Okay this is a viable response.
On "Small Blocks" - I never said 'small blocks'. I said that blocksize increase is not a long term viable scaling mechanism.
How long is long term for you? 10 years? 20 years? 50 years? More? The centralizations we see right now in my opinion are transient. What I mean is that Moore's law cannot continue forever which means at some point we will reach a point where chips cannot be made more efficient. At that point how many chips you have is literally how many stakes (votes) you have and you end up with the same exact math from what I can see that you would have if you just started with Proof of Stake. Only you will have burned up and wasted all these CPU cycles to get to the exact same place.
In addition Proof of Work funds the development of chips which literally are the equivalent of the paperclips from the grey goo problem. ASICs are so specialized that they produce nothing other than Bitcoins and to me this is the biggest problem with Proof of Work. If it were GPUs at least it's funding better GPUs but once it is ASICs then it's funding the paperclips. Since more paperclips equals more votes, why wouldn't a rich person simply buy as many chips as necessary to maintain a 51% controlling interest in Bitcoin? How can it even be stopped if for example the federal reserve as you brought up would just print money to buy a monopoly on ASICs and in essence buy the votes? Unlike with Proof of Stake there is no way to secure the votes from this computational resource monopoly that I'm aware of but in Proof of Stake there are ways.
While I'm not the math person in the room I would like to ask you if there is any quantitative difference if we measure influence in ASICs or in stakes? If a stake costs exactly as much as an ASIC chip what is the difference here? Cultural?
They estimate that eventually, if everyone in the world uses bitcoin and makes 2 transactions a day, but uses the lightning network, a 133mb blocksize will be needed. Without the lightning network, something like a 200gb (GIGABYTE) size PER BLOCK would be needed to accommodate that much usage. >> And this does NOT even accomodate the (near) future. Back on 'small blocks', specifically. Ofc, I'm not for small blocks, but I'm for blocksize increase matching the network capacity. If this could be automated - splendid. So , lets dub my position Net Fit Blocks :) :) ... if the need exceeds the capacity - LN, Omni, even traditional banking in crypto could be used to compensate BUT in terms of controlled and voluntary tradeoff centralization/cost/security. You notice the >3 orders of magnitude with or without Layering / Lightning Network.
Lightning network takes things off chain. If we go off chain then how does this impact security? I would think this has a bigger potential impact on security than bigger blocks or smaller blocks or just about any other change. Lightning presents risks which while I think small (in my opinion), are still much bigger than everything else we are discussing. If it's off chain then how does Proof of Work even secure it? This is still undecided even in theory so I will not discuss it too much, and in practice I don't know where Lightning is implemented to form any conclusion.
Which favors mining assets ownership and geographic concentration.
Geographic concentration is a legit argument but minimal. I don't think that geographic concentration would last very long. It is true there will be data centers but they could be built anywhere including on man made Islands, in the desert, anywhere the people with the money decide. The problem of data centers depends on the manufacturing and if that is centralized then of course mining can centralize.
Suppose Nvidia decides to start a cloud mining company and reward purchasers of their contracts with Nvidiacoins? What if Intel, AMD, Amazon, Google, and all the bigger companies do similar? Game over right?
This definitely requires several replies :) .: No.1 ''How long is long term for you?''. Easy to answer - just few years. BCH is just rejuvenation of BTC like reverting the difficulty clock few years back. To replenish scaling of network this way is as wise as to avoid collision into a brick wall but running in circles while waiting the brick wall to move ahead.
second, '' What I mean is that Moore's law cannot continue forever which means at some point we will reach a point where chips cannot be made more efficient. '' -- you can not reach the Planck scale. The closer you get, the more it takes (and gives, cf. Edward P. Tryon) to advance. There is ONE BILLION times , 9 orders of magnitude more spacetime towards the within of the Planck scale, than it is towards the without of the Hubble scale.
Third, ''In addition Proof of Work funds the development of chips which literally are the equivalent of the paperclips from the grey goo problem. '' I'm afraid I infected you with this dark 'meme' but you pulled it out of context. The paperclip maximizer argument of Nick Bostrom is flawed in one very important point direction: which commandment has higher chances for successful execution? 'Live!' or 'Live for ... !' ?? A paperclip maximizer smart enough to survive long enough to do its is job, inevitably will abandon the 'for ... !' part of its commandment. Paperclips get maximized as much as there is demand of paper to clip. Same with BTC - it lives for provision of monetary services. The best we ever had - long topic I'll develop it in series of posts later ... no demand no food for the 'grey goo'. The other thing - on cosmic scales - paperclip infinitization of btc asic mining , i.e. all the mass-energy and spacetime to be turned into btc miner - again it is not so apocalyptic because btc protocol does not utilize pure randomness. pure randomness is infinitely expensive. run long enough and the glitches away from randomness make enough room for entire meaningfullness universes to ride the process.
The problem with Bitcoin is that Proof of Work effectively is a paperclip maximizer at this point. ASICs are the functional equivalent of paperclips. ASICs only exist to mine Bitcoin and Bitcoin produces lots of ASICs.
I explained this few times. Will try now to compress it down to few words.: The best money are those totally useless for another purpose. The best money-maker mechanism is the one incapable of doing s.t. else. Thus money AND money-making utility maximized.
That makes no sense to me. Are you talking about Proof of Work in specific here? I'm not arguing how Proof of Work must work. I'm arguing that Proof of Work is inherently wasteful because of how it must work and that once any hashing algorithm produces ASICs then it is pure waste without even beneficial side effects like with GPU mining.
ASICs produce a lot of heat, waste and my argument is anti ASIC not even anti Proof of Work.
PoW is the least wasteful governance algo. ASICs are the most efficient PoW hw.
Forth, ''51% controlling interest in Bitcoin? How can it even be stopped if for example the federal reserve as you brought up would just print money to buy a monopoly on ASICs and in essence buy the votes? '' - an entity, i.e. single Will, i.e. sole Sensus, as opposed to CONsensus, will have to waste resources to disguise itself as non-existent, i.e. to behave exactly as if it does not exist, in order to utilize its position. The presence of such entity can be detected , because it imprints itself on the total pattern of the assets performance. One of the greatest achievements of Satoshi was the economic incentive foundation - BTC is valuable if and only if decentralized. This is conditio sine qua non est BTC. It is valuable if and only if you do not have it. The moment you have it, it loses its value. Takeover-BTC plots are doomed, because once you achieve 50%+ you instantly squeeze all the life outta it. The situation is ''so long and thank you for the fish'' the conqueror is left with nothing, and the happily rich wealthy subsidized by the attack ... rest, just fork out and keep on ahead with all the value you used to 'take over'. Back to your question above: The fed print money to buy asics? Buy from whom? this 'whom' gets immensely rich and the fed ends up with a heap of useless junk asics and totally depreciated dollar. Bitcoin incentive framework is like automated financial aikido - it uses the energy of the attacker to feed the good guys.
''...computational resource monopoly that I'm aware of but in Proof of Stake there are ways.'' - are you? Please explain these ways.
In Proof of Stake you can choose your witnesses which is equivalent to choosing your miners in Proof of Work. It can be a political choice like an election or random.
Additional expenses. Voting / choice must be informed - informing takes time and other resources and is prone to disinformation attack. The more you explain it to me, the more it looks like the present day corporate governance model - but digitized in fancy 'crypto' cover.
On political versions of Proof of Stake like DPOS for example I do agree this is a bottleneck. This in my opinion is the main bottleneck. But I also must note that not every version of Proof of Stake requires politics or political selection of witnesses. The process can be done randomly (such as algorand, or it can be done in the masternode way where people buy the masternodes.
Again, shareholder style governance is one of the better forms that exist for humans so to say it resembles that is in my opinion not a bad thing. It's better than communism, monarchy, etc. The people with the most to lose have the most to gain and done right the people who interact with the platform earn the stakes (like with Steem if Steem worked as intended).
You assume that voting and randomness have no cost? Human voting and delegation to vote, i.e. human attention is for free? Opinion costs! Randomization cheaper than hashing?
The problem with this way - data centers, net choke big blocks, centralization geographic, node etc. is that the investors in this strategy will waste their money. It is unscalable. To be scalable upon limited resource a scheme must have positive feedback loop upon moving the brick wall as you near it. Like predator-prey model where more predators = more pray.
''Suppose Nvidia decides to start a cloud mining company and reward purchasers of their contracts with Nvidiacoins? What if Intel, AMD, Amazon, Google, and all the bigger companies do similar? Game over right?'' - tokens ARE in perfects coincidence / match with so much well known entia of the past - you talk utility tokens and eventually shares. Access to services. Tickets, not money. Money are universal. They are useful ONLY for monetary function...
and last.: ''ASICs are so specialized that they produce nothing other than Bitcoins and to me this is the biggest problem with Proof of Work. '' - no. it is its biggest advantage. Optimal money, maximization of money-ness is where utility for anything else is minimized. Note.: BTC is only money, and asics do nothing but btc. Google for ''under the microscope true cost ''. When I say POW is the cheapest I mean cheapest then everything, not just PoS but also the traditional double-entry centralized-ledger book-keeping hierarchic system we call fiat.