In what way? If they distribute decision-making power by who has the most currency, then it's not really democratic.
From the very outset, it's explicit that the system is designed such that network security and correct-operation-as-designed was based on making that behavior optimal for those with the most to lose.
In other words, miners make the most money when they operate the network as designed. Potentially malicious actors get less return behaving maliciously than they do otherwise. It's simple, dumb, brutal, and effective.
What's important is that the design of the system allows anyone with an internet connection to participate, and is in that sense open to all.
BTW, ownership of currency literally doesn't matter in a proof-of-work currency (other than the ability to affect trading price). Only in proof-of-stake systems is that a possibility, and it may be possible, through careful design, to avoid that.
- disincentivize those participating in network decisions from making them in bad faith
- ditch the bad/evil network and form their own (and if they wish and can agree upon it, punish evil participants by not giving them equal money on the forked network which would theoretically become the main one in time)
It will always be in someone's interest to attempt to take control of a network, thus eventually causing opposition interest to fork the network, thus continued fragmentation and impenetrability w.r.t. normal users
Basically, how do you solve the "government and/or private individual/group with enough wealth and/or access to resources can take control of a cryptocurrency by acquiring majority consensus" problem?
I'm not saying this is fool proof, but the innovation of Bitcoin is precisely the system which is designed to resist these things (again, it's still very hard).
It's proven it can do all of these things except that it can be used as a "medium of exchange". It doesn't mean it's not possible, it just hasn't proven it yet. All crypto has proven is that we can create a digital version of bullion, that doesn't have all of the same issues as trying to barter bullion.
Anyways, solely by the fact that some people use it as a means of an exchange - Bitcoin is a viable medium of exchange.
Is it perfect? Is it great (considering current legal realities etc.)? Can it be used by everyone on the globe? Currently the answer to all three is "no", but it has a non-negligible chance to improve in all these aspects.
I like the concept of LN, but I am unsure what kind of on/off-ramp fees (I am only worried if it's in the thousands of dollars or more) people might have to pay in order to increase the funds of their node - and more importantly open/close channels (because services for topping up will surely be much cheaper than opening/closing channels). I'm not worried about that now, but in the future once a large percentage of the world might be using it as their primary financial interface.
And lastly, a big concern for me is the legal situation of crypto and LN (LN separate because it's much more anonymous). While technically nobody can stop you from using LN, it would be much better if I could run my node and use it for the majority of my financial activity(including receiving salary).
If I've said something reminiscent of concern trolls, please note that I think that Bitcoin still has the greatest potential (over Bitcoin Cash and Ethereum).
P.S. I'd also like to know when we'll have a user-friendly, relatively bug-free (will never lose money) app for using LN. Or have I missed that?
This seems to be the fundamental piece of Bitcoin dogma that still gives a modicum of hope to Blockchain enthusiasts. Let me try to get the record straight:
Firstly, “Bitcoin” is not tied to any blockchain by the laws of physics. Some people call the BTC blockchain “Bitcoin”, some people call the BCH blockchain “Bitcoin”, and some people call the sum of both UTXO sets “Bitcoin”. Some even call the set of all forks that originate from Satoshi’s genesis block “Bitcoin”. To wit, there is no set-in-stone definition of which blockchain is “Bitcoin” in the event of a fork. Some think it’s “most POW”, others say that’s not true because users can change the POW algo to escape from centralized miner takeover. The latter camp will argue that the fork that the economic majority call “Bitcoin” is Bitcoin. Some will say Bitcoin must use SHA256, others will disagree. Some say that the 21M supply cap is a defining characteristic of Bitcoin, others will say that if the majority of the network wants to change it to 22M, then that’s the new Bitcoin. So I think it’s clear at this point that Bitcoin is not tied to any one blockchain and is actually determined by social consensus.
Here’s a thought exercise: Say exactly half of the investors think a hard fork should be done to make Bitcoin fungible and anonymous (like Monero), but the other half disagrees. If such a fork happens, there is a social struggle to establish consensus on which fork is “Bitcoin”. It is impossible to accurately measure which side is “winning”. Maybe you can do Twitter polls to ask people which blockchain they think is Bitcoin, but we all know that such surveys can be trivially manipulated. So there is no robust way to mathematically determine which blockchain is Bitcoin. You may believe “BTC-Fungible” is Bitcoin but you have to understand that someone else, or the majority of the market even, may disagree with you and believe that “BTC-Non-Fungible” is Bitcoin.
A historical example: In 2013, due to a bug, there were 2 Bitcoin blockchains: the v0.8 blockchain and the v0.7 blockchain. For the time during which the 24 forked blocks were being mined in parallel, which blockchain was Bitcoin? The most reasonable answer is “both” but admittedly it’s not clear. Others would say it was v0.8 because it had more hash rate? But then Bitcoin just rolled back after 24 blocks mined? That doesn’t sound very immutable...
Anyway, this is where double-spending comes in. When the fork was happening, double spends could be done easily without having to be or work with a miner. Just send the merchant Bitcoin on the v0.8 fork. Luke DashJr could have easily done this since he’s the one that called for that chain to be dropped. Then, when the social consensus resolves on v0.7 being Bitcoin, it’s too late (24 blocks): the merchant already accepted your v0.8 tokens and you’re free to spend them again somewhere else on the v0.7 chain.
In conclusion, proof-of-work consensus does not rule Bitcoin, social consensus does. Double-spends are easy to understand when you talk about Bitcoin as being a God-given or set-in-stone ruleset. However, the rules of Bitcoin are in constant flux, determined by the market. This makes double-spends a social problem, not one resolved by code.
Social consensus, however, doesn't affect the standard 'malicious' double-spend cheat. You're not going to get social consensus forming around an obvious 'criminal' behavior. It's only going to happen around political issues like network governance/rules (like the DAO), technical bugs (like BTC forks), or global political issues (Satoshi Dice blacklist?).
Considering this a criticism of cryptocurrencies is inane. We're all just apes shouting at each other about value. We can just as easily blacklist or boycott each other outside of any kind of value-information network to achieve the same effect; recognizing that this behavior can become part of the network is trivial.
Social/political elements will always be the ultimately arbiter precisely because human assessments of value aren't physical or mathematical realities. This is overwhelmingly obvious when stated explicitly, but for whatever reason this is seen as some sort of 'gotcha!'
Bitcoin still achieves an entirely novel way for humans to communicate information about value. It is still qualitatively different from anything that has come before precisely because it is reliably a consensus mechanism. Nakamoto consensus is the innovation, yet many do not understand this consensus.
You haven’t refuted my point with any evidence. I’ve shown how one could spend a digital token twice by taking advantage of weak social consensus (see my Luke DashJr example). This attack bypasses Nakamoto consensus. You don’t need any hashrate or material wealth to pull this off, you just need social capital... or a wrench https://xkcd.com/538/
Hopefully I can sort some stuff out for myself too while responding to this. I'm not trying to overstate my knowledge on the subject (it's hard to understate it), just trying to reason this out for myself due to the fact that it's hard to find credible argumentation online.
Double-spending in digital currencies has been solved before.
Blockchain is one of the potential solutions for double spending in fully-distributed digital currencies.
I concede this: It's true that a blockchain is just an distributed immutable series of transactions, aka a slower database. I agree that that's overhyped and people don't need things like IBM Hyperledger, and basically any private blockchain or one that depends on trusted parties(the great majority of coins that boast to be faster than Bitcoin).
However, I believe all that misses the actual point and proves the ignorance of most such articles, because it is also true that cryptocurrencies solve the previously unsolved double spending problem and provide true, distributed, open-to-all decision making. Of course, from this I exclude the great majority of centralized shitcoin cash grabs / delusions.
Yes, there are scaling issues which might never be surmounted (I'd call it 50-50 that things like Lightning Network / Ethereum sharding will succeed One Day™). However, having an open, open source global payment/calculation/information network is a thing of great potential.