“Proof-of-work” proves not to work for spam prevention (2004) [pdf]

https://www.cl.cam.ac.uk/~rnc1/proofwork.pdf

by bravogamma • 5 years ago

66 104 5 years ago

cl.cam.ac.uk

debacle• 5 years ago

For everyone who is a big fan of crypto, what is the next "big step" after PoS.

I am more than happy to use a cryptocurrency where I can take 1 USD and receive a coin that is worth ~1 USD, without needing the promise that it will be a moonshot "investment," merely a vehicle for value.

When is that coin coming our way?

larsiusprime2• 5 years ago

Other than proof of stake I've heard of two validation systems:

1. Proof of space and/or time: https://en.wikipedia.org/wiki/Proof_of_space#:~:text=A%20pro....

2. Proof of authority: https://en.wikipedia.org/wiki/Proof_of_authority

Not sure either makes a huge difference

skerit• 5 years ago

Helium network's proof of coverage is also interesting.

CuriousCosmic3• 5 years ago

Proof of Authority is extraordinarily useful but it's not inherently complex by any means (really it's just the old school consensus problems).

I'd argue though that Proof of Authority definitely is the most useful outside of Proof of Stake and the slowly maturing Proof of Useful Work consensus systems. It's simplistic but it perfectly covers the needs of a lot of government systems.

noxer3• 5 years ago

Before these and even before PoS there was FBA consensus which is the true successor of PoW designed by ex-BTC devs who saw the problems with PoW and actually came up with something better rather than just replacing the worst part of PoW with something else.

ChrisClark• 5 years ago

DAI has remained stable, even when ETH crashed 90%, Maker worked perfectly and DAI remained $1 USD.

ogogmad3• 5 years ago

This is an honest question, and I'm not trying to pour cold water on DAI. What would happen if DAI had a single centralised source of truth which could be mirrored as needed if people lost faith in the central entity? This is a bit like what Wikipedia has, which is a fully open database that can be mirrored ad infinitum -- but still remains the central source of truth as long as people respect the organisation that runs it. More broadly, does DAI really need to be on a blockchain*? Are there efficient non-blockchain ways to make verifiable stablecoins?

I ask this question because a lot of things that are run on blockchains seem like they're losing more than they're gaining. It makes me suspicious of even DAI.

When I say "fully open database", you might object that this compromises a person's privacy in order to make the database mirror-able. But then again, all blockchains are fully open and public, so there's nothing more to be lost there.

* - By which I mean the Ethereum blockchain, which is inefficient like all blockchains currently are.

bradwood• 5 years ago

funny how everyone refers to coins which are pegged to a massively inflationary fiat currency as "stable"...

Kranar• 5 years ago

https://coinmarketcap.com/currencies/multi-collateral-dai/

intunderflow• 5 years ago

Delegated Proof of Stake is pretty cool, particularly as its applied in Nano (instant and feeless transactions), if someone manages to combine that with the transaction privacy of Monero that would be awesome in my view.

0x642• 5 years ago

There is nothing cool about dPoS. Compared to PoS, it's an objectively worse system in terms of decentralization.

zenogais• 5 years ago

What you're looking for exists today and is called a stable-coin (for example, USDC).

vmception2• 5 years ago

MIM - Magic Internet Money, a stablecoin that just leans into the meme because the space is big enough to just ignore crypto/blockchain skeptics (and maxis) as you dont need buyin from them anymore to attract billions of dollars for validation. It competes with DAI, same system just natively crosschain (via AnySwap bridging function added to the erc20 class) and potentially maintains better collateral choices. Right now they use yield bearing collateral like liquidity pool shares which earn enough to reduce loan to value ratios and even pay interest on their own. In comparison, DAI was released in a world without onchain distributed asset backed securities and its users eventually picked completely centralized assets like USDC for collateral. This limits that communities’ risk tolerance for raising debt limits.

That part of your question about stablecoins doesn’t have much to do with a Proof of Stake though-a consensus model.

chrisco2552• 5 years ago

DAI is still an extremely important in decentralized finance. It is simply easier to scale a centralized stable coin than a collateralized one as the collateralized one is less capital efficient. The centralized coin has different risk parameters though, such as a bank run scenario or the fact that USDC funds can be frozen at will by Circle.

0x642• 5 years ago

On Ethereum the three most popular ones are DAI, USDC, and USDT. All are pegged to $1. There are also more niche stablecoinds, such as RAI.

https://ethereum.org/en/stablecoins

capableweb• 5 years ago

Worth to keep in mind is that USDT is involved in a lot of shady stuff (and run by Bitfinex), USDC is run by a centralized organization (and Coinbase is involved in that too) while DAI is based on algorithmic stability/stableness. Which one is the best choice for the normal user is left as an exercise to the reader.

jazzyjackson• 5 years ago

the moonshot premise is the growth hack - a reason for people to want the coin. anything stable is unlikely to find widespread adoption, unless it’s introduced by central banks, in which case it’s called Central Bank Digital Currency (CBDC)

analog31• 5 years ago

PoD = Proof of Dollar. ;-)

DaiPlusPlus• 5 years ago

That’s what Tether is… ostensibly

0x4d464d48• 5 years ago

"When is that coin coming our way?"

My guess is around the time central banks start issuing it.

PKop• 5 years ago

Really? Stable-coins as a concept have existed for years, and in practice have blown up in trading volume and circulation the past 2 years.

USDC stable-coin [0]($34 Billion in circulation) is arguably the most trustworthy in terms of having a 1 to 1 exchangeable backing through a regulated centralized custodian (Circle/Coinbase primarily but also BlockFi and other entities that hold USD reserves for exchange).

Many of these entities (as well as "DeFi" decentralized finance platforms that use Ethereum or similar smart contracts to decentralize the process) allow for various forms of deposit and lending accounts that provide a whole range of yields way way above traditional banking deposits. On top of this, some of these custodians add an additional layer of payment ability to these deposit accounts. Crypto.com[1] for example has a Visa debit card that ties into your USDC/stable coin deposits that you can transact from, in theory avoiding needing to use fiat at all. As well as "CD-like" 3-month lockups where you can get 8-12% yield.

There are also many decentralized stable coins that have various forms of over-collateralized crypto-asset reserves backing the coin and algorithms to stabilize the value by buying or selling from these reserves, trading off possible volatility and uncertainty around peg to avoid centralization and KYC and other regulations of 1:1 backed coins.[2]

[0] https://www.circle.com/en/usdc

[1] https://crypto.com/us/earn

[2] $MIM dollar stable-coin: https://cointelegraph.com/news/magic-internet-money-races-pa...

rvz• 5 years ago

When is that coin coming our way?

Today. It is called USDC; but on the Stellar Blockchain. [0]

You will always know that 1 USDC will always be worth 1 USD and you won't have to deal with ridiculously slow transactions or incredibly high gas fees for every operation and it is not using PoW. [0]

[0] https://stellar.org/usdc

chrisco2552• 5 years ago

There is already nearly $100B worth of stable coins available on the Ethereum blockchain (and other EVM chains such as Polygon): https://defipulse.com/usd.

adhoc32• 5 years ago

Proof of work is the only system where you can look at the blockchain data and figure out the consensus. All other systems depends on people agreeing on what is the truth. PoW is not just superior, it's essential for true decentralized crypto.

1ark• 5 years ago

From an consensus perspective PPoS (Pure Proof of Stake) and PoH (Proof of History) are next steps. If you want to send around USD you can use UST for example, an algorithmic stablecoin.

larsiusprime2• 5 years ago

For context, Bitcoin launched in 2008, and this paper, concerning proof-of-work as an anti-spam prevention measure, launched in 2004.

Question: has any email system attempted proof of work? Did it run into the problems this paper predicted?

max_3• 5 years ago

Has any email system attempted proof of work?

You might want to have a look at hashcash[0]

[0] https://en.wikipedia.org/wiki/Hashcash

0xdeadb00f• 5 years ago

For email uses, a textual encoding of a hashcash stamp is added to the header of an email to prove the sender has expended a modest amount of CPU time calculating the stamp prior to sending the email. In other words, as the sender has taken a certain amount of time to generate the stamp and send the email, it is unlikely that they are a spammer.

I can see exactly why this wouldn't work - nowadays wouldn't spammers have enough processing power to just do this for every spam email? And how does this not slow down email processing for the end-user, sending an email now requires me to brute-force a hash, right?

surajs• 5 years ago

Ouch, I guess there's a bureaucracy behind the ontology of any proof of work, although spam/email was a good use case but perhaps crypto is a finer expression, so the paper's main thesis is partially right but it's still used as a spam filter so I guess there's a utility there.

max_3• 5 years ago

Alot of sentiment today thinks proof of work is a waste of energy, but I assert that it can solve a lot more problems beyond its use for "Nakamoto Consensus".

I don't think anything else can solve decentralized rate limiting more effectively than proof of work.

I wrote a short blog post about the use of Proof of work beyond crypto mining [0]

[0] https://as1ndu.xyz/2019/11/proof-of-work-on-layer-two/

delusional• 5 years ago

Alot of sentiment today thinks proof of work is a waste of energy, but I assert that it can solve a lot more problems beyond its use for "Nakamoto Consensus".

When you use "but" it's customary for the following statement to disprove or argue against the previous statement. How does it being applicable to more stuff stop it from being a gigantic waste of energy?

max_3• 5 years ago

How does it being applicable to more stuff stop it from being a gigantic waste of energy?

"Applicable" means that it is useful, as it solves the problems I talk about in the post.

wackro• 5 years ago

It's all in the link he posted

michaelscott• 5 years ago

Everything expends energy in order to solve some problem or accomplish some goal. Whether the problem is worth solving or the goal worth pursuing given the required energy is subjective, but beside the point. If it can solve more problems then the expending of energy becomes more justified.

robbedpeter• 5 years ago

It being a waste is a matter of opinion. There are negative externalities in some cases, but profit and services generated by the use of crypto have value to people.

If the problem is the pollution produced by power generation, then it's disingenuous to single out crypto for criticism. We really should be enforcing accountability and forcing markets to price in the negative externalities. Carbon capture and other technologies are surfacing to allow for that, and within a decade or so we should see widespread implementation. Legislation will arise out of the consensus of voters and mate technology and regulation.

If the problem is that you think crypto is frivolous or implicitly a waste of resources?

"Well, that's just, like, your opinion, man..."

nathias• 5 years ago

something is a waste if it is not useful, making new uses makes it less of a waste by definition

jayd16• 5 years ago

I guess to some degree waste is value judgement but by definition POW is never not incredibly expensive relative to the value it provides.

It needs to always be expensive or the system is vulnerable to a sudden burst of new and malicious workers.

staticassertion• 5 years ago

I certainly look forward to seeing real problems solved with these algorithms, but right now that work seems to be lost in the noise of crypto.

I'd be curious to hear more about decentralized rate limiting. That sounds like a reasonable problem to solve with PoW. Although it also sounds like a problem I can solve pretty easily today without PoW so idk.

CuriousCosmic3• 5 years ago

I posted about this elsewhere in this thread but you might be interested in this paper:

https://eprint.iacr.org/2021/1379

It gets about 50% efficiency compared to the current state of the art for the problem space without compromising any of the security properties that make for a good PoW algorithm. Generally I'm not a fan of PoW and prefer internal resource based consensus algorithms but PoUW algorithms seem rather interesting. I think we are reaching a point of maturity in the space that'll allow these types of self-securing service marketplaces (which really is what PoUW is) to reach their logical conclusion.

xg157• 5 years ago

The fundamental technical problem I see with PoW is that it only seldomly really aligns with the "good guy/bad guy" boundary.

I.e. the basic purpose of PoW is security: Allow desirable actors in, keep malicious actors out. But this implies that "ability to put in more work" is actually a working way to distinguish good actors from bad actors. This is true in very specific cases, like blockchains - but I believe in most cases, this is actually not given, such as emails.

E.g., suppose we're using PoW to secure email: We do away with SPIF and all that and simply require each email to contain some hash that a sender had to bruteforce (just an example: use whatever PoW scheme you want).

If the scheme has a fixed difficulty, spammers can easily defeat it - they just have to rent (or capture) more machines. So you have to dynamically adjust the difficulty to meet some message/time unit quota. Congrats, suddenly the whole network is limitited to some maximum throughput. Alternatively, you can have separate difficulties for each user - but then, you need a way to track individual users, compute individual difficulties, etc. All of this needs some centralized entity again and agents that enforce the rules. If you have all that, why not use traditional rate limit and forgo the energy (or resource) waste?

marcosdumay• 5 years ago

Well as an example, it's used in cryptographic key generator functions.

But there aren't many things it solves well. The easiest and most economical solution to "decentralizing rate limiting" is usually centralizing something.

CuriousCosmic3• 5 years ago

“Proof-of-work” proves not to work for spam prevention (2004) [pdf]

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