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At 19:27 Eastern time on April 12, the Ethereum blockchain, home to the world's second-most-popular cryptocurrency, ether, will finally sever its links to crypto mining. Within the Ethereum bubble, a sense of anticipation is building; some are planning "viewing parties" for the occasion. Codenamed "Shanghai," the update to Ethereum caps off a process, after "The Merge," which fundamentally changes the way transactions are verified and the network secured.
Under the old system, proof-of-work (PoW) mining, the right to process a batch of transactions and earn a crypto reward is determined by a race to solve a mathematical puzzle. The greater the computing power miners throw at the problem, the greater their chance of winning the race. Under Ethereum's new proof-of-stake (PoS) system, there is no race and there are no miners; instead, the winner is determined by raffle. The greater the amount of ether somebody locks up on the network—or stakes—the greater the chance they hold a prize-winning ticket.
By demonstrating that a large-scale blockchain can shift from one system to another, Shanghai will reignite a debate over whether the practice of mining that still supports bitcoin, the most widely traded cryptocurrency, is viable and sustainable. [...]
"The energy consumption problem is Bitcoin's achilles heel," says de Vries. "It's a simple fact that as the price of bitcoin gets higher, the energy consumption problem gets worse. The more money miners make, the more they will typically spend on resources: hardware and electricity.
But many bitcoiners dispute the characterization of the network as energy-guzzling and carbon intensive, saying that mining is increasingly powered by renewable energy. And, they say, PoS is inferior to PoW—prone to centralization (crypto's great nemesis), concentrating influence and wealth in the hands of the wealthy, without any mitigating forces, like energy costs, pulling in the opposite direction. All of this makes Shanghai a proxy battle over the future of crypto.
[...] According to de Vries, it would be perfectly possible, from a technical perspective, for Bitcoin to follow in the footsteps of the Ethereum network. "Bitcoin could move to PoS, no problem," he says. "But it's a social challenge."
[...] The impasse is worsened by the ideological opposition to PoS among bitcoiners, separate from the environmental considerations. Some find unthinkable the idea of tampering with Satoshi Nakamoto's original invention, and others, like Bendiksen and Pritzker, believe PoS introduces greater risk of centralization and censorship—and therefore represents a threat to crypto's founding principles. "PoS is essentially the fiat system," says Pritzker, "because whoever has the gold makes the rules." For this reason, explains Bendiksen, bitcoiners will "never agree" to a shift.
"Any attack on bitcoin is an attack on their morality, values, and often their net worth. This makes everything feel personal," Von Wong told WIRED. "Because most people don't see themselves as intrinsically bad, they feel misjudged and misunderstood, which is a terrible place to start a conversation."
(Score: 2) by stormreaver on Wednesday April 12, @12:33PM (4 children)
It's like this: A lottery is offering a $30M prize. The odds of winning are one in ten million, and a ticket costs one dollar. You put down your one dollar and buy a ticket, giving you a one in ten million chance of winning. A rich person puts down $10M, and is guaranteed to win the jackpot. He's betting that no one else will pick the winning numbers (a really good bet). However, he's rich enough that he's able to lose the entire $10M without losing his shirt, but the odds favor him tremendously.
Sure you have have a chance, but it's minuscule.
(Score: 2) by Immerman on Wednesday April 12, @01:43PM (3 children)
Basically, except your math is wrong.
The odds of winning a raffle are based on the number of entries - if you and rich dude are the only ones playing then when you bought your ticket you had a 100% chance of winning, which fell to a 1 in 10M+1 chance of winning when rich dude bought his 10M in 10M+1 chance of winning. He's *not* guaranteed to win, but the odds *highly* favor him.
If however you had a 1 in 10M odds when you bought your ticket, they fall to a 1 in 20M chance when rich dude buys his, while he gets a 50% chance of winning, and whoever had the first 9,999,999 tickets has the other ~50%.
Of course, from the tiny bit I've read I don't think anyone buys anything - sounds more like you essentially put the money in escrow during the raffle to prove you control it, and then get it back once the drawing has occurred.
And the prize is just that you get to add the next block to the blockchain. Though of course that also lets you collect fees from everyone who wants a transaction recorded.
(Score: 0) by Anonymous Coward on Wednesday April 12, @06:14PM (1 child)
So in either case, to use the terminology from the parent post, it sounds like no matter what, it only affects the ones who have more, and the ones who have less are screwed whether it is PoS or not.
(Score: 2) by Immerman on Wednesday April 12, @06:37PM
Pretty much.
Doesn't really matter whether it's PoW, PoS, or really, pretty much any other part of the economy even outside the financial industries... any endeavor within a capitalist system will disproportionately reward those who already control the most resources. That's why it's called capitalism - it's an economic model explicitly designed for the benefit those who control the capital.
Those of us who work for a living can sometimes get in on the ground floor of something that's about to skyrocket, but as a rule we'll have such a small stake in it that, while it may be a windfall for us, almost all the wealth generated still goes to the already-wealthy.
(Score: 0) by Anonymous Coward on Wednesday April 12, @08:28PM
except GP's math isn't wrong. At least not for a lottery, which was their example (which isn't what's discussed in TFS and, as such, is a bad example). In a lottery, the probability of winning with a single entry is independent of the number of other entries.
So no. GP's math is fine. it's just that their example doesn't fit the circumstance under discussion.
Your math is also correct, as in a raffle, the probability of winning is dependent on the number of other entries. And has the added benefit of being apropos to the topic at hand.
tl;dr: good math, bad example.