> "... Anyway, your argument about the security per dollar afforded by proof-of-stake makes total sense; Bitcoin's high energy costs are actually high security costs."
this interviewer is impressive; that's a complex point with evidence in recent writings by VB. Right there you can see that these questions are well-prepared
Vitalik recently gave a great talk on "Ideas worth building" in crypto [0]. He's focusing a lot more on non-financial use cases lately and what use cases L2 scaling (10-1000x throughput improvement) unlocks.
This bit in particular was interesting, talking about the comparative security of proof-of-stake Ethereum and proof-of-work Bitcoin.
> In the case of Bitcoin, I'm worried for two reasons. First, in the long term, Bitcoin security is going to come entirely from fees, and Bitcoin is just not succeeding at getting the level of fee revenue required to secure what could be a multi-trillion-dollar system. Bitcoin fees are about $300,000 per day and haven't really grown that much over the last five years. Ethereum is much more successful at this, because the Ethereum blockchain is much more designed to support usage and applications. Second, proof of work provides much less security per dollar spent on transaction fees than proof of stake, and Bitcoin migrating away from proof of work seems to be politically infeasible. What would a future look like when there's $5 trillion of Bitcoin, but it only takes $5 billion to attack the chain?
I can't bold here, but if I could I would have bolded "What would a future look like when there's $5 trillion of Bitcoin, but it only takes $5 billion to attack the chain? ".
> This time, the bull market lasted nearly one and a half years. People seemed to adjust into the mentality that the higher prices are a new normal.
No mention of the Fed balance sheet by Vitalik. How come? He's clearly too smart to be ignorant of the Fed's money printing and its dramatic effect on crypto prices.
I don't think the Fed dispersing money had anything to do with it. If anything more money with low interest rates would increase the crypto market.
Oppositely I think the global fiat currency inflation and the Fed increasing interest rates sunk the Crypto market. Now you could argue that the Fed keeping interest rate so low for so long created more "money", which it absolutely did, but not directly. Banks created more inflation than the Fed printing money because loans became so lucrative at these interest rates and put more money in everyone's pockets. That allowed the stock and crypto market to grow though not crash. You increase interest rates the first thing to get squeezed is always going to be high yield high volatility investments like crypto followed by the stock market as banks and wealthy people divest to the stable now higher yielding bonds market, which should out pace inflation with a fraction of the risk.
The banking system is a pull based system. You go to a bank, the bank gives you a loan and creates the money as they deposit it on your account, they literally don't care what the fed does rather the fed has no choice but to create more reserves if the commercial bank requests them. The commercial bank does something like "You wouldn't risk the banking system to collapse if you refuse me reserves would you?" The central bank then goes "Eh, I guess I have no choice, we have to do whatever it takes after all".
Meanwhile internet propaganda constantly tells people that it is a push based system, that somehow the Fed is telling the commercial banks to issue more loans and then for every dollar in created reserves the commercial bank calls and naggs you that you should borrow more and somehow the citizens just keep falling for it every single time.
> Meanwhile internet propaganda constantly tells people that it is a push based system, that somehow the Fed is telling the commercial banks to issue more loans and then for every dollar in created reserves the commercial bank calls and naggs you that you should borrow more and somehow the citizens just keep falling for it every single time.
GP is referring to Quantitative Easing which is a push based system, not sure how this is internet propaganda? The Fed actively creates new dollars and uses them to buy assets from the open market.
Why worry about the Fed printing dollars when you can create magically create new cryptos and print those instead. Money supply measures should count crypto too.
I suspect you are making a snide comment, but it is an interesting idea to roll around. The big difference I see is that people aren't forced to measure things in crypto. Your local tax office will get antsy if you don't trade in your local currency. If the local tax office required things to be measured vs "crypto" then the rate of new cryptocurrencies being created would become a very important measure indeed (although they aren't going to do that - they'd pick a specific blockchain to reference).
People already measure the amount of crypto that is registered in a block chain which effectively is counting the money supply. It is an interesting metric.
As an aside, take note that the value of something like Bitcoin is actually proving quite stable so far. This last downward collapse hasn't even been a dire crash by its historic standards. Yet, anyway. We haven't seen any signs of an implosion that would be comparable to the hyperinflation death spirals in fiat.
How does that statement not make people who bought at or near the high furious? It’d be like a housing developer being caught on tape laughing at the buyers of their properties at their peak (say 2006-2007) on a hot mic in 2009-2010.
For the record, I still don’t have a good explanation for a persons willingness to pay currency for any crypto. The relationship to QE is thus impossible outside of general trends. Raising seas rise all boats stuff.
Most mafia bosses don't have to kill people; they get people to do it for them. They facilitate the killing. One might suggest they _develop the ecosystem_ that rewards murderers.
Yet Ethereum is pretty centralized with stuff like the premine, and it's even more centralized with ETH 2.0, the Merge, which moves it to Proof-Of-Stake. Now, the richest (read: Vitalik and co) are the ones who can change the course of ETH. Well, they could before too with the hard fork but now they can do it even more so.
> There are also people who try to claim that PoS allows big stakeholders to control the protocol, but I think those arguments are just plain wrong. They rest on a misconception that PoW and PoS are governance mechanisms, when in reality they are consensus mechanisms. All they do is help the network agree on the right chain. A block that violates the protocol rules (eg. if it tries to print more coins than the protocol rules allow) will not be accepted by the network, no matter how many miners or stakers support it. Governance is a completely separate process, involving users freely choosing to download software, and BIPs and EIPs and all core devs calls and other bureaucracy to coordinate which changes get proposed. The funny thing is that bitcoiners (who tend to be the most pro-PoW) should understand this well, as the Bitcoin civil wars in 2017 demonstrated really well that miners are quite powerless in the governance process. In PoS, it's exactly the same; stakers don't choose the rules, they just execute the rules and help order transactions
Validators in proof of stake have less control than miners had in proof of work. They don't control the rules, they just control the order transactions get into blocks. They can't even censor transactions unless a majority of validators/miners work together to do so. Unlike in proof of work, in proof of stake any validators that are seen attempting double-spending attacks can have their invested stake slashed; in proof of work, miners that attempt double-spend attacks don't lose their mining hardware and are free to continue attempting to manipulate the system.
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this interviewer is impressive; that's a complex point with evidence in recent writings by VB. Right there you can see that these questions are well-prepared
0: https://www.youtube.com/watch?v=rp3cDq2LiBM
> In the case of Bitcoin, I'm worried for two reasons. First, in the long term, Bitcoin security is going to come entirely from fees, and Bitcoin is just not succeeding at getting the level of fee revenue required to secure what could be a multi-trillion-dollar system. Bitcoin fees are about $300,000 per day and haven't really grown that much over the last five years. Ethereum is much more successful at this, because the Ethereum blockchain is much more designed to support usage and applications. Second, proof of work provides much less security per dollar spent on transaction fees than proof of stake, and Bitcoin migrating away from proof of work seems to be politically infeasible. What would a future look like when there's $5 trillion of Bitcoin, but it only takes $5 billion to attack the chain?
I can't bold here, but if I could I would have bolded "What would a future look like when there's $5 trillion of Bitcoin, but it only takes $5 billion to attack the chain? ".
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No mention of the Fed balance sheet by Vitalik. How come? He's clearly too smart to be ignorant of the Fed's money printing and its dramatic effect on crypto prices.
Oppositely I think the global fiat currency inflation and the Fed increasing interest rates sunk the Crypto market. Now you could argue that the Fed keeping interest rate so low for so long created more "money", which it absolutely did, but not directly. Banks created more inflation than the Fed printing money because loans became so lucrative at these interest rates and put more money in everyone's pockets. That allowed the stock and crypto market to grow though not crash. You increase interest rates the first thing to get squeezed is always going to be high yield high volatility investments like crypto followed by the stock market as banks and wealthy people divest to the stable now higher yielding bonds market, which should out pace inflation with a fraction of the risk.
Meanwhile internet propaganda constantly tells people that it is a push based system, that somehow the Fed is telling the commercial banks to issue more loans and then for every dollar in created reserves the commercial bank calls and naggs you that you should borrow more and somehow the citizens just keep falling for it every single time.
GP is referring to Quantitative Easing which is a push based system, not sure how this is internet propaganda? The Fed actively creates new dollars and uses them to buy assets from the open market.
People already measure the amount of crypto that is registered in a block chain which effectively is counting the money supply. It is an interesting metric.
As an aside, take note that the value of something like Bitcoin is actually proving quite stable so far. This last downward collapse hasn't even been a dire crash by its historic standards. Yet, anyway. We haven't seen any signs of an implosion that would be comparable to the hyperinflation death spirals in fiat.
For the record, I still don’t have a good explanation for a persons willingness to pay currency for any crypto. The relationship to QE is thus impossible outside of general trends. Raising seas rise all boats stuff.
I think it’s a scathing indictment of the entire crypto industry that this is how its key figures are introduced.
It’s like introducing a mafia boss and starting off with saying that he hasn’t killed anyone.
> There are also people who try to claim that PoS allows big stakeholders to control the protocol, but I think those arguments are just plain wrong. They rest on a misconception that PoW and PoS are governance mechanisms, when in reality they are consensus mechanisms. All they do is help the network agree on the right chain. A block that violates the protocol rules (eg. if it tries to print more coins than the protocol rules allow) will not be accepted by the network, no matter how many miners or stakers support it. Governance is a completely separate process, involving users freely choosing to download software, and BIPs and EIPs and all core devs calls and other bureaucracy to coordinate which changes get proposed. The funny thing is that bitcoiners (who tend to be the most pro-PoW) should understand this well, as the Bitcoin civil wars in 2017 demonstrated really well that miners are quite powerless in the governance process. In PoS, it's exactly the same; stakers don't choose the rules, they just execute the rules and help order transactions
After all, the hostility between the Mafia and the Police is mutual.
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