Bitcoin and crypto currencies

Rwy20 wrote:

t will be more useful than Bitcoin

Sure

which will bring more widespread adoption

I would be not so sure about that one. A lot of technically superior stuff doesn’t make it for some reason or the other. Ethereum has a good chance, though, if people accept the transition

Rwy20 wrote:

But it won’t be one or the other, more than one cryptocurrency can coexist.

A lot has to happen to make cryptocurrencies viable as currencies (and have most of the function of established currencies, fiat or otherwise). The biggest issue is being a stable store of value. For a variety of reasons, a massive deflationary currency is as unviable as an inflationary one.

A 26 year old Blockchain entrepreneur with a £100 stated capital company has bought Stobart Air for £2, and claims to continue employing the aircrews.
(Is this thread drift or relevant?)

Sebastian_G wrote:

Better compare Bitcoin to a rare metal without any technical use case. The quantity is limited, mining it becomes more and more expensive the less is left to mine, the value is only in the trust of the users as such metal has no industrial demand.

Very good comparison – there is, however, not a single example of such a metal that had ever gotten any meaningful market…

Sebastian_G wrote:

To give an example a while ago I tried to pay for electronic parts from Asia and the transaction did simply disappear. My money was gone and the recipient did not receive it either.

Those things happen, unfortunately. But they not only happen with the traditional banking system but also (and presumably more often) with bitcoin.

One of the biggest mistakes many people make when comparing x-coins to the traditional banking system is that they compare the pure theoretic concept of x-coins with the real practical banking system (up to a point that frequently the cost for a bitcoin transaction are compared with the price for a global wire transfer…).

Rwy20 wrote:

Cheating will be discouraged by threatening the loss of the staked Ether coins of the miners

ETH 2.0 will of course be a great advancement, but does not solve the two fundamental problems:
1. Every “Proof of…” mechanism is based on the thread that somebody who cheats can loose so you need to establish some effort everybody has to put into to make sure they have something to loose
2. “Truth” in all of such systems is always defined by majority vote – so is cheating. If 50%+1 vote says a transaction is legit, it is legit. Therefore the question is always if you trust this 50%+1 (and in almost all real existing cases of x-coins these are Chinese) more than the FED, the ECB or the Bank of England

In the end, those coins work like every other Ponzi schemes have been working for ages: The starting generations make a great fuzz out of it to get as many people buying into it as possible. When it reaches a critical mass, each generation of victims has a high hurdle to call it out as Ponzi scheme as their personal incentive is high that it runs until they got their money back.
At some point in time someone from the outside will come and call it out (in case of bitcoin most probably the Chinese government) and will end the “hype”.

In case of bitcoin I can clearly see signs that we are at a tipping point: Just imagine the farce around paying Teslas with bitcoins…

Malibuflyer.

You keep making confident and self-assured statements that are just totally wrong.

You seem to think that if (in the case of Bitcoin) someone has control of 51% of the hashpower then they can control and make any changes they want. Including creating transactions to move bitcoin which is already on the chain.

This isn’t true.

The whole point about Bitcoin (and other similar Schemes) is that there is no “higher Power” that can tell what is right or wrong. So whatever 50%+1 of miners consider to be right is actually right.

If you believe in the idea, that 51% can not do whatever they want – what does keep them from doing so? Who is the “higher authority” that tells the 50+ % that they are wrong and the 50-% minority that they are right?

First of all – 51% of miners can’t do everything. It is next to impossible to fake the past or spend somebody else’s bitcoin. The validation miners do is preventing double spending, first and foremost.

However, they can hijack the overall network (prevent the minority from transacting) and can enable double-spending. This would be devastating enough and would destroy trust, so it is questionable whether doing that is of any real benefit to them. The risk exists, but it is akin to a nuclear attack to destroy the currency.

This is another example of my main ‘thesis’ – the biggest obstacles to crypto are not technological, but economic / behavioural / societal.

A nice theoretical solution for the 51% problem and the energy problem is to restrict mining nodes to a few people who absolutely hate each other and hence would never collude, and kick anyone out who exceeds the power limit per node. Getting that done in practice? No chance. Also too similar to central banks.

Cobalt wrote:

It is next to impossible to fake the past or spend somebody else’s bitcoin

Faking the past is impossible, right. Spending somebody else’s bitcoin is simple if you own the majority.

Cobalt wrote:

The validation miners do is preventing double spending, first and foremost.

What happens – in your opinion, if 50%+1 of miners validate a transaction which you believe is wrong? Who would say that the majority is actually wrong?

Malibuflyer wrote:

Spending somebody else’s bitcoin is simple if you own the majority

I think this is a bit of a misunderstanding. Making a transaction, and validating it are two separate things.

Transactions are digitally signed, so to make a transaction from a wallet, you need a private key related to that wallet. There is no “proof of work” required and it is as secure as public/private key cryptography can be. It is cryptographically ‘impossible’ to spend somebody else’s coin. This is also the reason why coins in wallets where people lost their keys are “lost forever”.

The transactions are added to the next block on the blockchain, and within a block you cannot spend the same coin twice – that would be obvious for everyone to see as the block shows clearly what has been transferred from where to where.

If you double spend, you have to create two blocks, sending the same coin to different recipients in each block.

HOWEVER, only one of these blocks will ever make it onto the authoritative blockchain, and which one depends on who gets most ‘Votes’, i.e., the most work performed. If the recipient waits until that validation has been performed, it has become irreversible and hence double spending cannot occur.

Malibuflyer wrote:

What happens – in your opinion, if 50%+1 of miners validate a transaction which you believe is wrong? Who would say that the majority is actually wrong?

Now enter the 51% attacker. They cannot spend YOUR coin. But they can pretty much put any (internally consistent) block they want on the chain and validate it, including
– blocks where they remove transactions made by others
– different versions of blocks where the same of THEIR coin has been given to other parties

In general, their power is mostly to undo and replace blocks on the chain.

Given the massive power required to do that, the theory is that it is actually much more economical to just mine bitcoin with that power because you can’t really make much money of a 51% attack – it is almost purely malicious.

Malibuflyer wrote:

The whole point about Bitcoin (and other similar Schemes) is that there is no “higher Power” that can tell what is right or wrong. So whatever 50%+1 of miners consider to be right is actually right.

To use your phrase from earlier. Absolutely Not!

You’re repeatedly wrong on this as you don’t seem to understand that having 51% of the hashpower mining does not give you carte blanche to rewrite the software and do whatever you like.

The protocol is well understood in what it can be done and what is needed to validate. The best that miners can do with a 51% attack is as above, they create double spends for their own coins, or they block certain transactions from getting on the chain. It’s a risk, but the bigger and more valuable it gets the more difficult it becomes to mount an attack.