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Comment by brndnmtthws | Hacker News Reader

I'm not entirely convinced that cryptocurrencies require fee incentives to stay secure. Most people using a currency aren't interested in the 'value' of a transaction, but rather, they want to perhaps pay a vendor or simply hold a balance. The miners (or stakeholders, in proof of stake) act in order to earn a profit, and may not actually act in the best interests of currency users (including holders and vendors). Miners and stakers are, in a way, just siphoning off profits, and it might be true that actors in the system would still behave honestly without the mining/staking incentives.

I wrote a blog post about this: https://medium.com/@brndnmtthws/questioning-assumptions-do-c...

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The fee incentive is required if, like Bitcoin, you have a capped money supply (and, therefore, the block reward must decrease over time).

A key insight into Nakamoto Consensus is that the security model depends on the the economic rationality of mining honestly: the difficulty of executing a double spend increases exponentially with the number of blocks the victim waits between the transaction hitting the chain and them "accepting" it, but the reward for executing that attack scales linearly with number of blocks (double spend + block reward/fees), which means that the return on investment for the attack decreases over time. The return on investment for mining honestly instead is constant: it's just given by your share of the mining power.

Assuming a worst case scenario of an attacker having just shy of 50% of the mining power, I can calculate how many blocks I should wait before the money I received is considered secure, and that time grows as the amount sent grows in respect to the block reward. Without fees, the block reward goes to zero over time, and the time-until-secure goes to infinity.

You can't have a decentralized, secure network without fees.

PoS doesn't work by itself, anyone who tells you otherwise doesn't understand the underlying security of a decentralized blockchain.

A saw a nice rant on twitter the other day about this very subject: https://twitter.com/hugohanoi/status/951762596255838209

You CAN have a PoS network built on top of a PoW network(LN) but there will still be fees.

Why oh why would you do something like that on twitter?!?

If you need to make multi-thousand character argument there are many better mediums. In fact, I'd be hard pressed to think of a worse presentation than 100 letter chunks surrounded by wasted space at 8 chunks per page (on 1080 vertical lines monitor).

This is not a useful rant. 90% of it is bad and completely unconvincing argument by analogy.

> Everything in our world ultimately translates back to energy, at the lowest level. You are energy. I am energy. Blockchain is energy.

The remaining 10% could plausibly be gesturing at a real argument, but it's way too vague and hand-wavy. It repeatedly says PoS is impossible, but then ends up admitting that it boils down to complicated questions about the stability of certain equilibrium.

>90% of it is bad and completely unconvincing argument by analogy.

What analogy?

The idea that somehow the law of conservation of energy applies to the security of block chains, or computing in general. The fact that tweets 1-20 come from a cryptocurrency developer is terrifying, because it reads like a speculator trying to drive down Ethereum. I get what the developer is trying to say, but it all falls apart once they tie "electricity expended in Proof of X directly maps to amount of ledger security".

Tweets 21+ are actually reasonable and well thought out. It's that whole nonsense in the first 20 that just poisons the whole thread.

I completely agree that PoS assumes that bad actors are at best a group of Chaotic Evil backstabbers and that there'd never be a massive organization of Lawful Evil people rewriting the block chain. Furthermore, it doesn't account for a group of possibly Chaotic Good miners "correcting" a coin heist by rewriting the block chain. It is the stance of a majority of cryptocurrency participants that such a power is corrupting and that no matter what, the block chain must stand immutable.

>"electricity expended in Proof of X directly maps to amount of ledger security"

That is absolutely true, this subtlety seems to be lost amongst all the hype.

Try to manipulate the BTC ledger, it's technically possible but not really affordable/feasible.

Reduced, the assertion made is: Because Proof of Stake requires less energy and is less secure than Proof of Work, all block chains are secure if and only if computing blocks requires a large investment of energy.

I don't think Proof of Stake is sufficient evidence to make that assertion. The source makes me even more skeptical, as they are invested in Proof of Work's continued dominance.

Perpetual motion machines, conservation of energy, etc.

> Since PoS removes billions of dollars of the mining that secures the ledger, it must follow that a PoS blockchain is billions of dollars less secure.

No, that doesn't follow. This person doesn't know much about DPoS because they don't grant it any points for the things it does right.

One thing that mining-free PoS coins give up is equitable distribution of the coin. Arguably there are other approaches to this but none of them are trustless.

>This person doesn't know much about DPoS because they don't grant it any points for the things it does right.

They definitely acknowledge PoS, it's problem is inherent in that you can always dispute with consensus and create an alternate ledger WITHOUT any upfront costs.

It sounds interesting but I wonder if I should trust the judgment of somebody who thought twitter was the right medium for something like that. What a pain it is to read through these tweets, even in the right order.

Aren't fees just the side effect though?

They are an easy way to limit transactions to prevent spam, as well as give the option to pick and choose which transactions get into a limited size block.

Without fees, miners have no incentives to include anything into a block in a PoW system (since not including any transactions is faster, which would mean more profit over time), and users have no incentive to not make significant amounts of transactions for no reason on the blockchain.

That's how they're pitched, yes. But what's actually happen with Bitcoin currently, is that miners have started spamming the mempool with small transactions that never confirm just to bump the TX fees. Furthermore, exchanges like Coinbase haven't implemented TX batching and Segwit, which further compounds the problem. Coinbase is one of the biggest contributor to the 'spam', by forcing fees higher and higher.

So in practice, it appears not to be working as theorized.

>spamming the mempool with small transactions that never confirm just to bump the TX fees.

For starters, i'm not convinced it's "spam" and not just people consolidating dust with low fees that don't really care if it never gets confirmed, but will try for a time when it might anyway.

I have done this myself, by carefully crafting a transaction with a ton of dust addresses and setting the fee to be a hair over 1 sat/byte, and it sat in the mempool for a month or 2 (after being rebroadcast several times) before finally getting confirmed a while back. You might call that spam, but for me it was Bitcoin working as intended. My "low importance" transaction waited until the mempool was low to get included.

But even then unless the "spammers" are spending a LOT of money on the fees, it won't affect anything, since all you need to do is spend 1 sat/byte more than them and you will get in next block...

>Furthermore, exchanges like Coinbase haven't implemented TX batching and Segwit, which further compounds the problem.

And fees provide them the ONLY incentive to fix those problems. Without the need for fees, why would anyone in the bitcoin ecosystem ever do batching (a complicated and potentially less secure way of managing transactions), segwit (requires more development resources), and even things like compressed keys (which some exchanges still don't use).

The spammers have been 'caught' on a few occasions. The patterns definitely look like transactions which have been generated by a script with the intention of filling the mempool to push up fees. I've also seen screenshots of Telegram chats where people discuss doing this on Reddit and elsewhere (although I can't find it now, and there's no way to verify authenticity).

Coinbase passes the fees directly onto their customers, and they don't seem to care much. They also don't let users change the fees. In fact, Brian has started shilling Bcash on Twitter, so one might guess they're intentionally pushing up fees to push an altcoin (Bcash).

Protip: GDAX pays the TX fees, so it's possible to workaround the TX fees by moving your coin to GDAX.

Well is it really "spam" if they are paying the same rate as you? It also points to tx fees being extremely necessary, as without them what would stop a malicious actor from spamming SIGNIFICANTLY more, clogging up the blockchain making it so a miniscule fraction of the real transactions could get through?

Also, I'm well aware of GDAX and coinbase and their pitfalls and benefits, but that doesn't have much to do with the discussion of fees and why they are necessary.

AFAIK RaiBlocks is the only coin that has tried to build a compeletely feeless cryptocurrency. Whether or not it will actually work, I don't know, and the current implementation has a lot of issues. But it's interesting if you're in to crypto. Furthermore, Lightning Network could provide a similar feeless system (excluding the settlement TXs).

>Furthermore, Lightning Network could provide a similar feeless system (excluding the settlement TXs).

There are even ways to get around the extreme majority of the fees for settlement transactions! Look up Channel factories for an idea on how even the opening and settlement transactions can be reduced to about 10% of their current size/cost for a single user. And there might be ways of interacting with channel factories to keep those settlement transactions off the main blockchain for the most part!

Also, I'm fairly certain IOTA doesn't have any TX fees, as well as several others that came before RaiBlocks.

IOTA has a few red flags:

- partially closed source

- has its own custom crypto

- uses a bizarre internal trinary digit system, instead of binary

- I've heard that it doesn't actually work, as in, you can't perform transactions

In terms of the top ~25 coins by market cap, AFAIK RaiBlocks is the only feeless one which acutally works. Regardless, it's worth watching these coins to see how the economics work out.

Take a look at https://raiblocks.net/

Feeless, near-instant, scalable, no mining. Apart from minor hiccups (see https://www.reddit.com/r/RaiTrade/comments/7qev9q/can_we_be_...) and the fact that security is not tested throughout, this could be the future.

If you read his article he's already pumping Raiblocks.

This is an untested proof of stake system that has been premined, no one is using it for anything other than speculation.

I'm really sick of seeing obvious pumps everywhere, this is untested garbage being perpetuated by hype posters everywhere. Go away.

Sorry for not reading the article. Apart from that: Did you read the RaiBlocks whitepaper? Did you try the technology? Sure there's a lot of room for improvement but the foundation seems to be working just fine. In contrast to many other coins. Furthermore there are projects using (https://brainblocks.io/) and shops accepting (https://www.spendraiblocks.com/) it.

Raiblocks is garbage, quit pumping

Your troll comments are garbage. Kindly take your shit elsewhere.

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