Prior to the merge ethereum’s trust was controlled by the organizations with the most money who bought/built massive data centers to mine it.
With the merge & staking that abstraction layer has disappeared and it’s still the organizations with the most money who control it.
Sure it’s great that non-productive math problems no longer need to be solved & consume so much energy and hardware to make it all work. And it may be an incremental improvement over traditional global finance because there is a much greater ability to publicly scrutinize what goes on.
But no one should consider this a fundamental paradigm shift & democratization compare to traditional financial systems controlled by a a very small number of big players. Their influence still can override the mining process that’s supposed to be the final word on transactions.
Although I’ll clarify a bit: I’m actually a proponent of having a layer of human judgement that can fix a problem when things go off the rails. The issue is that in crypto this layer is even less accessible to smaller players than in traditional finance. The DAO was able to throw its weight around and get a hard fork, but how many other groups with much less influence have suffered from similar problems and exploits without that same benefit?
Yes, even in traditional finance there are some types of irreversible fraud. But for every day transactions, for using money as a daily part of transactions necessary to live your life and not just as a speculative investment, crypto falls far short.
If a criminal spies on my credit card # as I make a purchase and uses that to go on a spending spree I can fix it with the credit card company with little cost but a few hours of time and frustration. If my wallet is pick pocketed or I simply lose it by accident I have a similar recourse to mitigate the fallout. Crypto? No. It may, eventually, have some other benefits though that’s yet to be seen. But as a major change & liberation of people from massively powerful banks and governments there seems to be nothing more that shouted rhetoric and wishful thinking.
Not using up a goat load of electricity is like 99% of why this change is great. Let people speculate on their funny money without harming everyone. A lateral move on the other details is rather unsurprising.
Agreed. My top concern with cryptocurrency is the huge waste of energy inherent to PoW. It's really, really good to see ETH pull this off. There are a pile of other problems in crypto, but it's fantastic to see this biggest (IMO) issue addressed by the #2 cryptocurrency. I actually thought it might never happen. It's a day to celebrate for sure.
Using electricity isn't the problem. Anyone could use vast amounts of electricity as long as they are willing to pay the price for it. The problem is carbon emissions.
The switch to PoS is a non-issue from my perspective: a centralized system changed from using method A to method B, I don't understand why I should care.
Bitcoin mining is increasingly being used to prevent methane emissions in stranded gas reserves. Having an economic incentive to not flare or emit methane but instead using it for generating bitcoin allows Bitcoin mining to become net carbon negative.
Reducing methane emissions is vastly more effective at preventing climate change than reducing co2 emissions.
Do they have an API for refusing to accept ETH mined via proof of work? This is a start, but personally I'm still never going to accept BTC or ETH as payment; their history taints them forever. The real value burned in the mining of these currencies is lost forever, and the people who did the burning should absolutely not be rewarded.
The thing is, most "crypto haters" on HN are just regretful no-coiners. Crypto is exactly the type of thing you would except HN to love, it ticks the box in so many ways, except for the one where... They forgot to buy some and are forever resentful.
I honestly struggle to believe this group of people truly care that much about crypto's effects on the environment; from the people I've spoken about this with personally, they always come across as hyperbolic and dishonest.
To some degree I believe it is their brain subconsciously trying to justify their hared because they were "left out," the same way some people, for example, irrationally hate The Avengers because they never saw it and got sick of hearing people talk so much about it around its release. Each reminder of being left out burns you just that little bit more, and it's hard to be objective and come around to something once you feel that way about it.
I'm not surprised this "ya but, crypto still bad" comment is the top comment here on HN. It's pretty funny to me.
My view is that crypto's goals (e.g. decentralized, deflationary, no transaction reversals) are non-goals, but even if those non-goals were goals, both PoW and PoS fail to effectively solve them, especially the decentralized part. PoS sucks more than PoW on this axis: PoS encourages centralization within the system (those with more ETH control the chain), and PoW encourages centralization outside the system (those who command more assets to buy GPUs and energy controls the system), so it's really silly and funny and pathetic both fail at the same thing, with PoS moving the needle in the wrong direction, but also, it was a non-goal to begin with so who cares I'll just go with the one that doesn't set the planet on fire please.
As in with PoW I can migrate once the ecosystem is damaged (i.e. just mine something else, sell the hardware, w/e) with PoS I need that ecosystem to thrive to profit or to even exit it.
> liberation of people from massively powerful banks and governments
The difference between business and governments is that in business every dollar has a vote, whereas in a democracy every adult has a vote.
"liberation of people" can only happen by having a working democracy. And a working democracy can only exist when there is (democratically elected) government. So it's not like people should be liberated from government, people should be the government.
Therefore I think the best situation is where government controls the money, and we the people control the government.
This is correct. Look towards "proof-of-personhood" protocols and other crypto projects that ensure one-person-one-vote voting - popping up now. Online democracy is coming and has only in the last couple years been doable safely, anonymously (and frankly, I'd like a few more years/decades of that being proven out in the wild before I'd trust it). We needed zero knowledge proofs to do it anonymously. We still need a somewhat-better proof-of-identity system but just passports and networks of people vouching for each other should carry us pretty far to start.
> If a criminal spies on my credit card # as I make a purchase and uses that to go on a spending spree I can fix it with the credit card company with little cost but a few hours of time and frustration.
I'll take this one step further.
My credit card company has caught every instance of fraud on my card. So I've had zero hours of frustration yet multiple instances of people trying to use my credit card number. One time they even had the card - they had stolen it that night and tried to use it at a local gas station. A fraud alert woke me up.
This is not a shining example of the security of credit cards, but an example of how insecure they are. We regularly carry passwords into our bank accounts in our pockets, and punch them into random ATM machines on the street in a foreign country, say them over the phone, or type them in while using the coffee shop WiFi. It is no wonder our cards are frequently compromised and the total cost of card fraud is many dozens of billions of dollars per year.
Usually, the credit card company is the one absorbing the cost of this fraud - the food or physical goods that the fraudster purchased doesn't just magically leave their possession.
It is entirely possible to build a company that holds custody of your crypto, extracts rent on transactions or borrows with your deposits, and uses their profits to give you some financial protection up to a certain limit. Most likely within 10+ years your local bank will have some account that will custodially hold some limited amount of funds in crypto that are FDIC insured. But not everybody in the world wants this system, and not everybody wants all of their assets to be held in this way.
There can't be fraud of the sort that you get with credit cards on a blockchain unless you leak your private keys.
The fact that security is built around a 16 digit number and 3 digit pin that you share with everyone and can be reused is embarrassing for credit card companies, not a win. Amazing.
> And it may be an incremental improvement over traditional global finance because there is a much greater ability to publicly scrutinize what goes on.
The flip side is that it’s creating new opportunities for massive privacy problems which would be irrecoverable. People who are trying to hide their activity will take precautions like using shell companies but normal people won’t think to do that or realize that they’re making that level of trust by using a wallet, exchange, etc.
There are some obvious big problems (“do voters know you paid for this porn site 15 years ago?”) but also more personal ones: imagine if employers, insurers, dating apps, etc. started data mining? Again, there are possible ways to mitigate that risk but I’d hesitate to make a lifetime commitment on those being effective and perfectly operated.
How i see it, when a group of powerful people wanted to control ETH to some direction or block a party, they needed to do some physical work , which acted as a time-delay lock. Now all they need to do is think about it. I m not sure why the second case has the same level of trust as the first.
I think this begins the search for another trustless transaction system that is neither PoW nor PoS.
>If a criminal spies on my credit card # as I make a purchase and uses that to go on a spending spree I can fix it with the credit card company with little cost but a few hours of time and frustration.
However, if a much more powerful criminal spies on your credit card # as you send money to Wikileaks or a bunch of truckers who drive to Ottowa for a protest you can never fix it when your card is cancelled and your bank account is seized. Or when you face a variety of other sanctions and persecutions for spending or donating your own hard-earned money.
>Crypto? No. It may, eventually, have some other benefits though that’s yet to be seen.
These benefits have already been seen and realized by people targeted by authoritarian governments and banking cabals all over the globe.
That argument could be made for anything if you are the one targeted. I mean, prison is authoritarian an oppressive. There are innocent people in them. Do we make it so that it is not possible to track crimes and put people in prison?
It is all about motives. If you think that the government is doing something wrong, change that, don't make it impossible for anyone to enforce laws at all.
Your concerns are valid. And you're free to commit to projects that align with your values.
To me, the immutability of an actual blockchain is non-negotiable. I've given up on Ethereum after the DAO fork out of principle.
But that's the beauty. Unlike our current financial system, you're not bound to use Ethereum. You have sovereignty and can make your own choices (and drive change).
-- (I only discuss part of your comment, don't have time for the rest)
Just FYI, the biggest problem for crypto fraud is phishing, not theft. A thief can't get your private keys from a hardware wallet. And there are many, many, MANY strategies you can use against phishing.
I'm not talking about tampering, not in the sense of a 51% double spend or anything. I'm talking about off-chain real world human influence. I'm talking about things like The DAO, an organization that was such a huge player in ethereum at the time that when they suffered an exploit like so many others have over the years ethereum did a hard fork for just them to fix things.
How many smaller players in the crypto scene have received that kind white glove treatment, going against the "code is law" principle, when they've lost huge sums of money? Code was law right up until The DAO massively screwed up and was deemed Too Big to Fail. No different than traditional financial institutions.
As the mining resources of the various trustless Proof of $X models needed to makes crypto work are increasingly centralized into the hands of massive players in the field the principle of crypto democratizing control of money & finance is becoming an Emperor With [increasingly] No Clothes.
If all the large entities band together and frame the issue as something negative that needs to be prevented/reverted, then nobody will care enough to attempt punishment. We've seen this when ETH and ETC split after Vitalik used ETH in the premine to vote for a split, then framed it as "the majority wants to split".
It sounds like your chief concerns are around transacting on and storing all your money on a layer 1. It would be very similar to walking around with your life savings in cash in a briefcase. But just like cash has banks, custodians, and settlement layers so can (for example) bitcoin.
If all services sitting on top of bitcoin were equal to the USD (settlement, fraud protection, PayPal/Venmo, etcetc) then you’d really need to compare the “tokenomics” of the currencies. With bitcoin, you have complete predictability in terms of when new bitcoins are created (inflation). With USD it’s purely up to the government.
At the very least it makes something that is the world's problem -- massive energy waste due to PoW -- into an economic problem that is self-contained to the Ethereum block chain.
That defeats the point. People keep forgetting that the single innovative aspect of cryptocurrencies was the invention of a way to do completely anonymous and trustless transactions. That's it. The second you wrap that in a layer that eliminates that, you're better off just skipping the blockchain altogether since it's an otherwise extremely awful performing persistence.
Why bother paying more for a slow database if you’re not going to rely on the one feature which can’t be done faster, cheaper, and more reliably than the current financial system?
>Prior to the merge ethereum’s trust was controlled by the organizations with the most money who bought/built massive data centers to mine it.
>With the merge & staking that abstraction layer has disappeared and it’s still the organizations with the most money who control it.
In the prior state, the folks with control were the ones willing to invest in it. In the after state, the folks with control are the ones willing to invest, OR the ones willing to get others to invest - i.e. coinbase.
> If a criminal spies on my credit card # as I make a purchase and uses that to go on a spending spree I can fix it with the credit card company with little cost but a few hours of time and frustration.
No, you can't.
It if someone hacks you mobile bank and transfers money to another country, all you can do is go to police, which can do fuck off.
Prior to this merge at least theoretically you could have a consortium of people collaborate to combat centralization.
Now, all big players have to do to print money is nothing. It is now actually impossible to ever overcome the mechanisms.
My young son the other day said “I’ll get money from the store and buy what ever I want”.
I explained you had to exchange work for money. So you can work for the store, then they give you money to buy things.
Then I thought about how banks or large lenders just give people money. They magically create a loan, which people have to pay back with interest. The bank assesses the risk they won’t and profit they want and that’s the interest rate. The FED works the same way, just handing out money. Those people don’t work for their money. They just get free labor for controlling the money.
Here it’s like the store printing money at 5-8% a year or what ever just for having money in the bank. They can then spend 4% or what ever of that and still always guarantee growth in their money supply. It’s the exact same.
Theoretically, someone can make something the store finds valuable enough in the real world to trade their reserves. However, they’d have to find it more valuable than the static growth rate.
The difference in POW is that anyone can enter the market. And large lenders won’t have an advantage. Sure they could PAY for more processing power, but they have no advantage of printing money over the next guy.
the basic point of crypto is to protect us from human judgment yes, this means the individual is responsible for their own security, privacy etc. but when this responsibility is taken away for the sake of convenience we all lose
Well, currently it looks like it will be more centralized, because before one could mine with just a single GPU, now one has to have a bunch of ETH to start.
"If a criminal spies on my credit card # as I make a purchase and uses that to go on a spending spree I can fix it with the credit card company with little cost but a few hours of time and frustration."
You just made a great case for why crypto as a backend for balance transfer that's abstracted by centralized payment options built on top of the transfer network for funding balances but directly interfaces with POS outside the crypto network will almost certainly continue to grow into a thing as crypto grows.
Get rid of bank accounts, and then firewall balances behind 3rd party abstractions powered by your crypto wallet.
By all means charge my vendors 3.25% of the transaction to firewall and insure my wallet against theft.
Give me 1-2% cash back and I'll be even more excited about the prospect.
You are saying two contradictory things. First that those with the most money control Ethereum, and then that transactions can't be controls be reversed, indicating that you want a human layer of control that is currently missing. This is a conflating of layers and evidence of a fundamental misunderstanding of of how it works.
The fact that these types of get off my lawn comments get voted to the top of HN that make me wonder if I'm on a ship of fools that is no longer the center of gravity of interesting and creative tech thought.
Crypto has been around for over a decade and isn't going away, and it's an complex technology that has massive depth and a lot of interest. These sorts of negative superficial comments that get repeated ad infinitum are tiring and provide no value.
If you prefer credit cards then use them. No one is taking that away from you. That isn't the main use case that Ethereum is going after.
>You are saying two contradictory things. First that those with the most money control Ethereum, and then that transactions can't be controls be reversed
No, absolutely not. I'm saying it's controlled by those with the most money, and history has show as that transactions __can__ be reversed when those large players throw their weight around in a too-big-to-fail sort of way.
I'm also saying that I don't mind there being a human layer of judgment, but also that it goes very much against the trustless ethos of crypto. And also that the currently layer of human judgement is vastly less accessible to the average crypto hold than it is in traditional banking & finance.
(1) in both traditional finance and crypto, a relatively small group of big players control the rules of the game
(2) in traditional finance, there are established ways for small players (Eg consumers) to appeal to big players (eg retail bank) to make exceptions and provide redress
(3) in crypto, there are not yet established pathways for small players to petition big players for redress in this way.
> It's like Finland has suddenly shut off its power grid
So, have we observed global energy usage go down by about one Finland?
Shouldn't that be observable somehow? Shouldn't there be some power stations reducing their output as a reaction to reduced demand?
Anyone know how this would be visible, and on what kind of time frame we expect it to become visible?
I'm not claiming it hasn't happened. I just feel surprised to not see more coverage of that in this article, nor here in the comments. Energy efficiency is largely the point of this major change. Shouldn't there be graphs of the power grids everywhere showing a big drop? Maybe my expectations are just off on that.
The entire world generates about 25,000 TWh of electricity every year.
Finland consumes about 87 TWh of electricity every year.
An entire Finland of electricity use thinly distributed over the entire planet disappearing is a negligible rounding error on the grand scheme of things. It's about a ~0.3% change.
News media uses word imagery like "an entire Finland of electricity use" because it sounds huge and scary to the average person who doesn't understand that absolute numbers are meaningless out of context. Zooming out, you realize that while Finland is big from an individual human scale, it barely exists in the wider cacophony of human civilization.
And that's just looking at electricity, which is a percentage total human energy use. Much more energy use comes from transportation, industry, and heating, which is much more carbon intensive than electricity generation, since much of our electricity comes from hydro, nuclear, and increasingly solar and wind.
The thing is, in the wider cacophony of human civilization, Ethereum and cryptocurrencies also don't exist.
If I and my grandma and everyone's grandma would use Proof of Work cryptocurrencies to buy peanuts at the supermarket, PoW energy usage would probably rival that of China.
Now it's just used for speculation by a bunch of rich folks, crooks and marks. Probably only a few thousand transactions per second, I imagine.
0.3% is a rounding error if you look at the electricity generation of a region, but it's huge if you look at the impact it will have over many years. That's 0.3% less of the global energy supply that needs to be replaced with nuclear or renewables+storage. It's like getting ten free nuclear plants.
>News media uses word imagery like "an entire Finland of electricity use" because it sounds huge and scary to the average person who doesn't understand that absolute numbers are meaningless out of context.
With the media tactics out of the picture, you don't think this is a huge amount of electricity for crypto alone to have been using? Seriously? 0.3% of global electricity use is ABSOLUTELY HUGE.
> The entire world generates about 25,000 TWh of electricity every year.
I know this isn't you, many people use these units, but I cringe every time I see abuse of units like this. 1 TWh/year is 113MW, so you are saying 2.8TW global; Finland is 9.4GW.
No, because of two reasons. First, many miners simply pointed their hardware to mine other cryptocurrencies such as ETHW or ETC. For example we have evidence that about a quarter of Ethereum's mining farms moved to ETC over the last 24h. Second, contrary to sensationalist headlines Ethereum miners only represent a drop in the bucket of the global electricity consumption: only 0.1%. Yes that can be a "country's worth of electricity" but in relative terms, 0.1% would be barely visible on charts you might examine.
Also, digiconomist, an often quoted source of Ethereum miner's energy consumption statistics, was grossly overestimating the figures. The actual consumption was probably around 20-30 TWh/year instead of the ~80 TWh/year figure they estimated. Just look at their chart: it made no sense, for example between Sep 2020 and May 2022 Ethereum hashrate grew 5-fold from 200 to 1000 TH/s, whereas in that same time-frame digiconomist estimated the consumption grew 15-fold from 6 TWh/year to 90 TWh/year. If anything, hardware has become (a bit) more efficient over time, it didn't become 3 times less efficient...
But that's not too surprising, given the author of digiconomist has a history of exaggerating his figures, like he did for Bitcoin see https://blog.zorinaq.com/serious-faults-in-beci/ But nowadays his Bitcoin estimate is more in-line with more reputable estimates such as Cambridge's https://cbeci.org/ Last time I looked he was within ±30%
> Ethereum miners only represent a drop in the bucket of the global electricity consumption: only 0.1%
1 out of every 1000 watts of energy produced in the whole world going to ethereum mining is tragic. It’s an absolutely massive waste, and the fact that crypto miners think a number like that isn’t a big deal is horrifying to me.
> First, many miners simply pointed their hardware to mine other cryptocurrencies such as ETHW or ETC. For example we have evidence that about a quarter of Ethereum's mining farms moved to ETC over the last 24h.
We'll see if this is maintainable.
Miners can't mine if the reward doesn't cover their costs. So, the only way the mining remains sustainable is if these tokens rise drastically in value.
It is possible that many miners are huge holders of ETH, in which case we may see them massively dump ETH and buy ETC to try to invert the price and keep their business going.
> For example we have evidence that about a quarter of Ethereum's mining farms moved to ETC over the last 24h.
...which is a stop-gap, holding-pattern sort of action to take, because there is OpEx to running a mining farm, and the lower trading value of ETC vs ETH (1 ETC = 0.025ETH) means ETC block rewards likely won't be enough to be positive-margin for these farmers. This is just a way to reduce burn while they try to sell their rigs. (Which they likely won't be able to do, because nobody wants overheated near-EOL mining GPUs. Mining farms will likely just end up bankrupt with assets liquidated at fire-sale prices.)
Power demand varies wildly during the day (Like +/-50%, maybe more depending on climate). A 1% change will get lost in the noise of "Oh, it's 3 degrees warmer today... HVAC working harder"
Ethereum Classic’s hash rate has gone up by about 25% of Ethereum’s hashrate, so at least for now it looks like a lot of the energy use is just moving as miners point their GPU rigs at alt coins. Very curious to see if ETHW, ie Ethereum without the merge, maintains a significant amount of hashing power. Another thing to watch will be if those alt coins are profitable to keep mining or if miners will start selling their rigs.
Aha, thank you! I felt like this change should be visible in some kind of graph somewhere, and you're right, the ETC hashrate has roughly quadrupled in the span of two days:
Whoever was using this electronics switched to other BTC variants, but in long term this reduced profitability and should harm people using energy in this way.
But sadly no immediate impact, unless there are electronics that could be profitably consuming power for Ethereum and it is not profitable for alternatives.
In some sense that's true, but missing the point. The amount of energy worth buying to mine crypto is exactly equal to the value of the crypto mined. What we should expect to see[1] is that the value of "Proof-of-Work ETH" (which is still a functioning blockchain[2], just like Ethereum Classic is) will drop as attention is focused on PoS ETH. And so energy devoted to it will drop in tandem.
It's also true that there are second order effects, like for example all the mining hardware dedicated to ETH needs to find a new home, which will depress prices for new mining hardware for "chains that are hardware-compatible with old ETH", and thus probably support their prices a bit.
[1] And do, I think. IIRC there was a stat rolling around a few months back showing electrical grid usage dropping due to the crypto crash, but can't remember where it was or how reliable the source seemed.
[2] Though AFAICT no one is tracking exchange rates for it yet, so your guess is as good as mine as to its value.
There's virtually no other ASIC resistant (i.e. can use GPU) PoW coin left to mine. There's the proof-of-work ETH fork, but it only has a market cap less than 2% of than real ETH. So even though they juiced the block rewards, miner rewards are more than 90% lower, which isn't enough to pay for electricity of the previous hash rate.
Turned off is more profitable than running at a loss for miners that need to fund their opex by selling what they mine.
It looks like it's already happening. After the merge there were a number of coins that saw huge spikes in hash rate which drove them to absolutely unprofitable levels. A lot of that hash rate has since gone elsewhere (most likely offline) and it looks like many coins are settling at a level in the short term that is breakeven at $0.06-0.08 kWh which many (most?) miners can't be profitable at as that is below their electric rate.
I think this is potentially the most interesting comment in here. If all of those GPUs just flipped to another cryptocurrency, global energy reduction would be zero.
If you're the type of person who poured capital into mining hardware and you own it, which you likely do because it's more cost effective, you still have all that hardware sitting around. You're going to repurpose it to other mining endeavors or quickly find a way to try and eek more money out of if, because you were already that type of person.
I don't keep up with crypto and mining but until it becomes unprofitable or you can't pull money for and start operating in the red, you're going to continue consuming similar power.
Yeah, I've got 21 3080s/3090s, and I'm still mining (NiceHash switched algorithms for me automatically). But I've also listed my machines on vast.ai to rent out for deep learning. When they're not being used by a client, they're mining still. My electricity is super cheap, though $0.0875/kWh. That said, it's hardly profitable at all. I'm just speculating and breaking even at this point.
Ethereum miners were using GPUs. AMD, Nvidia, and others. They could switch their GPUs from mining ethereum which is about $1500 per coin to Ethereum classic but that is only about $40 per coin. I’d guess that wouldn’t be worth continuing with since it would be much less than than their electricity bill. They could sell their GPUs on EBay or other secondary markets, switch to protein folding, cloud-based password cracking, or SETI sky scanning. Maybe they use them to play high resolution video games like most people. Some smaller percent might notice next month when they eventually see that their ETH wallet hasn’t grown over the next month and Google why that’s the case.
Crypto mining occurs mainly where electricity is either cheap or free. Hydroelectric and Geothermal tends to produce the cheapest energy so many large mining outfits were relocated next to Hydroelectric and Geothermal plants. Many are in remote northern areas where computer cooling costs are less expensive too. $HIVE blockchain technologies was running enough ethereum miners to mine 7675 ethereum ($11.5 Million dollars worth) during the 3 month period ending in June 30, 2022 according to their quarterly earnings report. 100% of all of their miners used renewable energy sources.
In case of Ethereum that wasn't true afaik, a lot of it was mined in the US for example. Since Ethereum wasn't all ASICs like Bitcoin, there was more decentralization in that sense with individuals running miners from home, not always at the highest efficiency. Your first paragraph is correct regarding profitability for most miners though, based on the numbers I've seen.
One thing that I find interesting in the electricity debates is that if we took the gaming example and looked at the collective consumption of all people playing video games around the world, you'd arrive at even larger numbers of power usage and emissions. Yet this isn't ever discussed, even though an immutable public ledger like Bitcoin arguably has more utility for society than playing games. A lot of HN users probably play video games, CO2 emissions are of course mainly an issue caused by other people and activities oneself doesn't take part in. In Europe, there's also a trend of public anger against SUVs and there are groups slashing tires of cars, simply based on the shape and ignoring the actual energy efficiency. Happened to a friend of mine who couldn't understand why they targeted her car and left 30 year old gas guzzlers in the same street alone. I think a lot of it has to do with emotions more than rational considerations around sustainability.
I guess hydro/geo is better than them firing up a coal fired power station to do the job. But all the "mining" nonsense just sucks up clean power than could be used in the real world which hopefully pushes out more polluting sources.
All to supposedly create artificial scarcity for .jpg files.
At least that illness is over now somewhat. Hopefully all the miners go bankrupt.
I find it incredible how many arguments rely on a uniform distribution assumption here. There are markets where crypto miners are double digit percentage of utilization. They have very favorable conditions for mining, like the Pacific North West. The “one Finland” isn’t smeared over all power consumption, it’s highly congregated in a relatively small number of locations. The argument that a sudden devaluing of the use of electricity has no impact in the power infrastructure where it’s concentrated is absurd. I’m not saying it has or hasn’t happened - I’ve no idea. But it will be news if it does happen because operators will see double digit drops in demand locally and it’ll be noteworthy. But I don’t think it’ll be like energy prices in the EU improve - the mining happens in places with huge gluts of power they can’t otherwise sell or distribute for more.
> Shouldn't there be some power stations reducing their output as a reaction to reduced demand?
No, because ETH mining is/was quite distributed globally, let's say across thousands and thousands of power grids. A single grid or power station shouldn't be able to notice the difference.
Think about it this way: all of a sudden, domestic fridges consume 1/100th of electricity, compared to before.
Fridges are 0.1% of average power consumption. Thousands of fridges in a given area are powered by the same power station. The power station barely notices the ~0.1% reduction in power consumption, compared to the day before. Shrugs.
Is it just me or does that sound like an insignificant amount? Finland has a tiny population, if ETH mining only used that much electricity sounds like it it was pretty great to begin with.
The people who were mining ETH didn't give a toss about the environment. They invested in PoW hardware and they're not going to stop using it because ETH is now PoS, they'll just mine something else.
I just hope the PoW markets collapse now ETH is moving on.
That is rude. I care about the environment, still I am mining.
How is it good for the environment? I only mine when my house and battery does not need electricity and our solar is producing over 1kw. Everything I earn (around 100-300$ a month between February to Oktober) I invest in the next environment project. My miners need about 500w. This is a fraction of the amount I put back into the grid.
If I would not do this, our new heating system wouldn't be financed yet.
My understanding is that Ethereum PoW used traditional GPUs whereas for example Bitcoin uses ASICs - "PoW hardware" is not as interchangeable as you're implying.
They've actually forked Ethereum to keep the original mined version, ETHPoW ($ETHW). They'll keep mining on the original PoW chain as long as it remains profitable.
I'd expect the value of ETHW to crash fairly rapidly, though, because there are not many buyers interested in buying into a deprecated chain without official support or ecosystem buy-in, and lots of sellers who need to sell their mined ETHW to fund mining operations. Then we'll see miners shut off and leave the network, as the mining rewards can no longer support the electricity costs of mining. At some point it might get 51%'d, but at that point nobody will care.
With ETH off there’s going to be a significant loss of profit to be had and people stopping because the expected value of mining has gone negative. Store stocks of graphics cards are booming. There absolutely will be a reduction in PoW power usage globally.
Maybe. What are they gonna move to though? If everyone moves to some other coin (not Bitcoin, because that's different hardware), it'll quickly become unprofitable to mine. They'll just sell their hardware, most likely. Hopefully.
I wonder what will happen now that the ponzi structure is now gained new velocity as energy constraints have shut down proof of work mining. PoW creates centralized collusion between those who can afford the best miners and this helped the velocity of the chain itself since it is only as good as the last mined block.
Now that layer is gone, its this proof-of-stake which is a bit funny since, Ponzi schemes are also proof-of-stake, where the previous investors stake's performance signals the next until the order books flip to a highly skewed with a very long til, it results in the last group who were late to the party, get caught with the bags.
I wouldn't be surprised if there are many whales dumping as they would know (and I hope so) what the new paradigm shift is in this digital ponzi gold rush.
Also rather anxious for these fellas who promoted securities written on ethereum. The SEC flat out came out and said almost all cryptocurrencies passes the howey test recently. This PoS seems perfectly timed for the occassion.
You're confused, in a ponzi earlier investors are paid from the investments of future investors. That's not how PoS works. In Ethereum, everyone is diluted to pay stakers and the time of their investment does not matter.
> The Merge is one of the largest technological events in the industry to date.
I feel kinda ashamed. I work in the IT industry and I claim to have knowledge about ("good") software engineering practices, distributed systems, compilers, algorithms, etc. Nevertheless, I didn't understand a word of what the article is saying. Could you recommend serious references (preferably books and not random blogs) I could read to catch up with what's going on with crypto these days? I'm not planning to "buy" crypto; I would like to understand the technicalities.
- The block chain is a distributed ledger database, where all peers hold a full copy to avoid manipulation (faking an entry is only possible by controlling >50% of machines in this peer-to-peer network).
- Spending money is implemented by adding a transactional record to the blockchain ledger at the end saying X amount moved from account A to B. A block is like a page in a paper ledger and they are appended with cryptographic hashes to avoid improper interference.
- Ethereum supports smart contracts, which are little scripts in a language called Solidity. So you can implement legally binding (and unstoppable) contracts along the lines of "if (condition) then (pay some money to someone)". Executing smart contracts cost a little bit of money. All Ethereum nodes collectively implement a distributed VM, and that money (called "gas") is the incentive to keep the network running. Smart contracts are highly interesting, and they have applications far beyond electronic currencies. For example, we played with implementing electronic rights management (https://link.springer.com/chapter/10.1007/978-3-030-36691-9_... - which turned out to be less than ideal due to a stack size limit in the current Ethereum VM, but hey).
- Whenever a new block (page in the ledger) needs to be created because the previous one is full, a randomized alg. determines who is permitted to do that ("mining"). The old process (proof of work) was environmentally a disaster (it still is for the Bitcoin ecosystem), which is why the Ethereum people implemented a smarter method (proof of stake - https://en.wikipedia.org/wiki/Proof_of_stake).
Excellent and very clear summary, as far as I can tell. My only niggle is that smart contracts are, in practice, neither legally binding nor unstoppable... the story of the DAO Hack/Hard Fork [0] proved that consensus can overrule "the invisible hand of the blockchain" during a particularly egregious incident.
I very much enjoyed Andrej Karpathy‘s „from scratch“ bitcoin implementation [1]. I‘m sure there are other projects on GitHub explaining blockchain concepts directly in code.
> The old process (proof of work) was environmentally a disaster (it still is for the Bitcoin ecosystem)
There's no problem with spending the energy if it actually buys us something. It's a disaster because it failed to actually decentralize the network.
Instead of everyone with a computer being able to participate, we have very few people buying up all the hardware for their massive centralized mining operations. If that's how it's going to be, then we might as well move on to proof of stake.
Monero seems to have a better designed proof of work system. It's ASIC and GPU resistant, normal people manage to use their computers to mine XMR. One CPU one vote, that was the whole point since the beginning.
> you can implement legally binding (and unstoppable) contracts
I would just call that "automated decision" The legally binding contract is the one where the parties agree on using the implementation as their means to fulfill the contract.
There is nothing legal related in that and no law in any legislation I am aware of giving it any special treatment.
Mastering Ethereum is great, and the high-level concepts all still apply, but I think it's important to mention that quite a bit of it is outdated. Basically, imagine you're reading a book on Kubernetes from a few years ago. Still applicable, but some of the details and API interfaces will have changed.
what are some examples of these conditions? how is it not like... i put money in escrow, if the buyer agrees i did my part, they click agree and that's the "condition"?
I love this work on a general ledger for electronic rights management!
A bit off-topic, but do you think this kind of rights management ledger is better stored and accessed in traditional data stores and managed by either a government entity or a private-public partnership of some sorts?
It seems like self-signed authentication would still be viable but with the added bonus of a mechanism for dealing with lost private keys while at the same time allowing for individual entities to quickly and effortlessly exchange ownership.
how are peers jump started and why is that mechanism trusted so well? like say I want to connect to the blockchain, I need to make an API request to some IP. how is that resolved and why is that regarded as "decentralized"? why is the mechanism for serving me peers trusted and why is every peer in the network trusted?
If you have a solid CS/software engineering background, you probably already know 90% of it.
I guess crypto-specific consensus might be new, but you can get a good grasp reading few articles. And that part is actually opinionated, so you need to decide on a camp before you read materials. Bitcoin people would likely disagree with anything written about PoS.
Another fun thing is Zero-Knowledge Proofs (ZKP). That's actually quite new, complex and might be interesting.
The rest can be rather boring. Users submit cryptographically-signed commands (transactions) which processed in a deterministic fashion. I'm not sure it's worth reading a whole book about it.
consensus is strongly related to distributed computing fault tolerance and database or file systems' atomicity and integrity in case of crash. Basically problems that involve multiple readers and multiple writers.
I'm in the same boat. However, I'm holding strong in being ignorant, as I believe crypto is a fad with no inherent value. I'm an avid reader and learner, but only if the topic is interesting or makes sense. Cryptocoins meet neither of those criteria -to me-.
That can be difficult if you read tech news like us, but it will give me a small twinge of joy if I live longer than crypto. Guess we'll see.
I think that crypto-currencies as a fairly direct replacement for traditional currencies is probably not the future. I don't think it's a 'fad', but I think it'll settle into a niche position in the long term.
The underlying problem that blockchains solve is 'distributed consensus'. This is a solution with a much broader range of applications. For example Maersk has a system for signing handover of shipping containers in ports (https://www.maersk.com/apa-tradelens). This is an international problem with a lot of it happening in countries with a lot of corruption (i.e. you can't rely on legal mechanism). Not being able to forge who is responsible for which container eliminates a lot of problems.
Ethereum does something even more interesting, which is that the network can agree on the result of computations (these are called dapps for "distributed apps"). These can be used to implement simple "smart contracts" for financial purposes but they have a much broader applications. To some extent I'm slightly underwhelmed by the things people are doing with them, but the potential is enormous.
I think there are a few common misconceptions that make people not understand the real value crypto is bringing to the table.
Many in tech look at crypto, and blockchain specifically as if it is another technicalogical capability they can integrate into their enterprise architecture. From that perspective blockchain in general doesn't really make sense. As cool as the composability of tokens and smart contracts are, that's not a capability only blockchain can deliver (in fact that's not the blockchain at all... that's the standards that have been built on top of it).
Others in tech look at blockchain as a currency to replace traditional currencies issued by governments. A reasonable world view, as that's kind of how it's been sold for a very long time, but it's pretty clear to me at least, that's not really possible. The US Gov is always going to require taxes to be paid for in dollars. The US, EU, China... everyone, they're not going to give up monetary sovereignty.
So what does crypto provide then? In my opinion, the sole thing the blockchain provides, when sufficiently decentralized is digital sovereignty... but more importantly an unlimited amount of digital sovereignties. Opt-in self governing communities that can decide for themselves what's fair. An enforcable user bill of rights that's global in nature. This doesn't replace the real-world sovereign nations, it's like a new layer in the digital world for digital applications. I've personally come to realization that Crypto doesn't really work well in the physical world. But in the digital world, it's proving quite adept...
Technology is still evolving, ETH2 is a huge leap forward... and glad to see it. Personally, I'm still attached to the Avalanche community because I personally think the technology is still superior. But the technology is kind of not the important part. It kind of just needs a minimunm spec, and then it's not important. It's how you treat the users who are using the stuff built on top of the technology. Libertarians were the first to understand that (though i'd argue they fail to understand that need to have a foreign policy, and real world governments are legitimate trading partners that you need to negotiate with. Their insistence on idelogical purity will be their undoing) But crypto is big enough for all kind of communities to crop up, and you can choose to join or not.
That's ultimately the thing, any app you can build in Web 3, you can replicate in Web 2 with a single server. But in Web3, the users can own it, and they can decide for themselves how to govern themselves. That's the value. We live in feudal system, a world dominated by Web 2 companies. Web3 in my opinion is the way we can build a diverse economic ecosystem of free (as in speech, not beer) digital services.
One thing I Think a lot about... today, all people in crypto are dual citizens. They have citizenship in their geogrpahic world, and in the digital world. But there's a future where AI can be pure digital citizens (citizens who have needs, such as compute, and they will trade their AI skills for that compute). I view a lot of the debate around crypto as a debate about foreign policy, and that gets really interesting when it's AI on the other end.... maybe a free AI :D
In otehr words: You have "faith" that cryptocurrencies are a fad, right? Some people spent dozens, maybe hundreds of hours understanding everything behind it, and those people colectivelly made Bitcoin worth what it is today. You can continue to have "faith" in this having no value. But if everyone around you start using Bitcoin, would you rather switch your faith to what the others around you believe? Or you rather chase knowledge of why this is the case?
The first problem that cryptocurrency solves is, how can to securely make transactions without giving away our secrets such as critical account numbers. It accomplishes this using cryptographic signatures.
Other systems that do not use cryptography and instead often rely on trust in exchanging critical secrets, such as how the banking system generally works, are outdated.
Thanks. I know the official docs. They just feel to me like the official docs of K8s (they are good, but not great. Great in the sense of "Brian Kernighan" or "Stevens" book kind of great). I guess there are not many more options out there I'm afraid.
I wouldnt worry, the whole system up to this point has used "technobabble" as a means to confuse and impress outsiders. When reading up on it, there is no meaning to find besides "yep, its a linked list allright".
I could say the same thing about reading fields I don't generally understand, and it can seem like "technobabble" because I don't understand the meaning of words they are using, since some things are written with a certain audience in mind that possesses the knowledge to understand the content, like many academic papers.
However, I don't regularly dismiss fields like that, but rather I understand that not everything is meant for me to understand without a deeper meaning. Not sure why anyone would treat the (technical) ecosystem of cryptocurrencies differently. Seems like a non-curious way of acting.
Just like I realize the problems pornography introduces to the world, but reading and speaking with engineers working at those companies are still a fruitful endeavour for me.
Fully distributed consistency algorithms running on N nodes on linked list in which each node is a Turing-machine program run concurrently on N nodes, whose consistency shall also be insured, and which can write on said linked-list. Everything has absolutely tons of edge-cases related to the distributed nature of the thing to take care of.
Of course, I haven't even begun anything about the whole "crypto" part, and minimizing power usage.
Absolutely no meaning besides "linked lists", riiiight...
I thought the same at the beginning. Yet somehow I think I'm missing something a bit more complex (complicated?) than just "linked lists". I don't want to understand only the theory but also the "practice" (e.g., one could read all about distributed systems... But one really gets the gist of it until one has to deal with real world networks in the cloud or on prem, dealing with real systems)
The internet is fundamentally little more than the ability to send 1s and 0s from point A to point B.
So you mean like me calling you and saying 0 1 0? Well, yeah kind of, but faster! And we can even have conference calls! It's going to change the entire world! Yeah, ok... Well, I'm going to leave now. Wait, sorry... I mean I'm going to '0 1 1 0' now. Wow, I can feel the world shifting already.
The applications of a technology often are far greater than the most simplified fundamental upon which it is built.
Really? I feel like the article explained most of the terms.
I remember having a similar feeling when NFTs were getting big. It turned out that I did understand the terms, there just wasn't enough actually there, triggering a feeling that I must have been missing something despite my eyes telling me the emperor has no clothes.
There is nothing new in cryptocurrency. The only real difference is the ability to flout the law. Having escape hatches is nice but glorifying the escape hatch of the week is odd.
There's an incredible amount of word salad piled on the fact that people are playing a negative sum game when getting involved with any cryptocurrency that has transaction fees.
Not true! Cryptocurrencies have real-world productive use cases such as money-laundering, ransomware, drug and weapons trade, terrorist financing etc. As well as some less-morally-wrong stuff like hiding from oppressive regimes. A bet on crypto is a bet on the future of these activities.
is much cheaper - less inflation.
is more environmentally friendly.
with PoS, only people who already own ethereum can mine. Rich get richer.
has less desirable consensus properties.
Many people keep coins on a handful of exchanges - now those will control the network.
Nothing-at-stake attack.
> I'm not planning to "buy" crypto; I would like to understand the technicalities.
That's been my entrance into crypto as well. I really dislike the speculative, get-rich-quick, even casino like connotation crypto has (inevitably) acquired. It shades the incredible technology behind it.
For a couple of years I have been studying and playing around with smart contracts in my free time, getting a better understanding of this paradigm (every smart contract can be seen as a singleton object "living" in the blockchain, with functions that are like API endpoints which you can interact with in a decentralized fashion), how it shapes applications built on top of it, and the possibilities ahead of us (ex: DeFi - Decentralized Finance).
There's a lot of skepticism around crypto, like "it's a solution without a problem", but I don't buy it. Even if it were, it's a solution sophisticated, interesting enough, worth diving yourself into ;)
The year of cryptocurrency is just as far away as the year of the linux desktop. I'm not saying it is impossible, I'm just saying that you will grow old while waiting for it.
The tech in Blockchain/Web3 world is changing and evolving incredibly fast (as is evident from this historic event today) and so by the time books come out, they already become outdated.
I would highly recommend reading Vitalik's blog[1]. He talks about various topics and has a knack for explaining things brilliantly.
The Bitcoin Whitepaper is fairly small and quite an easy read, and it is the source of all this ideas. There is only a couple of math formulas that you don't need to fully understand to understand the paper itself. Some of the concepts on the paper deserve to be explored further and you can resort to Wikipedia to dive deeper.
I find the book "The Bitcoin Standard" by Saifedean Ammous a good read to break down those concepts. Nevermind the extremists or so called "maximalists" and their exaggerations. The book is a really good intro to macro economics and helps understanding why cryptocurrency is interesting as a store of wealth and/or money replacement.
The technology side of all this is definitely interesting, but don't be fooled into thinking it's too interesting; you can read one guys book (the recommendations below are good) and understand how it works in enough detail. The basic idea is a series of data blobs with a cryptographic signature for each blob, with (importantly) the signature of the previous blob in the series included in the next blob. Then there is some distributed consensus mechanism (of which many have been devised) to come to consensus on which blob is canonically the next one in the series. Everything else is details or game theory.
Given your background, you likely already understand all the individual components of how a blockchain like Ethereum functions, just disparately or in different contexts.
I'd recommend just taking look at the documentation / code.
It's a crypto/blockchain podcast, but very technical, it's focused around the advanced technology that makes up the ecosystem (zero-knowledge cryptography, multi-party computation, consensus algorithms, miner-extractable value, new blockchain programming languages, etc).
Very technical, almost nothing about investing. The downside, some episodes may be a bit hard to jump into due to the technical nature.
They are 20min episodes that build up to explain the foundations of cryptocurrencies.
If you have any suggestions for future episode let me know. I’m thinking of spending a bit more episodes on Bitcoin to talk about bitcoin scripts, layer 2 apps, UTXOs, etc. Before talking about ethereum
Don't feel ashamed. The entire ecosystem is unsound, and the "technicalities" are the stuff that CS201 courses dismiss as irrelevant. There's no reason for a technologist to care about it.
This is not a very good explanation, but basically, you can have a "currency" using just asymmetric key cryptography: users simply sign "transactions". The problem is that you need a central authority to confirm the order of transactions, otherwise the recipient of a "transaction" will not know if the funds associated with that transaction have already been spent to someone else ("double spending"). You can solve this using hashcash to make the transaction order hard to reverse- creating a "proof-of-work" by doing something that is easy to verify but hard to determine (like reversing a hash function). Another method is "proof-of-stake" wherein transaction order is not signed by a central authority but instead general users that are guided by some internal incentive structure.
Cryptocurrency is often expensive to run or use because a cryptocurrency transaction has to be synchronized across the entire network of that cryptocurrency, and there are incentive structures like fees to prevent people from spamming the network.
There is also tech like zero-knowlege-proofs, multisig, etc. that can do interesting stuff. But this is the basic concept.
Is there any research on cryptomoney with central authorities, but also with reduced attack surfaces on a whole system? E.g. authority may be cryptographically bound in some way to only store the database and emit new tokens, but cannot spend them because they get freeze-signed by a receiver to their wallet. Then when you get a payment you check the path of money and algorithmically accept that path only. Anyone who accepts a similar subpath is on their own, because it is double-spending. Subpaths within few minutes self-cancel to prevent instant double-spend.
This is just a vague example, not a working idea. The point of it is that the level of security and trustlessness is not always required to be absolute. E.g. even with fully-secure pow crypto we still have to trust non-crypto claims about usdt, [non?]shitcoins, “hot” wallets, and other maybe-not-ponzis.
I appreciate it wasting less precious energy. But this change also means that "Decentralisation" and "Power to the people" are fading away right?
The wealthy actors are the ones dictating the transaction now and they also on top get paid for being rich. This does not sound like a "better financial system" for me. Also, don't forget the DAO Fork[0] where with the "ungovernable Blockhain" it was decided a transaction was not ok and it was removed?!
> But this change also means that "Decentralisation" and "Power to the people" are fading away right?
But it was always like this, also with proof of work. PoS and PoW are both just variations of "proof of resources", which in turn is a convenient substitution for likelihood that one's voting power is independent.
If you want to give "power to the people", you need some way of estimating independent voting power, that is not tied to resources.
With proof of work, you have to spend your pile of money if you want to influence a vote. Whatever the cost of a 51% "attack" would be, the attacker has to actually spend that money to do it.
With proof of stake, having that money is enough to vote and you don't need to spend or waste it. In fact, you get paid for having that money sitting in the account.
Not so fast. In both networks, the ultimate control is held by those who run end-user nodes. These people create demand for the asset, and creating demand is ultimately the way to control the asset.
An end-user node is like a device, which verifies that bank notes are genuine or that gold coins are pure. If everyone can independently reject bad money and accept good money, the good money will have more demand and therefore be more valuable.
Even if someone is very rich or has resources to mine blocks, they can't dictate demand for other entities. They must abide by the rules which are enforced by end-user nodes.
If there are entities which have power to dictate demand, and the network can't defend itself under pressure, means that the network is not properly decentralized.
Also, the decision between "good money" and "bad money" should probably be a game theoretic focal point, rather than something set by a foundation and large staking entities.
Miners need not only to spend money on hardware, but also the upkeep of earning money by mining is expensive (electricity, or the cost of electricity generation).
Thus, Proof of Stake let the rich grow their richness for doing nothing. In Proof of Work they need to continue working to make their money grow. Not to mention that they removed the miners from the equation, proving that in ETH system the poor and the people don't have power at all, whereas in BTC no one ever had any such power.
We have a concept called Proof of Authority where we basically went out and picked competent teams that have a vested interest in ensuring the blockchain is successful. They run the infrastructure in a fully decentralized manner, but we work as a group. There are 7 "pools" and we will eventually expand to 11. It's not decentralized as commonly understood, but way better (imo) than just putting whoever is richest in charge.
Not personally into crypto much, but wouldn’t proof-of-identity for those who want to vote be enough? Those who simply want to use the system (to send/receive) need not disclose themselves, but those participating in the ledger ought to have to unmask themselves so that when something goes horribly wrong there’s a person to point at/sue/whathaveyou…
It should also be said that the biggest entities are staking pools/providers. If one of those act up, people can unstake and leave. It's really not that different from mining pools in PoW.
That's like saying "100% of USA controlled by one entity" - except that in the US people are stuck with one president for four years no matter what, and when staking users can go stake with someone else at any time at all.
Transition to proof of stake consensus doesn't make a byzantine fault tolerant system anymore or less accessible to the everyman, it simply replaces depending on electricity to depending on investing directly into the protocol.
One may see the 'wealthy' as getting more 'say' but in reality they could (and did) just buy hardware that produces higher hashrates.
This performative ceremony is gone now to the benefit of all
And it will be the same group of people until the thermal death of the universe, because there are literally no mechanisms to separate those wallets from the tokens. The ultimate feudalism.
Every networked system (eth, btc, usd, the internet itself, trade, an economy) has aspects of centralization and decentralization. USD is decentralized in that if enough people stopped attesting to its value or accepting it for trade, the whole thing folds. That doesn't happen precisely because so many people believe in its value. But many aspects of USD and the banking system are opaque: how it is minted, what players are trusted, how much fractional reserve is allowed, etc.
The big difference is how easy it is to step into the game. I'd probably need millions of dollars, oodles of lawyer-hours, a bunch of employees, and a mountain of paperwork, to start a bank and participate in the banking system as a peer. I just need 32Eth (roughly $50kUSD) and some computers to participate as a validator.
The hard fork only "worked" cause enough people went with it. If enough people said "f it, no fork", then the fork still happens, but loses the social capital and thus the old chain "wins".
The internet struggles with ipv6 because not enough nodes support it. Politics breaks down when parties can't reach agreement. I don't know of any system which is truly tolerant to byzantine / 51% attacks.
But this change also means that "Decentralisation" and "Power to the people" are fading away right?
Don't look now but "decentralization" and "power to the people" are already gone in the crypto market.
Blockchain is a novel accounting system. But has any organization *ever* derived any real power from an accounting system? Are Google and Apple and Amazon market leaders because of a novel accounting system? I don't think so.
In a capitalist system, real power is derived from marketplace control. Accounting is just a way of keeping score.
Likewise, in the crypto market, Binance has now consolidated it's power position as marketplace leader and has effectively become the "central bank" of crypto with the power to mint it's own currency (Tether and BUSD) and use it to manipulate the marketplace at will. In a brazen demonstration of their power, they plan to crush other stable coins by simply replacing them with their own.
To give you an idea how big of an impact this is to miners, my 5700 XT went from making $1.2 / hour (mining Ethereum) to $0.15 / hour (mining Ethereum Classic) Eth classic seems to be currently the most profitable coin to mine and it is barely worth the electricity cost.
The people with actual mining rigs with multiple GPU's will either sell their stuff or start renting them for services like vast.ai. I assume most will end up selling because of the cost of getting a server-grade Motherboard/CPU + lots of RAM isn't exactly cheap and the effort required to set everything up is much higher.
I saw an article yesterday saying that Ethermine (the largest mining pool) is indeed shutting down. I was surprised too! It seems like they're switching their business model to a staking pool.
Over 90% of NFTs flow through one provider, Pinata. OpenSea, GME, and many other exchanges are all powered by Pinata, without which you would have a terrible experience buying and trading NFTs. Of which, NFTs are primarily traded on two platforms.
It's already centralized, all of it, from the blockchain to the "dapps" built on top of them.
Ungovernable doesn’t mean that the people involved can’t decide what to do. “Ungovernable “ meeans an external party can’t force them to do something they don’t want.
The dao fork proves this because some people decided not to roll back and forked the chain instead. The ecosystem decided which fork was the main fork but they both live on.
First one is Lido and second one is Coinbase both of them are pools. Lido is more decentralized than Coinbase as the stake is spread across many different staking providers. In any case the situation is not ideal and a bigger uptake of solo staking and truly decentralized staking solutions like RocketPool would be beneficial.
Those are staking pools, which represent thousands of individual users, and the largest one (LIDO) also has has additional decentralization that is not well captured by looking at just reward address. The reward address is a contract that individual users will be able to tap into.
Worth adding it's also not substantially less decentralized than PoW mining was, the status quo was 41% of hash power controlled by 2 pools. At least now it's using significantly less power and is largely more non-custodial.
I'm still flummoxed why people use blockchains for any kind of data or computation. Fundamentally isn't blockchain a tech stack built on a linked list with mandatory network calls in every operation? It seems purposefully inefficient. At least in theory it had a point (decentralized control). In practice, however...
The only purpose of a blockchain is to decentralize the storage and validation of data. It only makes sense if the decentralization is worth the loss in efficiency. Using a blockchain just to store data and perform computations when you have no reason to decentralize will only result in a crappy, slow database.
People won't use it for traditional number crunching.
Way I see it, the idea is to get your data, code, and capital into the big global ball of state by consensus where it can coexist with other code. The point is being able to co-operate with others by writing arbitrary programmable incentive mechanisms.
The tech isn't there yet though. It still needs higher throughput (sharding, layer 2s), better visibility into the mechanics, and probably some kind of privacy layer.
Wasn't a public blockchain supposed to solve this? I always see this speculation and I thought the blockchain was supposed to show the public who was doing what... instead I always see these comments about big holders and speculation who it is. Shouldn't exchange addresses be known?
You may be right that the majority is probably an exchange. But is there something in the protocol specification that prohibits such majority?
Then it raises a question, can an actor such as a government (which may have unlimited resources) to hold large numbers of ether (> 51%) to add blocks to their advantage?
Perhaps, it's my ignorance about this technology that makes me question and prevent me from adopting this technology.
This article was the first I read that describes the new system. It appears designed to benefit Etherium banks. The more you hold, the more you get.
> Miners are replaced by validators – people who “stake” at least 32 ETH by sending them to an address on the Ethereum network where they cannot be bought or sold.
These staked ETH tokens act like lottery tickets: The more ETH a validator stakes, the more likely one of its tickets will be drawn, granting it the ability to write a “block” of transactions to Ethereum's digital ledger.
There are two interesting things I want to watch from this. The first is I'm interested to see what kind of bull run ETH goes on. The merge has been incredibly long coming, it has huge risks and I think that puts downward pressure on price, you really don't want to be doing stuff in ETH at the moment because there's a fairly good chance something goes wrong, someone stealds $XBn and runs off and the Ethereum guys go "Well I guess we're going to have a centralized intervention and reset the chain back to date Y" (this famously happened with the first DAO). So as that risk dissipates I would expect a decent price run. I'll be very interested if that doesn't happen since it says a lot about broader market conditions.
The second thing I'm interested in is that ETH was the vast majority of revenue for GPU miners. I read an article on HN a few months ago about how once ETH is gone the rest of the PoS chains put together won't yield enough revenue to be profitable for the vast vast majority of current ETH miners. This alone could have a massive ripple effect on the used GPU market. Interesting to see where that goes.
regarding price, one can argue it both ways. at the point of the merge, most assets on ethereum are risky: if you were a uniswap LP and the two assets you were pooling chose different forks as their “official” one (most meaningful for off-chain collateralized assets like USDC), you can bet arbitrageurs would have left you holding the worthless asset on both chains. accordingly, Eth became the “safest” asset during the fork, since both forks will recognize it. that would create buy pressure leasing up to the fork, which goes away after the fork.
but there’s a million arguments on both sides of that picture. i think the strongest argument for price direction is that PoS miners are less likely to sell their Eth immediately after mining it than PoW miners because the latter purchased mining equipment with USD and want to repay that, whereas the former are invested in Ethereum itself instead of their mining equipment. also it sounds like block rewards are decreased with PoS, so the currency itself is deflationary now (?)
this, this is the right response. this is the most telegraphed event in crypto, all the bulls are literally in eth for this, there is just as much likely to be a "sell the news" effect as there is a bull run. OP betrays his bias imagining only one outcome.
The idea that because it's risky right now and that a decrease in risk will provide higher returns isn't necessarily sound. For example, playing a financial equivalent to Russian roulette won't give you higher returns. You can look at the countries titled with the euphemistic "developing markets" which have historically had extremely high risks AND a much lower return than in lower risk countries. The risk-return trade-off may be assumed often, but there are controversies, and it's underlying theoretical basis only holds in an efficient capital markets where market participants are capable of pricing risk. A bank can price the risk of a mortgage default, but how can you price the risk of anything in the Blockchain space, like say Ethereum getting completely wiped out by a hack, etc?
> You can look at the countries titled with the euphemistic "developing markets" which have historically had extremely high risks AND a much lower return than in lower risk countries.
Hmm? Not sure what you mean. High-risk countries' bonds pay higher interest than low-risk countries' bonds. E.g. Ukraine was paying 10% interest in USD when US was paying 1%. Of course, expected value might be lower if you average over all such countries, but we are talking about a "happy case" here where a bad event did not happen.
> how can you price the risk of anything in the Blockchain space, like say Ethereum getting completely wiped out by a hack, etc?
Well, you can't calculate the risk but you can get 1000000% return (the actual return over 7 years for ETH presale). Or you can calculate the risk and get 5% return. It's your choice.
>So as that risk dissipates I would expect a decent price run.
The risk you're describing is a social-political one. As long as the users do not fork with the etherium developers, that will not happen. Change to PoS has nothing to do with it.
> The risk you're describing is a social-political one. As long as the users do not fork with the etherium developers, that will not happen. Change to PoS has nothing to do with it.
Are you saying that the market did not price in any technical risk? I don’t follow crypto markets closely (and don’t own any), but given the number of crypto bug exploits and the unprecedented nature of this merge, that seems unlikely to me.
Even a social-political risk averted is a risk averted.
> “I feel very proud, you know, that I'll be able to look back and say I've had a role to play in removing a megaton of carbon from the atmosphere every week." -- Edgington
There's a very important difference in not emitting carbon into the atmosphere and actively removing carbon from the atmosphere.
Both are critically necessary and complementary, but I don't see how Edgington thinks that switching off PoW suddenly makes Ethereum carbon-negative.
Especially since the carbon emissions of Ethereum were a product of Ethereum's existence in the first place, hence an entirely self-made problem, produced by the very people developing and pushing the platform.
It's a lot like someone being an active part of a group of gangsters taking hostages, then turning around and helping the police freeing them, only to then brag about how proud he/she is of having a role in freeing those poor innocent people.
I love Ethereum and am a strong believer in Blockchain technology, but everytime I hear the "Ethereum PoS is a win for the environment" reminds me of the Simpons episode when Bart says something like: "I'm going to smoke and then quit smoking" to what Homer replies congratulating him because quitting smoking is one of the most difficult things to do... It is very misleading, and naive.
> There's a very important difference in not emitting carbon into the atmosphere and actively removing carbon from the atmosphere.
The phrase "removing a megaton of carbon from the atmosphere every week" is globally syntactically ambiguous. It can be read as "removing [a megaton of carbon from the atmosphere] every week" or as "removing [a megaton of carbon from the atmosphere every week]". The second interpretation means removing a source. Both interpretations are roughly equally valid, although "eliminating" would sound better.
"eliminating the emission of a ton of CO2 every week" is a similarly ambiguous phrase which can be interpreted as [the emission of a ton of CO2 every week] or [the emission of a ton of CO2], every week.
i’m thinking it was a single person who just really wanted to be the first tx on the PoS chain. i’m not versed to decode transactions well — i wouldn’t be surprised if it was somebody making a “first PoS transaction” NFT or something.
It's not "lottery as a banking system", because there are rules for validators for failing over and others replacing them. This is what complex consensus mechanisms are about - how to have 100% uptime instead of few nines. The system has built in incentives for the operators to keep it running smoothly, but still not being unable to change or reject the transaction payloads, like PayPal or banking system could.
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With the merge & staking that abstraction layer has disappeared and it’s still the organizations with the most money who control it.
Sure it’s great that non-productive math problems no longer need to be solved & consume so much energy and hardware to make it all work. And it may be an incremental improvement over traditional global finance because there is a much greater ability to publicly scrutinize what goes on.
But no one should consider this a fundamental paradigm shift & democratization compare to traditional financial systems controlled by a a very small number of big players. Their influence still can override the mining process that’s supposed to be the final word on transactions.
Although I’ll clarify a bit: I’m actually a proponent of having a layer of human judgement that can fix a problem when things go off the rails. The issue is that in crypto this layer is even less accessible to smaller players than in traditional finance. The DAO was able to throw its weight around and get a hard fork, but how many other groups with much less influence have suffered from similar problems and exploits without that same benefit?
Yes, even in traditional finance there are some types of irreversible fraud. But for every day transactions, for using money as a daily part of transactions necessary to live your life and not just as a speculative investment, crypto falls far short.
If a criminal spies on my credit card # as I make a purchase and uses that to go on a spending spree I can fix it with the credit card company with little cost but a few hours of time and frustration. If my wallet is pick pocketed or I simply lose it by accident I have a similar recourse to mitigate the fallout. Crypto? No. It may, eventually, have some other benefits though that’s yet to be seen. But as a major change & liberation of people from massively powerful banks and governments there seems to be nothing more that shouted rhetoric and wishful thinking.
The switch to PoS is a non-issue from my perspective: a centralized system changed from using method A to method B, I don't understand why I should care.
Bitcoin mining is increasingly being used to prevent methane emissions in stranded gas reserves. Having an economic incentive to not flare or emit methane but instead using it for generating bitcoin allows Bitcoin mining to become net carbon negative.
Reducing methane emissions is vastly more effective at preventing climate change than reducing co2 emissions.
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I honestly struggle to believe this group of people truly care that much about crypto's effects on the environment; from the people I've spoken about this with personally, they always come across as hyperbolic and dishonest.
To some degree I believe it is their brain subconsciously trying to justify their hared because they were "left out," the same way some people, for example, irrationally hate The Avengers because they never saw it and got sick of hearing people talk so much about it around its release. Each reminder of being left out burns you just that little bit more, and it's hard to be objective and come around to something once you feel that way about it.
I'm not surprised this "ya but, crypto still bad" comment is the top comment here on HN. It's pretty funny to me.
As in with PoW I can migrate once the ecosystem is damaged (i.e. just mine something else, sell the hardware, w/e) with PoS I need that ecosystem to thrive to profit or to even exit it.
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The difference between business and governments is that in business every dollar has a vote, whereas in a democracy every adult has a vote.
"liberation of people" can only happen by having a working democracy. And a working democracy can only exist when there is (democratically elected) government. So it's not like people should be liberated from government, people should be the government.
Therefore I think the best situation is where government controls the money, and we the people control the government.
If 51% democratically voted to enslave the other 49%, that would be a working democracy but far from "liberation of people".
Weak governments make for failed states, because corporations and other interest groups such as gangs, warlords, control things instead.
I'll take this one step further.
My credit card company has caught every instance of fraud on my card. So I've had zero hours of frustration yet multiple instances of people trying to use my credit card number. One time they even had the card - they had stolen it that night and tried to use it at a local gas station. A fraud alert woke me up.
Usually, the credit card company is the one absorbing the cost of this fraud - the food or physical goods that the fraudster purchased doesn't just magically leave their possession.
It is entirely possible to build a company that holds custody of your crypto, extracts rent on transactions or borrows with your deposits, and uses their profits to give you some financial protection up to a certain limit. Most likely within 10+ years your local bank will have some account that will custodially hold some limited amount of funds in crypto that are FDIC insured. But not everybody in the world wants this system, and not everybody wants all of their assets to be held in this way.
The fact that security is built around a 16 digit number and 3 digit pin that you share with everyone and can be reused is embarrassing for credit card companies, not a win. Amazing.
The flip side is that it’s creating new opportunities for massive privacy problems which would be irrecoverable. People who are trying to hide their activity will take precautions like using shell companies but normal people won’t think to do that or realize that they’re making that level of trust by using a wallet, exchange, etc.
There are some obvious big problems (“do voters know you paid for this porn site 15 years ago?”) but also more personal ones: imagine if employers, insurers, dating apps, etc. started data mining? Again, there are possible ways to mitigate that risk but I’d hesitate to make a lifetime commitment on those being effective and perfectly operated.
I think this begins the search for another trustless transaction system that is neither PoW nor PoS.
Why can't these hypothetical powerful people rent time on a mining farm?
PoW is PoS, it just has some extra steps that have the minor side effect of using huge amount of resources for no reason.
However, if a much more powerful criminal spies on your credit card # as you send money to Wikileaks or a bunch of truckers who drive to Ottowa for a protest you can never fix it when your card is cancelled and your bank account is seized. Or when you face a variety of other sanctions and persecutions for spending or donating your own hard-earned money.
>Crypto? No. It may, eventually, have some other benefits though that’s yet to be seen.
These benefits have already been seen and realized by people targeted by authoritarian governments and banking cabals all over the globe.
It is all about motives. If you think that the government is doing something wrong, change that, don't make it impossible for anyone to enforce laws at all.
To me, the immutability of an actual blockchain is non-negotiable. I've given up on Ethereum after the DAO fork out of principle.
But that's the beauty. Unlike our current financial system, you're not bound to use Ethereum. You have sovereignty and can make your own choices (and drive change).
-- (I only discuss part of your comment, don't have time for the rest)
Just FYI, the biggest problem for crypto fraud is phishing, not theft. A thief can't get your private keys from a hardware wallet. And there are many, many, MANY strategies you can use against phishing.
Any attempted tampering would be highly visible and why would anyone with control of that much ETH risk loss of trust in their valuable asset?
How many smaller players in the crypto scene have received that kind white glove treatment, going against the "code is law" principle, when they've lost huge sums of money? Code was law right up until The DAO massively screwed up and was deemed Too Big to Fail. No different than traditional financial institutions.
As the mining resources of the various trustless Proof of $X models needed to makes crypto work are increasingly centralized into the hands of massive players in the field the principle of crypto democratizing control of money & finance is becoming an Emperor With [increasingly] No Clothes.
If all services sitting on top of bitcoin were equal to the USD (settlement, fraud protection, PayPal/Venmo, etcetc) then you’d really need to compare the “tokenomics” of the currencies. With bitcoin, you have complete predictability in terms of when new bitcoins are created (inflation). With USD it’s purely up to the government.
>With the merge & staking that abstraction layer has disappeared and it’s still the organizations with the most money who control it.
In the prior state, the folks with control were the ones willing to invest in it. In the after state, the folks with control are the ones willing to invest, OR the ones willing to get others to invest - i.e. coinbase.
No, you can't.
It if someone hacks you mobile bank and transfers money to another country, all you can do is go to police, which can do fuck off.
Now, all big players have to do to print money is nothing. It is now actually impossible to ever overcome the mechanisms.
My young son the other day said “I’ll get money from the store and buy what ever I want”.
I explained you had to exchange work for money. So you can work for the store, then they give you money to buy things.
Then I thought about how banks or large lenders just give people money. They magically create a loan, which people have to pay back with interest. The bank assesses the risk they won’t and profit they want and that’s the interest rate. The FED works the same way, just handing out money. Those people don’t work for their money. They just get free labor for controlling the money.
Here it’s like the store printing money at 5-8% a year or what ever just for having money in the bank. They can then spend 4% or what ever of that and still always guarantee growth in their money supply. It’s the exact same.
Theoretically, someone can make something the store finds valuable enough in the real world to trade their reserves. However, they’d have to find it more valuable than the static growth rate.
The difference in POW is that anyone can enter the market. And large lenders won’t have an advantage. Sure they could PAY for more processing power, but they have no advantage of printing money over the next guy.
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You just made a great case for why crypto as a backend for balance transfer that's abstracted by centralized payment options built on top of the transfer network for funding balances but directly interfaces with POS outside the crypto network will almost certainly continue to grow into a thing as crypto grows.
Get rid of bank accounts, and then firewall balances behind 3rd party abstractions powered by your crypto wallet.
By all means charge my vendors 3.25% of the transaction to firewall and insure my wallet against theft.
Give me 1-2% cash back and I'll be even more excited about the prospect.
The fact that these types of get off my lawn comments get voted to the top of HN that make me wonder if I'm on a ship of fools that is no longer the center of gravity of interesting and creative tech thought.
Crypto has been around for over a decade and isn't going away, and it's an complex technology that has massive depth and a lot of interest. These sorts of negative superficial comments that get repeated ad infinitum are tiring and provide no value.
If you prefer credit cards then use them. No one is taking that away from you. That isn't the main use case that Ethereum is going after.
No, absolutely not. I'm saying it's controlled by those with the most money, and history has show as that transactions __can__ be reversed when those large players throw their weight around in a too-big-to-fail sort of way.
I'm also saying that I don't mind there being a human layer of judgment, but also that it goes very much against the trustless ethos of crypto. And also that the currently layer of human judgement is vastly less accessible to the average crypto hold than it is in traditional banking & finance.
(1) in both traditional finance and crypto, a relatively small group of big players control the rules of the game
(2) in traditional finance, there are established ways for small players (Eg consumers) to appeal to big players (eg retail bank) to make exceptions and provide redress
(3) in crypto, there are not yet established pathways for small players to petition big players for redress in this way.
So, have we observed global energy usage go down by about one Finland?
Shouldn't that be observable somehow? Shouldn't there be some power stations reducing their output as a reaction to reduced demand?
Anyone know how this would be visible, and on what kind of time frame we expect it to become visible?
I'm not claiming it hasn't happened. I just feel surprised to not see more coverage of that in this article, nor here in the comments. Energy efficiency is largely the point of this major change. Shouldn't there be graphs of the power grids everywhere showing a big drop? Maybe my expectations are just off on that.
Finland consumes about 87 TWh of electricity every year.
An entire Finland of electricity use thinly distributed over the entire planet disappearing is a negligible rounding error on the grand scheme of things. It's about a ~0.3% change.
News media uses word imagery like "an entire Finland of electricity use" because it sounds huge and scary to the average person who doesn't understand that absolute numbers are meaningless out of context. Zooming out, you realize that while Finland is big from an individual human scale, it barely exists in the wider cacophony of human civilization.
And that's just looking at electricity, which is a percentage total human energy use. Much more energy use comes from transportation, industry, and heating, which is much more carbon intensive than electricity generation, since much of our electricity comes from hydro, nuclear, and increasingly solar and wind.
If I and my grandma and everyone's grandma would use Proof of Work cryptocurrencies to buy peanuts at the supermarket, PoW energy usage would probably rival that of China.
Now it's just used for speculation by a bunch of rich folks, crooks and marks. Probably only a few thousand transactions per second, I imagine.
With the media tactics out of the picture, you don't think this is a huge amount of electricity for crypto alone to have been using? Seriously? 0.3% of global electricity use is ABSOLUTELY HUGE.
I know this isn't you, many people use these units, but I cringe every time I see abuse of units like this. 1 TWh/year is 113MW, so you are saying 2.8TW global; Finland is 9.4GW.
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No, because of two reasons. First, many miners simply pointed their hardware to mine other cryptocurrencies such as ETHW or ETC. For example we have evidence that about a quarter of Ethereum's mining farms moved to ETC over the last 24h. Second, contrary to sensationalist headlines Ethereum miners only represent a drop in the bucket of the global electricity consumption: only 0.1%. Yes that can be a "country's worth of electricity" but in relative terms, 0.1% would be barely visible on charts you might examine.
Also, digiconomist, an often quoted source of Ethereum miner's energy consumption statistics, was grossly overestimating the figures. The actual consumption was probably around 20-30 TWh/year instead of the ~80 TWh/year figure they estimated. Just look at their chart: it made no sense, for example between Sep 2020 and May 2022 Ethereum hashrate grew 5-fold from 200 to 1000 TH/s, whereas in that same time-frame digiconomist estimated the consumption grew 15-fold from 6 TWh/year to 90 TWh/year. If anything, hardware has become (a bit) more efficient over time, it didn't become 3 times less efficient...
But that's not too surprising, given the author of digiconomist has a history of exaggerating his figures, like he did for Bitcoin see https://blog.zorinaq.com/serious-faults-in-beci/ But nowadays his Bitcoin estimate is more in-line with more reputable estimates such as Cambridge's https://cbeci.org/ Last time I looked he was within ±30%
1 out of every 1000 watts of energy produced in the whole world going to ethereum mining is tragic. It’s an absolutely massive waste, and the fact that crypto miners think a number like that isn’t a big deal is horrifying to me.
We'll see if this is maintainable.
Miners can't mine if the reward doesn't cover their costs. So, the only way the mining remains sustainable is if these tokens rise drastically in value.
It is possible that many miners are huge holders of ETH, in which case we may see them massively dump ETH and buy ETC to try to invert the price and keep their business going.
...which is a stop-gap, holding-pattern sort of action to take, because there is OpEx to running a mining farm, and the lower trading value of ETC vs ETH (1 ETC = 0.025ETH) means ETC block rewards likely won't be enough to be positive-margin for these farmers. This is just a way to reduce burn while they try to sell their rigs. (Which they likely won't be able to do, because nobody wants overheated near-EOL mining GPUs. Mining farms will likely just end up bankrupt with assets liquidated at fire-sale prices.)
https://minerstat.com/coin/ETC/network-hashrate
And here is the ETHW hashrate:
https://minerstat.com/coin/ETHW/network-hashrate
EDIT: Better links
Whoever was using this electronics switched to other BTC variants, but in long term this reduced profitability and should harm people using energy in this way.
But sadly no immediate impact, unless there are electronics that could be profitably consuming power for Ethereum and it is not profitable for alternatives.
It's also true that there are second order effects, like for example all the mining hardware dedicated to ETH needs to find a new home, which will depress prices for new mining hardware for "chains that are hardware-compatible with old ETH", and thus probably support their prices a bit.
[1] And do, I think. IIRC there was a stat rolling around a few months back showing electrical grid usage dropping due to the crypto crash, but can't remember where it was or how reliable the source seemed.
[2] Though AFAICT no one is tracking exchange rates for it yet, so your guess is as good as mine as to its value.
It looks like it's already happening. After the merge there were a number of coins that saw huge spikes in hash rate which drove them to absolutely unprofitable levels. A lot of that hash rate has since gone elsewhere (most likely offline) and it looks like many coins are settling at a level in the short term that is breakeven at $0.06-0.08 kWh which many (most?) miners can't be profitable at as that is below their electric rate.
Those pile of GPU are going to be a write off since prices are dropping and supply issue improves as well.
I don't keep up with crypto and mining but until it becomes unprofitable or you can't pull money for and start operating in the red, you're going to continue consuming similar power.
Crypto mining occurs mainly where electricity is either cheap or free. Hydroelectric and Geothermal tends to produce the cheapest energy so many large mining outfits were relocated next to Hydroelectric and Geothermal plants. Many are in remote northern areas where computer cooling costs are less expensive too. $HIVE blockchain technologies was running enough ethereum miners to mine 7675 ethereum ($11.5 Million dollars worth) during the 3 month period ending in June 30, 2022 according to their quarterly earnings report. 100% of all of their miners used renewable energy sources.
One thing that I find interesting in the electricity debates is that if we took the gaming example and looked at the collective consumption of all people playing video games around the world, you'd arrive at even larger numbers of power usage and emissions. Yet this isn't ever discussed, even though an immutable public ledger like Bitcoin arguably has more utility for society than playing games. A lot of HN users probably play video games, CO2 emissions are of course mainly an issue caused by other people and activities oneself doesn't take part in. In Europe, there's also a trend of public anger against SUVs and there are groups slashing tires of cars, simply based on the shape and ignoring the actual energy efficiency. Happened to a friend of mine who couldn't understand why they targeted her car and left 30 year old gas guzzlers in the same street alone. I think a lot of it has to do with emotions more than rational considerations around sustainability.
All to supposedly create artificial scarcity for .jpg files.
At least that illness is over now somewhat. Hopefully all the miners go bankrupt.
Which ones we looking for?
No, because ETH mining is/was quite distributed globally, let's say across thousands and thousands of power grids. A single grid or power station shouldn't be able to notice the difference.
Think about it this way: all of a sudden, domestic fridges consume 1/100th of electricity, compared to before.
Fridges are 0.1% of average power consumption. Thousands of fridges in a given area are powered by the same power station. The power station barely notices the ~0.1% reduction in power consumption, compared to the day before. Shrugs.
Not likely. We'rein an energy crisis and it just started getting cold. So, the opposite.
I just hope the PoW markets collapse now ETH is moving on.
How is it good for the environment? I only mine when my house and battery does not need electricity and our solar is producing over 1kw. Everything I earn (around 100-300$ a month between February to Oktober) I invest in the next environment project. My miners need about 500w. This is a fraction of the amount I put back into the grid. If I would not do this, our new heating system wouldn't be financed yet.
https://blockworks.co/proof-of-work-ethereum-fork-pow-rally-...
I'd expect the value of ETHW to crash fairly rapidly, though, because there are not many buyers interested in buying into a deprecated chain without official support or ecosystem buy-in, and lots of sellers who need to sell their mined ETHW to fund mining operations. Then we'll see miners shut off and leave the network, as the mining rewards can no longer support the electricity costs of mining. At some point it might get 51%'d, but at that point nobody will care.
Now that layer is gone, its this proof-of-stake which is a bit funny since, Ponzi schemes are also proof-of-stake, where the previous investors stake's performance signals the next until the order books flip to a highly skewed with a very long til, it results in the last group who were late to the party, get caught with the bags.
I wouldn't be surprised if there are many whales dumping as they would know (and I hope so) what the new paradigm shift is in this digital ponzi gold rush.
Also rather anxious for these fellas who promoted securities written on ethereum. The SEC flat out came out and said almost all cryptocurrencies passes the howey test recently. This PoS seems perfectly timed for the occassion.
I feel kinda ashamed. I work in the IT industry and I claim to have knowledge about ("good") software engineering practices, distributed systems, compilers, algorithms, etc. Nevertheless, I didn't understand a word of what the article is saying. Could you recommend serious references (preferably books and not random blogs) I could read to catch up with what's going on with crypto these days? I'm not planning to "buy" crypto; I would like to understand the technicalities.
The short of it is:
- The block chain is a distributed ledger database, where all peers hold a full copy to avoid manipulation (faking an entry is only possible by controlling >50% of machines in this peer-to-peer network).
- Spending money is implemented by adding a transactional record to the blockchain ledger at the end saying X amount moved from account A to B. A block is like a page in a paper ledger and they are appended with cryptographic hashes to avoid improper interference.
- Ethereum supports smart contracts, which are little scripts in a language called Solidity. So you can implement legally binding (and unstoppable) contracts along the lines of "if (condition) then (pay some money to someone)". Executing smart contracts cost a little bit of money. All Ethereum nodes collectively implement a distributed VM, and that money (called "gas") is the incentive to keep the network running. Smart contracts are highly interesting, and they have applications far beyond electronic currencies. For example, we played with implementing electronic rights management (https://link.springer.com/chapter/10.1007/978-3-030-36691-9_... - which turned out to be less than ideal due to a stack size limit in the current Ethereum VM, but hey).
- Whenever a new block (page in the ledger) needs to be created because the previous one is full, a randomized alg. determines who is permitted to do that ("mining"). The old process (proof of work) was environmentally a disaster (it still is for the Bitcoin ecosystem), which is why the Ethereum people implemented a smarter method (proof of stake - https://en.wikipedia.org/wiki/Proof_of_stake).
[0] https://ogucluturk.medium.com/the-dao-hack-explained-unfortu...
[1] https://karpathy.github.io/2021/06/21/blockchain/
There's no problem with spending the energy if it actually buys us something. It's a disaster because it failed to actually decentralize the network.
Instead of everyone with a computer being able to participate, we have very few people buying up all the hardware for their massive centralized mining operations. If that's how it's going to be, then we might as well move on to proof of stake.
Monero seems to have a better designed proof of work system. It's ASIC and GPU resistant, normal people manage to use their computers to mine XMR. One CPU one vote, that was the whole point since the beginning.
I would just call that "automated decision" The legally binding contract is the one where the parties agree on using the implementation as their means to fulfill the contract.
There is nothing legal related in that and no law in any legislation I am aware of giving it any special treatment.
No - they are not necessarily legally binding.
They are just called 'contracts'.
We have no idea what they mean, and each individual 'contract' will have to be scrutinized by the Judge, or else it's not 'legal' anything.
what are some examples of these conditions? how is it not like... i put money in escrow, if the buyer agrees i did my part, they click agree and that's the "condition"?
A bit off-topic, but do you think this kind of rights management ledger is better stored and accessed in traditional data stores and managed by either a government entity or a private-public partnership of some sorts?
It seems like self-signed authentication would still be viable but with the added bonus of a mechanism for dealing with lost private keys while at the same time allowing for individual entities to quickly and effortlessly exchange ownership.
how large is a full copy these days?
how are peers jump started and why is that mechanism trusted so well? like say I want to connect to the blockchain, I need to make an API request to some IP. how is that resolved and why is that regarded as "decentralized"? why is the mechanism for serving me peers trusted and why is every peer in the network trusted?
"What is going on now" is largely the same thing as before:
If you have a solid CS/software engineering background, you probably already know 90% of it.I guess crypto-specific consensus might be new, but you can get a good grasp reading few articles. And that part is actually opinionated, so you need to decide on a camp before you read materials. Bitcoin people would likely disagree with anything written about PoS.
Another fun thing is Zero-Knowledge Proofs (ZKP). That's actually quite new, complex and might be interesting.
The rest can be rather boring. Users submit cryptographically-signed commands (transactions) which processed in a deterministic fashion. I'm not sure it's worth reading a whole book about it.
That can be difficult if you read tech news like us, but it will give me a small twinge of joy if I live longer than crypto. Guess we'll see.
The underlying problem that blockchains solve is 'distributed consensus'. This is a solution with a much broader range of applications. For example Maersk has a system for signing handover of shipping containers in ports (https://www.maersk.com/apa-tradelens). This is an international problem with a lot of it happening in countries with a lot of corruption (i.e. you can't rely on legal mechanism). Not being able to forge who is responsible for which container eliminates a lot of problems.
Ethereum does something even more interesting, which is that the network can agree on the result of computations (these are called dapps for "distributed apps"). These can be used to implement simple "smart contracts" for financial purposes but they have a much broader applications. To some extent I'm slightly underwhelmed by the things people are doing with them, but the potential is enormous.
https://whycryptocurrencies.com/
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Many in tech look at crypto, and blockchain specifically as if it is another technicalogical capability they can integrate into their enterprise architecture. From that perspective blockchain in general doesn't really make sense. As cool as the composability of tokens and smart contracts are, that's not a capability only blockchain can deliver (in fact that's not the blockchain at all... that's the standards that have been built on top of it).
Others in tech look at blockchain as a currency to replace traditional currencies issued by governments. A reasonable world view, as that's kind of how it's been sold for a very long time, but it's pretty clear to me at least, that's not really possible. The US Gov is always going to require taxes to be paid for in dollars. The US, EU, China... everyone, they're not going to give up monetary sovereignty.
So what does crypto provide then? In my opinion, the sole thing the blockchain provides, when sufficiently decentralized is digital sovereignty... but more importantly an unlimited amount of digital sovereignties. Opt-in self governing communities that can decide for themselves what's fair. An enforcable user bill of rights that's global in nature. This doesn't replace the real-world sovereign nations, it's like a new layer in the digital world for digital applications. I've personally come to realization that Crypto doesn't really work well in the physical world. But in the digital world, it's proving quite adept...
Technology is still evolving, ETH2 is a huge leap forward... and glad to see it. Personally, I'm still attached to the Avalanche community because I personally think the technology is still superior. But the technology is kind of not the important part. It kind of just needs a minimunm spec, and then it's not important. It's how you treat the users who are using the stuff built on top of the technology. Libertarians were the first to understand that (though i'd argue they fail to understand that need to have a foreign policy, and real world governments are legitimate trading partners that you need to negotiate with. Their insistence on idelogical purity will be their undoing) But crypto is big enough for all kind of communities to crop up, and you can choose to join or not.
That's ultimately the thing, any app you can build in Web 3, you can replicate in Web 2 with a single server. But in Web3, the users can own it, and they can decide for themselves how to govern themselves. That's the value. We live in feudal system, a world dominated by Web 2 companies. Web3 in my opinion is the way we can build a diverse economic ecosystem of free (as in speech, not beer) digital services.
One thing I Think a lot about... today, all people in crypto are dual citizens. They have citizenship in their geogrpahic world, and in the digital world. But there's a future where AI can be pure digital citizens (citizens who have needs, such as compute, and they will trade their AI skills for that compute). I view a lot of the debate around crypto as a debate about foreign policy, and that gets really interesting when it's AI on the other end.... maybe a free AI :D
Other systems that do not use cryptography and instead often rely on trust in exchanging critical secrets, such as how the banking system generally works, are outdated.
[0] https://ethereum.org/en/developers/docs/
In my opinion too, the crypto crowd is typically one I like to avoid. But to dismiss the tech behind it as babble is sad.
However, I don't regularly dismiss fields like that, but rather I understand that not everything is meant for me to understand without a deeper meaning. Not sure why anyone would treat the (technical) ecosystem of cryptocurrencies differently. Seems like a non-curious way of acting.
Just like I realize the problems pornography introduces to the world, but reading and speaking with engineers working at those companies are still a fruitful endeavour for me.
Fully distributed consistency algorithms running on N nodes on linked list in which each node is a Turing-machine program run concurrently on N nodes, whose consistency shall also be insured, and which can write on said linked-list. Everything has absolutely tons of edge-cases related to the distributed nature of the thing to take care of.
Of course, I haven't even begun anything about the whole "crypto" part, and minimizing power usage.
Absolutely no meaning besides "linked lists", riiiight...
Even something like a Dex can be far superior to traditional order book exchange models in some cases
So you mean like me calling you and saying 0 1 0? Well, yeah kind of, but faster! And we can even have conference calls! It's going to change the entire world! Yeah, ok... Well, I'm going to leave now. Wait, sorry... I mean I'm going to '0 1 1 0' now. Wow, I can feel the world shifting already.
The applications of a technology often are far greater than the most simplified fundamental upon which it is built.
I remember having a similar feeling when NFTs were getting big. It turned out that I did understand the terms, there just wasn't enough actually there, triggering a feeling that I must have been missing something despite my eyes telling me the emperor has no clothes.
You are on the right track.
There's an incredible amount of word salad piled on the fact that people are playing a negative sum game when getting involved with any cryptocurrency that has transaction fees.
That's been my entrance into crypto as well. I really dislike the speculative, get-rich-quick, even casino like connotation crypto has (inevitably) acquired. It shades the incredible technology behind it.
For a couple of years I have been studying and playing around with smart contracts in my free time, getting a better understanding of this paradigm (every smart contract can be seen as a singleton object "living" in the blockchain, with functions that are like API endpoints which you can interact with in a decentralized fashion), how it shapes applications built on top of it, and the possibilities ahead of us (ex: DeFi - Decentralized Finance).
There's a lot of skepticism around crypto, like "it's a solution without a problem", but I don't buy it. Even if it were, it's a solution sophisticated, interesting enough, worth diving yourself into ;)
https://people.csail.mit.edu/nickolai/papers/gilad-algorand-... Algorand: Scaling Byzantine Agreements for Cryptocurrencies
http://people.csail.mit.edu/silvio/Selected%20Scientific%20P... A DIGITAL SIGNATURE SCHEME SECURE AGAINST ADAPTIVE CHOSEN-MESSAGE ATTACKS*
The tech in Blockchain/Web3 world is changing and evolving incredibly fast (as is evident from this historic event today) and so by the time books come out, they already become outdated.
I would highly recommend reading Vitalik's blog[1]. He talks about various topics and has a knack for explaining things brilliantly.
[1] https://vitalik.ca/
I find the book "The Bitcoin Standard" by Saifedean Ammous a good read to break down those concepts. Nevermind the extremists or so called "maximalists" and their exaggerations. The book is a really good intro to macro economics and helps understanding why cryptocurrency is interesting as a store of wealth and/or money replacement.
I'd recommend just taking look at the documentation / code.
Here's some sample ones:
Ethereum - https://ethereum.org/en/developers/docs/evm/
Solana - https://docs.solana.com/cluster/synchronization
It's a crypto/blockchain podcast, but very technical, it's focused around the advanced technology that makes up the ecosystem (zero-knowledge cryptography, multi-party computation, consensus algorithms, miner-extractable value, new blockchain programming languages, etc).
Very technical, almost nothing about investing. The downside, some episodes may be a bit hard to jump into due to the technical nature.
Came out about 4 years ago
https://vitalik.ca/general/2017/12/31/pos_faq.html
They are 20min episodes that build up to explain the foundations of cryptocurrencies.
If you have any suggestions for future episode let me know. I’m thinking of spending a bit more episodes on Bitcoin to talk about bitcoin scripts, layer 2 apps, UTXOs, etc. Before talking about ethereum
In between a blog post and a book. I think it’s a good starting (and ending lol) point.
This is not a very good explanation, but basically, you can have a "currency" using just asymmetric key cryptography: users simply sign "transactions". The problem is that you need a central authority to confirm the order of transactions, otherwise the recipient of a "transaction" will not know if the funds associated with that transaction have already been spent to someone else ("double spending"). You can solve this using hashcash to make the transaction order hard to reverse- creating a "proof-of-work" by doing something that is easy to verify but hard to determine (like reversing a hash function). Another method is "proof-of-stake" wherein transaction order is not signed by a central authority but instead general users that are guided by some internal incentive structure.
Cryptocurrency is often expensive to run or use because a cryptocurrency transaction has to be synchronized across the entire network of that cryptocurrency, and there are incentive structures like fees to prevent people from spamming the network.
There is also tech like zero-knowlege-proofs, multisig, etc. that can do interesting stuff. But this is the basic concept.
This is just a vague example, not a working idea. The point of it is that the level of security and trustlessness is not always required to be absolute. E.g. even with fully-secure pow crypto we still have to trust non-crypto claims about usdt, [non?]shitcoins, “hot” wallets, and other maybe-not-ponzis.
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The wealthy actors are the ones dictating the transaction now and they also on top get paid for being rich. This does not sound like a "better financial system" for me. Also, don't forget the DAO Fork[0] where with the "ungovernable Blockhain" it was decided a transaction was not ok and it was removed?!
[0] https://ethereum.org/en/history/#dao-fork
But it was always like this, also with proof of work. PoS and PoW are both just variations of "proof of resources", which in turn is a convenient substitution for likelihood that one's voting power is independent.
If you want to give "power to the people", you need some way of estimating independent voting power, that is not tied to resources.
With proof of stake, having that money is enough to vote and you don't need to spend or waste it. In fact, you get paid for having that money sitting in the account.
You mean like a democracy?
An end-user node is like a device, which verifies that bank notes are genuine or that gold coins are pure. If everyone can independently reject bad money and accept good money, the good money will have more demand and therefore be more valuable.
Even if someone is very rich or has resources to mine blocks, they can't dictate demand for other entities. They must abide by the rules which are enforced by end-user nodes.
If there are entities which have power to dictate demand, and the network can't defend itself under pressure, means that the network is not properly decentralized.
Also, the decision between "good money" and "bad money" should probably be a game theoretic focal point, rather than something set by a foundation and large staking entities.
Thus, Proof of Stake let the rich grow their richness for doing nothing. In Proof of Work they need to continue working to make their money grow. Not to mention that they removed the miners from the equation, proving that in ETH system the poor and the people don't have power at all, whereas in BTC no one ever had any such power.
We have a concept called Proof of Authority where we basically went out and picked competent teams that have a vested interest in ensuring the blockchain is successful. They run the infrastructure in a fully decentralized manner, but we work as a group. There are 7 "pools" and we will eventually expand to 11. It's not decentralized as commonly understood, but way better (imo) than just putting whoever is richest in charge.
On the other hand they want the same amount of their virtual currency for themselves as 2 billion people.
"64% of staked ETH controlled by five entities"
https://cointelegraph.com/news/64-of-staked-eth-controlled-b...
One may see the 'wealthy' as getting more 'say' but in reality they could (and did) just buy hardware that produces higher hashrates.
This performative ceremony is gone now to the benefit of all
The big difference is how easy it is to step into the game. I'd probably need millions of dollars, oodles of lawyer-hours, a bunch of employees, and a mountain of paperwork, to start a bank and participate in the banking system as a peer. I just need 32Eth (roughly $50kUSD) and some computers to participate as a validator.
The hard fork only "worked" cause enough people went with it. If enough people said "f it, no fork", then the fork still happens, but loses the social capital and thus the old chain "wins".
The internet struggles with ipv6 because not enough nodes support it. Politics breaks down when parties can't reach agreement. I don't know of any system which is truly tolerant to byzantine / 51% attacks.
Don't look now but "decentralization" and "power to the people" are already gone in the crypto market.
Blockchain is a novel accounting system. But has any organization *ever* derived any real power from an accounting system? Are Google and Apple and Amazon market leaders because of a novel accounting system? I don't think so.
In a capitalist system, real power is derived from marketplace control. Accounting is just a way of keeping score.
Likewise, in the crypto market, Binance has now consolidated it's power position as marketplace leader and has effectively become the "central bank" of crypto with the power to mint it's own currency (Tether and BUSD) and use it to manipulate the marketplace at will. In a brazen demonstration of their power, they plan to crush other stable coins by simply replacing them with their own.
https://fortune.com/2022/09/06/binance-moves-against-rival-s...
What are "the people" going to do about this? What does blockchain have to do with this? Not a damn thing.
Power to the Binance! They are now driving the crypto bus and everyone else is just along for the ride.
You have Coinbase, Kucoin, Gateio, Crypto.com, Kraken, Bitfinex, Uniswap, Sushiswap, Pancakeswap, ...
Competition is also a form of decentralization.
The developers behind ethereum have effectively rediscovered what banks are.
I doubt that they actually switch off their stuff. That makes no sense economically.
The people with actual mining rigs with multiple GPU's will either sell their stuff or start renting them for services like vast.ai. I assume most will end up selling because of the cost of getting a server-grade Motherboard/CPU + lots of RAM isn't exactly cheap and the effort required to set everything up is much higher.
It's already centralized, all of it, from the blockchain to the "dapps" built on top of them.
The dao fork proves this because some people decided not to roll back and forked the chain instead. The ecosystem decided which fork was the main fork but they both live on.
https://etherscan.io/address/0x388c818ca8b9251b393131c08a736...
https://etherscan.io/address/0x4675c7e5baafbffbca748158becba...
Worth adding it's also not substantially less decentralized than PoW mining was, the status quo was 41% of hash power controlled by 2 pools. At least now it's using significantly less power and is largely more non-custodial.
Way I see it, the idea is to get your data, code, and capital into the big global ball of state by consensus where it can coexist with other code. The point is being able to co-operate with others by writing arbitrary programmable incentive mechanisms.
The tech isn't there yet though. It still needs higher throughput (sharding, layer 2s), better visibility into the mechanics, and probably some kind of privacy layer.
Seems the most likely explanation.
The idea that this isn’t true in BTC or PoW seems like a wild fiction to me.
Perhaps, it's my ignorance about this technology that makes me question and prevent me from adopting this technology.
> Miners are replaced by validators – people who “stake” at least 32 ETH by sending them to an address on the Ethereum network where they cannot be bought or sold. These staked ETH tokens act like lottery tickets: The more ETH a validator stakes, the more likely one of its tickets will be drawn, granting it the ability to write a “block” of transactions to Ethereum's digital ledger.
https://github.com/lidofinance/docs/blob/main/docs/deployed-...
https://lido.fi/ethereum
The second thing I'm interested in is that ETH was the vast majority of revenue for GPU miners. I read an article on HN a few months ago about how once ETH is gone the rest of the PoS chains put together won't yield enough revenue to be profitable for the vast vast majority of current ETH miners. This alone could have a massive ripple effect on the used GPU market. Interesting to see where that goes.
but there’s a million arguments on both sides of that picture. i think the strongest argument for price direction is that PoS miners are less likely to sell their Eth immediately after mining it than PoW miners because the latter purchased mining equipment with USD and want to repay that, whereas the former are invested in Ethereum itself instead of their mining equipment. also it sounds like block rewards are decreased with PoS, so the currency itself is deflationary now (?)
The fact that the vast majority expects a bull run means that it's very likely it will crash instead.
Hmm? Not sure what you mean. High-risk countries' bonds pay higher interest than low-risk countries' bonds. E.g. Ukraine was paying 10% interest in USD when US was paying 1%. Of course, expected value might be lower if you average over all such countries, but we are talking about a "happy case" here where a bad event did not happen.
> how can you price the risk of anything in the Blockchain space, like say Ethereum getting completely wiped out by a hack, etc?
Well, you can't calculate the risk but you can get 1000000% return (the actual return over 7 years for ETH presale). Or you can calculate the risk and get 5% return. It's your choice.
The risk you're describing is a social-political one. As long as the users do not fork with the etherium developers, that will not happen. Change to PoS has nothing to do with it.
I look forward to the increased GPU supply.
Are you saying that the market did not price in any technical risk? I don’t follow crypto markets closely (and don’t own any), but given the number of crypto bug exploits and the unprecedented nature of this merge, that seems unlikely to me.
Even a social-political risk averted is a risk averted.
> “I feel very proud, you know, that I'll be able to look back and say I've had a role to play in removing a megaton of carbon from the atmosphere every week." -- Edgington
There's a very important difference in not emitting carbon into the atmosphere and actively removing carbon from the atmosphere.
Both are critically necessary and complementary, but I don't see how Edgington thinks that switching off PoW suddenly makes Ethereum carbon-negative.
It's a lot like someone being an active part of a group of gangsters taking hostages, then turning around and helping the police freeing them, only to then brag about how proud he/she is of having a role in freeing those poor innocent people.
The phrase "removing a megaton of carbon from the atmosphere every week" is globally syntactically ambiguous. It can be read as "removing [a megaton of carbon from the atmosphere] every week" or as "removing [a megaton of carbon from the atmosphere every week]". The second interpretation means removing a source. Both interpretations are roughly equally valid, although "eliminating" would sound better.
"eliminating the emission of a ton of CO2 every week" is a similarly ambiguous phrase which can be interpreted as [the emission of a ton of CO2 every week] or [the emission of a ton of CO2], every week.
In this case, a better wording would have been: "removing the source of a megaton a week of carbon emissions".
er, I mean...
"We are saving the environment!"
"The wall is very close"
"We're going too fast, shouldn't we brake?"
"Oh at least, we're not accelerating, look, constant speed, everything is fine!"
https://etherscan.io/block/15537394
i’m thinking it was a single person who just really wanted to be the first tx on the PoS chain. i’m not versed to decode transactions well — i wouldn’t be surprised if it was somebody making a “first PoS transaction” NFT or something.