sipa changed the topic of #bitcoin-wizards to: This channel is for discussing theoretical ideas with regard to cryptocurrencies, not about short-term Bitcoin development | http://bitcoin.ninja/ | This channel is logged. | For logs and more information, visit http://bitcoin.ninja
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<bsm117532>
r0ach: That's an unfortunate view to be be sitting in this channel. ;-)
<Aleph0>
just because its not outsourcable, it doesn't mean it will magically decentralize everything.
<Aleph0>
economies of scale exist regardless of outsourcing.
<r0ach>
yea, I talked to amiller a long time ago. It's a non-solution because it just creates a higher barrier of entry...which just leads to further centralization, and it would be defeated by pools charging a current $10,000 bond for block reward anyway
<bsm117532>
Yeah one needs to lower the barrier to entry -- hence lower or miner-chosen difficulty targets.
<r0ach>
but that's a different issue from unprofitable mining altogether
<amiller>
i like unprofitable mining, memory-hard puzzle like equihash, high variance + jackpot payouts, and (strong) nonoutsourceable puzzles, i think all of those things together are the best long term soluiton
<bsm117532>
If users of a currency are allowed to spend $X in electricity and hardware as a throwaway cost and entry to the system, that's $X cheaper an outsourced miner has to run his operation.
<bsm117532>
s/allowed/willing/
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<Aleph0>
amiller: if mining isnt profitable, why would anyone do it?
<amiller>
Aleph0, same reason people spend $50B a year on lottery tickets, even though that's unprofitable too
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<r0ach>
turning mining into a lottery is really one of the funniest solutions where you just look at it and scratch your head saying, ok, what tricks are the public going to do to reduce variance. They would probably pay you to mine even if no reward is coming in (about half of what you would get with regular payouts), then eventually the big pool strikes it rich and makes a bigger profit
<r0ach>
than you
<bsm117532>
We all spend money on bank fees. If we spent 1/10 as much on mining hardware in our computers and cell phones...
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<bsm117532>
I'm actually really worried about variance. From what I understand, it's a major reason p2pool isn't popular. The smaller the miner, the higher the variance. I'd like to find a way to not have that...
<amiller>
bsm117532, that's because people think it has to be profitable, trying to reduce variance is sort of "stuck in local minima" thinking IMO
<Aleph0>
bsm117532: i have a first hand source on bank fees.
<r0ach>
but anyway, lottery mining woulg probably make things even worse instead of better
<Aleph0>
they are a pittance. the biggest business is lending. bank fees are just there for the ride.
<amiller>
r0ach, i don't think people would buy lottery tickets if they were (justifiably) concerned that they'd get the ticket stolen from them if they won the big prize
<amiller>
r0ach, "probably make things even worse instead of better" <--- it's tricky, i don't know for sure, i think this sort of idea is inherently difficult to validate
<Aleph0>
relying on gamblers to secure your network, is a big gamble. forgive the unavoidable pun.
<r0ach>
I mean, solo mining technically already is lotto mining...
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<amiller>
r0ach, yeah but it's a crappy payout structure.... no consolation prizes, no big jackpot
<bsm117532>
amiller: I do think a better solution is to make it unprofitable.
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<bsm117532>
The cost of mining is a hedge against fraud that should be borne by everyone.
<Aleph0>
so an attacker would just buy a lot of tickets
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<Aleph0>
and potentially attack you AND win the jackpot?
<Aleph0>
that jackpot sounds like a really big deterrent.
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<amiller>
Aleph0, i dont get it
<amiller>
could you rephrase, who is the attacker?
<amiller>
are you saying that the risk of just being attacked by bitcoin malware that steals your jackpot is enough of a concern no one would do it anyway?
<amiller>
or are you saying that a 51% attacker or something would be more motivated by the jackpot than they would be today?
<Aleph0>
amiller: 51%, yes,.
<Aleph0>
you are basically giving them a huge incentive.
<amiller>
i dont see what's the difference, a 51% attacker can earn all the bitcoins anyway
<amiller>
such an attack is expensive, risky, and tanks the value of the coins they'd need to sell off to profit... same deal here
<Aleph0>
more expensive because of costs to acquire tickets?
<amiller>
oh, sorry, i think now i've just been unclear.... i'm using 'tickets' as just a metaphor for mining
<Aleph0>
i see.
<amiller>
all i'm proposing is that you do mining like ordinary (well, plus the nonoutsourceable thing), only now when you find a puzzle solution, the remaining bits of the hash are used to determine a reward size
<amiller>
most likely you get a low value consolation prize, maybe sometimes a medium tier prize, sometimes a big ol' jackpot worth literally hundreds of millions of dollars, just like powerball
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<Aleph0>
amiller: in that case, how do you convince miners to run mining at a loss?
<Aleph0>
recruit all gambling junkies to operate asic farms?
<Aleph0>
this could perhaps work if mining is distributed enough so that everyone has a miner in their phone.
<amiller>
i don't think any one of these components is going to solve the whole problem on its own, rather i think everything would need to work right all at once and this would be a significant change...
<amiller>
lets first suppose that the hardware / economy of scale is mostly out of the picture...
<amiller>
yeah, miners in everyone's phone
<amiller>
i don't think you have to do anything special to force mining to be unprofitable
<amiller>
i think the (non-rational) equilibrium will be unprofitable
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<Aleph0>
amiller: in some ways, it is cheaper to mine than to profitably mine/buy coins
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<Aleph0>
mental costs of going thru AML/KYC are a lot lower if you just plug the phone in, and mine some coins for microtransactions
<amiller>
the payoff structure in bitcoins would be fixed, but the difficulty factor would be scaled by participation
<Aleph0>
vs going through the process just to buy some dust
<amiller>
so, all the people who are willing to play at a loss will drive the EV down
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<bsm117532>
amiller: If mining is nonoutsourceable (e.g. I'm thinking mining a PoW with your tx signature) then submitting a transaction just takes longer when the system is under attack. Why does there have to be a reward at all? (neglecting distribution questions)
<amiller>
i think it's likely that's happening today in a sense, some people mine at a loss, but because of the huge economy of scale there is a pretty powerful contingent of profitable miners
<amiller>
so i guess my hope would be that the economy of scale would be flattened, and then the competition from unrpofitable gamblers would keep the price down so that even the most efficient scaled-up miners are *still* unrpoftiable
<amiller>
another factor to our advantage is that i think there is a differential where small entities and individuals are more wiling to play -EV games, whereas large institutions are more likely only to want +EV ones
<Aleph0>
you don't think this is beginning to sound like altrusim at some point?
<amiller>
no it's obviously not altruism, it's gambling!
<amiller>
whatever the explanation is for why people spend $50B on state lotteries, i think bitcoin could harness that economic energy to have a decentralized system
<Aleph0>
business-wise it would be difficult.
<Aleph0>
state-sanctioned lotteries have a lot of buzz around it.
<bsm117532>
No it's not. People pay tx fees. All businesses do too, as a cost of doing business. They just pay them in a different way...
<Aleph0>
bsm117532: i mean in terms of promotion/marketing/onboarding/etc.
<Aleph0>
one positive thing is that gamblers are quite resourcesful when it comes to getting their fix.
<amiller>
bitcoin has: internet wizard money memes, doge memes, honeybadger of money billboard, anonymous, wikileaks, etc.
<amiller>
plenty of hype!
<amiller>
(i mean... user onboarding materials)
<amiller>
bitcoins destiny isn't just to compete with state monopolies on money creation, but also with state monopolies on lotteries!
<moa>
state lotteries are centralised
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<amiller>
moa..
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<moa>
amiller: how do you keep your loteery 'unprofitable' without centralised inputs?
<instagibbs>
moa, I think the idea is that "Too many" people mine/get tickets, so it's inherently unprofitable.
<moa>
unprofitable relative to some external pricing mechanism supposedly?
<instagibbs>
like bitcoin mining, but too many people mining at a loss
<instagibbs>
maybe he's talking about something else
<moa>
how does the system know that they are at a loss without some input of the external pricing (necessarily centralising)
<amiller>
moa if people are willing to play -EV lotteries,
<amiller>
then the 'competitive equilibrium' mining difficulty is such that the outcome is -EV
<amiller>
like, that would even be the case today, if there were no such thing as asics and economies of scale
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<r0ach>
"But Lee says about these questions of decentralization versus scale, “this kind of stuff, the Chinese people don’t care about. It’s not in the vocabulary. Chinese people don’t grow up thinking about democracy and decentralization and individual freedom and liberty.”"
<r0ach>
ahahahahaha
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<maaku>
r0ach: what's funny?
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<tromp>
his quote from the forbes article
<r0ach>
it is the way the concept of face in China means it's ok to screw over anyone for personal gain except immediate family members, so you have a constant state of art of war vs everyone with deceit everywhere, then occasionally something is said with more honesty than the west
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<maaku>
r0ach: cultural and historical differences. maybe it just shouldn't be surprising that some parts of the world don't treat democracy as an applause light?
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