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Cc: Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>,
	"Kenshiro \[\]" <tensiam@hotmail.com>
Subject: Re: [bitcoin-dev] Secure Proof Of Stake implementation on Bitcoin
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> On Jul 18, 2019, at 20:45, ZmnSCPxj <ZmnSCPxj@protonmail.com> wrote:
>=20
> Good morning Kenshiro,
>=20
>=20
> Sent with ProtonMail Secure Email.
>=20
> =E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90 Original M=
essage =E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90=E2=80=90
>> On Thursday, July 18, 2019 11:50 PM, Kenshiro [] <tensiam@hotmail.com> wr=
ote:
>>=20
>> Hi all,
>>=20
>>>>>  A 51% attack under proof-of-work is only possible, in general, if som=
e singular entity were able to have physical control of almost 50%, or some s=
uch close number, of the globe, simply due to the fact that energy availabil=
ity is somewhat distributed over the globe.
>>=20
>> Mining is not only about the energy sources, individual miners spread aro=
und the globe can join big mining pools, and these mining pools could be hac=
ked to participate in a 51% attack. Some governments (or other groups) could=
 plan this type of attack if it's in their interest.=20
>>=20
>> If you look at this graph you will see that controlling 4 mining pools co=
uld be enough:
>>=20
>> https://www.blockchain.com/en/pools
>=20
> Pools only have short-term power in that they can only temporarily attack t=
he coin until miners notice and then voluntarily leave.

But also long term economic power, since leaving implies a lower proportiona=
l hash power, until another comparably-sized pool exists, but this is not th=
e case when there is a majority hash power pool, which is economically inevi=
table until the majority miner starts censoring.

https://github.com/libbitcoin/libbitcoin-system/wiki/Pooling-Pressure-Risk

> Pools are themselves still subject to economic forces, and censored transa=
ctions can raise their fee until competing pools arise which do not censor (=
and which would have an economic advantage in taking the higher fee offered)=
.
> The invisible hand abides.

This is why PoW is necessary, and why fee-based confirmation is necessary. I=
t=E2=80=99s the only economically-rational way that the censor can be overpo=
wered. But keep in mind the only net cost to the censor is the *premium* on c=
ensored transactions.

https://github.com/libbitcoin/libbitcoin-system/wiki/Censorship-Resistance-P=
roperty

> Further, the correct solution is to support the development and deployment=
 of better pool<->miner protocols, such as BetterHash.
> So we should instead focus on helping Matt Corallo et al. in this work, th=
an proposing a hard fork to proof-of-stake which will be strongly opposed ec=
onomically.

While this proposal may introduce engineering improvements, it does not chan=
ge any of the economic forces at work and therefore does not mitigate this i=
ssue. The pool controls the payout, and therefore retains power over tx sele=
ction regardless of who selects and grinds on them.

https://github.com/libbitcoin/libbitcoin-system/wiki/Decoupled-Mining-Fallac=
y

>>>>>  Secondly: change of hashing algorithm is pointless in the highly unli=
kely case of a 51% attack, because what matters is control of energy sources=
.
>>=20
>> As far as I know, if the PoW algorithm changes to an ASIC resistant algor=
ithm that can only run in GPUs or CPUs, the hashing power would be much more=
 distributed at least until someone creates a new ASIC for that algorithm. T=
here are many GPUs around the globe, but not so many ASIC miners right?
>=20
> GPUs still require electricity to run, and are far easier to source.
> Hash change simply means that those with control of energy sources can eas=
ily purchase the needed hardware from many sources (as opposed to ASICs whic=
h are only sourced from a few places).
> So a hash change will only affect things temporarily, and it will still se=
ttle to the existing distribution of mining hashpower.

Yes

https://github.com/libbitcoin/libbitcoin-system/wiki/Proof-of-Work-Fallacy

>>>>> Nothing can be more efficient than proof-of-work, and the proof-of-sta=
ke delusion is simply a perpetual motion machine that attempts to get someth=
ing from nothing.
>>=20
>> As time passes and more PoS coins appears, including big projects like Et=
hereum, we will see if it's delusional or not =F0=9F=99=82
>>=20
>> I forgot one, if you do a 51% attack to a PoS coin you know that all your=
 staking funds will be burned. In a PoW coin you don't lose your miners and c=
an use them to mine or attack another coin with the same algorithm.=20
>=20
> I already told you that it is always possible to get around this: leverage=
 by use of short options.
> Short the coin to attack, then perform your attack by censorship.
> Coin value will drop due to reduced utility of the coin, then you reap the=
 rewards of the short option you prepared beforehand.
> By this, you can steal the entire marketcap of the coin.

Yes, and of course stealing the value in the chain is not the only way to pr=
ofit from the destruction of its usefulness. PoS offers no defense against t=
he primary threat to permissionless money.

https://github.com/libbitcoin/libbitcoin-system/wiki/Fedcoin-Objectives

> Then you still have the economic power (plus what you managed to steal), w=
hich you can then use to take over another proof-of-stake coin, regardless o=
f whether it uses the same proof-of-stake algorithm or not.
>=20
> At least mining hardware are physical hardware and subject to deprecation o=
ver time.

Capital cost isn=E2=80=99t the source of this defense, it=E2=80=99s the abil=
ity to introduce as much power as necessary to evict the censor, paid for by=
 the rising premium on censored txs. Without this the majority miner can min=
e indefinitely and be the most profitable. This is of no consequence to conf=
irmation until censorship begins.

In PoS, once a miner achieves necessary stake (also profitably) it can censo=
r indefinitely. It=E2=80=99s a big difference.

https://github.com/libbitcoin/libbitcoin-system/wiki/Cryptodynamic-Principle=
s

>>>>>  You must understand that removing the chain tip puts the transactions=
 in that block back in the mempool, before we ever start following the longe=
r chain.
>>=20
>> Yep but it could make double spend attacks very easy. People would know w=
hat is happening and could send the money to themselves with a higher fee to=
 recover it. Many people would lose money with that.
>>=20
>> To fix that problem with a PoS algorithm, some community-guided initiativ=
e could get all transactions of both chains and create a merged chain with a=
 hard fork so double spends attacks would not be possible. This could be som=
ewhat slow, maybe the network is stopped a few days, but in the end no one w=
ill see money disappear from their wallet, much better than pray that your p=
ayer doesn't send the money back ato himself.
>=20
> This happens every day in Bitcoin, and nobody particularly cares.
> You just wait for confirmations that in practice are impossible for some o=
rphaned chain to persist.

Yes, and of course the same scenario as described above can also occur with P=
oW. Gather up the victims, invest in mining a stronger chain, get the profit=
 from the mining investment, and get your money back.

>>>>>  This solution is worse than the problem, and speeds up the dominance o=
f large stakers over the coin, trivially letting someone with the largest st=
ake in the coin grow their stake even faster.
>>=20
>> I think it's very evident that the rich guy earn coins faster in both alg=
orithms.=20
>>=20
>> In PoS if you have 51% of the coins and use them to stake, you make 51% o=
f the blocks, I don't see any problem with that. If you decide to do a 51% a=
ttack, stopping doing blocks in the main chain to force the others to follow=
 your "private" chain, well, you know for sure your funds will be burned in t=
he next hard fork.
>=20
> But your proposal of being non-linear on the size of the stake means that i=
f you have 51% of the coins, if you put them in a single stake UTXO you pote=
ntially get 99.999% of the blocks, which is ***much worse***.

It=E2=80=99s sort of like Bitcoin=E2=80=99s nonlinear hash power to hash rat=
e ratio, on steroids. The nonlinearity hasn=E2=80=99t been shown to be avoid=
able, but certainly something to minimize.

> Just admit that you have no real solution to knowing how much every entity=
 controls of your coin.

>>>>>  No, I think it will be very successful in ensuring that smart individ=
uals will spend their time actually doing things that benefit the economy an=
d technology instead of wasting their time being distracted with Ethereum an=
d proof-of-stake.
>>=20
>> Ok, we the PoS advocates will let the smart people to work in more diffic=
ult issues like finding reasons to justify the energy waste and heat generat=
ion of PoW when Bitcoin price reaches 1 million dollars =F0=9F=98=89
>=20
> We hope to see you back soon after having learned your lesson.

Let=E2=80=99s all be nice. But WRT energy waste... see last paragraph for a c=
onsideration of waste in relation to any other monetary options.

https://github.com/libbitcoin/libbitcoin-system/wiki/Energy-Waste-Fallacy

e

> Regards,
> ZmnSCPxj

--Apple-Mail-32167C27-5C92-477F-95C2-1AAF1459D863
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<html><head><meta http-equiv=3D"content-type" content=3D"text/html; charset=3D=
utf-8"></head><body dir=3D"auto"><div dir=3D"ltr"></div><div dir=3D"ltr"><br=
></div><div dir=3D"ltr">On Jul 18, 2019, at 20:45, ZmnSCPxj &lt;<a href=3D"m=
ailto:ZmnSCPxj@protonmail.com">ZmnSCPxj@protonmail.com</a>&gt; wrote:<br><br=
></div><blockquote type=3D"cite"><div dir=3D"ltr"><span>Good morning Kenshir=
o,</span><br><span></span><br><span></span><br><span>Sent with ProtonMail Se=
cure Email.</span><br><span></span><br><span>=E2=80=90=E2=80=90=E2=80=90=E2=80=
=90=E2=80=90=E2=80=90=E2=80=90 Original Message =E2=80=90=E2=80=90=E2=80=90=E2=
=80=90=E2=80=90=E2=80=90=E2=80=90</span><br><span>On Thursday, July 18, 2019=
 11:50 PM, Kenshiro [] &lt;<a href=3D"mailto:tensiam@hotmail.com">tensiam@ho=
tmail.com</a>&gt; wrote:</span><br><span></span><br><blockquote type=3D"cite=
"><span>Hi all,</span><br></blockquote><blockquote type=3D"cite"><span></spa=
n><br></blockquote><blockquote type=3D"cite"><blockquote type=3D"cite"><bloc=
kquote type=3D"cite"><blockquote type=3D"cite"><span>&nbsp;A 51% attack unde=
r proof-of-work is only possible, in general, if some singular entity were a=
ble to have physical control of almost 50%, or some such close number, of th=
e globe, simply due to the fact that energy availability is somewhat distrib=
uted over the globe.</span><br></blockquote></blockquote></blockquote></bloc=
kquote><blockquote type=3D"cite"><span></span><br></blockquote><blockquote t=
ype=3D"cite"><span>Mining is not only about the energy sources, individual m=
iners spread around the globe can join big mining pools, and these mining po=
ols could be hacked to participate in a 51% attack. Some governments (or oth=
er groups) could plan this type of attack if it's in their interest.&nbsp;</=
span><br></blockquote><blockquote type=3D"cite"><span></span><br></blockquot=
e><blockquote type=3D"cite"><span>If you look at this graph you will see tha=
t controlling 4 mining pools could be enough:</span><br></blockquote><blockq=
uote type=3D"cite"><span></span><br></blockquote><blockquote type=3D"cite"><=
span><a href=3D"https://www.blockchain.com/en/pools">https://www.blockchain.=
com/en/pools</a></span><br></blockquote><span></span><br><span>Pools only ha=
ve short-term power in that they can only temporarily attack the coin until m=
iners notice and then voluntarily leave.</span><br></div></blockquote><div><=
br></div><div>But also long term economic power, since leaving implies a low=
er proportional hash power, until another comparably-sized pool exists, but t=
his is not the case when there is a majority hash power pool, which is econo=
mically inevitable until the majority miner starts censoring.</div><div><br>=
</div><div><a href=3D"https://github.com/libbitcoin/libbitcoin-system/wiki/P=
ooling-Pressure-Risk">https://github.com/libbitcoin/libbitcoin-system/wiki/P=
ooling-Pressure-Risk</a></div><br><blockquote type=3D"cite"><div dir=3D"ltr"=
><span>Pools are themselves still subject to economic forces, and censored t=
ransactions can raise their fee until competing pools arise which do not cen=
sor (and which would have an economic advantage in taking the higher fee off=
ered).</span><br><span>The invisible hand abides.</span><br></div></blockquo=
te><div><br></div><div>This is why PoW is necessary, and why fee-based confi=
rmation is necessary. It=E2=80=99s the only economically-rational way that t=
he censor can be overpowered. But keep in mind the only net cost to the cens=
or is the *premium* on censored transactions.</div><div><br></div><div><a hr=
ef=3D"https://github.com/libbitcoin/libbitcoin-system/wiki/Censorship-Resist=
ance-Property">https://github.com/libbitcoin/libbitcoin-system/wiki/Censorsh=
ip-Resistance-Property</a></div><br><blockquote type=3D"cite"><div dir=3D"lt=
r"><span>Further, the correct solution is to support the development and dep=
loyment of better pool&lt;-&gt;miner protocols, such as BetterHash.</span><b=
r><span>So we should instead focus on helping Matt Corallo et al. in this wo=
rk, than proposing a hard fork to proof-of-stake which will be strongly oppo=
sed economically.</span></div></blockquote><div><br></div><div>While this pr=
oposal may introduce engineering improvements, it does not change any of the=
 economic forces at work and therefore does not mitigate this issue. The poo=
l controls the payout, and therefore retains power over tx selection regardl=
ess of who selects and grinds on them.</div><div><br></div><div><a href=3D"h=
ttps://github.com/libbitcoin/libbitcoin-system/wiki/Decoupled-Mining-Fallacy=
">https://github.com/libbitcoin/libbitcoin-system/wiki/Decoupled-Mining-Fall=
acy</a></div><br><blockquote type=3D"cite"><div dir=3D"ltr"><blockquote type=
=3D"cite"><blockquote type=3D"cite"><blockquote type=3D"cite"><blockquote ty=
pe=3D"cite"><span>&nbsp;Secondly: change of hashing algorithm is pointless i=
n the highly unlikely case of a 51% attack, because what matters is control o=
f energy sources.</span><br></blockquote></blockquote></blockquote></blockqu=
ote><blockquote type=3D"cite"><span></span><br></blockquote><blockquote type=
=3D"cite"><span>As far as I know, if the PoW algorithm changes to an ASIC re=
sistant algorithm that can only run in GPUs or CPUs, the hashing power would=
 be much more distributed at least until someone creates a new ASIC for that=
 algorithm. There are many GPUs around the globe, but not so many ASIC miner=
s right?</span><br></blockquote><span></span><br><span>GPUs still require el=
ectricity to run, and are far easier to source.</span><br><span>Hash change s=
imply means that those with control of energy sources can easily purchase th=
e needed hardware from many sources (as opposed to ASICs which are only sour=
ced from a few places).</span><br><span>So a hash change will only affect th=
ings temporarily, and it will still settle to the existing distribution of m=
ining hashpower.</span></div></blockquote><div><br></div><div>Yes</div><div>=
<br></div><div><a href=3D"https://github.com/libbitcoin/libbitcoin-system/wi=
ki/Proof-of-Work-Fallacy">https://github.com/libbitcoin/libbitcoin-system/wi=
ki/Proof-of-Work-Fallacy</a></div><br><blockquote type=3D"cite"><div dir=3D"=
ltr"><blockquote type=3D"cite"><blockquote type=3D"cite"><blockquote type=3D=
"cite"><blockquote type=3D"cite"><span>Nothing can be more efficient than pr=
oof-of-work, and the proof-of-stake delusion is simply a perpetual motion ma=
chine that attempts to get something from nothing.</span><br></blockquote></=
blockquote></blockquote></blockquote><blockquote type=3D"cite"><span></span>=
<br></blockquote><blockquote type=3D"cite"><span>As time passes and more PoS=
 coins appears, including big projects like Ethereum, we will see if it's de=
lusional or not =F0=9F=99=82</span><br></blockquote><blockquote type=3D"cite=
"><span></span><br></blockquote><blockquote type=3D"cite"><span>I forgot one=
, if you do a 51% attack to a PoS coin you know that all your staking funds w=
ill be burned. In a PoW coin you don't lose your miners and can use them to m=
ine or attack another coin with the same algorithm.&nbsp;</span><br></blockq=
uote><span></span><br><span>I already told you that it is always possible to=
 get around this: leverage by use of short options.</span><br><span>Short th=
e coin to attack, then perform your attack by censorship.</span><br><span>Co=
in value will drop due to reduced utility of the coin, then you reap the rew=
ards of the short option you prepared beforehand.</span><br><span>By this, y=
ou can steal the entire marketcap of the coin.</span><br></div></blockquote>=
<div><br></div><div><span style=3D"background-color: rgba(255, 255, 255, 0);=
">Yes, and of course stealing the value in the chain is not the only way to p=
rofit from the destruction of its usefulness. PoS offers no defense against t=
he primary threat to permissionless money.</span></div><div><span style=3D"b=
ackground-color: rgba(255, 255, 255, 0);"><br></span></div><div><a href=3D"h=
ttps://github.com/libbitcoin/libbitcoin-system/wiki/Fedcoin-Objectives">http=
s://github.com/libbitcoin/libbitcoin-system/wiki/Fedcoin-Objectives</a></div=
><br><blockquote type=3D"cite"><div dir=3D"ltr"><span>Then you still have th=
e economic power (plus what you managed to steal), which you can then use to=
 take over another proof-of-stake coin, regardless of whether it uses the sa=
me proof-of-stake algorithm or not.</span><br><span></span><br><span>At leas=
t mining hardware are physical hardware and subject to deprecation over time=
.</span></div></blockquote><div><br></div><div>Capital cost isn=E2=80=99t th=
e source of this defense, it=E2=80=99s the ability to introduce as much powe=
r as necessary to evict the censor, paid for by the rising premium on censor=
ed txs. Without this the majority miner can mine indefinitely and be the mos=
t profitable. This is of no consequence to confirmation until censorship beg=
ins.</div><div><br></div><div>In PoS, once a miner achieves necessary stake (=
also profitably) it can censor indefinitely. It=E2=80=99s a big difference.<=
/div><div><br></div><div><a href=3D"https://github.com/libbitcoin/libbitcoin=
-system/wiki/Cryptodynamic-Principles">https://github.com/libbitcoin/libbitc=
oin-system/wiki/Cryptodynamic-Principles</a></div><div><br></div><blockquote=
 type=3D"cite"><div dir=3D"ltr"><blockquote type=3D"cite"><blockquote type=3D=
"cite"><blockquote type=3D"cite"><blockquote type=3D"cite"><span>&nbsp;You m=
ust understand that removing the chain tip puts the transactions in that blo=
ck back in the mempool, before we ever start following the longer chain.</sp=
an><br></blockquote></blockquote></blockquote></blockquote><blockquote type=3D=
"cite"><span></span><br></blockquote><blockquote type=3D"cite"><span>Yep but=
 it could make double spend attacks very easy. People would know what is hap=
pening and could send the money to themselves with a higher fee to recover i=
t. Many people would lose money with that.</span><br></blockquote><blockquot=
e type=3D"cite"><span></span><br></blockquote><blockquote type=3D"cite"><spa=
n>To fix that problem with a PoS algorithm, some community-guided initiative=
 could get all transactions of both chains and create a merged chain with a h=
ard fork so double spends attacks would not be possible. This could be somew=
hat slow, maybe the network is stopped a few days, but in the end no one wil=
l see money disappear from their wallet, much better than pray that your pay=
er doesn't send the money back ato himself.</span><br></blockquote><span></s=
pan><br><span>This happens every day in Bitcoin, and nobody particularly car=
es.</span><br><span>You just wait for confirmations that in practice are imp=
ossible for some orphaned chain to persist.</span></div></blockquote><div><b=
r></div><div>Yes, and of course the same scenario as described above can als=
o occur with PoW. Gather up the victims, invest in mining a stronger chain, g=
et the profit from the mining investment, and get your money back.</div><br>=
<blockquote type=3D"cite"><div dir=3D"ltr"><blockquote type=3D"cite"><blockq=
uote type=3D"cite"><blockquote type=3D"cite"><blockquote type=3D"cite"><span=
>&nbsp;This solution is worse than the problem, and speeds up the dominance o=
f large stakers over the coin, trivially letting someone with the largest st=
ake in the coin grow their stake even faster.</span><br></blockquote></block=
quote></blockquote></blockquote><blockquote type=3D"cite"><span></span><br><=
/blockquote><blockquote type=3D"cite"><span>I think it's very evident that t=
he rich guy earn coins faster in both algorithms.&nbsp;</span><br></blockquo=
te><blockquote type=3D"cite"><span></span><br></blockquote><blockquote type=3D=
"cite"><span>In PoS if you have 51% of the coins and use them to stake, you m=
ake 51% of the blocks, I don't see any problem with that. If you decide to d=
o a 51% attack, stopping doing blocks in the main chain to force the others t=
o follow your "private" chain, well, you know for sure your funds will be bu=
rned in the next hard fork.</span><br></blockquote><span></span><br><span>Bu=
t your proposal of being non-linear on the size of the stake means that if y=
ou have 51% of the coins, if you put them in a single stake UTXO you potenti=
ally get 99.999% of the blocks, which is ***much worse***.</span><br></div><=
/blockquote><div><br></div><div><span style=3D"background-color: rgba(255, 2=
55, 255, 0);">It=E2=80=99s sort of like Bitcoin=E2=80=99s nonlinear hash pow=
er to hash rate ratio, on steroids. The nonlinearity hasn=E2=80=99t been sho=
wn to be avoidable, but certainly something to minimize.</span></div><br><bl=
ockquote type=3D"cite"><div dir=3D"ltr"><span>Just admit that you have no re=
al solution to knowing how much every entity controls of your coin.</span></=
div></blockquote><br><blockquote type=3D"cite"><div dir=3D"ltr"><blockquote t=
ype=3D"cite"><blockquote type=3D"cite"><blockquote type=3D"cite"><blockquote=
 type=3D"cite"><span>&nbsp;No, I think it will be very successful in ensurin=
g that smart individuals will spend their time actually doing things that be=
nefit the economy and technology instead of wasting their time being distrac=
ted with Ethereum and proof-of-stake.</span><br></blockquote></blockquote></=
blockquote></blockquote><blockquote type=3D"cite"><span></span><br></blockqu=
ote><blockquote type=3D"cite"><span>Ok, we the&nbsp;PoS advocates will let t=
he smart people to work in more difficult issues like finding reasons to jus=
tify the energy waste and heat generation of PoW when Bitcoin price reaches 1=
 million dollars =F0=9F=98=89</span><br></blockquote><span></span><br><span>=
We hope to see you back soon after having learned your lesson.</span><br></d=
iv></blockquote><div><br></div><div>Let=E2=80=99s all be nice. But WRT energ=
y waste... see last paragraph for a consideration of waste in relation to an=
y other monetary options.</div><div><br></div><div><a href=3D"https://github=
.com/libbitcoin/libbitcoin-system/wiki/Energy-Waste-Fallacy">https://github.=
com/libbitcoin/libbitcoin-system/wiki/Energy-Waste-Fallacy</a></div><div><br=
></div><div>e</div><br><blockquote type=3D"cite"><div dir=3D"ltr"><span>Rega=
rds,</span><br><span>ZmnSCPxj</span><br></div></blockquote></body></html>=

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