Date: Sat, 20 Jul 2019 11:07:14 +0000
To: "Kenshiro []" <tensiam@hotmail.com>
From: ZmnSCPxj <ZmnSCPxj@protonmail.com>
Reply-To: ZmnSCPxj <ZmnSCPxj@protonmail.com>
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Cc: Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] Secure Proof Of Stake implementation on Bitcoin
Precedence: list

Good morning Kenshiro,


>
> >>>=C2=A0For example, if you are capable of disrupting a coin such that i=
ts value is very likely to drop, you can buy short options as leverage.
> Suppose you hold a large stake of coins and know you control a significan=
t fraction, enough that a censorship attack by you will be so disruptive th=
at the coin price will drop.
> You take out a short contract with the contract price at the "hopium" lev=
el others have (say 10% higher), buying enough options that you can cover t=
he current price of your owned stake, plus some more options.
> Suppose you buy, a number of options equal to twice your stake.
>
> Thank you for the explanation, I understand it now. But what percent of B=
TC trades are short options? If everyone is doing short options, the attack=
 is very dangerous as you say, but if only a small percent of trades is don=
e in short options, then it's not a big problem.=C2=A0

It is immaterial, because this is just *one* possible economic attack.
Further leverage can always be had as Bitcoin does not exist in isolation.

>
> And this type of attack could also be done in PoW by evil miners. It's on=
ly one step more, they have to purchase a lot of BTC before the attack, buy=
 many short options and execute the attack. Purchasing 50% of BTC is a prob=
lem because of the price, but that's the same for PoW or PoS.

Miners cannot feasibly take over 50% of energy sources in the world.

>
> >>>=C2=A0Let's suppose there are two big whales in your coin.
> Each of them owns 50% of the total staked value.
> Let's say "wait many blocks" parameter is 100 blocks.
>
> >>>One whale puts all his coin in a single UTXO.
> The other has distributed his stake in 100,000 different UTXOs.
>
> I think there is a misunderstanding here, you forgot to divide the 50% st=
aking weight of the evil whale by 100.000.

No, you have a misunderstanding of your ***own*** system.
You forgot that you indicated that a staking UTXO is banned from adding a n=
ew block for "wait many blocks", as you indicated.
Thus it is immaterial that each tiny stake of the evil whale is tiny: only =
the tiny stakes of the evil whale are in play during the time that the sing=
ular big UTXO by the honest whale is banned.
Thus it has 100% of the stake during those 100 blocks.
The honest whale gets 1 block (with very high probability) and then the evi=
l whale gets the rest of the blocks for 100 blocks.

?Now again, consider that the situation indicates that there are in fact on=
ly two actual stakers, each of whom have 50% of the staked funds, thus ther=
e are no other stakers (even though the evil whale appears to be multiple s=
eparate stakers) because 50% + 50% =3D 100%.
I did indicate "each of them owns 50% of the total staked value", did I not=
?

The rest of your counterargument ***completely forgets*** this, so I will i=
gnore it.
A whale composed of many tiny fishes is still a whale.
It is immaterial that there may exist many small stakers who individually c=
an overpower a tiny stake of the evil whale: the evil whale will still domi=
nate during those times that the honest whale is banned because of your add=
itional rule that "a staker who creates a block is banned from creating ano=
ther block for many blocks": the evil whale simply dominates from having ma=
ny tiny stakes, each of which can be banned with little effect on the actua=
l power of the evil whale over the coin.

> >>>=C2=A0We already know that miners are setting up mines at locations wh=
ere energy is being wasted (e.g. oil well gas flares, putting up solar pane=
ls instead of just letting sunshine pointlessly heat up their roofs, etc.),=
 and channeling the wasted energy into productive activity.
>
> I'm sure a big percent of mining will be done in this way, but if there i=
s still dirty energy like nuclear energy or others is because we can't get =
all the energy we need from clean sources (and that's excluding bitcoin min=
ing). So even being very optimistic about bitcoin mining, it will steal cle=
an energy sources from other human needs which will make us keep using dirt=
y energy. So PoW makes use dirty energy sources in a direct or indirect way=
.

It is immaterial: what matters is the economics.
Dirty energy is dirty because it causes damage to the economy by creating s=
ickness and preventing people from surviving long lives and producing for t=
he economy, destroys ecology and reduces biodiversity (and many products ar=
e derived from the variety of lifeforms available) and so on.
Thus, all energy uses will inevitably move towards cleaner energy sources a=
s competition arises.

>
> >>>=C2=A0Thus, adding more rules is rarely the optimal thing to do.
>
> Proof of Stake is more complex than PoW, so you need to add a few more ru=
les. Of course the rules must be well designed and tested, but as I explain=
ed above there is no problem with the extra rule of giving a great increase=
 in staking weight to coins together in a single UTXO, because there is wai=
t time for each staking deposit.

You have demonstrated no such thing, merely demonstrated your own willful i=
ncompetence in designing protocols.

I will no longer respond.

Regards,
ZmnSCPxj