And you missed the essential caveat; aprox 4.11% of Bitcoin addresses control 96.53% of all BTC in circulation. This is a conservative estimate, as anyone familiar with how Bitcoin addresses and wallets work, would know one user is likely controlling many addresses.
A perfect example of this, is a few days ago 1933phfhK3ZgFQNLGSDXvqCn32k2buXY8a created a script to subdivide 111,114 BTC into several hundred addresses, from 60,000 / 30,000 / 20,000 / 10,000 / 5,000 / 500 and then to 100 BTC accounts, over the course of a few hours. [2] Following the movement here now leads to recent deposits into the Binance and Bitfinex wallets.
And most importantly, on the computer science behind Ethereum - In any DLT network with an adversarial threat model it's impossible to create a smart contract with any functionality relying on external data inputs (betting on the outcome of a sports game, or tracking any real world data input) within the network as there's no way to validate the authenticity of that data unless a trusted 3rd party is designated, at which point the network becomes useless. Not even to mention the question of why anyone would want to use a token with such wildly fluctuating market price, and who's supply is controlled by a small userbase of oligarchs.
Additionally, the entire cryptocoin market has an Achilles' heel.. Tether, and Bitfinex are widely suspected of counterfeiting aprox $4,000,000,000 USD (by producing USDT for free anytime they want) [3] [4] [5]
[1] https://www.sec.gov/rules/sro/cboebzx/2018/34-83520.pdf
[2] https://www.reddit.com/r/Bitcoin/comments/9bfnff/near_1b_are...
[3] https://medium.com/@bitfinexed/latest
[4] https://blog.chainalysis.com/reports/tether-aug
[5] https://www.bloomberg.com/news/articles/2018-08-24/not-even-...
Mining pools form due to the transaction costs of decentralization.
"decentralized" except not.
72,009,99 of the 101,684,297 Ether means the Ethereum network has a worse Gini coefficient than North Korea or really any Fiat based economy.
See also: "Quantifying decentralization"
https://news.earn.com/quantifying-decentralization-e39db233c...
"How long would it be before you saw traders investing in a way that would bring about the desired result?"
As in, if one found a way to bet against your car remaining in tact and realized sabotaging your car was cost effective to manipulate their bet, then they reap the market pay out. Is this good?
https://en.wikipedia.org/wiki/Information_Awareness_Office#F...
This means a sybil attack can be launched by anyone behind the Augur project (assuming they set aside large reserves of REP for themselves, how would anyone know?), or anyone who acquired thousands of ETH in the presale for $0.50USD, or anyone with excessive capital can attack any Augur "prediction" and manipulate the outcome in their favor.
Augur essentially gives total power to manipulate "truth" though tokens / capital.
(edit, downvoting to suppress information? please explain why this post is wrong)
https://www.stellar.org/about/mandate/
Lumen Distribution
>SDF manages the execution of lumen distribution, with oversight and direction provided by SDF’s Expansion Board. The initial lumens held by SDF are required to be distributed to the world in the following manner:
50% for distribution via the Direct Sign-up Program
25% for distribution via the Partnership Program
20% for distribution via the Bitcoin Program
5% held by SDF to support operational costs
>The Stellar Network has a built-in, fixed, nominal inflation mechanism. New lumens are added to the network at the rate of 1% each year. Each week, the protocol distributes these lumens to any account that gets over .05% of the “votes” from other accounts in the network.
The cryptocoin community has an established Modus operandi.
Write a piece of software that generates a supply of database tokens, and write the rules in such a way that they gain majority ownership and distribute a large portion of the supply to a few early "whales". These early users then act in every way they can to spread promotional promises and propaganda to the public in an attempt to convince people they too can become an oligarch of this token system that will surely be the future (as they sell their tokens for fiat) and all they need to do is "hodl" the supply and wait of course.
It's like some evolution of Multi-Level-Marketing meets penny stock.
How would someone 3 years from now have access to generate coins/tokens after the protocol increases the difficulty and stops generating coins so easily?
Wouldn't it be cheaper just to run a normal DNS server? What's the use case?
We already have https://www.eff.org/observatory, and anyone can run a DNS server for free.
Guessing an insider on is hoping to exploit this for financial gain and control of this isolated DNS pool.
and why would users want to participate in a protocol which inherently relinquishes centralized accountability and responsibility, in favor of a security model that allows any of these mining warehouse operations run by anonymous robber barrons with enough excess capital to fill up an entire building with random number generating electricity wasting heaters?
Who thinks this is seriously a good idea for anything other then exploiting greater fools to sell digital beanie babies to?
Immune to country-
specific sanctions
(e.g. Russia-Visa)
If you want an example of an ancap society visit Somalia and read the book "The Jungle" by Upton Sinclair.
Transparency in moderation here at HN is immensely appreciated and respected.
Manipulation of arbitrage and suppression/prioritization of transactions.
This was demonstrated in an attack on the Ethereum network by the mining pool F2Pool, where a timed smart contract was manipulated by the mining pool to prioritize its own transaction and ignore other users transactions.
One of the main reasons this ETF was rejected is because many of the major exchanges like Bitfinex, BitMEX, Binance, and Kraken are alleged to be manipulators of spot price though wash trading, and front running their customers.
>"[23] Bitcoin are interchangeable, so that a purchaser is sure to get exactly the same thing no matter where she purchases it."
This is no longer true. Bitcoin transactions that have history tied to stolen funds, and illegal black market transactions will get your exchange account frozen and bank account flagged. ( see BTCe caught laundering MTGox funds https://www.theguardian.com/technology/2017/jul/27/russian-c... )
>[24] In addition, bitcoin mining is not geographically limited (except to the extent it migrates to places with cheap electricity), so it is not subject to geopolitical threats that plague other commodity markets.
This is a naive and incorrect risk assessment. Any large ISP is in a position to interfere, suppress, and drop traffic. Chinese based Bitmain, the largest BTC ASIC mining manufacture and the top known mining pools based in China are currently controlling over 40% of network block activity.
i.e. recent news about the Ethereum based Augur prediction markets being used to place bets that would incentivize murder and terrorism have been removed from the front page. Similar articles are quickly being removed, normally a mod will comment with a link to another submission that was submitted.
What if someone just programs more programmable money?
Also why would anyone want to use a system where over 71% of all money is owned by a small group of anonymous oligarchs?
Presale ICO / Premine ( max cost $0.50 USD per ETH )
= 72,009,990 ETH
Total Supply today (Jul 19th 2018)
= 100,773,797 ETH
Source:
https://etherscan.io/stat/supply
It's ironic you would single out Bitcoin Cash as an attempt by the software devs to defraud people.
Take a look at how Ethereum, Bitcoin Core, or any of the top 10, 50, or really any cryptocoin, DAG, or blockchain inspired project works in regards to defrauding new users by extracting their wealth to enrich the early adopters.
The very nature of Satoshi's Proof-of-Work protocol is to establish a new oligarchy which exploits anyone without access to surplus capital that can be wasted on expensive random number generators for the mining protocol.
One important point: if we actually include all 7 billion
people on the earth, most of whom have zero BTC or
Ethereum, the Gini coefficient is essentially 0.99+. And
if we just include all balances, we include many dust
balances which would again put the Gini coefficient at
0.99+. Thus, we need some kind of threshold here. The
imperfect threshold we picked was the Gini coefficient
among accounts with ≥185 BTC per address, and ≥2477 ETH
per address. So this is the distribution of ownership
among the Bitcoin and Ethereum rich with $500k as of July
2017.
In what kind of situation would a thresholded metric like
this be interesting? Perhaps in a scenario similar to the
ongoing IRS Coinbase issue, where the IRS is seeking
information on all holders with balances >$20,000.
Conceptualized in terms of an attack, a high Gini
coefficient would mean that a government would only need
to round up a few large holders in order to acquire a
large percentage of outstanding cryptocurrency — and with
it the ability to tank the price.
With that said, two points. First, while one would not
want a Gini coefficient of exactly 1.0 for BTC or ETH (as
then only one person would have all of the digital
currency, and no one would have an incentive to help boost
the network), in practice it appears that a very high
level of wealth centralization is still compatible with
the operation of a decentralized protocol. Second, as we
show below, we think the Nakamoto coefficient is a better
metric than the Gini coefficient for measuring holder
concentration in particular as it obviates the issue of
arbitrarily choosing a threshold.
...However, the maximum Gini coefficient has one obvious
issue: while a high value tracks with our intuitive notion
of a “more centralized” system, the fact that each Gini
coefficient is restricted to a 0–1 scale means that it
does not directly measure the number of individuals or
entities required to compromise a system.
Specifically, for a given blockchain suppose you have a
subsystem of exchanges with 1000 actors with a Gini
coefficient of 0.8, and another subsystem of 10 miners
with a Gini coefficient of 0.7. It may turn out that
compromising only 3 miners rather than 57 exchanges may be
sufficient to compromise this system, which would mean the
maximum Gini coefficient would have pointed to exchanges
rather than miners as the decentralization bottleneck.
Conversely, if one considers “number of distinct countries
with substantial mining capacity” an essential subsystem,
then the minimum Nakamoto coefficient for Bitcoin would
again be 1, as the compromise of China (in the sense of a
Chinese government crackdown on mining) would result in
>51% of mining being compromised.
Presale ICO / Premine ( max cost $0.50 USD per ETH )
= 72,009,990 ETH
Total Supply today (Feb 23rd 2018)
= 97,800,000 ETH
Source:
https://etherscan.io/stat/supply