
A Bitcoin battle is brewing - jasonisalive
http://techcrunch.com/2014/12/06/a-bitcoin-battle-is-brewing/
======
jmcnevin
Previously, on HN:
[https://news.ycombinator.com/item?id=8712261](https://news.ycombinator.com/item?id=8712261)

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0xA21F
When you read this sort of document, keep a few things in mind that don't
normally come across well from non technical authors. There is no such thing
as "blockchain technology", that is, you can't separate the block chain from
Bitcoin without making it hopelessly vulnerable to attack. The functionality
and security of the system relies on the premise that miners are only mining
due to the financial reward. If you don't a reward you don't have miners, you
have a highly inefficient way of storing transactional data. As such, concepts
that claim to take Bitcoin and turn it into Uber, Craigslist, eBay, messaging,
twitter, video distribution, file storage are all complete nonsense spewed out
by an author with little or no concept of the functioning of the network.

If anybody is claiming to take "block chain technology" and cram it into
another system to make it decentralised, you ought to be showing them the
door.

> _Ripple disputes that they are affected, stating “All is fine and well with
> the Ripple protocol._

What Ripple/Stellar (same thing, different name) is a system which absolutely
can not come to consensus under normal operational conditions. To solve this
they have made the system entirely centralised, which isn't a problem for them
but is for anybody who believes it to be decentralised. When you read things
about Ripple know that there's two flavours: "Ripple", which is the original
concept, and OpenCoin's "Ripple", which has a different technical
underpinning. A lot of the early praise you'll see for Ripple was for the pre-
OpenCoin version, which wasn't so heavily flawed as the one known today is.

I don't quite get why it's even mentioned in the parent article, it doesn't
even have a block chain to begin with.

~~~
0xA21F
> _the potentially extraordinary Ethereum project, built to "decentralize the
> web" with its blockchain, which recently raised $15 million (in bitcoin, of
> course) by pre-selling its cryptocurrency prior to next year’s launch_

I've still not met anybody who can tell me what Ethereum is without using the
words "turing complete" (which it's not due the halting problem, just like
Bitcoin). Most of the information you can get from secondary sources seems to
just mirror Bitcoin (you can do _this_ awesome thing, but you'll need an
oracle to do it..).

~~~
drcode
Your point is fair.

The idea with ethereum is that oracles will be able to have a much finer
granularity; whether this allows for more useful apps still remains to be
proven by us in the ethereum community.

(Also, there are plenty of folks like myself working on oracle-free apps, but
since these are based on unproven economic models at this point, it would be
negligent for us to promote them widely before we have evidence that such
designs work in practice, on the live ethereum blockchain)

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danbruc
Bitcoin in it current form will (most likely) never replace traditional
currencies because it is either to easy to attack or prohibitively expensive.
Right now the Bitcoin network consists of mining hardware worth 100 million
Dollars and consumes electricity worth 219 million Dollars per year [1]. While
100 million Dollars is not nothing it would still be affordable by most states
and even large companies or rich individuals to effectively shut down the
Bitcoin network by gaining a large share or even the majority of the network
hash rate.

If Bitcoin would gain widespread adoption and see transaction worth billions
of Dollars every day, it could easily become a worthwhile attack target even
at the mentioned attack costs. The only protection would be to use a lot more
mining hardware worth billions of Dollars to make an attack to expensive but
this in turn would also raise the energy consumption proportionally and in the
end the costs per transaction. I think that in this regard Bitcoin is
fundamentally flawed because - up to some limit - you want the transaction
volume protected by a proportional amount of mining hardware causing
proportional energy and transaction costs which then imposes a lower bound on
the costs per transaction.

[1]
[https://news.ycombinator.com/item?id=8782877](https://news.ycombinator.com/item?id=8782877)

~~~
FatalLogic
_but this in turn would also raise the energy consumption proportionally_

I'm curious about this point. Is this true? Does the energy cost increase in
proportion to the hardware cost? It seems like bitcoin mining hardware becomes
much more energy efficient with each new generation.

Could you link to a source?

There's some background data in here: [https://medium.com/@interdome/how-much-
electricity-does-bitc...](https://medium.com/@interdome/how-much-electricity-
does-bitcoin-use-c350bd84c64e)

~~~
gnopgnip
If bitcoin mining hardware gets more energy efficient, it is more efficient
for the attackers too. The symmetrical costs are the problem here.

~~~
FatalLogic
Thanks, but I wasn't commenting on that really, just the point I asked about.

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Animats
The "Bitcoin battle" exists mostly in the minds of people promoting some get-
rich-quick scheme of their own. There were about 175 altcoins the last time I
looked. Only a few have any significant liquidity.

"Blockchain technology" runs into one of the biggest problems on the Internet
- identities are too easy to create, so anything based on voting has spam
problems. Distributed identity is an unsolved problem. There's a long track
record of failures, from Web of Trust to Facebook's "real names" policy.
Bitcoin deals with this using "mining". The effect is to require operations
the size of Google data centers to maintain a database and transaction rate
one desktop machine could handle easily. Bitcoin isn't very distributed any
more; there are about half a dozen big players. That wasn't the plan.

None of the alternatives look good. There's centralization (Ripple, Paycoin
2), proof-of-stake (the rich get richer), using algorithms unsuitable for ASIC
or GPU implementation (big floating point matrix calculations, maybe), and
various tweaks to make the block chain a tree so not everybody has to store
the whole chain. So far, those are mostly talk, except for the centralized
altcoins.

~~~
0xA21F
There's many more times that, my estimates put it between two and three
thousand.

> _using algorithms unsuitable for ASIC or GPU implementation_

You don't want that. Give this a read.

[https://download.wpsoftware.net/bitcoin/asic-
faq.pdf](https://download.wpsoftware.net/bitcoin/asic-faq.pdf)

~~~
Animats
Two or three thousand altcoins? The biggest list I can find has 601 today:

[http://coinmarketcap.com/all/views/all/](http://coinmarketcap.com/all/views/all/)

8 have a daily volume over $100,000: Bitcoin, Litecoin, Ripple, Dogecoin,
Stellar, NewBits, Paycoin (XPY; there are two Paycoins), and Bitshares. Those,
you might be able to sell without crashing the market. (Maybe not Paycoin,
which looks like a pump and dump in the "dump" phase. See Reddit or any
Paycoin message board for details.)

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jwildeboer
A clickbait battle is needed for TechCrunch while the bitcoin/blockchain users
and developers experiment with new fields of use. And because it didn't really
work for TC when they posted it a few weeks ago, let's try again! :-(

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petertodd
_But after that soft fork, most subsequent blockchain innovation and
experimentation will probably happen on sidechains_

It's far from clear that will in fact happen - mined sidechains that aren't
widely adopted by miners are insecure, just like small altcoins are vulnerable
to 51% attacks. Even worse the 2-way-peg mechanism Blockstream proposes trusts
hashing power to determine where coins go so an attacker not only destroys the
sidechain, but has a direct financial incentive to do so because destroying
the sidechain lets them steal all the money that has been moved to it. Equally
even if a majority of miners support a given sidechain, they can always change
their minds later and take the funds. (quite possibly due to a temporary
problem, like a hack or a a court order)

To solve this problem Blockstream explicitly proposes that smaller or
experimental sidechains without majority support use a "federated" model where
one or more trusted authorities controls the sidechain. Of course, needless to
say needing a trusted third party to keep the sidechain secure isn't a good
solution in many cases - they're essentially acting as a bank and it's
extremely difficult to design systems where that bank can't profitably steal
all the funds.

~~~
fryguy
I would hope that any sidechains to bitcoin that use proof of work would have
a shared mining model, so that miners could mine both simultaneously.

~~~
petertodd
That's the problem: merge-mining means there's zero cost to attacking a
sidechain. Of course, people like to invoke economic incentives here and say
there's opportunity cost with the idea that the sidechain will pay ongoing
fees or something. But this is a very untested idea to put it charitably -
keeping Bitcoin itself secure with only fees is widely considered to be an
unsolved problem, and that problem doesn't have a reward in the form of a
bunch of 2-way-pegged Bitcoins waiting to be stolen.

Ultimately I think media coverage of this is really misunderstanding how
sidechains are _very_ far from a proven idea, except in the centralized model
where you trust someone to maintain the sidechain. Equally it's pretty clear
that they have a high risk of making the incentives behind Bitcoin mining even
further tilted towards centralization of hashing power.

~~~
fryguy
I feel that the other side: zero cost to protect a sidechain, is a much bigger
benefit. Presumably, the sidechain has mining rewards as well, which devalue
the amount of BTC you get when going back to the main chain.

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hollerith
Most of the time when an author uses an analogy to help explain something to
do with computers, the analogy wastes more time and causes more confusion IMHO
than it is worth.

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jokoon
Bitcoin is a nice tech, but all I see is libertarians and other fed haters
using its hype to bolster a political agenda, like the internet could change
the economy or something like that.

The blockchain could be used for many other things though that could be game
changing, like a publicly distributed database with trusted data. but I don't
think many really are able to understand how it really works, and I don't
users would really trust it.

~~~
LAMike
Look deeper into it and make your own conclusions

~~~
meepmorp
Perhaps they have.

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at-fates-hands
_" Bitcoin true believers think it will ultimately do to Wall Street what the
Internet did to fax machines"_

Uhhhhhh yeah, because the internet totally killed fax machines right? The last
three fortune 500 companies I've worked for still actively used fax machines
which were integrated into their copy machines. They're very much far from
being extinct.

~~~
jusben1369
I'm not sure where you came to the conclusion that it meant complete and utter
annihilation vs something much less dramatic like moving from the primary way
to send and share important documents to a marginalized secondary player kept
alive mostly due to legacy/dated procedures. Trust me no one who is 10 years
or under today is ever going to send a fax in their professional life.

------
LAMike
I think sidechains will replace the need for altcoins

~~~
davidgerard
What's the progress on sidechains? At present they don't exist.

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amalag
I think Ripple still has the better concept with consensus to verify
transactions instead of proof of work.

------
Ologn
Bitcoins are worthless. They have no value. The whole thing is a scam. The
ASIC manufacturers have been raided by the government, the major exchanges
have been shut down for fraud. I mean, even their inventor keeps himself
anonymous.

Bitcoins entered 2013 worth $14, a historic high at the time. By November 2013
it hit $1160 on the hype cycle. It has only fallen since then - it is <$320
currently, a historic post-high low.

It is going to keep sinking. It is worthless. It has no value. It is going to
$0. All those who talk about bubbles and the dot-com bubble can see how the $5
billion Bitcoin market cap was created out of nothing. I mean, this is the
central demonstration of a bubble, a scam, a Ponzi scheme in our time. Look at
all the VC's and angels etc. shilling for this scam. Why not? They will make
money, only the suckers who believe them and shell out $320 for these
worthless hashes will lose money.

It's pointless to dwell on this too much, but the Bitcoin scammers are rampant
on HN. They are trying every means to hype their worthless, valueless product,
so this post will surely get downvoted to oblivion. Anyone who listened to me
when Bitcoins were worth $460 and I said the same thing (
[https://news.ycombinator.com/item?id=6753545](https://news.ycombinator.com/item?id=6753545)
) would have saved themselves a 30% loss. But the scammers here don't want
suckers warned, this post will be downvoted to oblivion so people don't see it
and the next round of suckers will get robbed by the scammers.

