Quote from: cbeast on December 04, 2014, 11:49:09 PM

Quote from: jabo38 on December 04, 2014, 03:27:53 PM

I am lucky because I lived in one of the poorest places in the world, a poor village in one of the poorest countries in Africa (no running water no electric no telecommunications and so on).

An interesting story. Why do you consider them poor? Is it because they have no good work to earn money? Do you think they would not work for Western wages if they had the opportunity? Work is important. Wages are your Proof of Work. That's how you stop being poor. We all have to work. How can you morally justify someone getting rich without working when there are so many starving children in Africa?

I know this argument is long, but stay with me for a minute.

None of them had a car but the guy with a small shop. It was an old pick-up. He sold bags of rice and coke-a-cola, soap, toilet paper, beer, tobacco, and other most basic things. He had no employees. That was the only western style business within walking distance. Money only comes into the village from people that have left the village to work in one of the cities. They get there by walking to the road and hitching a ride from there (I did this myself so many times).

The rest of the "economy" is communal. Not communism as taught by Marx, but communal. The houses are built from materials sourced locally; rocks from the field for walls, branches from trees for roof beams and grass from near the river for thatch to finish off the roof, and dung from animals to finish off the walls and floor. The people locally raise animals that are slaughtered for weddings and funerals. For daily meals they eat food veggies and grains grown locally.

Most of course would work for western wages if they could and there simply aren't jobs within walking distance. (Exception being a small school that is an hour walk away in a different village that has a teacher being paid by the government). They could of course hitch a ride to the city and try to find work, and a few younger ones do, but most don't. There is a chance for work but the process is psychologically intimidating because it's a world they don't understand well.

The people do work every single day and are not lazy, but a wage is not there proof of work. That is a western concept. For them a good is the product of their work. They literally have fruits from their labor whether it be meat, a house, or a plate of food. They can exactly look at their labor and judge if the amount of labor is worth the end good.

With Bitcoin the system gets way more complicated. Whereas the African has a simple one to one judgment of asking himself "was today's work worth the fruits?", in Bitcoin there are multiple parties involved asking themselves this question. I'll leave the developers out of the equation and just focus on the miners and the end users.

The case for the miners is quite simple. If I run this ASIC, will I get a just reword for my work/waste of electricity and computational power? I say waste because most of the power being used doesn't actually produce an end result. An African farmer might only have a 25% success rate per seed to plant. The other 75% of his effort was wasted in trying to get that 25%. If he could improve efficiency, he would be much better off. His cost per fruit would be much lower. How many hashes does a miner waste before finding the productive one? I think the answer is, A LOT. Now when a good hash is found a large reward is given. And so miners can justify whether or not it is profitable to run an ASIC. It is a simple question of work done for reward, just like the farmer. And for the miners it is a system that works well.

But what about for the end user? What are they paying for and is the service they pay for worth the service received. When a person puts a record into the blockchain it costs about $0.04 which all things being considered is pretty cheap. Somebody just recently moved millions of dollars worth of Bitcoin for that small fee. What a great deal! But how much did it cost the whole system. See that exchange only paid four cents to make that transaction, but the real price of that transaction came from me and you. It came via the fact that the miner that made the block was rewarded bitcoins. Those bitcoins diluted the total supply. Effectively taxing me and taxing you a little bit for his transaction. That guy didn't pay the fee for the transaction, we did. The miner didnt mine that block for the transaction fee, he did it for the block reward, a reward that is a tax me and on my existing bitcoins because they are now worth less because of the dilution.

So the question I need to ask as an end user is, "am I getting a good service for what I'm paying?" The service I'm getting is trust with a community of people that can see my record of bitcoins. They can trust I have Bitcoins and I can trust that they can trust that and vice versa. Anonymint has some pretty weird ideas but sometimes he comes up with a good point. I don't know if his numbers are right but he said the real cost in miner rewards is $30 per transaction. This comes via dilution of your and mine money. It's easy to figure out. Just figure out how many transactions were processed and divide it from the block reward. That's how much a transaction really costs.

A system where a user only pays $0.04 per transaction but the community as a whole was taxed $30 is simply just not sustainable. When I as an end user pay more for a good or service than its actual value, then a bubble is created. Right now there is an effective bubble of $29.96 per transaction out of $30.

Now we are in an early stage of Bitcoins development and PoW whether you consider it work or waste is actually a very successful system right now. But will it always be? When the block rewards go down dramatically, then I as an end user am no longer being taxed for the action of others putting a record in the blockchain. It's a big win for me. At that point the miners are working more for the transaction fees, so now we need to ask ourselves "is it worth it for them?" Remember right now the network is currently subsidizing miners at a rate of $29.96 per transaction via taxes on the people. We all know that miners are selfish. If they won't continue to be paid well then they won't work. Just like farmer that can't get a certain crop to grow moves on to a new crop, a miner of PoW will move onto a different chain or just stop being a miner all together. Here in lies the problem with a system of waste to secure the blockchain, in the long run it just feels like to me it can't continue. The end users and miners need to come to an agreement on how the chain will be secured. With PoW so many hashes are being wasted per transaction. What we need to find is a way to increase our hash per fruit of labor ratio. That way the system isnt being taxed and subsidized so much.

In different proof-of-x systems this problem is being solved in that the end user is securing the blockchain at the same time they are using it (not the miners). They are not wasting as many hashes and the fruit of labor per hash ratio is more balanced. They are putting their energy and computational power to as good as use and most efficient use as possible. This brings down the cost per transaction to the whole system down much lower. In a pure proof of stake system, you and I are not taxed at all per transaction of other people. As an end user, this sounds better to me. Why have my money diluted via miners fees when I can have my money not diluted at all on a different chain?

I think PoW is and has been an amazing system and I own a lot of Bitcoin, but honesty when a more beautiful blockchain comes around, one in which I'm not getting taxed so heavily for being provided with my network of trust, I will move to that blockchain. See miners aren't the only selfish actors; end users are selfish too. Right now I use Bitcoin because it is the main and only real option to me, but in the future that may or may not always be the case.