Social elements

Social consensus mechanism Corey Fields March 5, 2016

Decentralized consensus

Economy of scale

A Pen Should Write

MIT March 4, 2016

I can use a pen

to defend myself

I can use a pen

to smoke with

But pen manufacturers

aren’t going to lose two

years talking about how

to make pens into better

weapons or pipes

The essential feature of a pen is the

ability to write.

Writing is the sine qua non of a pen

Bitcoin has a sine qua non as well

Decentralized consensus

Decentralized consensus is the only

essential feature of Bitcoin

A decentralized consensus allows

for a currency and a distributed time

stamp ledger. It is why Bitcoin is

trustless and requires no third party.

Next to that, nothing else matters.

Anonymity. Smart contracts. Block

size. Miners. Wallets. Nodes.

Lately, however there’s been this

Block Size / Scaling debate

You hear things like “investors want

speed”, “customers want cheap

transactions”, “just go to 2MB

blocks”

Bigger blocks solve everything!

Yeah right.

This Block Size / Scaling debate is

bunk.

It is a proxy war

This an all-out battle over the most

dangerous type of centralization

And if Bitcoin becomes centralized

in this dangerous way, it is no

longer censorship resistant.

The dream is gone.

We have nothing.

So what’s going on?

“Bitcoin is as decentralized (an

institution) as possible”

– Gavin Andresen

“You have centralization on the low

end and the high end”

– Jeff Garzik 2015 Scaling Bitcoin

If the blocksize is pushed upward,

then propagation times are going

to increase, fewer individuals can

afford to mine, and there are

centralization risks.

If the blocksize is pushed

downward, fees will increase, low

cost transactions become

impossible and are forced to move

off chain, and there are

centralization risks

“(Centralization at the 1MB end) isn’t

a particularly dangerous type of

centralization”

– Peter Todd LTB 2015

So what is this dangerous type of

centralization?

Some say it’s the large mining pools

Hashrate Distribution 11/2/15

Some say it is off-blockchain

settlements like Circle or Coinbase.

Hashrate Distribution 11/2/15

But these are all subscriber-based

centralizations. A mining pool does

bad things we switch to another

instantly.

The bad dangerous centralization

isn’t mentioned in the scholarly /

journal articles.

Bad centralization =

The owners of the mining hardware

They are centralizing, but how

much?

Measuring decentralization

is difficult

Measuring Bitcoin decentralization

is impossible?

Is it kosher for Bitcoin to even use

the word ‘decentralized’ at all?

A centralized consensus is an

oxymoron like saying civil war or

jumbo shrimp.

Decentralization has nothing to do

with numbers of nodes, hashrate,

bandwidth, etc. It cannot be

accomplished with hardware or

software.

Decentralization requires

counting noses (humans)

Decentralization requires

limiting each nose to one vote

Bitcoin does neither

In early 2013, almost everyone in the

Meetup groups were miners. Now

none of them are. And no software

or hardware solution is going to

reverse this.

Folks who own massive amounts of

mining hardware opt-in. We cannot

“vote” to remove them. If they

centralize or collude, Bitcoin is

centralized.

The Ugly Axiom:

In any system, one can

assure anonymity or

decentralization, but not

both. The two are

inversely proportional.

Inversely Proportional

Even if blocks are lowered to 1k, big

miners still benefit from massive

economies of scale & access to chip

foundries. So centralization may be

inevitable.

To assume that miners in China are

not colluding with chip

manufactures in China to print cash

is just utter foolishness.

Even staying with 1MB blocks

means hardware miners will

continue to centralize exponentially.

Even if SegWit and Lightning

Network worked today, mining will

continue to centralize exponentially.

They just make it cheaper for the big

miners to centralize.

Dear engineers,

Not everything can be solved with

more technology

No hardware or software solution is

going to return us back to 2013

when most of the mining was done

by individuals with small rigs.

And switching to 2MB blocks means

we will get centralize even faster

This is dangerous.

It appears that Satoshi made a fatal

mistake.

Satoshi understood that voting

decentralized. But that’s all he

understood about voting.

The only way to decentralize

anything is by voting. Really voting.

It requires identity. And it requires

one person one vote.

Proof of Work is just Proof of

Wealth, and it is broken.

Decentralization can only be

assured if identity is assured.

Real human miners…provably

decentralized, infinitely faster and

infinitely more scalable

Is this possible?

If so, this doesn’t change the most

important type of anonymity

This leaves anonymity of

transactions entirely intact

So, we can either have anonymous

mining, a large unsalable network

and massive centralization or we

can have Satoshi’s dream.

Unless we inject a dose of old

school identity based voting into

mining we cannot use the word

decentralization and we can’t claim

censorship resistance

This would also help with Bitcoin

“governance.”

How long will it take a libertarian

mob to realize that old school

governance has some benefit?

No governing body has ever been as

decentralized as Bitcoin’s

“governance.” That’s bad.

Just ask Satoshi

Day one Satoshi Ran Bitcoin on 50

Machines. Why?

He did it to run 51% attacks on

Bitcoin. And he did lots of them.

Early decentralization terrified him.

He wouldn’t be able to run updates.

He wouldn’t be able to prevent 51%

attacks. The first months (years?) of

Bitcoin it was entirely centralized.

He sacrificed everything to achieve

his final goal. Something that no one

had ever achieved.

Decentralized consensus

From which grows a currency, a

public ledger, a trustless database,

smart contracts, etc.

Satoshi was focused on making a

pen that writes.

Bitcoin isn’t protected by math. It is

protected by us. It is people. It is

social. It requires voting. It is not a

honey badger. It is fragile. Act

accordingly.

My proposed solution is a Conner

Consensus. Pick 1,000 individuals to

do the ‘mining’ without proof of

work. They act as a mining

congress. This gives massive

scaling and massive

decentralization.

Note: All the problems mentioned in this talk apply equally to

Ethereum and every alt coin. It applies even to Proof of Stake, but

the effect is somewhat less severe. Proof of Stake like mining

relies on anonymous control that can centralize.

Twitter: @JamesGDAngelo