74

Bitcoin was not designed to only be mineable with specialized hardware. When Bitcoin was created in 2009, ASIC miners did not exist, SHA256d ASICs did not exist. Even GPU mining software did not exist because mining was a completely new thing. Bitcoin's difficulty was low enough for Bitcoin to be CPU mined on a laptop. However over time, as more and more ...


15

“Centralization” is now a word constantly repeated but is one that, generally speaking, no one tries to define accurately. ---Alexis de Tocqueville, Democracy in America, Vol.1, Part 1, ch.5. Lightning Network channels will naturally tend to form along the paths of economic activity. If you assume (as I do) that most economic activity in Bitcoin ...


14

A hard fork is by definition one that does not get solved. At least not by the rules of the system, as it is essentially an incompatibility between the rules assumed by separate nodes. But think about what can cause such a thing: An incorrect (=not identical to the rest of the network) implementation forks off. In this case it will always certainly be ...


13

Asking how to prevent the mining industry from being centralized into places with low electricity costs is like asking how to prevent the shipping industry from being centralized into cities that are on the coast. Both industries will tend to thrive in places where the profit margins are highest...and there's no profit margin in building a port in a land-...


13

The idea that Lightning will reduce the amount of fees going to miners is very common, and we probably won't know for sure until we actually try it. However, I'll try to provide some arguments as to why I don't believe it'll result in a drop in fees for miners, let alone a drop in hashrate. I think the idea that Lightning will drain transaction fees from ...


12

GPU-mineable cryptos are arguably more decentralized. Sure, but in a bad way. Say you want to attack or compromise bitcoin. You have to buy ASICs to do it. You could use GPUs or CPUs, but you would be at a tremendous disadvantage. The honest guys would win. So you have to invest in all these ASICs to attack bitcoin. And if you succeed, you turn your ...


11

Ripple solves the double spend problem by consensus. Everyone who wants to run a server on the Ripple network picks a set of validators and tries to reach a consensus with them on which transactions are valid. The Ripple equivalent of Bitcoin's 51% attack would be if some group obtained control over enough validators that the consensus process failed. ...


10

The only systems which benefit from being distributed are ones that display the property of being "embarrassingly parallel", or some approximation of it. Tasks which do not require a significant amount of data to be transmitted between operating systems, or those which don't require a significant amount of coordination fit this description well. Typically ...


10

Proof of work does not create trust. It creates incentive. Miners are paid if their block is eventually part of the main version of history ("blockchain") that the network accepts. They must irrecoverably burn electricity in order to create blocks, which costs them money; money they only get paid for if their block "wins". These factors together mean that ...


8

This is a valid concern and I think nobody can give you a clear answer here. We'll just have to wait how it evolves and how people react; it is an unclear future. There are some ideas about changing the proof-of-work algorithm to make mining pools not that profitable, but the effects of such implementations could be various. I highly recommend this article ...


8

The problem arises from the uneven propagation of information in the network. While the propagation of small blocks is fast, i.e., every miner gets to know a new block approximately at the same time, this is no longer true for large blocks. Large blocks take a lot of time to be forwarded to every node in the network, since this includes miners, these miners ...


8

Speaking as someone who has worked on a blockchain project for a bank, I can tell you that banks are interested for several reasons. Banks know they are ripe for disruption Due to a combination of heavy regulation and incumbency (mixed with a variable level of collusion), banks have remained relatively protected from the technological disruption that has ...


8

But then the next problem is transaction order and validity to prevent double spending. I don't understand completely why a timestamp can't just be included for every broadcasted transaction, and the transaction could have the correct, universally agreed upon time, and each ledger gets sorted chronologically. Is this because it requires a centralized system ...


7

Nobody keeps track of all the computers in the network, or at least not as part of core network functionality. There are sites that attempt to track nodes (such as https://bitnodes.21.co/), but they are not needed in order for Bitcoin to function, and are not utilized by nodes. Each node only knows about the nodes it is connected to. Therefore, to ...


7

If you want to route a lightning payment via your node, your channel(s) must hold at least a balance of the to-be-routed amount, right? If not, your node by definition cannot be chosen as a potential routing path. yes this is true. If you don't have enough bitcoin to forward you cannot forward a payment. So, in the future, when we dream about mass ...


6

One possibility among others to encourage mining decentralization is to rely on already owned/amortized hardware to mine the currency. Most people will not by ASICs to mine bitcoin, but many already have a computer, so the jump to mining is easier if that computer is somwwhat plausible as a miner. For bitcoin, ASICs are so far ahead that mining with a ...


6

Yes, independently operated nodes help decentralization more than the same number of nodes operated by a single entity. That's basically the definition of "decentralization" in this context. That is not to say that a single organization running multiple full nodes does not add to overall network health, since those nodes still participate in relaying ...


5

TL;DR yes, it's still decentralized, no it isn't perfectly anonymous. From the Darkcoin (now Dash) Wikipedia: "It adds privacy to transactions by combining identical inputs from multiple users into a single transaction with several outputs. Due to the identical inputs, transactions usually cannot be directly traced, obfuscating the flow of funds." The nodes ...


5

Stealing directly from Satoshi's original paper: Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-...


5

The core concept has always been accept the largest blockchain that passes the predetermined proof of work tests. Hard forks like the one that occurred in March happen as a result of some software in the p2p ecosystem having a different understanding of what the legitimate blockchain should be. This reality is ok with all distributive networks to some extent ...


5

According to Ripple: Ripple for Financial Institutions Financial institutions, network operators and regulators play critical roles scaling and providing stability to payment systems. Ripple enhances the existing payment stack, offering real-time settlement infrastructure at the foundation." https://ripple.com/integrate/ Given that financial institutions, ...


5

A bitcoin node could be down or (extremely rarely as you say) all its peers could be down... but the bitcoin network could not be considered down; you could still synchronize by connecting to different peers manually using fallback nodes or even have your own list of nodes. The only way for the bitcoin network to be down is if all the nodes+miners are down ...


5

The DAO's service provider would hire the person, not the DAO. The contract would be with the service provider, and the service provider could then sue the agent if the task wasn't completed as the specified. The DAO does have to carefully arrange things so its service providers can't betray it. One way to do that is to have the DAO pay the service provider ...


5

If anything, I believe the ability to buy insurance on cryptocurrency investments would speed up adoption by making it less risky to traditional investors. Simply having insurance available doesn't mandate that everyone buy it; we'd all still have the choice whether we opt-in or not. Traditional investments tend to have insurance policies on the insurance ...


5

But then the next problem is transaction order and validity to prevent double spending. I don't understand completely why a timestamp can't just be included for every broadcasted transaction, and the transaction could have the correct, universally agreed upon time, and each ledger gets sorted chronologically. Is this because it requires a centralized system ...


5

ASIC resistance is a buzzword thrown around by scammers trying to sell you what is actually impossible as well as a bad thing. Pool resistance doesn't sound much better. https://download.wpsoftware.net/bitcoin/asic-faq.pdf


5

To expand on @Jannes’ answer: ‘ASIC resistance’ is not technically possible in the absolute sense. No matter the algorithm, it is theoretically possible to create some hardware that can run the algorithm more efficiently than a general purpose device (such as a GPU). What ASIC resistance does accomplish is making situations in which creating a more ...


5

If most users are honest, then they would voluntarily enforce the prohibition to rewrite the blockchain. Without proof of work, this is just not possible. There would be no limit to the number of blocks that could be created at about the same time, there could be thousands of them created every minute. Different servers might receive them in different ...


4

They basically let you do the same thing. The differences are that: Counterparty relies on the XCP currency whereas colored coins work directly on Bitcoin, so you don't have to get price exposure or volatility risk with a new currency when you use colored coins. Counterparty uses a monolithic protocol where breaking changes are introduced about every 2 ...


4

The main difference between these protocols is how they associate and store data about asset ownership. Colored coins at least as implemented by Coinprism, put data in the form of a transaction output that must be retained in later transactions involving the associated standard transaction outputs (spending money). If a colored coin is handled by a wallet ...


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