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.
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 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.
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.
> 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.
>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.
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.
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.
> 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.
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?
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 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...).
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.
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).
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 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.
> 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.
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.
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.
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.
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'.
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.
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.
> 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.
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).
> 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.
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.
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.
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.
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.
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.
> 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.
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.
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.
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).
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.
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.
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.
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.
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.
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 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?!
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.
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?
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.
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?
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.
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.
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.
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.
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.
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".
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.
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...
> 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.
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".
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)
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.
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.
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.
> 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.
> 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. 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.
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.
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.
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.
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.
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.
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 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.
> 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.
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).
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.
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.).
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.
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.
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...
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.
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'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.
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.
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
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.
> 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.
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
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.
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.
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.
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.
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.
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'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'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 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?
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.
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.
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...
- 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.
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.
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.
> 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.
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.
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.
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.
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.
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.
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.
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.
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!"
> 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.
> 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.
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?
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"?
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.
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
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.
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.
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.
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 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.
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.
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.
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
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.
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.
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.
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
> 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.
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.
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]
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.
[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.
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).
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.
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.
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).
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.
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?
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.
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
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.
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.
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.
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.
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?
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)
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.,)
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.
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.
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.
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.
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.
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/
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).
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?
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…
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.
> 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.”
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.
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.
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.)
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
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.
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)
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..
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.
>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.
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.
> “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!
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".
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.
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[ 3.0 ms ] story [ 475 ms ] threadEthereum Mainnet Merge Viewing Party
https://www.youtube.com/watch?v=Nx-jYgI0QVI
Updated Sep 15, 2022 at 12:01 a.m. PDT
The Ethereum Merge Is Done, Opening a New Era for the Second-Biggest Blockchain
https://www.coindesk.com/tech/2022/09/15/the-ethereum-merge-...
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.
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.
EDIT: Edited to include at least one source on the connections between PoW and renewable energy. This just scratches the surface though. https://squareup.com/us/en/press/bcei-white-paper
Gamers had to put off buying new GPU because they were misused for POW. Ask them about the "incentivized GPU production".
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.
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.
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 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.
In PoW reward is proportional to normalized "work". Reward is proportional to normalized amount staked. This very directly leads to wealth concentration.
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).
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?
100% no. I call your bullshit.
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...
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.
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.
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.
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.
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.
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.
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.
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.
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).
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.
[1] https://paulbutler.org/2022/the-problem-with-bitcoin-miners/
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)
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.
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.
0. https://arstechnica.com/gadgets/2022/08/nvidias-excess-inven...
And it reduces the world's energy bill by 0.5%:
https://twitter.com/JonathanBeuys/status/1570305323629527046
I feel a great disturbance in the force. As if a million miners cried out all at once and then were suddenly silenced.
Although they built the hell machine in the first place, so maybe better if they would not have ever done anything.
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.
I guess the more efficient version of the same thing would be the move to using heat pumps.
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.
https://ethereum.org/en/energy-consumption/#proof-of-stake-e...
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.
https://levelup.gitconnected.com/how-ethereum-reversed-a-50-...
Oh.
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.
and you do know a group of people tried to have the same thing done again a few years ago and it failed right?
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.
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.
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.
That will never happen, since these things, by design, offer none of the guarantees that banks do.
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.
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.
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.
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.
Ah yes. Unlike the cryptoscams.
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 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?
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 did re-read it. That's how I could quote your words.
> You threw barbs and used the word "scam" as often as you could
Because that's what the absolute vast majority of crypto is.
> This is exactly like every crypto discussion on the internet today, it's very frustrating.
Yes. Every crypto discussion on goes like this:
- Crypto claims are refuted or questioned
- Crypto maximalist spouts some grandiose bullshit
- Crypto maximalist gets called out
- Crypto maximalist disappears
I've yet to see you actually address anything I said in my very first comment here: https://news.ycombinator.com/item?id=32850112
> 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.
What is a qualified investor? And why do you have to be one if you want legal access to unregistered securities?
Says the person with such gems as "go educate yourself", "normies" etc.
> you've only quoted from the parts you cherry-picked as you could easily be responsive to them.
Says the person who ignores everything written in every single response and then pretends he's being offended
---
There's a reason you repeated several times you're a big time investor from age 12. That is most likely representative of your actual age.
At this point I've lost all interest in trying to have a conversation with you. Adieu.
The context was "us normies"
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'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.
- "Wait until you hear how much Y is more wasteful"
Ok?
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.
Q2: April, May, June
Q3: July, August, September
Q4: October, November, December
Edit: https://en.wikipedia.org/wiki/Calendar_year
Some companies, like Costco, are in their Q1 period right now.
If there is a more accurate way of calculating it that results in 0.2%, I would love to hear about it.
- Youtube 244 TWh/year
- Gold mining 240 TWh/year
- Bitcoin 200 TWh/year
- Ethereum PoW 112 TWh / year
- Netflix 94 TWh / year
- Gaming 34 TWh / year
- Paypal 0.26 TWh / year
- Ethereum PoS 0.01 TWh / year
The only way production drops is if that takes the price below the point of profitability.
Price is them somewhat affected by this and many other factors.
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.
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.
Nvidia really milked that cash cow.
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.
https://ethereum.org/en/energy-consumption/
- Youtube 244 TWh/year
- Gold mining 240 TWh/year
- Bitcoin 200 TWh/year
- Ethereum PoW 112 TWh / year
- Netflix 94 TWh / year
- Gaming 34 TWh / year
- Paypal 0.26 TWh / year
- Ethereum PoS 0.01 TWh / year
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.
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.
Miners sometimes sign long-ish-term contracts for energy.
I’m gonna assume there won’t be some huge shutdown of power plants so this power is still being produced.
It’s so wasteful to be using electricity when we could all be playing chess or Yazee instead.
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.
1: https://en.wikipedia.org/wiki/Kardashev_scale
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.
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?
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.
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.
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.
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.
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).
[1] https://en.m.wikipedia.org/wiki/Tulip_mania [2] https://en.m.wikipedia.org/wiki/Beanie_Babies
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.
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.
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.
There are at least a dozen 'very solid' currencies that people anywhere should be able to transact in, notably the USD.
All of which you 'own'.
If there are helpful things they can do, 'digital' currencies, especially USD, (one that is not mess) would be imminently useful.
If you thought the 'petro dollar' was a big thing wait until the 'digital dollar' and entire economies de facto switch to USD.
Your comment is like telling someone poor “just go to work”, or telling people dying of hunger: “you don’t need to die of hunger, you can eat!”.
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.
EDIT:
https://www.nationsonline.org/oneworld/third_world.htm
>>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.
“Third world” was just a grouping of nations that didn’t align themselves with the USA or USSR during the cold war.
Over time labelling a country as “3rd world” become the de facto way of categorising it as a “developing country”.
It might work as a backup option to people who are less lucky. That's the majority of the world. Whether it's a good option depends on a situation.
In any case, it's not for you to judge if it's necessary or not.
We detached this subthread from https://news.ycombinator.com/item?id=32848104.
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.
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 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.
They can't go all to other coins. It won't be profitable.
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.
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.
[0]: https://www.coinwarz.com/mining/ethereum-classic/hashrate-ch...
https://www.nicehash.com/profitability-calculator/nvidia-rtx...
Seems logical to just sell the GPU for $300 on the used market and get 833x its daily mining profitability.
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?
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.
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.
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.
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.
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.
Is this your argument?
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.
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.
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".
[1] https://www.ebay.com/sch/i.html?_from=R40&_trksid=p2380057.m...
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).
However here in Germany they still cost around 410-450€ used, not $350.
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...
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.
Most of it is just companies putting blockchains everywhere because VCs give them money in that case. Nothing scientific about that.
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)
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.
Not sure how this opinion relates to failure, but just in case, things only got worse since.
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.
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.
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.
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.
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.
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.
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.
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 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.
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.
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 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.
In my opinion too, the crypto crowd is typically one I like to avoid. But to dismiss the tech behind it as babble is sad.
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.
I will gladly give a Turing award to whoever formally proves the safety and liveness of Gasper like Lamport did for Paxos.
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.
https://ethresear.ch/t/pragmatic-signature-aggregation-with-...
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.
Not to mention the adoption possibly going on behind the scenes.
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'm not sure it's going in the right direction.
To be fair, so is Linux.
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
"The Internet, bah. Hype alert"
- https://www.youtube.com/watch?v=UlJku_CSyNg
"What is the Internet, Anyway?"
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.
What is the widespread problem crypto is solving ?
Hint: darkness and obscurity most of the time don't hide shy virtuous people.
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.
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.
They're as smart as they come.
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.
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.
Here is some more history on early cryptocurrencies and blockchains:
https://twitter.com/moo9000/status/1389573901815066627
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).
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.
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.).
Anything of values get its share of fakes, even dev shops.
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.
> 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.
https://www.pcmag.com/news/is-heliums-new-5g-network-just-ho...
Helium was, until recently, one of the companies bound to come up if you asked around for real-world use cases of crypto.
> 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".
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...
Even something like a Dex can be far superior to traditional order book exchange models in some cases
And it all went downhill from there.
it's well researched https://en.wikipedia.org/wiki/Byzantine_fault
Again, _please point out how you can have a distributed ledger with global consensus with only signatures and no other technology_
So then the innovation of cryptocurrency was an economic one.
It does have the word "currency" in it, so that should not be surprising.
> It turns out that "distributed linked list" is actually a difficult problem that involves very interesting challenges
It's not that.
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
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.
[0] https://ethereum.org/en/developers/docs/
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.
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.)
Vitalik's original Ethereum whitepaper, updated to be relevant in 2022 - https://ethereum.org/en/whitepaper/
Vitalik's blog - https://vitalik.ca/
other than that https://ethereum-magicians.org/ and github.
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.
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.
You could argue the intermediary knows the info, but most crypto buyers also use an intermediary.
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.
It's ignorance.
You can easily do that with other tech.
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.
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.
Because you actually need to convert your Fiat into crypto first.
The current limitations are real and the theoretical possibility is equally good of what currently exist: a black market.
In Iran everyone took euros or exchanged them on the spot. Even when the currency shop was closed people were waiting outside for us
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.
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.
Yes, it depends on electricity, but so does 95%+ of the modern economy. https://www.scientificamerican.com/article/2003-blackout-fiv...
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).
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?
I just searched and the first service I found had already exited the business after stealing the coins of many people: https://bitcointalk.org/index.php?topic=1260582.0
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".
[1] https://twitter.com/flipper_zero/status/1567194641610465281
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.
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 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...
Maybe you don't want to?
The trust is that the bank recognizes when a transaction looks off, and holds it/notifies me, without my involvement
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.
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.
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
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.
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.
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.
> 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.
[0] https://devonzuegel.com/post/inside-argentina-s-currency-exc...
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 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...
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.
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.
You always need to rely on third parties for finance (even if you manage your own crypto wallet) and for other stuff in life.
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.
This is fairly new tech academically btw, and it's only possible anonymously since the ZSnark cryptography tricks.
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.
I'm waiting for a good relevant use Case.
Haven't found one yet which is purely digital.
https://whycryptocurrencies.com/
No, rampant speculation made that.
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 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.
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.
Secondly, is Bitcoin + Lightning in combo decentralized in practice?
I don't know. I'm much more interested in Ethereum, personally.
Solana: 0.12 seconds
Bitcoin: 1.2 seconds (on Lightning)
Ethereum: 12.0 seconds
Banking System: ~30 days (2 hours to 5 days for usable funds)
Payment Card Industry: 180 days (2 seconds to a few minutes for usable funds)
15 minutes is 75 confirmations.
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.
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.
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!
The blockchain hype cycle peaked nearly five years ago: https://trends.google.com/trends/explore?date=all&geo=US&q=b...
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.
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.
https://people.csail.mit.edu/nickolai/papers/gilad-algorand-... Algorand: Scaling Byzantine Agreements for Cryptocurrencies
http://people.csail.mit.edu/silvio/Selected%20Scientific%20P... A DIGITAL SIGNATURE SCHEME SECURE AGAINST ADAPTIVE CHOSEN-MESSAGE ATTACKS*
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.
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.
https://www.bankofengland.co.uk/research/digital-currencies
https://www.federalreserve.gov/central-bank-digital-currency...
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...
The short of it is:
- 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).
[0] https://ogucluturk.medium.com/the-dao-hack-explained-unfortu...
Like for example in the world of finance, where you have to be able to backtrack.
Meaning such 'contracts' are least useful for things like, well, 'currency' and 'stores of value' ... hmm ...
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.
Needs backtrack, code it in, then everyone knows how the rules work and there isn't any side deals or exceptions.
Cheers!
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 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 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.
This is so important.
If someone is trustworthy, you need fewer checks in balances to be able to be confident that transactions with them will go well.
If, on the other hand, someone is not trustworthy, all the systems in the world cannot guarantee good outcomes.
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.
[0] https://en.m.wikipedia.org/wiki/Labeling_theory
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.
[0] https://www.bi.team/blogs/social-trust-is-one-of-the-most-im...
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.
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 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.
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.
https://en.m.wikipedia.org/wiki/Design_by_contract
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.
Yes, Ethereum's security model is a problem. There's no reason to believe, however, that it won't be improved upon.
[1] https://karpathy.github.io/2021/06/21/blockchain/
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.
No - they are not necessarily legally binding.
They are just called 'contracts'.
We have no idea what they mean, and each individual 'contract' will have to be scrutinized by the Judge, or else it's not 'legal' anything.
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.
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.
how large is a full copy these days?
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?
Source: https://etherscan.io/chartsync/chaindefault
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"?
Came out about 4 years ago
You are on the right track.
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.
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.
[1] https://vitalik.ca/
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.
"What is going on now" is largely the same thing as before:
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.
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.
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 ;)
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.
I'd recommend just taking look at the documentation / code.
Here's some sample ones:
Ethereum - https://ethereum.org/en/developers/docs/evm/
Solana - https://docs.solana.com/cluster/synchronization
In between a blog post and a book. I think it’s a good starting (and ending lol) point.
https://vitalik.ca/general/2017/12/31/pos_faq.html
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
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.
https://etherscan.io/block/15537394
PoS is the same, except it doesn’t ALSO burn electricity that needs to be paid for by parts of the mining rewards.
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.
With PoW, you have to sell/spend some of the coins you earn in order to pay for operation expenditures.
PoS is more centralizing.
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.
As long as Bitcoin doesn’t implement ASIC-resistance, it’ll always be a rich gets richer.
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.
They're not the same.
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.
With PoS, without significant operating expenses, you can simply use your earnings to perpetually increase your stake.
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.
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.
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.
We often complain people hold cryptocurrencies instead of using them as money. Isn't this change going to make this worse ?
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 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.
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.
https://www.afr.com/companies/financial-services/anz-the-fir...
Like Aztec Protocol, which is used by zk.money.
It’s also the same technology used by Tornado Cash, which was sanctioned recently.
And they pride themselves on differentiating themselves in the market by offering specialised products and services.
Not sure why a bank would deliberately want to turn themselves into the equivalent of a reseller.
In a capitalistic world efficiency comes before pride or your shareholders replace you.
Who is using crypto to deliver mainstream financial products (banking, insurance, credit cards, loans, mortgages) at lower cost?
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.
In this case, the crypto-not-currency community really needs to work on branding.
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.
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.
Sounds great...
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.
Hardly limitless possibilities
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.
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] - https://help.venture.angel.co/hc/en-us/articles/682949304692...
[1] - https://whiskeyraiders.com/bourbon/justins-house-bourbon-bax...
[2] - https://www.decanter.com/premium/spotlight-on-blockchain-win...
The ability to send money instantly from any regular bank account to any other regular bank account, without any fees, that's what we should aim for.
Cryptocurrencies do this worse than the existing banking tech (e.g., the mentioned SEPA ICT).
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.
[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.
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.
I think it's hard to argue with this.
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.
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.
Or you could use Wise.
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.
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.
and other people’s use cases aren't legitimate to you
We’re past the point of playing with people’s goal posts
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
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?
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.
I see that 99% of use cases are "speculation to get rich on the basis of telling bigger fools to buy and HODL LOL".
People have been using heroin for years, doesn't mean it's a good thing.
>3. PoS (Ethereum, soon™)
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.
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.
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
Well then, that's not at all solving the same consensus problem that crypto solves.
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)
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.,)
And, on the contrary, SWIFT was hacked not so long ago: https://en.wikipedia.org/wiki/2015%E2%80%932016_SWIFT_bankin...
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.
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.
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/
The one nice thing about crypto is that if there are bugs, the incentive to exploit them is large, they will get found quickly.
How the problem is dealt with after the fact (e.g. ETH Classic hard fork) i.e. the governance model is the real interesting part.
You're always at the mercy of a hard fork that "fixes" the bug after the exploit.
This is what the Ethereum classic fork was about.
A malicious supermajority cannot break the rules your client enforces, because your client will reject it.
Think of it as everyone running ethereum has a bunch of asserts() each block or communication it receives.
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
Ref: https://news.ycombinator.com/item?id=32843961
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.
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.
Not really sure I get why this is a good thing.
But "toxic environmental narrative"?
Totally agree with your point. Our politics and society don't do a good job with that.
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.
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.
https://news.ycombinator.com/item?id=32844350
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
** big asterisk here as I have spent no time trying to understand how they made it work for ETH and how/if this actually applies to BTC..
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.
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.
Bitcoin is the representation of Decentralised Proof of Work.
I couldn't imagine any Bitcoin loving person to ever consider a POS BTC reality.
PoW enables real decentralization. No party/company/govt can control a PoW network like BTC. This is why it’s considered a commodity by many.
PoS is almost the opposite. A small group with stake control the network. This is why it’s considered a security by many.
For Bitcoin, PoW is a feature not a bug.
No chance at all while BTC remains top dog (in market cap)
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.
ALL gpus are going to go down in price, just because the market is saturated, it has nothing to do with what workloads they happened to be used for.
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.
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.
I look forward to the increased GPU supply.
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.
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 (?)
The fact that the vast majority expects a bull run means that it's very likely it will crash instead.
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.
"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.
Please do not substitute a statistical model of something for the thing itself.
People do think about that. But definitely an improvement!