'backwater' community-focused brown people with guns and their own prerogative, who don't fit the mold of the typical example that when society 'breaks down' it must be taken over by savage worlords or drug barons.
You can guarantee if there were a story of a bunch of American rednecks even trying to pull off anything similar it'd be downvoted to hell here and nearly universally hated by American society. Soccer moms everywhere would clap to their execution by the National Guard. Some ATF-esque character would stand over the rubble for photographs like they did over the char of the dead kids at Waco and the public would eat it up.
Admitting the Zapatistas are a 'success' challenges a lot of people's philosophies and assumptions. Hell it even admits some of my own were wrong. This can be difficult to reconcile. It's not surprising that answers to your question are not exactly forthcoming.
But that's kind of the problem, isn't it? It may be obscure, but its success does disprove a very non-obscure claim.
(Side note: my definition of "success" for socialism is fairly modest: to be sustainable long term economically, and to preserve personal freedoms at least to the same degree that modern capitalist liberal democracies have. That's the only way I see it as a meaningful alternative to the status quo.)
There's also Rojava to consider, and it's perhaps somewhat more widely known because it was covered somewhat during the Western press' fascination with ISIS and war with them. These guys are perhaps more interesting than the Zapatistas long term because they're doing it in a somewhat more urbanized & industrialized area with 10x population, and they are explicitly designing a governance framework with intent to scale to nation-state size and beyond. But, well, it hasn't even been 10 years yet, so I don't think it counts as solid evidence of anything just yet.
They talk a big talk about socialism but honestly I wasn't seeing it in the cities like Qamishlo. Full of capitalist street vendors and the like, and poverty on the outskirts. Honestly they seemed pretty vanilla capitalist outside the 'mustache-jesus' (Apo) talk you see in YPG, etc. I do recall free bread/naan line on the street.
In the firmly 'Rojava' 'owned' cities like Deyrik the general structure of the people and markets reminded me quite a bit of Barzani controlled KRG. Of course, I spent most my time with the militia and not civil life, so I'm sure there's lots I missed. I think many of the 'true believers' in the old Kurdish socialist causes probably migrated more to the Iraqi Mountains, sadly those people are getting pounded on by the Turks.
From their agitprop, my impression was that by socialism they mostly mean minimizing economic exploitation, so e.g. street vendors, craftsmen etc who aren't wage workers aren't really incompatible with that approach. I'd be more curious to see the statistics on larger businesses - how many have a hired labor force, and how many are co-ops.
Also, the most recent iteration of the social contract that I have - one from 2016 - has these bits in it:
"There shall be a right to invest in private projects which, while taking account of environmental balance, provide the services necessary for economic development, respond to the needs of society and help to stimulate economic activity in the community.
The right to private property shall be safeguarded in such a way as not to conflict with the public interest, and it shall be regulated by law."
Now this is all rather vague, but it doesn't read like a hardline stance against any hint of capitalism. And given the bottom-up political system, so long as democratic institutions work as declared, it seems that individual municipalities should be able dial the balance as they see fit. From what I heard, while PYD enjoys broad popular support, that doesn't necessarily translate to specific policies they advocate for. So perhaps it's basically as socialist as people actually want it to be at the moment?
Which would make it even more important. While the economics of it is interesting by itself, I think the key part of the experiment is decentralized council democracy. That should be enough to give people actual voice on matters that concern them, as opposed to the sham that representative republics inevitably end up at scale. Once communities actually have control over their commons, they can figure out the economics according to their needs and preferences.
But, again, this is assuming that their governance model is as advertised and can persist in the long term. What was your impression on the ground?
Sorry for the abbreviated response I'm going to give here.
I didn't spend a lot of time in civil life. I saw no large businesses. I saw these in KRG Iraq (even big dealerships, like for farm equipment) but not in Rojava. Basically all the businesses I noticed in urban areas were what I describe as roughly family-unit sized operations run in your typical middle eastern stall. Perhaps a hardware store or something was a bit larger. The biggest 'business' I saw was vehicle repair shop with 4 or 5 stations and that was run by YPG. In civil city such a repair shop would basically be a single booth with the storage-shed style big room and they probably worked on the car while it was outside. I never saw something large-businesses esque like the kind of supermarkets you may see deep in latin America. I also did not notice much presence of 'government operated' retail business and if that was happening for anything other than bread, it was invisible to me (PYD/YPG does run some co-ops, like agriculture and textiles related stuff).
I have no idea how the farms were run. It's possible these were run by the state. The farmers are very dedicated, they gave no fuck and just kept going while active shelling/fighting was happening proximally. It is possible as I mentioned above to get bread for free in the cities. You just walk up and ask for it (of course, you could ask practically anyone for food anywhere, they would probably give you some). No money was seen changing hands, but that is at specific stalls. I do think whatever their food distribution system is, it seemed to be working better than in ISIL controlled territory -- when we took over one village people were begging in a desperate way and fighting over the little food our people were able to give. I never saw such desperation in Rojava proper (lots of beggars in Rojava, but for money not food).
Overall I did not find many devout followers of some particular brand of political writings, although I'm sure some politicians are, but I'm not much a politician myself :) A few 'Westerners' joined the Kurds with extreme political views, but anecdotally I found those people were not very well liked. I have my doubts whether the average people even give a fuck about whatever the PYD or people in charge think. The Kurds have a long history and most of that doesn't include Apo's (Ocalan's) brand of socialism, although they would surely view him highly charitably. There may be significantly different opinions in (the tip of) Northern Iraq where the hardcore socialist elements hold more sway. Then again, given the temperament of the Kurdish people I think it would be hard to impose any sort of anything on them.
I would wager as long as you don't perform some egregious crime you could get away with a lot in Rojava without the government imposing their will on you. I visited a prison and some petty criminals escaped as I was there, the reaction of the guards was just kind of 'meh' as they got away. I do not think the government has the strength to fight their existential threats while simultaneously enforcing any strong form of socialism on the populace, although doing so on a large business would be easy enough as they'd be a big centralized target.
The main attractions I would describe to Rojava are pretty extreme freedom (minimal government, you can have guns, you seem to be able to run a business pretty openly without much fanfare, by middle east standards extremely liberal view on religion, booze is sold openly, people are open and friendly and helpful, personal rights like privacy and ownership appear to be well respected, etc). If I were looking for a socialist utopia, or anything near approximating it, I would not go there.
If I could describe Kurds, I'd call them Americans of the middle east. Instead of America's de facto religion of Christianity, their 'religion' is Apo (Ocalan, the socialist). But like America, the average person seems to be not much a practitioner and Apo is more of a symbol like the cross so many people hang as much for cultural reasons as anything else. Nevertheless their culture is incredibly hospitable, so perhaps their brand of socialism can better described as just being a good neighbor and not the government putting a foot up your ass to redistribute your wealth.
I can pretty confidently say that all of Visa+Mastercard is way more than a few thousand transactions per second, I'm familiar with several companies that push hundreds of transactions per second through Visa+Mastercard and there's no way they're a significant portion of their business.
Visa says they process "150 million transactions every day in 175 currencies" (see page 3 at https://usa.visa.com/dam/VCOM/download/corporate/media/visan...). That's ~1,800 per second. Mastercard is smaller, so this would be the upper limit for them. Both combined should still fit into "a few thousand transactions per second".
True. The latest financial report from Visa [1] says 164.7B transactions in 2021, or ~5,000 per second. This number is 3x larger! Mastercard is slightly smaller, but comparable at 140B [2].
Imagine we can achieve that throughput with a single server without breaking a sweat![1]. The number of economic transactions all humans engage everyday including cash is perhaps 100x of that: so just in order of 500,000 TPS or less that feels quite small to be honest.
[1] Yes these systems are complex and very distributed and have lot of checks and balances and the actual transactions apps and DBs are running on infra in hundreds or thousands of servers in DCs all around the world.
On the busiest day of the year at peak hour here in the Netherlands the debit card transactions (creditcards are uncommon) reach just over 700/s. [Search for 'pin transacties per seconde' for news items covering this]
Comparing visa and Mastercard transactions with Bitcoin is something that doesn’t make a lot of sense. Do people really think visa settles transactions between two different bank accounts? Those card transactions can take days to settle.
Slow settlement and reversible transactions are a boon for buyers (and for fraudsters abusing chargebacks to get free stuff). For sellers they're a bit of a nightmare since you never know when money you thought you had been payed in good faith might disappear from your accounts with little or no recourse.
Zkrollups on Ethereum can do a couple thousand tx/sec, without security compromises. The plan now is to use the base layer mainly to support rollups, and use data sharding on the base layer to multiply the capacity of rollups. That should get it to about 100,000 tx/sec. That will be a pretty big change, but not as big as what they just did, and they've already got the design mostly worked out.
I doubt that for credit cards. Carrefour or pick your favorite supermarket chain alone probably generate hundreds of transactions per second worldwide during peak periods, and there are tens of major supermarket chains you've never heard of. Add regular grocery stores, cinemas, etc, I'd be really interested in an order of magnitude, but at peak times it has to be in the tens of thousands if not low hundreds of thousands.
For crypto I was trying to be super generous, I know they're incredibly slow.
in PoW, energy consumption scales linearly with the block reward value which is denominated in bitcoin thus scales with value of btc. Reward for mining is [ ( your hashrate / network hashrate) * block reward ].
so it's not usage that scales energy consumption, it's value of btc. Arguably though the two are intrinsically related (this should be obvious - if bitcoin somehow becomes the defacto global currency, a shitload of investment will pour in and bring its value much much higher)
in truth it's a moot point. even with lightning protocol, bitcoin as a protocol couldn't handle that much capacity. If a few hundred million people just wanted to publish a single transaction (putting money in a wallet and thereafter doing everything on lightning protocol), it would take literally years to process that many transactions.
Edit: just to be explicit, the reason energy consumption scales with block reward value is because it becomes very profitable to buy more mining equipment and mine more if the reward say doubles. It’s not an instant effect of course because there’s capital acquisition and operational capacity involved
Misinformation, both from proponents and opponents is the name of the game in crypto.
It's incredibly difficult to find the truth from either side, especially if you're a lay person who doesn't have any grasp of how the technology works.
I can tell you as an opponent of cryptocurrencies.
Experiments on social systems, currencies and stores of value should start small and work their way up OVER DECADES to tens and hundreds of thousands of people.
Experimental stuff put into production, like Communism, can bring suffering for decades, if not centuries, to tens and hundreds of millions of people... billions, even.
So if the proponents want to revolutionize the system immediately for a 5% efficiency improvement, especially since many of them have so MUCH MONEY AND POWER to gain from this revolution, be very, very SKEPTICAL.
Frankly their odds to not be grifters or (smart) idiots are minuscule.
> If I and my grandma and everyone's grandma would use Proof of Work cryptocurrencies to buy peanuts at the supermarket
Beyond your misconception that work scales with users rather than value, it's also a misconception that bitcoin is competing with technologies like Visa and Paypal. It's not supposed to be an alternative payment system.
It's competing with gold and sovereign currencies.
> If I and my grandma and everyone's grandma would use Proof of Work cryptocurrencies to buy peanuts at the supermarket, PoW energy usage would probably rival that of China.
You don't understand how any of this works, do you?
> Good try, but trite criticism regarding crypto is required to include the words "Ponzi" and "tulips"
Thank you, I'm trying to come up with an "anti bullshit bingo" since the bullshit bingo from cryptocurrencies has already managed to raise tens of billions of dollars. Glad you like it.
> Quite an imagination! You're very far off, do you have any experience in this space?
I was trying to be generous since crypto supporters always like to point to the newest barely working bleeding edge centralized "layer" called lightning or thunderbolt or some other electricity derived thing, which is supposed to greatly accelerate the glacial rate of crypto transactions.
Again, can I use crypto of any kind to buy $2 peanuts at the supermarket in Bucharest and grandma $1 popcorn at the cinema in Djibouti, without turning Earth into Venus?
> Again, can I use crypto of any kind to buy $2 peanuts at the supermarket in Bucharest and grandma $1 popcorn at the cinema in Djibouti, without turning Earth into Venus?
Probably not, but you can neither use USD (or any sort of dollar) for that either. In Bucharest you'd use Romanian leu (RON) and in Djibouti you'd use Djiboutian franc (DJF).
It's all about finding people in the middle, to agree on what you both have. In this case, you wouldn't be able to buy anything in those locations.
Like my normal dollar based credit cards that allow foreign transactions and have no foreign transactions fees...thr processor converts thr currency to dollars for me and puts it on my statement.
0.3% is a rounding error if you look at the electricity generation of a region, but it's huge if you look at the impact it will have over many years. That's 0.3% less of the global energy supply that needs to be replaced with nuclear or renewables+storage. It's like getting ten free nuclear plants.
>News media uses word imagery like "an entire Finland of electricity use" because it sounds huge and scary to the average person who doesn't understand that absolute numbers are meaningless out of context.
With the media tactics out of the picture, you don't think this is a huge amount of electricity for crypto alone to have been using? Seriously? 0.3% of global electricity use is ABSOLUTELY HUGE.
> The entire world generates about 25,000 TWh of electricity every year.
I know this isn't you, many people use these units, but I cringe every time I see abuse of units like this. 1 TWh/year is 113MW, so you are saying 2.8TW global; Finland is 9.4GW.
No, because of two reasons. First, many miners simply pointed their hardware to mine other cryptocurrencies such as ETHW or ETC. For example we have evidence that about a quarter of Ethereum's mining farms moved to ETC over the last 24h. Second, contrary to sensationalist headlines Ethereum miners only represent a drop in the bucket of the global electricity consumption: only 0.1%. Yes that can be a "country's worth of electricity" but in relative terms, 0.1% would be barely visible on charts you might examine.
Also, digiconomist, an often quoted source of Ethereum miner's energy consumption statistics, was grossly overestimating the figures. The actual consumption was probably around 20-30 TWh/year instead of the ~80 TWh/year figure they estimated. Just look at their chart: it made no sense, for example between Sep 2020 and May 2022 Ethereum hashrate grew 5-fold from 200 to 1000 TH/s, whereas in that same time-frame digiconomist estimated the consumption grew 15-fold from 6 TWh/year to 90 TWh/year. If anything, hardware has become (a bit) more efficient over time, it didn't become 3 times less efficient...
But that's not too surprising, given the author of digiconomist has a history of exaggerating his figures, like he did for Bitcoin see https://blog.zorinaq.com/serious-faults-in-beci/ But nowadays his Bitcoin estimate is more in-line with more reputable estimates such as Cambridge's https://cbeci.org/ Last time I looked he was within ±30%
> Ethereum miners only represent a drop in the bucket of the global electricity consumption: only 0.1%
1 out of every 1000 watts of energy produced in the whole world going to ethereum mining is tragic. It’s an absolutely massive waste, and the fact that crypto miners think a number like that isn’t a big deal is horrifying to me.
You care about 1 in 1000 ? Did you know that 660 out of 1000 watts of primary energy used to create electricity are wasted by the time the electricity arrives at the customer meter? (source: https://www.enerdynamics.com/Energy-Currents_Blog/How-Much-P... )
Logically, you should be 660 times more "horrified" by this waste than by cryto mining, and yet you are not. In fact most likely until today you were not even aware of such waste. This is what bothers me the most about these discussions. People have priorities in the wrong places. You want to show you care about waste? Then start caring about the most important problems instead of being laser-focusing on 0.1%.
Your 66% number includes generation losses. You're literally arguing that we should be horrified that solar panels don't produce 1 watt of electricity for every watt of light which hits them.
Would it be great if solar panels and wind turbines and nuclear reactors converted 100% of the heat/light/wind energy into useful electricity? Sure. But that's also not something we have the technology to achieve, and likely never will. People are constantly researching ways to improve power plants, but they will never reach 100% efficiency.
What we _do_ have the technology to achieve, however, is turning off things which use a ton of energy but provide no value. Saving 1‰ of earth's global electricity consumption just by turning off a useless gambling toy is a huge win, and the fact that it was allowed to use 1‰ of our global energy use in the first place is horrifying.
The transmission losses are something inherent in the system that can’t be avoided, and if someone could solve that problem they’d help a great deal with greenhouse emissions and I’d certainly applaud that.
But this 1 in 1000 watts going to ethereum mining is entirely useless, contributing nothing to society except a Ponzi scheme that, like most Silicon Valley bullshit, only exists because regulations haven’t caught up yet. I don’t care that 1 in 1000 watts is a small number. The wattage going to Finland actually gives tens of millions of people electricity to live their lives. Crypto mining is just tech bros playing with funny money, robbing people of real money in the process.
«are something inherent in the system that can’t be avoided»
Firstly they aren't inherent. Losses can be minimized. But you don't seem to care, even though losses account for orders of magnitude more energy waste than mining. Your position is illogical.
Secondly, this isn't only about transmission losses. The link explains, for example, that some of this waste comes from incandescent light bulbs that waste 90% of electricity as heat. Again, logically you should be "horrified" by this, but you aren't because media doesn't write click-baity articles about incandescent light bulbs "boiling oceans".
> Firstly they aren't inherent. Losses can be minimized
“Can be minimized” and “Inherent” are not antonyms. It can be both. And yes, I care.
> some of this waste comes from incandescent light bulbs that waste 90% of electricity as heat. Again, logically you should be "horrified" by this
I am. Every reasonable human being would look at incandescent light bulbs and say “yes, those are wasteful”. Because a reasonable alternative exists, and if you’re still burning incandescent light bulbs, you’re being wasteful.
PoW cryptocurrency however, is a system that is designed to be wasteful, and if the crypto bros had their way, we’d do all transactions this way. When an obvious alternative exists: Don’t fucking use cryptocurrency. Crypto solves zero problems, has zero benefits, and wastes electricity. The faster we abandon it, the better for literally everyone.
> First, many miners simply pointed their hardware to mine other cryptocurrencies such as ETHW or ETC. For example we have evidence that about a quarter of Ethereum's mining farms moved to ETC over the last 24h.
We'll see if this is maintainable.
Miners can't mine if the reward doesn't cover their costs. So, the only way the mining remains sustainable is if these tokens rise drastically in value.
It is possible that many miners are huge holders of ETH, in which case we may see them massively dump ETH and buy ETC to try to invert the price and keep their business going.
> For example we have evidence that about a quarter of Ethereum's mining farms moved to ETC over the last 24h.
...which is a stop-gap, holding-pattern sort of action to take, because there is OpEx to running a mining farm, and the lower trading value of ETC vs ETH (1 ETC = 0.025ETH) means ETC block rewards likely won't be enough to be positive-margin for these farmers. This is just a way to reduce burn while they try to sell their rigs. (Which they likely won't be able to do, because nobody wants overheated near-EOL mining GPUs. Mining farms will likely just end up bankrupt with assets liquidated at fire-sale prices.)
Power demand varies wildly during the day (Like +/-50%, maybe more depending on climate). A 1% change will get lost in the noise of "Oh, it's 3 degrees warmer today... HVAC working harder"
Ethereum Classic’s hash rate has gone up by about 25% of Ethereum’s hashrate, so at least for now it looks like a lot of the energy use is just moving as miners point their GPU rigs at alt coins. Very curious to see if ETHW, ie Ethereum without the merge, maintains a significant amount of hashing power. Another thing to watch will be if those alt coins are profitable to keep mining or if miners will start selling their rigs.
Aha, thank you! I felt like this change should be visible in some kind of graph somewhere, and you're right, the ETC hashrate has roughly quadrupled in the span of two days:
There will probably be some really interesting network effects with this. Since a lot of the other PoW coins that are ETH-hardware compatiable have low volume, I think we're going to very rapidly see the profitably of mining these go way down (to the point of going negative in some cases) as all these extra miners suddenly start mining these coins, but this takes time. So in other words, I would expect the real global energy usage reduction to happen weeks or months after the merge since it will take a while for all the altcoins to get overmined.
So, with all the new hashers coming from ETH, ETHW still has an order of magnitude less activity than ETH had before the change. Evidently it didn't absorb all the hardware.
The question if it is visible in the electricity generation numbers is still very relevant. (If it is, we will probably only be able to see it in an year, when international organizations compile their numbers.)
Whoever was using this electronics switched to other BTC variants, but in long term this reduced profitability and should harm people using energy in this way.
But sadly no immediate impact, unless there are electronics that could be profitably consuming power for Ethereum and it is not profitable for alternatives.
In some sense that's true, but missing the point. The amount of energy worth buying to mine crypto is exactly equal to the value of the crypto mined. What we should expect to see[1] is that the value of "Proof-of-Work ETH" (which is still a functioning blockchain[2], just like Ethereum Classic is) will drop as attention is focused on PoS ETH. And so energy devoted to it will drop in tandem.
It's also true that there are second order effects, like for example all the mining hardware dedicated to ETH needs to find a new home, which will depress prices for new mining hardware for "chains that are hardware-compatible with old ETH", and thus probably support their prices a bit.
[1] And do, I think. IIRC there was a stat rolling around a few months back showing electrical grid usage dropping due to the crypto crash, but can't remember where it was or how reliable the source seemed.
[2] Though AFAICT no one is tracking exchange rates for it yet, so your guess is as good as mine as to its value.
> The amount of energy worth buying to mine crypto is exactly equal to the value of the crypto mined.
That's like saying a stock price is directly proportional to the p/e ratio. Things have both intrinsic and extrinsic value. You are only considering the intrinsic value. In reality, people mine stuff at a loss all the time because they think it might be work more later, i.e. speculation.
Why would they mine it at a loss relative to the market when they could just buy it at whatever the current market price is, if they think it's going to go up in the future?
I don't think that's a solid argument. Some coins were structured such that there would be a finite supply (21M in the case of bitcoin IIRC). The health of a coin seems to me to be its transaction volume, and somewhat related its ability to be directly exchanged for physical goods or services.
So back to a previous user's suggestion: instead of buying energy to mine coins at a loss, one could instead buy the coins at a lower price which seems on many levels to make more sense than to continue mining.
There's a whole wasteland of people mining to keep coins alive. But not very many people. If ten people are running one graphics card each, out of nostalgia or just in case it catches a rocket to the moon, this is no environmental catastrophe, any more than a personal Minecraft server is.
Exactly! Which is why we expect the energy expended on mining PoWETH to drop to zero as the coin dies due to lack of interest, which was the upthread point you were arguing against.
I don't understand your point. If you want to speculate on crypto you can hand a credit card to Coinbase at near-zero cost, you don't need to buy mining hardware to do it. If miners are buying electricity to speculate, they're making stupendously bad decisions. They should sell that hardware and buy crypto; their leverage will be much higher and their costs will be vastly lower.
No, mining is economic activity, not investment. You pay stuff to get stuff. Whether you then invest your profits in crypto has nothing to do with where you got them.
True, and yet nearly every original bitcoin millionaire became one specifically because they decided to mine something that was worthless at the time. Sometimes you don't have money, but you have a GPU and someone else is paying for your electricity. I understand that doesn't describe most mining these days, but the point still stands: people will speculate at a loss.
Again, you're confusing "mining" (economic activity that produces new coins and fees that happen to be measured in BTC) with "investment" (acquiring BTC via any means with the intent to hold).
They are not the same concept, in fact they're completely orthogonal. You don't mine to get coins for investment, because you can get coins much (MUCH!) more cheaply via other means. You mine to get income in the present.
Wouldn’t you have better luck speculating if you just used your money to buy the coins directly, instead of buying GPUs and then paying more than the cost of the coin in electricity to mine it?
There's virtually no other ASIC resistant (i.e. can use GPU) PoW coin left to mine. There's the proof-of-work ETH fork, but it only has a market cap less than 2% of than real ETH. So even though they juiced the block rewards, miner rewards are more than 90% lower, which isn't enough to pay for electricity of the previous hash rate.
Yep. But with that the difficulty is going through the roof and earnings are dropping. Ethereum had A LOT of hash power while ETC isn't really used by anyone so where are the earnings supposed to come from. It's not going to be economically viable because the electricity is a fixed cost, even if some individual miners are trying it out.
There is a new PoW fork that was started by miners that want to continue mining. Some of the work could go there assuming it doesn't tank. I personally don't see the utility though, doubt it will be able to attract many users.
Turned off is more profitable than running at a loss for miners that need to fund their opex by selling what they mine.
It looks like it's already happening. After the merge there were a number of coins that saw huge spikes in hash rate which drove them to absolutely unprofitable levels. A lot of that hash rate has since gone elsewhere (most likely offline) and it looks like many coins are settling at a level in the short term that is breakeven at $0.06-0.08 kWh which many (most?) miners can't be profitable at as that is below their electric rate.
I think this is potentially the most interesting comment in here. If all of those GPUs just flipped to another cryptocurrency, global energy reduction would be zero.
In the short term, that's true because the GPUs are already purchased. In the long run, people will invest in new cryptocurrency mining rigs very much in proportion to the profitability of running one.
Not necessarily. It's true if the person making the decision is getting paid directly from the mining. But perverse incentives abound in the cryptocurrency space. For example, consider Celsius:
As they thrash around in bankruptcy, they have proposed that they will mine their way out of the hole. Will this work? I doubt it. But will it let the CEO stay in charge for a while longer, taking in more investor money and continuing to get paid? Possibly! So actual economic efficiency may not matter.
If you're the type of person who poured capital into mining hardware and you own it, which you likely do because it's more cost effective, you still have all that hardware sitting around. You're going to repurpose it to other mining endeavors or quickly find a way to try and eek more money out of if, because you were already that type of person.
I don't keep up with crypto and mining but until it becomes unprofitable or you can't pull money for and start operating in the red, you're going to continue consuming similar power.
Yeah, I've got 21 3080s/3090s, and I'm still mining (NiceHash switched algorithms for me automatically). But I've also listed my machines on vast.ai to rent out for deep learning. When they're not being used by a client, they're mining still. My electricity is super cheap, though $0.0875/kWh. That said, it's hardly profitable at all. I'm just speculating and breaking even at this point.
Ethereum miners were using GPUs. AMD, Nvidia, and others. They could switch their GPUs from mining ethereum which is about $1500 per coin to Ethereum classic but that is only about $40 per coin. I’d guess that wouldn’t be worth continuing with since it would be much less than than their electricity bill. They could sell their GPUs on EBay or other secondary markets, switch to protein folding, cloud-based password cracking, or SETI sky scanning. Maybe they use them to play high resolution video games like most people. Some smaller percent might notice next month when they eventually see that their ETH wallet hasn’t grown over the next month and Google why that’s the case.
Crypto mining occurs mainly where electricity is either cheap or free. Hydroelectric and Geothermal tends to produce the cheapest energy so many large mining outfits were relocated next to Hydroelectric and Geothermal plants. Many are in remote northern areas where computer cooling costs are less expensive too. $HIVE blockchain technologies was running enough ethereum miners to mine 7675 ethereum ($11.5 Million dollars worth) during the 3 month period ending in June 30, 2022 according to their quarterly earnings report. 100% of all of their miners used renewable energy sources.
In case of Ethereum that wasn't true afaik, a lot of it was mined in the US for example. Since Ethereum wasn't all ASICs like Bitcoin, there was more decentralization in that sense with individuals running miners from home, not always at the highest efficiency. Your first paragraph is correct regarding profitability for most miners though, based on the numbers I've seen.
One thing that I find interesting in the electricity debates is that if we took the gaming example and looked at the collective consumption of all people playing video games around the world, you'd arrive at even larger numbers of power usage and emissions. Yet this isn't ever discussed, even though an immutable public ledger like Bitcoin arguably has more utility for society than playing games. A lot of HN users probably play video games, CO2 emissions are of course mainly an issue caused by other people and activities oneself doesn't take part in. In Europe, there's also a trend of public anger against SUVs and there are groups slashing tires of cars, simply based on the shape and ignoring the actual energy efficiency. Happened to a friend of mine who couldn't understand why they targeted her car and left 30 year old gas guzzlers in the same street alone. I think a lot of it has to do with emotions more than rational considerations around sustainability.
>One thing that I find interesting in the electricity debates is that if we took the gaming example and looked at the collective consumption of all people playing video games around the world, you'd arrive at even larger numbers of power usage and emissions.
Okay, this is the second time I've seen an argument of the form: If you're not okay with the energy consumption of PoW cryptocurrencies, you can't be okay with X.
The first time I called it out, was someone pointing at the energy consumption of making, transporting, and storing ice cream. You are bringing up gaming.
You are advocating for making our children's/descendants lives worse, our lives worse, and trying to throw a valuable industrial subsidizer of the state of the art in many sub-fields of computer science...
...to defend the least efficient, wasteful,least empowering form of computation we've ever discovered. You're taking and making hostages of something that has objectively wrought joy and innovation to millions of lives.
If you find yourself on one side of an argument, and ice cream/video games on the other... I'd recommend having a long hard think about how you managed to get there.
I think that pattern of tire slashing is rational. Old cars will die, and the thing you want to hurt most is the incentives for making more oversized vehicles.
If it's a hybrid SUV then it's more complicated, but a gas SUV makes sense as a target even with an engine tuned for efficiency.
>even though an immutable public ledger like Bitcoin arguably has more utility for society than playing games
Video games' secondary impacts to simulation, film making, and modeling have and will provide more benefit per energy used than any proof of work system ever will.
I guess hydro/geo is better than them firing up a coal fired power station to do the job. But all the "mining" nonsense just sucks up clean power than could be used in the real world which hopefully pushes out more polluting sources.
All to supposedly create artificial scarcity for .jpg files.
At least that illness is over now somewhat. Hopefully all the miners go bankrupt.
I find it incredible how many arguments rely on a uniform distribution assumption here. There are markets where crypto miners are double digit percentage of utilization. They have very favorable conditions for mining, like the Pacific North West. The “one Finland” isn’t smeared over all power consumption, it’s highly congregated in a relatively small number of locations. The argument that a sudden devaluing of the use of electricity has no impact in the power infrastructure where it’s concentrated is absurd. I’m not saying it has or hasn’t happened - I’ve no idea. But it will be news if it does happen because operators will see double digit drops in demand locally and it’ll be noteworthy. But I don’t think it’ll be like energy prices in the EU improve - the mining happens in places with huge gluts of power they can’t otherwise sell or distribute for more.
> Shouldn't there be some power stations reducing their output as a reaction to reduced demand?
No, because ETH mining is/was quite distributed globally, let's say across thousands and thousands of power grids. A single grid or power station shouldn't be able to notice the difference.
Think about it this way: all of a sudden, domestic fridges consume 1/100th of electricity, compared to before.
Fridges are 0.1% of average power consumption. Thousands of fridges in a given area are powered by the same power station. The power station barely notices the ~0.1% reduction in power consumption, compared to the day before. Shrugs.
Is it just me or does that sound like an insignificant amount? Finland has a tiny population, if ETH mining only used that much electricity sounds like it it was pretty great to begin with.
The people who were mining ETH didn't give a toss about the environment. They invested in PoW hardware and they're not going to stop using it because ETH is now PoS, they'll just mine something else.
I just hope the PoW markets collapse now ETH is moving on.
That is rude. I care about the environment, still I am mining.
How is it good for the environment? I only mine when my house and battery does not need electricity and our solar is producing over 1kw. Everything I earn (around 100-300$ a month between February to Oktober) I invest in the next environment project. My miners need about 500w. This is a fraction of the amount I put back into the grid.
If I would not do this, our new heating system wouldn't be financed yet.
You are certainly right.
However I am under the assumption that you only mine where electricity is cheap. If you are not stealing it, there is only nuclear, wind, water and sun produced energy left => Miners are kind of forced to use environment friendly energy.
It's better for the environment if we build expensive cables to send that power to areas still emitting CO2, instead of selling it cheaply to miners. At least up to some pretty large distance.
There's a case to be made for using the spikes of solar power to run miners, on a grid dominated by renewables, but that requires the economics to work out just right with very cheap silicon that can sit idle a big majority of the time.
Yes, germany is already doing that with electric cars. I have a Wallbox in our garage, with seperate electric because it is sadly 300 meters away from our house. So I can't use our solar. However this connection is terminated via GSM when many people are using the grid. This is usually around morning and evening. If the grid isn't exhausted they will turn the electricity back on. I really like this approach. It works well.
It would be nice, if this would be mandatory for big official mining operations. Pretty sure they would just move somewhere else but still.
Unless your “new heating system” is a euphemism for a gpu array, you’re being pretty dishonest here.
Mining takes energy that is likely created by fossil fuel, that would otherwise be used to some necessary purposes, and burns it.
Unless you are generating green energy yourself, you’re likely hurting the environment.
I’m not saying you need to stop, and I’m not saying mining rigs are the end of the world (lord knows at least they aren’t frivolous airline flights), I’m just saying the previous poster isn’t being rude… it’s a valid point.
I was under the impression that when they said "This is a fraction of the amount I put back into the grid", it implied that they are generating their own electricity to use for this, most likely from solar panels.
This is an assumption though, they could be running a large diesel generator for all we know.
I think anyone involved in a PoW system (holding, mining, spending) is legitimising wasting energy. Even if you're using a sustainable source, others aren't, and the power you're using could have been used elsewhere.
Your personal impact might have been small, but it still takes serious compartmentalization or blissful ignorance to be involved in crypto and profess care for the environment.
My understanding is that Ethereum PoW used traditional GPUs whereas for example Bitcoin uses ASICs - "PoW hardware" is not as interchangeable as you're implying.
RandomX is pretty GPU-hostile. If you have a lot of VRAM, you could theoretically make it work okay, but I don't know of a GPU miner that has any semblance of performance (or perf/watt) that is close to a CPU.
Gotcha, CPUs have been most of my experience with it.
I dabbled with GPUs but it seemed like I'd have to do a lot of clock/voltage tuning to make it worthwhile. This was way before energy prices jumping, too
There are lots of other coins that still use GPUs to mine, though. I imagine most people who are running profitable operations will switch coins. Hopefully the popular coins will switch to PoS and the mining operations cease their profitability and shut down.
There are a 1000 other coins using GPUs for mining. E.g. "Ethereum Classic". Miners will switch to these. There are ETH ASICs btw, they just aren't as dominant as BTC AntMiner ASICs.
It is only worth it though if the shitcoin is worth more than the cost of electricity used to generate it. At the moment and for many miners, that just won’t be the case.
Most shit pins probably have few miners, and are pretty susceptible to market manipulation. I large influx of miners across the market could dramatically change the price.
Also, many miners are already using software that automatically changes their hardware to target whatever coin has the most profitability. It’s expected that this will continue just without ETH
They've actually forked Ethereum to keep the original mined version, ETHPoW ($ETHW). They'll keep mining on the original PoW chain as long as it remains profitable.
I'd expect the value of ETHW to crash fairly rapidly, though, because there are not many buyers interested in buying into a deprecated chain without official support or ecosystem buy-in, and lots of sellers who need to sell their mined ETHW to fund mining operations. Then we'll see miners shut off and leave the network, as the mining rewards can no longer support the electricity costs of mining. At some point it might get 51%'d, but at that point nobody will care.
With the price of ETHW currently at $22.80 and the price of ETH at $1500, I can’t imagine mining ETHW would even cover the electric bill. It’s also not clear to me what advantages ETHW would over ETC which is about $37 ea.
Previously ETC was often used as a lower cost dev-testing server for ETH applications that might not be ready for the main-net.
With ETH off there’s going to be a significant loss of profit to be had and people stopping because the expected value of mining has gone negative. Store stocks of graphics cards are booming. There absolutely will be a reduction in PoW power usage globally.
Maybe. What are they gonna move to though? If everyone moves to some other coin (not Bitcoin, because that's different hardware), it'll quickly become unprofitable to mine. They'll just sell their hardware, most likely. Hopefully.
Well, there are options. I do not want to point to obvious candidates, because I am biased and it could easily be misconstrued, but RVN just just saw a decent influx of those ETH miners based on recent spike.
Life hates vacuum. Short of outright ban, nothing will change in that space.
I will admit that it is hard for me to make a good prediction here. I ridiculous amount of it boils down to psychology and perception and not any kind of fundamentals. The following statement can be true in some instances, but I am not sure if it is true across the board.
I wonder what will happen now that the ponzi structure is now gained new velocity as energy constraints have shut down proof of work mining. PoW creates centralized collusion between those who can afford the best miners and this helped the velocity of the chain itself since it is only as good as the last mined block.
Now that layer is gone, its this proof-of-stake which is a bit funny since, Ponzi schemes are also proof-of-stake, where the previous investors stake's performance signals the next until the order books flip to a highly skewed with a very long til, it results in the last group who were late to the party, get caught with the bags.
I wouldn't be surprised if there are many whales dumping as they would know (and I hope so) what the new paradigm shift is in this digital ponzi gold rush.
Also rather anxious for these fellas who promoted securities written on ethereum. The SEC flat out came out and said almost all cryptocurrencies passes the howey test recently. This PoS seems perfectly timed for the occassion.
You're confused, in a ponzi earlier investors are paid from the investments of future investors. That's not how PoS works. In Ethereum, everyone is diluted to pay stakers and the time of their investment does not matter.
> in a ponzi earlier investors are paid from the investments of future investors.
Also, a Ponzi scheme requires fraud, where the earlier investors are being lied-to about where the money comes from in order to paint a false financial picture of the company.
Not directly related to your point, but I wanted to put that out there since it's a pet-peeve of mine that "Ponzi" gets frequently misused as a label for anything the speaker thinks is unsustainable.
A pre-mine might make it a security, but it's basically the opposite of a ponzi. Not everything is a ponzi. I think you're just confusing different financial constructs with one another
You're confused. In The Ethereum Ponzi, early token holders 'stake' their tokens and are paid by future transactors.
But here's the funny thing that no-one gets: all assets are a ponzi scheme (stocks are only worth something now because future rubes will buy them for more later), what makes bad ponzi schemes is when the underlying asset that everyone is speculating on doesn't do anything useful.
> stocks are only worth something now because future rubes will buy them for more later
Stocks are valuable because they are a claim on the assets and future profits of a company, as well as a claim on the ownership and control of the company.
Some people buy stocks just in the hope that a Greater Fool will buy them for more money later, but that's not the same thing as calling stocks in general a "ponzi scheme".
But no, that's not the same. If the owners of a stock received a fee when somebody used the company's product, that wouldn't be a "ponzi". It lacks the key element that earlier investors are paid via the investments of future investors. That's just not what happens on Ethereum.
I am, because it's true. For example I own a lot of Ethereum and didn't pay any transaction fees to obtain it. Most ETH transactions work this way because they happen on centralized exchanges.
>Most ETH transactions work this way because they happen on centralized exchanges.
Well then what does Ethereum do actually? And why exactly can't those centralized transactions be denominated in "Coinbase points" without all the crazy "Proof-of" code?
Because if Coinbase did that, nobody would use them, but people do use Ethereum.
Btw, Binance has done this with BNB and their USD stable coin, and they are top ranked coins by market cap, so in fact sometimes it is the case that having a highly centralized and liquid coin backed by a major player is good enough.
>Because if Coinbase did that, nobody would use them, but people do use Ethereum.
And that doesn't feel anything like a ponzi scheme to you? Because, again, as you state, people are not using Ethereum (that would require paying fees to old investors) they are buying it (in hopes that they aren't too late to become an old investor themselves).
Or are you literally saying that the value of ETH is that "Aesthetically, it's nicer to see 'ETH' at the end of an account balance than it is to see 'USD'"?
People are using Ethereum, they are paying transaction fees to use it. Those fees mostly do not go to stakers, they are mostly burned. Even if that weren't the case, it's not even close to a ponzi because the stakers aren't paid out by future stakers, they are paid out by diluting everyone and via fees for usage.
Also to address your second point, I'm not saying that, but that would not make it a ponzi at all. Art has this property, art isn't a ponzi.
> People are using Ethereum, they are paying transaction fees to use it. Those fees mostly do not go to stakers
Why exactly are people staking then? How are they being rewarded for slashing risk? Who do you think gets the gas fees? You know ETH2 still has them, right?
> the stakers aren't paid out by future stakers, they are paid out by diluting everyone and via fees for usage.
Again, you’re absolutely misinformed here, but aren’t crypto maximalists supposed to be all about how bad inflation in fiat is? Or is that old news?
> Also to address your second point, I'm not saying that, but that would not make it a ponzi at all. Art has this property, art isn't a ponzi.
You’re the one who said “most ethereal is bought on centralized exchanges”! You can’t have it both ways.
The people paying a fee are not investors. This is like saying the grocery store is a ponzi because customers pay the shop owner, who was an early investor.
The people paying a fee do not expect to make a profit off of holding ethereum. (Some of them do, but that's a coincidence in the same way that a shop owner might shop at their own store).
> The Merge is one of the largest technological events in the industry to date.
I feel kinda ashamed. I work in the IT industry and I claim to have knowledge about ("good") software engineering practices, distributed systems, compilers, algorithms, etc. Nevertheless, I didn't understand a word of what the article is saying. Could you recommend serious references (preferably books and not random blogs) I could read to catch up with what's going on with crypto these days? I'm not planning to "buy" crypto; I would like to understand the technicalities.
- The block chain is a distributed ledger database, where all peers hold a full copy to avoid manipulation (faking an entry is only possible by controlling >50% of machines in this peer-to-peer network).
- Spending money is implemented by adding a transactional record to the blockchain ledger at the end saying X amount moved from account A to B. A block is like a page in a paper ledger and they are appended with cryptographic hashes to avoid improper interference.
- Ethereum supports smart contracts, which are little scripts in a language called Solidity. So you can implement legally binding (and unstoppable) contracts along the lines of "if (condition) then (pay some money to someone)". Executing smart contracts cost a little bit of money. All Ethereum nodes collectively implement a distributed VM, and that money (called "gas") is the incentive to keep the network running. Smart contracts are highly interesting, and they have applications far beyond electronic currencies. For example, we played with implementing electronic rights management (https://link.springer.com/chapter/10.1007/978-3-030-36691-9_... - which turned out to be less than ideal due to a stack size limit in the current Ethereum VM, but hey).
- Whenever a new block (page in the ledger) needs to be created because the previous one is full, a randomized alg. determines who is permitted to do that ("mining"). The old process (proof of work) was environmentally a disaster (it still is for the Bitcoin ecosystem), which is why the Ethereum people implemented a smarter method (proof of stake - https://en.wikipedia.org/wiki/Proof_of_stake).
Excellent and very clear summary, as far as I can tell. My only niggle is that smart contracts are, in practice, neither legally binding nor unstoppable... the story of the DAO Hack/Hard Fork [0] proved that consensus can overrule "the invisible hand of the blockchain" during a particularly egregious incident.
The only reason contracts are binding is because they are enforced by courts. Legally enforceable contracts and the courts that enforce them was one of the killer features of western societies an a non-trivial reason for their economic success.
I have no idea how smart contract could be globally enforced, or can they be, but if they can, the way I see it, this should create new prosperity for those who have been unable to enjoy access to fair courts and binding contracts.
"this should create new prosperity for those who have been unable to enjoy access to fair courts and binding contracts. "
This is the heady mythology of those who said 'Crypto would create XYZ for those who cannot'.
Except it's been 10 years of Crypto popularity and they have no material function, are a huge drain of energy and human intellectual capital.
Contracts are subject to legal oversight of a Judicial system, the credibility of which is require of a system to function.
Digitization of a 'contract' really doesn't make sense so much at all in terms of it's 'legality'. The algorithm whether it's in regular code or Ehterium makes no difference.
If someone really wanted to 'help those without legal recourse' they'd just use a foreign legal system for transaction record. So, contracts between 2 people in Haiti could be designated under 'Canadian Law'.
But even that would be besides the point: It's not the 'legal system' that makes things work, it's the integrity of the system overall, maintained by a 'legal system'. Canada isn't rich because it has a 'legal system' - that's just one component. It's rich because people and groups act with integrity. The 'law' is involved very rarely.
There's no technical utopia that will replace 'integrity'. Or frankly 'values'.
Ehterium is a neat experiment, that's all it is for now.
In addition to not being fully effective and implicitly labeling[0] participants as untrustworthy, a system that forces everyone to play by the rules without removing the factors that make people abuse the system in the first place only makes the abuse more attractive, consequential and inevitable. The most attractive position in such a reality would of course be the position of those who set the rules (I suspect the field in question is bustling in part because many see themselves within that elite, if only they could make this future come true)—and, of course, the rule-setters are never immune to the motivation for abuse either (only they may get away without it being labeled as such).
On the other hand, if those factors are addressed, an intricate system of verifications and hash checks is just unnecessary friction and a source of added complexity to maintain.
Ethereum contracts 'enforce' integrity the same way (but better) as escrowed down payments on housing purchases 'enforce' integrity - they allow a consequence if one or both parties do not fulfill the terms. They can also automate the financial transaction. Why anyone would read more into it than that is beyond me. These are not meant to replace laws or writ.
> But even that would be besides the point: It's not the 'legal system' that makes things work, it's the integrity of the system overall, maintained by a 'legal system'. Canada isn't rich because it has a 'legal system' - that's just one component. It's rich because people and groups act with integrity. The 'law' is involved very rarely.
You have flipped the direction of the causal arrow here.
The existence of functioning and accessible court systems in the western world is one of the reasons that western societies have higher levels of trust—not the other way around. It's much easier to trust someone when you know that if they cheat you, you have recourse to pursue justice in the courts.
In my experience doing business in both developed countries and less-developed countries, there isn't much difference with regards to individual human beings' "integrity". In fact, in countries without functioning judicial systems, business owners might demonstrate more "integrity" toward their customers, vendors and partners than we see in the US—but this has more to do with incentives than it has to do with people's character. In countries without functioning and accessible judicial systems, people typically do business with people that they have done business with before, because doing business with strangers is so risky. Reputation matters a bit more.
> There's no technical utopia that will replace 'integrity'. Or frankly 'values'.
Yes, as a general matter, many of the problems that exist in the less-developed world originate from deficiencies of trust [0]. But again, this is largely attributable to there not being reliable ways for people in those societies to mediate disputes.
This isn't about utopia. If smart contracts can take the place of functioning court systems in commercial transactions—or at least can reduce the complexity of legal disputes and narrow the discretion of judges to influence dispute outcomes—a real problem is solved and an impediment standing in the way of economic development is removed.
Smart contracts allow for certain types of commercial transactions to be conducted without the existence of a reliable judicial system, which transactions would otherwise be too risky to undertake. This incremental improvement will have a material impact on people's lives.
My grandfather used to do business out of his wallet with cash and handshakes. He would do deals with farmers to make things in his workshop, and then get paid in pigs/parts of cows 6 months later. Farmers in particular are extremely reliable and credible people.
People in agrarian areas didn't move around much and personal integrity was definitely a kind of currency.
When you're dealing with industrial level trade and commerce, esp. with far flung traders and investors - yes, you're right.
And you're right to point out the relationship on some level.
But ultimately, Crypto is not going to add integrity to the system, and, integrity is essential.
"Smart contracts allow for certain types of commercial transactions to be conducted without the existence of a reliable judicial system, which transactions would otherwise be too risky to undertake. This incremental improvement will have a material impact on people's lives."
No - they do not.
The naming of these things are a total misrepresentation.
Contracts can only exist within the context of a Judical system, otherwise, they're not really contracts.
No businesses on planet earth are going to allow their businesses to be managed outside the auspices of some kind of judicial oversight, and especially not in things that cannot be undone.
The world is full of accidents, misinterpretations.
Every situation we see a 'smart contract' there is probably room for a market maker, and/or just some kind of simple software that 'implements' a regular contact.
> My grandfather used to do business out of his wallet with cash and handshakes. He would do deals with farmers to make things in his workshop, and then get paid in pigs/parts of cows 6 months later. Farmers in particular are extremely reliable and credible people.
You don't think that this kind of trust exists outside of the developed world? Why do you think that your grandfather's experience is unique, compared to small farming communities anywhere else in the world where people have already known each other and done business with each other for many years?
> When you're dealing with industrial level trade and commerce, esp. with far flung traders and investors - yes, you're right. And you're right to point out the relationship on some level. But ultimately, Crypto is not going to add integrity to the system, and, integrity is essential.
The argument I am making is that at the industrial level, the existence of institutions capable of mediating disputes and enforcing agreements paradoxically increase levels of trust within society as a whole by reducing the need for counter-parties to depend on each other's personal integrity.
Of course personal integrity is important in business! But it is not a difference in integrity between societies that explains differences in development. Rather, differences in development can be largely explained by different levels of trust, which are a function of the tools and mechanisms available to mediate disputes. You are going to trust people more if you believe that cheaters will be penalized somehow for their cheating.
In traditional societies, cheating is punished by repetitional mechanisms within the community. The courts have served this function in modern industrial societies, and have thereby facilitated industrialization at a massive scale. Smart contracts can serve a similar purpose in places where courts are unavailable or cannot be relied upon today.
> "Smart contracts allow for certain types of commercial transactions to be conducted without the existence of a reliable judicial system, which transactions would otherwise be too risky to undertake. This incremental improvement will have a material impact on people's lives."
> No - they do not.
> No businesses on planet earth are going to allow their businesses to be managed outside the auspices of some kind of judicial oversight, and especially not in things that cannot be undone.
In some circumstances, it is better to have the option of taking a dispute to court. But even today in the US, most businesses try to avoid the courts and instead use arbitration to resolve disputes. In most of the third world, neither arbitration nor the government court system are available to most businesses.
Around the world, I think there are a lot of businesses that would prefer to completely eliminate the kinds of ambiguities in paper contracts that lead to disputes, by opting instead to use a smart contract to specify the mechanism of a transaction. If you don't see it being done already, that is because there is still a lot of infrastructure that needs to be built out.
> The world is full of accidents, misinterpretations.
> Every situation we see a 'smart contract' there is probably room for a market maker, and/or just some kind of simple software that 'implements' a regular contact.
Smart contracts are interpreted by machines, so there is no misinterpretation—if there is a problem, it is a problem with the implementation.
Sure, you could delegate the responsibility of encoding the terms of a paper contract to some third party. But then all parties need to agree on and trust that third party, and the third party itself needs to agree and accept some risk. A smart contract is a better solution because there is no third party involved. Everyone gets to read the smart contract before the transaction is performed, and if all agree, the terms are set.
> You don't think that this kind of trust exists outside of the developed world? Why do you think that your grandfather's experience is unique, compared to small farming communities anywhere else in the world where people have already known each other and done business with each other for many years?
You just wrote that trust is thanks to judicial system and that's what GP countered based on personal experience.
> You are going to trust people more if you believe that cheaters will be penalized somehow for their cheating.
Indeed. That's what we have with judicial system. And the opposite is true too, if cheating is not penalized if it was due to a maliciously crafted smart contract (because smart contact would be king) then I sure am going to trust everyone and everything much less.
> You just wrote that trust is thanks to judicial system and that's what GP countered based on personal experience.
I think both jollybean and I are drawing a distinction between traditional societies where high trust primarily exists within smaller communities, and industrial societies where trust operates at scale. I don't disagree with jollybean regarding how trust operates within smaller traditional communities.
My point was that at the level of industrial societies with millions of people doing business with each other, high trust is maintained largely because of the existence and functioning of the judicial system, not due to some unique personality characteristic of the individuals living in that society. Smart contracts can serve a similar functional purpose in societies where ordinary people do not have access to a functioning judicial system.
> And the opposite is true too, if cheating is not penalized if it was due to a maliciously crafted smart contract (because smart contact would be king) then I sure am going to trust everyone and everything much less.
Certainly trust would work differently in an economic system that is mediated primarily by smart contracts. Do not forget, though, that you currently have the advantage of living in a society which has a functioning and accessible judicial system. Your level of trust is already very high. People who live in societies that don't have the same advantages are starting at a lower trust threshold.
Using imperfect smart contracts to mediate commercial transactions might be a step down for you. For other people, waiting for a perfect system does nothing but stop them from improving things right now.
You are downplaying the real impact of "software that run on the EVM."
Absent the existence of a functioning and accessible legal system to mediate the resolution of disputes, smart contracts can serve the societal purpose otherwise served by traditional paper contracts.
Yes, smart contracts are not paper contracts disputes over which are judiciable by a court, but in many situations smart contracts can replace paper contracts, reducing or eliminating the need for courts to intervene in the first place.
I'm an Eth fanboy and I find this take hyperbolic. It's programmable money and often a security nightmare. In order for smart contracts to replace paper contracts in the way you describe, every participant needs to be a software engineer that can audit the code.
Not every smart contract needs to be unique or original. A well-audited library of reusable smart contracts that is published and/or endorsed by a coalition of reputable entities can provide most of the functionality that most businesses and people would typically need. Think of the standard form agreements that are offered by companies like LegalZoom, etc.
Yes, Ethereum's security model is a problem. There's no reason to believe, however, that it won't be improved upon.
Smart contracts are still contracts, just a different kind than the typical legal contracts. "Contract" has been used to describe API interfaces. Words can have more than one meaning. "Contract" is also a verb, with multiple meanings.
I interpret "contract" like a contract between two software components. e.g. This is the schema of what our endpoint returns. You can work off of that.
For ETH contracts to be be binding to things outside of the digital world there will be need for courts. But for small transactions that can be expressed in software, ETH is just a way to enforce the algorithm both parties agree on using to be enforced by the network. So there is at least a small value there (or it was, depending on you trusting PoS as oposed to PoW).
Yep, though courts will eventually be emulated by a consensus network as well - judged by random oracles (paid jury duty essentially), and any contract can be automatically verified to comply with many others. In the end it won't be anything more special than "we digitized Law", but hey - that's gonna open a lot of doors economically for what is otherwise a very pricey process mostly reserved for richer members of society. When you can automatically iterate through thousands of contracts to check they all comply with each other "legally" - that's value. We can also do digital voting with guarantees of one-person-one-vote now, so it's not much of a leap to see where that might go.
Sounds like you haven't wrapped your head around the basics of smart contracts.
Yes, a blockchain gives you an (ideally) immutable foundation. No, that doesn't mean that every transaction that invokes a smart contract has to be immutable. If a smart contract for a particular use case needs to have the ability to "backtrack", so it can, there's nothing stopping it.
The problem with exploitable systems is that the 0.00001% is not random. It's not like a random 1 in a million transactions is dropped.
I think the bigger issue is that the system is somewhat arbitrarily controlled by the large players. That could work out well in some cases (funds hacked are returned) but it could also be less optimal (e.g. you're thrown on some list and all of a sudden your transactions are not valid). We've already seen hackers and obviously malicious actors dinged, which is good. But this opens up an avenue for things like forcing participants to go through regular banking protocols that starts to affect more and more people (e.g. political dissidents). By then you just recreated the modern financial system with all its flaws and gatekeepers, except its less efficient.
I very much enjoyed Andrej Karpathy‘s „from scratch“ bitcoin implementation [1]. I‘m sure there are other projects on GitHub explaining blockchain concepts directly in code.
> The old process (proof of work) was environmentally a disaster (it still is for the Bitcoin ecosystem)
There's no problem with spending the energy if it actually buys us something. It's a disaster because it failed to actually decentralize the network.
Instead of everyone with a computer being able to participate, we have very few people buying up all the hardware for their massive centralized mining operations. If that's how it's going to be, then we might as well move on to proof of stake.
Monero seems to have a better designed proof of work system. It's ASIC and GPU resistant, normal people manage to use their computers to mine XMR. One CPU one vote, that was the whole point since the beginning.
> you can implement legally binding (and unstoppable) contracts
I would just call that "automated decision" The legally binding contract is the one where the parties agree on using the implementation as their means to fulfill the contract.
There is nothing legal related in that and no law in any legislation I am aware of giving it any special treatment.
Mastering Ethereum is great, and the high-level concepts all still apply, but I think it's important to mention that quite a bit of it is outdated. Basically, imagine you're reading a book on Kubernetes from a few years ago. Still applicable, but some of the details and API interfaces will have changed.
Evil Supervillain: "Darn you jollybean! You have foiled my plan to make slavery legal via an unstoppable smart contract by stating the obvious. If only you didn't exist I would be the ruler of earth!"
what are some examples of these conditions? how is it not like... i put money in escrow, if the buyer agrees i did my part, they click agree and that's the "condition"?
I love this work on a general ledger for electronic rights management!
A bit off-topic, but do you think this kind of rights management ledger is better stored and accessed in traditional data stores and managed by either a government entity or a private-public partnership of some sorts?
It seems like self-signed authentication would still be viable but with the added bonus of a mechanism for dealing with lost private keys while at the same time allowing for individual entities to quickly and effortlessly exchange ownership.
how are peers jump started and why is that mechanism trusted so well? like say I want to connect to the blockchain, I need to make an API request to some IP. how is that resolved and why is that regarded as "decentralized"? why is the mechanism for serving me peers trusted and why is every peer in the network trusted?
If you have a solid CS/software engineering background, you probably already know 90% of it.
I guess crypto-specific consensus might be new, but you can get a good grasp reading few articles. And that part is actually opinionated, so you need to decide on a camp before you read materials. Bitcoin people would likely disagree with anything written about PoS.
Another fun thing is Zero-Knowledge Proofs (ZKP). That's actually quite new, complex and might be interesting.
The rest can be rather boring. Users submit cryptographically-signed commands (transactions) which processed in a deterministic fashion. I'm not sure it's worth reading a whole book about it.
consensus is strongly related to distributed computing fault tolerance and database or file systems' atomicity and integrity in case of crash. Basically problems that involve multiple readers and multiple writers.
Distributed computing research is focused mostly on increasing throughout, reducing latency and enabling parallelism and concurrency.
OTOH cryptocurrency consensus is mostly about answering a question: "How do we prevent bad guys from stealing money or doing other nasty things?"
While a concept of Byzantine Fault Tolerance was known before Bitcoin, it was never really applied in practice AFAIK - people thought it's overkill. Also I'd say doing it within a private network is one thing, and doing it with random weirdos on internet is completely different.
Distributed computing researchers like Lamport were considering models where e.g. up to 30% of nodes are compromised, that won't work on internet where an attacker can potentially simulate billions of fake nodes. Nakamoto consensus is really elegant as it combines Sybil protection, incentivization and consensus into one thing.
I'm in the same boat. However, I'm holding strong in being ignorant, as I believe crypto is a fad with no inherent value. I'm an avid reader and learner, but only if the topic is interesting or makes sense. Cryptocoins meet neither of those criteria -to me-.
That can be difficult if you read tech news like us, but it will give me a small twinge of joy if I live longer than crypto. Guess we'll see.
I think that crypto-currencies as a fairly direct replacement for traditional currencies is probably not the future. I don't think it's a 'fad', but I think it'll settle into a niche position in the long term.
The underlying problem that blockchains solve is 'distributed consensus'. This is a solution with a much broader range of applications. For example Maersk has a system for signing handover of shipping containers in ports (https://www.maersk.com/apa-tradelens). This is an international problem with a lot of it happening in countries with a lot of corruption (i.e. you can't rely on legal mechanism). Not being able to forge who is responsible for which container eliminates a lot of problems.
Ethereum does something even more interesting, which is that the network can agree on the result of computations (these are called dapps for "distributed apps"). These can be used to implement simple "smart contracts" for financial purposes but they have a much broader applications. To some extent I'm slightly underwhelmed by the things people are doing with them, but the potential is enormous.
I've been looking for years, and aside from cryptocurrencies, I can't find a single practical use for blockchains that couldn't be done better with more boring technologies.
The Maersk thing is a fine example. It's one company. They already have the trust relationships and legal power that make distributed-consensus approaches unnecessary. That "blockchain" is involved makes no practical difference. It was a shiny bauble that got a lot of consulting hours for IBM, and surely helped getting the project approved because Maersk execs were seeing "blockchain" in the news a lot when it was kicked off.
Yeah but now instead of organizing around a local division of the Maersk company and their software to validate operations - relying on trust that they'll handle things correctly on their end - the locals could just use a blockchain app with zero organization and zero people to trust beyond the protocol itself. Granted that's not needed, as Maersk is apparently doing a fine job now, but if that ever changes - it's there as a backbone, and it's unlikely to be replaced except by a better protocol. This just lowered the need for organization and cut out a middleman (Maersk) saving money on the whole process (at least once the protocol market has churned for a bit and settled into a nice boring reliable one around for a few years / decades, charging only the bare computation costs - which is hopefully/predictably the future of all crypto tech... boring and cheap as shit).
I have little trust in cryptocurrency beyond "people like hype markets", but a global consensus layer is an obvious step with many applications for whittling down every process to its barebones - with some guarantees at a protocol level that the savings aren't going to anyone in particular. This doesn't need to do anything new, it doesn't need to do anything flashy. It just needs to slowly devour every existing business and reduce them to essentially open source software, uncontrolled by any middlemen or power brokers, accessible by anyone for pennies. And it probably will!
There were many pilot projects that soaked up vast sums of money. But in reply to a comment saying I haven't been able to find any practical results, what do I get? No practical results, just the same sci-fi guff.
Again though, you shouldn't be expecting practical results already. The short term hype soaking up vast sums of money is just an overreaction to a technology that will still take many years to develop proficient programmer/user experiences and public trust before it sees real use. Being skeptical of every current project claiming they'll be the ones left standing a decade from now is only smart - it's a giant hype market built on dreams. But you shouldn't be so doubtful that a relatively-uncontrollable internet consensus layer won't be built upon with some interesting results down the line. And that has clearly been created, and proven with decent security already.
I absolutely should be expecting practical results, because most of the people trying to apply this technology are promising practical results. If blockchain proponents were just saying, "Hey, we're fucking around with some tech to see what happens," I wouldn't have any complaints. But that's not where we are. Instead, it's billions of dollars of investment.
Is it possible that there will be "a relatively-uncontrollable internet consensus layer won't be built upon with some interesting results down the line"? Sure. Lots of things are possible. But it's also very possible that after another decade of Bitcoin, et al, we'll still have just a bunch of stuff that's not adding at all to the world beyond a playground for scammers and some tooling for light financial crime.
Sometimes a small and ugly technology turns out to be the Internet. But most of the time, it's just a bit of garbage that never went anywhere.
I'm on the opposite side of yours. I believe that blockchain has a bright future as a currency, but not in logistic.
Blockchain money is great because its inflation is very predictable, everyone can use it without permission (versus the slow banking system).
I don't believe in blockchain in logistic because database corruption has never been an issue, the problem has always been that people did not insert any data or corrupted data in the database. Blockchain only insure that the database won't be corrupted (not that the data it uses are correct), so it doesn't solve the main issue of logistic.
The slow banking system? Don't crypto transactions (on bitcoin or ethereum) take 5-10 minutes to complete, whereas I can tap my credit card to make a transaction more or less instantly?
A transaction on the Bitcoin base layer takes 10 minutes to be confirmed once. There is second layer tech available to allow faster transactions (Lightning).
A transaction on the Ethereum base layer takes 12 seconds to be confirmed once. There is a vast variety of second layer tech available to allow faster transactions.
There are very different amounts of risk associated with accepting a transaction on the base layer of Bitcoin vs Ethereum after n blocks. For example, Coinbase accepts Bitcoin deposits after 3 confirmations (30 minutes) and Ethereum deposits after 35 confirmations (7 minutes).
Compare to traditional banking: Coinbase accepts ACH deposits instantly (up to a limit) and wires of any size can take 24 hours.
Tx finality is immediate in banks, payment cards and blockchains in the same manner. The difference is in network finality. Network finality in Eth2 is around 15 minutes.
Transactions are not finalized for 30-60 days at banks and even longer for payment cards. This is why you can charge-back. 'Time to usable funds' and finality are not the same thing. And no, Eth2 reaches finality in 12 seconds.
For example, let’s say you sell a car, the buyer sends you 150 ETH, you wait for 3 confirms and he drives away with the car. Then at some point the tx is removed from the blockchain. Now the buyer has your car and the 150 ETH as well. Why did it happen? Because you didn’t wait for tx network finality before giving away the car to the buyer. The amount of time that you should wait is around 15 minutes. Therefore Ethereum is a bad choice to buy coffee with :)
The Ethereum network has never deviated by more than 2 confirmations (24 seconds) and with PoS this is even less likely to happen.
Finally, the likelihood of that happening AND a car buyer colluding with block producers to scam you is effectively zero.
You're FAR more likely to be struck by lightning in the 15 seconds it takes the driver to leave than you are to have their transaction reversed on the Eth2 blockchain.
I am still waiting for a compelling argument why distributed consensus about me buying some bread this morning is important. What does it gain that mere non-repudiation doesn't?
I think there are a few common misconceptions that make people not understand the real value crypto is bringing to the table.
Many in tech look at crypto, and blockchain specifically as if it is another technicalogical capability they can integrate into their enterprise architecture. From that perspective blockchain in general doesn't really make sense. As cool as the composability of tokens and smart contracts are, that's not a capability only blockchain can deliver (in fact that's not the blockchain at all... that's the standards that have been built on top of it).
Others in tech look at blockchain as a currency to replace traditional currencies issued by governments. A reasonable world view, as that's kind of how it's been sold for a very long time, but it's pretty clear to me at least, that's not really possible. The US Gov is always going to require taxes to be paid for in dollars. The US, EU, China... everyone, they're not going to give up monetary sovereignty.
So what does crypto provide then? In my opinion, the sole thing the blockchain provides, when sufficiently decentralized is digital sovereignty... but more importantly an unlimited amount of digital sovereignties. Opt-in self governing communities that can decide for themselves what's fair. An enforcable user bill of rights that's global in nature. This doesn't replace the real-world sovereign nations, it's like a new layer in the digital world for digital applications. I've personally come to realization that Crypto doesn't really work well in the physical world. But in the digital world, it's proving quite adept...
Technology is still evolving, ETH2 is a huge leap forward... and glad to see it. Personally, I'm still attached to the Avalanche community because I personally think the technology is still superior. But the technology is kind of not the important part. It kind of just needs a minimunm spec, and then it's not important. It's how you treat the users who are using the stuff built on top of the technology. Libertarians were the first to understand that (though i'd argue they fail to understand that need to have a foreign policy, and real world governments are legitimate trading partners that you need to negotiate with. Their insistence on idelogical purity will be their undoing) But crypto is big enough for all kind of communities to crop up, and you can choose to join or not.
That's ultimately the thing, any app you can build in Web 3, you can replicate in Web 2 with a single server. But in Web3, the users can own it, and they can decide for themselves how to govern themselves. That's the value. We live in feudal system, a world dominated by Web 2 companies. Web3 in my opinion is the way we can build a diverse economic ecosystem of free (as in speech, not beer) digital services.
One thing I Think a lot about... today, all people in crypto are dual citizens. They have citizenship in their geogrpahic world, and in the digital world. But there's a future where AI can be pure digital citizens (citizens who have needs, such as compute, and they will trade their AI skills for that compute). I view a lot of the debate around crypto as a debate about foreign policy, and that gets really interesting when it's AI on the other end.... maybe a free AI :D
Decentralised self governing communities probably can't function as imagined or advertised.
First problem is that the owner(s) of majority of voting tokens can unilaterally decide anything in the community. Because they work on "winner takes it all" principle. This means they are not self governing (because minority stakers are effectively excluded from any governing), and they are not decentralised.
Second problem is that there are no "people"/"humans" in the token infrastructure, there are only wallets. And there is no public mapping between wallets and humans (unless they expose themselves). This leads to the ability of "oligarchs" who own the majority of tokens (see problem #1) to obfuscate their existence. Creators of the community will false advertise that "oh no, we have no majority stakers, here people can truly decide anything by voting", but in reality there can be majority staker who owns majority of voting tokens, just spread out across the several wallets.
Basically these DAOs are recreating feudal fiefdoms in the digital realm but obfuscated by lies or omissions of information.
Your core assumption isn't true - you don't need to have 1 token 1 vote, communities can create literally any voting procedure they like. Including NFT based voting, multiple governance houses like optimism, quadratic voting like Gitcoin.
That changes nothing until wallets != humans. You can have own multiple NFTs by the same person. So the organisation is either oligarchy or not private.
That exists now btw, with verification based on physical passports. It will soon plug into other forms of verification (social network, fingerprints, stake-based bounties, etc) to give higher certainty of one person one vote. But yeah I would bet any distant-future consensus mechanism has proof-of-humanity as its basis, using a democratic decision making layer to verify transactions. https://coinpassport.net/
This is fairly new tech academically btw, and it's only possible anonymously since the ZSnark cryptography tricks.
Passports - issued and verified by centralised entity
Fingerprints, I infer that's basically digital signatures in use today - also controlled by centralised entity
Social networks - to base your auth on the bot moderated and bot infested 3rd party platform with zero support functions is a laughable idea
Stake based bounties - what does this even mean? Inferring from stake based, you meant that the auth will be based on the stake, meaning on the wallet with tokens? Then that's precisely the problem I've described above.
There is no clever technical way to solve social problem. Human identification is a social problem. You can't anonymously identify a person, unless dragnetting through his life with spyware scripts and fingerprinting (great idea for privacy, I'm already dreaming about it).
Passports - the cost of creating fake passports or removing valid ones to most lawful countries is prohibitive enough and visible enough to watchdog groups that we're not under any serious threat from governments going rogue here anytime soon. It's a decent start. At least a few thousand $ cost to forge security wise - increased the better your security market is watching for it.
Social networks - I mean furthering social verification by having networks of users (probably bootstrapped with their passports, and whatever other verification data - video, fingerprints, documents, etc) vouch for each other as real-world connections. You dont need Facebook etc for that - you build that into your identity system as a second layer which compounds the trust. A network discovering a fake user gets financially penalized for vouching (stake based bounties) so there's incentive to really do what you're asked - verify in person someone you've known for some time.
We don't need to anonymously identify a person. In fact, I'm expecting people will be willingly supplying some ungodly amount of data to prove they're real for the financial incentive alone (securing larger loans based on trust). But we can make the verification functions taking all this data go through smart contracts with zero knowledge proofs that can ensure said data doesn't leak to anyone the user doesn't want to share it with - and the protocol can establish a trust score.
And even if we failed to keep personal data off the internet, regardless of how public your profile is you'll always be able to use those zero knowledge proofs to setup an anonymous avatar with a proof hash that it belongs to (exactly) one existing profile from the set of verified profiles, allowing you to vote with the avatar while the system can still guarantee one-person-one-vote. So - anonymous voting.
That's what peeked my interest in crypto in the first place, and is also the reason I am no longer on that bandwagon.
Because you don't really own it in web3 either. Until normal people get comfortable with self hosting their own stuff there will always be gate keepers and places where governments can apply pressure.
You don't really own your crypto coins unless you have your own wallet on your own hardware (with proper backups as well). And for most normal people even just that is too much.
And we are rapidly approaching a point where we don't really even own our hardware any more.
And everything else, that is build on top of that needs to run on top of some machine somewhere and unless you own it, you can't really rely on it. It's all encrypted so they can't steel from you (unless bugs), but they can also shut it down. Sure there are plenty(and jet still not enough) of nodes on ipfs system now. But many someone's need to run them and it's always possible that people will loose interest or economies will change and number of nodes goes down enough that it becomes practically unusable.
Same problem is with much of the other web3 stack. With few companies controlling much of the developers/stack and infrastructure needed.
Sure it's all open source and distributed, but even nowadays in early stages, before the masses come in, we are talking about lot of infrastructure needed to run everything.
And right now there are VC's putting billions in investments in this space, so having lots of infrastructure for "free" seems like it works. But sooner or later this people will want their money back, with interest, and regular people will be even more screwed, because this is completely unregulated (which is why VC's love it so much ) as a design principle.
On the other hand if you are technical enough to be able to self host your own stuff, boring old federated systems, like smtp, jabber , matrix, ... are a lot easier, cheaper, with a lot less moving part - easier to administer etc.
I am all for federated content and people owning their own digital features in their own hands and I think crypto chains are a distraction/overcomplication at best and could possibly be a trap for ultimate corporate walled gardens.
So my focus is on boring old self hosted federated services.
"You don't really own your crypto coins unless you have your own wallet on your own hardware"
Well, that's the thing about freedom. It's a pretty big responsibility. You can't offload the responsibility and still be free. True in the real world, and true in crypto.
Frankly, I'm not interested in "critical mass" whatever that means. I want the benefits of free (as in speech not beer) digital products and services. I don't need a critical mass of the population to do that. Bitcoiners talk about critical mass adoption because they want to replace the existing system. I view crypto as in addition to it, not instead of it.
Well, if there isn't much adoption, there likely won't be many products and services for you to use. You may be fine with that, but it's not necessarily congruent with the enormous amount of hype this whole experiment has received in the last decade or so.
Perhaps my biggest issue then is I'm not all in on the purely digital world that you describe and admit doesn't really exist, yet. That is to say, my plumber doesn't care about any of this and just wants cash. In the future, that can and probably will change, of course.
But today, in our current world, very few industries and virtually no blue collar industries accept such currency.
So then the question becomes, what is the value of <insert coin here>. Some will talk about energy, or efficiency. Some will talk about scarcity. Some will talk tech merits. But nobody to date has been able to convince me that it has any real value. There are no armies or economies validating it.
I think in simple terms, perhaps I'm a luddite. If someone, say completely disconnected from modern conveniences, were selling an item, I could perhaps trade physical goods for it. Or perhaps shiny metals, and explain why they're valuable(assuming they didn't know). Or explain dollars, and the guarantee behind them. How would you sell them on cryptocoins having value? The tech doesn't matter a ton here to a person, so onto the value. Why are bitcoins worth more than say, beanie babies of yore? Both seem to be run purely on speculation, at this point.
Said another way, if someone gives me 10k in cash, I have faith it will still be worth 10k in a year(ignoring our awful inflation). If someone gave me 10k in bitcoins, I have zero faith it would be worth anything tomorrow.
The world doesn't need to be purely digital, and crypto doesn't need to be the entire worlds economy. In fact, my argument is that it's NOT. It's something seperate, and unique and new. It's not a replacement for the economy, it's an addition to it. Though i'm sure a plumber could find a useful digital service hosted in crypto... i'd argue crypto isn't for plumbers. Not their plumbing business at least.
Imagine a git + smart contract service (this doesn't really exist today, and it's my side project i'm trying to build) which is integrated with a hosting service like Akash (cosmos). You can build new digital services/games/worlds that are governed in a decentralized way. You could build a new Facebook for example. The difference here, are changes are voted on by the owners of the token. I'm not even sure the token would be worth a whole lot monetarily (depends how the owners). But as a user, how much is having control over the social media you use daily worth? To me, A lot.
Everything in crypto is open source, but unlike the open source world today, crypto provides a mechanism and culture to pay contributors. So a lot of crypto applications are designed to capture that value in a communial way to pay people (or bots) for their work. The value of the crypto is access to these services. It's no different from the value our digital economy today provides. Just governed differently. Instead of Zuck controlling the digital service, the users can control the digital service.
But why/how? Online services today already saw that nobody wants to pay. That explains the fast death of journalism, news sites, etc. That also explains why scummy ads currently act as the financier to most sites.
Given that people won't pay when it's easy, why would they suddenly start paying when the barrier of converting cash to crypto is added on top?
Perhaps I'm misunderstanding and you're instead referring to actual ownership of said services. How does that differ from written agreements or stocks today?
What you may be describing seems similar to how Brave sees the world. I respect that and love the product, but don't see it as a reality.
"How does that differ from written agreements or stocks today" I think of it more like a PTA organization than a stock and a corporation. The goal of a stock is to create a profit stream for the owners. The goal of a crypto service is to build a useful utility for the owners.
The obvious difference is it's permissionless and global - this may surprise a lot of US citizens on this site but it's actually really hard to buy and hold shares in US companies today even in many developed countries, let alone the developing world.
NFT projects have demonstrated new forms of monetization that don't need ads or all users to pay, we can now experiment with these now that we have a value layer for the internet.
I don't really agree with the original post and I don't buy into the "purely digital world" argument. I'm excited about crypto for different reasons. But a few thoughts:
> So then the question becomes, what is the value of <insert coin here>. Some will talk about energy, or efficiency. Some will talk about scarcity. Some will talk tech merits. But nobody to date has been able to convince me that it has any real value. There are no armies or economies validating it.
Why are stocks without dividends worth anything? Companies have earnings. Many protocols have earnings as well, and they are built on top of Ethereum, which provides the security layer. What do you mean by "real value"?
> Said another way, if someone gives me 10k in cash, I have faith it will still be worth 10k in a year(ignoring our awful inflation)
10k denominated in what? I think ignoring inflation is an example of why people care. You only trust your cash because you trust the US government, which may be reasonable, but people in other parts of the world don't trust their government with monetary policies, e.g. [0]. Imagine inflation gets worse, the EU needs bailout, or we have WW3, and the the US government says "Sorry, you're no longer allow to buy gold or move your assets abroad, you need to buy our bad government bonds" - stuff like this has happened before, in many countries. And you can't do anything about it other than watching your savings crumble. Crypto gives you optionality. A government-independent monetary ecosystem. Nobody can lock you out. I trust the "Ethereum government" more than most centralized governments due to the transparency, global footprint, and aligned incentives. I can hold my savings in a USD-backed stablecoin as long as I believe in the US government's monetary policy. If that changes, I can swap into something else in a matter of seconds, and I don't need permission from any government to do so.
My experience has been that the value people see in crypto is directly inversely proportional to how much they believe in their government and whether they have experienced governments being malicious due to misaligned incentives. Most middle-aged people in the US don't fall into this category - they have never experienced war or malicious governments because they were lucky being born at just the right time and place and enjoyed nothing but prosperity. Convincing them about crypto is hard.
>My experience has been that the value people see in crypto is directly inversely proportional to how much they believe in their government
That's an interesting thesis and 'feels' true, but I have a hard time reconciling HN's (seeming) indie ethos with it's cryptoskepticism if that's the overriding factor. Have you any theories to explain the seeming disconnect?
I don't think HN can be considered indie these days. It was 10+ years ago. Now it's as mainstream as it gets. You rarely see something here that's not an echo chamber or the same as mainstream tech media. Just a result a of tech/startups being a lot more mainstream now than they were 15 years ago when HN launched.
I think many of the more "indie communities" are now assembling in Discord, subreddits, etc.
I'm also somewhat surprised at the extreme crypto hate on HN, but I'd attribute that to demographics. I do think that quite a large number of HN users are middle-aged Americans significantly above middle class. They probably started using it when they were early 20s interested in tech/startups and YC, which means they're now ~35-40 and have probably made a decent amount of money in tech. And that demographic doesn't really benefit from crypto for the reasons above...
Nice comment. That's basically the same conclusion I came to as well. Crypto's real impact is political-economical. The tech doesn't matter too much. The whole point is that users get to own a portion of the systems they interact with.
Agree wrt avalanche, ava labs however... would be great if people could do some kind of pow to the decide to pos with avalanche tech, would have been better than current distribution of supply of validators and where those machines are running (like +70% on aws, ovh, etc..., though probably would have taken longer to grow)... which i wonder about what will it look like for eth now.
In otehr words: You have "faith" that cryptocurrencies are a fad, right? Some people spent dozens, maybe hundreds of hours understanding everything behind it, and those people colectivelly made Bitcoin worth what it is today. You can continue to have "faith" in this having no value. But if everyone around you start using Bitcoin, would you rather switch your faith to what the others around you believe? Or you rather chase knowledge of why this is the case?
I can promise you that 99.9% of the people trading bitcoin have zero understanding about the underlying technology.
I don't need to understand how an internal combustion engine works to know cars are not a fad. Same way I don't need to know how to reverse-engineer a distributed ledger system to know crypto is.
The first problem that cryptocurrency solves is, how can to securely make transactions without giving away our secrets such as critical account numbers. It accomplishes this using cryptographic signatures.
Other systems that do not use cryptography and instead often rely on trust in exchanging critical secrets, such as how the banking system generally works, are outdated.
Venmo, cashapp, and PayPal all have geographic restrictions (only one of those works where I live), and also pretty shit reputations - PayPal routinely just dicks its users and freezes their funds indefinitely.
Crypto doesn't give a shit about borders, there's no intermediary who can freeze your assets (unless you decide to leave them on am exchange), etc.
Crypto right now is just to new to have been properly regulated yet.
And while you are true that you can run your own wallet, you are depending on the decentralized network, you do need a certain amount of stabity and you need to make sure you can recover and keep your wallet.
Enough people demonstrated at least with the last point and millions lost in locked away wallets that there are still fundamental problems.
You cannot easily make payments to or from certain places, or based on certain activities, with the dominant payment technologies.
Yes, this is due to regulations, but it's also due to the centralized nature of the technology which requires permission to use.
Even when more regulation is forced onto cryptocurrencies, the architecture will always be permissionless, as it's a decentralized network. That is a fundamental difference.
I'm a fan of cryptocurrency but I don't think this is a great description of it. Its primary goal is finding a way to make transactions work, given that you don't want to involve a central authority. Cryptocurrency works the way it works specifically because of that desire to work without a central authority. It's perfectly possible to create payment systems involving cryptographic signatures involving a central authority (with the downsides a central authority involves).
> Cryptocurrency works the way it works specifically because of that desire to work without a central authority.
The word works is doing a lot of work there. Every compromise, hack, scam, theft, and weird "oops I sent the crypto to an address that doesn't exist and now it's gone forever" incident screams for central authority. Even what we call Ethereum is a rage-quit to pretend the DAO thing didn't happen.
How can you do any transactions at all without trusted intermediaries? You have to trust government, banks, paypal... something.
Or you can start trusting the individuals at the other side of the transaction. Perhaps these folks who do not have experience can also benefit from your exp... Oh wait, you've become an intermediary?
Cryptocurrency is just an asset that you can sell nearly everywhere in the world. But it depends on electricity, is volatile in value, and has long transaction times. It's just an inferior cash, except the fact that it's not physical so border control can't take it away from you. If you are optimizing for that... Maybe there can be a simpler solution? Buy art shares? I don't know.
> You have to trust government, banks, paypal... something.
In the case of crypto you're trusting that an adversary won't be able to control 50% of the computation power on the network for a substantial amount of time (and cryptographic theories, but you're trusting those whenever you use the internet anyway). Generally you're not even trusting the other party.
Except you don't even need to completely trust them like you are probably thinking of.
Depending on the level of trust you are willing to give the other party, you could use one of many automated eskrow services (that kick back to a human when one or both parties dispute the transaction), or on the other end of the spectrum, you can have a mostly automated smart contract with built in refund mechanisms where all of the rules of the transaction are declared upfront.
At the end of the day, reducing the number of parties you need to trust for a transaction to succeed is a strictly better outcome than the status quo (or expanding the number of parties that need to be trusted).
> you could use one of many automated eskrow services (that kick back to a human when one or both parties dispute the transaction)
How do you think that would be better than paypal, ebay, or anything else? Do you think people who use cryptocurrency escrow services have less problems than people who use anything else?
Paypal arbitrarily suspends accounts and steals funds, so yes... practically anything is better than that. They don't discriminate by size, as even I have been digitally mugged by that mob. Most recently they have given Flipper Zero the same run-about. [1]
Ebay isn't a payment provider, as far as I'm aware, so I'm not sure why they are relevant. They have certainly focused on the digital to physical mapping, but are overall rife with buyer and seller scams and they aren't really offering a solution beyond their easily gamed reputation system.
>Do you think people who use cryptocurrency escrow services have less problems than people who use anything else?
Typically, yes, the people using escrow have less problem by virtue of there being far less reports within the crypto community of actual escrow services being bad actors.
You brought up a random company from 2015 that happened to have eskrom in its name. That was not an eskrow service in the crypto sense of the word. If you are sending your crypto to a stranger and hoping they do the right thing, it's no eskrow. The typical eskrow setup will be some kind of multi-sig wallet (e.g. 2 of 3 signature) where the buyer, seller and eskrow service provider have a signature each, and two are required to release the funds.
Note: Eskrow systems are the very lowest tier of "zero-trust" when dealing with services or physical goods. It's a sliding scale of effort versus security, where a smart contract would be the "gold standard", and the eskrow is "better than nothing".
PayPal probably has many orders of magnitude more customers than any escrow service could imaginably have.
Also, you are still trusting humans, or a company as a trusted intermediary (and in the case of escrow services, most likely with no course of legal action if things go wrong). My argument still stands.
Why are you fixated on the lowest tier of "zero-trust", that is eskrow? And why does the number of people using a service or technology have to match what Paypal clears to be an improvement on the status quo? At the end of the day, we were talking about the concept of trust, and it seems pretty straight forward to me that lowering the number of parties involved in a transaction reduces the number of parties that need to be trusted.
Paypal doesn't even appear on the radar (even if you overlook their outright predatory and scummy behaviour) when there is the option to outright remove the payment provider from the equation and reduce the number of involved parties by one, while still allowing for a third-party (a human for eskrow, or an oracle with human fallback for a smart contract) to arbitrate if necessary if one or both parties are malicious.
Also who says there is no legal action if it goes wrong? It's better to set things up such that things can't go wrong, but if they do, the rule of law doesn't cease to exist just because it happened online.
I haven't seen a coherent argument yet, but maybe I'm missing something...
> it seems pretty straight forward to me that lowering the number of parties involved in a transaction reduces the number of parties that need to be trusted
It increases how much you have to trust them. You can also build the same escrow system with anything. You don't need cryptocurrency for that.
> the rule of law doesn't cease to exist just because it happened online
Is there any legible escrow businesses for cryptocurrencies? If yes, how are they "less amount of parties involved" in comparison to Paypal?
> I haven't seen a coherent argument yet, but maybe I'm missing something...
I didn't initiate or authorize the transaction though, how am I to decide what the rules of transaction are when somebody else set up the transaction and authorized it?
The trust is that the bank recognizes when a transaction looks off, and holds it/notifies me, without my involvement
> to securely make transactions without giving away our secrets such as critical account numbers
This describes any "push" payment system where you instruct your bank, service provider, wallet, device etc. to transfer funds, rather than providing the payee with your information, as well as any pull-based system with additional verification (such as 3DS and PIN-based payment cards), and isn't unique to crypto at all.
This is not a very good explanation, but basically, you can have a "currency" using just asymmetric key cryptography: users simply sign "transactions". The problem is that you need a central authority to confirm the order of transactions, otherwise the recipient of a "transaction" will not know if the funds associated with that transaction have already been spent to someone else ("double spending"). You can solve this using hashcash to make the transaction order hard to reverse- creating a "proof-of-work" by doing something that is easy to verify but hard to determine (like reversing a hash function). Another method is "proof-of-stake" wherein transaction order is not signed by a central authority but instead general users that are guided by some internal incentive structure.
Cryptocurrency is often expensive to run or use because a cryptocurrency transaction has to be synchronized across the entire network of that cryptocurrency, and there are incentive structures like fees to prevent people from spamming the network.
There is also tech like zero-knowlege-proofs, multisig, etc. that can do interesting stuff. But this is the basic concept.
Is there any research on cryptomoney with central authorities, but also with reduced attack surfaces on a whole system? E.g. authority may be cryptographically bound in some way to only store the database and emit new tokens, but cannot spend them because they get freeze-signed by a receiver to their wallet. Then when you get a payment you check the path of money and algorithmically accept that path only. Anyone who accepts a similar subpath is on their own, because it is double-spending. Subpaths within few minutes self-cancel to prevent instant double-spend.
This is just a vague example, not a working idea. The point of it is that the level of security and trustlessness is not always required to be absolute. E.g. even with fully-secure pow crypto we still have to trust non-crypto claims about usdt, [non?]shitcoins, “hot” wallets, and other maybe-not-ponzis.
Yes, see David Chaum's original pre-bitcoin "e-cash" and the more recent GNU Taler project: https://taler.net/en/
The problem is that banks won't implement these systems unless they're forced to. They seem to benefit from the insecurity, surveillance, and bureaucracy of the existing system. So we will have to make new banks...
Perhaps CBDCs (Central bank digital currencies) are close to what you're looking at, the concept being digital money issued and verified by a central authority. There's been a bunch of research done by the central banks of various countries e.g.
Thanks. I know the official docs. They just feel to me like the official docs of K8s (they are good, but not great. Great in the sense of "Brian Kernighan" or "Stevens" book kind of great). I guess there are not many more options out there I'm afraid.
Perhaps it's due to my ignorance in the field or perhaps it's because the field is pretty young: I would like to read something from the Linus Torvalds/Brian Kernighan/Richard Stevens of the crypto world.
In that case I suggest https://vitalik.ca/ and dip into articles with titles that appeal to you.
He covers a range from high level opinion essays to (imho) good technical simplified explanations of the special kinds of low-level cryptography. I've personally found the articles on how SNARKs and STARKs work very helpful.
Note that Ethereum and the other "smart contract" blockchains which link general program execution with transactions, are very different from Bitcoin and the other "money only" blockchains.
I also suggest https://ethereum-magicians.org/ if you want to get more into the guts of protocol discussions or just see them, and the Eth R&D discord.
>Note that Ethereum and the other "smart contract" blockchains which link general program execution with transactions, are very different from Bitcoin and the other "money only" blockchains.
Smart contract blockchains like Ethereum have a lot that classic blockchains like Bitcoin don't have, but all of the lessons of classic blockchains are relevant to Ethereum. The original Bitcoin whitepaper by Satoshi is still a strong introduction to the goals and basics of cryptocurrency; understanding the goals of Bitcoin and the idea of solving double-spending in a decentralized manner is critical to understanding cryptocurrency. (But anyway after reading the Bitcoin whitepaper, just move on to reading docs about other projects like Ethereum. There's little interesting to Bitcoin beyond its initial invention.)
I wouldn't say Vitalik Buterin is anywhere near as legendary as the names you dropped, but he's the closest to what you described, in terms of being as close as possible to the underlying tech rather than just being associated with the hype train (and scam train) riding on top of it.
I wouldnt worry, the whole system up to this point has used "technobabble" as a means to confuse and impress outsiders. When reading up on it, there is no meaning to find besides "yep, its a linked list allright".
There's a lot of slang and jargon (metaphors, some good, some silly), to the point where most crypto projects are scams, hiding what's going on (many DeFi projects built on Ethereum).
And this is my opinion as someone who loves the value proposition of what cryptocurrency was supposed to be (see first line of Satoshi whitepaper), and care more about seeing the technology gain mindshare than hype cycles and price movement.
A randomly chosen crypto project (including ones that use Ethereum) will probably be mostly nonsense, but Ethereum itself is a serious project with interesting deep engineering.
What technical projects have no impenetrable to outsiders terms at first glance? Try to read information on React, Django, Tensorflow or whatever software project you like from the PoV of an outsider and tell me you won't find plenty of jargon, metaphors etc.
But those also aren't ponzi schemes offering 1000's of % APY based on convoluted multi-token staking schemes, minting, etc. that directly interact with money (as tokens) you send it, potentially breaking SEC rules because of what it means to be a money transmitter (low bar).
(Overall I'm talking about a bunch of tokens/dapps on Ethereum, not Ethereum itself, BTW.).
The latter. Or both: there isn't really a distinction between blockchain and scams. On the merits, blockchains are inarguably a regression on the status quo; philosophically, they solve problems that don't exist in reality. (Censorship is a non-issue.) They exist for one reason only: to provide a faster vehicle for money seeking return. Prior to blockchains, a 100M fund would have to wait ca. 10 years for a ROI; now, due to lack of regulation and etc. etc., you can get a return in 12 to 18 months. That's it. That's all there is.
You're entitled to your own opinion but not your own facts; proof of stake is not 12 years old (Sunny King and Scott Nadal, 2012), and certainly there have been a lot of other hard problems solved since then.
There's a lot of other stuff beyond Ethereum, too. Privacy coins in particular look very little like what was envisioned in Satoshi's paper.
Whether that's all worth anything from an economic perspective, I'm not sure (and even less sure whether it's worth what it's valued), but crypto is legitimately a bunch of very clever technological solutions to hard problems, invented by actual hackers, so I'm a little sad to see people minimizing it on Hacker News.
Especially since this particular innovation is ameliorating the whole global warming problem, which is the prime criticism leveled at crypto. Take that away, and isn't it just open source software that we're talking about here?
Crypto is one of the primary grounds for hacking right now. Not just hacking in the sense of writing code, but hacking in the sense of defining a system from scratch.
Cryptocurrency is so quintessentially hacker that hackers have a "no true scotsman!" moment about its ascent.
Similar feelings abounded with this thing called the Internet if you look in the archives.
Edit: Yes, it's raw. Yes, it's messy. The beginning of every new era of protocols is always like this. Look in the history of computer science and tell me that the Internet's origin was materially more orderly than the chaos that is web3. It's always a mess until it becomes boring, and then we do the dance again.
> The beginning of every new era of protocols is always like this.
No it's not.
Web2 exploded largely because of XMLHTTPRequest which from the second it was released was simple to understand, simple to use and solved an immediate problem.
To this day I'm still yet to find a problem that Web3 solves uniqely well other than money laundering, sanctions evasion etc.
> To this day I'm still yet to find a problem that Web3 solves uniqely well other than money laundering, sanctions evasion etc.
Many of cryptographical constructs of the past 4 years were and are spearheaded by blockchains, in particular fast signature aggregation, threshold signatures protocols and zero knowledge proofs. This translates to protocols for:
- voting.
- splitting a critical company secret between say the CEO, COO, CFO, Head of HR, Compliance, Legal and requiring 4 out of 6 to sign off critical actions, without ever revealing that secret.
- proving that you did or you own something without revealing what. Which could be quite interesting for law enforcement for example.
It's a decade josh and it's still unusable for 80% of people on this planet. I was as excited as everyone was in 2012 but that plateu is just going on and on.
Seems to me like adoption has gone backwards in some regards. Look at companies like Steam which at one point were accepting bitcoin but then pulled the plug on it. I also don't know anyone that owns crypto for any reason other than as an investment.
Adoption? More like, speculation. I still don't know anyone who's doing any real world transactions with crypto, but I know people who hold it for speculation purposes.
Adoption has mostly increased thanks to centralization, via exchanges, which seems antithetical to Bitcoin's foundation. What's the number one use case? Speculation and scams.
I have a question to people who were around and have a memory of the times because I don’t as I was not born yet. But does the crypto thing feel similar to how the internet started in the late 80’s and early 90’s before finally taking off?
I recall some videos/articles dissing internet as a passing fad at that time - does anyone who remember what it was like then think the crypto industry going through something similar?
The utility of systems like email was very quickly apparent, and while the 90s web was much more about publishing structured information than any sort of interaction, again it was pretty immediately recognised as a powerful, useful thing.
I don’t recall any negativity to “the internet”, but a lot for the dot com hype cycle, which is what I think cryptocurrency most closely resembles, but it has dragged on for years
HN is -in essence- a collection of vocal minorities. Post something on Kubernetes, and you'll get every Linux Sysadmin complaining about how it was better before the age of containers and we didn't invent anything new. Post something on cloud infrastructure management, and you'll get people somewhat angry about its cost. Post something on Electron apps, and you'll get everyone to talk about how C++ and QT apps outshine them in 2022. Post something on crypto, and, you know, it's going to be about how it's not used, too complex, or too energy inefficient.
Good news is, those topics change and become more accepted after some time. It's an endless cycle of Bash-and-Move-on. If something is "too popular", then it's obviously the worse technology ever, according to HN.
sending money to family in countries with harsher financial systems, being able to donate to causes you support without it being traceable to you (through tornado cash and zcash/monero), being able to move large amounts of money instantly with minimal fees and no intervention, etc.
I don't understand why people are so excited about computers, integrated circuits have been around since the 60's. You have companies like Intel and AMD coming out every year with announcements like it's some new thing.
I remember the silk road, and bitcoin donations to wikileaks, and bitcoin pizza. I think it all got bogged down after that with the irrational exuberance of the bull run, and everyone was too distracted to pay attention to the XT dispute when it really mattered. But it is getting better now, I am optimistic that the crash will continue and we'll see sanity returned to cryptocurrency.
The problem is fundamentally that cryptocurrency requires network effects to work. Cryptocurrency is not an easy thing to explain to most people, and it can be quite dangerous, so the best thing you can do for new users is tell them to stay away.
imo, Silk Road deserves the credit for solving Bitcoin's chicken-and-egg problem with network effects.
a single enterprising dealer could have started it off - exchange rate basically didn't matter, as long as someone was buying and selling BTC, it'd work to keep the dealer's identity private. SR tapped into a massive new market, regular people started learning about crypto so they could buy drugs, this created a flow of money through the market. honestly, I was excited to see my friends using Tor and buying BTC for cash - it's the gritty, cypherpunk dream!
whenever there's a real market opportunity like that, network effects don't seem to get in the way. Monero and Zcash got very popular from all the ransomware, though I'm admittedly less exuberant about hospitals being ransomed than drugs.
Maybe if you turned your mind off 12 years ago. Fast Zero knowledge proofs only left the research labs a handful of years ago and are now being used to power layer 2s that deliver 10 - 1000x scalability improvements. DeFi is barely 2 years old.
The consensus and scaling mechanisms being rolled out were only just created in the last few years (that's why Ethereum PoS took so long, thery were still making changes to the design as new research came out).
A. 12 years old is relatively new for tech / computer science. There aren't that many novel / widely adopted computer science ideas introduced each year.
B. This "merge" in particular utilizes innovations in computer science that were non-existent 12 years ago when the original Bitcoin whitepaper was published.
C. There continues to be loads of cutting edge CS research that is broadly applicable to the entire industry but is being spear-headed by blockchain development, for example work on Zero-Knowledge Proofs.
BLS signature aggregation was finalized as an IETF standard in 2019. It's the reason Ethereum can support over a million staking nodes.
BLS was invented back in 2001, but was expensive to verify. A paper published in 2018 showed how to verify n aggregated signatures on the same message m with just 2 pairings instead of n+1.
to be really pedantic, I'd say PoS is an economic breakthrough rather than heavy-duty computer science, strictly speaking. the actual math of the consensus algorithms seems relatively simple, the challenge is aligning all the incentives so that adversaries in a group of anonymous people have nothing to gain by subverting the rules.
I will gladly give a Turing award to whoever formally proves the safety and liveness of Gasper like Lamport did for Paxos.
I could say the same thing about reading fields I don't generally understand, and it can seem like "technobabble" because I don't understand the meaning of words they are using, since some things are written with a certain audience in mind that possesses the knowledge to understand the content, like many academic papers.
However, I don't regularly dismiss fields like that, but rather I understand that not everything is meant for me to understand without a deeper meaning. Not sure why anyone would treat the (technical) ecosystem of cryptocurrencies differently. Seems like a non-curious way of acting.
Just like I realize the problems pornography introduces to the world, but reading and speaking with engineers working at those companies are still a fruitful endeavour for me.
Genuine research states claims for the methods and discovery, making it often quite easy to work backwards from the conclusions to the theory. No such logic seems to exist in the crypto culture.
Here’s an example of a well-hyped, well-funded crypto startup being loose with words that have well-understood technical meaning outside of crypto.
> The "Helium 5G" network is instead a 4G LTE CBRS network, which right now has significant advantages over 5G but doesn't have the "5G" moniker Helium and its partners wanted for marketing. So it's just calling it 5G because, apparently, anyone can use any word to mean anything.
> In the current architecture, specific transactions, including Proof-of-Coverage and Data Transfer Accounting, are processed on-chain unnecessarily. This data bottleneck can cause efficiency issues such as device join delays and problems with data packet communications, which bloats the Network and causes slow processing times. HIP 70 proposes transferring these processes onto Oracles which will resolve these issues and further stabilize the Network.
There's a bunch of jargon, but for "Oracle" read "EC2 instance".
thought we were talking about open source community research. i'm not here to get into the debate of if crypto has a scam problem, it does. but that isn't research.
The comment you accused of “just saying things” was referring to crypto culture, rather than research specifically. I picked Helium because it was something that the web3 community glommed onto as a “successful” use case.
I wrote "no such logic [of adherence to formalized and academic research standards of claims and so on] .. doesn't exist in relation crypto culture."
I was clearly defining the entire practice of formal research as a null set within the crypto set.
Crypto culture is a compounds noun that's additive absent declination of sub distinction.
About Helium you assert that token has some kind to recognition and beau regard for- I really don't know what you're talking to but if I was sub editing your comments for clarity, I'd use the word Kudos. You claim this 5G access token has community kudos "glommed" or "attached to it" but in actually read the papers for Helium when first announced vector of investing adjacent to private 5G networks (UK Gov lets you drive truck throughout publishing network licenses awards since 2016) absolutely nothing but a more expensive convoluted and arbitrary code for the putative but barely functional exchange of on demand cellular next generation service.
If can possibly convey only one insight into what we're discussing to your everlasting benefit it sure would definitely be giving you a innate sense for why any discussions or even detailed research into things that you can build out of Lego isn't mathematical geometry or symmetry learning but model box picture building the prettiest parts you purchased.
Fully distributed consistency algorithms running on N nodes on linked list in which each node is a Turing-machine program run concurrently on N nodes, whose consistency shall also be insured, and which can write on said linked-list. Everything has absolutely tons of edge-cases related to the distributed nature of the thing to take care of.
Of course, I haven't even begun anything about the whole "crypto" part, and minimizing power usage.
Absolutely no meaning besides "linked lists", riiiight...
I thought the same at the beginning. Yet somehow I think I'm missing something a bit more complex (complicated?) than just "linked lists". I don't want to understand only the theory but also the "practice" (e.g., one could read all about distributed systems... But one really gets the gist of it until one has to deal with real world networks in the cloud or on prem, dealing with real systems)
Try to imagine you are building a new banking system, and you want it to be secure.
How would you
A) allow for secure payments without giving away something like a bank account # or debit card number
and
B) ensure that, even if those payments were secure, there was no other cheating, such as people at a bank just deciding to initiate an account with one million?
Generally speaking the way to handle those requirements is by employing cryptographic signatures and public blockchain(s), and the result is usually referred to as a cryptocurrency.
> A) allow for secure payments without giving away something like a bank account # or debit card number
You can use PKI for this. The public key is public and the private key never has to be online. That's how (most?) crypto works, but the system doesn't have to be a cryptocurrency to work like this.
> B) ensure that, even if those payments were secure, there was no other cheating, such as people at a bank just deciding to initiate an account with one million?
You can have public ledgers without crypto, there's usually no reason to do so, and good reasons not to do it (privacy, funnily enough).
Crypto is _a_ solution for this, not _the_ solution, and not even the best solution at that.
Since you are using PKI but not a blockchain, it sounds like half a cryptocurrency to me.
I didn't actually say "cryptography" for the block chain. What do you propose other than a block chain for the public ledger? And if your system uses cryptography for the transaction security and has a public ledger, why would you not call it a cryptocurrency? It would seem to be in the same category if you ledger was secure.
> What do you propose other than a block chain for the public ledger?
A csv file, SQLite file, mysql database dump, ... The blockchain is a distributed, trustless ledger, which is not necessary for most applications.
If I may paint a picture of why this matters with an example from the gaming industry - simply because I'm familiar with it: There are projects being made where the inventory/achievement/whatever system lives on a public blockchain, so that you may use/display it in another game, website, whatever.
But this already exists without blockchain! If you play Spiral Knights or Half Life on Steam, you get a hat in Team Fortress 2. There are various third-party websites where you can display your Steam/Team Fortress/Dota/LoL achievements, inventories, ... because those 'ledgers' are public already. You can trade Steam items on third-party websites (which interfaces with steam underneath) that dodge Steam's 30% store tax and will actually pay money out unlike Steam.
The above applications only require public (or even just shared) ledgers. Distributed and trustless is not a requirement for these use cases.
> And if your system uses cryptography for the transaction security and has a public ledger, why would you not call it a cryptocurrency?
You could just as easily transfer USD, GBP or EUR using such a system. The currency itself need not be 'crypto' for the system itself to use cryptography for transactions. You wouldn't publish such a ledger for obvious reasons, but technically you can.
> If you play Spiral Knights or Half Life on Steam, you get a hat in Team Fortress 2
A centralized MySQL database is not a "public ledger" in the same way that a decentralized blockchain is considered a "public ledger."
In the former, the database can be removed or censored easily by the central entity controlling it. This includes issuing API keys: the central controller decides who has permission to access, use, modify, and even retrieve the data.
In the case of a "decentralized, permissionless, public ledger" blockchain, no single entity controls the data structure.
> A centralized MySQL database is not a "public ledger" in the same way that a decentralized blockchain is considered a "public ledger."
A public ledger is just that, a public ledger. It need not be distributed nor trustless to be public. The novelty of blockchain is the distributed and trustless, but most applications (as I outlined in the example above) only need to be public.
Trust me, I understand that a database dump is very different from a blockchain ala bitcoin, in exactly the ways you described, but that doesn't mean we need to shove blockchain everywhere.
I concede with this and your earlier point, you don't need a blockchain to build a new banking system. The current banking system is evidence of that: there is no blockchain needed when you ask your bank sends your funds to another bank.
But if you want to build a system that is not wholly dependent on "banks" and centralized actors securing consensus of financial transactions - which is effectively Proof of Authority - you end up having to look at alternative consensus mechanisms like Proof of Work or Proof of Stake.
The same logic applies to something like game assets. People buy and sell game assets already without a blockchain, but they do so only through centralized custodians and intermediaries.
>But this already exists without blockchain! If you play Spiral Knights or Half Life on Steam, you get a hat in Team Fortress 2. There are various third-party websites where you can display your Steam/Team Fortress/Dota/LoL achievements, inventories, ... because those 'ledgers' are public already. You can trade Steam items on third-party websites (which interfaces with steam underneath) that dodge Steam's 30% store tax and will actually pay money out unlike Steam.
That ledger is controlled/can be edited/changed by Vavle. Valve can delete your inventory and there is nothing you can do. Wouldn't that defeat the purpose of having a public ledger that no one can modify on a whim?
The first one is easily solved with one-time-use card numbers, which credit card companies have offered for well over a decade.
The second one is a dubious benefit if you're at all interested in stopping crime (eg money laundering is very easy if no party can block a transaction.)
Thats not to suggest there's no benefit to ETH, or even that crypto might be better than traditional money in some ways, but those two specific points are fairly easily argued.
> A) allow for secure payments without giving away something like a bank account # or debit card number
We have a whole bunch of these systems, like Open Banking payments in the UK, Pix in Brazil, and to a lesser extent stuff like Apple/Amazon pay and other payment proxies which don't require you to expose account numbers to merchants. Physical credit-card transactions work this way too, as the chips have built-in cryptographic processors.
> such as people at a bank just deciding to initiate an account with one million?
This is not a problem people really have. Having a limited quantity of your means of exchange is not a desirable quality in a currency.
Credit card transactions may at some point involve cryptography, but at the bottom is the credit card number, and that can still be exposed.
Cryptocurrencies don't necessarily have to operate on an (effectively) fixed supply, and actually if you are concerned about modifying the supply frequently it is possible to design a cryptocurrency that gives you much better control over that.
> Credit card transactions may at some point involve cryptography, but at the bottom is the credit card number, and that can still be exposed.
That's not really "at the bottom of things", for physical, customer-present transactions which I was talking about there. At the bottom of things are private keys stored on the card, which sign the transaction. Exposing the credit card number gets you no more than having someone's cryptocurrency wallet address, in fact a lot less as you can't look up their balance. The idea that credit card transactions are simply the handing over of a number, that a merchant can then do with whatever they like, is very outdated, though I guess still makes sense in countries that haven't moved on from magnetic strips.
Yes, plugging in your card number online to buy things is still distressingly popular for various reasons, I agree we should definitely get rid of it. And we can! Either by reforming the credit card payment process in the sort of way Apple Pay online payments and Paypal already have (though they still use the numbers themselves, it's true), or by ditching cards entirely and going with things like open banking payments and pix, which tend to have OAuth under the covers (among other measures) that don't involve 'card' infrastructure at all.
The question was how you design a system from the ground up that will "allow for secure payments without giving away something like a bank account # or debit card number". Well, I would use these sorts of technologies (that already exist and are in widespread use), rather than a blockchain.
It's amazing how superior you've let yourself feel while not addressing anything.
Was I supposed to have a revelation that cryptocurrency is the answer, in some sort of holistic come-to-jesus moment? Sorry, no, cryptocurrency is still a crapfest.
David Chaum opined then “As the Web grew, the average level of sophistication of users dropped. It was hard to explain the importance of privacy to them”https://en.m.wikipedia.org/wiki/Ecash
Not sure how this opinion relates to failure, but just in case, things only got worse since.
Have you seen the "Line goes up" summary by Dan Olson?
It puts the crypto sphere into context. From that many descisions and marketing practices start to make sense.
Crypto being full of grifters does not mean that the actual developers in the space are using "technobabble" in order to sound smarter without actually introducing new concepts. Crypto is actually innovating in ways that are broadly applicable to computer science in general, e.g. with all the work being done on Zero-Knowledge Proofs. And those innovations require new words because they are new concepts. I think it should be somewhat obvious to anyone that has actually looked at the space that devs are not just re-naming existing ideas.
Again, the two things are not mutually exclusive. Most people/orgs can be applying blockchain tech in ways that are not actually useful (or are actively harmful), but that doesn't mean there aren't people in that same space doing novel work that requires new terms in order to communicate with other experts/researchers/developers efficiently and effectively.
In that video he searches for the griftiest projects and treats them as defining the whole technology. Suggesting it as an answer here is like responding to a question about how eBay is engineered and showing off the scammiest eBay auction pages you can find by searching for the lowest-rated users.
I actually thought Line Goes Up was pretty well informed and well-presented. It's definitely one-sided, but I think there were only a couple of statements that I found questionable.
I work in the crypto industry, and definitely agree there's a ton of innovation in the space, but the innovations lie at an incredibly technical intersection of cryptography, game theory, and distributed networks. Get marketing, sales, and investment capital involved in the mix (which almost every project has), and you have a bundle of products being thrust in front of the public which they can't rigorously evaluate, and because everything is directly incentivized, tons of scammers, grifters, liars, and fraudsters.
When my non-technical friends ask me about crypto, I'm happy to tell them some of the things I think are really cool about it. But I don't recommend buying anything based on my perspective; it's basically gambling (even if you're well-informed)
Well yeah this is how he gets paid. It's not about being informative about a class of technology, its about generating clicks to get more patreon subscriptions and youtube ad payments.
The "innovation" in the original blockchain is that it is computationally expensive on purpose, to create "economic value". There is no computer science innovation there. Computer scientists didn't come up with the idea because it made no sense.
No, the goal wasn't to create economic value. The goal was to make it prohibitively expensive to recreate the chain and thus fool someone else. Satoshi did not say that the purpose of PoW was to "create economic value".
Proof of work blockchain is nothing technically complicated. Nobody was doing it before because it makes no sense technically. The only reason it is used is because it adds economic value. Anyone using it for other purposes could use something else but wants VC money.
Okay then tell me how you can make a distributed ledger with global consensus without a consensus mechanism like PoW or PoS even with “no economic value”
But cryptocurrency doesn't really solve these in a technically interesting way, as it's neither consistent nor available under partition. The pressure to keep the chain consistent and unified is a purely social one - your BTC is only valuable to other people on the same chain as you.
I don't know, looking into the papers that are written in crypto research, especially in academia, it seems like there is a lot of very technically interesting stuff going on, especially with zero knowledge proofs for example...
These are largely (if not completely) applications of existing zero-knowledge algorithms to blockchain data, not the application of blockchains to solve some difficult ZK problems or make a useful-outside-of-blockchain novel ZK construction.
I'll leave the question of whether it's economically interesting to economists and sociologists (though I suspect the answer is it's not at least in this regard, as the pressure to use the same non-blockchain currency seems not too different across the sweep of history). The claim was:
> It turns out that "distributed linked list" is actually a difficult problem that involves very interesting challenges
Are you saying it's easy? The PoS algorithms I've read seem quite complicated, and honestly quite interesting. Also there is a lot of academic research about this stuff, some of it private, some of it public.
I mean, I know there are people out there who think that, for example, particle physics is totally uninteresting, and you are of course free to decide that a given research area is totally uninteresting, but you can't expect others to agree. It is just your opinion
The internet is fundamentally little more than the ability to send 1s and 0s from point A to point B.
So you mean like me calling you and saying 0 1 0? Well, yeah kind of, but faster! And we can even have conference calls! It's going to change the entire world! Yeah, ok... Well, I'm going to leave now. Wait, sorry... I mean I'm going to '0 1 1 0' now. Wow, I can feel the world shifting already.
The applications of a technology often are far greater than the most simplified fundamental upon which it is built.
Really? I feel like the article explained most of the terms.
I remember having a similar feeling when NFTs were getting big. It turned out that I did understand the terms, there just wasn't enough actually there, triggering a feeling that I must have been missing something despite my eyes telling me the emperor has no clothes.
There is nothing new in cryptocurrency. The only real difference is the ability to flout the law. Having escape hatches is nice but glorifying the escape hatch of the week is odd.
There's an incredible amount of word salad piled on the fact that people are playing a negative sum game when getting involved with any cryptocurrency that has transaction fees.
Not true! Cryptocurrencies have real-world productive use cases such as money-laundering, ransomware, drug and weapons trade, terrorist financing etc. As well as some less-morally-wrong stuff like hiding from oppressive regimes. A bet on crypto is a bet on the future of these activities.
I think you forgot "contributing to climate change by using as much energy as a small country" which may not apply to ethereum anymore, but it sure still applies to bitcoin
is much cheaper - less inflation.
is more environmentally friendly.
with PoS, only people who already own ethereum can mine. Rich get richer.
has less desirable consensus properties.
Many people keep coins on a handful of exchanges - now those will control the network.
Nothing-at-stake attack.
> I'm not planning to "buy" crypto; I would like to understand the technicalities.
That's been my entrance into crypto as well. I really dislike the speculative, get-rich-quick, even casino like connotation crypto has (inevitably) acquired. It shades the incredible technology behind it.
For a couple of years I have been studying and playing around with smart contracts in my free time, getting a better understanding of this paradigm (every smart contract can be seen as a singleton object "living" in the blockchain, with functions that are like API endpoints which you can interact with in a decentralized fashion), how it shapes applications built on top of it, and the possibilities ahead of us (ex: DeFi - Decentralized Finance).
There's a lot of skepticism around crypto, like "it's a solution without a problem", but I don't buy it. Even if it were, it's a solution sophisticated, interesting enough, worth diving yourself into ;)
The year of cryptocurrency is just as far away as the year of the linux desktop. I'm not saying it is impossible, I'm just saying that you will grow old while waiting for it.
The tech in Blockchain/Web3 world is changing and evolving incredibly fast (as is evident from this historic event today) and so by the time books come out, they already become outdated.
I would highly recommend reading Vitalik's blog[1]. He talks about various topics and has a knack for explaining things brilliantly.
The Bitcoin Whitepaper is fairly small and quite an easy read, and it is the source of all this ideas. There is only a couple of math formulas that you don't need to fully understand to understand the paper itself. Some of the concepts on the paper deserve to be explored further and you can resort to Wikipedia to dive deeper.
I find the book "The Bitcoin Standard" by Saifedean Ammous a good read to break down those concepts. Nevermind the extremists or so called "maximalists" and their exaggerations. The book is a really good intro to macro economics and helps understanding why cryptocurrency is interesting as a store of wealth and/or money replacement.
The technology side of all this is definitely interesting, but don't be fooled into thinking it's too interesting; you can read one guys book (the recommendations below are good) and understand how it works in enough detail. The basic idea is a series of data blobs with a cryptographic signature for each blob, with (importantly) the signature of the previous blob in the series included in the next blob. Then there is some distributed consensus mechanism (of which many have been devised) to come to consensus on which blob is canonically the next one in the series. Everything else is details or game theory.
Given your background, you likely already understand all the individual components of how a blockchain like Ethereum functions, just disparately or in different contexts.
I'd recommend just taking look at the documentation / code.
It's a crypto/blockchain podcast, but very technical, it's focused around the advanced technology that makes up the ecosystem (zero-knowledge cryptography, multi-party computation, consensus algorithms, miner-extractable value, new blockchain programming languages, etc).
Very technical, almost nothing about investing. The downside, some episodes may be a bit hard to jump into due to the technical nature.
They are 20min episodes that build up to explain the foundations of cryptocurrencies.
If you have any suggestions for future episode let me know. I’m thinking of spending a bit more episodes on Bitcoin to talk about bitcoin scripts, layer 2 apps, UTXOs, etc. Before talking about ethereum
> could you recommend serious references like books?
we are writing history not books
--
beside jokes and comments. as any research field it's difficult to have books yet and catch-up with everything is hard, i feel your struggle. said that, as i can see from the comments, there are already some good resources where you can learn and catch-up.
fwiw, i followed this in the 2018, i learnt foundations with the book mastering in ethereum and then by articles starting from a specific domain. like you would do in academic research.
Don't feel ashamed. The entire ecosystem is unsound, and the "technicalities" are the stuff that CS201 courses dismiss as irrelevant. There's no reason for a technologist to care about it.
I appreciate it wasting less precious energy. But this change also means that "Decentralisation" and "Power to the people" are fading away right?
The wealthy actors are the ones dictating the transaction now and they also on top get paid for being rich. This does not sound like a "better financial system" for me. Also, don't forget the DAO Fork[0] where with the "ungovernable Blockhain" it was decided a transaction was not ok and it was removed?!
> But this change also means that "Decentralisation" and "Power to the people" are fading away right?
But it was always like this, also with proof of work. PoS and PoW are both just variations of "proof of resources", which in turn is a convenient substitution for likelihood that one's voting power is independent.
If you want to give "power to the people", you need some way of estimating independent voting power, that is not tied to resources.
With proof of work, you have to spend your pile of money if you want to influence a vote. Whatever the cost of a 51% "attack" would be, the attacker has to actually spend that money to do it.
With proof of stake, having that money is enough to vote and you don't need to spend or waste it. In fact, you get paid for having that money sitting in the account.
The catch is that people will notice 51% attacks. If you have enough voting money and fudge transactions, all that money becomes worthless pretty quickly. The more realistic issue is that the big voter gets to decide the direction of the protocol, but again sufficiently screwing things up only leads to their own demise.
It was worse with PoW in theory. Just because you have tons of mining equipment doesn't mean you have a stake in the future of the cryptocurrency.
>The catch is that people will notice 51% attacks.
The thing about crypto is that the majority hashrate/stake gets to decide what is an "attack" and what isn't. This behavior isn't a bug, it's a feature and it's what separates crypto from fiat.
With PoW, sooner or later the attacker will run out of money. When they stop paying for the hashrate, their votes all goes away, they don't get extra points for being the top miner at one point in time. With PoS, getting a majority means that your majority will actually increase over time unless someone actively decides to burn the cash necessary to stop you. The longer the community waits/debate over it, the harder it will be to remove the "attacker".
Right, the majority decides what is an "attack" in that it decides which chain to use, and the longest chain wins. But that's not the issue. People (or automated systems) can decide on their own what is an attack. They see transactions being reversed after several confirmations and say "the blockchain is compromised, so I won't use it anymore."
Yes with PoS it's harder to remove the attacker. But the attacker also stands to lose far more money than the attack can possibly be worth.
> You also (almost always) try to preserve anonymity in a democracy.
You most definitely do not. When you turn up to vote, you get asked for id.
EDIT: your actual vote is anonymous, yes. But your participation in the voting is not anonymous. Blockchain allows for anonymous participation, so to say.
> Blockchain allows for anonymous participation, so to say.
No, different agents are voting. Democracy could be totally anonymous, in principle- get a secret key, generate a valid public one-time key, and your vote is verifiably valid but nobody has any idea who voted, much less who they voted for. If everyone is registered, you don't even have any useful information about who could have voted. Even in reality, your identity is discarded as soon as possible.
Blockchains are inherently public. Validators are NOT anonymously participating- they may be owned anonymously, but the owner isn't the one with the actual right to vote.
It's not just a semantic difference. In a real election, your ballot comes in a voter envelope. The ballot is anonymous inside the envelope, and the envelope is opened blind, but kept until the election is over. If they get two envelopes from the same person, they know it was a fraudulent vote. Once those envelopes are thrown out, there is nothing tying you to an election at all.
On the blockchain you effectively never throw out the voter envelope. Your vote -and what you voted for- can both be tied back to you via ownership of the voting agent. There is zero inherent protection of that relationship. All protection is done externally and the system does not do anything more than making sure it's not actively impossible to conceal your identity.
The vote is public, yes, but the participation is anonymous. I can easily set up two different miners, both controlled by me, but with different addresses. There is not generally an easy way of looking up agent ownership.
And while participation could in theory be anonymous for democracies, as you've described, I'm not aware of any country that actually does that?
It's not very anonymous in the US. You're required by law to identify yourself if possible*. Your party affiliation, registered mailing address, and registered phone number are all publicly visible. Someone knows your votes too, and they try to keep it secret, but I have little faith in that.
* In all 50 states AFAIK you can register with no ID and no home address, but it's illegal to lie.
IDK democracy is the best way to ensure prosperity and wealth. It's basically the idea that the 51% can rob the 49%. Preservation of wealth arguably can be better preserved if taking from the 49% results in their violent frustration of those efforts, and enabling that may require some constitutional republic, benevolent dictatorship/monarchy, or ancap kind of situation.
I'd always rather the greater than 50% coalition have control than the less than 50% coalition. Just look at it from a numbers standpoint. If the vote is to "kill the other team" giving which group power does the least harm? The Majority.
And just because that vote can happen isn't a mark against the system. The three other forms of government you mentioned are all equally capable of that atrocity.
51% killing the 49% in iteration is 1% killing the 99%.
>The three other forms of government you mentioned are all equally capable of that atrocity.
If you ignore the psychological disadvantage of the killers having a monopoly on 'legitimate' violence. For instance, in some anarchistic type scenario there is at least the upper hand that everyone understands the aggression of others is not granted some philisophical legitimacy over their own, and people frustrating these efforts will know their defensive efforts are not philisophically disadvantaged. Moral is an important component of self defense. It is easier to push many people in the cattle car if they think a legitimate 'authority' of the government has spoken.
I realize now there's been some massive miscommunication. The statement about government and train cars was not meant to be portrayed "instance" of anarchism. It was supposed to convey a counter scenario that was not so possible under an anarchistic scenario, since obviously government is not anarchism.
I didn't (and don't) think my paragraph conveyed that. But perhaps so it does. Either way it appears I'm unable to effectively communicate to you. I apologize for that. I do not think I am an able communicator in conveying my ideas to you, so I will just stop here and apologize for the trouble.
Not so fast. In both networks, the ultimate control is held by those who run end-user nodes. These people create demand for the asset, and creating demand is ultimately the way to control the asset.
An end-user node is like a device, which verifies that bank notes are genuine or that gold coins are pure. If everyone can independently reject bad money and accept good money, the good money will have more demand and therefore be more valuable.
Even if someone is very rich or has resources to mine blocks, they can't dictate demand for other entities. They must abide by the rules which are enforced by end-user nodes.
If there are entities which have power to dictate demand, and the network can't defend itself under pressure, means that the network is not properly decentralized.
Also, the decision between "good money" and "bad money" should probably be a game theoretic focal point, rather than something set by a foundation and large staking entities.
> An end-user node is like a device, which verifies that bank notes are genuine or that gold coins are pure. If everyone can independently reject bad money and accept good money, the good money will have more demand and therefore be more valuable.
The key word there "independently". Proof of resources is one way to tell if an individual node is actually independent.
Proof of resources gives an individual who has more invested in the network more weight in deciding which "bank nodes are genuine". Those individual's votes in theory deserve more weight because proof of resources assumes those individuals are harder to influence (or bribe) and have a stronger incentive to keep the network functioning because they have more at stake. These systems are trying to ensure that the nodes that have the power to accept or reject "money" only accept "good money" and always reject "bad money", and they're using demonstration of resources as a proxy of trustworthiness and independence.
Whether someone ties a bunch of money into specialized ASIC chip that's really only good for mining bitcoin, or they tie a bunch of money into staking eth is an implementation detail.
Miners need not only to spend money on hardware, but also the upkeep of earning money by mining is expensive (electricity, or the cost of electricity generation).
Thus, Proof of Stake let the rich grow their richness for doing nothing. In Proof of Work they need to continue working to make their money grow. Not to mention that they removed the miners from the equation, proving that in ETH system the poor and the people don't have power at all, whereas in BTC no one ever had any such power.
If you're willing to admit a central authority to authenticate who can and cannot vote, cryptocurrency becomes easy.
Really bitcoin is fundamentally trying to solve the problem that its impossible to tell who is a "real" person on the internet. If you dont have that problem everything is trivial.
So what you're saying is, bitcoin was always useless in sufficiently advanced society, like mine, where I routinely verify my identity online through my bank?
Interestingly, the original bitcoin white-paper had a motivating example that basically amounted to side-stepping banks, because banks do not provide fully non-reversible transactions. In essence, bitcoin was a technological solution to a problem which would have been solved more elegantly by changing financial laws, and requiring banks to offer non-reversible transactions. (the problem with that is obviously that it could be used for fraud, but then you get into the whole debate about freedom vs protection)
> In essence, bitcoin was a technological solution to a problem which would have been solved more elegantly by changing financial laws, and requiring banks to offer non-reversible transactions.
Ahh, this may explain why I don't see how cryptocurrency is a good thing. I consider the fact that banks do not allow fully non-reversible transactions as a very strongly desirable feature, not a bug to be done away with.
And I think this is a very valid viewpoint. Clearly, many people think the same, otherwise we'd already have non-reversible transactions in the conventional banking system.
I mean, yes. If you read the bitcoin paper it very clearly talks about what problems it is trying to solve, so this shouldn't come as a surprise.
Whether or not it is useless really depends how much you value independence from a central authority (i was originally going to say anonoyminity, but if you only care about anonoyminity, digicash is a much better solution than bitcoin)
They always rely on scarcity of something: scarcity of processing power, scarcity of being on the ledger of the blockchain and owning an amount of currency, scarcity of hard disk space, etc.
We have a concept called Proof of Authority where we basically went out and picked competent teams that have a vested interest in ensuring the blockchain is successful. They run the infrastructure in a fully decentralized manner, but we work as a group. There are 7 "pools" and we will eventually expand to 11. It's not decentralized as commonly understood, but way better (imo) than just putting whoever is richest in charge.
There isn't any cryptographic basis to human retinas, though, to prove a scam is "real"; so, at the end of the day, this is just a centralized actor in the form of a hardware manufacturer that can forge as many retina scans as they want, with the only limit preventing any of us from doing the same being whatever DRM they can try to pile on their device.
On that note, is there anything we could use as a cryptographic basis? I'm guessing DNA would qualify. We could make everyone's addresses be derived from a content-address of our DNA.
Handing over a copy of my biometrics to a VC-funded-and-ran private company is about the last thing I'd want to do in my life, just below taking said eyeballs out.
Not personally into crypto much, but wouldn’t proof-of-identity for those who want to vote be enough? Those who simply want to use the system (to send/receive) need not disclose themselves, but those participating in the ledger ought to have to unmask themselves so that when something goes horribly wrong there’s a person to point at/sue/whathaveyou…
It should also be said that the biggest entities are staking pools/providers. If one of those act up, people can unstake and leave. It's really not that different from mining pools in PoW.
2. Having a centralized staking pool means that there could be governmental sanctions a la tornado cash coming on such "validators" for facilitating North Korean payments and such. Once again, not a good look.
There is a mechanism to unstake it's controlled to 6 leavers per epoc, reducing if that's an issue: it has been thought out. It's not live yet which is slightly different.
I think it's worth mentioning that a pool large enough to do malicious things on the chain and get away with it is strongly disincentivized from doing so.
It would take billions of dollars worth of ETH to do such a thing, and then doing it would destroy confidence in the coin and absolute tank the price, costing the evil pool hundreds of millions.
> doing it would destroy confidence in the coin and absolute tank the price
People seem to say that but there's no evidence of this in fact. A price will only tank if lots of other holders rush to sell before the thief sells his stolen billions.
I think it's a matter of how quickly the thief could make their profits before people notice.
Of course, keep in mind that for such an attack to work, you need 51% of the total ETH being staked. Again, that's billions of dollars right now. If you stole some coins via double-spend, you couldn't pull the money into usable fiat very quickly. Even dumping a bunch of coins is going to crash the price.
That's like saying "100% of USA controlled by one entity" - except that in the US people are stuck with one president for four years no matter what, and when staking users can go stake with someone else at any time at all.
No doubt about that, people are in the dark about effective centralization of PoW and PoS, but PoS makes it easier to move to a new representative. In PoW, if you wanted to be a part of those centralized services with any return at all, you often had to get a spot on a mining farm, which meant you were locked into that place; even if you left, someone else just took your place, so effectively, it was the computational power that was locked in with that specific centralized mining operation. With PoS, there is no such lock-in, and changing the staking destination is a quick affair.
Transition to proof of stake consensus doesn't make a byzantine fault tolerant system anymore or less accessible to the everyman, it simply replaces depending on electricity to depending on investing directly into the protocol.
One may see the 'wealthy' as getting more 'say' but in reality they could (and did) just buy hardware that produces higher hashrates.
This performative ceremony is gone now to the benefit of all
And it will be the same group of people until the thermal death of the universe, because there are literally no mechanisms to separate those wallets from the tokens. The ultimate feudalism.
Every networked system (eth, btc, usd, the internet itself, trade, an economy) has aspects of centralization and decentralization. USD is decentralized in that if enough people stopped attesting to its value or accepting it for trade, the whole thing folds. That doesn't happen precisely because so many people believe in its value. But many aspects of USD and the banking system are opaque: how it is minted, what players are trusted, how much fractional reserve is allowed, etc.
The big difference is how easy it is to step into the game. I'd probably need millions of dollars, oodles of lawyer-hours, a bunch of employees, and a mountain of paperwork, to start a bank and participate in the banking system as a peer. I just need 32Eth (roughly $50kUSD) and some computers to participate as a validator.
The hard fork only "worked" cause enough people went with it. If enough people said "f it, no fork", then the fork still happens, but loses the social capital and thus the old chain "wins".
The internet struggles with ipv6 because not enough nodes support it. Politics breaks down when parties can't reach agreement. I don't know of any system which is truly tolerant to byzantine / 51% attacks.
But this change also means that "Decentralisation" and "Power to the people" are fading away right?
Don't look now but "decentralization" and "power to the people" are already gone in the crypto market.
Blockchain is a novel accounting system. But has any organization *ever* derived any real power from an accounting system? Are Google and Apple and Amazon market leaders because of a novel accounting system? I don't think so.
In a capitalist system, real power is derived from marketplace control. Accounting is just a way of keeping score.
Likewise, in the crypto market, Binance has now consolidated it's power position as marketplace leader and has effectively become the "central bank" of crypto with the power to mint it's own currency (Tether and BUSD) and use it to manipulate the marketplace at will. In a brazen demonstration of their power, they plan to crush other stable coins by simply replacing them with their own.
To give you an idea how big of an impact this is to miners, my 5700 XT went from making $1.2 / hour (mining Ethereum) to $0.15 / hour (mining Ethereum Classic) Eth classic seems to be currently the most profitable coin to mine and it is barely worth the electricity cost.
The people with actual mining rigs with multiple GPU's will either sell their stuff or start renting them for services like vast.ai. I assume most will end up selling because of the cost of getting a server-grade Motherboard/CPU + lots of RAM isn't exactly cheap and the effort required to set everything up is much higher.
Hm, I went on coinmarketcap.com and filtered by PoW, and it shows Bitcoin (of course) and Dogecoin as being PoW with higher market cap. Next three are Litecoin, Monero, and Bitcoin Cash.
The last one I don't expect to work, because mining is about as profitable as Bitcoin, since both use the same algorithm, and the best relative profitability fluctuates between them, and they're both dominated by ASICs. But Monero deliberately avoids ASIC dominance.
I saw an article yesterday saying that Ethermine (the largest mining pool) is indeed shutting down. I was surprised too! It seems like they're switching their business model to a staking pool.
Over 90% of NFTs flow through one provider, Pinata. OpenSea, GME, and many other exchanges are all powered by Pinata, without which you would have a terrible experience buying and trading NFTs. Of which, NFTs are primarily traded on two platforms.
It's already centralized, all of it, from the blockchain to the "dapps" built on top of them.
Ungovernable doesn’t mean that the people involved can’t decide what to do. “Ungovernable “ meeans an external party can’t force them to do something they don’t want.
The dao fork proves this because some people decided not to roll back and forked the chain instead. The ecosystem decided which fork was the main fork but they both live on.
First one is Lido and second one is Coinbase both of them are pools. Lido is more decentralized than Coinbase as the stake is spread across many different staking providers. In any case the situation is not ideal and a bigger uptake of solo staking and truly decentralized staking solutions like RocketPool would be beneficial.
Coinbase is the only entity that knows the private keys which could be used to move the funds in this wallet. So if "owns" means actual technical control of the coins, Coinbase owns them.
Now, many people (pretty much all) follow the laws and contractual obligations of the region in which they live. Under the framework of that system, the funds at still belong to the customer that deposited them. Whether that means the customer "owns" them or is simply "owed" them by Coinbase is debatable...probably a pointless debate.
> Under the framework of that system, the funds at still belong to the customer that deposited them.
Careful. In the case of bankruptcy, you probably won't get your money back. Bloomberg Law[0]:
> An exchange going bankrupt would likely have to face Chapter 11 debtors’ rules on creditor recovery. Generally, secured creditors would be paid back first before others.
> A crypto exchange is not likely to have investor protection measures in place for cryptocurrency, though it could carry insurance policies for certain covered incidents, such as cybersecurity incident. And unless user terms specified otherwise, an investor would likely be an unsecured creditor who may not be able to recover what they’re owed.
Those are staking pools, which represent thousands of individual users, and the largest one (LIDO) also has has additional decentralization that is not well captured by looking at just reward address. The reward address is a contract that individual users will be able to tap into.
Worth adding it's also not substantially less decentralized than PoW mining was, the status quo was 41% of hash power controlled by 2 pools. At least now it's using significantly less power and is largely more non-custodial.
I'm still flummoxed why people use blockchains for any kind of data or computation. Fundamentally isn't blockchain a tech stack built on a linked list with mandatory network calls in every operation? It seems purposefully inefficient. At least in theory it had a point (decentralized control). In practice, however...
The only purpose of a blockchain is to decentralize the storage and validation of data. It only makes sense if the decentralization is worth the loss in efficiency. Using a blockchain just to store data and perform computations when you have no reason to decentralize will only result in a crappy, slow database.
I agree completely, and I am disappointed that so many projects start which have no benefit from the computation redundancy (yet will have to pay for it).
People won't use it for traditional number crunching.
Way I see it, the idea is to get your data, code, and capital into the big global ball of state by consensus where it can coexist with other code. The point is being able to co-operate with others by writing arbitrary programmable incentive mechanisms.
The tech isn't there yet though. It still needs higher throughput (sharding, layer 2s), better visibility into the mechanics, and probably some kind of privacy layer.
I thought the transactions within a block are stored in a Merkle tree, but the blocks themselves are stored as a linked list. So if you wanted to find a particular transaction you'd still have to traverse all the blocks (O(length)) and then inspect each block (O(log(depth))). I have no idea what dominates in verifying a Bitcoin transaction, so maybe in practice the cost of finding a particular block is amortized because you're spending most of your time within a block.
But from the original bitcoin paper[1] I got the impression that to verify any particular transaction you need to traverse the whole list of blocks.
Wasn't a public blockchain supposed to solve this? I always see this speculation and I thought the blockchain was supposed to show the public who was doing what... instead I always see these comments about big holders and speculation who it is. Shouldn't exchange addresses be known?
You may be right that the majority is probably an exchange. But is there something in the protocol specification that prohibits such majority?
Then it raises a question, can an actor such as a government (which may have unlimited resources) to hold large numbers of ether (> 51%) to add blocks to their advantage?
Perhaps, it's my ignorance about this technology that makes me question and prevent me from adopting this technology.
There's a common misconception that once you have >51% you can do anything. This isn't true. There's plenty of mischief you might get away with (censoring, double spending), but you can't transfer other peoples money without their private key, and you can't change the rules of the protocol. You can probably tank the value of the currency by doing large enough double spends and causing problems, but in PoS importantly you're hurting yourself more than anyone else, while in PoW, you still have a bunch of useful hardware left over after the attack, and with hash power marketplaces you can attack a PoW chain while having more or less no investment in the chain itself.
I keep hearing "you can't do X without getting slashed". What happens if there is a network partition that lasts for longer than 6 minutes? Which two of the diverging blockchains get to slash the other one and take all their stake?
> What happens if there is a network partition that lasts for longer than 6 minutes?
With less than 2/3 of the total stake active on a single partition, that partition stops finalizing transactions, meaning that the chain explicitly stops guaranteeing that it's canonical.
Notably, slashing cannot result from a partition, only from malicious validator behavior.
> Which two of the diverging blockchains get to slash the other one and take all their stake?
For a partition, which is not a slashable offense, there is no slashing. The minority partition stakers suffer inactivity leak on the majority chain, meaning that they very slowly (at first) start losing their stake until the majority partition has 2/3 stake again. It's not a big penalty like slashing, unless the chain remains in a degenerate state for many hours or days.
On the other hand, a slashing rules offender (attacker) gets slashed on all chain forks. The conflicting signed block from one gets included on all others for a bounty. This means that every staker must vote for only one fork at a time, which means the network can eventually determine which fork is canonical because it was voted for the most.
The short answers is yes, there are various safeguards and countermeasures in place, some on the protocol and some on the social/incentive layer. But it would take dozens of pages to explain all of these in detail, so if you are truly interested in this you can search for "proof of stake security" or "proof of stake centralization risk" and you will find a huge number of resources.
Not really the same. Mining pools simply point their capital at an api while those staking with exchanges literally give them their capital. With stratum V2 on the horizon (allows miners to construct their own blocks while in a pool) the similarities will be even less.
But either way, it's a central entity ordering transactions and putting transactions in blocks.
The real question is, how much capital do you need to be a block producer. For Ethereum that's 32 ETH; with 400K validators and 12-second blocks you'll produce one every 55 days on average.
So on Bitcoin, the largest remaining PoW network, how much capital do you need to produce a block that often?
Let's see....actually 14M ETH staked now so about 430K validators. Blocks are 12 seconds, so blocks per day is 24 * 60 * 5 = 7200. Taking 430,000/7200 gives 60 days.
But they're saying returns are more like 6%. Where are you getting return per block? (Also I think some of the return comes from doing block attestations, on every block.)
This article was the first I read that describes the new system. It appears designed to benefit Etherium banks. The more you hold, the more you get.
> Miners are replaced by validators – people who “stake” at least 32 ETH by sending them to an address on the Ethereum network where they cannot be bought or sold.
These staked ETH tokens act like lottery tickets: The more ETH a validator stakes, the more likely one of its tickets will be drawn, granting it the ability to write a “block” of transactions to Ethereum's digital ledger.
There are two interesting things I want to watch from this. The first is I'm interested to see what kind of bull run ETH goes on. The merge has been incredibly long coming, it has huge risks and I think that puts downward pressure on price, you really don't want to be doing stuff in ETH at the moment because there's a fairly good chance something goes wrong, someone stealds $XBn and runs off and the Ethereum guys go "Well I guess we're going to have a centralized intervention and reset the chain back to date Y" (this famously happened with the first DAO). So as that risk dissipates I would expect a decent price run. I'll be very interested if that doesn't happen since it says a lot about broader market conditions.
The second thing I'm interested in is that ETH was the vast majority of revenue for GPU miners. I read an article on HN a few months ago about how once ETH is gone the rest of the PoS chains put together won't yield enough revenue to be profitable for the vast vast majority of current ETH miners. This alone could have a massive ripple effect on the used GPU market. Interesting to see where that goes.
GPUs are already flooding the market. 3090s are up for ~900 bucks on ebay at the moment which is 25% below their MSRP, and I strongly suspect it's miners dumping their stock.
regarding price, one can argue it both ways. at the point of the merge, most assets on ethereum are risky: if you were a uniswap LP and the two assets you were pooling chose different forks as their “official” one (most meaningful for off-chain collateralized assets like USDC), you can bet arbitrageurs would have left you holding the worthless asset on both chains. accordingly, Eth became the “safest” asset during the fork, since both forks will recognize it. that would create buy pressure leasing up to the fork, which goes away after the fork.
but there’s a million arguments on both sides of that picture. i think the strongest argument for price direction is that PoS miners are less likely to sell their Eth immediately after mining it than PoW miners because the latter purchased mining equipment with USD and want to repay that, whereas the former are invested in Ethereum itself instead of their mining equipment. also it sounds like block rewards are decreased with PoS, so the currency itself is deflationary now (?)
this, this is the right response. this is the most telegraphed event in crypto, all the bulls are literally in eth for this, there is just as much likely to be a "sell the news" effect as there is a bull run. OP betrays his bias imagining only one outcome.
The idea that because it's risky right now and that a decrease in risk will provide higher returns isn't necessarily sound. For example, playing a financial equivalent to Russian roulette won't give you higher returns. You can look at the countries titled with the euphemistic "developing markets" which have historically had extremely high risks AND a much lower return than in lower risk countries. The risk-return trade-off may be assumed often, but there are controversies, and it's underlying theoretical basis only holds in an efficient capital markets where market participants are capable of pricing risk. A bank can price the risk of a mortgage default, but how can you price the risk of anything in the Blockchain space, like say Ethereum getting completely wiped out by a hack, etc?
> You can look at the countries titled with the euphemistic "developing markets" which have historically had extremely high risks AND a much lower return than in lower risk countries.
Hmm? Not sure what you mean. High-risk countries' bonds pay higher interest than low-risk countries' bonds. E.g. Ukraine was paying 10% interest in USD when US was paying 1%. Of course, expected value might be lower if you average over all such countries, but we are talking about a "happy case" here where a bad event did not happen.
> how can you price the risk of anything in the Blockchain space, like say Ethereum getting completely wiped out by a hack, etc?
Well, you can't calculate the risk but you can get 1000000% return (the actual return over 7 years for ETH presale). Or you can calculate the risk and get 5% return. It's your choice.
> Well, you can't calculate the risk but you can get 1000000% return (the actual return over 7 years for ETH presale). Or you can calculate the risk and get 5% return. It's your choice.
"Past returns are not indicative of future performance" is a mantra you will see everywhere in the financial world. If not doing any risk calculation whatsoever gives you 1000000% return them you didn't "invest" anything, you just gambled with it.
>So as that risk dissipates I would expect a decent price run.
The risk you're describing is a social-political one. As long as the users do not fork with the etherium developers, that will not happen. Change to PoS has nothing to do with it.
> The risk you're describing is a social-political one. As long as the users do not fork with the etherium developers, that will not happen. Change to PoS has nothing to do with it.
Are you saying that the market did not price in any technical risk? I don’t follow crypto markets closely (and don’t own any), but given the number of crypto bug exploits and the unprecedented nature of this merge, that seems unlikely to me.
Even a social-political risk averted is a risk averted.
> “I feel very proud, you know, that I'll be able to look back and say I've had a role to play in removing a megaton of carbon from the atmosphere every week." -- Edgington
There's a very important difference in not emitting carbon into the atmosphere and actively removing carbon from the atmosphere.
Both are critically necessary and complementary, but I don't see how Edgington thinks that switching off PoW suddenly makes Ethereum carbon-negative.
Especially since the carbon emissions of Ethereum were a product of Ethereum's existence in the first place, hence an entirely self-made problem, produced by the very people developing and pushing the platform.
It's a lot like someone being an active part of a group of gangsters taking hostages, then turning around and helping the police freeing them, only to then brag about how proud he/she is of having a role in freeing those poor innocent people.
I love Ethereum and am a strong believer in Blockchain technology, but everytime I hear the "Ethereum PoS is a win for the environment" reminds me of the Simpons episode when Bart says something like: "I'm going to smoke and then quit smoking" to what Homer replies congratulating him because quitting smoking is one of the most difficult things to do... It is very misleading, and naive.
> There's a very important difference in not emitting carbon into the atmosphere and actively removing carbon from the atmosphere.
The phrase "removing a megaton of carbon from the atmosphere every week" is globally syntactically ambiguous. It can be read as "removing [a megaton of carbon from the atmosphere] every week" or as "removing [a megaton of carbon from the atmosphere every week]". The second interpretation means removing a source. Both interpretations are roughly equally valid, although "eliminating" would sound better.
"eliminating the emission of a ton of CO2 every week" is a similarly ambiguous phrase which can be interpreted as [the emission of a ton of CO2 every week] or [the emission of a ton of CO2], every week.
i’m thinking it was a single person who just really wanted to be the first tx on the PoS chain. i’m not versed to decode transactions well — i wouldn’t be surprised if it was somebody making a “first PoS transaction” NFT or something.
With PoW you had capital expenditure, but also operational expenditure (e.g. electricity costs). Your capital also depreciates over time.
With PoS, you don't have any operational expenditure, and the sticker price of your capital expenditure stays the same, and you can get it back when you unstake.
That’s not true. There is operational expenditure, like electricity cost, internet data, hardware that holds the client softwares, etc.
It’s just that the depreciation is slower, and less expensive over time than GPUs or ASICs.
Maybe this isn’t the case with some of the other DPoS chains out there, where people can delegate their stake to validators, making it unnecessary to run any hardware.
Interestingly, unstaking is not actually supported by the network yet so the staking only goes in one direction. The price and demand impact when that does go live will be interesting to watch.
Not OP, and not about opex specifically, but around PoS and centralization...
Before we had ~3 groups (miners, holders, users) that all kind of needed each other. Now there's no more miners. Given that crypto loves zero-trust and all that, I think it'll be an interesting experiment to see how the randomness of staking allocations plays out; if randomness streaks towards major capital, it'll look like they're favoring themselves and their stakes will accumulate %-wise increase at a higher rate (centralization!). The other "random-streak" outcomes aren't as bad (imo) and there's some game theory around this topic that I'm only topically versed in. Complicated by the part that miners did have some of their own problematic incentives and externalities.
In summary I view it as moving away from an unstable 3-body problem down to a more stable/centralized 2 bodies, one of which has greater influence. Hopefully good stewards and all that, but instead of forced cooperation among the 3 we now mostly trust 1 group.
Basically yes but in fairness there is a bit of operational expenditure. You need to pay a bit for energy (there is still a computer that needs to run), internet costs and your HW may need to be renewed every 5 years or so (perhaps longer). Typical costs of a normal consumer grade computer plugged to the internet, almost insignificant but not strictly zero.
PoW was worse because it had an economy of scale. For example, it is far cheaper to add mining power if you already own a big mining centre or buy ASICs in bulk.
PoS does not have this: your rewards are always linear to the amount of ETH you stake.
This means that, while PoS is still controlled by those with the most money, it does not trend to centralisation as harshly as PoW.
Pos is controlled by those with the most money, and they continuously gain more money through staking rewards (i.e. the rich control the system and automatically get richer).
With PoW, you have to sell/spend some of the coins you earn in order to pay for operation expenditures.
I don't see how it is beneficial to anyone (other than ASIC developers and energy companies) to build a tax paid to ASIC developers and energy companies into the protocol.
The energy expenditure anchors the money into the real world, making it a hard money like Gold, and it also facilitates decentralization.
Energy is naturally decentralized all over the world.
A "tax to energy companies" is a subsidy from the energy company's point of view. If you want more of something, subsidize it. A world with more energy is better than a world with less, as we're all in the process of relearning.
There is no evidence that the exchange value of any PoW coin has anything to do with the energy used to mint it. In fact we have counter evidence, for example that there are PoS coins that have value
That's the same in both cases. Both times you are turning money into more money. Literally the only difference is that in PoW you have external costs. But since these costs are physical and out of the scope of the chain, they do not scale linearly.
In theory, yes. But in practice, most miners have joined a mining pool. Mining pools allow miners to share in the rewards, which means they have a vastly more predictable income per block. A solo miner would probably not have a statistically significant chance of finding a single block for the next 100 years, while pooled miners earn bitcoin through finding blocks roughly equivalent to the mining pools relative size compared with the total hash rate. Since mining is a cutthroat, bleeding edge, hypercompetitive system, that means dependability and stability are very important.
It's not "lottery as a banking system", because there are rules for validators for failing over and others replacing them. This is what complex consensus mechanisms are about - how to have 100% uptime instead of few nines. The system has built in incentives for the operators to keep it running smoothly, but still not being unable to change or reject the transaction payloads, like PayPal or banking system could.
This is categorically incorrect. You can have any amount of ETH (up to 32 because there's no value in going higher) and be a validator participant if you partake in a pool.
Sure, but that doesn't make the difference between getting a lottery ticket and not getting one. If you have 1 ETH in the pool when the validator hits, you get the corresponding fraction of the award, minus the pool fee.
I mean......isn't that any lottery? People who buy 100k lotto tickets have an undeniably higher chance of winning than people who bought a single ticket. Here it's the same - the higher your stake the higher the chances. But you don't need to stake all 32 eth to participate.
For those interested in understanding the tech rather than the typical bashing things as beneath them, I wrote up a detailed technical explainer of how Ethereum PoS works: https://0xfoobar.substack.com/p/ethereum-proof-of-stake
I find the complexity of that algorithm both impressive ( since they seem to have made it work), but also quite worrying. I'm really not sure how such a beast can't be filled with bugs, not in the implementation but rather in the protocol.
I know a lot of very smart people are working on this, but i'd rather have something conceptually simpler to work as the base layer for a whole new economy.
There is large areas in cryptography where if you don’t do it right the whole thing won’t work at all - in that sense there are large parts that are self verifying which collapses complexity. I’m not saying it’s all easy, just that experts can navigate through complexity because they know what to ignore by abstracting it and thinking about properties it holds, not keeping in mind all the guts underneath. Maybe good example is that you can use sha256 effectively in your code without knowing or focusing on how it works internally. You’re interfacing with it through relatively easy properties it has.
There are even larger areas in cryptography where if you don't do it right the whole thing will work, and after a few months someone will make $1B by crashing your currency into oblivion.
Edit: if you want to see how that can happen, I like to take apart weak cryptocurrencies and show what's wrong with them. Someone paid me to do a public review of a thing called Stratis a while back, and I went to town. Here's a highlight. https://twitter.com/PLT_cheater/status/1235036182284820481
I still accept commissions doing code review. It's just too much fun.
Except cryptography usually rely on mathematical proofs. I'm not aware of such possibility for distributed systems. I know Lamport did work on that subject, but i'm not sure if you can equate a TLA+ proof on some properties to a mathematical proof about the structure of numbers, nor do i know if ethereum even has a TLA+ proof or equivalent of anything regarding the PoS protocol (i honestly don't know, so i may be completely wrong).
But the main issue in provable security is that you're trying to prove real world things with math, and so far we're quite bad at it. The more mathematical the thing you want to prove is, the better.
I wouldn't rely on experts being able to navigate through complexity as it happens quite a bit that a major bug in a protocol obliterating it completely is found 15 years after its inception...
Formal? Computer assisted proof checkers? Building strong cryptosystems is notoriously hard, especially when you start composing different systems since some are only secure given certain preconditions which are on you to remember and ensure.
Proof checkers only check for invariants you knew to check for. They're not future proofing against exploits, they're merely a solidification of what you knew about your attack surface at a time.
Good cryptography should be auditable, that means it should be simple. It should not rely on experts knowing their way through the complexity but should rely on mathematical guarantees.
Yes the cryptography primitives should act like black boxes, no need to peak inside but when a number of these black boxes are used together to form a high level protocol allot of subtle things can go wrong for example see the history of SSL/TLS https://www.feistyduck.com/ssl-tls-and-pki-history/
Agreed that conceptual simplicity is always best, and the current Casper FFG + LMD-GHOST doesn't have provable guarantees yet (though seems to be working in practice). I'm excited to see slight modifications to the consensus/forkchoice algo that do have provable guarantees, like [Goldfish](https://www.paradigm.xyz/2022/09/goldfish) from Paradigm Research.
Cryptocurrencies impose some complex constraints on themselves that require complex solutions.
Conceptually banks and exchanges solved the consensus problem decades ago and they did it with a highly secured simple database and lots of crosschecks.
But if you trust nobody (except some developers somehwere) then things get tricky
Could you go into more detail or provide references on where I could read up more on how banks do this? I've always wondered why we hear a lot about crypto exchanges getting hacked, but seldom about banks. What is it that banks are doing right (or crypto exchanges doing wrong) in terms of security?
Banking systems do not require consensus. So, it is a single party that has to make a trust decision with a counterparty that it partially trusts, but may potentially be a fraudulent party masquerading as a trusted party.
Crypto requires consensus amongs millions of untrusted and possibly malicious parties i.e., no trust, all cryptography.
Both require cryptography to work (eg: online banking transaction vis-a-vis crypto currency transfer). But the former is well-known (Public Key Encryption and Symmetric Encryption) client and server with established trust relationships that can be cryptographically verified whereas the latter is a distributed system with untrusted nodes and has different dynamics.
The other issue is about correctness. If there is an error (system or human) in the banking system, there are compensatory transactions/procedures possible. Crypto has not evolved yet to accommodate these real world issues. It is also not proven that the crypto protocols are 100% correct. Therein lies the rub. The banking system is also not 100% correct, but has procedures to address the failures (complaint system, appeals, courts etc.,) but with crypto, there is no way to address the failure cases (hacks, lost wallets, corrupted drives, 51% attacks etc.,)
I'm not sure if you're half joking, but banks authentify every single tenant in the transaction (from account owners, to institutions) in the most rigid way. Fraud usually happens at the edge (credit card), but everything "inside" the system is a legally registered entity.
It is completely integrated with the legal system.
They do solve the consensus problem but don't have the same constraints crypto does.
The consensus (of who owns what and how did that happen) is whatever the banking says it is at the moment.
This works because society places a lot of trust in the actors and the checks and regulations surrounding them (e.g. liability regimes) as well as the ways to rectify mistakes (through the legal system).
Crypto adds the additional requirement that every participant of the system (even end users) can independently come up with the same state without a single entity being the arbitrator of truth. The tradeoff is added technical complexity and inefficiency (storage and computation)
This is all about ledgers, traditional banks have a centralized ledger that only they can edit. Blockchains the ledger is decentralized, anyone can edit the ledger (based on specific rules) this provides allot of avenues of attack.
Making PoS scale to hundreds of thousands of nodes with commodity hardware is not simple though. Few projects managed so far, and Ethereum wasn‘t designed for it from the outset, so it‘s even more difficult.
I'm a crypto skeptic, but I have to admit, one of the cool things about crypto-currencies is that they come with their own built-in bug bounty. If there's a bug, it will most certainly be found.
I'm not sure a criminal mind would advertize having found a bug in the algorithm. Instead it would probably try to capitalize on that bug for as long as possible while remaining quiet about it (assuming it's possible, of course).
It’s like… I can be fascinated by the creativity that goes into designing and making credit card skimmers that blend invisibly into an ATM, that doesn’t mean I like the theft…
Having read your article, I still don't understand one part. The claim that the honest validators in the face of a malicious superminority can eventually leak them out, but a malicious supermajority cannot do the same to an honest superminority. I figure there would need to be some other mechanism that would tip the balance in favor of the honest validators, otherwise it seems like majority should always win.
What are these rules? Say for instance 51% of validators decide to include a malicious transaction inside of a block, what rules would that be breaking?
Depends on what way the transaction is "malicious". If malicious means transferring funds that don't exists, it'll be noticed. If malicious means transfer funds out of an address it doesn't hold the key for, it'll be noticed, and so on.
> If malicious means transferring funds that don't exists, it'll be noticed.
who cares?
As far as I can tell, a majority that wants to block a vote can do so freely and the only resolution is a fork where people just assume that the honest fork will win out.
I also think it's not a majority but actually just a little more than a third to block a vote for eth
And in the case that the malicious supermajority isn't breaking the rules? In the stated instance where they're omitting certain transactions, what rule would they be breaking?
What mechanism is deciding who pays inactivity leaks?
It says that if a minority stop attesting then they will leak until eventually the attestors get to a supermajority.
That makes sense.
It also says that, if a dishonest minority start a soft fork, the fact that they stop attesting on the honest fork means that they eventually leak out until the honest fork gets a supermajority.
That implies that, unless some mechanism has decided which is the honest fork, then all attestors will leak assuming that they aren't trying to attest to both blocks (which is illegal). But if all attestors are leaking then that supermajority won't occur will it?
So something must be deciding which is honest. But it can't be using number of attestors/deniers because of USAF ie where the honest fork is the less attested one.
So how does that work? How is honesty determined given that both forks are legal wrt rules and failed attestation is penalised but cannot be shown to be malicious (according to the doc).
Also, as an aside, how are leaks actually transacted? They can't be using the main transaction or none of the above would work. Is there some sort of shadow transaction system for staked ETH? If so, what mechanism decides the validity of the leak transactions?
Very interesting mechanism. Clearly a lot of thought has been put into it.
In case anyone's interested, from what i can tell from reading other writeups, there is no "honest fork" check. Each fork will independently deal with inactivity until they're able to finalise.
If that's the case, the article is correct in saying that a minority honest fork will finalise as would an honest supermajority fork. What it didn't mention is that the respective dishonest forks would too. If I've understood correctly.
I don’t think that’s an obtuse comment. I understood the article to be talking about Point of Sale the entire time because I live off the blockchain hype.
I'm sure you can find a naughty word or phrase, or some other semantic collision, out of almost any 3-letter combination, in some language somewhere. Sure it's one of the more well known ones in a very common lingua franca, but we humans are smart and can context switch.
Edit: Actually not sure if you are talking about Point of Sale, Place of Service, Piece of $#!7, or something else. Case in point: context matters.
It'll be okay like Medium used to be until it isn't and the funders turn it into Medium while seeking that return on investment. You're still better off owning your own blog in the long run.
GPUs are ridiculously cheap now, compared to how they used to be. You can buy a 3070 from newegg for $599 and they’ll throw in a free monitor to sweeten the deal for you
Most of the rewards in GPU mining were from Ethereum. There won't be enough money to go around to make it worth the electricity once ETH is no longer mineable. Lots of mining businesses are going to go out of business or switch to Bitcoin/ASICs, and they're going to dump those used graphics cards on the market as they do.
> “Proof-of-stake is like running an app on your MacBook,” he said. “It's like running Slack. It's like running Google Chrome or running Netflix. Obviously, your MacBook plugs into the wall and uses electricity to run. But no one thinks about the environmental impact of running Slack, right?”
People do think about that. But definitely an improvement!
People definitely think about it RE mobile apps and battery life. As well as just leaving electronics on all day vs at least sleeping them. But yea purely for energy cost of using apps, that’s pretty fringe.
I know at least one clear counterexample for mobile: MetaMask, a widely used crypto wallet app, noticeably drains battery while it's in use. Usually down 3% within a minute of opening, and it's been like that for a while.
It's also completely untrue. Staking is unprofitable if you cannot guarantee uptime of your node. In fact Ethereum includes slashing for inactivity, so not only do you lose out on rewards if you shut of your MacBook, you run the risk of losing Ethereum. Unless of course you stake with a centralized pool, which defeats the whole purpose.
I think that specific part is meant more to be read as "consume as much energy as an app running on your MacBook", not "you can stake your ETH in your notebook".
In terms of ROI, the 3060 with 12GB of RAM seems to be the best one for cheap. The M40 has 24GB of RAM too but the core is super slow.
I'm personally holding out for prices on 3090s to crash. Also, NVIDIA is rumored to be launching their new GPU series in 2 weeks (there is a scheduled event already).
If you are only interested in Stable Diffusion there's no need to get up to 24 GB. Plenty of people are using a 12 GB RTX 3060 (with that you could generate something like 4 simultaneous 512x512 images in a matter of seconds).
Even the cheaper and recently re-released 12 GB RTX 2060 could be a good pick although the 2060 is generation behind and is less efficient in terms of electricity consumption.
Of course with more GB you get higher resolution images, but plenty of people just generate at 512x512 and then use other AI projects (for example "real-ESRGAN") to later upscale their images, which will still let you achieve great results.
I think a good advice could be to join Stable Diffusion Discord and talk to other users sharing their results and experiences there.
By the way, IIRC (please double-check the following) it could be also worth noting that the guys behind Stable Diffusion (Stability.AI) declared that in the end they will eventually bring down the VRAM usage to approximately 5 GB.
However more GB are always a good thing in general for Machine Learning...
From what I gather you would want the M40 if anything as it is a single GPU with access to all of the 24GB for SD inference. But if you are going to do smaller you might as well get a 3060 12GB as it will be about 3x faster.
12GB is on the lower end of what you want for SD though. Granted, optimizations are still happening, but if you wanna do something like 1024x1024 or higher, you should at least get 24GB.
1024x1024 doesn't work very well in SD since it only iterates over 512x512 windows. For higher resolution images the best method is to use a different AI model for upscaling a 512x512 SD image.
I think this is nice, it forces people that want to participate to have skin in the game.
With proof of work there is incentive for people not invested in crypto to mine as much as possible and sell everything.
If a big enough computer is created, someone not interested in crypto can take money away from it, or if the computer is big enough even destroy it, a quantum computer for instance, should make a 51% attack on a network as proof it is a quantum computer.
I know it is unlikely, I myself think is impossible. But the incentive is there.
With proof of stake there is no incentive to do it, a 51% attack is idiotic since you have to buy so much.
Imagine if people voted or staked dollars to decide how many dollars the Fed or ECB should print. It looks like it had been suboptimal for most of history that s why the previous monetary systems successively failed. Maybe there is some kind of game-theoretic gradient that leads to monetary failure by default, which needs to be fixed by central banking . But there is no place in the world where people vote their central bankers, they are among the most opaque world leaders out there.
>If a big enough computer is created, someone not interested in crypto can take money away from it, or if the computer is big enough even destroy it, a quantum computer for instance, should make a 51% attack on a network as proof it is a quantum computer.
Ethereum isn't supposed to be money (though it can be), it's fuel you use for doing other things. Do people use less oil because it's deflationary and gets consumed when used? No, because it's useful now.
The most likely end game for Ethereum is being a replacement for all backend financial systems. Instead of having to hire teams of people to verify things or integrate various legacy systems together, everyone can build on one neutral platform and pay a little ETH as the fee for using it.
Banks would never switch to a system that makes all transactions publicly traceable, and they shouldn't.
The industry has investigated blockchains for many years, since distributed consensus for transactions is a problem they actually have. They might run their own private chains. But it won't be ETH.
Conceptually, a service provider utilizing Ethereum could create or aggregate on-chain services and package them in a similar format to what a bank is today with very little overhead.
I heard exactly the same said about AWS in 2009, now almost every major bank uses it. Once something is shown to be more efficient those banks are going to have to adopt it or justify their inneficiency to their shareholders.
Lots of companies released blockchains and coins. It's called FOMO, or "Metoo-ism". Interpreting this (or IBM's blockchain) as signs of a significant market shift is a triumph of hope over realism.
It won't be public and it won't be distributed - it would quickly revert to some form of centralized piece, hopefully one at each bank, but will probably end up with one huge central point. They will still call it blockchain to attract gen z to work there, but behind the scenes it will work just as badly as the current mess. It's in the bank's/banking industry's blood and regulations to centralize. Whatever gets thrown their way will get locked down and centralized. I can just imagine the huge audit systems that will spring up to audit the blockchain (where ideally you wouldn't need to audit it to begin with, just look at it cause all the same info is in front of all parties, unmodified). Nightmare fuel actually. Better just to start from scratch (new banks, new core banking software, different kinds of audits and regulations).
Do those banks use AWS now? Did they fight it with many justifications of why bare metal is better and cheaper and more efficient before finally realising it's holding them back? Because that's what happened in every company I worked in and that same thing is going to happen to every company working in finance.
In a capitalistic world efficiency comes before pride or your shareholders replace you.
The only problem with this analogy is that “cloud” was able to quickly produce numerous examples of material cost savings. You’re right insomuch as the banks were all over it as soon as the business case was proven. But there’s nothing comparable in the crypto space.
Who is using crypto to deliver mainstream financial products (banking, insurance, credit cards, loans, mortgages) at lower cost?
AWS came out in 2007 and most companies barely started exploring it until at least 5 years later. All of the same arguments I heard about AWS back then I hear about Ethereum right now (it's more expensive, bare metal is more flexible, we have to recode things in the AWS way) but people have selective memories and think things that are obvious now were always obvious.
Most banks in Australia are working on crypto related products, Visa is too. Eventually once a few have a network together, especially internationally, the snowball accelerates because of Metcalfs law and soon it's more costly to not integrate.
The way I think of it is "if we had everything running on crypto rails, would companies want to switch back to what they have now" and the answer is obviously no, so it's just a matter of time until it happens.
It’s really non-obvious to me that there is any advantage of crypto that makes its use inevitable in financial products. Those Australian banks - are they crypto-related products in the sense that they appeal to crypto people (maybe a way to buy or trade crypto?), or are they actually more efficient versions of mainstream products? The idea that banks will inevitably adopt crypto because their crypto-using competitors will be more cost-efficient seems implausible to me. I just don’t see the mechanism for crypto being a cheaper way of doing things.
The merge won’t affect gas fees, which makes Eth unsuitable for small purchases when the network is busy. Apparently Eth will do other work in future to fix that though.
I never use stable coins for payment, and I don't know anybody who does despite being in crypto since btc was at $8. I do pay stuff in BTc and get paid in BTC once in a while and see people in my bubble do the same. We use stable coins to limit taxe exposure, mainly.
It's true eth has never been a mean of exchange for any of us and more a platform for smart contract (my friends at kryll.io use it for that).
The majority who trade crypto use stablecoins for payment all the time. It's the default on most exchanges, and for a lot of the biggest pairs on DEXs.
If you are talking about payments of non-crypto products, I was exploring the hiring for small jobs subs on reddit yesterday and the two main accepted means of payment I saw seemed to be PayPal and stablecoins.
ETH as cryptocurrency mainnet still has the same high gas fee when it was PoW. Some layer 2 solutions will have the utility to use their token as cryptocurrency because low gas fees.
What boggles my mind is that there is no withdrawal from staking and almost no one talks about it. That is, staking right now is a one way street with a promise to be able to withdraw some time in the future and returning only about 4% gross annually, which is laughably low for something that risky. It's well hidden in Ethereum press releases, the only mention I can quickly find is the FAQ entry titled 'Misconception: "The Merge enabled staking withdrawals."' here [1].
It's not just about transparency either. The whole system's security rests on game theory. Not being able to withdraw must affect incentives, which means the introduction of withdrawals will change the system in ways that were not tested yet.
> It's well hidden in Ethereum press releases, the only mention I can quickly find is the FAQ entry titled 'Misconception: "The Merge enabled staking withdrawals."' here [1].
You shouldn't make financial decision based on press releases. It was a well known fact that the withdrawal of staked ETH would not be enabled with the POS hard fork. Every staking tutorial does point that out.
The Beacon Chain has been started in December 2020. That means people have been staking for almost 2 years now, knowing that they won't be able to withdraw any of their staked ETH for years.
You can say what you want that is quite the commitment.
> That is, staking right now is a one way street with a promise to be able to withdraw some time in the future and returning only about 4% gross annually, which is laughably low for something that risky.
You are aware that the POS rewards are calculated taking the amount of staked ETH into account? The more ETH is staked the smaller rewards are? That means that people are totally fine with staking for that kind of return.
Withdrawals haven’t been enabled _yet_. Per your own link it will be enabled in an upcoming upgrade.
Of course you can argue this upcoming upgrade will never happen. But you could argue the same about the merge upgrade, and this one did happen in the end.
> Withdrawals haven’t been enabled _yet_. Per your own link it will be enabled in an upcoming upgrade.
lambdadmitry is aware of that, they wrote "that is, staking right now is a one way street with a promise to be able to withdraw some time in the future".
>Of course you can argue this upcoming upgrade will never happen. But you could argue the same about the merge upgrade, and this one did happen in the end.
They weren't saying that it definitely won't happen, their main point was "[the return] is laughably low for something that risky". Yes, you might be able to withdraw in the future, but it's not guaranteed and right now you can't, so there should be more attention paid to the risk as it stands.
I'm saying that right now staking is an activity with a serious risk of losing all of the staked money, an undefined period of the money being inaccessible, and just 4% gross reward for that, which is so poor I can only imagine very specific people engaging in it. It doesn't make sense financially, so the people doing that are either foolish, enthusiasts, or looking for other ways to profit such as regulatory capture, which should not inspire confidence.
What's more, it's expected to change, changing the rules of a system relying on incentives to stay sound. In that sense it's not even releasing an alpha version, it's releasing a different product and promising to launch the announced one some time later.
It still doesn't, unless you mean as a cause for activists. Stocks are here to stay too, and SP500 returned about 12% since mid-20th century while being much lower risk and having no withdrawal restrictions. Why settling down for 4% when you can have multitudes of that with lower risk? There is no financial sense to do that, and "voting with your wallet" against your financial interests is by definition activism.
What you're saying is effectively "staking is a donation to Ethereum future", which I don't mind as long as it is explicit. In Ethereum's communications, it's anything but.
I think our disagreement is that I vehemently consider global warming to be against my long-term financial interest, making it perfectly rational to invest in anything that has a serious shot at limiting it, while you consider this to be « activism ».
Congrats to the devs. This is a historic moment for computing and distributed tech, and will pave the way for Ethereum’s next updates: scalability, privacy, stronger censorship resistance, easier UX and account abstraction.
Yes, of course this is my opinion. The transition has been years in the making and the amount of research and contributions to computing, distributed systems, and cryptography that this transition has created has been immense.
Switch to a different currency that is still proof of work? I mean if you've got all the gear and just need to change was software is running and you get back to making money, wouldn't you?
Nothing else was as profitable (and ETH profitability had already dropped), and depending on your costs switching won't be worth it for many. Even for those who is the other mineable currencies are much smaller and will likely be oversaturated with just a fraction of the hashpower which was going into ETH.
I have a very very large GPU farm. We switched to ETC, for now. Why? Because it is the easiest one that doesn't require retuning everything. GPUs are like snowflakes and each one of my cards are tuned for hash/power/stability, individually. It is an insane amount of work to do this because the failure mode is that the card (and machine) crashes.
But, do you believe ETC has future? I think the current increase in ETC GPU mining is due to people trying to squeeze the last bits of money return of their farming investment until they could sell/repurpose (I mean non-crypto) their rigs.
I honestly don't believe ETC has any practical future value, and any increase in valuation these days will result in a bigger crash of ETC value in a few days/weeks as people get out of the GPU mining ecosystem.
ETH transitioning to PoS is a poison pill for all of the gpu mineable shitcoins out there.
Any gpu mineable coin will trend towards zero because they cannot support the irrational speculation any longer... unless they come up with some better use cases for usability.
There are enough home miners that either have free power and/or low capital opex requirements, such that any money earned is good money, even just a few dollars. This constant sell pressure on the market will always push things down.
Unlike BTC the miners can sell their gear so they are not down on their investment.. I imagine BTC miners putting up a good fight if this was on the table and they stand to lose all their asics
Not yet, but when the combined effects of the merge + EIP 1559 drive ETH to flip BTC _and_ the ever-increasing "BTC wastes X countries worth of power per day" it will eventually happen.
No chance at all while BTC remains top dog (in market cap)
There are huge concerns over centralization. As it stands 2-3 entities (e.g. Lido, binance and Coinbase) over 50% of all validators. This is due to a mix of issues (no withdrawal making liquid staking very attractive, 32Eth limit leading to hugely inflates numbers of validators and no stake delegation creating the need for off chain pools). I would say there is about a 1-2% chance that BTC adopts PoS on a good day. Based on what Ethereum has delivered it's very close to 0.
I support bitcoin because it is a pattern that allows value transfer absent intermediaries, binds value directly to energy and computational capacity (work), and has clear mechanisms for any new party to enter into consensus.
In other words, if PoW is attacked by say a governmental entity, a massive mining op or central mining shuts down, it does not fail. The hash rate just gets distributed.
I don’t support bitcoin to get rich. I support it for freedom from tyranny. I support it for independence from oligarchs, banking authoritarians, and a corrupted monetary system.
PoS is a carry over of aristocracy and oligarchs. The oligarchs are just called “stakers” now. And with a name behind the stakers, governments can enter and control the mechanisms. With a massive stake locked in an asset you become vulnerable to control from external forces.
There are so many problems with this pattern one could write, at the very least, a very long article on it. But it would seem reason and freedom is as a fart in the wind these days.
Tldr: Bitcoin will never move to PoS because it is inferior.
> I support it for freedom from tyranny. I support it for independence from oligarchs, banking authoritarians, and a corrupted monetary system.
This is the main reason why many big brains either moved to Bitcoin Cash or Ethereum in 2017. Bitcoin basically got taken over by Blockstream and other L2 VC-backed companies, holding it hostage with small blocks just so these intermediaries can skim profits off of transactions with their half baked federated solutions.
Rationale is pretty much “if Bitcoin has been taken over by toxic lead developers who are in it for the money, then I might as well look for the next best thing (even if it’s less decentralized) with good developers, and many discovered Ethereum fits the bill.
One, they are going to sasturate the market which will drive the prices down significantly. They cannot not saturate the market, because GPUs age due to new developments by manufacturers. This already makes the prospect of recouping initial investments rahter dim.
Consider that non-miner market has a huge distain for miners and are willing to pay premium on new cards just to stick to the miners. I don't think resale value is going to be spectacular.
No, the most ROI efficient cards are 4-5 year old cards (like the RX480). ETH's algo, ethash, is memory hard, which means that it is a false narrative that buying the latest card is necessary. The bottle neck isn't the speed of the card, but the speed of the memory controller.
I suppose they made some money by running these cards..
They stand to get SOME of the initial investment back, unlike BTC ASICs, they are basically worthless outside of BTC mining..
I gotta say, I’ve been really cynical about this and honestly thought Ethereum would keep putting off the move to PoS forever. I’m very very happy to be wrong.
I still don’t see the value in cryptocurrency as a project, but now that it’s not rolling back years of renewable energy development, I’m down to have some much more interesting conversations about Ethereum, and I may even be willing to buy some and try it out.
Monero is the only cryptocurrency that is fulfilling its original promise (basically digital cash, untraceable) and that is being banned left and right by exchanges these days. ETH is more of the old power balance with slightly new players without all the previous regulations (i.e. scams everywhere).
> the only cryptocurrency that is fulfilling its original promise
What was the original promise again? I don't see original Bitcoin whitepaper mentioning traceability or untraceability. There is a chapter about privacy features and no sane person would see a promise of untraceability in that chapter.
It seems that shills and spin doctors pumping their own crypto coins twist the history to their needs.
It's not how it was spelled out in the Bitcoin whitepaper, but how it was sold to the public - privacy was among the biggest draws initially if you remember.
It is really a canandrum IMO. Being untreceable like cash has advantages, for sure. But humans will always need to interact with each other, and some interactions rely on certain levels of trust.
A small part of the reasons our society is safer, in comparison with a hundred years ago, is that wealth is held by large institutions and cannot be stolen (as oposed to storing gold and jewlery at home). Thus making personal violent crimes slightly less lucrative.
Trust in banks and government arguably yeilded some benefits as a tradeoff for privacy. Monero might be too far for many people. In some ways the value not migrating from Bitcoin to Monero proves it to some extent. The institutions refusing to make the transition proves distrust in their system, also to some extent.
and programmatically "generable" is a recipe for disaster (i.e. most of the exploited machines nowadays run a monero miner, when they once ran a spambot)
It isn't really over yet. This must have had a fairly radical impact on the incentives of the people who are involved in running the network since random outsiders can't muscle in any more. We don't know what that does the economics of the project from just the first couple of hours. I'm going to be checking back in on Ethereum after 1 and 12 months to see what really happened here.
They're already dropping plenty. Ars Technica reported[0] a few weeks ago that nVidia is currently struggling with a stock surplus, rather than deficit, and Amazon UK has several RTX3070 SKUs shipping at MSRP or thereabouts.
The switch to proof of stake is not exactly abrupt, it was,discussed and planned well in advance. I bet the video card makers must have been preparing.
Unlikelly. Miners are still mining other crypto. Some believe ETH is worth nothing now that it is not PoW anymore, so they are choosing other crypto to mine.
PoW incentivizes renewable energy development. It's certainly not rolling it back.
It used to also incentivize GPU production, but as of today that has been diminished as well. Instead it is only current asset holders who reap the rewards.
PoW incentivizes energy development. And then proceeds to use it all up on PoW. It's a paperclip optimizer, except the fitness function is how much power it can waste.
> It used to also incentivize GPU production
And then proceeds to use it all up on PoW. It's a paperclip optimizer, except the fitness function is how much e-waste it can produce.
It's for these reasons I'm not super convinced in the proof-of-storage type proposals. All it'd do is change what was being wasted. proof-of-stake seems to be the one proposal that avoids ridiculous amounts of waste. The only downside of course being that it essentially hard-codes the "1% of people make 99% of the money" principle.
Even more so because realistically you need to set it up somewhere where electricity is cheap which which is a centralizing force in itself. Also you need to have a really efficient mining rig for it to be profitable. With Ethereum PoS you can easily home stake on a Raspberry Pi which means it is much easier for regular people to participate.
> The only downside of course being that it essentially hard-codes the "1% of people make 99% of the money" principle.
This is only true if the only or best way to make money is through staking. This is unlikely to be the case - the ability to deposit your cash in a savings account or park it in government bonds doesn't stop people from investing in stocks. What it does instead is put a floor on acceptable rates of return from more risky options.
You already occasionally have to wait for solar panel deliveries. (depending on your location) By buying them for mining you effectively make others wait and not use them for moving off fosil fuels. Additionally, both solar panels and batteries still rely on mining actual limited materials, so every one used for crypto effectively means one less for useful purposes in a long run.
I don't really follow - 3090s are below £1000 each, you hit 2000W power consumption with just 4 of them, so £4000 on GPUs. 2000W panels + battery is going to be at least £15-20k at current prices. Not sure why affording one would mean being able to afford the other.
2000Wh power station can be had for <$2k and 2000W solar panels for ~$2k. 3090s don't really consume 500W, more like 350W and that assumes regular voltages; in reality for mining it's much lower. 3080Ti would be even cheaper for about the same throughput.
Yeah but you have the rest of the system to account for. And you need more than just what the system uses to charge the battery storage for overnight use - probably 4000W of panels if not 6kW. The batteries are the most expensive part of this(unless you only want to run the system for few hours during the day, but then what's the point?). You mentioned a 2000Wh power station, but I'm not sure how that helps? That will only store enough energy for an hour of running at most. So yeah, you're looking at about £15k for the whole power system alone.
All the other people are free to buy the cheaper/more efficient solar panels for their own purposes. Why do you care that somebody uses them for Bitcoin? Do you also care that I shower with hot water a lot?
Well, if they are being bought for PoW mining there is a good chance that they would then become more expensive for other uses. It is not like we have solar panels just laying around and nobody tough of using them before PoW came along.
Hmm, I'm not so sure about that. To me it seems much more like the increased demand has generated a lot of competition and that got prices way down from the levels just 5-10 years ago.
And that is exactly why we should base plans and decisions on the actual facts we are sure about and can measure and verify and provide citations to prove, not just our feelings about how things seem and how we wish the ideal world worked in our childish libertarian fantasies and get-rich-quick pyramid schemes.
So where's your data? I bought a pretty large solar array by adding a panel or two over the years. It's so big now that I have more than enough energy to sell/mine BTC even in winter - and that's for a large old EU-style village house and I like to shower in hot water a lot and keep 24 degrees (admittedly, I use a little coal the week/two it's -20 outside), and I don't even have new windows - still these 100 year old wooden ones - nor modern insulation (my ceiling is insulated with >50 year old straw, lol).
Today it's possible to buy a shipping container full of incredibly efficient solar panels for just around 8k EUR and have it delivered the same month. If that's not cheap and available I don't know what is - and it definitely wasn't this good 5 years ago, not even playing the same game.
5 years ago I had to talk to a sales rep who wanted to visit me and do special deals (and tried to bag the difference from grid costs through their shit leasing), now I just order on an eshop, pay with card and it's done in 15 minutes. My last shipment last year arrived within a week after ordering, now it's worse because of the Russian war - but that applies to everything related to energy, and there are new companies trying to cater to this new market already, it just takes some time to ramp up.
Each year the availability, efficiency and price of solar panels improved for me. You're claiming it got worse because of crypto - based on what? To me, your snark seems just like a childish socialist fantasy and anti-money/market scheme, and the reality starkly disagrees.
I'm not paying for it, I have my own solar arrays. And after I am finished I'll redirect the unused energy to BTC mining again - the grid pays less than half of what I get from mining. Nobody's business.
Are you suggesting the high-end semiconductor shortage was caused by crypto? I don't think so. When you have Apple buying out the entire 5nm TSMC capacity for a year/more - in direct competition with NVidia, it's a hard proposition to make. And it's not like the GPU vendors were unhappy about the high prices and/or tried hard to get more production capacity.
BTW you don't mine Bitcoin with GPUs, that's impossible for at least 5+ years now. Bitcoin is mined with ASICs that are using older production nodes (+-30nm and the like).
The semiconductor shortage? No. The GPU shortage, and the insane prices also due to scalpers abusing the shortage?
100%. yes.
Shall we pretend you replied in good faith to a post asking "Same as people were free to buy graphics cards for gaming in the last couple of years?", genuinely misunderstood the question, genuinely missing the "graphics card" and thought only of the general semiconductor shortage in your answer?
Well my point is, you make GPUs in the same factory where you make CPUs and networking chips. So first have a look at what happened there - e.g. a massive new client has appeared and booked out the entire capacity that usually Nvidia and AMD were getting. Are you saying this 100% surely had zero impact?
And again, I was talking about Bitcoin, and you don't mine it with GPUs, and ASICs don't compete with GPU production capacity. So who replies in bad faith? I'm happy to believe the other commenter genuinely missed me talking about Bitcoin, so I mentioned it again. Then you come here with your attack...
Fair point about Apple buying out the output of TSMC's 5nm line - but Nvidia used Samsung's 8nm process. One could argue some orders were displaced due to TSMC being booked out, thus crowding Samsung's capacity as a cascade effect, driving prices up, or that Nvidia would have used a different process or booked capacity on both factories if it was possible.... but on the other hand Apple likely financed the entire 5nm line (it's pretty much in line with their operational model and they did it in the past - although I'm writing with no evidence it took place in this specific occasion), so an argument could be made that such 5nm line wouldn't have even existed for a further year or 2 hadn't Apple basically paid for it.
I don't know precisely what's the net impact of all of the above, but I have reasonable suspicion it it pales compared to the miner-induced shortage (which enabled scalping - it would have hardly made sense otherwise).
And while I agree bitcoin hasn't used GPU mining in ages, you were replying to a graphics card related question, and the entire thread is about Ethereum PoW (GPU mined) being sunset with this merge.
I personally know people who were successfully mining crypto using GPUs in the last couple of years. If it was Bitcoin, Ethereum or Doge, I don't know and it doesn't matter to me. As soon as the crypto prices came down this year, they sold their GPU collection. So saying that miners used only ASICs is not true.
Yes, there was a semiconductor shortage, but miners made the situation worse for others because they each used tens of GPUs instead of just one as a normal person would for gaming or graphics work.
My friends who have an AI company bought out these miners by the dozen and are running it for training - and yes they got it by offering more money than gamers and buying the whole lot, so gamers got the short stick again.
Why is that not bad? I don't see where the value for society got so much better, if that's the measure you're using - I'd rather have someone run the Ethereum blockchain than generate catgirl porn pictures. But even that is IMHO more useful than a bunch of guys gaming, at least more people get to feel the effect of a GPU than if it was owned by a gamer and only ever used for his eye candy. Games also could simply use the available resources better and then the gamers wouldn't need such absurdly overpowered hardware.
Overall, I think we shouldn't be measuring usage of GPUs, solar panels or any other products like this and definitely shouldn't be saying who has a right to have it and who doesn't, or for what prices - that gets us into nasty situations with only nasty answers.
This is a product like any other, gamers don't have any right to get cheap GPUs. Somebody else offered more money for it and the vendor didn't take the low-end market - that's just how it is.
>The only downside of course being that it essentially hard-codes the "1% of people make 99% of the money" principle.
Anyone can stake, and the more people that stake, the smaller the reward, so the result should end up being that more people join in until the expected reward is lowered to that of other widely-available investment opportunities.
It creates a system where money makes money. It's hardly surprising if that leads to the richest people making the most money. The result won't be more people joining in until the expected reward is low enough, The result will be that a few rich people will join in with enough ETH to push the reward down. There's probably be a bunch of small-time investors doing it too, but again, more ETH in is more ETH out.
It preserves a system where money makes money. You need money to buy mining hardware and energy. If you had enough money you could start mining. Now if you have enough money, you can stake.
If the reward is pushed down to be equal to the same reward that's available to anyone through widely available investment opportunities, then it doesn't seem like it's any more of an issue than how any other investment works.
> the more people that stake, the smaller the reward
In PoW reward is proportional to normalized "work". Reward is proportional to normalized amount staked. This very directly leads to wealth concentration.
In PoW, the "work" is just how much money the miner spends on mining hardware and electricity. Both PoW and PoS are cases where people with money invest that money and get a proportional reward. PoS just cuts out the hardware and electricity waste.
There is no reason PoW-incentivized energy development would have to be only used for PoW.
PoW means there can now be a buyer of last resort no matter when and where you are generating power. Newly developed renewable based electricity can be sold at "x" price when there is residential or commercial demand, and at "y" price (y < x) to a PoW miner otherwise.
In this scenario there may not have been enough demand at price "x" to finance the renewable development, but the PoW buyer of last resort makes it feasible.
In fact, it is precisely the reverse of that: it's not a buyer of last resort, it's an energy price FLOOR. Any energy that you could sell to a customer, must be sold above "y". And so it is with computer hardware - any top or near top wafer capacity item you may want to buy must be above "Y" (what a crypto miner would pay for it). And this is why we saw massive price hikes for consumer computer tech in the last two years.
And is this way - a price floor - and not the way you describe it, because of the economic incentives of miners. They have already paid for these captial intensive mining rigs, and to best turn a profit they must be running at all times. The marginal cost of mining is important, but given the capital costs (incl depreciation of hardware!) you cannot ignore it.
Basically, your explaination is a failure of first order thinking. To a first order approximation, only the marignal cost of mining matters and thus the scenario you describe is true. However, you must include the second and nth order effects of capex to truly match reality.
The miners don't need to be running at all times. If the cost of power exceeds mining returns then they definitely should not be running -- they'd be losing money AND wearing out their equipment. There is a middle ground where mining returns exceed power costs but don't fully cover capital expenditures, but the miner doesn't have to operate during that time if they think they are better off making no revenue but avoiding the wear on their machines. The question is whether you think you will have a period of cheap power in the near future, and in this case miners can benefit from the cyclical and predictable nature of power demand in answering that for themselves.
One can easily imagine a scenario where miners run overnight when power is cheap, turn their machines off during the day when power is in high demand and expensive (and you'd either lose money by having them on, or you would make less than you would by conserving your hardware and optimizing its usage), and earn a profit overall (while leaving the power producer better off too by letting them sell power that would otherwise be wasted).
>wear on mining machines
There is virtually no wear on mining machines from actual use. There is, but it's negligible compared the main cause of depreciation of mining machines: better hardware coming out every 2-4 years AND the reduction in mining reward rate[1]. A bitcoin mining rig is worth essentially 0 after 2 years due to this depreciation. Not failure from wear. This is also true for GPU miners.
Second, there are many better uses for cheap power - one could use it to store energy in a hypothetical future where we use lots of intermittent renewables. You could use it to produce highly energy intensive physical goods - aluminum, hydrogen gas, fertilizer. You could use it for intensive climate engineering with carbon capture.
Almost anything else you can think of would be better than running a proof-of-waste cryptocurrency network.
The free market hasn’t been operating and never will operate with the restrained controls on energy usage that you outline though.
Besides, there’s so many more useful things to do with that cheap renewable energy at times of low demand - synfuels, desalination, etc - that we should definitely see what else the free market can come up with given negative energy prices, rather than propping prices up by running pointless hash-computers for some speculative investment scam.
It's one thing to have excess power, and another to have excess power in the time and place that you want to do these things. For example excess solar energy in the middle of the country is never going to be able to be deployed to desalinate water in the ocean because you will lose it all in transmission and storage (or you will spend more than you would just generating new power near the desalinization plant).
This is what makes bitcoin mining so unique as a way to make use of excess energy. First of all, securing a censorship-resistant digital monetary system is not pointless nor a scam. Second of all, energy from anyplace on earth, at any time, can be deployed for this purpose -- all you need is a mining machine and an internet connection.
POW incentivizes wasting energy for a practice that turns it into money without the in between steps of creating businesses and jobs (read: progress), and that alone is a huge minus point. That energy is then wasted for more POW currencies, which implies that those who make the most money out of it can dictate energy prices.
The only way to bring back down energy prices isn't to create more, as it would quickly be allocated by highest bidders for more POW mining in an endless circle, but to reduce that toxic demand, and eliminating POW mining would represent a good start.
People had an option against the "you must believe me it has value" money and now it goes down the drain because a bunch of idiots are crying about "excessive" energy usage. It was the perfect energy backed money (like there was a gold backed money back then...).
Stockpiling food and lighting it on fire for warmth would incentivize more food production also, but if there are ways to generate warmth without wasteful steps, I think we can all agree they're unarguably better
PoW incentivizes renewable energy development for useless mining, but not for anything more than that I guess. At least the renewables can now be used to power other more necessary demands, if the owners don’t move on to mine other coins that are compatible with their rigs.
Intuitively to me it seems that PoS can never work.
With PoW the physical reality of scarce energy secures the chain - you can’t spend energy on one computation and another.
With PoS we secure it by holding Ether, but what determines who holds Ether? The chain! But that’s what we are trying to secure. Is this turtles all the way down? Can anyone enlighten me?
Scarce energy does not secure PoW, the value of the mined currency does, in the same way that scarce supply does not secure the gold standard, it's the value of gold (the 'fiat' shared illusion that it's a reserve).
I can fork a PoW chain with a difficulty bomb so that the difficulty is 1000x that of mainnet for any given hashrate. Energy is still scarce, you can't double spend energy on my chain and the 'real' one. Yet my chain isn't secure, because no one will recognize it as canonical: the rewards it yields aren't worth expending effort for.
I think you're confused about what the chain is securing. It's not who owns what, it's who spends WHEN. Distributed consensus of ownership does not require PoW/PoS, these were invented to solve double spending/censorship attacks that were a problem in P2P networks.
You can't attack a chain to muddle the past, only the present. A successful attack on ETH won't change who holds ETH, it will only prevent agreeing on who receives it.
The part you got wrong is that you think they care about decentralization. Very few people in the crypto spare actually care about it. They say they do, but that's only a part of the sales pitch for their own crypto that they pre-mined.
the BTC dev community did (and still do) a lot of bad things, but the one thing they did right is put their foot down on decentralization even if it meant a bad user experience. If it becomes centralized, then it's nothing more than the most inefficient SQL database and there would be no point in using it to being with.
So there's an article with information about how to run a validator from home [1]. But my question is, what the typical ROI for this sort of thing? Not just from your stake of 32 ETH, but from the hardware depreciation, electricity costs, etc?
I like the idea of a non-PoW blockchain, and I don't mind taking some risks, but before I invest $60k in becoming a validator, I'd like to know what the potential payback might be.
APY depends on the current validator count, decreasing as more validators come online. Currently, the base APY is around 4 %.
On top of that, you have to factor in luck: block proposals are randomly assigned to validators, and they include a random amount of tips depending on network activity. You could propose a block that nets you 0.01 ETH in tips, or a block with 50 ETH in tips.
On average, I believe the post-Merge APY has been estimated to be ≈6 % (non-cumulative).
Hardware can be anything. Even a RasPi 4 with 8 GB of memory can be made to work. Any old x64 machine with two or more cores works. 16 GB of memory is recommended, as is a 2 TB SSD to minimize down-time. Storage requirements are likely to go down in the medium-term, as e.g. state expiry get implemented.
I’d recommend an Intel NUC. They use laptop CPUs, so electricity consumption is around 5–20 watts. For networking, you’ll need around 5 Mb/s up and down after the initial sync.
In addition to the APY described by sibling comment, validators can also run MEV-Boost to increase their APY:
> You should run mev-boost to earn a fair share of the MEV extracted in the blocks you propose. Connecting your consensus client to mev-boost allows you to get full blocks from a network of block builders optimized for MEV extraction. This can increase validator rewards by 75.3%, or give an APR of 12.86% rather than a non-MEV APR of 7.35% from staking eth.
ETC's block reward pays for a certain amount of mining to happen. If demand for ETC and its price stay about the same, then ETC's block reward won't change. Nearly all of the miners who quit mining ETH will find it not profitable to mine ETC. (If they all started mining ETC, then the reward would be split too many ways, it wouldn't be profitable for anyone, and people would exit until the reward was split less.)
> Edgington, who began his career researching climate science before eventually landing in crypto, understood where his daughter was coming from. “Rightly or wrongly, she'd absorbed a very toxic environmental narrative,” he said. “I mean, it's kind of hard to defend ‘stickers for grownups’ that emit, by some estimates, a megaton of [carbon dioxide] a week.”
I'm just glad I renamed the word for staking in Tezos from "forging" to "baking". There's now about a million companies with names referring to baking in some way. I don't think there would be a lot of financial companies that have forging in the name. It might well have been a detractor for Ethereum PoS as well.
I feel like you have an overly emotional attachment to this, given your need to make this comment. People say things that turn out to be wrong all the time, but you seem to have become resentful that they disbelieved this would happen.
I was sarcastic about the "expert" part. Those commenters were not merely wrong, they were spreading misinformation. To actual experts, Ethereum's move to PoS has been a certainty for many years now.
Well that's easy: a 2kW Bitcoin miner heats your house just as well as a 2kW electric furnace.
(I'm kidding but I'm also not; I'm regularly amazed by the fact that the most complex and intricate computational machines have exactly the same 'output' as the most basic 'heat this piece of metal' contraptions, when looked at as a blackbox.)
While resistive heating was state of the art for years, and you might as well do some computation with the electricity before turning into heat, we can now make systems that are far more efficient ("200%" and up) by moving heat instead of generating it: https://en.wikipedia.org/wiki/Heat_pump
I definitely have, and I wouldn't use an electric furnace nowadays unless there was no alternative. That's what the 'I'm kidding' was meant for. Sadly, heat pumps can't mine Bitcoins on the side afaik, so I couldn't use those for the analogy :P
A recent study by an American governmental organisation (I don't remember which) recently showed that Bitcoin can be used to reduce methane emissions. This in turn would make Bitcoin mining and Proof-of-work net carbon negative (significantly so if my memory of the graph accompanying the news isn't letting me down).
edit: also, this is a new frontier that combines the best of both worlds for energy suppliers, bitcoin miners, governments and the environment.
Let's be clear: Bitcoin is NOT reducing methane emissions or carbon emissions. Crypto mining cannot reduce anything. This is just a straw man.
The study you reference discussed burning waste methane to turn into electricity, rather than gas flaring.
That electricity could be used for anything. Water desalination, stored for grid balancing, powering agricultural needs or offsetting the electrical needs of the gas facilities.
> That electricity could be used for anything. Water desalination, stored for grid balancing, powering agricultural needs or offsetting the electrical needs of the gas facilities.
No it precisely could not, because there's no transport infrastructure, storage or grid balancer there.
sigh, one of these days, I'm going to be able to downvote despite being heavily suppressed for having a fact-based opinion about Bitcoin, which is the result of literally years of study. Until then, you have my upvote.
These are modern technologies. The infrastructure to use the methane isn't there, so it needs to be monetized locally. Bitcoin mining is one of the very few options available to do this at scale.
Total electricity*. Which is still huge, I am not sure people realize that there are no more low-hanging fruits in the form of a technical feat that a small group of people can accomplish like this, without impacting people's lives.
It's weird to celebrate the electricity savings of Ethereum like this. It's good that it's less energy-intensive now, but it was that energy-intensive before because of Ethereum in the first place.
This is how all tech works - trains, cars, power stations. We build things that are initially inefficient. We eventually transition to energy efficient tech. We celebrate. It’s rare the transition can reduce 99.95% of energy footprint the size of a country within a minute of activating the new tech.
The difference is that PoW is not "inefficient". Rather, it is intrinsically wasteful by its very nature.
Take an inefficient car for instance. There are diminishing returns in its utility after a certain point of energy use. On the other hand, there are no diminishing returns in PoW. The more energy you use, the more money you make.
Sure? It was both an inefficient and wasteful mechanism to secure consensus. This is why developers have been actively researching and developing how to switch Eth to PoS for years.
Electric heaters are the classic exception in energy efficiency calculations. The heat produced is only wasted in that it will eventually dissipate. But heat is exactly what you wanted when you turned the heater on, and so heaters are often described as 100% efficient. I guess with heat pumps this logic makes less sense. It is more efficient to move heat around than to generate it.
Not quite sure how this relates to Proof of Work. People don't generally run mining rigs because they want to generate heat. The heat is almost always waste.
I've always wondered if the economics of using CPUs in heaters to do something useful and generate heat would ever work out.
Trains, cars and power stations serve a purpose. The blockchain only creates waste with nothing in return. Yeah it does pollute less now, but it's still too much.
For something that millions of people across the world rely on, with million+ transactions daily, it's definitely worth celebrating. It's using a magnitude less energy now than YouTube or Netflix [1] If YouTube had a similar decrease in energy, Hacker News would be all over it.
> For something that millions of people across the world rely on
People keep claiming that millions of people rely on it is such a bullshit claim
> with million+ transactions daily
Which is a paltry 11 transactions per second. I think a Raspberry Pi is now capable of the same amazing feat.
> It's using a magnitude less energy now than YouTube or Netflix
And doing orders of magnitudes less while consuming insane amounts of energy.
Had Ethereum tried to move around as much video as Youtube and Netflix are doing, heat death of the universe would happen the next day after the attempt.
Can nodes in Etherium? Or is there a central governing body there which has the power to revert legitimate transactions, just like in traditional systems?
But hey, at least it's an unregulated, informal, ad-hoc process in Etherium with no justice system or oversight to enforce the rights of the little guy.
The DAO hard fork was an exceptional event that occurred in 2015, under very unique circumstances inherent to the world's first smart contract platform experiencing the world's first major smart contract hack, and has not been repeated since.
Ethereum at this point - with seven years of autonomous operation and no repeats of DAO-like hard forks - has proven to be an immutable and credibly neutral settlement layer.
You're pretending that tech is more important than the uses of that tech or the outcomes. Which is doubly ironic because the comment above compared Ethereum to Youtube and Netflix.
The 99.999999999% of use cases for Ethereum (or for Blockchains in general) can be easily handled if not by a single Raspberry Pi, but at least by a modern laptop. Because those use cases are currency speculation, buying useless shit, and asset hoarding.
The remaining arguably useful usecases are an exchange of IOUs.
You underestimate the utility of a global financial system which can be participated in by anyone.
This makes many tools and processes (leveraged financial instruments and automated market makers) available without an intermediate third party that most humans would never know existed, let alone how to use.
They are still in their infancy, the investment in knowledge that is required to use them well remains quite substantial. How many years before a regular person can ditch the bank for their own personal hedge DAO?
I'm afraid you are the one who must be kidding, if you think that internet TV is more important than leveling the financial playing field.
> You underestimate the utility of a global financial system which can be participated in by anyone.
Ah yes. By anyone. Especially those who got in early before the prices skyrocketed and can now enjoy the global financial system of... currency manipulation and hoarding.
> I'm afraid you are the one who must be kidding, if you think that internet TV is more important than leveling the financial playing field.
You must be kidding when you call scams, currency manipulation, hoarding and zero customer protections a "level playing field for a global financial system".
> They are still in their infancy, the investment in knowledge that is required to use them well remains quite substantial.
The only investment in knowledge there was (and there was very little of that) is discovering why existing systems are the way they are and keeping busy reinventing them.
> discovering why existing systems are the way they are and keeping busy reinventing them
You may have had access to those existing systems (the global financial market) before Ethereum, but many of us did not. Being able to take a risky asset, and hedge it against itself, is not a strategy that I was aware of two years ago.
I was a 12 year old investor and E-trade told Grandma and Auntie that they would have to sell their Red-Hat stock, back in 2003 or 4, because it had gone down so much in value that it was no longer worth the monthly trade commission to maintain the position open. We bought some stock after IPO, and had bad timing by a few months. If they had known then what we know now, well...
I'd not be here wasting my time talking about re-inventing the global financial system on the internet, believe you me. That was a good investment, bad system and bad timing.
Do you have any idea how exploitative the global financial system is for people who are not "in the know"? It's well over time we reinvent it all. This is awful.
> You may have had access to those existing systems (the global financial market) before Ethereum, but many of us did not.
Many you... who?
> Being able to take a risky asset, and hedge it against itself, is not a strategy that I was aware of two years ago.
That's not "leveling the playing field". It's either "financial education" (because it's something you could always do in "traditional finance"), or "let the suckers come, the more the better" (most of crypto).
> I'd not be here wasting my time talking about re-inventing the global financial system on the internet, believe you me.
Oh, I do believe you. Crypto maximalists never talk about it. They only speak vague trivialities and then disappear.
> Do you have any idea how exploitative the global financial system is for people who are not "in the know"?
Ah yes. Unlike the cryptoscams.
> It's well over time we reinvent it all. This is awful.
> That's not "leveling the playing field". It's either "financial education" (because it's something you could always do in "traditional finance")
OK. Now we are really splitting hairs, because "education" actually doesn't count as "leveling the playing field." I'm totally done here, you just played yourself.
You go ahead and educate yourself in the traditional exploitative financial system, and I'll continue my education here in the exploitative crypto-financial system. And we shall never talk again. That would be a positive outcome, right?
We're not. I'v directly responding to what you write, and not to hat you think you write.
You started with "leveling the playing field" and continued with "Being able to take a risky asset, and hedge it against itself, is not a strategy that I was aware of two years ago".
> You go ahead and educate yourself in the traditional exploitative financial system
Ah yes, you continue to use the words you don't fully understand, but since they are emotionally charged, this makes them the right arguments in your mind.
> And we shall never talk again.
As I already said, "Crypto maximalists ... only speak vague trivialities and then disappear."
If you antagonize someone in a discussion, they're going to disappear. I don't need a degree in crypto-finance to tell you that. I'm not here for any of this.
If you want to engage me in a proper discussion, you can look me up. I've been on the internet using this name since I was 12 years old (and yes educating people, and also getting educated myself.) I'm not going anywhere.
Why don't you explain more about how easily accessible those traditional financial instruments are for normies? I'm interested in that information, can you provide links?
You haven't disappeared as you promised, you keep replying. Please keep your promises when you make good ones with positive outcomes like disappearing. It makes you seem insincere when you keep promising to disappear, but don't. There's a huge difference between disappearing because somebody actually antagonized you, and disappearing because you couldn't prove your point and decided to act antagonized because people wouldn't believe your wild claims without proof.
I haven't made any claims. I said I learned something, and your buddy disappeared without explaining how to do the same thing I said I learned how to do as he said was "something you could always do," while shouting insults at me on his way like I'm somehow the one responsible for the Crypto-calypse. I'm not, and you people need to get over yourselves.
I did try to engage in the discussion. "I'd not be here wasting my time talking", "You go ahead and educate yourself", "we shall never talk again." are hardly a proper response.
> Why don't you explain more about how easily accessible those traditional financial instruments are for normies?
Define "normies" first. Or better still, drop this condescending pejorative.
> I'm interested in that information, can you provide links?
I have no links, as it's a service often provided directly by your bank. Right now I have some money invested in risky assets that in the past two months sank 10% due to the way the world is right now.
There are multiple lists of "best books about investment", so you could start there. You know why? The absolute vast majority of "innovation" and "knowledge" in crypto space falls roughly into:
- scams
- currency speculation which is indistinguishable from Forex trading except that it's running on "smart contracts". Forex trading was huge in some countries (Moldova and Turkey among those I know about) in early-to-mid 2000s. I had friends at university heavily invested in it. It probably still is quite popular (and it's very popular in "defi" which is rarely anything but currency speculation and unsecured loans).
- asset hoarding + speculation. "Buy cheap, hype, hope for the price to go up, sell". Indistinguishable from anything traditional (from stocks to bonds to Ponzi schemes): you buy an asset, wait for the price to go up, sell.
What crypto is busy discovering is why "traditional finance" has all these things in place: KYOC, fraud protection and prevention, reversibility of transactions, deposit insurance, functional courts and laws etc. And is just as busy re-inventing all those, poorly.
Go back and read it. I'll give you the benefit of the doubt now, but you did not. You threw barbs and used the word "scam" as often as you could, and told me I'd be likely disappearing in a few minutes. Then someone showed up to comment on how disappointed they are I didn't really disappear like I promised. Can't win for losing. This is exactly like every crypto discussion on the internet today, it's very frustrating. I hope you know how difficult it is for me to be this patient. (It actually reminds me a whole lot of doing Ruby evangelism in almost the same circles...)
> how easily accessible those traditional financial instruments are
> I have some money invested in risky assets that in the past two months sank 10% due to the way the world is right now
I'm talking about deliverable perpetual futures. If you had seen this coming, you could have done some short-selling to hedge your risks. Price goes up, you deliver and sell for a profit. Price goes down, you still have your asset and can cash out for a profit. Is that a service offered by your bank? Not mine...
But maybe your bank offers it ...maybe only to qualified/accredited investors? How do I get that?
Now perhaps you see what I am getting at? It's not accessible, no matter how many books you read. Go out and get a million dollars today, through some act of God, and you still won't be a qualified investor next week or next year. Or you can wait for SEC approval, and then you can go get them through your broker I guess.
Some people read books, others are not well-served by book learning. I looked for a book that could explain it to me, but ultimately I only learned by getting hosed using these instruments flatly incorrectly until I figured out what I was doing wrong, by using them, and observing the outcomes, then also asking for help. Lovely people answering questions to help others learn. (It was the friends we made along the way!)
Is there some reason the system is the way it is? Yes, I'm sure there is. Does it protect people how it was really intended, or does it actually mean it just remains inaccessible to most people? This is how crypto levels the playing field.
Does that mean you cannot cut yourself when working with the sharp object? No, it definitely is not safe to go alone here. There are a million and one ways to lose all your money, plus a million new ones that weren't possible before. And soon a new technology will come, and everyone who understands the current landscape will know immediately what to do with it, (and everyone who has had their head in the sand will wait for the SEC for guidance, and eventually begrudgingly accept the improvement, maybe, once all the life has been sucked out of it by bureaucrats.)
> I'm talking about deliverable perpetual futures.
It's a nonsensical term (like many other nonsensical terms) that only exists in the crypto space. And only works in the highly volatile market like crypto. This is short-to-medium term currency speculation, and I'm sure there are plenty of services that allow you to do that in "traditional finance". As I'm not interested in currency speculation, I couldn't tell you what they are.
> Now perhaps you see what I am getting at? It's not accessible
You've selected a single service revolving around currency speculation and you call "traditional finance" inaccessible because of that. That... is not what accessibility to financial services means. Or what "levelling the playing field" is.
> Is there some reason the system is the way it is? Yes, I'm sure there is.
You're sure, but at the same time you are completely uninterested to learn why it is that way, and you dismiss anyone telling you why it is the way it is because, let me quote, "it's an awful exploitative global financial system".
> There are a million and one ways to lose all your money, plus a million new ones that weren't possible before.
Indeed. And that makes this "accessible and a level playing field" unlike traditional finance which offers fraud protection, deposit insurance, etc. etc.
> And soon a new technology will come, and everyone who understands the current landscape will know immediately what to do with it
So, the "accessible system" will be accessible to those who understand current landscape, who have already lost money a million ways and cut themselves on sharp corners.
That is neither accessible nor a level playing field.
If you claim that it is "global financial system which can be participated in by anyone", where are the protections for those who "did not have access to existing systems" (I keep quoting you).
I'm a programmer, I earn quite a lot. And I still cannot afford to just go ahead and "lose my money in a million ways" and "cut myself when working with a sharp object". Where's your accessibility, huh?
> and everyone who has had their head in the sand will wait for the SEC for guidance
Ah yes. Instead we can just not wait and lose the money a million and one ways for the sake of.... something.
There's a reason for SEC guidances, but, again, you're entirely unwilling to learn why they exist. Perhaps, you will learn it the hard way.
I literally just came here today to tell everyone that I learned something, and you ruined it. You raised the bar, it's no longer enough that I learned something, I have to make it accessible for everyone else too, or I am a bad person. Thanks.
I absolutely love overdraft fees. I've never used a bank that didn't have some ridiculous scheme of their own which you had to internalize or pay a monthly fee. Banks offer some guarantees, but they're not really helping most people.
Neither is Ethereum, maybe you'll say, but I didn't come here to argue about that. This is a day to celebrate because the #1 top complaint of all crypto detractors has been addressed by Crypto's second largest collective. Now that is finished we can move onto #2 top complaint, whatever that will be.
I certainly do not imagine, foresee, or desire to live in a world in which people must protect their private keys or forfeit their house to a hacker. But can you really say we aren't headed there now? Is the alternative better, (that you have to trust the bank's security? Are you in the US? Oh god, I have some bad news...)
Acting like scams began in 2008 when Bitcoin was first invented is the ultimate scam. I grew up in NY, we've all been getting scammed our entire lives, by the government too.
Yeah, this quote from the article made me groan out loud:
> I've had a role to play in removing a megaton of carbon from the atmosphere every week
You're not removing it, you helped create the thing that was putting it there in the first place, and fixed your mistake! It's still there, it's just not getting worse now.
While I hate ads with a burning passion, they do affect multiple orders of more people than cryptos ever did, even if that effect is far from positive (but not blanket negative either).
There is lot of talk and debate about building wind, nuclear doing the green transition etc. in Finland. I guess like in every country. Somehow it makes me sad that group of open source developers could do more today than we ever can to help the planet no matter how much we scale back.
Although they built the hell machine in the first place, so maybe better if they would not have ever done anything.
Well, in that perspective 'green production' seems like the right thing to be talking about (vs. cutting usage, say) - if you over-produce you can always export, selling 'green' energy to a country that might otherwise have been buying 'brown'.
I live in Europe and the measures my county is taking to combat energy shortage are pretty wild like limiting the heating of apartments, indoor swimming pools, reducing street lighting, but nowhere was is stated "banning crypto mining".
Pretty insane how we're just tolerating this massive energy waste just so some people and organizations can have something to speculate on for money.
I mean it's technically both, Australia sure isn't waiting for the world to rely less on coal and gas, it's pumping 10's of billions into renewables, something some of us argue should have been done years ago.
No it's not, there's a lot of stranded energy in the world. We are just missing it where we need it the most. That's why your country is doing "local solutions"
There are definitely cases where The Market doesn't magically fix things and regulation needs to be introduced to prevent bad behaviour (or encourage a societally beneficial behaviour).
However in this case with the high cost of electricity in Europe right now, isn't crypto-mining similar to lighting money on fire? I can't imagine it's profitable in many European countries, if any.
You honestly say it with a straight face that 0.5% of the total electricity used by the word is not an unfathomably large number that was wasted for years with no good reason?!
I have a massive full tower case, it is housing my 3rd rig currently.
The first one was standard pc and the motherboard with gpu looked tiny in it,
I got 3070 recently and it barely fits (with hdd cage still in place), it looks ridiculously big. The card is so big it comes with a special bracket to be mounted below to support its weight.
Those cards are not going down in price any more than they already are.
Also worth mentioning $1,000 in 2000 is equivalent in purchasing power to about $1,719.92 today, it feels like those cards are getting expensive but part of it is cost of inflation.
Energy generation changes depending on energy usage. The grids around the world are highly flexible (in relative terms) so when energy usage goes down, less energy is produced and vice-versa.
Alright, I concede I didn't think that comment through.
I was only considering a national grid, at peak consumption hours, where excess power is exported and hence "disappears from view", but of course taking a global view the electricity is just consumed somewhere else.
Still, with the current energy crisis, with prices at all-time highs across at least Europe, I don't know if there is anywhere where power production is not running at close to 100% capacity at peak hours. Right now it is extremely profitable to be a power producer in Europe, and you can sell every kWh you produce thanks to the countries being interconnected.
The regulation capacity you're talking about is on the margin. Certain plants (like most hydro power plants) will adjust their production to keep the frequency stable, but there is certainly no excess production capacity right now.
> where power production is not running at close to 100% capacity at peak hours
That's not how it works really. The peak can change - it may literally be influenced by the break time in TV shows and people putting the kettle on at the same time. In the other direction, we may lose capacity due to repairs and unplanned outages. If we ever get close to 100% of production capacity for more than a moment, that's a massive planning issue. Instead we do rolling blackouts.
I feel like you’re still thinking of a closed system without the possibility to import or export. Maybe it’s a regional thing, I don’t know how many interconnects to abroad the US has. In Sweden this year, like in much of Europe, production is as close to maxed out as is safe, and peaks are filled by importing/exporting.
My original point was that, in regard to the ancestor comment “We'll still use that 0.5% for something else, right? It's not as if power generation (and emissions) will be reduced.”, yes it’ll be used, and no it most likely won’t be reduced. It will be exported to Germany (or some other country with a drastic electricity shortage) and used there instead.
Some power generation is done by demand, e.g. coal plants are fired when there is demand or turned off when there is low demand. Same with e.g. pumped hydro and other sources.
I’m not taking the thread on a flamewar tangent. My comment did not contain any insults nor did I encourage anyone else to do so.
I am pointing out with a sarcastic analogy that pre merge and post merge ethereum are not the same thing. Outwardly looking they are both ethereum but the post merge ethereum lacks the triangular incentive structure that pre merge ethereum had.
I am also pointing out the hypocrisy whereby people will happy accelerate climate change for the sake of leisure but get upset when someone else accelerates climate change for the sake of utility.
I am disappointed with your decision to detach this sub thread and any responses that may lead me to challenge my own perspective.
I do however respect that it was done with the intention of an preventing unproductive dialogue.
Flamewars run on more than just insults. (though the snark in your comment did sound insulting, when I first read it.) Attributing a stupid position to somebody else, especially on an inflammatory topic, is flamebait and against the site guidelines: https://news.ycombinator.com/newsguidelines.html.
On a second reading though, it doesn't seem worse than the comment you were replying to, so I'll reattach it.
Btw, your follow-up here is a case of an interesting phenomenon I've noticed many times: people often give a better (i.e. more neutral and explicit) expression of what they originally meant, when explaining it in response to a moderation scolding.
It is as if the original comment presupposed the meaning and just gave us the snark, where the follow-up spells out the actual argument. Usually the actual argument isn't obvious; that is, it's obvious to you (i.e. the original commenter) because you have it in your head already—but it isn't obvious to the rest of us. Since that's the interesting bit, it would be better to include it up front (and then you could drop the snark as well).
I'm not sure if there's any way to actually use this pattern to improve the threads—short of scolding every comment, which would end up becoming background noise soon anyhow—but it's interesting how frequently it shows up.
I thought the original comment was very good. It was succinct, humorous in an absurd way yet truthful if the reader was willing to decipher it.
I guess it could be considered snarky however I was mocking a common perspective (the idea) not the commenter that I was replying to (the person). The GPU shortage during the pandemic pushed a large percentage of the gaming population to despise cryptocurrency. Often they will criticise cryptocurrencies for contributing to climate change without realising the hypocrisy of that position.
If I had to write a rule to discourage comments like mine it would be:
"critical replies should quote and address the points of disagreement in their response directly"
This would cover indirect criticisms like mine that cause some people to react emotionally. I guess a rule like this might be too strict to enforce though maybe it could only be enforced on the most serious of offenders.
You're trying to compare mining farms running 24/7 with people using a single card for a probably an hour a day on average. Without actual data on the number of users, this is meaningless.
You're not citing your source, but it's likely "Taming the energy use of gaming computers" which is a problem: it's from 2014, it's a rough estimate, assumes that you turn off your computer only for 8h sleep, includes all the other work done on a PC if it's at all used for gaming, is based on hardware before we got massive frequency scaling, double graphics (like optimus) and before everyone moved away from CRTs... and finally before a massive exodus to laptops. (their follow up report discusses moving away from CRTs as a way to limit power usage) It's really not a good source today, it was a disputable one at the time, and doesn't even match the question - it measures gaming computers usage, not gaming usage.
Crypto does nothing. Or you could argue, it 'entertains'. But in a way that is unnecessary (it's a distraction, not entertainment), and in a manner that creates unnecessary energy costs (PoW vs PoS).
You definitively live in the first world. As a person that lived in a third-world, dictator infested country for 3 decades, I can tell you, OWNING your own money is LIFE CHANGING. I prefer not to have games, or netflix, or anything, but have financial certainty.
For you guys money is a done deal. For a HUGE part of the world, something as basic as money (or even water) is not. Try to be a little bit more empathic.
I live in a 3rd world country too (Switzerland) and i can tell you that the stability of our money (politics?) is 90% of our wealth, otherwise we would have literary nothing (with the exception of water (but who knows for how much longer)).
>>The term Third World was originally coined in times of the Cold War to distinguish those nations that are neither aligned with the West (NATO) nor with the East, the Communist bloc.
The people in Lebanon, Turkey, Venezuela holding USDT on Tron would hard disagree with your statement.
There are capital controls in place in these countries that make holding foreign currency simultaneously difficult and illegal.
This is why I believe a US CBDC and CBDC wars are highly likely.
A CBDC allows nations to control those nations that use their currency and the increasing it’s use allows the issuing nation to debase the currency to their advantage.
The only problem is distribution of technology but this is only a matter of time.
Before you get all worked up about "crypto is better than tulips!", I'm primarily responding to your question by saying that _just because_ people are willing to pay (sometimes exorbitant amounts) for something doesn't imply it has that value.
People will pay for something that they value but others do not.
I prefer to think of value as a function of rarity and utility. I'll skip over rarity but utility can include the possibility of selling something for more than it was purchased at some time in the future.
If someone pays an exorbitant amount for something it has that value to them at the time of purchasing. Whether that value is reflected in the market price or persists over time is something else though. Value is not static. Value is dynamic. You can observe this both personally and in the markets.
Indeed. If energy is so important and the root of all our problems, we should stop generating and using energy altogether.
I am more and more frustrated with the energy angle of crypto. We live on a technological world that consumes energy, everything has an energy cost. The goal for an advanced civilization is not reduce energy usage, but make it cheaper, cleaner and more abundant! Why does people complaining about "0.5% of world energy usage" think we're researching fusion energy? So we can stop consuming it?
It's such a populist and uninformed argument that drives me up the wall. We can discuss the pros and cons of PoW and PoS, but using the "it consumes as much as X country" argument is intellectually dishonest and pushes forward a particular agenda. How much energy does porn use? Video games? Advertising? Spam? Space heaters? Surely we could do without them and consume even less energy.
Do you know how we can measure the technological advancement of a civilization? By how much energy they have at their disposal ready to use. [1] Not by how much energy they have saved.
We all hate climate change, let's push for cleaner energy instead of glorifying idiotic energy reduction slogans. If governments were to put a tax on energy generation from fossil fuels, crypto miners will be the first to set up hydro and solar plants to run their GPUs. Because mining makes only sense if you can get cheap energy, otherwise it's unprofitable. But that's a more nuanced and intellectual argument than "Bitcoin warms the planet!" and doesn't fit as nicely on a top-voted comment on a forum.
I think you're reading the situation completely wrong here. Yes, we should make energy cheaper, cleaner and more abundant. I don't think anyone with any real stake in the game is rallying against that fact.
The issue most people have with Bitcoin is about it's value. It uses tremendous amounts of energy for what most people perceive as little to no tangible return, and the view is that we could use the same energy (and maintain the same "technological advancement" as you put it) for more valuable purposes; things essential to our survival both on an individual level (warmth/cooling, food, shelter) and as a species (accelerating our move to renewables, protected biodiversity, enabling simulations for improvements in medicine and the like).
Your argument seems to be against a fictitious opponent, or one at the extreme end of the normal distribution. Very few if any are campaigning against only reducing energy usage. Most are campaigning for a redistribution of Bitcoins energy consumption, about 0.55% of global production, to accelerate our technological progress.
> I don't think anyone with any real stake in the game is rallying against that fact.
Minor and probably distant concern. All forms of energy usage have losses, mostly heat. If consumption keeps going up forever, then at some point the accumulated generated heat will become a problem on itself. But let’s solve the more present matters first.
> The goal for an advanced civilization is not reduce energy usage, but make it cheaper, cleaner and more abundant!
Why? Do you think every additional watt of energy will make us happier? The countries using the most energy per capita are gulf countries like Qatar, Kuwait, the UAE. The population there is 10-20% residents, the rest are quasi-slaves living in awful conditions (hopefully you heard about what they did for the World Cup).
> Do you know how we can measure the technological advancement of a civilization? By how much energy they have at their disposal ready to use.
Again, is the middle-eastern civilization more advanced? Most of them are still monarchies.
We already live in an energy-abundant society. Making more energy will not solve the underlying problems of it.
> (hopefully you heard about what they did for the World Cup).
What did they do? I mean, besides the ridiculous Guardian article claiming unrealistically low death rates among immigrant workers. (discussed on HN earlier at https://news.ycombinator.com/item?id=30930117)
> the rest are quasi-slaves living in awful conditions
How would you describe the much worse lives of those people in their countries of origin?
> How would you describe the much worse lives of those people in their countries of origin?
I was born in one of those countries, and personally know people who have made the choice to work in these counties. Do understand that people are not choosing to be quasi slaves because their lives are better as quasi slaves. No, more often it's a choice to create better lives for their families, and sometimes rarely it's a choice by their parents to ship off one out of their seven children to generate income. This quasi slavery is only possible through the insane arbitrage generated by petrodollars, and because we only selectively choose to be morally outraged at human rights violation only when it's done by the villain of the week.
Although there are better reasons to reject crypto, energy usage for crypto has few benefits aside of speculation/gambling for material gain. In Europe, energy bills for most people have tripled so reducing energy demand is a priority right now. I think there are less harmful ways to gamble. You could try a casino perhaps or buy futures contracts on ornamental gourds.
Just because it's not very useful today, it doesn't mean it's not useful ever.
Reminds me of people that were sure the Internet wouldn't go anywhere in the 80s. Technologies don't have to necessarily be useful on day 1 or even 1000 to be eventually successful.
Sun’s mass is 2e30 kg.
E=mc^2 gives you max energy. (2e30 * 9e16).
Assume we start with one joule this year. Each year increasing energy output by 5%.
How long will it take till we use-up whole sun?
ln(2e30 * 9e16)/ln(1.05) = 2230 years
How long till we use up whole milky way? (Around 1.15e12 solar masses)
ln(2e30 * 1.15e12 * 9e16)/ln(1.05) = 2799
How long till we use-up whole universe? (10e53 kg)
ln(10e53 * 9e16)/ln(1.05) = 3348 years
Our potential is not limitless, exponential growth is not sustainable even on universe’s scale. Eventually we will reach hard wall.
2. Crypto heating (mining and poW) is very inefficient use of resource (as in, percentage of planet using crypto vs percent of total energy required for it). Not a smart thing for humanity to do.
3. Energy being limited, makes it shared resource. Crypto heating raises energy prices for others.
> I feel a great disturbance in the force. As if a million miners cried out all at once and then were suddenly silenced.
You might want to adjust your force sensitivity. The merge doesn't simply GPU mining will stop, simply that the PoS chain is now merged with the PoW chain. You'll still be able to PoW mine with your GPU until they remove PoW fully, which is due to happen sometime around Q3 2022.
More precisely, it depends whether Q3 2022 meant calendar 2022 or financial 2022 (and if the second, which financial 2022). But for an international project, I suspect the right reading is Q3 of calendar 2022.
"That innovation was the essential ingredient behind decentralized finance (DeFi) and NFTs"
as if defi was already globally in use! And later:
“Rightly or wrongly, she'd absorbed a very toxic environmental narrative,”
I am actually very glad that new generations have a much better understanding of environmental risks and I find very difficult to sympathize for a ecosystem that is such energy greedy.
Are there resources that tell you how to do moderately complex things in ethereum/crypto properly/safely?
I've dug in every once in a while, but the people doing things in crypto seem to have crypto "stacks", and those stacks aren't transparently obvious. I haven't been able to find the useful entry point into these things.
I think this is great news because it reduces wasted energy. The sooner cryptocurrency stops boiling the ocean, the sooner the rest of us can ignore it.
I have no problem with weird nerds having their own hobbies (I have a model train set!) as long as they are not actively hurting anyone.
You do realize that the entire cryptocurrency space (all coins, regardless of their names) are using less electricity than the total of electronics that are in standby in US only. So, if you want to have an impact, better to reorient your efforts to have the industry do away with standby idea. That was a good idea 5 decades ago in 70's, when electronics were expensive and they lasted a decade. But nowadays, with planned obsolesce, it makes no sense to have standby technology implemented to make the electronics last longer because they fail after one year anyway due to other factors rather than transient response on startup (https://en.wikipedia.org/wiki/Transient_response & https://en.wikipedia.org/wiki/Transient_state)
So, boiling the ocean is not done by this anyway, my point.
There was an article that said bitcoin blockchain uses as much energy as entire country of Argentina, which made rounds here in HN (https://www.bbc.com/news/technology-56012952). In that graph there you also get US consumption too. And China's as well. Now compare them and tell me again the oceans are boiling because of bitcoin.
You haven't provided the requested data. What's the energy consumption of "the total of electronics that are in standby in the US only"?
Actually, let math out an estimate of what your claim amounts to. Bitcoin uses ~125TWh/yr of electricity. The US has ~125 million households. That means Bitcoin uses about 1MWh/yr per US household, or on average, about 114W per US household. If I assume that's 5V DC circuits that's about 22A.
Therefore, your claim that Bitcoin uses more electricity than standby circuits in the US implies that standby circuits are consuming more electricity than the maximum capacity of one of the circuits in a typical circuit breaker box. That doesn't pass the smell test.
> “Rightly or wrongly, she'd absorbed a very toxic environmental narrative,” he said. “I mean, it's kind of hard to defend ‘stickers for grownups’ that emit, by some estimates, a megaton of [carbon dioxide] a week.”
This doesn't really change anything, I still cannot find any legitimate use cases for blockchain, Proof of Stake or not.
I would happy to be proven wrong, but this is extremely rare as I can't find any legitimate actual useful use case since Bitcoin and Ethereum's existence.
As someone pointed out to me recently when I argued the same thing, crypto and blockchain does have a use case: funding organizations and people through anonymous means as to circumvent the scope of the law/avoid the eyes of state or corporate authorities. This includes funding politically persecuted groups or terrorist groups as well as buying drugs or other more or less recommendable things. After all it's mostly what it's been used for so far (if we ignore speculation and various scams).
Another point is that crypto allows for easy transfer of money across borders. Say I want to hire a dev in Germany/Chile/Nigeria, I could go through the cumbersome and expensive process of wiring money, which incurs taxes on money being exchanged, broker fees in the form of a spread and so on, or I could use a cryptocurrency to just send the money and avoid all of that.
Crypto is also a very powerful tool for people in countries with spiraling inflation, such as Venezuela, Turkey and Argentina. Instead of being 100% exposed to local currency or USD, now you have options on how to perform transactions even inside your own country.
> Say I want to hire a dev in Germany/Chile/Nigeria, I could go through the cumbersome and expensive process of wiring money, which incurs taxes on money being exchanged, broker fees in the form of a spread and so on, or I could use a cryptocurrency to just send the money and avoid all of that.
As much as I'd like this to be the case, that's not a valid argument. If you're a random person who wants to fund a certain organization, you're going to have to buy the cryptocurrency somehow. For anything except tiny amounts this is going to require you to do KYC at some point. Every transaction on a blockchain is recorded forever and traceable back to you and the legal ID that you used during KYC. No one's going to mine Monero for five months just to fund a grassroots organization.
The way covert funding of illegal or unpopular operations or bribes _actually_ works in the real world is different. It often involves stuff like gambling, getting a thousand pre-paid cards, having a bank that issues credit cards (eg Russian-owned MyWireCard which now dissolved issued huge, prepaid, free cards to EU politicians), or "ant work" such as hacking or grinding up game accounts and selling them for profit. That's the covert and difficult part - not having a blockchain. Before you could get paid for your OF leaks with Ethereum, you'd get paid with Amazon prepaid card codes. The tender being on a blockchain doesn't improve anything at all for those performing the payment or those receiving it.
> mine Monero for five months just to fund a grassroots organization.
Am I missing something here? This is the main use case for Monero. You can just buy it with your credit card or after buying bitcoins thru a KYC'd service. That's the point - once you got Monero, it is practically untraceable by the authorities or anyone else interested. No one can see who sent or received money without a view key. The same cannot be said for most other cryptocurrencies like BTC or ETH, since once you buy these from a KYC service, it's tied to your identity forever.
No it's not. Our monetary systems depends on very few companies that restrict things that go way further than the law.
You cant use credit cards for thousands of things you never thought about, PayPal is banning even more, wire transfer isn't international and banks may still complicate things, not even talking about how long these can take internationally and how that doesn't work for realtime services.
There are dozens of things like perfect money, Payeer, Payoneer that could also be blamed because it is used for bad things. But reality is we need those to pay for things that visa doesn't want us to pay for.
Crypto is one solution to this obvious problem. It's easy to say it's all drug money and money laundering but only if you never happen to be in a position where you have to trust untrustworthy russian credit card gateways because it's nearly impossible to charge for a skin colored dildo.
Monero is close to anonymous by default. You generate wallet, and send money there. While this first step can be tracked, you can just transfer the XMR from the first wallet to a new one. This time, no one can see your transactions or associate this address with you (unless you, for example, publish it next to your name).
> I still cannot find any legitimate use cases for blockchain
Blockchains solve the double-spend problem. Allows for scarcity in the digital realm. Ethereum is a platform for decentralized finance, anyone can borderlessly lend and borrow in seconds. Endless possibilities.
> anyone can borderlessly lend and borrow in seconds.
You can only do _secured_ lending and borrowing, and only where the security is, itself, a highly liquid digital token.
Person A lending USDC to person B, taking ETH for security, isn't doing much for the world at large except allowing B to defer his capital gains tax.
Unsecured lending, backed only by the faith or expectations we have around future cash flows, is how the world creates opportunity for true investment and growth... and impossible in a trustless and anonymous system like crypto.
The main use case for a block chain is to ensure that a ledger is valid and not tampered with.
The reason we want public ledgers is to keep track of financial transactions securely.
Why can't we just use a bank? At some level there needs to be security for the bank's database. Blockchains are generally considered the best way to do this. So when legacy financial databases are replaced in recent years blockchains are often considered.
Public blockchains are even better because they ensure the validity of the overall system.
the easiest use case to grok (and one that's being used right now) is a near-instant global settlement layer
e.g. startups today are able to accept funds in USDC[0] without the hassle + cost of sending/receiving a wire transfer or waiting up to 2 weeks for an ACH to clear.
Another interesting use case is tracking provenance for physical goods.
e.g. the ownership history of a bottle of whiskey[1] or wine[2]
[0] "A network fee of 2.5% (with a cap of $500) will be deducted from your investment amount for settlement, custody, and trading costs associated with your payment in USDC". Very cheap indeed.
[1] [2] Blockchains offer no guarantees off-chain. Everything that happens in the real world boils down to the oracle problem. You need trusted third parties in supply chains, a cryptographic signature would essentially achieve the same thing.
Fair critique — AngelList is pretty aggressive with its fees. If you're willing to handle settlement + custody yourself, it's much cheaper.
The oracle problem is very real (and solvable). Even ignoring the ability to transact within the same system where provenance is maintained, I tend to think that trusted third-parties moving their supply chain operations into a public ledger which is verifiable across time is more advantageous than point-in-time cryptographic signatures.
Mostly US bureaucracy and central banks + states having their own agendas. At this point, world governments have had how many years to figure this out? It's no better than 2009 in the US.
Much of the world doesn't have SEPA ICT. And much of the world probably doesn't want to support a euro-centric system (e.g. Serbia). Also, about ~1B people in the world are unbanked.
Decoupling the geopolitical aspects from the settlement layer is a big advantage to crypto. USDC/Circle is free to censor whomever they'd like, but the Ethereum blockchain isn't going to halt at the whims of the SEC or any other regulator.
Typically you, the person replied to, or someone else is simply primed to debate the use cases, in a classic dropbox-style moment about how some other combination of technologies nobody wants could do it, as opposed to diving into the technology itself and the opportunities presented by the platform
For them its a quagmire because they cant find a reason to justify any time or mindshare on the technology, and are simply using any discussion to rationalize not doing that
Its just past the point where they're relevant or the concept needs to be defended at all, its just not new or fragile enough anymore. Even politicians can debate nuanced aspects of 1 out of 100 use cases.
And then there’s the reality that speculation is a use case, so obvious yet somehow so unacceptable to technology savants, as if the entire financial services industry doesn't exist with its own niche technology to facilitate it
And then it derails into a relative utility argument, when someone points out the irony that nearly everyone here is working for a democracy destabilizing advertising conglomerate and getting paid in lottery tickets
So, I interpreted your comment as "No, there's no use cases currently identified that couldn't be done far more effectively without a blockchain, and well, that's a fair point".
Here's the thing - I work with Kafka a lot. It's a complex piece of technology, people using it incur real costs, both financially and in terms of system complexity. But it's great for some use cases. And terrible for others. You could use it to replace RabbitMQ or ActiveMQ etc., but that would generally be a bad idea, a distributed log isn't a message queue.
However, it has use cases where it shines.
If you were to ask me about the use cases where Kafka is genuinely better than other technologies, I can easily provide them.
I wouldn't say "Well, you've really got to dive into the technology itself and the opportunities presented by the platform". I'd just give you actual use cases where a distributed log is superior to other technologies.
So, should be easy to do that for Web3 stuff right?
Have a look into DeFi and what A16Z is investing in is a good start. When many of the biggest SV firms are investing billions and you still don't understand it, don't you get curious and dig deeper?
We know why they're investing billions. Same reason they invest billions into start-ups - their capital gives them preferential terms that let them cash out at the expense of other investors, whether it be at IPO, or ICO.
I'll dismiss claims that it's a massive shift in society until it actually... causes a shift in society.
Unless you consider "A new way for grifters to run ponzi schemes" a societal shift, then there's no evidence of any alleged shift, nevermind a massive one.
But you choosing to believe that it is indeed a massive shift in society, well, that's on you, but more likely, that's _from_ you. You want to believe.
Congrats to the devs. This is a historic moment for computing and distributed tech, and will pave the way for Ethereum’s next updates: scalability, privacy, stronger censorship resistance, easier UX and account abstraction.
"pointing out that it might make ETH, the network's native token, deflationary."
Isn't deflation basically the whole point now? Anyone who buys crypto with the expectation of its price going up is essentially betting on deflation. That's what economists predicted when bitcoin launched and it seems to have held up. Most crypto (certainly BTC and ETH) have no intrinsic value. They pay no dividends, offer no equity. They are described as currency, not assets. So price fluctuations must be explained in terms of inflation and deflation. Rising price is deflation.
The thing I've noticed about comments in a lot of HN threads about Crypto is that each comment posted is long, like really long and I'm none the wiser.
Proof-of-stake does not solve the Byzantine General's Problem. Therefore, it does not provide decentralized consensus.
This effectively "unsolves" that which PoW solved.
smart contracts remain not just a failed experiment, but a horribly horribly horribly failed experiment with a lot of broken dreams and broken people in their wake.
And Ethereum's transaction rate necessitates a bunch of hacks rife with their own grift, vulnerability, opacity, and manipulation.
Yay for removing one of the more egregious of the ten things fundamentally wrong with this, I guess.
The date of the merge has been known for sometime, so the price increase has been mostkly priced in the previous weeks (see recent pumps). Unfortunately the recent US CPI info release has sent the markets (including crypto ones) into a frenzy. In any case I am optimistic that the price of Eth will explode once the better part of this "recession" is behind us.
Makes sense. The bit I didn't understand was that presumably there was uncertainty around whether the merge would be successful. But perhaps there still is, or like you say, the CPI info release has obscured things.
The merge is freaking incredible. Switching the engine of a $60 billion financial network in-flight. Permanent power savings the scale of a country. An incredible coordination between a huge number of diverse parties all over the world. Everything open source. And all we get is a rehash of tired old arguments against cryptocurrencies.
This was originally a forum for hackers, makers and entrepreneurs. It does not seem like that anymore.
Unfortunately all the NFT scams (most of which were run on top of ethereum) and smaller coins/networks created and promoted solely for pump-and-dump schemes (not ethereum) got conflated in some people's heads with everything else in the cryptocurrency space and now they think it is all just a scam that doesn't do anything besides trick people into losing money.
If you want a majority of people using your thing, perception is important.
- Governments were pretty late to the party with regulations/law enforcement because they understandably didn't know if it was serious. This meant your average person who lost in a scam probably had no justice.
- The volume of scams made it seem that all of this was normal - best case was you did some research that found out before you put money in. This is partly because of governments but also there's no central authority from the crypto side to say what is safe and what isn't. "Buyer beware" with an every day currency/payment system doesn't really do you any favors in terms of adoption.
- People lost substantial real money to complicated technical issues on top of the scams
- All of this meant you had to do your research to fundamentally use the thing safely, which turned it more into an investing chore than payment convenience.
So it's actually pretty reasonable if someone has this impression
Ethereum has always seemed like the only real effort towards accomplishing the goals that were set out for the Bitcoin ecosystem.
Everything else...literally everything else in the space appears to be pump and dump, get rich quick scams: ICOs, NFTs, new coins appearing constantly, etc.
Kudos to Ethereum for pulling off the merge. There's a lot of people heavily invested in mining that this move threatens and they're going to scream about it. IMO Eth2 is the future core of everything in the web3 space.
Well, the whole crypto/fin tech space is such a rotten cesspool of scammers and blowhards that it's becoming very difficult to take anything they do and say seriously.
The ETH core team who pulled off a very ambitious migration to POS might be different than the run of the mill scammers who are involved with crypto. Seems weird to group them all together when they appear to be very different.
The coreteam actively support building a platform which is to 90% or somused by scammers. They might be technically curious and not be scammers themselves, but this is a bit like Wernher von Braun's Statement that he is just building the rockets for the Nazis and makes them manoverable, what payload is loaded and where they are aimed at is "not my [his] department"
To be fair, the article talks about none of that and focuses on the high-level traders perspective. I'd bet that a write up of the process of the merge would be a huge hit on HN.
I want to have the same faith as you, but I've been here since y2, and it has seldom been positive. I get it, I'm in the same field of research and can't stand what traders have done to the industry.
0. In the beginning we had no legitimacy, so we courted regulators and current financial types in as a means of legitimacy by proxy.
1. Those financial types and regulators who had open minds joined, shenanigans ensued, and we saw a replaying of all the dirty tricks that were outlawed in traditional markets like front-running.
2. Then fast forward to where we are now; industry types who came in early are making a killing and funding legislation like New York's BitLicense, which pushes toward centralization by outlawing participation for 'unaccreddited' types like the nerds who built this whole shindig.
For folks like me who just want to build distributed systems and tackle issues like consensus, it's hard to be taken seriously, because we're all just trying to do our work but we're trapped in this casino where there's starting to be more pinky rings than poker chips and it's only getting worse.
I don't know if you ever argued against that massive energy footprint as "FUD". But I do find it pretty hilarious to see a crypto proponent now use that as a positive. "We're not wasting country-sized amounts of electricity anymore!"
FWIW, I don't think most crypto-critics (yours truly included) argue that it's not technically interesting. We argue that it's tech in search of a (mostly) non-existent problem, that has a whole host of very negative externalities.
Cryptocurrency jumped the shark long ago and this comment section is a reflection of that. Claiming that people aren't real hackers because they don't uncritically slurp up cryptocurrency hype isn't doing your cause any favors.
This isn’t crypto “hype.” It’s not going to impact the price of Ethereum. At least it’s not hype in my opinion. It’s just an impressive engineering feat.
Given crypto isn’t going to die tomorrow, it’s good to see Ethereum has sunset the combustion engine for the EV (Proof of Work -> Proof of Stake). Even if you hate Ethereum, reducing electricity usage of the network by 90%+ is admirable.
Not wasting electricity is absolutely good news for the environment. At the same time, they were wasting electricity before... so I don't know about admirable, they've stopped doing something they shouldn't have been doing in the first place.
I'm curious, what are your thoughts on these neural net AI art generation tools like DallE and GPT? You seem to have strong opinions on what "legitimate" uses of electricity are, and they given that an entire economic ecosystem is apparently not legitimate, is making art? How about playing video games?
It depends... can the same outcome be achieved by using 99.5% less electricity? If it can, then it means 99.5% of the electricity consumed by this activity is being wasted, and that is a fact. Otherwise, it becomes a matter of opinion. Do I think casinos are a waste of space and energy? Sure, but this is just an opinion based on my personal preferences. I understand people have different preferences.
But this is the opposite of hacking. Feels like turning ETH to a political system. Soon you ll have the "republican party of ETH" forming. Those are natural self-organized outcomes when groups of humans are trusted with power.
ethereum is a political system, it exists to recreate the present arrangement with dlt and the extra niceties that it gives those in power. excuse the paranoia. anyway, definitely an achievement in my book
> This was originally a forum for hackers, makers and entrepreneurs. It does not seem like that anymore.
There has to be a goal insight, otherwise it's just technical virtuosism for the sake of nothing. Nobody likes technical virtuosism for the sake of nothing otherwise guitar players who can play at 2000 bpm would dominate the billboard.
Blockchain is not a young technology it was conceived in 1996, almost 30 years later the usecase it's still obscure, except the only usecase has been to create a casino in disguise.
Making regular daily tasks less painful is a goal which if it was ever there has been abandoned post the first BTC run from 1$ to 127$
Over a Russian cryptocoin? Weird spot to draw the line. Ethereum Classic is still running with billions of USD in market cap after the last fork that happened years ago. Why does anyone think this fork is anything except another way for the controllers to cash out before their scam bubble pops?
I just want to check in and make sure you understand that the fundamental principle of how a Con Game works is that the mark thinks they know something that no one else knows.
I mean, 1 —- HN is largely populated by big tech coders who decided selling out the entire world population for a mid $100ks salary from the surveillance state sounds like a good deal.
But 2, there are liquid markets for crypto. So, while you might feel good typing out how you value crypto —- it simply doesn’t matter. Put your money where your mouth is. Short it.
> We just don't accept Monopoly Money as compensation for work rendered.
Every person that took equity in a startup that then went out of business would love to talk with you. Believing bitcoin will be valuable for some people isn't really any different than believing pets.com will be successful or that tesla will actually be able to make electric cars and taking equity instead of cash for compensation.
This is not the same thing. Shares of a company have an actual value: a part of the company's capital (computers, building, etc). At least there is some ground based on real-world something. Of course the company can go bankrupt and owe more money than its capital can cover, but that's still not the same has crypto assets, whose values are purely speculative.
These remote startups building social media sites and SaaS products with Javascript surely own lots of buildings and computers and run their own datacenters!
In the sense that there isn't any difference in spending your annual salary on lottery tickets instead of food. Before you balk, I point you at the handful of winners who raked in billions, a ROI most of these "food eaters" could only dream of.
Hey, if you don't mind your per-diem being less liquid than your stock options, go for it. Thinking pragmatically about the future of cryptocurrency though, I'd reckon it's safer to bet on the US dollar than Bitcoin bouncing back.
Hacker News has a serious mob mentality with regards to crypto. Some loud voices decides it was a "scam" years ago and would not get out of their high horse despite the evidence, and despite incredible technical feats like the merge. It was never the place to have an intelligent conversation about pros/cons and it will never be.
So we now have a technical marvel used for financial speculation, conducting illicit transactions, and dodging regulators... that no longer is also burning the planet. Am I supposed to be impressed by this?
It's easy to worship engineering as some kind of pure endeavor divorced from the real world, and admire cleverness for its own sake. But things that actively make the world worse should not necessarily be praised, no matter how clever they are.
Basically proving their point. We should have been more critical of the ICE too before we built our whole society around it and let it contribute to destroying our environments.
Any tool is a weapon proportional to its power & utility. Beyond that, there's nothing nefarious inherent in weaponry, the DARPA initiatives that birthed the internet were based in defense, against nuclear annihilation. Seems like a win-win, politics non-withstanding.
> Michael Morell, who was previously the CIA’s acting director, said in ‘An Analysis of Bitcoin’s Use in Illicit Finance’ that “blockchain
technology is a powerful but underutilized forensic tool for governments to identify illicit activity and bring criminals to justice.”
> Tracking illicit Bitcoin transactions is therefore easier than tracing illegal funds moved across borders using “traditional banking transactions” and “far easier” than trying to follow cash, according to the report.
> One source in the report was quoted saying that “if all criminals used blockchain, we could wipe out illicit financial activity.”
TL;DR cash is a better tool for crime according to an ex CIA director
Yes, we should focus on surveillance capitalism instead. Perfectly legal.
If you want to talk about actively making the world worse look at most web2 "algorithms" and how the push to the extremes is tolerated by "but numbers go up."
> So we now have a technical marvel used for financial speculation, conducting illicit transactions, and dodging regulators
You're right, it's an impressive piece technology that's been growing through questionable use cases. But that's not the fault of the underlying technology, but of the actors involved.
As long as blockchains are treated as a second class citizen, governments choose to ostracize it, financial oligopolies lobby against it, things won't change.
But imagine what could be accomplished if governments decided to embrace and properly regulate it, and what it could empower in our society in terms of a more open and acessible socio-economic environment.
That sounds like something people say to defend guns, nukes, and crypto. Why wouldn't you blame a technology whose primary use is malignant?
It's not like the crypto hellscape we have now was an accident of its evolution. It was the inevitable and predictable outcome of a decentralized and poorly regulated system built atop complex code that the average person has little chance of properly evaluating.
From all appearances, this is exactly how they were designed and exactly the point, to extract money from fools and funnel it to a select few crypto bankers. That's not a good thing.
Friend, blockchains were designed to circumvent centralized regulation. Fraud is still illegal whether or not you use a funny internet cryptography tool, we don't need to be regulating our tools.
Imagine thinking securities fraud is the profession of the superior man: instead, he is merely a slave to his desires, namely greed, debasing himself in order to vainly feed the insatiable beast inside. Truly pitiable and truly servile.
i have as much of a problem with wealth inequality as you do, but wealthy people have as much of an advantage playing the crypto game as they do the regular game, because its just a market.
HN has been oddly prejudiced against crypto. Sure there is a ton of hype, but there are some extremely interesting ideas and some incredible innovation taking place.
This is what happens when startups become cool and the people who would have otherwise gotten an MBA and tried to find work at a major bank are now the ones on HN.
I’ve given up on HN understating crypto before they mint some Giga unicorn and everyone understand where the future is. The hive mind here is dangerously anti crypto.
It’s the biggest wealth producing opportunity of the next decade or two and HN doesn’t get it at all.
It’s basically become a forum for your average developer. I’d bet a lot of folk who don’t understand crypto at all are web developers or something where innovation is a new JavaScript framework.
Not saying anything bad about that, but people here don’t seem to have innovation in mind. I mean r/Ethereum on Reddit is better than HN to discuss these topics. It’s just wrong. HN has become counter futurism.
> It’s the biggest wealth producing opportunity of the next decade or two and HN doesn’t get it at all.
Help me understand where that wealth comes from. Because as far as I can see the only wealth that gets generated is from people who got in earlier selling their bags to people who got in later.
I would say you haven’t looked into smart contracts, NFTs and distributed apps enough.
Look into Uniswap, Balancer, Curve, Compound, MakerDAO. Read what Vitalik Buterin has written on his blog and watch some podcasts with him.
For people outside of the art world the narrative around NFTs is “it’s all fraud / it’s all silly pictures of apes”.
This is demonstrably untrue but its hard to show this to the hive mind here since they want to believe that it is true. But a lot of folks in the digital art world will tel you that NFTs have been a godsend.
Basically you are looking at tokens (99% of which are a scam) instead of looking at applications (99% of which are also a scam). The fundamental problem with crypto right now is the lack of regulation - without regulation it’s become a free for all for all kinds of scams and ponzis. If you were a criminal today the best way to make money is crypto. There is no regulation. You have to separate the wheat from the chaff but the chaff is humongous due to the lack of regulation. This gets a lot of people confused and they just end up dumping the whole space (unfortunate but understandable).
That’s not what I said (of course). Multiple others in this thread decry the same thing.
And you can be a great developer and still misunderstand crypto. But I really struggle to see how you can be a great innovator and fail to see cryptos potential at this point.
> It’s the biggest wealth producing opportunity of the next decade or two and HN doesn’t get it at all.
It HAS been the biggest wealth producing opportunity of the LAST decade , along with Bitcoin.
They are now both priced for world changing paradigm shift and perfect execution doing so. Which means that there is no wealth producing opportunity at all considering that you need everything to pan out great just to mantain the current valuation.
Also everything is an S-curve and once you arrive to 750bn (or whatever they crypto-marketcap is) there is physically nowhere to go to from there.
Distributed applications running on chain have literally just started. Enormous opportunities there.
Already multiple huge apps such as: Uniswap, Opensea, MakerDAO, Compound, Balancer, Curve. A lot of small stuff that could grow like Opulous. Lots to be built. Huge field of opportunity.
They are all priced for perfection. Meaning priced for complete replacement of the legacy financial system. If it happens you get to keep your money, if it doesn't you lose them all.
You can't make money by betting on something with a valuation of 800bn which is the cryptospace.
The cryptospace as a whole you cannot make money from anymore, the only thing you can make money from is betting that the marketcap of old coins such as BTC will flow into new coins such as ETH.
But that if you are gonna do that, then it's better to just do it on the stock market, by betting on new companies replacing old companies and taking their marketcap
The time to invest and also build is when new people and new money are coming into the game , not when everything is cooling down and the early winners enjoy their lead.
2014 was not the time to build a social media company, it was the time to build a social media presence.
Now they're going to pay for the damage done to the environment for the last six years that they've profited off of, right? No? Oh okay so it doesn't matter. I guess the miners have stopped operations, sold off their businesses, and moved on then.
Trouble is that governments and regulators are cracking down. I don't think it will be long before the SEC finally makes moves that will blanket label cryptocurrencies as securities. And we will see more arrests and trials. Once NFTs and web3 and everything else is wiped off the market I doubt there will be much left here.
It's always been a solution in search of a problem.
Update To clarify, what I'm saying is that the environmental angle here of using less energy isn't a concern for the Ethereum project. If the merge didn't work and they had to delay again they wouldn't have hesitated to delay again and continue burning energy on PoW at all. And they're not going to pay reparations for the damage they have already done because that's not what this is about, is it?
It's still not really used for anything that really matters to anyone (in a business sense). Until now the high cost and low transaction volume meant that it was just not really suitable for its intended use as a transactional store of ledgers of stuff unless the stored entries were extremely high in value and relatively rare.
But on paper building something useful now is a bit easier as transaction cost is likely to come down and the network should support a more reasonable transaction volume.
When your global transaction volume per hour is capped below what even a small web server running on a tiny computer would easily handle, there isn't much you can do with it in the real world. And when those transactions then cost you tens/hundreds of dollars and take minutes/hours to clear, any utility that might exist goes out of the window. It's a complete non starter for anyone looking to do some transactions that actually have business value. Why would you? It's many orders of magnitude worse than what a plain old database gives you on all relevant dimensions.
That was the status quo up until the merge. Now that that is in the past, we'll see. I personally doubt Ethereum will be the tool of choice for this kind of thing. If you are serious about building something that does something useful, there are better tools available.
It immediately improves the environmental story if you had previously wanted to use smart contracts but didn't think it was ethical for environmental reasons.
ETH was already potentially useful in the real world if you were on an L2 like zksync - low fees, fast enough to work, decent UX with wallets like Argent. Only thing missing was wide adoption.
Having said that, the merge is actually just the first of a multipart set of upgrades that should make the L2s massively better than they are today. We're still at the 'potentially' useful rather than the actually useful, but things improve the whole time.
Just wondering if there is a betting market somewhere that would show odds for e.g. such a bug in the PoS that Ethereum needs to roll back to PoW within the next 6 months?
Besides, BTC and ETH care tightly coupled. Perhaps some people sold BTC because they think it is now at a disadvantage compared to ETH and bizarrely it caused ETH to drop in price as well.
Ethereum was using an algorithm called "Proof of Work" to secure the blockchain's state and it was using huge amount of energy as it literally was using hashing power of GPUs to verify/generate Ethereum "blocks" (immutable units containing transactions) to get Ether as rewards.
The Merge changed this algorithm to "Proof of Stake", killing the GPU mining and the energy consumption completely (at least for Ethereum) and the new algorithm secures the network by giving incentives to Ether stakeholders (anyone can be, by the way) to secure the network instead of computing hashes on GPUs. This single event reduced world's energy usage by 0.2% overnight.
No more mining for ETH. And all other crypto together (not counting Bitcoin, which uses ASIC) have 20x less daily mining reward compared to ETC. That means a lot used GPU cards will hit the market, since huge part of pie just disappeared.
Does Eth have an advantage now vs. even more trusted actors like Binance? Binance has a history of relative reliability and is better understood by people. The unknown crowd of ETH stakers is .. unknown, but it demands our trust. Why should we trust it?
curious, have you looked into the years worth of research and work that actually went into the merge? it didn't materialize out of thin air, people had to build it first.
For sure there was a lot of work, but hardly any innovative work. Most of the work was busy-work/unnecessary complexity - As is almost always the case with mainstream blockchain projects. PoS was innovative back in 2016. Blockchain migration to a new tech and consensus mechanism is also not new; it has already been done by hundreds of projects over the last 5 years.
One of the reserve banks' two mandates is 'maximum employment' - IMO, blockchain is one of the clearest examples were you can see the reserve bank's policies working as planned. There is no limit to the complexity and job creation potential of these over-engineered blokchain projects.
Complexity compounds and so does the creation of (less-than-useless) jobs needed to handle all that unnecessary complexity... Solving problems while adding even more complexity on top.
The only innovation is the financial innovation involved in convincing so many rich suckers to pour their money into something which is so inefficient and poorly designed... Somehow tricking them into thinking that the charitable creation of unnecessary jobs is a profitable long term activity.
The real bright minds are those working for the Federal Reserve.
Let's congratulate ETH from consuming 99.9 less energy, thus having 99.9% less value. IMO they essentially transformed something revolutionary, which is value secured by the masses. Anyone could mine and help ETH be secure. Now the rich (steakers) control the system. Which is essentially what happens with the current economy dominated by the rich. They are simply trying to change the "who". Alienating the miners was precisely the move to show in ETH the rich rule, the poor suffer. Same old capitalism as usual.
This sounds fab, I worry all the energy saved in ethereum will just be transferred over to crunching bitcoin instead and no actual energy will be saved.
I'm OK with being downvoted for irrelevance but in case anyone doesn't get the reference:
A great deal was made of the change to Proof Of Stake, enough that it sort of became an end to itself, and the conversations about how exactly it would be safe or even a smart thing to do -- national energy output of country X notwithstanding -- got very hand-wavy.
And yet it came to pass.
The sci-fi reference linked here is about that, precisely. A big decision is made, the affected parties think they know all the implications, and yet -- well, see the movie.
Great, now all that energy can be "wasted" rendering pixels with GPUs instead.
This was always going to happen. Eth was never going to realistically compete with Bitcoin for energy. Now Bitcoin is the only PoW network remaining, as it should be.
Looking forward to seeing Bitcoin play a pivotal role in renewable energy infrastructure build-out and capturing flared and vented methane to be one of the biggest carbon-negative industries on the planet.
It arrived right when we needed it to tackle carbon emissions.
> Looking forward to seeing Bitcoin play a pivotal role in renewable energy infrastructure build-out and capturing flared and vented methane to be one of the biggest carbon-negative industries on the planet.
Crypto-talk is so similar to satire as to be indistinguishable.
Let's talk about this in 10 years when it becomes plainly obvious that that is exactly what it's going to do.
In the meantime you could actually do some research on it and discover that you might not have a clue what you're talking about. Or don't, it makes little difference to the outcome.
Lancium raises 150 million dollars to build windfarms 100% of whose output will be wasited on mining Bitcoin and not on, you know, actually producing electricity that people can use.
"Bticoin will save the climate by replacing the financial stranglehold on our planet with a financial stranglehold that consumes ever increasing amounts of electiricty and gobbling up more and more resources (such as solar panels and windfarms that could be used elsewhere) to keep running". Also, "For a habitable future, we must stop financialization" says the article describing a system where profits are paramount.
----
Crypto-talk is so similar to satire as to be indistinguishable.
> "Bitcoin is solving the issue of brning gas flares by buying that gas and burning it ... thereby reducing emissions"
You realise methane is a worse GHG than CO2, right? You realise flaring is incredibly inefficient with most of the methane still being released into the atmosphere, right? You realise that capturing it and burning it in a generator is better for GHG emissions, right?
Right?
> Lancium raises 150 million dollars to build windfarms 100% of whose output will be wasited on mining Bitcoin and not on, you know, actually producing electricity that people can use.
100% of output to Bitcoin? Where did you see that? Do they specifically state that? Because I couldn't see it in the article.
Also, you just completely gloss over the benefit Bitcoin mining provides in load balancing and curtailment as a demand response (DR). You know, the main point of the article? You know what curtailment is, right? You realise the purpose of demand response, right? That's the real "wasted" energy. Bitcoin is an energy buyer of last resort so that the energy isn't wasted.
Do you also realise that many renewable projects sit in waiting for months to be connected to the grid, right? In that time they could be mining Bitcoin to recoup any losses from just sitting there doing nothing. The more profitable renewables can be the faster they can scale up to replace fossil fuels. The only way this happens fast enough is through economic incentives.
But seriously, I'm not sure why I bother explaining all this to people like you. You're not going to change your mind and your opinion on the matter is ultimately irrelevant. It won't affect the economic incentives for a faster transition to renewables. You'll just be proven wrong in a few decades, but figure out some logical backflips to think it's not so, to save your ego.
Also, the fact that you keep referencing "crypto-talk" says a lot. You haven't yet figured out the difference between Bitcoin and the wider "crypto" industry, which is almost entirely a scam.
I realise that article you linked is very thin on details and doesn't describe what they actually do with that gas. Neither the Bloomberg article nor the bullshit marketing piece they link to on the Crusoe wbesite have any details what they actually do.
Your claim that they capture and burn it in the generator is just that: a claim.
Is burning that gas in a generator better than just flaring it? Yes. Is it significantly better? That depends on a large number of ifs that we have no knowledge about, and I'm not inclined to just blindly trust the marketing propaganda.
> 100% of output to Bitcoin? Where did you see that? Do they specifically state that? Because I couldn't see it in the article.
The title of the article is literally "This Houston tech company wants to build renewable energy-run bitcoin mines across Texas".
The very first paragraph is literally "raised $150 million to build bitcoin mines across Texas that will run on renewable energy".
It's not "we're building useful wind farm and redirecting excess energy to bitcoin mining". It literally is "we're building wind farms to exclusively power bitcoin farming".
But sure, we are to trust them that "In times of scarcity, our data centers will go down". Because we know that this is what will surely happen.
> Bitcoin is an energy buyer of last resort so that the energy isn't wasted.
Bitcoin is never the energy buyer of last resort. Because it needs continuous power supply to generate profit.
> why I bother explaining all this to people like you.
Ah yes. It only took one reply to derail into insults. Couldn't expect less from a crypto maximalist.
> It won't affect the economic incentives for a faster transition to renewables.
Indeed. Those same economic incentives that you pretend will surely make those mines shut down when demand outstrips supply.
> You'll just be proven wrong in a few decades,
No, I won't be proven in the next few decades.
> You haven't yet figured out the difference between Bitcoin and the wider "crypto" industry, which is almost entirely a scam.
It's not my job to chase up every tiny detail for you. You have to be curious enough to look into it and verify for yourself. I've given you enough information to research it for yourself. You've shown zero good faith curiosity that would encourage someone to help you understand it any further, and you're getting pissy at me? That's rich.
But I'll give you one last thread to follow. Beyond that you're on your own.
Every other crypto is a product released by a company with a CEO, investors, VC funding, a marketing team etc. and all based on dubious promises of "utility", "defi", or "yield", faster transactions speeds, or "web3". It's all a bullshit affinity scam riding on the coat tails of Bitcoin.
Bitcoin is literally just an open source protocol for an open, neutral, and permissionless global monetary network, similar to how TCP/IP is a neutral communications protocol for the Internet. There's no CEO or "foundation" like in the case of Ethereum and other cryptos. Companies are building up businesses around this open and neutral protocol. If you can't see the potential behind that combined with its application to demand response, load balancing, methane capture, AND the humanitarian benefits [1][2], well...
“If you don't believe me or don't get it, I don't have time to try to convince you, sorry.” -Satoshi Nakamoto
People have had plenty of time to understand bitcoin. If they are so seeped in ignorance still, just let time do the convincing.
We have dirty shipping barges, endless pounds of meat, useless use of cars, tvs for entertainment, computers for the same, private jets, hell planes in general, skyscrapers for jobs that don’t matter, roads to nowhere, and so, so much more wasted energy — but a sovereign monetary system that is free from corruption in its creation and in transfer, and THIS is the great evil energy user?
How utterly daft people are to not see the plainness of this attack on freedom. They are like sheep to the slaughter.
Time is a brutal teacher. Freedom lost is regained through suffering.
Energy production is flexible to a degree and it very much depends on energy usage. Up to 0.5% of the total energy usage of the word just disappeared overnight, so it is safe to claim that a big percentage of that difference won’t even be produced, decreasing carbon emission.
A mining GPU is running 24/7, the GPU of the heaviest-usage gamer will be maybe a quarter of that, with the vast majority of actual gaming use cases being far below that. Nowhere near equivalent.
Good. The merge worked and they are not burning up the planet.
Now when are those Deep Learning systems in these data centers going to stop incinerating the planet with their useless deep learning models that not only are broken but require constant retraining and wasteful CO2 energy usage for years without any efficient alternatives?
All datacenters and network infrastructure in the world account for 2,5% at most (I don't remember the source anymore, I read this months ago) so I can't imagine machine learning is more than maybe 0,5% total.
So instead of going after actually useful technology that consumes a tiny fraction, how about you look at some of the truly unnecessary users that consume much more than that. What if we added up all the electricity used by the entire supply chains of all the smartphones people throw away prematurely due to planned obsolescence? Or all the other unrepairable disposable devices? How about all the clothing that's made of increasingly shittier materials and often needs to be replaced every two years? Some estimates for the clothing industry are as high as 10% of global GHG emission, primarily from fossil fuel power plants. And don't get me started on all the cars that wouldn't need to be produced if we fixed public transport and americans stopped building cities like idiots.
The only reason people go after the IT sector is that it's easy to stick a current probe on the wire and get a relatively large number. Turning it off is simple and makes the number, however small, go down. All the actual big users are complex systems that are difficult to analyze and "turn off".
They have largely already switched to renewable energy so they can operate cheaper. Depending on fossil fuels has been a bad business plan for quite a few years now and no new data centers are coming online that depend on it. Some of the older data centers are the exception to this rule. But even those are the target of massive efforts to de-carbonize as soon as possible.
Crypto has a far lower ratio on utility/speculation than other wasteful computations. Deep learning is changing the world in many visible ways (with a whole lot of speculation regardless).
What visible ways? Machine generated photographs? About as useful as NFTs...
I can, right now, send liquid assets to any human being on the planet with an internet connection without asking a financial institution, government, bank, payment processor or phone company for permission. That's utility, that's changing the world in a visible way.
You make it sound as if financial institutions and banks didn't have a purpose. There is far more negative utility in this. Governments, banks and financial institutions prevent tax fraud, apply workers' rights, redistribute money, etc. Of course they're not perfect. In that case fix your government, not the money system.
I get that financial systems have a purpose, I'd argue there's far more negative utility in them. They have positive effects, but a lot of their utility is not to protect people, but to control them to someone else's benefit. If they protected us without attempting to control us to the benefit of others, or brazenly looting us for our labor, nobody would be trying to build cryptocurrency in the first place.
PoW is different to all other categories of energy usage and should be feared more. Ill let you have a think about what the reason for this is. If you need a hint,
read the bitcoin whitepaper.
That sounds like fearmongering to me. And also condescending fearmongering, as you assume I need 'hints'.
Going back to your argument about all other categories of energy usage, transport using ICE should be feared more, in particular the way huge ships not only pollute the atmosphere but also the oceans.
In fact, I believe you intended to mean only electricity in your comment, but the condescending got the best of you.
With PoW energy usage is roughly proportional to the $ price of the asset regardless of the number of transactions it can process. A successful Bitcoin means higher and higher energy usage. Whereas anything else success means making it more efficient not less.
And every four years it will double in price, and right now it consumes 0.5% of all electricity, which means in 56 years it will consume 82% of all electricity, assuming we produce roughly the same electricity as today.
Not really. It is more
immediate than that. Right now we heavily rely on CO2 emitting power generation. And if bitcoin becomes wildly successful, or simply gets into another bubble, while trying to combat climate change, and it stays on PoW that is an issue.
Huge ships are multiple times more efficient than the equivalent transport would be on roads — so, don’t throw out the baby with the bathwater.
We should obviously try to cut back on transports of such huge distances, but when necessary, ships are currently the best way even with all the pollution they do. Nonetheless, their current use is still incomparably more effectful on our lives and live quality than cryptos that it can’t be taken at face value.
Yes and no. Because of the pandemic, and now the invasion, we have realized the world has too many unnecessary imports which could be produced locally.
They were cheaper because all this contamination is called "externalities", which is a code word for "someone else's problem"; and because short term profit is king and responsibilities be damned. Also dumping, tariffs, dominant countries imposing free trade treaties on weaker countries, and so on.
They still have a huge cost. There are of course things that need to be transported these distances, and with or without oil these need to be moved, but also a considerable percent is cheap plastic stuff from China.
This remains a far better usage of energy than ETH. It's not optimal but at least it's preserving some food. You can hardly do worse than consuming energy just to eventually get a proof that you burned a big amount of energy.
I think my iPhone SE has a ~7 Wh battery. It needs about 80% extra charge each day, which means its consumption is roughly 5.5 Wh per day or about 2 kWh/year.
At the previous 112 TWh/year ETH was using before the merge, that would be the equivalent of 56 billion iPhone SE's. Think about that.
The energy usage of ETH's POW used the equivalent power of 50B smartphones.
Come on, do you seriously compare something that you and nigh everyone use multiple hours each day and effects you on a physical basis to something as useless as cryptos?
As these cryptocurrencies have provided utility to the miners in the past.
My point is, everyone is arguing here thinking only about their own particular self-interest, while pretending to be arguing about some abstract universal good.
And cryptocurrency energy usage is now a low-hanging fruit argument. If we really cared, we would cut much more than just that.
With the merge & staking that abstraction layer has disappeared and it’s still the organizations with the most money who control it.
Sure it’s great that non-productive math problems no longer need to be solved & consume so much energy and hardware to make it all work. And it may be an incremental improvement over traditional global finance because there is a much greater ability to publicly scrutinize what goes on.
But no one should consider this a fundamental paradigm shift & democratization compare to traditional financial systems controlled by a a very small number of big players. Their influence still can override the mining process that’s supposed to be the final word on transactions.
Although I’ll clarify a bit: I’m actually a proponent of having a layer of human judgement that can fix a problem when things go off the rails. The issue is that in crypto this layer is even less accessible to smaller players than in traditional finance. The DAO was able to throw its weight around and get a hard fork, but how many other groups with much less influence have suffered from similar problems and exploits without that same benefit?
Yes, even in traditional finance there are some types of irreversible fraud. But for every day transactions, for using money as a daily part of transactions necessary to live your life and not just as a speculative investment, crypto falls far short.
If a criminal spies on my credit card # as I make a purchase and uses that to go on a spending spree I can fix it with the credit card company with little cost but a few hours of time and frustration. If my wallet is pick pocketed or I simply lose it by accident I have a similar recourse to mitigate the fallout. Crypto? No. It may, eventually, have some other benefits though that’s yet to be seen. But as a major change & liberation of people from massively powerful banks and governments there seems to be nothing more that shouted rhetoric and wishful thinking.