Author Topic: Cryptocurrency  (Read 26939 times)

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Offline John Albert

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Re: Cryptocurrency
« Reply #435 on: October 15, 2018, 06:25:11 PM »
What benefits of a distributed ledger can justify the cost of the energy needed to build and sustain it? Banking transactions are so much cheaper that only the demands for privacy of the black market, or the hope of speculative profits, or the illiteracy of the anti-money wackaloon fringe, can justify the cost of Bitcoin and its imitators.

It's not even that blockchain can't be used for a variety of different projects. I'm sure it could be used for any number of purposes. But why bother? What is it about blockchain that makes it superior to other solutions that have served just fine?

Upthread, Art posted a link to an article boasting about some brilliant solutions powered by blockchain. One of them was for a distributed permissions and login management solution that employs blockchain to create and distribute a shared user/privileges list to all nodes on the network.

For the life of me, I can't think of any inherent advantage to using a decentralized peer-to-peer network for this purpose. They say they've reduced the computational overhead of blockchain without sacrificing security, by only allowing it to run on a finite number of secure nodes. Okay, so they've allegedly minimized the worst aspect of the technology, but what's the advantage of using blockchain over a more traditional server-client arrangement? They say their system requires no secret keys to be passed between the server and clients, but the flipside is that it requires the entire listing of all users and their permissions to be shared between nodes! I can see a potential argument being made for superior resiliency of the system by eliminating the server as a single point of failure, but how can that system be faster and more secure when the protected assets themselves are regularly being shared in their entirety?

Offline brilligtove

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Re: Cryptocurrency - Byzantine Fault Tolerance
« Reply #436 on: October 15, 2018, 09:32:06 PM »
Byzantine fault tolerance can be handled a few ways. The options are still being developed, as noted in a paper on IEEE called Decentralized Consensus for Edge-Centric Internet of Things: A Review, Taxonomy, and Research Issues. The authors talk about the tradeoffs between scalability and security in many current blockchain-based systems. The IOTA Tangle approach seems promising, though it gives up perfectly provable security to enable high scalablilty. (IOTA is up in the top right of their Figure 2, below.)

I don't claim to have a deep expertise in this domain. I know much more than a layperson, and much less than a person actively working on blockchain math and tech. I'm pretty sure I understand most of what this (and similar articles and videos) have described.

Blockchains have robust BFT not only because of the hashing of each individual transaction, but also because of the hashing of each block, and the resulting connections to other blocks. Bitcoin takes about an hour to solidify enough for a transactions to be almost guarunteed to be the real deal. All systems have a lag, but some are much faster because of the way the blocks are connected and how they are verified. Bitcoin intentionally creates a tight bottleneck for block creation, and achieves a chain that is mathematically provably secure. IOTA trades off that level of rigour to become massively parallel: to post a transaction you have to verify two others, so the computational power of the system scales up with increasing use. If I understood correctly the IOTA tangle may take a little longer to solidify - I'm not completely clear on the timeline - but it was described as comparable to Bitcoin but with much higher transaction rates and much lower costs (time, electricity, and money) for a variety of reasons. I found their FAQ fascinating, and after pulling on a bunch of threads (their claims) and reading a lot of critiques the IOTA approach looks pretty promising for several uses. I personally like a system like this for providing verifiable video/audio security footage. This could offer protection against something like deepfakes putting words in your mouth.

None of this is to say that there is One True Way To Blockchain - just the opposite. There are many ways to chain together blocks of data, depending on the requirements for a particular use. Robust BFT can be achieved in differenet ways depending on the characteristics the system needs to solve a particular set of problems.
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Offline brilligtove

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Re: Cryptocurrency - Blockchain Security Model
« Reply #437 on: October 15, 2018, 10:30:07 PM »
It's a security model built upon leveraging overwhelming computational power to secure the transaction processing and block writing. It does this by requiring all of its transaction authorities (called "miners" in Bitcoin argot) to brute-force an SHA-256 hash that's been arbitrarily calculated to be very difficult, until one of them achieves a 'collision' (legitimate solution to the hash).

This is similar to my understanding, but different enough to discuss. I spent another ½h with 3Blue1Brown's video about Cryptocurrency as a refresher. He focuses on bitcoin's model, but works up from basic principles. It's very well done IMO.

You use "overwhelming" a few times when talking about the computational power needed to deal with blocks, but I'm not clear on exactly what you mean. My understanding is that the computational power required to find a valid hash for a block by guess-and-check (a.k.a., brute force) is a key design decision in each individual blockchain protocol. The bitcoin protocol (BCP) uses a specifically structured sliding scale for this. (I think that the arms race for minting blocks, the high transaction fees, and the slow transaction processing times are unintended shortcomings of the v0.1 instance of cryptocurrency that bitcoin is.)

For Bitcoin, the protocol changes the number of leading zeroes needed for a valid block, to ensure that new blocks are minted in about 10 minutes. Depending on the power of the miners out there this might mean 30 zeros or 80 zeros at the start of the number - but it should still take about 10 minutes to find a valid nonce+hash. Other cryptocurrencies have much shorter hash times and/or use entirely different block topologies to link blocks and ensure that no changes are made to the chain. (IOTA's tangle is multidimensional, for example, where bitcoin's chain is one-dimensional.)

A question of jargon: my understanding is that a "collision" refers to the rare circumstance when two nonces are discovered to result in the same hash. Regardless of whether 'collision' is the best term for this part of mining, I want to make sure we talking about the same thing. With the Bitcoin protocol, there is a race among miners to find a vaild nonce/hash combo for the latest block. When it is found that's not called a collision - it's called success, and in the BCP it comes with a reward: a special kind of transaction that creates a specified number of bitcoins for the miner who first created the block.  (Some blockchain protocols are designed to be collision tolerant, because the immutability of the chain is be maintained by other features of how the system works.)
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Offline DCLimey

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Re: Cryptocurrency
« Reply #438 on: October 16, 2018, 04:48:01 PM »
There are some non cryptocurrency uses of the blockchain out there.

For example, BTA are actively looking for projects:

And we recently ran a trial in Macedonia using blockchain to notarize election monitoring statements:

Maybe it's not widely adopted, and possibly not the best use case, but there are a few examples out there!

Offline moj

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Re: Cryptocurrency
« Reply #439 on: November 20, 2018, 07:37:39 AM »
Fresh new lows

Bitcoin plummets to its lowest value in over a year
Its fallen by roughly 75 percent since its December peak
Bitcoin has plummeted to below $5,000, its lowest value in over a year, amid drops for the world's leading cryptocurrencies. Its value currently stands at $4,463 (as of 04:32AM ET), while its losses for the past week now total 16 percent and more than 65 percent for the year, according to CoinDesk.

The dip comes after a period of welcomed stability for the notoriously volatile cryptocurrency market. Bitcoin had been steadily trading in the $6,400 range in October, which seemed even more remarkable against the backdrop of a troubled US stock market. But it all came to an end last week when Bitcoin dropped by 9 percent to a low of $5,390, according to CNBC.

Bloomberg says the decline coincides with a "hard fork" in Bitcoin Cash -- which split into two versions last week, "Bitcoin ABC" and "Bitcoin SV". Rival currencies Ethereum and XRM also suffered dips as a result of uncertainty in crypto markets. Now Bitcoin is even lower than its price before its big spike, when it hit a peak of almost $19,000 last December, forcing everyone to take notice. Four weeks later it tumbled to below $10,000.

With interest waning, the good news is you don't have to explain what Bitcoin is to your family over the holidays. But if you do get cornered by a crypto-evangelist this Thanksgiving, you can still point them in the direction of HTC's Blockchain smartphone or Hublot's luxury watch that can only be purchased with Bitcoin.