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Bill Gates Says that Bitcoin is bad For the Planet (technologyelevation.com)
590 points by awb on March 8, 2021 | hide | past | favorite | 801 comments

There are so many better crypto-currencies. Better for the environment because they use proof-of-stake, and not proof-of-work. Better for users because transactions are confirmed in seconds, not hours, and without the ridiculous fees that Bitcoin has.

I think this shows how truly powerful the network effect, and being first to market is. Because without those things, Bitcoin would be nothing.

You know what actually bothers me the most about all crypto-currencies?

None of them are actually money, like in the paper-or-gold-coin sense. They're all ledgers.

The thing about money is that I can hand it to someone. Possession of the money is possession of the money and third parties don't need to get involved in every transaction. I can hand someone dollars and take a sandwich and walk away, transaction done.

The problem with a digital currency, of course, is that when you hand someone a sequence of bits, they don't go away from you, so you can hand that same sequence of bits to another person.

The "solution" people came up with to this problem was to not solve the problem, and instead solve a different problem, how to have a distributed ledger.

Which is like, neat and all. But also infuriating. We don't have crypto-currencies, we just have crypto-banks.

You're getting a lot of responses, because this is a pretty common complaint about crypto, and it taps into a great "WELL ACTUALLY" moment, because your concern is close enough to the "at least real money is backed by something" misconception (which, tbh, I'm sure you're aware of at this point if you weren't already).

Fundamentally, what folks are trying to get to with crypto is a trust-less system, one that can operate regardless of whether or not there are bad actors involved (including and most commonly as the central authority, aka banks). Historically, it's been a lot easier to build systems that don't account for bad actors, and it's been continually problematic for society because that assumption is so obviously and blatantly false.

Maybe crypto, as we know it, isn't the solution, and certainly proof-of-work has serious negative drawbacks. However, with the advent of automated computational devices, the possibility of evolving past our many-thousand year old system of bartering is too enticing to just ignore. We know there's a better way, and the odds we'll nail it on the first try are nearly zero, so I personally welcome any attempts that lurch us forward in the meantime, even if they're not the end destination.

Crypto is 'backed' by the sunk cost of the energy used to mine it.

That sounds like the Sunk Cost Fallacy. Just because something valuable was already wasted, doesn't make the result valuable.

Agreed, that is why on a long enough timeline someone will end up holding the bag.

A lot of people are comparing crypto to some kind of ponzi pyramid thing, ie a scam where some people will get rich but a lot will suffer. But isn’t that true about everything, ie smarter/more lucky ones will find ways to increase their wealth and those making suboptimal decisions will get broke? It looks like only when it gets obvious how the scheme works it becomes a scam.

The challenge with crypto is it is so easily manipulated/wash traded by those with large holdings. So those who are later to the game (with smaller holdings) are at a systemic disadvantage.

It could stabilize at a price and not crash, but who knows.

I sold most of my crypto because it's too risky/sketchy for me now.

I'd modify that to:

"Crypto is 'backed' by the value of the sunk cost of the energy used to mine it."

...which is to say: nothing.

But for as long as collective agreement persists, there is volatility. And where there's volatility, there are profitable trades.

The natural question becomes "Why does, and for how long will, the collective agreement persist?".

For that, I have no answer. :)

This is an interesting thought that crypto (or at least proof of work crypto) is backed by a sunk cost of an otherwise useless task. But let me extend that paradigm: why is (or isn't) gold also not baked by a sunk cost? What was the point of all that expensive mining and digging if not for the sole purpose to extract that shiny metal from the earth's crust?

To some degree they are similar. The one difference is perhaps that BTC mining income is effectively guaranteed, ie if you join a mining pool and invest enough money, you will get a return of known quantity. In contrast, you could invest a virtually unlimited amount of money in a gold mining operation but not get anything back.

Mining gold removes it from the earth in the future; mining Bitcoin secures the blockchain in the past.

If the moment you stopped mining gold, it began to sink into the earth again, would the amount of mining you did in the past have value in the future?

We can (and China already does) use energy that would otherwise be wasted to mine bitcoin: https://twitter.com/nic__carter/status/1369007894969122816?s...

This only holds water if you completely disconnect supply from demand, which is obviously ridiculous.

Same here in Iceland where we mine 11% of the btc Network.

ETH is backed by the distributed computer you can pay ETH to execute software on.

And what is the value of a distributed computer?

Turns out, virtually nil, because it's been around for 8 years and nobody is using it, because there is no real-world use case for contracts written as software.

At least you could try a quick googling before you write a comment.

I love how this comment amounts to "nuh-uh!" because you can't think of a single example even though you're an enthusiast.

The only people using smart-contracts are enthusiasts and proof-of-concept startups that have no traction in the market because smart contracts don't offer any advantage over any other computing system.

So users you don't like?

Somebody, somewhere, is using glass jars to drive nails. That doesn't mean it's the right tool for the job.

> it's been around for 8 years and nobody is using it

That's laughably wrong, go look up how much revenue the Ethereum network is bringing in with smart contract fees.

And what are those smart contract fees being used for?

- Speculators buying ETH to ride the bubble

- A revolving door of Proof-of-concept startups with backing from starry-eyed VCs and no viable business plans that pop up, use a bunch of compute, and then fail, every couple of months.

Ethereum mining conglomerates don't even use Smart Contracts, they just cite "a long history of successful payouts", trust, and old-fashioned promises written in vernacular English.

So you're moving the goalpost from "no users" to "no users I approve of"?

A few other use cases: DeFi (mainly crypto backed loans), NFTs (so far not too interesting to me), distributed ETH2 staking pools, distributed betting markets (the coolest one in my opinion).

No, the goal posts are standing still at "competitively successful commercial activity". The fact that somebody somewhere hammers nails with glass jars doesn't mean that glass hammers are about to take over the hardware world. Early investors getting rich off of a Ponzi scheme doesn't make the Ponzi a good businessman.

DeFi is used almost exclusively as margin for speculation. Since smart contracts have no legal force, the only way lenders can be guaranteed their money back is by demanding collateral that is greater than the value of the loan. When is the last time you needed a loan of $10,000, for which you were happy to put up $15,000 of your own dollars in escrow as collateral, other than securities gambling?

NFTs are just cryptokitties by another name, ETH2 staking pools are just private equity firms but without security because millions of dollars are stolen out of them every year, and crypto distributed betting markets are patently illegal.

Which brings us right back to where these conversations always end: the only things blockchain has or will ever be useful for are speculation and obscuring criminal activity.

> nobody is using it > no competitively successful commercial activity

Those are two wildly different claims but I'll bite anyway:

Your argument against DeFi could be made about Schwab, or any brokerage providing margin so I don't find it very compelling. Is selling margin to gamblers not a "competitively successful commercial activity"? Your original claim was that there were no users.

> crypto distributed betting markets are patently illegal

That's like saying self driving cars are patently illegal. Of course they are (more illegal than grey market sports betting), but it's a nascent technology and it's not obvious that it will stay illegal.

Now you're just being deliberately obtuse.

> semantics

Every competent English speaker knows that the phrase "nobody uses X" is never meant to be taken literally. When I say "nobody uses PowerPC", I mean that its market share is miniscule and the industry has moved on, I am not claiming that there does not exist some nerd somewhere who maintains a 20 year old imac as a hobby, and finding that nerd is not a disproof.

> margin trading

Margin accounts are not commercial activity. When you buy or trade securities, whether on margin or otherwise, no new value is being created, no workers are being paid, no commodities are being traded, no products are being consumed.

The entire market could vanish overnight and nobody would notice, because it isn't doing anything, it's just making increasingly complicated guesses at what other people will do.

> betting is like self-driving cars

Self driving cars are new technology. Online betting is not, it has been around since the beginning of the internet. Blockchain is doing nothing but helping the illegal gamblers to hide from law enforcement.

> When I say "nobody uses PowerPC", I mean that its market share is miniscule and the industry has moved on, I am not claiming that there does not exist some nerd somewhere who maintains a 20 year old imac as a hobby, and finding that nerd is not a disproof.

Well that's bad analogy, because unlike PowerPC there are more users of Ethereum than ever before, and Ethereum is generating more revenue than ever before.

> Self driving cars are new technology. Online betting is not, it has been around since the beginning of the internet. Blockchain is doing nothing but helping the illegal gamblers to hide from law enforcement.

I think you're being obtuse. Ethereum is the new technology here, that enables a distributed betting platform that was previously not possible. Self driving cars are a new technology that enable a type of transportation (existing market, like betting) that previously wasn't possible.

> That's laughably wrong, go look up how much revenue the Ethereum network is bringing in with smart contract fees.

Nobody is using the compute power, though. Can you point to what they are using it for, if you have an example?

What do you mean by compute power? Smart contracts (which run on-chain code) pay fees for each command they execute. The most popular smart contracts are token exchanges and DeFi (ie crypto backed loans).

Having trouble finding the total smart contract revenue, but this article has examples of the top few, and gives an idea of their usage patterns: https://medium.com/@vikati/ranking-ethereum-smart-contracts-...

Proof of Stake cryptocurrencies are not mined, so where do they get their value from? Plenty of them have high market caps.

I suppose the value is derived from staking your coins on PoS. There is real opportunity cost associated with locking up assets.

I think it's backed by the hope that on a couple of years it will be worth lot more (instead of looking backwards, people look forward and hope to get rich).

Why can't it be the hope that it's worth something (not necessarily a lot more)?

Paper USD is backed by something though isn't it? It's backed by the US Govt. It's backed by the USG guaranteeing they will accept it.

Crypto ain't even backed by that.

It's a misrepresentation, but you're on to something. Crypto is also backed in addition by all the other network participants willing to transact in crypto. which scales log with number of network participants.

I think the mindset of those people who make such arguments are those who want to delegate individual responsibilities that involve such risks to other parties. They might not understand the risk involved when such parties get big enough to dominate and decide what to do and how to do it.

Usually, we commonly agree by coming to consensus on what to do and not to. But here the consensus, sometimes, can get hijacked by the third parties which lot of people don't understand how it happens (read historical events). 2008 banks bailouts is a good example to begin with.

As Satoshi mentioned, in the OG Bitcoin paper, that cryptocurrencies will be attractive to Libertarians. That's a fair assumption as one would start to notice a lot of activities involved in being part of cryptocurrency, atleast currently, requires lot of individual responsibilities, especially maintaining the wallet's credentials. Not to say that they can't be automated away.

Coming to terms with taking individual responsibilities in general is very hard. Most people want others (Government) to do it.

> The thing about money is that I can hand it to someone.

Honestly don’t know if you’re trolling or just old.

I used paper money once last year. To buy weed. Because the federal government has determined I am not responsible enough to use or own weed.

No one I know uses physical cash anymore. We’re moving away from physical items where possible, not toward it. I would rather have my currency on a public DLT than controlled by the government.

> Honestly don’t know if you’re trolling or just old.

No need to be ageist. It's a fair perspective. There is a quality of independence and agency that comes from being able to purchase things with cash.

Ironically, your weed transaction is a perfect example of that. I am a little confused by your argument though. Are you saying that you used cash because you couldn't pay legally with a debit/credit card or something? How come you didn't you use crypto? That aside, even with cash you were able to come to an independent accord (without the gov) and trade value for value. You could almost call it a barter, if you really consider cash to be a relic.

Despite having laws against this, society is mostly okay with some gray area around "off the books" transactions - which is why you can brag about it online and no one really cares, much like jaywalking.

More options for independent transactions don't necessarily hurt, but they do muddy the waters. The thing about cash is, since it is so commonly used, people generally understand what it is worth.

If I sell a TV for $100 on Craigslist, I take my $100 and I have a good idea of what I can buy at the grocery store with that. Offer to trade me 0.0020 BTC (~$100 right now) and I'm less likely to engage in the transaction because I don't understand its inherent value. You could even offer me 0.0022 BTC ($110) and I'd pass. How much gas can I buy with 0.0022 BTC? Do any gas stations around me take BTC? Do I need to convert it? I don't know. Add even more cryptos and it becomes even less clear...

I'm not against more options. More crypto options = more ability to barter. You and your dealer can decide to transact in Pokémon cards and no one's going care. But I do not see it being some sort of fix-all for the downsides to cash.

Seriously, cash is awesome:

* If I want to get payed quickly for a quick job, cash is the preferred payment method.

* If I immigrate to a country where I am not allowed to work legally, cash would be my preferred payment method.

* If I’m buying something illegal (including labor from a person not allowed to work in my country) cash is the preferred payment method.

* I can use cash to pay for products in the farmstand across the street without any transaction fees or 3rd party apps.

* I can use cash during a week long blackout.

* I can use cash without an internet access.

Parent might not personally use cash. But for many people around the world cash is by far the most convenient payment method. And for many less privileged people cash is the only payment method.

Re. buying/selling with BTC, one other problem is stability of value. Without stability, usability as a currency becomes hard. How does one even list items' cost in BTC when the value of BTC is constantly fluctuating?

There are stablecoins on Ethereum that fix that problem. Some of them are derivatives backed by nothing but ETH.

So, right back to fiat!

No reason we couldn't peg those to the price of gold, a basket of commodities, or of consumer goods.

Cash’s no. 1 use case in the 21st century is tax evasion. Most people just refuse to acknowledge that because they like evading taxes.

I’m sure there are ways to use cryptocurrency to do the same.

I doubt that’s true. It doesn’t seem to work out logically.

Lets say for the sake of argument that you are right, and the no. 1 use case of cash is to evade taxes. Then the people getting payed for their tax-free labor will need to use this cash somehow. The easiest (and cheapest) is simply to circulate the money while buying regular goods and services. So buying of regular goods and services would rise to be at least as popular use case of cash as tax evasion is.

Also note that there are plenty of people willing to pay tax for their transaction, but the transaction is made illegal by their government and hence they cannot. Then the reason to use cash is not tax evasion, but illegal transaction, (note that this includes paying and receiving salaries for people not allowed to work because of immigration status). Tax evasion then becomes a happy byproduct of the no. 1 reason for using cash, illegal transaction.

But I honestly doubt that either illegal transactions, nor tax evasion comes even close to why most people use cash. Convenience. Though I could be persuaded if I saw some data pointing to the opposite.

There are certainly a lot of people who use it for tax evasion, to be sure. One interesting tangible example that this problem exists is the recent removal of large bank notes by the Indian Central Bank, which was done expressly to combat tax evasion and money laundering.

The fact that lots of people in India have had serious issues because they were unbanked does seem to indicate that there's a sizable population of people using cash for everything*. I'm curious if there's any research into whether that's for tax-evasion reasons or for some other reason.

My personal belief is that the number one use is for money laundering, and that people who are using it that way would be willing to pay taxes on the money they are laundering from some other illegal activity. For instance, there are all-cash drug dealers who pay taxes on their drug money. I'm sure Al Capone wishes in retrospect that he'd paid taxes...

> My personal belief is that the number one use is for money laundering...

Have you ever experienced a natural disaster? One thing you realize quite quickly is that your debit card is useless. That doesn’t mean transactions stop, people are still buying and selling, those with cash at least. If there’s runs on banks, infrastructure outages, etc, those relying entirely on debit and other payment cards won’t be buying food!

That's a reason why you might have cash, not why you would use it. For example, you might own a gun in case society collapses. It stays locked in a hard to find place in your house. You don't walk down the street with it on your hip. Similarly, you don't pay for goods and services with cash when you're not in a crisis unless you're breaking some law, whether or not you want to figure out if you are or not.

There's something like $13 trillion in consumer spending in the US each year, and something like 9% of that is in cash.

That's like $1.2 trillion in boring, normal, law-abiding cash transactions each year.

What makes you think that it's law-abiding? You're aware that literally the entire goal of money laundering is to appear law-abiding, yes?

What country are you from? I’ve only seen this kind of hate towards cash in the European countries. Last time in Sweden and ask to use cash they looked like they were about to kick me out of the store.

You should get out of your bubble more?

Heh, I’ve been to about 30 countries, how about you?

112, disaster response is a great way to see the world.

Do you seriously think that even a large minority of cash transactions are somehow related to natural disasters...?

So logically we get rid of it since most transaction don’t happen for those reasons? Is my point invalidated in any way if a majority of cash transactions are not during a natural disaster?

You replied to, and quoted, a comment about the majority of cash transactions. Your point is entirely irrelevant to that discussion.

Also, for the record, I have been in and responded to a number of natural disasters in the "first world". With the exception of a few hours here and there, using cards was never a problem. If the infrastructure is so wrecked that cards don't work, food/water is coming from people in high-vis vests.

No my point is relevant and struck a nerve, hence the hostile replies. Keep loving digital currencies tho.

Try a hurricane, or something serious enough to be registered as a natural disaster.

As you've discovered yourself once last year, the option of using cash (without permission / knowledge of a third party) is more important than actually using it.

This is the same misleading argument as when people claim that BTC is in practice equivalent to USD as most people just keep it on exchanges (same as USD in banks). Yes, but BTC/crypto also gives you one new option, i.e. not keepign money on an exchange ("being your own bank"). You're free to take that option, or not - but it exists.

I'm old and in the same boat as you, for many years now. I haven't been to a cash machine in years, because maybe once a year I get someone who wants to pay me in cash for something, so that just becomes my "bank" for the year. I use so little cash that just one person paying me for their part of a nice meal is enough for the entire year. Even the vendors on the side of the road prefer Venmo/PayPal now.

Hell, aside from recurring bills, I put everything on credit and then pay it off within the week. That way I get cashback rewards, build credit and can ensure I have the peace of mind of being able to pay for anything at the time of transaction without worrying about shifting money between accounts or where I am in the pay cycle. It also ensures that, due to building my credit score, I have ample credit at my disposal in an emergency situation. And, of course, the antifraud benefits are immeasurable.

As someone who comes from a working class background, I hate this system. Credit is something that ought to be abolished in its current form. Credit card companies and banks abuse this system to offer overpriced loans to desperate people, and they oversell the convenience to working class folks, encouraging them to buy things on credit they otherwise couldn’t afford... Now they most likely will pay their credit card bill at the end of the month, but at the cost of not having any money for the rest of the month.

Moving to America I was horrified to learn that in order to get applicable for loans (including home loans) I had to “work up my credit”, which includes maxing out on credit cards and then paying it back. As a teenager I made it my philosophy (experiencing second hand stress from the people around me) never to get a credit card. Now if I want to have a realistic opportunity to buy a house here I’m forced to abandon this philosophy and to the thing that kept my mom in constant state of stress. This credit system ought to be abolished.

From my personal perspective, credit cards are a systematic way to bamboozle the working class into over-consuming and keep them in constant state of dept. And to reward the wealthy for the same behavior, which only serves to shove it in the face of poor folks that the rich get away with everything. This system ought to be abolished.

Those 1% cash back rewards cost everybody you buy from 3%

That sounds like a complaint to take to your representatives. It won't be solved with a boycott of using credit cards.

My understanding is that Europe has strict limits on credit card fees, and as such, most cards in Europe don't have rewards.

I've never been robbed for cash. I have had my bank account emptied multiple times though, recently too.

When I hand cash over to someone, I know how much is leaving and coming back right then and there. When I fill out a payment form with my card details I'm handing over my entire balance into the ether. I could be sleeping and quietly money is leaving my bank account, which happened. So cash is king still.

Plus it's generational. If I said walkman's are the best I would guess you have a different response, more digital based I imagine.

I'm curious how your bank account is being emptied so often?

I work in digital marketing so generally I make purchases for random ebooks, courses etc. Chrome tells me that basically every major website has been hacked or exposed.

But here is my PIN **

and what his account number and pin are!

This sounds really stupid. No bank allows it here. You get redirected to the bank's site and are asked to confirm the transaction with all the details including the amount of money, plus there's an OTP pin required. Maybe it's the damn socialism protecting it's citizens with regulations again.

Card not present is the bane of the ecommerce world. Which is how most fraud is done but it makes it very easy for banks to recover it.

You're aware that your experiences are not universal though, yes? Anecdotally, I know far more people who have been mugged than had their accounts zeroed out. I actually know more people who have been passed counterfeit money than have had their accounts zeroed as well!

It's also hard to have silverfish eat your bank account balance, or have your credit card account catch fire and disappear.


> No one I know uses physical cash anymore.

But physical cash should always be an option. You can't have a truly free society without it. Some intermediary could always have control over your transactions.

It's much easier to imagine a scenario where physical money is controlled by an outside force than crypto. Holding physical zimbabwean dollars, for example, did not ensure you held anything of value.

I think arguing that control over crypto transactions is more likely than the devaluing of physical currencies is a little far-fetched since we've seen plenty of the former without much of an example of any centralized power being able to control users actions on the internet.

Just think of all the wealth changing hands on the internet today against the will of governments.

They are having to mandate cash acceptance at stores now as many would prefer to do away with it.


The possibility of not getting robbed because you have $4000 cash on the till is a damn killer feature. Sure, this would just lead to an evolution in methodology. but for now its worth it.

Safes exist. There's no reason to have $4000 in a till.

Besides, even without cash, you're still going to get robbed. They'll just take merchandise instead of cash.

If you want a hipper, 21st-century term all the yutes love, cash is peer-to-peer.

Crypto-currencies don't provide a way to transfer value peer-to-peer, online, just a third party that is (hopefully) neutral.

If you both have full node bitcoin wallets it's possible, just like how it worked in the first place. But having a full node on your computer takes up >350GB of space now, so I doubt there's too many people that still do that.

Is this true? You still need connections to the rest of the network so that you know your block chain is the longest one and you get the number of confirmations that both of you feel is sufficient to remove double-spend risk. So it's not really just between the two of you, even if you both have full nodes. Right?

run a pruned node and it only takes up 3Gb

Save the risk of forgery, physical cash is still the only way for a seller to guarantee the dollar value of a transaction with an unknown buyer. Otherwise Paypal could block it, or your bank, or the buyer could reverse the charge, or whatever.

And that's why plenty of businesses still only take cash. Casinos want cash for chips. Peter Luger's still only takes cash. When you buy something like a dog from a breeder, it will be in cash. Any transaction where person on the other end has little recourse if your payment didn't go through will be in cash. Or if the business is popular enough to force it (in the case of Luger's).

Maybe you’re just too young but it’s still recommended to store your fancy digital cash in offline paper wallets. Maybe research what happened with Mt Gox :)

>Possession of the money is possession of the money and third parties don't need to get involved in every transaction.

That's only true if you discount the US government as the third party (at least for USD$) who are involved in every transaction, by virtue of them needing to exist for the $ to have any value or for the seller to accept the $ in the first place i.e for them to know it will still be worth something in 3 weeks when they want to spend it.

Eh, it's arguable how much the US Government is determining the worth of dollars rather than cultural consensus. I can guarantee that in the event of a zombie apocalypse where the government falls, USD would be used for a long time after.

> I can guarantee that in the event of a zombie apocalypse where the government falls, USD would be used for a long time after.

This seems like a strange guarantee, I think it's incorrect, and I would have absolutely no way in a zombie apocalypse to hold you to the guarantee. Which is, inherently, why I think it's incorrect.

A zombie apocalypse would lead to a collapse in production and thus eliminate the ability to exchange USD for physical goods and services. Currency is just a points system used to allocate resources. It's a necessary evil. If we could allocate resources in a more effective way we would do it.

What resources does Bitcoin allocate? Isn't Bitcoin merely glorifying the concept of currencies but without anything to justify its existence? Since when did we ever talk about the USD (or any other currency) as being an end in itself rather than a means to an end?

I don't think it would. In a zombie (or other type) apocalypse dollars have zero value. You can't eat them or use them as fuel. Gold may have value as a medium of exchange but it would quickly revert to barter system for food, fuel etc.

What good is selling food for dollars if you can't spend those dollars next week? Better to swap the food for another good which can be used or exchanged.

Gold is a terrible medium of exchange. People would continue using dollars for a long time because they still exist

Just existing doesn't give them value. After an apocalypse event, even with some sort of US military and US government functioning dollars will lose their fungibility quickly. What could happen is an increased supply of them e.g unprotected banks/vaults could be robbed. But this would have the effect of making more dollars available, so although they exist they are not scarce, if they are not scarce then why would I swap them for 10gallons of fuel? ATMs would be easily looted and are widely located.

the us government is a cultural consensus, just like the dollar. there's not much space between the two.

That's any fiat currency, though. But if you think not being backed by something tangible is bad, wait until you hear about 51% attacks...


Kinda like you waking up to a brand-new bank account, with proof! The only thing stopping 51% on BitCoin is the cost of mounting one: were it a smaller crypto currency, it would be at risk. (I'm pretty sure I got that right, but I'll be corrected if I didn't!)

I'm probably speaking _way_ out of my league here, but I imagine it's somehow spoofable, kinda like how you can generate fake MACs or IPs, so why not? One terrifying/beautiful element of tech is that where there's a will there's a way!

It's spoofable in the same way that a hash collision or guessing a password is "spoofable", given infinite time and / or energy you could. But the chain would move on while you're generating your spoof, and you're limited by the constraints of the physical world and your available computing power.

Not exactly... You just need the majority to agree that the new manipulated chain is the real chain. You don't need to find a SHA256 collision.

A smaller currency would be at risk but the upside would also be smaller. Generally speaking there doesn't seem to be an incentive large enough to justify the enormous costs associated with a 51% attack.

> The problem with a digital currency, of course, is that when you hand someone a sequence of bits, they don't go away from you, so you can hand that same sequence of bits to another person.

> The "solution" people came up with to this problem was to not solve the problem, and instead solve a different problem, how to have a distributed ledger.

And what would be, at least intuitively, a solution to the "you can copy bits, give them away but also keep a valid copy for yourself" problem which is a problem for currency but also the default way digital information work?

If you had access to a near-perfect money printing machine, you would have just the same problem, we are just "saved" by the implementation difficulty. Just the same as with the ledger approach.

Hmm. But the ledger is the solution to that problem. You hand someone the sequence of bits, the ledger authoritatively rules that they are now the holder of those bits, and not you.

> None of them are actually money, like in the paper-or-gold-coin sense. They're all ledgers.

Many of the other comments have pointed out how money doesn't have this quality either. This comparison is a wash: buy gold if that's your goal (at least until we find/mine a gold-laden asteroid).

The other comparison is who you have to trust to insure the value of that currency. In the case of cash, it is your government/Treasury. In the case of cryptocurrency, it is mathematics. I am originally from Zimbabwe and have much to say about trusting the government with insuring the value of cash...

That's why I have a small clutch of proof-of-stake.

>I am originally from Zimbabwe and have much to say about trusting the government with insuring the value of cash...

Have you ever thought about how to boost the economy and thus the ability to exchange zimbabwean dollars for more services and goods? Because that is what is necessary to get the zimbabwean dollar back in order.

Anything whose price is going up is scare and its domestic production must be expanded.

Yes, you have to do the opposite of what the government did (printing more cash): remove money from circulation. The Zimbabwean dollar ceases to exist, regardless. They have adopted forex, usually ZAR and USD.

My main point is that fiat currency implies trust in some entity. Zimbabwean vendors have chosen to trust the South African and US governments.

You can do that with the lightning network. The problem is double spend. With cash, it’s hard to copy. With anything electronic, it’s trivial to copy. That’s why it has to be a ledger. Notice visa requires internet connection as wel

> The thing about money is that I can hand it to someone. Possession of the money is possession of the money and third parties don't need to get involved in every transaction. I can hand someone dollars and take a sandwich and walk away, transaction done.

Fiat is also moving in this direction. Credit cards, are just exchanging bits, and in Asia, with Alipay and WeChat pay you are just scanning QR codes. At least with (good) crypto currencies is you can remove the third-party from the equation.

There still remains the problem of having your transaction broadcast to the entire network, but I think that is also a solvable problem.

With money though there's still someone who needs to make it "money". It's printed, its supply is controlled, its integrity is enforced. Otherwise it's just paper with numbers on it.

With crypto all of this is taken care of by the network, and with the truly decentralized networks (not all of them are) anyone can be part of the network. No one "owns" the ledger. In my mind this has successfully created something that is more free (as in speech) than any previous form of "money" other than gold.

There are third parties involved with exchanging cash, even though it might not be obvious. Central banks take part indirectly in these transactions, since they guarantee the value of the money.

The double spending problem is not a problem; it was solved already with BTC. You can always have your crypto on a physical drive, which kinda makes it like cash in the sense that you can have it in your hands like cash.

> None of them are actually money, like in the paper-or-gold-coin sense. They're all ledgers.

This is the same when people's net worth is discussed though. To the average individual that hears a net worth it almost feels like they think it's cash money. But it's on paper, as in sell all the shares of businesses and assets to cash it in.

Perception is the mother of all great products and marketing.

There is nothing stopping you from signing a crypto transaction by hand using your private key from memory and handing someone an envelope.

Except that's like giving someone your ATM card and PIN code instead of handing them $5 for said sandwich.

no its not, sign a TX and let the new owner broadcast it whenever he wants to (if ever)

Alice has never given Bob her bank account, more like created another account just for Bob

Signing the transaction does zip to block a double-spend without committing it to the ledger. The buyer could walk around town signing dozens of transactions for the same money and only the first seller to submit the transaction gets the money.

There's a similar problem with handing someone the private key to a wallet with a pre-set amount of money as an offline transaction. Besides not being able to verify the amount in the wallet without checking with the central ledger, you also don't know that the other party isn't handing out the same private key to multiple people.

Paper money or even metal money can be counterfeited, sure, but in low-counterfeiting environments individuals transacting can verify the authenticity of the script locally with reasonable confidence, without consulting a (distributed, decentralized) third-party to verify.

I'm not an export but i can print off a wallet key and give it to someone, on paper or usb. Sure i can give that same wallet to someone else but it's pretty quick to check the value of a wallet before accepting it.

Why do you even need physical cash? I can carry my countries currency around with me easily enough but i generally don't bother as i don't ever need to.

Other than literal precious metal coins - everything else is a share of existing or future value - it's a credit to acquire material possessions.

Take an example of burning $100 bill. You aren't destroying more than the piece of paper, because the destroyed value is instantly shared between every other unit of currency.

cash is just a physical distributed ledger

there are many problems with bitcoin but this really isn't one of them. most dollars aren't real either. dollar transactions bounce all the time.

and there will always be some kind of cash counterpart to any electronic payment system. how else would people buy contraband or work under the table?

>The problem with a digital currency, of course, is that when you hand someone a sequence of bits, they don't go away from you, so you can hand that same sequence of bits to another person.

I mean, you're not wrong, but this is where the cryptographic elements actually take place.

There was an article linked on HN talking about exactly this.


> The "solution" people came up with to this problem was to not solve the problem, and instead solve a different problem, how to have a distributed ledger.

“If I had asked people what they wanted, they would have said faster horses.”

With an offline wallet we can just give each other some tokens? The ledger is just to keep track of it.

This is why it will be very handy for African countries where no-one has a bank account but they do have cell-phones.

Cryptocurrency solves for the issue of two people that don't trust each other transacting. How do I know the $100 bill you're handing me isn't fake?

Give "Debt the first 5000 years" a read. Not sure it will change your view but it definitely provides a lot of interesting context.

> None of them are actually money

only because the US Gov didn't classify it as money for tax purposes...

You should look into Nano, it covers a lot of this.

Banks are what establish what is money, and taking ourselves as individuals, if one doesn't accept that reality, then one gets out of sync with society quickly.

Historically the events that caused this mode of exchange to be locked in were out of the hands of anyone but key economic players - world leaders and top advisors and the like. Some of them are still alive and have vested stake in the continuance of their own power.

The reset away from this depends on the incompetence and failure of institutions that otherwise permeate every aspect of modern civilization. Financial capitalism's fall will be a very big problem in its own right.

This is actually something that Bjarne Stroustrup addressed when talking about C++:

There are only two kinds of languages: the ones people complain about and the ones nobody uses.

In the case of cryptocurrencies, as soon as a cryptocurrency has any important percentage of use, these transactions are not confirmed in seconds anymore, and transaction fees starts to grow up. No one is really using PoS right now, so let's wait and see if this solution actually works when Ethereum officially switches.

You're spot on. The ETH fans love to wax poetic about PoS and how it's always around the corner and coming soon. It's been that way for ages.

Lightning Network is similar. It's been perpetually 6 months away for years.

Frankly, I'll be impressed if the current power structure within PoW cryptos doesn't find any way to hamstring PoS, mostly because they have a vested interest in keeping everything the way it is now.

I think the trick for PoS coins has to come from keeping their transactions flowing without censorship. PoS coins feel to me like I can call someone, and they could freeze funds somehow. I cannot prove my suspicion, but PoS coins should trend towards fewer and fewer validators which means fewer and fewer points of failure edit:(or rather, more and more single points of failure).

Eth 2.0 is running right now. It is 100% PoS.

Well, yeah, the Beacon chain is running but shards is not live nor is the docking of Ethereum mainnet and Eth 2.0, so of course people are not really interested in building on it yet, it's barely in production. Once the two chains work together, I'm sure there will be an explosion of activity.

But until then, we can't really say that Ethereum is 100% PoS, although one pre-alpha project is.

I don't see anyone really using it though. That's the thing. Which makes me wonder if it's really ready.

I remember Stroustrup also saying how much he detested Bitcoin in his keynote from a few years ago, where he says it uses as much power as Switzerland and was saddened to know it had been written in C++.

Obligatory: "Ok boomer."

I use C++ everyday and I am still shocked about how user-hostile it is. I don't buy the usual "backwards compatible" and zero-cost abstraction canned arguments. I identified a lot of missed opportunities for simplification... I wonder how much energy we wasted by trial and error while writing/compiling useless C++ programs /s

OK boomer isn't obligatory.

Jeezus people have short memories. Bitcoin solved a flotilla of problems that were blockers for an all-digital currency in 2008. The most severe and proven problem was the threat of government shutdown by a police raid of your servers, this is what killed E-gold and other predecessors. The blockchain solved the problem of having your central ledger being shutdown by the cops/IRS/etc. by decentralizing it and of course Bitcoin also solved a ton of other problems as well to make it an actual viable electronic cash transaction system. This is why it took off, not just because "it was the first to market". It wasn't, but it solved all of the real-world blockers that had killed all other attempts before it. Don't forget that we don't know for certain who "Satoshi" was and for good reason, he knew he'd have a target painted on his back by the government. He was incredibly smart to conceal his identity.

As a side-bar, a major role of money is to allow the government to easily collect taxes from their citizens and so governments have to be careful here as they must ensure that there are no challengers to their primary form of taxation payment. Bitcoin was very carefully crafted to survive government attack and finally the government accepted it by considering it a taxable commodity. While the early crypto-is-cash people are annoyed by this, it was the only possible outcome in a match between the government and crypto currency that doesn't end in outright warfare on crypto.

Now that digital currencies have moved from theoretical to a proven model people can move on to solving newer problems rather than just getting it off the ground. Now we have privacy coins which attempt to solve the problems of getting anonymous transactions among other desirable features. But wait there's more, now that we don't have to prove that electronic cash is a workable system we have decentralized finance coins now. If people thought the government hated bitcoin, just wait until the banking system realizes defi is coming.

> governments have to be careful here as they must ensure that there are no challengers to their primary form of taxation payment

Why do they have to be careful? Are they going to magically going to have to start accepting Bitcoin instead of dollars?

> Bitcoin was very carefully crafted to survive government attack and finally the government accepted it by considering it a taxable commodity.

They still doesn't mean you can pay taxes with it.

They have to be careful because they won't be able to collect taxes. There are 2 types of taxes. Direct and Inflationary.

The second one is gone because control of money supply is gone and as far as the first one the govt can trace funds in your bank accounts but it's going to have a really hard time if someone holds crypto currency and is intent on not disclosing their real wealth.

>Why do they have to be careful? Are they going to magically going to have to start accepting Bitcoin instead of dollars?

There is zero chance bitcoin with it's current network is every going to be used as money. What might happen however is that more and more transactions could move towards other networks like nano or various stablecoins that are built on top of smart contract platforms.

If governments end up issuing a currency that is only useful for tax payments then they have effectively lost control of the monetary policy. And in any case banning crypto will only help towards redirecting monetary flow towards other countries. So in many ways governments' hands are tied in this.

Could anyone explain to me how proof of stake works (as opposed to proof of work), and how it is better? Has proof of stake been proven to be as robust as proof of work?

EDIT: The wikipedia article is easy to find[1]. However it is really short, looks incomplete, and has a lot of “citation needed” after each point. So I would rather ask on HN.

1: https://en.wikipedia.org/wiki/Proof_of_stake

I'll give it a try, but I'm by no means an expert in cryptography.

Proof-of-work works (very broadly) by computers solving harder and harder math problems to create value. Eventually, these get so hard that solving one requires either joining a pool or a huge investment in electricity and mining rigs - which is where we're at now. This isn't good for the environment.

Proof-of-stake works by individuals "staking" some of their own coins to be more likely to be randomly chosen to "validate" a transaction (which earns them a reward, similar to hashing). Validating a transaction is trivial and uses very little electricity, but the rest of the network also checking the transaction keeps the validator honest.

While proof-of-work and proof-of-stake are both a kind of "the rich get richer" game, to get more coins in proof-of-stake all that's required is a greater investment into the network, as opposed to the mining rigs and large amounts of electricity that are required by proof-of-work.

I found this video to be helpful in visualizing the networking parts of proof-of-stake.


Thank you, this was really helpful

Kind of funny the goal of crypto was a total new, decentralized, democratic system, and what we end up (to solve the scale issue), is yet another class system where you can vote only in proportion to your wealth.


This is a massive and common misunderstanding. Publishing a block is NOT voting on its validity. Every node, regardless of stake accrued 'votes' (the correct word is 'chooses') independently of the validity of blocks just like in Bitcoin.

Blockchains that allow protocol changes via votes are an option, and how you quantify votes is a parameter, but PoS is not tied to being a government token, and 'votes' on forks (its really not a vote as both protocols exist after a fork) are made by large and small holders alike. It has nothing to do with amount of currency owned.

Mining isn't exactly a fair shake either... at least in PoS more network participants are even able to "vote".

Staking better aligns incentives when compared to mining and most other alternatives.

Yes, with POS aren't we just back to a (now programatically enforced!) cabal of bankers that control the money system?

Nope, it's still distributed consensus rather than centralized. If one banker stops being nice, he'll loose all his funds. The current system either ignores people not-being-nice or ejects them, but they'll never lose what they made.

Compared to PoS where the biggest incentive is to be nice.

The fear is that there will be a powerful in-group that has majority control, not just a single bad actor.

Correct me if I’m wrong, but isn’t that a problem shared with PoW?

I would argue that POW tends towards specialization of the hardware, congregating power in few hands, so yes. Yes it is.

This, I find, to be the biggest flaw with crypto in general.

In short, "validators" (which replace miners) put up some crypto, and in return get to validate transactions.

If a validator approves a fraudulent transaction (as determined by other validators), they lose their stake.

Assuming a simple PoS system of more stake=more blocks validated achieving a 51% attack is as capital intensive as it would be on a PoW system of the same size. So as far as the most basic notion of security is concerned there's no difference.

No, it has in fact been proven many times over in many research white papers to be fatally flawed and that's why no serious cryptocurrency would implement proof of stake.

Still asking out of desire to learn: How has it been shown to be flawed? With what kind of experiments? Which are the flaws? How to they manifest them self (e.g. how could you exploit them with PoS but not with PoW)?

One problem: You fire up your blockchain software and it reaches out over the internet to find other servers and ask them if they have a copy of the blockchain.

But how does in know which copy is the real one and not one cooked up by someone like me showing I own half the coins?

With proof of work you can choose the one with the most work in it and that's hard to fake as the real bitcoin blockchain has billions of dollars worth of computer work in.

With proof of stake it's hard. If there is no real cost, fakers can make thousands or millions of fake chains and how do you know which is the 'real' one?

There are potential solutions but it's tricky. Like if you have www.stake-coin.com point to the real one, what if someone manages to take over the domain?

You bootstrap the pos chain onto the pow one, so you have your trivially checkable first part. After that it.s not exactly trivial to fake the whole chain without holding validators private keys (remember, they had stake in pow chain).

Im kinda at a loss about what other vectors of attack possible, hard to find any digestible info, and pos protocol designs are really complex.

What if you just accept the one that's coming from the node with the most stake on it? Or a consensus across multiple nodes with high stake on them?

I am not searching down all the whitepapers for you, if you truly want to learn then you will need to dig into the myriad mathematician's white papers against Proof of Stake.

Here is one link, and you can find several more.


Now, that is a PDF, and I do not recommend blindly opening PDFs. This is by Andrew Poelstra, who is a mathematician at Blockstream.

What defines a currency being "better" than another? Is it number of transactions? Is it acceptance among merchants? Is it low fees? Is it stability in purchasing power? Is it likelihood that there will be a fatal flaw in the system that causes financial loss?

Every project has its own strengths and weaknesses, but it's hard to argue that Bitcoin isn't the best on many of those measures. It's all about which of them you as an individual value most.

All the features mentioned above. For example:

- transaction times

- energy consumption

- scalability (BTC currently does 7tx/s)

- security (BTC is getting more centralized over time, increasing the risk of a majority takeover.)

- fewer fees as possible (ideally 0)

BTC only has first mover advantage, and security...for now.

I'm a big fan of bitcoin and a few altcoins, including some PoS. But I feel like you are understating bitcoin's security. It has been very well tested and has a large bounty - both in its market cap and value of transactions that have not been susceptible to any double-spend attacks.

Other coins might sound good on paper -- adding new features but introducing serious design errors that have yet to be discovered because they're not a big enough target.

You're right. But security today does not guarantee security tomorrow in a landscape where mining incentivizes economies of scale. The more mining power converges (as it is already doing), the more likely for a fewer entities to collude. While it may not be in their interest given their investment in the project, who says that a government or malicious actor might not?

Metcalfe's law is also an interesting way for measuring value of the network


another is privacy. Bitcoin is not private.

Monero is exclusively private and ZCash is opt-in private.

Look at Bitcoin.orgs own marketing. https://bitcoin.org/en/faq#what-are-the-advantages-of-bitcoi...

"Payment Freedom" and "Choose your own fees" are both things that no longer apply to Bitcoin.

"Choose your own fees" still holds, but everybody has freedom around the choice of fees. You are free to propose a fee that suits you and miners are free to ignore your proposal.

The marketing makes it sounds like higher fees get processed/"confirmed" faster.

The reality is that if your fee isn't high enough, it stays in the mempool until it expires, never being sent.

For many online commenters the quality of a crypto currency is directly correlated to their portfolio

> but it's hard to argue that Bitcoin isn't the best on many of those measures

Seems pretty easy to me. What is Bitcoin best at apart from having the largest market cap?

* Longest running network.

* Largest network by nodes.

* Largest network hashrate / Most energy consumed.

* Simple Satoshi Codebase.

* Most accessible - blockchain delivered via satellite!

* One can run a node on a RPi. Requires 351G storage for full chain. Eth is TB's (and growing), requires SSD, fast CPU, etc.

You are not running ETH nodes at home.

* Most decentralized

* Most reliable

I am running ETH nodes at home, on RPis. They are even participating in the (future) consensus model through PoS.

I'm a fan of Bitcoin, and I'm not sure why the random need to criticize Ethereum here. Bitcoin has enough reasons to be useful, no need to be insecure about other projects being useful too.

I was under the impression that the RPi CPU is too slow to process/sync blocks. And unless you have an SSD to store blocks, IO will limit your capacity to verify new incoming blocks every 15 seconds. This was my experience a few years ago.

Are your running a full archival ETH node on a RPI with a 3TB+ SSD attached?

I am also running a couple of validators at home without special hardware.

Half of them are debatable and the rest is true but useless.

You gain nothing from using a system that's 12 year old over one that's 6 years old. Also more nodes just dont add any usefulness anymore at some point, it just more not better.

Reliable is useless without comparing it to something else. BTC had unintentional forks and many small possible double spends and all that stuff in the last 12 years. Its overall reliable, sure but at what metric. Incidents per time? incidents per Tx? Or just the fact that it didn't die in the last 12 years?


Another armchair cryptographer on HN who has no idea what they're talking about... somehow this is acceptable when it comes to Bitcoin. I feel like I'm being charitable here but what exists are other cryptocurrencies which trade-off security and/or decentralization in favor of some other properties.

Regarding proof-of-stake for example, I'll defer to this comment: https://news.ycombinator.com/item?id=25007874

In addition to technical difference between cryptocurrencies, there’s also a difference in financial properties of the token itself, e.g. liquidity. Liquidity refers to how much the price moves when buying from or selling into the market.

For example, you can sell roughly 5 million USD worth of litecoin on the Bitfinex exchange until you push down the price by 0.5%, but for Bitcoin this figure is roughly 500 million USD (~100 times greater).

The greater the liquidity of a currency the less value is lost when exchanging back and forth between it and e.g. USD.

[1] https://www.bitfinex.com/order-book/?pair=BTCUSD

[2] https://www.bitfinex.com/order-book/?pair=LTCUSD

This attitude that people who disagree with you are stupid or don't know cryptography about is part of the problem, and why people still buy into BTC when there are technologically far-superior coins out there.

So you just demonstrated the problem that the OP was talking about.

My point was that OP's point and yours, "there are technologically far-superior coins out there", is not true by any stretch of the imagination. Pardon my attitude but this is getting out of hand on HN lately. It seems the idea that you shouldn't authoritatively comment on subjects you are barely familiar with goes out of the window when it comes to Bitcoin and cryptocurrency. If you disagree, I'd invite you to cite some respected cryptographers and researchers who have made such claim.

Theres a lot of people on here who have no idea what they're talking about but make claims there is a better coin. Theres always a tradeoff they dont fully comprehend.

I'm not even an amateur cryptographer, let alone an armchair one.

I'm just someone who sees the failed promises made by Bitcoin (fast, cheap transactions) against the horrendous damage it is causing the environment.

There has to be a better way.

I appreciate your honesty.

Fast and cheap transactions have been around since long before Bitcoin. Bitcoin's innovation was to make those possible without a trusted centralized intermediary. Therefore, decentralization and security are arguably the most important properties when evaluating cryptocurrencies. And Bitcoin is king on that front. Cryptocurrencies that promise faster, cheaper or "more energy efficient" transactions pretty much always have to compromise on that.

But as an end user, you probably wouldn't know that. That's why I'm frustrated with people who authoritatively claim things like "there are so many better crypto-currencies" while not disclosing that they're merely commenting from a "user experience" point of view.

Is Bitcoin king on security and decentralization because of anything in the protocol, or because it has the most miners?

I do think Ethereum will overtake Bitcoin eventually in usage. In some ways it already has. Ethereum's transaction fees are set to drop like a rock over the next few years, and so many useful things are built on it already.

What usage? Isn't bitcoin used only for speculation, and a bit of crime on the side? I'm not aware of any usage for bitcoin that isn't purely commodity trading (with zero actual underlying value) or scams.

I know someone who just took out a loan on Ethereum to buy a house.

That's its usage.


Every one of those "apps" is usage on Ethereum, everything from trading (Uniswap, think of it as a Coinbase competitor), loans (Maker), to mutual fund like assets (Yearn).

It's hard to convey in a few words how much better buying a house using Maker/Eth was compared to going to a bank. Everything about the process smashes the traditional system.

Ethereum has had a few other interesting, non-black-market uses over the years. DeFi, game assets, NFTs, etc. And the technology has actually evolved. Bitcoin is just...still bitcoin.

These are all bubble scams.

A significant % of Bitcoin hasn't moved in years, people seem to be using it as a store of value. Crime usage is magnitude smaller than traditional currencies (source Citi's Bitcoin on the tipping point report).

The same Citi report that confused percentages with basis points in reporting that 13% of credit card charges are fraudulent?


Bitcoin is used daily for paying real people money across the internet. You are in fact speculating on it's uses.

Doesn't Ethereum have the same environmental issues?

They're moving toward PoS, which should help with that: https://ethereum.org/en/developers/docs/consensus-mechanisms...

They are talking about POS in ethereum since years.

The recent activation of the beacon chain (and ether staking on it) means that they're committed to proof of stake now. All currently staked ether would be stranded otherwise.


Yeah, duh, it's not like it's a small project:


It's pretty bad that Bitcoin still hasn't started working on it.

And now the PoS chain has already launched and been working great. Next step is just to move the PoW chain to it. But they are definitely going slowly and safely. And it is definitely a slow process. :(

The v2 POS is live, but the complete migration of the v1 chain will take one or two years: https://ethereum.org/en/eth2/

Their mainnet PoS network went live last december. The aim is to turn off PoW next year.

Ethereum is already transitioning to proof-of-stake which has a number of benefits including much lower power usage. I'm so tired of people equating bitcoin with all cryptocurrencies.

Ethereum is supposedly changing over to proof of stake, but it's been a years long process

Love that username! XD

Yes, Ethereum has been working towards several long-tail projects for years. I think it's more important to distinguish that nothing good or important has come of Ethereum though, and that it is NOT money, and it is not a safe currency. The blockchain is fraught with front-ran txs, the mining is very centralized, and all projects atop ETH suffer dependency on it's success. The blockchain is growing very large which leads to further centralization on very expensive customized equipment. DeFi is a buzzword that means little but "super alpha experimental money leveraging tools" and financial instruments on the cutting edge. Ethereum is Dave & Busters tokens in comparison to Bitcoin being real money.

> more important to distinguish that nothing good or important has come of Ethereum though

I mean, Ethereum has the second largest marketcap of all cryptocurrencies and it feels like 80% of the research & development either comes from Ethereum directly or close-by ecosystems.

To say that Ethereum is Dave & Busters tokens when compared to Bitcoin is funny, since every single cryptocurrency is magic internet money anyway.

Right now it has >$5 billion staked and >100,000 validators on the PoS network. What remains is to transition the rest of the network and eliminate miners, which is a relatively simple process.

>eliminate miners Yes please. Ive been trying for weeks to buy a gpu.

Come on - you’d say the same thing about the freeway that plowed through some wonderful neighborhoods and blights us with noise and pollution. It’s all good. Cars are going electric, Ethereum is going to become efficient - problem solved. /s

Yes. Ethereum 2.0 "promises" to fix most of them though. We'll see.

Not once Proof of Stake is adopted next year (hopefully).

Worse as it is specifically designed to run on GPUs.

They would like to switch to proof of stake and plan to do so next year.

ETH wasn't designed to be a store of value, there is no max supply and the emission rate is higher than even Vitalik predicted/expected... storing your money in ETH is generally a bad idea.

They are changing the transaction fee pricing system though to a model that 'burns' (dumps to /dev/null) part of the transaction fee when there is congestion. Exactly how much will be burned is hotly debated, but it will put a damper on the inflation side from block/staking rewards.

The fact that network and first to market effects are so strong in crypto is an indication that the market doesn't actually value things like proof-of-work or faster transactions or smaller fees. Sure, there are a small number of enthusiasts and professionals who do, but they don't make a market. Most of the people involved just want to buy a worthless asset and trade it to somebody who will pay more for that worthless asset. The bitcoin brand is the most import feature for that use case.

It is an indication that in a free market, people are able to choose what works best while the forks and knockoffs prove that nobody believes in them, or that they are unsafe networks.

It's not just about a currency usage network effect but also about speculative investments and alternative ways to "store" money. Depending on this you can compare it more with stocks without a company behind the stock or gold which for arbitrary reasons can't be used in manufacturing.

Without this and usage for criminal purposes bitcoin would be worth a fraction of it's current worth and as such likely not worth mining for.

This also means IMHO that Bitcoin as currency not just already failed, but did so pretty hard.

As a non currency speculative investment/mony parking product it didn't fail. But it wasn't meant to be such a think.

Furthermore the massive environmental problems it introduce by having a high such a absurd high need of energy and other economical problems (drain of currently limited chips without producing "general" economic benefits, usage for criminal activities if combined with mixers etc.) makes it a highly flawed product.

It should be noted that this is Bitcoin specific. Other cryptocurrencies have this problem much less by neither having absurd high energy costs, nor having absurd high purely speculation/money parking based prices.

Sure there will always be some drain of energy and some drain of chips and some usage for criminal activity. It's just that for Bitcoin thinks have gotten out of balance and besides availability through the network effect there is no reason to use Bitcoins for normal (legal) payments. It's just too costly, slow and price unstable (due to speculative investments always forming a bubble) to be used for normal payments IMHO.

Exceptions can be countries with a "broken" economy, but even then other crypto currencies would be normally preferable as far as I know.

< Without this and usage for criminal purposes bitcoin would be worth a fraction of it's current worth and as such likely not worth mining for.

Is there anything definitive on this? I've heard/read that less than 3% of bitcoin was used for illegal purposes but I don't know if they include tax evasion in that.

With bitcoin, you are paying for security. I know if I send you a bitcoin transaction there is a high probability it won't be reverted in our lifetime, possibly ever. I'm not a maxi but these new projects don't have that guarantee yet; likely they never will.

How many times has this been used in practice?

Like really - did your friend owe you $200 and you wanted to make sure he couldn't pay you something over square and then call his credit company and say his card was lost?

Like are you a shop online and you wanted to make sure ALL of your customers are paying in Bitcoin so they can't claim someone stole their card?

Are you a party to a lawsuit and the judge decided to oversee the other party pay you (the fictitious plaintiff in this scenario) $50000 with a check and you're worried he's calling his bank afterward and cancel the check?

None of these scenarios would be made better with Bitcoin:

Transaction costs

Some online stores ARE scams and it's better to have a real money trail - especially the ones involving bitcoin

The last scenario is easily solved because the judge would be able to provide much harsher realities for the check canceller.

From a practicality standpoint every time someone talks about irreversible transactions I just eyeroll at the actual logistics of that working in our world of 7B people.

The fundamental purpose stated in the bitcoin whitepaper is to provide an electronic equivalent to physical cash.

The first line of the whitepaper[0] is "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another"

In practice some "third" party (bank, paypal, square, venmo, etc) will still be involved in most transactions because of the scenarios you have described. But this would be because they are helpful and add value not because they are necessary.

[0] https://bitcoin.org/bitcoin.pdf

Security is not usually the main use case of a service, but a necessary feature of one. Bitcoin can do many things, and its main use case right now is store of wealth, so with your examples you've demonstrated you don't understand its most basic function.

When you notice that multi billion dollar transactions of Bitcoin are made every blue moon you might not be scoffing at what its security protocol is providing it.

Exactly. Although I do want to add that money can be both money, and a store of value. Gold, being the main primary example.

Username doesn't check out with logic.

Do you mean to tell me you just cannot understand why some people want money with total finality to use with anonymous people across a network? I mean, at this point I have no argument with you I just can't understand your line of thinking. Cryptocurrency, or digital cash, digital money was an idea for a decade+ before Bitcoin finally solved the problem. It's an obvious money with many obvious use cases. Many thousands of folks around the world are using Bitcoin on a daily basis. It's like the phony fees story people spread about Bitcoin, while those of us using Bitcoin daily can send any amounts of money we like for payments to folks around the internet for a couple dollars.

Let me be totally blunt with you since you are acting clueless as to how people use money on the internets.

I pay people ALL THE TIME, in Bitcoin, for codebase work that they perform. I do not want banks involved, I do not want to know their real life identity, I do not want them to know my identity, etc. Therefore, do the work, I pay you. We have a Web-of-Trust (Something folks here in general just seem ENTIRELY clueless about) and we trust eachother just as far as the Web of Trust and our online chat history and trust level allows. Do people get ripped off at times with payments? Sure. You lost $50 bucks, or whatever. Maybe you'll learn not to trust that party again. It's very simple. You don't need to act clueless. It's money, and if you use it correctly it just works. It's not reversible. If I were paying someone who ran off with my cash, it's the same shit.

The only reason proof of work is working for Bitcoin is because of the amount of hashing power put into it.

Nearly every other bitcoin fork can suffer a 50% attack because the network is sufficiently small that one can rent enough hashing power to attack it (see Bitcoin Gold).

Alternate coins absolutely need some other mechanism to secure their chain that doesn't require a critical mass.

This is precisely why those other chains are only imitators with no true value. The longest chain is bitcoin, and all the forks thereof are imitations that hold no value or network effect. This will always be the case when someone tries to fork Bitcoin rather than actually do some new cryptographic work.

This is repeatedly cited delusional conclusion.

The reality is that consensus only requires people to agree on something. It does not require burning tons of energy or military action.

Prisoner's dilemma is only a thing if you consider finite games, ie. played for your immediate benefit. If you consider an infinite game (for example the good and survival of humanity in perpetuity), it can be clearly shown that there is better solution and it is for people to grow up and just agree on a protocol that does not require burning energy or military action.

Do you think people will cheat each other given chance? That may be true when there is good chance of not getting punished for it. But if you ever lived in a small community where people rely on each other for survival (ie. infinite game), you would notice people will not cheat each other when they know they will have to rely on the community until death.

People will ALWAYS cheat others given the chance, and especially when facing very little online repercussions. I am not sure who you were replying to here. I do live in a small community, I have relied on a few others for survival, and I have been both stolen from, and price gouged due to others who would try to make skin off my back. I assume you've got less real life experience in these matters. I live on the basis of trusting nobody else but a very select few and being very self sufficient and reliant. I grow hundreds of pounds of my own vegetables, for instance, and I would seldom ever buy vegetables from a store throughout the season. Least of all, my trust in government. Most who initially got into bitcoin very early on did so for libertarian values towards government and monetary systems. I can really assure you that most of us who got into Bitcoin in 2010 did NOT do so because we initially thought we were getting lucratively rich or having thoughts we were selling assets to folks for a higher price just to get out. No, we got into Bitcoin because we see USD fiat paper as trash cash that is ever losing value and is backed by nothing but a phony government system. Used to keep people poor, used for financial control.

I am sorry for you.

Now, what you experience isn't necessity.

Think why you decided to write you only trust "select few"? Aren't these the people you plan on interacting with for a long time like family, friends or coworkers?

That's because when you plan to work with somebody for a long time, your game changes from finite to infinite. It suddenly makes other than altruistic sense to invest actual resources into fostering the relationship and avoid damaging this relationship by cheating.

This is called projection. You assume people cannot be trusted because you cannot.

This is neither projection, nor a deflection due to myself not being trustworthy and I find it strange that one would jump first to this. No, it's situational due to life experience lived. People can and do take advantage of systems, which is more to the point of what drew libertarians to Bitcoin. Now move along.

Security perhaps (if you're sufficiently careful how you use it), but I would have thought stability was also pretty important if you're thinking in terms of lifetimes. Bitcoin doesn't show much sign of offering that.

Ethereum and Litecoin for example are far, far less secure than Bitcoin. The centralization of ETH will continue to increase, and mining hardware for Scrypt for Litecoin is nearly non existent in comparison.

Proof of stake crypto currencies are just as secure.

Proof of stake is a different security model. It may work but it has not been proven in a $1 trillion high stakes environment yet.

They work under the same assumption as PoW - that the majority of those participating in consensus will be honest.

PoS also offers something PoW does not: absolute finality, https://medium.com/mechanism-labs/finality-in-blockchain-con...

Additionally, PoS attackers can have their stake slashed, so they may never attack again. However, you can't slash PoW attackers, once attacked, they will just keep on coming back (no matter how many times you change the hashing algorithm)

And you need to bootstrap your PoS system by enriching a bunch of insiders so that they can validate your transactions. PoS systems are unfit for being the decentralized digital store of value. Bitcoin has the most fair launch any cryptocurrency can ever have. There is no alternative for Bitcoin's use case.

PoS systems can be bootstraped by PoW, so no problem there.

Bitcoin did not have a fair launch either, there was a lot of information asymmetry between the project insiders and the public. Satoshi's stealth-mine of ~1 million BTC for example.

No, if Bitcoin was PoS, Mt Gox would bail themselves out and govern Bitcoin to this day. Early on, Mt Gox was responsible for over 80% of all economic activity on the Bitcoin network, and was by far the dominant holder of coins.

This has yet to be shown.

This isn't true. You don't understand Bitcoin. Proof of work is the only way to secure a decentralized system like Bitcoin's. Proof of stake requires trust in a group of validators. An oligopoly of sorts. A proof of stake system is unfit for a decentralized store of value. Alternatives to Bitcoin enriched a central group of people. Bitcoin's distribution was "fair". There is no replicating it.

Picture bitcoin in its final state, where central banks trade in and out of Bitcoin to weaken or strengthen their respective currencies. Bitcoin is the only solution, and other cryptocurrency is fit for the task.

Surely proof of work also requires trust in a group of miners, trusting that 51% of them don't collude?

As mining complexity grows, surely this problem is only exasperated, since you need a bigger investment to be able to mine effectively, which would presumably result in an even smaller group of more powerful miners?

So far Bitcoin mining is getting increasingly decentralized in practice - from China to Iran to US to Venezuela.

Bitcoin’s excessive energy consumption is a feature, not a bug, designed to deter a 51% attack. It will only get worse as the price of BTC increases. If we reach an era of nearly free energy, the price of BTC will fall.

Unfortunately, there really aren't that many better. Full transaction privacy (addresses not visible to public + amounts not visible to public) does not exist in any of the top 10.

+ offline transactions should be possible (allowing sync with the chain whenever), but also I do not think any have that.

A good crypto-currency is like cash, with a nice physical gauge theory (allowing offline transactions) guaranteeing security + any transaction processing rate.

Every single cryptocurrency now is still a research project first.

I'm having trouble seeing how you could have offline transactions that prevent doublespending. Could you expand on "nice physical gauge theory (allowing offline transactions)?"

If you have a good idea here, it might be possible to implement as a second layer on a chain with smart contracts.

I'm aware of approaches similar to this: https://gist.github.com/DavidBurkett/32e33835b03f9101666690b...

describing offline transactions.

That title might be misleading; the doc is just about generating transactions without the sender and recipient needing to engage in an interactive protocol. It doesn't address double spending.

Ah, so this is a thing just because mimblewimble's private transactions are interactive. Regular blockchain transactions are already non-interactive.

Which proof of stake systems currently exist and work well?

Since you asked: nano is the only _pure_ cryptocurrency using a variant of PoS called Open Representative Voting. Other projects are piling on features to chase trends (defi, smart contracts). The inherent problem with having multiple functions, is that it inevitably takes away from the primary purpose of pure store and transfer of value. Cash for example, can only be cash and has no utility except that of being stored, or switched for a good or service, or another form of cash from another country. If cash suddenly had a "feature" (such as fees, rewards, etc), the feature in itself will suddenly take priority over cash's original purpose of being a means of exchange and store of value. Transfer and store of value can't be separated. In order for something to be a good store of value, it needs to be a good transfer of value.

Taken from a Q&A with nano's creator[1] around a question of why doesn't nano implement smart contracts:

> Smart contracts can’t cause side effects to happen. They can’t move property and they can’t negotiate unforeseen disputes. When you carefully look at it, all smart contracts take the form of a prepayment and slow release of locked-up funds. People haven’t and won’t use this for multiple reasons. Economically the opportunity cost of locked-up funds means they can’t be used elsewhere while locked up. From a practical standpoint, something simple like a rental smart contract could mean you’d have to lock up your year’s rent to slowly trickle out to your landlord. People simply don’t have this much money to lock up. Smart contracts can’t sample unforeseen circumstances, something like a judge ruling in contradiction to a smart contract means it will continue to operate incorrectly given the new situation. Oracles in smart contracts will very quickly become infeasible. Consider writing a contract about a building in a remote town, who is the person that’s going to go on location, make the determination, and feed the input into the system? How are we sure they aren’t coerced to lie?

[1] https://changenow-io.medium.com/ama-with-nanos-founder-colin...

Ethereum currently has a working proof-of-stake network. As far as I know it's the most scalable version currently live, capable of millions of nodes without any sort of delegation. Right now it has over 100,000 nodes and has run perfectly since it launched on Dec. 1.

However, so far it doesn't have users other than the stakers themselves. It's not all that hard to transition everything over, it's just that it's a live $200 billion economy and they're being really careful about it. Should happen next year though.

Tezos is interesting, upgrades happen without forks and are voted on-the-chain. It’s developer-friendly and seeing slow adoption with some governments. Allegedly France’s C3N uses it and Reno is testing it with NFTs.

Bonus points for it being overseen by a Swiss non-profit, they fund development efforts and encourage adoption.

Who knows what the end result it, but I think the ideas there make it favorable compared to BTC and ETH. Not to mention lower transaction fees :).

Don't forget, it is written in a purely functional language. So they are able to apply formal verification to the code. They adopted recently privacy-preserving smart contracts. They are able to adapt all the good stuff other chains are testing. Therefore some people say other blockchains are just their test net.

Fwiw, the Ethereum Foundation is also a Swiss nonprofit.

Cardano and Polkadot iirc.

Cardano is still being ran by the company/foundation behind it. It is yet to transition to actual PoS.

If I want to learn blockchain, would these two be good projects to start with?

Might also want to research Nano as a pure P2P currency. Cardano and Dot are more focused around smart contracts.

I started with a combination of crypto basics + bitcoin and Cardano. The combination was great imo.

Do you work in the blockchain space now? Is there a way I can get in touch with you?

NEO, Dash, QTUM, Algorand



Nano uses a voting consensus algorithm. There’s no staking, no transaction fees, and a fixed supply.

Those are not better. Bitcoin offers too many things, trading off decentralization and security for speed is not exactly a better solution.

Moreover, those "better" solutions are mostly operated and promoted by founders with questionable profit incentives, they also control the rules of those crypto-currencies.

Bitcoin shines due to its fixed Rules, unknown founder, best incentive structure.

No, they are not better, because they are easy to change, and so it is easy to change monetary policy "for better", or make the coin "more compliant".

Bitcoin value is that it is extremely hard to change, especially when it comes to fundamental properties, like 21m hard cap.

You can actually rely on Bitcoin's monetary policy to be fixed forever.

Yeah, I think bitcoin has been completely surpassed technologically speaking. Monero in particular solved almost all of bitcoin's problems yet still can't compete with it in popularity.

Isn't litecoin also better than bitcoin on the technical side, with very few changes?

I think Monero failed at the name. Bitcoin's name is self defining to some degree which I think helped make it gain a lot of popularity. It's also impersonal, bits and coins, there's no real branding there to get twisted up with. When people first hear "bitcoin" they already have constructs in their head about bits and coins and it elicits free advertisement as the imagination tries to create a working theory on what a bitcoin is.

Monero makes me think of some kind of failed sports car nobody has ever heard of. I'm not counting it out, but if it's really better on the technical side then it needs some prominent evangelists spreading its use.

Litecoin is literally a fork of Bitcoin with the hashing algo switched to Scrypt and made by Charlie Lee (which was hardened against ASICs mining) with a 4x supply release, and which ironically became mined primarily by custom Scrypt ASICs only. Whatever in the world would make you say "Isn't Litecoin better than Bitcoin?"

One of the purposes for it was to allow faster and cheaper transactions which it arguably does.

XMR has the Bitcoin core devs developing for it and it has nothing technologically "surpassing" Bitcoin. Bulletproofs for Monero were written by GMaxwell. Do all people on HackerNews outside of my own bubble also constantly speak about things from a position like they know things when they clearly know nothing of the subject matter?

XMR is great but no, it does not have Bitcoin core devs developing for it. And no, nullc did not implement bulletproofs for Monero. Maybe you meant nullc designed confidential transactions. A modified variant of CT was then implemented independently in Monero by Monero devs.

I must admit to not following recent XMR development much the last couple years and last recall after Maxwell wrote bulletproofs that it was intended to be implemented. I did check and see that it had been re-written and implemented by another in a different custom-tailored way. I do pay the XMR guys respect for doing their thing and branching their way. No disrespect, I should have generally said that the Bitcoin core devs have paved work for them. No, I did not mean core devs are writing all XMR code.


Instead, it shows your lack of knowledge on safety and security of a Proof of Work blockchain with the network effect behind it, vs Proof of Stake which is flawed and insecure all in general.

Actually, isn't it the case that the first to market often fails, and it's really the second or third to market that usually has the better investment opportunity?

Nothing proven yet in large usecases...

Why is proof of work so much more popular than proof of stake?

Because PoW is easier to implement correctly than PoS.

PoW can be as simple as checking a hash (in addition to the basic block rules). PoS has a lot more rules, for example Eth has a lot of PoS rules and includes features like slashing which improve economic securities. https://docs.ethhub.io/ethereum-roadmap/ethereum-2.0/proof-o...

When rules aren't by implemented correctly it causes situations like Bitcoin's 2013 fork https://bitcoin.org/en/alert/2013-03-11-chain-fork

Because PoS effectively means a handful of exchanges run the coin. This is far worse than a handful of mining pools, because pools depend on many more individual hash power providers.

Care to give some examples?

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