[JohnJamesRambo]

I sold all my Ethereum miners around 2017 I think because proof of stake was “coming soon”. It arrived a few months ago haha. I used the profits and all future money to just buy coins and that has worked much better. :)

I do miss the heat of the Ethereum mine though. Thank you for sharing your story, it brings back a lot of memories. It also echoes the stories of most Bitcoin mining companies I read in The Age of Cryptocurrency by Casey and Vigna. Always racing on the hamster wheel of profitability against the difficulty algorithm and electricity prices and flirting with or going bankrupt. I’m glad proof of stake is finally here and we can move to a more sane way of doing things.

[unboxingelf]

  I’m glad proof of stake is finally here and we can move to a more sane way of doing things.

Proof of Stake isn’t a drop in replacement for Proof of Work - it comes with completely different properties and implications. If you’re just looking at it from the perspective of running a miner in your room, sure, but if you’re talking about the security and longevity of the actual network…

Proof of Work means participants in the network exchange energy to validate transactions. Anyone may participate without permission. Anyone may leave at any time.

Proof of Stake means participants in the network, that already hold a large stake in the network (32ETH in Ethereum) deposit that stake in exchange for permission to validate transactions. You may not withdrawal your stake (Coming Soon™) and if the transactions you publish are not inline with the rest of the network, you are fined (slashing).

So while it’s true both PoS and PoW can be used to validate and secure a blockchain network, they couldn’t be further from each other. Proof of Work is currently the only solution for a truly decentralized network that’s not susceptible to coercion.

[nootropicat]

To mine bitcoin you need to buy an asic, which is a single purpose physical good with at most two original maker (fabs). It needs to be physically received. This single distribution is trivial to track by the authorities and makes bitcoin mining a permissioned system.

Energy use is so large mining at any non-negligible scale anonymously is impossible. Any serious miner will have to open a company, move to a special facility and get a special energy connection. Mining only makes financial sense in few countries with cheapest energy. Last but not least, due to the difficulty mechanism mining for anyone but enormous miners requires pooling with others.

Pools are public entities that are yet another possible layer of control by regulation. Adding all that and the conclusion is that PoW has zero resistance to regulations. China could take over bitcoin, but they decided to throw away mining instead, only making it possible for America to do so in turn.

All it takes is indirect or direct control over >50% of hashrate to censor anything. It's not possible to create a fork without censoring miners, because any minority fork can be trivially attacked in an adversary situation. If any PoW network even becomes important for American government to try to censor it there's no defense.

To stake in ethereum, you need to buy eth, which can be trivially bought anonymously from anyone that owns eth, most likely fully online without any physical contact. A more permissionless system isn't possible. There's no physical trail, both from ordering asics and from energy use. All that's needed is an internet connection. Staking can be easily fully anonymous and can happen anywhere in the world. That's why PoS is the only way to have a decentralized network.

It's always possible to fork with any arbitrary subset of validators, whether for censorship reasons or other disagreements.

PoW is objectively worse than PoS in literally everything but as a method to distribute coins. Mining is a way to sell coins for energy and hardware cost, which is an advantage at the cost of being worse in everything else, but only in the early period.

[datadata]

> To mine bitcoin you need to buy an asic, which is a single purpose physical good with at most two original maker (fabs). It needs to be physically received. This single distribution is trivial to track by the authorities and makes bitcoin mining a permissioned system.

There is no hard limit here on the supply chains for miners, this is like saying "there are at most two mobile phone operating systems". Sure it is somewhat true, but there is no deep reason it must be true.

Second, bitcoin mining is not a permissioned system. A permissioned system means that the system itself imposes permissions. You are talking about actions outside of the system that would perhaps incentives people to not use the system. This is a concern but not the same as being a permissioned system.

> All it takes is indirect or direct control over >50% of hashrate to censor anything.

For bitcoin PoW and ethereum PoS (hashrate => stake percentage) this is true. However the difference is that with PoW it is possible to increase the supply of mining hashrate to overthrow this quorum of censorship by literally building more physical hardware. In ethereum, if this ever happens there is no recourse as the supply of coins to stake is finite.

[nootropicat]

>There is no hard limit here on the supply chains for miners

That's an irrelevant theory. There are very few fabs capable of making adequate asics.

>if this ever happens there is no recourse as the supply of coins to stake is finite.

It's much easier to fork rather than fight state-affiliated miners.

[justajot]

> Proof of Work is currently the only solution for a truly decentralized network that’s not susceptible to coercion.

Enter Proof of Space and Time. PoST improves upon Proof of Work to maintain the high level of security PoW provides (if not improve upon it) while using considerably less energy. It essentially does the work once instead of for every block, storing the proofs with space and using the time component to collectively move the chain forward.

[password4321]

I can't tell if this is serious or not, well played.

[accountofme]

Enter a Time And Relative Dimension In Space and even PoST can be broken ;)

Though you must be a time lord...

[lupire]

PoW burns (wastes) energy, not exchanges". PoW is really "Proof of Waste".

Anyway, the real world use cases are largely large money transfers and scams, and PoS is more efficient for that.

[unboxingelf]

No, it literally exchanges energy for digital matter/scarcity.

Real world use cases are digital scarcity and digital commodities.

[justajot]

For now, but I don’t think this is true for long. There are too many talented people working in this space who care enough to develop solutions to some really difficult problems that blockchains are perfect for.

[LordDragonfang]

People have been saying that exact thing for over a decade now, and there still has not been a single compelling use case outside of conducting illegal (or fraudulent) activity. A decade's worth of work from talented, enthusiastic people turning up nothing of substance should serve as evidence that blockchains are not, in fact, going to provide anything revolutionary.

[JohnJamesRambo]

You couldn’t be more wrong about what you are saying. Bitcoin has zero long term answers for what happens when the block reward isn’t enough to secure the blockchain in the future.

https://www.bis.org/publ/work765.pdf

[foxhill]

apologies, this is non-sense. this is what transaction fees are for. the gradual reduction in coinbase incentivizes miners to charge for transactions, and the desire for transaction completion incentivizes clients to pay for them.

the paper you linked hand-waves away this for some reason, either to suggest that interest in bitcoin is purely speculative (which to be fair would only be half-wrong), or ignoring that market forces put upward pressure on transaction fee cost.

[cowtools]

Why do you expect transaction fees to increase?

[somenameforme]

One of the core strengths of Bitcoin is in dynamic difficulty adjustment. If there are fewer people mining then the difficulty to mine new blocks will automatically decrease, which will in turn increase the value/revenue per block. And vice versa in the case where there are more people mining. So regardless of the state of the market, you will always reach an equilibrium point where it will be profitable.

The one asterisk that needs to be added here of course is that with sufficiently low difficulty, a double spend attack becomes more viable, but this is a somewhat overblown threat. It's low reward, extremely high cost, and 'easily' undone if the market so agrees. It shouldn't be ignored, because it is indeed a threat, but at the same it's also kind of a 'meh' threat.

---

edit: And for those who are may not be aware. Even once the final Bitcoin is mined, miners will continue mining - something which may be counter-intuitive. Whoever mines the block will get no coins, but will get all revenue from the fees attached to whichever transactions are processed.

[cowtools]

>you will always reach an equilibrium point where it will be profitable.

That is my point- that equilibrium point will eventually be low enough that 51% attacks, selfish mining attacks, etc. become feasible and highly desirable to execute.

>It's low reward, extremely high cost

It is currently low reward/high cost. But it will eventually not be.

>and 'easily' undone if the market so agrees.

False. Bitcoin has not made a hard fork in how many years? Can you make a hard fork faster than the attacker can "cash out" to crypto-crypto exchanges? Highly doubtful.

>Whoever mines the block will get no coins, but will get all revenue from the fees attached to whichever transactions are processed.

... which is dependent only on the fee market, and currently amounts to a small fraction of total block reward.

[imtringued]

What if Bitcoin security has been subsidized by "money printing"?

Mining is a liquidity service, therefore it only makes sense that the holders of the liquidity pay for it.

[foxhill]

because i expect miners to not operate at a loss. they can address this by either turning off their miners (which is most likely to occur when coinbase dominates the block payment amount), or by charging more to process transactions.

so far, by-and-large, the proportion of block profit coming from transaction fees has increased, as expected: https://buybitcoinworldwide.com/stats/fees-percent-of-reward...

[cowtools]

>so far, by-and-large, the proportion of block profit coming from transaction fees has increased, as expected:

of course it has. I am not talking about the proportion of block profit, I am asking how you expect the total block profit to stay the same from just fees. The network will have to survive when the proportion will eventually be 100%

[smeej]

I expect on-chain transactions will eventually be extremely high-value, between major players and institutions willing to pay the fees, while the daily transactions will be on sidechains/other layers.

I'm not sure the fees will actually change a whole lot if denominated in BTC. I just expect that when 1 BTC is worth a lot more than it is now in fiat, people won't be paying for their coffee on-chain (assuming inflation doesn't do crazy things to the price of a cup of coffee!).

[Aperocky]

So just like the current financial system where the real transactions are between the fed and the banks while everyone else you me and him are just fiddling with numbers in a mainframe table.

[cowtools]

>people won't be paying for their coffee on-chain (assuming inflation doesn't do crazy things to the price of a cup of coffee!).

Okay, but those LN transactions clearly depend on the security of their multisig channels without subsidizing the miners through the fee market.

[unboxingelf]

  You couldn’t be more wrong about what you are saying.

What part am I wrong about? The stake required to validate Ethereum[0]? The lack of ability to withdrawal it[1]? coercion[2]?

[0] https://ethereum.org/en/staking/

[1] https://ethereum.org/en/upgrades/merge/#merge-and-shanghai

[2] https://www.coindesk.com/tech/2022/10/14/censored-ethereum-b...

[cowtools]

The solution is monero's tail emission: https://localmonero.co/knowledge/monero-tail-emission

[Defitio]

Ah yes of course there is no way of coercing someone in a PoW scenario.

Very well argumented!

(This is sarcastic )