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Offline starspirit

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What is the best standard for global money: PoW or DPoS?
« on: January 14, 2015, 12:38:28 AM »

In this forum there have been many criticisms of PoW (dubbed "Proof of Waste") as a system for global money, along with inferences that a DPoS standard like BTS could be global money. Imagine we are 20+ years down the track and there is a universally accepted form of digital money. Which standard (or alternative) is most likely to underpin it?

Looking at PoW, the waste appears tremendously high right now, some $400m per year, which must cover miner electricity costs to profitable generate those coins. But by 2032 this falls under 1%, and by 2044 under 0.1%, which is barely noticeable. It may be that the inflation is replaced by higher transaction fees to continue to ensure network integrity, but even so this cost burden probably compares favourably to previous fiat systems or the gold standard before that (which experienced around 1-2% inflation per year from memory).

DPoS significantly reduces this cost, but introduces the burden of voting to ensure the network's integrity. The burden of voting, although not obligatory, is a moral expectation that is also a cost of maintaining the system, measured in time and inconvenience. History shows the weaknesses of voting systems and people's reluctance to engage in them unless they have a meaningful stake in something. Theoretical considerations aside, people want money to be as easy and secure as possible. Maybe to be practical for a global population the burden needs to be reduced as much as possible by individuals being able to delegate votes up a hierarchy to those who have better information or common principles on which to vote.

Ultimately though I see DPoS as great for running global businesses and special interest networks, I have question marks when it comes to a global money standard. Any views on how realistic this is?


Offline xeroc

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Re: What is the best standard for global money: PoW or DPoS?
« Reply #1 on: January 14, 2015, 07:10:57 AM »
It's a trade-off.

Advantage of POW against DPOS is that if you receive just one block from the network you can quickly figure out (through difficulty) how much energy (read: mining) was required to build that block .. that makes light-weight clients "more" secure. People argument that thus, with mining, the network security is "as high" as the difficulty. Though in fact, the only important thing for blockchain security is "Who get's to SIGN an actual block". Here, POW (in particular BTC) has something like 4 big pool operators that sign 95%+ of all blocks .. (guestimation - do research on the numbers yoursefl) ...
In contrast, in DPOS, you have 101 delegates that are "allowed" to sign blocks... those signature are equivalent, no one has "more power" than the other one .. all 101 delegates have to sign a single block every round (~17 minutes) ..

Thus, in terms of security (and decentralization) DPOS is superior, while in terms of light-weight client block verification, all POS schemes suck, though BM has a nice explanation why this is not a big issue for DPOS:
http://bytemaster.bitshares.org/article/2015/01/08/Nothing-at-Stake-Nothing-to-Fear/?r=xeroc

</weightedFacts> :P
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Offline santaclause102

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Re: What is the best standard for global money: PoW or DPoS?
« Reply #2 on: January 14, 2015, 11:10:38 AM »
Quote
Maybe to be practical for a global population the burden needs to be reduced as much as possible by individuals being able to delegate votes up a hierarchy to those who have better information or common principles on which to vote.
Do you know about this https://bitsharestalk.org/index.php?topic=6096.0 ?

Offline jckj

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Re: What is the best standard for global money: PoW or DPoS?
« Reply #3 on: January 14, 2015, 11:18:26 AM »
None. Better solutions will come out few months later.

Offline xiahui135

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Re: What is the best standard for global money: PoW or DPoS?
« Reply #4 on: January 14, 2015, 11:30:19 AM »

None. Better solutions will come out few months later.
I like the idea of bitusd, but dislike DPOS.

Offline santaclause102

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Re: What is the best standard for global money: PoW or DPoS?
« Reply #5 on: January 23, 2015, 12:18:55 PM »

None. Better solutions will come out few months later.
I like the idea of bitusd, but dislike DPOS.
Then this might be for you https://bitsharestalk.org/index.php?topic=11634.0

Offline gamey

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Re: What is the best standard for global money: PoW or DPoS?
« Reply #6 on: January 23, 2015, 12:29:25 PM »
POW is no good because it relies on wasting enough electricity to make the network too costly to hack. This is not a cost that will be carried by people going forward as they start to realize how sad of shape the Earth has been put in starting with the Industrial Revolution.  It is literally a step backwards in efficiency.  Maybe DPOS won't be the king, but I am fairly certain it won't be POW.
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Offline matt608

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Re: What is the best standard for global money: PoW or DPoS?
« Reply #7 on: January 23, 2015, 01:01:50 PM »
AI.

Machines could have people with unique identities give machines a reputation point for Proof of Useful Delivery.  The more useful deliveries the machine makes (drone, or a car with its own blockchain identity), the higher the chances of it winning a lottery to sign blocks.  But that would become outdated fast.

It could just become DPOS but with AIs as potential block signing candidates... but it's easier to trust 1 person who has proven themselves than multiple people.  That one person just has to be invincible.  We'll just end up trusting a single AI that has proven itself benevolent and competent, or that has simply be programmed as such, to sign all the blocks.  It would be very profitable for the AI to remain honest.

The whole reason for decentralising the network is to be not be shut down by anyone.  If an immortal AI can create its own network then that solves it.  An AI could be programmed specifically for this task.

Not that I know anything about this on a technical level, but it seems plausible in 5-10 years.

Offline Empirical1.1

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Re: What is the best standard for global money: PoW or DPoS?
« Reply #8 on: January 23, 2015, 01:25:06 PM »
DPOS can function well as global money standard.

This can be achieved by explicitly defining a supply curve or lack thereof. It can also become implicit just by sticking to a certain system for a long period of time.

While you can't define what future shareholder consensus will be, once the market defines you as having a defined supply & uses you as a money, then changing it results in a catastrophic loss of value. (Lost trust, confidence and certainty of future supply expectations.)

Despite being only a few months old and still not established, the dilution of BTSX and the resultant significant value loss was a demonstration of not adhering to this principle in practice.

Now that BTS has a supply curve that can be used to meet the majority of its needs and the market is aware of the cost of changing the rules, the probability that future shareholders will change the existing system is extremely low. Over time and with enough examples of the price you pay, all DPOS blockchains will eventually be trained to never change the rules if they wish to function as a money.

(Undefined supply company shares can still function as a form of payment, but they don't get widely adopted on a large scale as a money.)

In terms of DPOS voting, I guess we could look at public company voting trends.

http://www.pwc.com/en_US/us/corporate-governance/publications/assets/pwc-proxypulse-april-2014.pdf

I don't know how useful that is, first thing that came up but on page 3, I think it says that public companies seem to end up being owned by a fairly even mix of institutional and retail investors.
Institutional investors vote with a majority of their shares, up to 90%, and retail investors only about 30%. This seems to still result in high voting numbers while giving smaller investors the ability to be less involved and yet have the blockchain still run smoothly.

I suspect DPOS chains will also introduce a range of incentives and mechanisms to encourage voter participation as in the case of a decentralized crypto-currency, greater involvement adds value.
« Last Edit: January 23, 2015, 01:48:49 PM by Empirical1.1 »

Offline kokojie

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Re: What is the best standard for global money: PoW or DPoS?
« Reply #9 on: January 23, 2015, 02:18:35 PM »
PoW is a doomed concept, because it can not become scalable, the bigger the marketcap, the bigger the waste, and higher the transaction cost. This is why Bitcoin went to over 10B marketcap, but then have to fall back to now 3B marketcap, because PoW can not support a high marketcap due to the huge expense and waste.

Offline gamey

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Re: What is the best standard for global money: PoW or DPoS?
« Reply #10 on: January 23, 2015, 08:18:02 PM »
PoW is a doomed concept, because it can not become scalable, the bigger the marketcap, the bigger the waste, and higher the transaction cost. This is why Bitcoin went to over 10B marketcap, but then have to fall back to now 3B marketcap, because PoW can not support a high marketcap due to the huge expense and waste.

Yep and the blockrewards are too high for this point in time for BTC.  It has hurt BTC and may be what lets other coins get a foothold to take over #1 spot.
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Offline triox

Re: What is the best standard for global money: PoW or DPoS?
« Reply #11 on: January 24, 2015, 11:40:57 AM »
Neither. Hopefully we will have many competing standards and currencies. Relying on a single, global money has a "fat tail" risk distribution. 

We need modular, flexible systems that are asset-agnostic and localize risks to individual gateways and issuers so that a failure of a single blockchain doesn't bring down whole asset classes.. My best bet at the moment would be Open Transactions, perhaps Ripple.

 

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