> Ethereum's energy consumption will be reduced by ~99.95% following The Merge from proof-of-work (PoW) to proof-of-stake (PoS). After The Merge, Ethereum will use dramatically less carbon to be more secure.
How many years has it been, at this point? I distinctly recall "imminent" plans to switch over to PoS as early as 2019.
It’s very healthy to be skeptical. I’m no expert but the current status appears to be a successful test of the merge on a public testnet and an expectation that it will happen on mainnet in the next few months. More details here: https://ethereum.org/en/upgrades/merge/ and a prediction market on the actual date it will happen here: https://polymarket.com/market-group/ethereum-merge-pos
> The Merge, Ethereum will use dramatically less carbon to be more secure.
How is "[using] dramatically less carbon" more secure? What are the security implications?
> Since its inception, Ethereum has aimed to implement a proof-of-stake consensus mechanism, but doing this without sacrificing security and decentralization has taken years of focused research and development.
A rather notable criticism of PoS, and its variations, is that it /does/ sacrifice decentralization to achieve its aims. I know that much smarter people than me have been working on this, and I don't follow research into consensus algos super closely, but I haven't heard or read anything validating PoS as the silver bullet it's made out to be.
PoW burns a lot of energy, but the algorithm has an elegant simplicity to it. Crucially, the _work_ is impossible to fake.
PoS (very roughly) means that the richest control the network... which seems reasonable. But suppose you decide to rewrite the blockchain to say you're the richest, do you then control the network? It's a circular loop, and defending against those kinds of attacks is dramatically more complex. I've been lightly following development and I get the sense they've been playing whack-a-mole with vulnerabilities and bugs since ~2016. It's hard to have confidence in the result.
Even if you controlled 51% or even 67% of the staking power, you would not be able to “rewrite” the blockchain to give yourself free money. A common misconception. All state transitions must follow the rules of the chain.
To be clear, I'm not claiming that any particular implementation of PoS is vulnerable to this exact attack. It's an illustrative example of one class of attack that is a danger on PoS chains but not PoW chains, and might help people intuit why PoS implementations are more complex.
Coming back down to earth, this is why ETH requires checkpoints[1], but PoW chains do not[2].
ethereum PoS finality is part of the mechanical consensus protocol and established every epoch or two automatically, vs Bitcoin “checkpoints” that were hardcoded into clients. not really comparable
Miners can not rewrite the blockchain. They only get to choose which transactions go in and which are rejected or delayed. Each transaction must be signed by the wallet owner so miners can not just assign money to themselves.
That's incorrect. There were plans to switch to hybrid PoS in 2018 which were (surprisingly even to Parity node devs) rapidly shelved. Since then a new design is being slowly worked upon. There were no plans to switch in 2019 that I recall.
The linked article does mention that work towards the transition has effectively been in progress since before Ethereum even launched.
If you're talking about when it started being claimed that it was happening soon, the beacon chain launched at the end of 2020, so probably 2019/2020 sometime.
That version of PoS would have required a minimum stake of 1500 ETH, because it couldn't handle many staking nodes. Then they figured out the beacon chain, which would support staking with only 32 ETH. They made a conscious decision to eat a couple years to go that way instead. The beacon chain launched as a parallel network in December 2020.
Yes, I do find it interesting that it's only finally happening now that the price of ETH is tanking. I wonder if the miners were paying bribes to keep their monopoly this long.
Those would have to be some amazing bribes. A full 10% of the ETH supply is locked up in the staking network, and neither the original capital nor earnings can be withdrawn until about six months after mining is eliminated. The dev teams themselves were granted significant amounts of staked ETH by the Ethereum Foundation.
The production staking network was launched in December 2020, was upgraded in mid-2021, and since then there's been extensive public testing of the merge with the rest of the network.
Surely someone has made a graph analyzing the trend line of projected PoS switch date compared to the current date, à la https://xkcd.com/2014/... where might I find such a graph?
Because this comment is basically copy/pasted in every HN article about Ethereum[0]. It doesn't add anything to the conversation and is extremely repetitive. A bit like the "generics in Go" comments on every Go article until they were implemented.
I'd also like to know. It's an honest question, and I don't see why we should evaluate Ethereum's power consumption based on an unrealized scheme that's been promised (and left undelivered) for years.
Because the final steps are finally being performed. Just because something has taken a long time, doesn't mean it will never be done. There is nothing more to be done now except the actual final step of the merge.
The latest test merges have gone very well, but when you're dealing with something this valuable, you do a lot of tests, just to be sure.
Okay. I can appreciate the need for caution and careful direction when making significant changes to a financial scheme.
What I recall is a number of public announcements over the years claiming that the PoS transition was imminent, only to have it delayed at the last moment. That kind of repeated whiplash is not confidence inspiring, either from a design or a community standpoint. Is there a reason to expect this time to be different?
I don't remember any announcement of the merge being imminent from the project itself. I remember lots of articles claiming that based on the project taking about the progress. There was some goal of ~2018 that was missed / didn't work out. But the "imminent" part became more of a meme people talk about than reality though.
>Is there a reason to expect this time to be different?
Well...
- five+ different consensus clients, all with a full PoS implementation and a working PoW -> PoS transition mechanism
- four different execution clients, all with a working PoW -> PoS transition mechanism
- Multiple (dozen+) of successful merges on testnets and shadow forks. Ropsten, an ancient test network, was successfully merged to PoS from PoW a couple weeks ago.
There's two more existing testnets that will be merged soon. Sepolia on the 5th of July, and Goerli on some date TBD. If those are successful and there are no major issues found, it's time for mainnet.
I'm surprised to see Paypal only uses 0.26 TWh/yr (compared to Bitcoin's 200 TWh/yr and Ethereum's 112 TWh/yr) which includes their offices and data centers[1].
I've heard the argument that if you take into account all the human-associated energy costs Bitcoin's energy use compared to a company like Visa would be comparable. Now I'm not so sure.
Notably this 0.26 TWh/yr number doesn't include things like the energy used by each human to drive to and from work or the amount of energy needed to make the food that fed them that year but now we're getting into some anti-human territory.
Perhaps the goal shouldn't be to minimize energy use but to maximize energy output.
You shouldn't be so surprised. The energy consumption issues of cryptocurrency are very well-known, and the claims that "you didn't take into account all the human office staff" were attempts to deflect discussion from this energy consumption, almost certainly made by nobody who ever attempted to crunch any numbers. (The last time I tried crunched the numbers, I noted that Bitcoin uses more energy than the US mint making literal physical currency in industrial processes, and that was with heavy overestimation of the energy consumption of the latter.)
Believing that taking into account human-associated energy costs would put them on rough parity would require assuming that computers take up 1/1000th the total energy costs. And that's before you actually look at how many human jobs would actually disappear were cryptocurrency to magically replace the financial industry.
Minting is probably the least energy intensive part of maintaining a fiat currency since paper is cheap. There is an enormous enforcement apparatus that goes into going after counterfeiting, keeping the mints incredibly secure, armored trucks to carry bills to destinations, etc.
Paypal and any other company is interested in efficiency. Servers, air conditioning and power all cost quite serious amounts of money. UPSes and backup generators have to be sized for the load. Bringing large amounts of power into a building is also non-trivial. All of this means that most companies want to be reasonably efficient.
If Paypal found that their needs are covered by half the servers, leading to shutting down half their datacenters, they'd be quite happy about it. Plus less wages to pay!
Proof of Work on the other hand intrinsically wastes power. If somebody made a 2X more efficient ASIC/GPU, that'd mean that mining is now cheaper, which means you can do twice of it, which means that quickly everyone scales up and power usage remains the same.
Explain how PoW 'wastes' energy, if it is not sustainable to use high demand energy to mine. Miners who use 'free' or cheap energy, indicating low demand, will always out compete those attempting to use retail energy to fuel mining. Excess and stranded energy are the only sensible, sustainable sources for hashrate based mining. I use 'sustainable' in the context of mining operations, not globally or abstractly.
Efficiency is the ratio between what you spend, and the useful output you obtain.
The output we want from a blockchain is capacity to do work, that is transactions.
PoW means you're burning more and more energy, while the amount of work the network remains constant, because none of that energy actually results in more useful work being done. Thus the efficiency of PoW chains goes down and down and down.
Well its my personal opinion that washing machines are useless, so obviously they do nothing but waste energy. Please level up your argument and put a bit of effort into good faith.
No part of his response is opinion. Proof of work adjusts the difficulty of mining (literally search "proof of work difficulty") so that the number of transactions processed in any unit of time is roughly constant regardless of the amount of energy going into the system. Transactions processed are useful work. The energy going in does not increase the amount of work produced. This is why crypto holds value (if you believe in it): a finite amount of reward is produced per unit of time, but the material cost of producing that reward increases over time as the system expands. You need to spend more resources to mine more cryptocurrency because the algorithm makes it less likely for you to be rewarded as more people do more mining.
Correspondingly, if I buy a washing machine, I can do one load of laundry per hour. If I buy a second, I can do two loads per hour at the expense of more water and electricity. If washing machines were powered by proof of work, adding more washers and using more water and power wouldn't increase the number of loads I can wash per hour. The algorithm would see that too many loads are being done per hour and decrease the efficiency of each washer to compensate.
People working on crypto also drive around and do things? Which would make the crypto numbers equally larger. It would presumably take as many humans to run a kind of crypto-Visa as it would take to run regular Visa. Crypto isn't somehow automating some human-intensive activity. The big numbers on crypto is just the algo costs. So your whole argument is kind of terrible?
> Notably this 0.26 TWh/yr number doesn't include things like the energy used by each human to drive to and from work or the amount of energy needed to make the food that fed them that year but now we're getting into some anti-human territory.
Surely the crypto numbers don't include the same figures for folks working on all of the Ethereum infrastructure. PayPal employs 31000 people. Surely there are more people globally working on Ethereum (in mining facilities, writing code, etc).
If most of Paypal/Visa's employees commute into the office? I imagine the energy consumption is quite a bit higher.
If they work from home? How would you even measure this energy? They have to power their home and feed themselves so that they can do their job to keep the system running. Is that taken into account?
Why would you be surprised by that? The incentives for any normal company are to minimise energy use; energy is expensive. The incentives for most cryptononsense instead point to wasting as much energy as possible; that is literally how proof of “work” (waste, really) works.
> I've heard the argument that if you take into account all the human-associated energy costs Bitcoin's energy use compared to a company like Visa would be comparable. Now I'm not so sure.
The amount of misinformation around crypto energy usage has been out of control in the past few years. It's still weird to dip into an HN comment section and see people spreading the false claim that mining is powered by renewable energy sources that would otherwise go to waste (an absurd claim on every level) or that Bitcoin is somehow a "store of energy". The extreme energy inefficiency of cryptocurrencies is well-documented and doesn't even come close to any other financial system.
> Perhaps the goal shouldn't be to minimize energy use but to maximize energy output.
The real goal is to minimize harmful emissions. If we had some hypothetical infinite clean energy source then mining wouldn't be a big deal. However, even when mining is colocated with renewable energy sources, that renewable energy is prevented from going into the grid and offsetting fossil-fuel power plants.
> that renewable energy is prevented from going into the grid and offsetting fossil-fuel power plants
I’m not sure that’s how energy markets work… do you have any further reading? I’ve heard generally miners buy the cheapest electricity possible—typically oversupply that would otherwise be curtailed.
I don’t understand why Bitcoin mining is incompatible with emissions reduction. It sounds like an additional source of demand may make economical plants that otherwise could not be built.
> I don’t understand why Bitcoin mining is incompatible with emissions reduction. It sounds like an additional source of demand may make economical plants that otherwise could not be built.
Some years ago, there was a book published where the author systematically looked at the energy consumption (not just the of the UK and compared it to the total possible renewable energy sources therein. He found that even if you covered every hectare of the UK with solar panels, sent every raindrop through hydro power plants to extract energy as it runs to the sea, etc., it still would not provide enough renewable energy to satisfy UK consumption.
Switching existing energy sources to renewable isn't sufficient to avoid climate change; we need to reduce aggregate energy consumption. And that means that Bitcoin mining, adding a massive energy sink where one did not previously exist, is doing the exact opposite of what needs to be done.
You might be referring to David Mackay's excellent 2008 book Sustainable Energy – Without the Hot Air - https://www.withouthotair.com
In the book he tries to determine if renewables could support UK's energy needs. He estimated the UK consumes about 195 kWh per day per person (food, transporation, heating, miltary defense, ...)
If the UK massively invested in all the renewable options it stacked up to 180 kWh per day per person (obviously he provided lots of caveats).
His assumption on Solar PV was covering 5% of the UK land with 10% efficient PVs (about 200m2 per person). He estimated that could contribute 50kWh/d/p.
In the 14 years since the book was published it seems like Solar PV efficiency is now commonly 17-19%. So might only need to use 2.5% of the land.
And while it might be true of a densely populated and cloudy country like the UK, so what? As long as you can solve long-distance energy transmission from countries that don't have that problem (Spain would come to mind as somewhere close, Northern Africa would be the next option), there's far more energy provided via renewable sources that human kind will be using for some centuries yet (by which time we should finally have fusion licked).
They don't only buy oversupply, because energy isn't their only cost. They also have very expensive equipment that turns obsolete in a couple years. If the keep it turned off half the time, then they effectively double their equipment cost.
The thing that the "oversupply" can go into a PSPS, or you can just turn off pulsed coal or oil production facilities (if you have a national leadership over energy production and distribution, it won't work in Texas)
It's not fair to just say [financial institutions power consumption] vs bitcoin as financial institutions do not protect their assets. Governments with militaries protect the fiat assets and the power consumption of a military strength necessary to stabilize a fiat currency might be substantial.
But, governments with militaries also protect crypto assets. Like when the DOJ went after Frosties founders, or more recently, SK and Do Kwon. There's also the CFTC and the SEC fighting over who will regulate the space.
Even the most charitable argument, that crypto-relieved folks are trying to get governments involved.
Ignore all your examples, they are completely irrelevant, centrally controlled assets that operate on a layer that gives the option of decentralized control.
Bitcoin can perform without a government - the involvement desired by some people is not at all, nor is it claimed to be, or understood by anyone but you, to be necessary to the healthy functioning of Bitcoin or other sufficiently decentralized open protocols.
Of course, that's why it's muddy on how you should compare the energy costs. Bitcoins energy costs are 99.9% related to protecting the asset, they are not related to the functionality of the system.
Likewise financial systems have little to do with protecting fiat, banks are backed by governments businesses like paypal hold money in banks, etc.
So to compare bitcoins energy consumption to an entity that spend energy in an unrelated way isn't entirely fair - there is some merit there, but not much.
Visa and Paypal's energy use to secure their transaction records and assets from cyberattack is included in their much smaller energy use though; the fact they do so in a more energy efficient manner doesn't make the comparison unfair.
Bitcoin's energy use contributes no more towards preventing armed antagonists destroying or seizing assets, harming their economic value by destroying the underlying economy or compromising the network by seizing ASIC farms than Visa's. Bitcoiners outsource that bit to governments too.
I mean that fiat is always issues by a central authority. To be a trusted/stable central authority you need power, which is usually represented by military strength (either your own or the strength of your allies).
You do not get stable fiat without a trusted central authority and you do not get a trusted central authority without military power.
> By the way, bitcoin is also "fiat", in the sense that it isn't backed by anything (this is what "fiat" means).
That's not what fiat means in any sense. It has latin origins for "let it be done" which is to say that it is a decree by an authoritative actor.
But both bitcoin and fiat are backed by something - bitcoin is backed by a lot of energy consumption and fiat is backed by government authority.
> Do you mean that private property is enforced by violence? How else do you expect to enforce it?
I don't expect it to be enforced any other way, I didn't mean to give the impression that bitcoin was somehow free from the necessity of enforcing private property. However, bitcoin is different in that you only need to protect people and the network, with fiat you have much more to protect, such as political positions of power and physical buildings like fort knox.
No, a fiat currency is one that isn't backed by anything (as opposed to commodity money, which is itself a commodity, or fiduciary money which is redeemable for a commodity). For example:
The OLG models with money attribute to fiat money two basic characteristics: (a) it is intrinsically useless – that is, it cannot be directly used in production or consumption 3 – and (b) it is inconvertible 4 – that is, the issuer does not give a commitment to redeem it into commodities.
Handa, J. (2008). Monetary economics. Routledge. (p. 719)
Bitcoin is a fiat currency, just like the US dollar. And you're also wrong that with bitcoin "you only have to protect people and the network". What? Bitcoin itself can't be consumed (because it's fiat, remember), therefore it's worthless unless it can be exchanged for goods and services that can be consumed, which means these goods and services also need to be protected.
I understand your position, but saying something is "backed by nothing" is much different than saying something is "intrinsically useless and lacks commitment for conversion".
Both bitcoin and USD (as an example of traditional fiat) are absolutely backed by something - they are backed by quite a large economy, for one.
I'm not sure if you intentionally left this out, but following your quote literally just one sentence further you get:
> Further, it is assumed that fiat money is costless to produce, to store and
to transfer, and does not pay interest to the holder
Which is quite obviously not a definition that fits bitcoin.
The term backing has a very precise meaning. It means the issuer of the currency promises to redeem the currency for a certain amount of a commodity. When people say "Tethers are backed by dollars" they mean that, i.e., that Tether Inc. promises to redeem Tethers for one dollar each. While it's true that the value of a US dollar is related (in a non-trivial way) to the output of the US economy, this doesn't mean that the dollar is backed by the US economy. The issuer of US dollars is under no obligation to redeem the dollars, and therefore it's right to say the US dollar isn't backed by anything.
> I'm not sure if you intentionally left this out, but following your quote literally just one sentence further you get
It says that these economic models assume fiat money costs nothing to produce, which is not accurate, because it does cost money. However, the production cost is not relevant for the purposes of these models, and therefore they can make this simplification and assume that it costs nothing.
It definitely doesn't, at least not the way you're suggesting - you can find article after article talking about oil backed USD. Further, you can find plenty of definitions for the gold standard that don't use the word "backed" because it's not a precise term.
> It says that these economic models assume fiat money costs nothing to produce
You can either use this models parameters as a definition for fiat or as simply parameters for the model, you don't get to pick and choose only the parts that support your argument while ignoring the parts that explicitly don't.
It has a precise meaning. I've just told you what that meaning is. I'm an economist and I know the language of economics.
Regarding your other point, I'm not sure what you're trying to say. Are you saying that the dollar is not fiat money because it costs something to produce?
To be honest, I don't care. I have nothing else to add to this conversation, therefore I'm out.
Sure, except that enforcing property rights hinges on the ability to confiscate the stolen or misappropriated assets. The harder the assets are to confiscate, the harder it is to enforce ownership of those assets.
This doesn't really explain why energy is needed in a blockchain. Every block contains a verifiable proof that energy has been used to mine the block. Given the properties of the algorithm and physical reality, it is also a verifiable proof that certain amount of time has passed. This proof is what enables all participants to verify that the longest chain is the correct one.
Proof-of-work isn't used just to add cost, but to make sure that the longest chain has longest history in physical time, and make it objectively verifiable.
Proof-of-stake doesn't have this property. Whole history can be recreated in a microsecond, and there's no way to tell by looking at the blockchain. Instead, network participants have to ask others for the correct chain, or refer to a trusted source when there are disputes.
I would argue that PoW participants still need to "ask others", albeit for different kinds of information -
- For starters, if say I'm accepting a BTC payment, I need to ask a trusted source about the market value of BTC.
- I need to ask which software I can trust to implement the Bitcoin protocol.
- If I don't want to verify every transaction from the genesis, I need to ask for a checkpoint.
- In case I'm being eclipsed, I need to ask whether the chain I'm seeing is the canonical one, or what approximate hash rate the canonical chain should have.
Citing Digiconomist numbers is really undermining the credibility of this article. de Vries’s work has been debunked and shown to be garbage literally every time he publishes something (he is a low-level EU central banker, so not really a great authority).
If you want to use something, this is much more credible from Cambridge University (showing radically different numbers): https://ccaf.io/cbeci/index
As I write this comment, the Digiconomist estimates for the Bitcoin network is 129.74 TWh
The Cambridge University estimate for the Bitcoin network is 92.93 TWh with a lower bound of 51.01 TWh and an upper bound of 153.61 TWh. (I don't see an Ethereum comparison on the Cambridge site, so I can't check those numbers)
Given that the Digiconomist estimate is within the bounds of the Cambridge estimate, I don't see how this is really a debunking. I'm not really inclined to put too much faith into an article from "Bitcoin Magazine" on the topic when a quick look at the numbers shows that the two primary sources don't really disagree and have similar estimates.
It’s amazing to compare the energy consumption of a network where the all time high of total worldwide transactions in a 24 hour period is 1.7 million. Compared to the entire energy consumption of a country (Netherlands) with a population of 18 million people.
1 transaction can transfer 1 billion dollars worth of Bitcoin. The number of transactions is what is limited, not how many coins can be moved. I disagree with parent though, they're both important.
I think Ethereum is pretty cool, generally, but there are two downsides this post doesn’t address.
The first is that there’s still no date for The Merge beyond “expected to happen in the second half of 2022.”
Secondly, the Ethereum organization can only ask people nicely to stop mining the POW version of the coin. It’s possible that the current version of the Ethereum blockchain will continue to progress, like Ether Classic has, albeit at a greatly reduced value.
Notably, there is only 2 testnet merges left to do. Ethereum has 3 testnets to try things out. One testnet has already merge and is running on PoS (Ropsten testnet). The merge was a success although it allowed to uncover some minor issues. The next one, called Sepolia, is happening this week. After that, there is only one other testnet merge to occur, likely in August. If all that goes well a date will be set.
Ethereum does have a way to force the death of PoW. The Ethereum protocol has always built-in the so-called "difficulty bomb". The difficulty bomb is simply a target date in the future when the mining difficulty starts rising exponentially. Making finding new blocks exponentially harder until the chain freezes to a halt. Its death is always coded-in, so to speak. The difficulty bomb needs to be delayed periodically so Ethereum can keep working. Last month the difficulty bomb was pushed a few months to occur in September. If all testing goes well, the merge will be triggered in September aligned with the difficulty bomb which will cause the death of PoW Ethereum.
You could argue that you can always fork Ethereum, remove the difficulty bomb, and run that instead. Which is true. Except there won't be economic value in that chain, so there won't be fee revenues to capture which means it won't be profitable to point your hash-power to this forked chain.
I understand Proof of Stake to be much more centralized and prone to takeovers than proof of work. So if the merge ever actually happens, it would fix the energy consumption issue at the trade-off of security (staking, aka rich get richer).
I'm much more bullish on Chia and proof-of-space/time — same nakamato consensus as proof-of-work without the energy consumption: https://chiapower.org/ Also helps that Chia can be farmed from a raspberry pi or similarly low-performance device, making it so there are over 100k farmers around the world currently.
>I understand Proof of Stake to be much more centralized and prone to takeovers than proof of work. So if the merge ever actually happens, it would fix the energy consumption issue at the trade-off of security (staking, aka rich get richer).
The opposite is true, proof of work is hopelessly insecure and centralized. It's hopelessly insecure because resources needed to mine are external - so any attack by the only realistic adversary (ie. a state) is always just a question of resources, and the most pessimistic cost is in low billions of dollars. Realistically - America could already 51% bitcoin by forcing regulations on existing miners for nearly zero cost.
It's also centralized because mining has infinite economies of scale. Bitcoin mining started with hobbyists mining on home pcs, now there are companies buying power plants just to mine. This only makes it easier for governments to control.
The only reason no big PoW coins were successfully attacked is because there's no clear motivation for anyone - nothing in the real world relies on any cryptocurrency to continue existing. The only realistic attack would be to try to exchange tokens on the attacked PoW network for tokens on another - which is easily done for low 9 figs, but becomes increasingly hard afterwards - making any attack uneconomical. On top of that there are legal issues - it's very possible a 51% double spending attack would be legally treated as theft.
This all changes completely the moment major countries and corporations go down if some blockchain goes down. Imagine Iran defaulting if bitcoin or ethereum gets taken over in a 51% PoW attack, with all transactions from Iran addresses censored. It would be orders of magnitudes cheaper than any serious military action. Fortunately for Iran and crypto holders that's not true. A significant adoption of a PoW network would end up in an inevitable disaster and potentially destroy any trust in cryptocurrencies forever.
Of all invented consensus methods only proof of stake can survive in a truly hostile environment. No government can print eth at will to take over ethereum, and stakers can easily stay anonymous, unlike massive corporate miners.
Bitcoin holders are very good at propaganda and pretending PoW is safe, which works as marketing, but wouldn't do anything against a real military incentive to take control over bitcoin.
>I'm much more bullish on Chia and proof-of-space/time
No, Chia has the same issue. Anything that relies on external resources as consensus votes is fundamentally insecure.
I think your comment would need to be five times as long to cover the attack surface and unknowns of a post-merge Ethereum PoS system.
Already custodied stake is centralized. In Ethereum today Infura could selectively withhold and distribute transaction data in a manner suitable to attack - with 64x the chain space reliance on data providers which are already highly centralized increases.
In both scenarios the security comes from the motivation to not sully trust in the network you have invested so much to attack, so you are correct in pointing out how externalizing the work function provides a dangerous way in. The issue with PoS, of course, is that while the work function is insular, purchasing stake is not.
The only solution is to design a consensus that pays for the whole network (so Infura type entities are not necessary) and which always has a negative return on attack. The seed to achieving this is attaching work to every transaction, rather than every block. Saito goes further.
Infura is completely irrelevant as far as security goes, they have zero power to do anything related to consensus.
>The issue with PoS, of course, is that while the work function is insular, purchasing stake is not.
That's not the issue, that's the 'S' in PoS. Consensus partially breaks if majority of state is hostile (no imminent double spend risk unlike PoW, but may require a manually coordinated fork with minority of validators). It breaks for 2/3 of hostile validators in the sense that new nodes would follow a different chain while honest minority is building on its own fork.
Both failure modes require some manual coordination, but rather than successfully censor or steal, they create temporary chaos - at the cost of millions of eth. It's impossible to even buy enough now, and any attack is self extinguishing because the available supply shrinks.
Under PoW the failure mode is trivial and deadly. If the attacker owns majority of hashrate he can censor anyone forever, including other miners. There's no real defense because there's no in-protocol way to delete the attacker's asics. Switching to a gpu pow achieves nothing - because the only entity prepared for that would be the attacker itself - but it would be pointless in the more general sense, as nobody would ever trust PoW anyway, because the same attack can always be repeated. The issue is use of external resources not controlled by the protocol.
Attack from the state is one thing, infinite economies of scale is another. An entity controlling majority can multiply its income by censoring everyone else. Eventually, everyone else mining at loss disappears. Then they can only mine at a fraction of hashrate and instead of paying for energy, use a fraction of excess profits to buy more asics. In the case of any competitor they would turn all of them on again until competitor gives up. This one is eventually inevitable, hard to say how soon.
These issues are completely unsolvable in PoW.
>so Infura type entities are not necessary
It's just a rpc - it's always necessary to answer queries and send transactions. At best it could work inside js in metamask as a light node. The only theoretical attack infura could do is lie about balances to someone, but the discrepancy would be detected and that would be the end of people trusting infura (to report correct state).
Infura collects upwards of 80 percent of the fees that flow into Ethereum and is in a position to control exactly who participates profitably. If your solution is "minority will fork" the obvious question is surely "with what scalable infrastructure?"
Infura is not 'just an rpc.' It takes real economic output to do what Infura does and its necessary for Ethereum to operate as well as it does today. If you force users to run their own lite nodes in their browsers they will simply leave, the alternative is that chain data interfaces centralize exactly as they have.
> Infura is completely irrelevant as far as security goes, they have zero power to do anything related to consensus.
Not directly, but the majority of data which ends up in block chains runs through Infura which accounts for transaction fees and affects the profits of miners. There are certainly levers to be pulled there. At the end of the day networking operations are important to security and therefore should be directly tied into consensus and the incentive system. That's why I bring up Saito, its work function is the quality of open networking provided.
As far as staking goes. Stake isn't protected from custodial pools, its already condensing in pools since people want to stake and can't afford 32 Eth. Not only does that defeat the purpose of having an arbitrary requirement, it incentivizes users to give up control of their keys.
Your failure condition for PoW is that someone eventually accumulates 51%, and you simply assume that it will happen. Convenient you get to ignore one of the best arguments for PoW, which is that sustainably mining, monopolizing mining, and centralizing the resources for profitable mining are all made extremely difficult by the distributed and remote nature of cheap energy. Scaling up with thin margins is not as simple as just buying another ASIC.
But just like in Ethereum's proposed PoS system, controlling a PoW network to the point of disaster does nothing but damage the attacker's own investment. The incentives are basically the same: extract as much value without going noticed. Its not great in either case.
Appreciate the enlightened discussion. It's in the spirit of crypto these systems are highly debated and it helps everyone get ahead and learn to participate in them.
While on the topic of Saito consensus and energy consumption, as far as I understand is far more energy efficient than both PoW and PoS without having to sacrifice security (or anything else) in the process.
Is chia the one that doesn't burn through hard drives? Or is that Sia.. I can't even remember any more.
I don't think it's true that Proof is Stake is less resilient personally, of the 30-100 proof of stake chains that have been running for over a year now, I don't believe there have been any consensus attacks, and many of those would be far easier to attack (as the cost of doing so is relative to the market cap of the native coin)
On the other hand, we did see consolidation of >50% of the hashrate on Bitcoin, due to mining pools. That was only short-lived because the mining pool which accumulated that much hashrate agreed to cap it at 48% or something
But when is this merge happening? There is still no date as far as I can see? It's been happening "soon" for years now :(
I really hope it takes off though, because if crypto is here to stay it really should stop wasting so much energy. We'll never solve the climate crisis this way.
> Ethereum will use dramatically less carbon to be more secure
Why is that? PoS security model is fundamentally different from PoW - for instance - you cannot determine which of the two chains is "correct" anymore, you have to consult "a friend" [0]. That's not the case in Bitcoin, where the correct chain is simply the longest.
All PoS algos are very complex and have a ton of seemingly bandaid solutions for various problems that arise when you can create alternate histories freely (even if you use VDFs I think), and there is a disturbing lack of critique on that. So, why is it seen as "more secure"?
If the most-difficult chain wins, period, then Bitcoin is completely controlled by the miners. Nobody else has any say over consensus rules, and even if the miners violated the rules to mint themselves extra money, they would still have the "correct chain" if it had the most accumulated hashpower.
If the correct chain is actually the most difficult chain that follows the accepted rules, then you're still checking with a friend to find out what software implements the correct rules.
Most bitcoin people tell me the latter is the actual case, which means there's a level of social consensus for PoW as well as PoS.
There's multiple levels of consensus. Chain consensus is what determines the correct chain, given the current rules. Miners work under these rules.
Consensus on which rules to use happens on a different level. I'd say that it's economic consensus enforced by network participants. There's economic incentive to use rules which will not split the network.
That means you can't tell what the correct chain is just by counting hashes. You have to ask someone what the currently correct software is, and then you can find the correct chain for that software.
This puts you in the same position as someone on a proof-of-stake chain.
That's not really how it works either. Everyone makes decisions individually based on their understanding of the best rules and also tries to keep the network from splitting. There aren't any competing chains, because issues are debated and solved externally. If this consensus fails, then the network splits and there's a fork. After that, everyone can choose either Bitcoin or Bitcoin Cash. Neither of them is "correct". Everyone chooses whichever version they like most. I call this economic consensus, because I believe that this consensus tries to find rules which would maximize long-term economic demand for the currency.
This is completely different issue than chain consensus disputes, which means that inside the chosen rules there's disputes on which history is correct. I.e. it's the double-spend problem, which PoW solves. PoS is subjective, and it's impossible to determine the correct history without asking someone. [0]
By "correct," I mean the chain used by the community I'm interested in. To know that, I have to ask a member of that community for the correct software.
Honestly, the thing kinda breaks if you have several sets of rules aka Bitcoin clones. No, ideally, the thing works if you have > 50% computation resources of the planet consumed (and of course, controlled) by miners using one set of rules. This way you cannot have competing chains at all, and the correctness of the set of rules is kinda obvious - they're correct if they make sense to me (paying arbitrary rewards to oneself does not make sense, obviously) - no need to ask anyone - I see an enourmous chain with enourmous burned computation and I see the code.
In this sense there could only be Bitcoin. PoS cannot come close to that at all.
P.S. To clarify a bit more - I don't think the most-difficult chain can be with broken nonsensical rules, not in the long term.
I concede that PoS is not as secure as a hypothetical future Bitcoin consuming over half the computation on the planet. That would also have the advantage of making 51% attacks flatly impossible.
Compared to Bitcoin as it exists in the real world, PoS has advantages.
Choosing between Bitcoin and Bitcoin Cash is a completely different matter. You choose whichever you like, and you can verify yourself that the software follows those rules. There's no chance that users wouldn't converge into their chosen blockchain, because both forks follow the longest chain in their forks.
You assume that the community somehow can agree which chain is the correct one in proof-of-stake. This is not true because there's no longest chain rule. Without an authority, users would never be able to converge into the same chain, after a split has happened.
Energy use can be computed from first principles given some arbitrary assumptions: average power per node and number of nodes.
There are ARM nodes that require less than 10W. Then there are more conventional servers that require ...150W? Average here is pure guesswork, but error bounds aren't that large - let's say 100W/node.
How many nodes are going to exist - I think 10k is a reasonable maximum number.
The result is 24000kWh per day. At $0.15/kWh, that means $3600 in daily energy costs.
There's also the hardware cost itself and internet connection cost (which can be zero if there's an already paid for connection) - but all in all, total, real expenses to run ethereum become a rounding error of current ones. Guesstimating hw depreciation and connection cost, daily total at $5k translates into $1.825M/year. The value of block rewards during the last 24h is ~$15M.
In other words resources required for running ethereum for ~3 hours now are going to be enough to run it for a year after the merge.
Although validator earnings will be single digit percentages in ether per year, isn't that just the block reward, and all of the transaction fees are also split?
With higher throughput, more strategies that once again saturate the block space, that could be more lucrative than it seems?
> Although validator earnings will be single digit percentages in ether per year, isn't that just the block reward, and all of the transaction fees are also split?
Don't forget about MEV (maximum extractable value). Block producers can front run your trades and do other interesting stuff to about 6% extra a year using something like flashbots.
How can I get MEV people to want to use my validator for the blocks they want to bribe in? I get how that works in Proof of Work, but not this form of Proof of Stake.
When your validator is chosen to produce a block the client software asks flashbots for a list of transactions to include at the front of the block and you get paid for that. The validators produce blocks in a similar manner as miners do.
Is it fanciful to hope this could - in and of itself - allow several polluting power stations to be decommissioned, and/or appreciably reduce energy prices for the rest of us?
A quick look at https://whattomine.com/ shows that several altcoins are within 70% profitability of mining Ethereum.
That math is going to change as the Ethereum miners reconfigure for altcoins and the difficulties change, but the bottom line is that mining will continue as long as some coin is still profitable to mine.
I've read that a lot of former ETH miners have sold or are planning to sell their rigs (I think this is related to the submission yesterday about the GPU shortage being over[1], as Ethereum is usually mined on GPUs)
We'll see if it plays out, but cryptocurrency prices falling have certainly reduced the energy consumption as well (it becomes less profitable to mine at a given difficulty when your mining reward is worth less).
If Ethereum does eventually manage to overtake Bitcoin, that'll bode well for crypto's energy footprint in the long term (fingers crossed for this happening, or at least for there to not be another Bitcoin/PoW bubble)
But Ethereum mining rewards are orders of magnitude greater than the mining rewards for all of the altcoins (combined). The attack cost on this page [0] is a good reference for the relative mining incentive.
Given this, a LOT of mining capacity is going to go offline when this occurs.
Something here it not computing. They said Ethereum energy consumption is similar to the Netherlands. This would mean a single coal planet can power the Netherlands 35 times over. Some numbers are definitely wrong here.
A terawatt is a trillion watts (or a billion kilowatts), so no, you're out by 3 orders of magnitude and Ethereum ceasing to use PoW would be the equivalent of losing the need for 30-40 typical coal power plants (or a handful of the world's largest coal power plants)
Those numbers don't look right. A plant running at 90% uptime is ~8000 h/yr, and a typical large power plant produces 100s of MW. So you should be looking at a yearly output in ~1000s GWh/yr range.
Proof-of-Stake doesn't solve the Byzantine General's Problem. Therefore, the system no longer has the property of being able to get decentralized consensus
I don’t trust proof of stake, mostly because loads of people who I consider irrational want it to work so desperately.
Proof-of-work actually does work - it is no longer a debate, and these people (many of the same people who were saying “b-b-but tulips” a couple years ago) can’t stand it. I wouldn’t trust them to engineer their way out of a paper bag - definitely not after some muppet on the TV reminds them to get back in line.
Capitalism is still winning again, folks. Deal with it.
Unfortunately, I will never go along with one of your plans, because I do not trust your ability, or the ability of others who panic about the environment.
Bit of a Catch-22 for you there, sorry. It’s just reality.
I’m not sure I follow your logic. Climate change is happening and rich players of capitalism are making record profits while being significant contributors of greenhouse gas emissions.
The logic of whom not to trust in this chain is pretty simple. There is no catch-22 here without some magical stretch of logic.
Do you care to explain your logic then? Why do you not trust the ability of those that claim climate change is an issue for capitalism? Despite climate change obviously happening with devastating consequences for most of humanity, and despite most major polluters raking in record profits?
I mean my reason for not trusting said capitalists is that I don’t want people’s success to be vested in the destruction of our planet. I honestly don’t understand yours.
Keep in mind this is all hypothetical and these numbers are not based in any reality. The foundation cites a random wordpress blog on these numbers. (really?)
Even if this merge is done, a greener pyramid scheme doesn’t change anything about the speculators and scams that Ethereum harbours as Ethereum becomes even more centralised and plutocratic.
Gas fee surges will always still be a problem after the merge which only favours the rich that can afford them making Ethereum useless at scale for on chain usecases.
How many years has it been, at this point? I distinctly recall "imminent" plans to switch over to PoS as early as 2019.