[ericb]

It is like if you and I took turns paying for lunch periodically and we used a ledger to track who paid what, and who owes who. The ledger itself is bitcoin. The ledger paper is worthless, but the entries on it "have value." For you and I, the ledger "has value" because that's where the history is.

If you printed 50 new blank ledgers, they wouldn't have value because they don't have the history and our mutual agreement.

Bitcoin is the worldwide ledger (WWL).

[matt_wulfeck]

Except it takes usually 2 to 3 days for the ink to dry in the ledger, and costs you $3 every time you wrote in it, and consumed more electricity than your house does in a week, and you do it this way because you want it to be trustless.

[lunchables]

His analogy isn't perfect with all respect to bitcoin, but it is for that explanation. And transaction fees doesn't really matter when it's used as long term value storage for a significant amount of money. The small transaction fee is basically irrelevant.

[vasilipupkin]

I don't get it. why is it a store of value? what makes it have value? For example, suppose I just got paid and I buy bitcoin today. What is the force that will make my bitcoins not be worth 0.5X over the next 20 years ?

[vasilipupkin]

ok, so I had an upsight, to borrow Neil Stephenson's terminology. Speficifcally, that POW coins are inherently flawed. There is no fundamental reason to own one of them.

POS coins on the other hand, are a different animal. If you own a POS coin, you get paid transaction fees for helping verify transactions. Thus, POS coins make fundamental sense, can be valued accordingly and create a reason to actually own the coin - and should, therefore, prove a better store of value than POW coins. Of course, POS is somewhat theoretical, but if Ethereum can pull it off, it should supersede bitcoin. Now, ELI5 why I am wrong, please.

[droffel]

Try this article from Paul Sztorc:

http://www.truthcoin.info/blog/pow-cheapest/

Definitely not ELI5 material though.

[vasilipupkin]

ok, I skimmed through it. I admit, I didn't get it. However, I don't think it addresses my fundamental point: there is no reason beyond speculation to own a POW coin. There is a reason, independent of speculation, to own a POS coin.

[Frogolocalypse]

> there is no reason beyond speculation to own a POW coin.

The incentives of a pow coin align with the users, not the owners, so there's no reason any user would prefer to use another incentive structure.

> There is a reason, independent of speculation, to own a POS coin.

It is not trustless. You are reliant upon the owners not re-writing the consensus rules to your detriment.

[ericb]

POW relies on self-interest, though.

For example, if you own the most of a particular POW coin, it is not in your interest to corrupt the ledger because you will suffer the loss of faith in the currency worse than anyone.

[vasilipupkin]

but if you are one of the owners, how can owners rewrite the rules to your detriment? or, why would they? whether you own $10k worth of coins, or $10 million, in the case of POS, the incentives are aligned and the coin owners earn transaction fees. In the POW case, what underpins the value of the coin?

[Frogolocalypse]

> In the case of POS, the incentives are aligned and the coin owners

Biggest owner wins. That's why it is not trustless. The only long-term game-theory outcome for the system is a monopoly. Owners own the miners, and dictate the rules to the users. Otherwise known as our world financial system.

> In the POW case, what underpins the value of the coin?

The network effect of the decentralization, i.e. the nodes. It is the nodes that are peers in the peer-to-peer cash of bitcoin. It is they who hold the blockchain, validate transactions, and validate blocks. Because there are so many of them (185,000 and counting) unless you can effectively convince all of those nodes to adopt consensus changes, the existing consensus rules apply.

PoW alone doesn't make something valuable. Its successful implementation does.

[throwaway413]

WWL, now that’s good...checks domains