RE: Bitcoin is backed by electricity: Why I believe PoW will outlive PoS, and I do not trust DPoS
A very interesting and thought provoking post! Thanks for sharing!
I'm not sure about the points made here unfortunately though.
Andreas gives a good craic at trying to get people onboard the PoW train, but I'm not buying it. I know he wants (and needs) more adoption of Bitcoin, but hey, don't we all. We do have a moral obligation to stop and think however, if our actions to attain great riches might potentially be harmful to the future of others.
The argument Andreas makes seems to be basically "Electricity is there so lets use it and everyone is more profitable through the process".
Protection of the environment begins by reducing consumption and PoW doesn't reduce at all. It constantly increases in consumption and wastage based on the value of the coin being mined.
Saying that it is OK to keep consuming more power because we need to build power plants 15 years ahead of time doesn't make it any less wasteful. The industries that build power plants and deliver energy need to become more efficient and agile and we need to stop helping them manage their way through wasteful processes by not building more industries such as PoW mining around them.
DPoS and PoS still use a lot of electricity, but much less than PoW. They have a much better chance of reducing wastage, although it would be wrong to say that they are not wasteful.
The fact that the (D)PoS staking mechanisms generate income or value is a great thing I think though. Their value is not backed only by the fact they generate more coins. They must still show or explain a tangible use in the world (e.g. Reddcoin Vs Ark).
DPoS, PoS or PoW will all ultimately have a small number of wealthy individuals or groups that control them.
The question should be which has the highest long-term chance of resistance to centralisation. I honestly couldn't say. A few Bitcoin mining pools are massive but Lisk is fairly dominated by a few groups too. It seems like any cryptocurrency you look at, you'll find that those with a good chunk of money are constantly trying to own more and more of them.
Perhaps EOS and it's year long ICO might actually be more ahead of the game than people take it for!
The issues of centralisation will remain forever as long as there is money to be made. I don't mean to give a "2%" diatribe here, but the more you have the more opportunity you have to gain and conserving the environment will never get in the way of progress (or the rich getting richer).
Great reply!
I agree Andreas goes a little bit overboard in his defense, but I do think his comparison to the current cost of operating the financial system is spot on. While PoW is definitely more wasteful than PoS/DPoS, it's still probably cheaper than the way we currently do it.
^^^This, indeed, basically
I love staking coins, don't get me wrong. My main holding is NEO and I love that because you can 'stake' (sorta) with any amount. I feel that opens the door to a more decentralized system than one like Stratis where you need 250.000 STRAT to run a Masternode, or 1000 Dash for a Dash Masternode.
The problem remains though, what the core value of the coin is. If it is a utility coin, like you say, then it may be clear what the value is. But we have quite some coins whose utility simply is 'money' and nothing else. It's mainly these coins that I worry about losing value, with no base cost associated with producing them and no real use for which to spend them on, except as 'money'. When the current 'bubble' bursts.. and when even Chaincoin is going up again we can definitely call this a bubble.. but when it bursts, I think people are going to wonder what the price of a tulip truly is. And when it comes down to it, one of these tulip costs x amount of electricity to create, while another does not. It seems like the second would be more at risk of losing it's value entirely.
I definitely agree that there are coins out there that have no utility, but regarding the value of something just because it had a cost to produce, I would have to give the example below.
Hair straighteners: extremely popular and valuable to men and women that want to straighten their hair, but totally worthless to men and women with short hair. Their value can be deduced by popularity then the cost should be considered.
If however, they are no longer popular or valued by consumers, the business that produces them will continue to reduce the cost right down to giving them away for free to try and gain whatever value they can salvage from them and prevent the business from going under.
I would still turn the offer of a set for free down as I don't like or need them and it would be wasteful for me to take them. If a new more energy efficient or more popular product replaces them, even the target market will reject them.
It's almost a philosophical dilemma. I thought of this before when thinking of the value of a Bitcoin.
Let's say we're trying to obtain the value of a Lamborghini. What if you have a thousand Lambo's, but nobody wants to buy one from you? What is then the value? Is it still hundreds of thousands of dollars, or is it zero? I would argue that the value of a lambo is not zero, even if there is nobody willing to pay the price.
Similarly, if there was a buyer who offered $10, the value is not $10 unless the seller actually agrees.
When you think about it, there's not 'one' price of value for an item. It's not whatever somebody is willing to pay, but there is also the price at which point no seller will sell below.
I experienced this myself when I hodled Litecoin for 3-4 years. I wasn't going to sell at the 'value', simply because I didn't agree with the price. I would rather choke on it, so to speak.
The same applies with digging for gold too, of course. There is not just the perceived value, but also the cost of digging through a mountain to get an ounce of gold. Now there may come a point where some gold becomes too expensive to dig up compared to the current market price, but still... If you can't find any elsewhere and you want that gold, it's going to cost you x amount to get it. Wether you want to value it at that price or not?
I think it applies to hair straighteners too. The difference being that they are worthless to you. But you may very well say 'I don't care for gold, so it is worthless to me', but that doesn't say much for the price of gold at all?
I'm glad ubernerds are thinking hard on these issues ;)
I think this blog post and discussion is the most interesting I've found since joining Steemit a few months back! Thank you!
I hope you still have that Litecoin?! Totally agree that the seller must be willing to agree to the offer to buy. The offer or opportunity to sell only happens however when there is a buyer. Take any object or material in the world and ask if it is irreplaceable or could be improved on significantly or not. That is how I judge the value of things.
Lambos are Lambos! The old ones (same with Ferraris) are absolutely irreplaceable. They have been improved upon, but people love to capture the spirit of the times when they were built. They were truely works of art then. The new ones devalue by almost half when you drive them off the forecourt as they are less classy and nothing really special (fast and cool looking, but not classy at all).
Facebook is not irreplaceable, but you would have to spend so much more than you could ever make to knock it out of dominance that it wouldn't be worth it. You also probably couldn't improve on it enough to make your new product stand out enough to convince users to change ( as it stands today)
In Bitcoins case, it has that same first mover adoption advantage as Facebook, but when you ask if it is irreplaceable or could be improved significantly, the answer has to unfortunately be.....
Gold is slightly different from a purely practical perspective. Gold is a great conductor and is the best at many practical applications (mobile phones, satellites...and many other products). It's value is so high because in many cases it is the only thing that can do what it does and the only time gold is created is when a star explodes in a supernova. This means that there is a finite amount of gold that we will ever have the opportunity to poses, whilst all the time knowing that it is absolutely essential to many many different products and projects.
If we want more gold we're going to need a bigger....
You're welcome!
No, I sold my Litecoin. I kind of lost faith.. when the last time the bubble burst, everything lost value way more than Bitcoin did. Even Charlie Lee abandoned the project for years. He only moved back when the price suddenly spiked. I got it because of the 'Bitcoin's silver' but I don't believe that anymore. Especially with other competitors like Dash, Bitcoin Cash, etc. it is becoming less and less clear what Litecoin's purpose really is.
I sold my LTC for $30 each at the beginning of the year and got BTC for it. Then BTC went up big time, and now my value is a lot more than if I had just held LTC. So I'm happy. I've learned that in the end, Bitcoin is what matters most.
Also... we always need a bigger spaceship. How else will we moon, with this many people wanting to moon?!
That's got to be a great post header for a future debate!
"Best way to get to the moon? Millennium Falcon or Bitcoin?"
Good deal on your LTC! I bought at the top of the market a while back for more than it's current value, but offloaded at a loss for the exact same reasons as yourself. Strangely enough, I also bought into Dash so it's not such a sad story after all!
I think Vertcoin has to have it's day at some point. It just needs more belief from a wider audience and more articles written about it to highlight that it actually does what LTC and BTC do, but is GPU mined so less susceptible to centralised control.
I say that but halving just took place 2 days ago and it's getting quite tough to mine without a proper rig already. Is still possible on most gaming rigs though.
Vertcoin seems like a good project, but what bugs me is that people were excited about how asicproof it was years ago too. And that didn't lead to anything huge either. Maybe this time it will be different. I just don't know which digital currency to pick.. like the non utility ones, the real currency ones. Bitcoin seems the one that has the standing. All the others, there's just so many, I wonder if all of them can truly survive into the future. I wouldn't be surprised if we ended up with half a dozen 'currency'-coins that are huge, and all of the other ones being super tiny and failing. After all, people want to be able to talk about things in the same prices generally.
Vertcoin seems to have a good community though and is very popular and it did an amazing run, so what do I know :)
Crypto is madness..
I think if you want to mine profitably, you shouldn't mine the most profitable coin of the day. Instead look for a new project that is good, then mine that the first few days and hold on to them for a year. If the project is really good, maybe you got some of that really easy to mine crypto
Thinking back on our conversation, I just came across this video by Julian Hosp (TenX) who talks about the issue of wether the price of crypto is the same as the value of crypto.
Not trying to make any point here but as you said you thought it was interesting I thought you might appreciate his viewpoints too!