[bmcusick]

Hi Paul. I'm Brock.

I hope we're not talking at past each other, but I read your post as proposing a system where there's a central party that computes transactions "in the open" in a way that third party observers can verify.

That's hardly useless, but it's not a replacement for Proof of Work. PoW is for decentralizing the ability to choose between competing valid blockchains. It prevents double-spending by making the benefit of double-spending (the value of the your transaction) far less than the cost of double-spending (the electrical cost of 51% of the mining power for 1 hour or so).

Your system uses a centralized host (see "Services with Secure Ledgers", paragraph 2), and (I presume) third-party observers can verify a "secure ledger" by seeing which one has been more recently signed and time-stamped by the single host.

I mean, sure, centrally hosted servers are more efficient than Proof of Work. No one who know what they're talking about disputes that. But the whole point of PoW is to allow decentralization without a single host.

[pfraze]

Hey Brock.

My argument is that decentralized consensus is actually a political solution. It has technical merits -- it makes it easier to deal with a host that breaks the contract, because there are lots of nodes, so you just 'route around' the faulty host's output. But that's a technical solution to a political problem: how do you deal with a bad actor. And we deal with that every day with existing services, by switching away from bad actors. You handle bad behavior politically. If we can lower the cost of a switching, and we can build accountability into the system, then we're getting the same kind of value that decentralized consensus provides at substantially lower system cost.

[bmcusick]

How do you "switch" from a global shared ledger that everyone uses to a shared ledger that no one uses? I mean, you an, you can fork Bitcoin and start your own, but what does that get you? No one else will use your coin. There will be no market for it and it will have no value.

I mean if you're REALLY lucky you'll start something that's as popular as Litecoin and it will be worth 1% of what your Bitcoins were worth.

Bitcoins are only worth anything because you can go anywhere in the world and people will accept that there is one and only one blockchain, and if you own bitcoins on that blockchain then you own them, period.

Proof of Work allows you to solve bad actors without switching away to a new network and losing all your Bitcoins. Your solution doesn't. If you have a centralized system that centralized party could refuse to honor your bitcoin holdings and wipe out your balance.

This really isn't a new solution. I was serious before when I said David Chaum's ecash (from 25 years ago) was an approximation of this .

[pfraze]

I think you're right that handling catastrophic failure is the key question for a hosted ledger. You have to find a way for the network to agree on who will rehydrate the balances, so to speak, into a replacement host, and you need to do it quickly. The whole network has to agree on this.

This isn't impossible to solve. You can establish, in the ledger itself, the process for migration after a catastrophic failure. You can set a party which will mediate the issue and decide on the solution. You set up rules for how to reconfigure the network, and trigger them when a corruption proof is published.

I agree it's less elegant than what decentralized consensus provides for handling bad nodes, but you really have to balance this against the expenditure of proof-of-work. The cost of a handling every ledger failure ever will almost certainly be less than the cost of proof-of-work.

Part of my point is also that it's a gamble, which I find questionable, that Bitcoin will become "the blockchain" in the future, because it still has a political reality, and that political reality has involved plenty of forks. So, my point is, between the cost and the political instability, PoW doesn't sustain it's claim.

[cat199]

the post is talking about using blockchains as a systems tool to build a distributed ledger, not how to create a new cool crypto currency that will be more 31337 than bitcoin.

[runeks]

> It has technical merits -- it makes it easier to deal with a host that breaks the contract, because there are lots of nodes, so you just 'route around' the faulty host's output

How do you decide whether a host is faulty unless there’s consensus on what constitutes non-faulty? And how do you reach this agreement in a distributed manner without distributed consensus?

You can’t switch away from a bad actor in a decentralized system unless you have a decentralized way to establish who’s a bad actor.