
Problems on the Blockchain - bbyford
http://benbyford.com/articles/problems-on-the-blockchain/
======
chrispeel
Ethereum will move to proof-of-stake, as described in a blog post yesterday
[1].

I agree with the author that blockchain-based tech is more appropriate for
small networks at present, yet the tech (e.g. Lightning network) will only get
better and enable bigger and bigger networks.

BTW, what the hell is up with capitalizing 'blockchain' as the article does?
It's like capitalizing 'database'.

[1] [https://blog.ethereum.org/2015/12/28/understanding-
serenity-...](https://blog.ethereum.org/2015/12/28/understanding-serenity-
part-2-casper/)

------
droffel
_The size off this endeavour is starting to consume more effort than is
sustainable, not only for most peoples wallets, but also for the planet
generally._

This is a common misconception, and only really is a "problem" in the initial
distribution phase of the currency. Economically, all other things being
equal, the cost of electricity spent on mining will approximately equal the
mining reward.

The mining reward is approximately equal to (Fees + 50/(2^(floor(Years/4)))),
where Years is the number of years since the network's inception. As time
passes and the block reward drops off, the security of the network
(equivalently, the amount of energy spent on mining) will approach the
transaction fees paid for the use of the network.

~~~
nunyabuizness
Unless the hashrate of the sum of miners declines once they stop creating the
cryptocurrency and start only validating transactions, the amount of energy
spent on mining will always be high and will always be ecologically-
unfriendly.

~~~
droffel
Sure, any energy expenditure over and above what would be necessary to run a
centralized database can be considered inefficient, and therefore
"ecologically unfriendly". However, the hashrate isn't burning energy for no
utility: the security of the network is directly proportional to the energy
expended in hashing.

Considering that the energy is being expended for a purpose (security against
malicious actors), and that it is economically infeasible to expend more
energy than the marginal fee revenue in a given moment (once we transition
from the current block subsidies to a pure fee market), I question whether
calling mining "economically unfriendly" is fair. The energy usage will scale
linearly (not exponentially) with usage, which seems perfectly alright to me.

~~~
nunyabuizness
I completely agree with everything you said; however to clarify what I meant
originally, I say "ecologically unfriendly" because of all the ways to do
distributed consensus, proof-of-work is the least efficient mechanism when
compared to the various proof-of-stake algorithms and Ripple/Stellar's
cascading consensus model.

They all have their own individual tradeoffs (some technical, some political),
but when talking about energy consumption, there's no argument that PoW is the
most costly.

------
lordnacho
I was wondering if instead of having all the miners churning away at a proof-
of-work there would be a simpler way to validate a block.

For instance, could you have a defined chain of authoritative servers, where
the authority passes in a way where it cannot be abused?

Example: A mines a block by signing it with a key, throws up random number
corresponding to B. B then does the same and nominates C. C stopped working,
so authority passes to D.

Is there a way to do this so that the obvious attacks are thwarted?

~~~
throwaway2048
if you have defined authoritative servers, they can just hold ballance amount
and you can dispense with the rest of the blockchain entirely

~~~
lordnacho
I don't mean defined as in static. Of course if you did that you could just
use an old fashioned database.

------
lumberjack
Did anyone bother to calculate the inefficiencies caused by a centralisation
or federalisation and whether they justify all the effort that is going into
bitcoin and other decentralization technologies?

Who is to say that a more transparent federalised system wouldn't be more or
less on par with the bitcoin blockchain in terms of power centralisation?

~~~
sp332
Bitcoin is now effectively a federated system anyway. Miners coordinated to
fix a hard-fork situation, which means they have the power to favor or
disenfranchise certain people. They don't seem to have that motivation at the
moment, but it's very possible. E.g.
[https://twitter.com/Datavetaren/status/631080568487342080](https://twitter.com/Datavetaren/status/631080568487342080)

~~~
lumberjack
That's was exactly my point. Bitcoin is not as decentralized as it was
envisioned to be so maybe there are other sorts of federalized systems that
can be just as good and easier to implement.

~~~
grubles
Further down the twitter convo:
[https://twitter.com/TheBlueMatt/status/631715218788360192](https://twitter.com/TheBlueMatt/status/631715218788360192)

------
mchahn
> The higher the consumption the harder it is for the general public to
> participate in the spoils

I don't think the purpose of bitcoin is for the public to get "spoils", such
as from mining. The public only needs the exchange utility of bitcoin, not to
make money from it.

------
jv0010
Agreed with most comments in this article except for the ecological comment. A
good perspective where the author is just pointing out need for improvement in
certain areas.

------
kordless
> Presumptions: at this point I'm presuming that the reader has a basic
> knowledge of Bitcoin and the concepts in the Blockchain technology.

At this point I presumed that the author had a basic knowledge of Bitcoin, but
we all know what happens when you presume.

~~~
bbyford
Love to hear any additions or pointers you might have. This article was mainly
to point out the obvious to much of the cryptocurrency industry (but not
necessarily to the average Joe) and as discussed in the comments there are
efforts and alternatives. My main worry is that people can sometimes put blind
faith in a technology, when they should really knock it down and build on its
sturdy foundations

~~~
kordless
There's a bit of irony in my statement as I don't assume you know or _don 't_
know. We, as a population, depend heavily on trust for day-to-day life. As an
author of an article like this you might consider that speaking as trusted
authority on something which provides computed trust will affect the trust the
general population has in said technology and in you (and the rest of us
Bitcoiners). The general assumption is the value of Bitcoin is linked to how
much people trust it. When you post things that negatively impact it, perhaps
intentionally or perhaps altruistically, there's going to be trust issues
between people who disagree with you.

The best way I can describe this effect with cryptocurrencies is "it's a
polarizing topic". :)

Blockchain technology, no matter the implementation, will always have some
degree of risk associated with the trust it embodies. Nothing will be made to
be perfect. The question I'd like to know the answer to is whether or not it's
providing enough value for the applications it currently runs, and what other
applications can be improved by adding the blockchain's natural immutability
to them.

Thanks for writing something interesting!

------
pstrateman
Proof of Stake does not work.

[https://download.wpsoftware.net/bitcoin/pos.pdf](https://download.wpsoftware.net/bitcoin/pos.pdf)

~~~
DennisP
That's not a proof that no Proof of Stake system can work. It's a list of
possible attacks, at least some of which are mitigated by recent Proof of
Stake designs. See Vitalik's post here:
[https://www.reddit.com/r/ethereum/comments/3y0ysi/understand...](https://www.reddit.com/r/ethereum/comments/3y0ysi/understanding_serenity_part_i_abstraction/cy9wz6e)

A fairly detailed description of that system is here:
[https://blog.ethereum.org/2015/12/28/understanding-
serenity-...](https://blog.ethereum.org/2015/12/28/understanding-serenity-
part-2-casper/)

~~~
pstrateman
> That's not a proof that no Proof of Stake system can work. It's a list of
> possible attacks, at least some of which are mitigated by recent Proof of
> Stake designs.

I have yet to see a design which mitigates all of the attacks.

Indeed I do not believe that such a design is even possible.

Would love to be proven wrong though.

~~~
CyberDildonics
Some people don't believe that bitcoin works or is possible even though it
literally is working right now.

~~~
pstrateman
All of the currently "working" "proof-of-stake" systems have central trusted
third parties signing blocks.

~~~
CyberDildonics
Until bitcoin was created all currencies used centralized trusted parties too.
These things are in their infancy. Saying something can't be done at this
stage is begging to be on the wrong side of history.

~~~
pstrateman
As I said.

>Indeed I do not believe that such a design is even possible.

>Would love to be proven wrong though.

