The elephant in the room - BCH PoW fail?

Thanks for your reply, SharkySharkdog.

The incentive is not primarily about the mining hardware, although its a longer term one. The incentive is about the fact that the miner gets paid in coin that they have to actually sell at best a day after they mined a block.

There are a lot of possible changes to the protocol that might have a short-term positive or neutral impact, but still be pretty bad long-term. So you're saying miners are incentivized to protect the chain from short-term (1 day) effects, but not from long-term ones? Or maybe you're saying the market will anticipate the long-term negative effects and price them in within 120 blocks?

Hell, even the threat of a chain split lost 25% of the BCH chain in the last days.

In USD-terms? You know all cryptos dropped in the last days and it's hard to tell how much of the BCH drop is attributable to split fears.

regarding "barriers to entry"

You seem to think that it should be available to all, regardless of economics or capability.

I'm not sure yet, but I might actually think that, yes.

No, not everyone is equal, not everyone has the capabilities or cheap electricity.

that's my point. Why should access to cheap electricity make you have more say in the coin?

This does not in any way limit the level playing field that we have.

yes, there is a market for mining in PoW coins. I'm not saying I want to be able compete there or get some kind of subsidy to be able to compete. The idea is to remove that market comletely from the equation. It might make sense if the miners job is purely to secure the chain and order transactions, but it ceases to make sense when the miners actions go towards changing the protocol. Every holder suffers the consequences of protocol changes and should have a say in that. And I think maybe more directly than via social outcry and market action might make sense. Otherwise we might end up splitting ourselves to death.

that's my point. Why should access to cheap electricity make you have more say in the coin?

this and another comment shows you have a core misunderstanding of the basis of power in Bitcoin (Cash).

Miners can indeed validate any ruleset they want, but it would be a misunderstanding to think that they have a say in the coin. What you should realize is that we can have a near infinite amount of coins because at every point you can just fork and change one rule. You can have hundreds of coins that are mined with a sha256 miner. The question you should ask is why we don't have those.

The answer is that because miners are not in control. They don't have the final say in the coin because they have bills to pay. The people that pay their bills are the ones in control. Much like the employees can be said to have a say in the product, but the one that pays them ultimately has veto power.

The ones paying the miners are the holders, the regular people. The merchants accepting the coin and running a full node (or paying someone to do so) to validate the miners are not cheating. The businesses that hold some crypto-money to pay their employees, the businesses that lend out money for an interest rate. Those holders create value of money. Make it money. And that value is what pays the miners.

The power over the coin lies, simply said, in the hands of the people that choose to buy it and not sell it. The miners are providing a product that the people buy. And if the miners change the rules to drop the intrinsic rules that people value, then the people sell.

The value of the coin is ultimately decided by the buyers, the intrinsic value of the coin is based on the properties of what it can do. The 21Million rule and others. Miners know this and that is why they mine it. Lazy miners just follow the market, for sure. But remember that the market is the people. Not the miners.

You have say in the coin based on your financial strength. You own more, you vote for the coin. This is how markets work and this is something that has worked for centuries. It may not seem fair to exclude the poor from a vote, but history shows that what is good for the many is good for the poor.

I understand your argument about how "the market" keeps miners in check. However this works after the fact (unless some futures products are used for "market voting" before a change is made, but that carries other problems). So miners really have to predict market reaction and they can be wrong. My point is: if push comes to shove and they are wrong, it doesn't really hurt them (unless they are also holders, but as you said, they are not in the business of speculating, but in the business of mining)

Because, even if you disregard all the politics involved (there would probably be a fork of the fork), there is no time for this.

you're probably right. let alone implementing, we would need a lot of discussion about the details. however I can see myself supporting even a half-baked fork and work out details later.

that points to another issue with PoS, of course: it's very cheap to fork.

that PoW is a fail and PoS is a win: https://www.youtube.com/watch?v=ch8gSbrIfh8

this is exactly the video I linked in the article. I even took the time to link to that last 3-4 minute part directly. ;-)

They are causing the split BECAUSE they want to damage the coin

I'm not sure about that. Maybe you've read about how the Chinese BCH community is not against the IFP. Those miners probably really think the IFP is a good idea.

I can also see how the current situation is not good for them. Some of them are presumable paying ABC (I would really like some transparency on this, too, btw) and it makes them less competitive compared to miners that don't do that. That's not a good situation because these good-willed pro-BCH miners are less competitive and in the long run may disappear in the long run.

Because miner-financed development isn't sustainable per se, I think we need to fund development in some other way.

It's probably too early to write off the miners; the past couple weeks have seen a great outpour of support from miners, and even the pools are gradually waking up - it is an information problem, and we're gonna solve it. Neither miners nor stakers can operate efficiently under a huge information asymmetry, and we're gonna fix that part.

It's probably too early to write off the miners

let's hope so. The whole ifp discussion seems to really wake a lot of people up. myself included, tbh.

I think that will be a great idea but once again thanks for your article sir

while this might be a cool project, please don't spam unrelated threads

BTC is not equally valuable. BTC is dead man walking.

I was talking about the profit in fiat-terms that can be made mining BTC, not its long term fundamental value.

Proof is that miners are mining BCH at a loss quite often to protect it.

As I explained in the article that may be coincidental because Jihan is a holder and believer. This doesn't invalidate the criticism of PoW in minority chains.

This is a built in incentive because their business depends on BCH in the long term.

Let me get this straight: you argue BCH miners assume that BTC will vanish at some point and BCH be the dominant coin and therefore they have incentive to protect BCH?

Another argument against doing PoS fork now, as opposed to later, is the loss of network effect again. There is going to be a debate about switching Bitcoin to PoS later for sure. What is your minority PoS coin going to be worth if the main branch goes PoS as well?

This is not about change to PoS for the sake of PoS. It's about being forced to fork from the IFP and seeing the opportunity to change to PoS while we're at it.

Let me get this straight: you argue BCH miners assume that BTC will vanish at some point and BCH be the dominant coin and therefore they have incentive to protect BCH?

yes, they both said this explicitly (jihan) and is the only rational explanation for their behaviour. If the only reason forcing them to babysit BCH at a loss were BCH bags, then that is trivially solved by changing them to BTC, USD, CNY... If you were running FED, would you risk your business to speculate on the price of USD? Miners are businessmen, not speculators. Why risk the goose that lays the golden eggs.

PoS does have an unsolvable fair distribution, barrier to entry problem. You need to have the coins (or pay someone who has) to get the coins. Also PoS has fundamentally inferior security model - you cannot tell whether i gave you the correct pos blockchain, without being perfectly connected to the network. Also it has the rich get runaway richer problem.

those are definitely good arguments against PoS.

I'm going to paste a snippet from my last article, specifically the bit about the block reward:

When Bitcoin was created, there was a need to distribute new coins in an efficient and fair way. If Satoshi had given himself all 21M Bitcoins, you can be sure it would have never taken off. He could have given some to people who were interested in p2p electronic cash, but all this (and most conceivable alternatives) is incredibly inefficient. The block reward acts as a “double-whammy” because it distributes new Bitcoins fairly and efficiently following economic incentives, and rewards the miners’ investment in hardware, real-estate and electricity, thus ensuring the security of the network.

Essentially, PoW is great because its distribution is fair (among other things). The way that I see it is, PoS is a less insane "Satoshi gives himself all the coins".

well, introducing PoS after most coins have been mined by pow lessens this problem, no? crazy idea: we could fork block reward to 0, capping supply to the currently circulating 18.3 million and use only the tx fees?

sure, but then the income would be 10$ per day ..imagine what would happen to paypal or FED if that was the income they had suddenly.

Of course you can solve this problem the way all the startups with low income do - print more shares, and put lets say 95% of this budget to the HW guys running the network and 5% to pay some SW devs for improvements ..maybe you can allocate even a bit for marketing, sales, customer support.. you know, exactly same way as any other organization in existence would do .. oh wait, that wouldnt work because people still believe bitcoin is somehow magically different

sure, but then the income would be 10$ per day ..imagine what would happen to paypal or FED if that was the income they had suddenly.

the incentive to run a PoS node is not (just) to have some income. It's to secure your investment.

yes, but that is completely besides the point - that would also be true in the paypal scenario about running the paypal server - it does not change the fact that if the whole yearly income of paypal would be 3650 USD then it would collapse instantly

Please note that PoS has many unsolved problems and can't easily be used as a replacement for PoW. But I still think it's good to talk about the option, even if it's just to make miners think twice about their actions.