Comments by "SAL" (@SAL-fs1mr) on "The Problem with Bitcoin | Charles Hoskinson and Lex Fridman" video.
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@kevinteo8149 1. a minority of whales will always control the majority of supply, no matter the system. this becomes an insurmountable problem for PoS systems. I've studied ADA closely, and there is no mechanism to prevent whales from distributing their coins over many staking pools, they just have to optimize each of their pools to a size that isn't too big or too small, and pretend their many pools are independent. it just gives the appearance of decentralization, but in reality it isn't. Faux decentralization, if you will, don't fall for it. over time, the whales who have majority of the coins will have "democratic" voting and easily push changes they want through PoS systems, it will appear fair and decentralized, like how pools appear to be, but it won't be.
2. the cheapest electricity is available all over the globe because the cheapest energy comes from renewables that are outside populated areas. It's unreasonably far fetched to think only a single country to have all solar and wind power to themselves.
3. The choice is a) bitcoin - true immutability of the base blockchain that has set rules but no rulers (not even satoshi has authority to change the rules), or b) altcoins, which have governance structures that sacrifice immutability of the protocol. I know which I want as my money system.
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@kevinteo8149 "Whales can only make limited number of pools" - how is that enforced exactly? they can just go and pledge portions to many pools, there is no limit. people looking at all the many different pools can be easily fooled to think they are independent, but in reality, the majority of pools are probably just controlled by a handful of whales. at the end of the day, there will be still be a small number of whales who control over 50% of the coin supply, and the number of coins they control over time will keep increasing in absolute terms over the majority who control less than 50% of the supply. this leads to worsening centralization over time, and this goes for all PoS systems. Then when protocol upgrades get voted on, the whale minority always gets to pick and choose whatever they want in their own favor (this is just oligarchy, which is what we have everywhere in society today, so I hope you can understand my lack of enthusiasm for any PoS systems). In bitcoin, miners don't get to change the protocol and neither do whales. ossification just means lack of flexibility of change, which is what you expect in a neutral protocol becoming more entrenched and decentralized. PoS projects don't have neutrality due to the whale problem outlined above.
In years past, yes, asics did lead to centralization due to manufacturers using their own machines (profitability was there regardless of electricity cost), but that was due to the rapid rate of chip improvement because it wasn't yet in line with the rate of moore's law. but now it is, which is why mining decentralization is improving again (this was noticeable well before the recent chinese gov crackdown on mining).
Having bitcoin as a sound base digital money system is by far the most important invention since the internet. Defi is cool, but it is still just bells and whistles compared to the invention of Bitcoin. I wouldn't say I'm confident in any bitcoin defi protocols yet, i'm going to wait several more years to see what gets developed. I believe some will choose L2 speed and some will choose L1 security depending on individual preference. L2 protocol changes are definitely the way to go when it comes to adding functionality to bitcoin. we already see it with lightning network, which gets upgraded very rapidly.
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@kevinteo8149 The pools will have decreased rewards if a pool has too much stake right? so to me, the incentive seems to be for whales to have many pools that are medium in size. The dynamic of large companies are such that several key players get to make changes in a top down way (impose their decision on the majority), hence my concern about PoS just resulting in another oligarchical type system. I'll read up on atala prism, but forcing identity raises other problems. Now i will say it is a big mistake to assume only large datacenters will run bitcoin nodes in the future, this issue was at the heart of the blocksize war. Fortunately, small blockers won, meaning that the bitcoin blockchain won't grow uncontrollably (can't grow much more than 100 gigs per year). This means that even after another 10-20 years, it will still be very possible to run bitcoin nodes on the average computer systems of today (and likely much easier on future computer systems). Keep in mind that even though blockchain growth is limited, it doesn't mean economic growth is. You're right, moore's law is an observation, it does little to show hardware will decentralize. I didn't consider the possibility of defi smart contracts becoming more ubiquitous than bitcoin. If we see more adoption of stable coins over bitcoin, then it could play out that way. but with the rate of inflation we see in fiat, that might discourage stable coin use, but then again, maybe the yield from defi makes up for it. i'll have to think about it more.
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