Inside Russia's Largest Bitcoin Mine - Bloomberg

Eth 2.0 vs Polkadot and other musings by a fundamental investor

Spent about two hours on this post and I decided it would help the community if I made it more visible. Comment was made as a response to this
I’m trying to avoid falling into a maximalist mindset over time. This isn’t a 100% ETH question, but I’m trying to stay educated about emerging tech.
Can someone help me see the downsides of diversifying into DOTs?
I know Polkadot is more centralized, VC backed, and generally against our ethos here. On chain governance might introduce some unknown risks. What else am I missing?
I see a bunch of posts about how Ethereum and Polkadot can thrive together, but are they not both L1 competitors?
Response:
What else am I missing?
The upsides.
Most of the guys responding to you here are full Eth maxis who drank the Parity is bad koolaid. They are married to their investment and basically emotional / tribal in an area where you should have a cool head. Sure, you might get more upvotes on Reddit if you do and say what the crowd wants, but do you want upvotes and fleeting validation or do you want returns on your investment? Do you want to be these guys or do you want to be the shareholder making bank off of those guys?
Disclaimer: I'm both an Eth whale and a Dot whale, and have been in crypto for close to a decade now. I originally bought ether sub $10 after researching it for at least a thousand hours. Rode to $1500 and down to $60. Iron hands - my intent has always been to reconsider my Eth position after proof of stake is out. I invested in the 2017 Dot public sale with the plan of flipping profits back to Eth but keeping Dots looks like the right short and long term play now. I am not a trader, I just take a deep tech dive every couple of years and invest in fundamentals.
Now as for your concerns:
I know Polkadot is more centralized
The sad truth is that the market doesn't really care about this. At all. There is no real statistic to show at what point a coin is "decentralized" or "too centralized". For example, bitcoin has been completely taken over by Chinese mining farms for about five years now. Last I checked, they control above 85% of the hashing power, they just spread it among different mining pools to make it look decentralized. They have had the ability to fake or block transactions for all this time but it has never been in their best interest to do so: messing with bitcoin in that way would crash its price, therefore their bitcoin holdings, their mining equipment, and their company stock (some of them worth billions) would evaporate. So they won't do it due to economics, but not because they can't.
That is the major point I want to get across; originally Bitcoin couldn't be messed with because it was decentralized, but now Bitcoin is centralized but it's still not messed with due to economics. It is basically ChinaCoin at this point, but the market doesn't care, and it still enjoys over 50% of the total crypto market cap.
So how does this relate to Polkadot? Well fortunately most chains - Ethereum included - are working towards proof of stake. This is obviously better for the environment, but it also has a massive benefit for token holders. If a hostile party wanted to take over a proof of stake chain they'd have to buy up a massive share of the network. The moment they force through a malicious transaction a proof of stake blockchain has the option to fork them off. It would be messy for a few days, but by the end of the week the hostile party would have a large amount of now worthless tokens, and the proof of stake community would have moved on to a version of the blockchain where the hostile party's tokens have been slashed to zero. So not only does the market not care about centralization (Bitcoin example), but proof of stake makes token holders even safer.
That being said, Polkadot's "centralization" is not that far off to Ethereum. The Web3 foundation kept 30% of the Dots while the Ethereum Foundation kept 17%. There are whales in Polkadot but Ethereum has them too - 40% of all genesis Ether went to 100 wallets, and many suspect that the original Ethereum ICO was sybiled to make it look more popular and decentralized than it really was. But you don't really care about that do you? Neither do I. Whales are a fact of life.
VC backed
VCs are part of the crypto game now. There is no way to get rid of them, and there is no real reason why you should want to get rid of them. They put their capital at risk (same as you and me) and seek returns on their investment (same as you and me). They are both in Polkadot and Ethereum, and have been for years now. I have no issue with them as long as they don't play around with insider information, but that is another topic. To be honest, I would be worried if VCs did not endorse chains I'm researching, but maybe that's because my investing style isn't chasing hype and buying SUSHI style tokens from anonymous (at the time) developers. That's just playing hot potato. But hey, some people are good at that.
As to the amount of wallets that participated in the Polkadot ICO: a little known fact is that more individual wallets participated in Polkadot's ICO than Ethereum's, even though Polkadot never marketed their ICO rounds due to regulatory reasons.
generally against our ethos here
Kool aid.
Some guy that works(ed?) at Parity (who employs what, 200+ people?) correctly said that Ethereum is losing its tech lead and that offended the Ethereum hivemind. Oh no. So controversial. I'm so personally hurt by that.
Some guy that has been working for free on Ethereum basically forever correctly said that Polkadot is taking the blockchain tech crown. Do we A) Reflect on why he said that? or B) Rally the mob to chase him off?
"I did not quit social media, I quit Ethereum. I did not go dark, I just left the community. I am no longer coordinating hard forks, building testnets, or contributing otherwise. I did not work on Polkadot, I never did, I worked on Ethereum. I did not hate Ethereum, I loved it."
Also Parity locked their funds (and about 500+ other wallets not owned by them) and proposed a solution to recover them. When the community voted no they backed off and did not fork the chain, even if they had the influence to do so. For some reason this subreddit hates them for that, even if Parity did the 100% moral thing to do. Remember, 500+ other teams or people had their funds locked, so Parity was morally bound to try its best to recover them.
Its just lame drama to be honest. Nothing to do with ethos, everything to do with emotional tribalism.
Now for the missing upsides (I'll also respond to random fragments scattered in the thread):
This isn’t a 100% ETH question, but I’m trying to stay educated about emerging tech.
A good quick intro to Eth's tech vs Polkadot's tech can be found on this thread, especially this reply. That thread is basically mandatory reading if you care about your investment.
Eth 2.0's features will not really kick in for end users until about 2023. That means every dapp (except DeFI, where the fees make sense due to returns and is leading the fee market) who built on Eth's layer 1 are dead for three years. Remember the trading card games... Gods Unchained? How many players do you think are going to buy and sell cards when the transaction fee is worth more than the cards? All that development is now practically worthless until it can migrate to its own shard. This story repeats for hundreds of other dapp teams who's projects are now priced out for three years. So now they either have to migrate to a one of the many unpopulated L2 options (which have their own list of problems and risks, but that's another topic) or they look for another platform, preferably one interoperable with Ethereum. Hence Polkadot's massive growth in developer activity. If you check out https://polkaproject.com/ you'll see 205 projects listed at the time of this post. About a week ago they had 202 listed. That means about one team migrated from another tech stack to build on Polkadot every two days, and trust me, many more will come in when parachains are finally activated, and it will be a complete no brainer when Polkadot 2.0 is released.
Another huge upside for Polkadot is the Initial Parachain Offerings. Polkadot's version of ICOs. The biggest difference is that you can vote for parachains using your Dots to bind them to the relay chain, and you get some of the parachain's tokens in exchange. After a certain amount of time you get your Dots back. The tokenomics here are impressive: Dots are locked (reduced supply) instead of sold (sell pressure) and you still earn your staking rewards. There's no risk of scammers running away with your Ether and the governance mechanism allows for the community to defund incompetent devs who did not deliver what was promised.
Wouldn’t an ETH shard on Polkadot gain a bunch of scaling benefits that we won’t see natively for a couple years?
Yes. That is correct. Both Edgeware and Moonbeam are EVM compatible. And if the original dapp teams don't migrate their projects someone else will fork them, exactly like SUSHI did to Uniswap, and how Acala is doing to MakerDao.
Although realistically Ethereum has a 5 yr headstart and devs haven't slowed down at all
Ethereum had a five year head start but it turns out that Polkadot has a three year tech lead.
Just because it's "EVM Compatible" doesn't mean you can just plug Ethereum into Polkadot or vica versa, it just means they both understand Ethereum bytecode and you can potentially copy/paste contracts from Ethereum to Polkadot, but you'd still need to add a "bridge" between the 2 chains, so it adds additional complexity and extra steps compared to using any of the existing L2 scaling solutions
That only applies of you are thinking from an Eth maximalist perspective. But if you think from Polkadot's side, why would you need to use the bridge back to Ethereum at all? Everything will be seamless, cheaper, and quicker once the ecosystem starts to flourish.
I see a bunch of posts about how Ethereum and Polkadot can thrive together, but are they not both L1 competitors?
They are competitors. Both have their strategies, and both have their strengths (tech vs time on the market) but they are clearly competing in my eyes. Which is a good thing, Apple and Samsung competing in the cell phone market just leads to more innovation for consumers. You can still invest in both if you like.
Edit - link to post and the rest of the conversation: https://www.reddit.com/ethfinance/comments/iooew6/daily_general_discussion_september_8_2020/g4h5yyq/
Edit 2 - one day later PolkaProject count is 210. Devs are getting the hint :)
submitted by redditsucks_goruqqus to polkadot_market [link] [comments]

Don't blindly follow a narrative, its bad for you and its bad for crypto in general

I mostly lurk around here but I see a pattern repeating over and over again here and in multiple communities so I have to post. I'm just posting this here because I appreciate the fact that this sub is a place of free speech and maybe something productive can come out from this post, while bitcoin is just fucking censorship, memes and moon/lambo posts. If you don't agree, write in the comments why, instead of downvoting. You don't have to upvote either, but when you downvote you are killing the opportunity to have discussion. If you downvote or comment that I'm wrong without providing any counterpoints you are no better than the BTC maxis you despise.
In various communities I see a narrative being used to bring people in and making them follow something without thinking for themselves. In crypto I see this mostly in BTC vs BCH tribalistic arguments:
- BTC community: "Everything that is not BTC is shitcoin." or more recently as stated by adam on twitter, "Everything that is not BTC is a ponzi scheme, even ETH.", "what is ETH supply?", and even that they are doing this for "altruistic" reasons, to "protect" the newcomers. Very convenient for them that they are protecting the newcomers by having them buy their bags
- BCH community: "BTC maxis are dumb", "just increase block size and you will have truly p2p electronic cash", "It is just that simple, there are no trade offs", "if you don't agree with me you are a BTC maxi", "BCH is satoshi's vision for p2p electronic cash"
It is not exclusive to crypto but also politics, and you see this over and over again on twitter and on reddit.
My point is, that narratives are created so people don't have to think, they just choose a narrative that is easy to follow and makes sense for them, and stick with it. And people keep repeating these narratives to bring other people in, maybe by ignorance, because they truly believe it without questioning, or maybe by self interest, because they want to shill you their bags.
Because this is BCH community, and because bitcoin is censored, so I can't post there about the problems in the BTC narrative (some of which are IMO correctly identified by BCH community), I will stick with the narrative I see in the BCH community.
The culprit of this post was firstly this post by user u/scotty321 "The BTC Paradox: “A 1 MB blocksize enables poor people to run their own node!” “Okay, then what?” “Poor people won’t be able to use the network!”". You will see many posts of this kind being made by u/Egon_1 also. Then you have also this comment in that thread by u/fuck_____________1 saying that people that want to run their own nodes are retarded and that there is no reason to want to do that. "Just trust block explorer websites". And the post and comment were highly upvoted. Really? You really think that there is no problem in having just a few nodes on the network? And that the only thing that secures the network are miners?
As stated by user u/co1nsurf3r in that thread:
While I don't think that everybody needs to run a node, a full node does publish blocks it considers valid to other nodes. This does not amount to much if you only consider a single node in the network, but many "honest" full nodes in the network will reduce the probability of a valid block being withheld from the network by a collusion of "hostile" node operators.
But surely this will not get attention here, and will be downvoted by those people that promote the narrative that there is no trade off in increasing the blocksize and the people that don't see it are retarded or are btc maxis.
The only narrative I stick to and have been for many years now is that cryptocurrency takes power from the government and gives power to the individual, so you are not restricted to your economy as you can participate in the global economy. There is also the narrative of banking the bankless, which I hope will come true, but it is not a use case we are seeing right now.
Some people would argue that removing power from gov's is a bad thing, but you can't deny the fact that gov's can't control crypto (at least we would want them not to).
But, if you really want the individuals to remain in control of their money and transact with anyone in the world, the network needs to be very resistant to any kind of attacks. How can you have p2p electronic cash if your network just has a handful couple of nodes and the chinese gov can locate them and just block communication to them? I'm not saying that this is BCH case, I'm just refuting the fact that there is no value in running your own node. If you are relying on block explorers, the gov can just block the communication to the block explorer websites. Then what? Who will you trust to get chain information? The nodes needs to be decentralized so if you take one node down, many more can appear so it is hard to censor and you don't have few points of failure.
Right now BTC is focusing on that use case of being difficult to censor. But with that comes the problem that is very expensive to transact on the network, which breaks the purpose of anyone being able to participate. Obviously I do think that is also a major problem, and lightning network is awful right now and probably still years away of being usable, if it ever will. The best solution is up for debate, but thinking that you just have to increase the blocksize and there is no trade off is just naive or misleading. BCH is doing a good thing in trying to come with a solution that is inclusive and promotes cheap and fast transactions, but also don't forget centralization is a major concern and nothing to just shrug off.
Saying that "a 1 MB blocksize enables poor people to run their own" and that because of that "Poor people won’t be able to use the network" is a misrepresentation designed to promote a narrative. Because 1MB is not to allow "poor" people to run their node, it is to facilitate as many people to run a node to promote decentralization and avoid censorship.
Also an elephant in the room that you will not see being discussed in either BTC or BCH communities is that mining pools are heavily centralized. And I'm not talking about miners being mostly in china, but also that big pools control a lot of hashing power both in BTC and BCH, and that is terrible for the purpose of crypto.
Other projects are trying to solve that. Will they be successful? I don't know, I hope so, because I don't buy into any narrative. There are many challenges and I want to see crypto succeed as a whole. As always guys, DYOR and always question if you are not blindly following a narrative. I'm sure I will be called BTC maxi but maybe some people will find value in this. Don't trust guys that are always posting silly "gocha's" against the other "tribe".
EDIT: User u/ShadowOfHarbringer has pointed me to some threads that this has been discussed in the past and I will just put my take on them here for visibility, as I will be using this thread as a reference in future discussions I engage:
When there was only 2 nodes in the network, adding a third node increased redundancy and resiliency of the network as a whole in a significant way. When there is thousands of nodes in the network, adding yet another node only marginally increase the redundancy and resiliency of the network. So the question then becomes a matter of personal judgement of how much that added redundancy and resiliency is worth. For the absolutist, it is absolutely worth it and everyone on this planet should do their part.
What is the magical number of nodes that makes it counterproductive to add new nodes? Did he do any math? Does BCH achieve this holy grail safe number of nodes? Guess what, nobody knows at what number of nodes is starts to be marginally irrelevant to add new nodes. Even BTC today could still not have enough nodes to be safe. If you can't know for sure that you are safe, it is better to try to be safer than sorry. Thousands of nodes is still not enough, as I said, it is much cheaper to run a full node as it is to mine. If it costs millions in hash power to do a 51% attack on the block generation it means nothing if it costs less than $10k to run more nodes than there are in total in the network and cause havoc and slowing people from using the network. Or using bot farms to DDoS the 1000s of nodes in the network. Not all attacks are monetarily motivated. When you have governments with billions of dollars at their disposal and something that could threat their power they could do anything they could to stop people from using it, and the cheapest it is to do so the better
You should run a full node if you're a big business with e.g. >$100k/month in volume, or if you run a service that requires high fraud resistance and validation certainty for payments sent your way (e.g. an exchange). For most other users of Bitcoin, there's no good reason to run a full node unless you reel like it.
Shouldn't individuals benefit from fraud resistance too? Why just businesses?
Personally, I think it's a good idea to make sure that people can easily run a full node because they feel like it, and that it's desirable to keep full node resource requirements reasonable for an enthusiast/hobbyist whenever possible. This might seem to be at odds with the concept of making a worldwide digital cash system in which all transactions are validated by everybody, but after having done the math and some of the code myself, I believe that we should be able to have our cake and eat it too.
This is recurrent argument, but also no math provided, "just trust me I did the math"
The biggest reason individuals may want to run their own node is to increase their privacy. SPV wallets rely on others (nodes or ElectronX servers) who may learn their addresses.
It is a reason and valid one but not the biggest reason
If you do it for fun and experimental it good. If you do it for extra privacy it's ok. If you do it to help the network don't. You are just slowing down miners and exchanges.
Yes it will slow down the network, but that shows how people just don't get the the trade off they are doing
I will just copy/paste what Satoshi Nakamoto said in his own words. "The current system where every user is a network node is not the intended configuration for large scale. That would be like every Usenet user runs their own NNTP server."
Another "it is all or nothing argument" and quoting satoshi to try and prove their point. Just because every user doesn't need to be also a full node doesn't mean that there aren't serious risks for having few nodes
For this to have any importance in practice, all of the miners, all of the exchanges, all of the explorers and all of the economic nodes should go rogue all at once. Collude to change consensus. If you have a node you can detect this. It doesn't do much, because such a scenario is impossible in practice.
Not true because as I said, you can DDoS the current nodes or run more malicious nodes than that there currently are, because is cheap to do so
Non-mining nodes don't contribute to adding data to the blockchain ledger, but they do play a part in propagating transactions that aren't yet in blocks (the mempool). Bitcoin client implementations can have different validations for transactions they see outside of blocks and transactions they see inside of blocks; this allows for "soft forks" to add new types of transactions without completely breaking older clients (while a transaction is in the mempool, a node receiving a transaction that's a new/unknown type could drop it as not a valid transaction (not propagate it to its peers), but if that same transaction ends up in a block and that node receives the block, they accept the block (and the transaction in it) as valid (and therefore don't get left behind on the blockchain and become a fork). The participation in the mempool is a sort of "herd immunity" protection for the network, and it was a key talking point for the "User Activated Soft Fork" (UASF) around the time the Segregated Witness feature was trying to be added in. If a certain percentage of nodes updated their software to not propagate certain types of transactions (or not communicate with certain types of nodes), then they can control what gets into a block (someone wanting to get that sort of transaction into a block would need to communicate directly to a mining node, or communicate only through nodes that weren't blocking that sort of transaction) if a certain threshold of nodes adheres to those same validation rules. It's less specific than the influence on the blockchain data that mining nodes have, but it's definitely not nothing.
The first reasonable comment in that thread but is deep down there with only 1 upvote
The addition of non-mining nodes does not add to the efficiency of the network, but actually takes away from it because of the latency issue.
That is true and is actually a trade off you are making, sacrificing security to have scalability
The addition of non-mining nodes has little to no effect on security, since you only need to destroy mining ones to take down the network
It is true that if you destroy mining nodes you take down the network from producing new blocks (temporarily), even if you have a lot of non mining nodes. But, it still better than if you take down the mining nodes who are also the only full nodes. If the miners are not the only full nodes, at least you still have full nodes with the blockchain data so new miners can download it and join. If all the miners are also the full nodes and you take them down, where will you get all the past blockchain data to start mining again? Just pray that the miners that were taken down come back online at some point in the future?
The real limiting factor is ISP's: Imagine a situation where one service provider defrauds 4000 different nodes. Did the excessive amount of nodes help at all, when they have all been defrauded by the same service provider? If there are only 30 ISP's in the world, how many nodes do we REALLY need?
You cant defraud if the connection is encrypted. Use TOR for example, it is hard for ISP's to know what you are doing.
Satoshi specifically said in the white paper that after a certain point, number of nodes needed plateaus, meaning after a certain point, adding more nodes is actually counterintuitive, which we also demonstrated. (the latency issue). So, we have adequately demonstrated why running non-mining nodes does not add additional value or security to the network.
Again, what is the number of nodes that makes it counterproductive? Did he do any math?
There's also the matter of economically significant nodes and the role they play in consensus. Sure, nobody cares about your average joe's "full node" where he is "keeping his own ledger to keep the miners honest", as it has no significance to the economy and the miners couldn't give a damn about it. However, if say some major exchanges got together to protest a miner activated fork, they would have some protest power against that fork because many people use their service. Of course, there still needs to be miners running on said "protest fork" to keep the chain running, but miners do follow the money and if they got caught mining a fork that none of the major exchanges were trading, they could be coaxed over to said "protest fork".
In consensus, what matters about nodes is only the number, economical power of the node doesn't mean nothing, the protocol doesn't see the net worth of the individual or organization running that node.
Running a full node that is not mining and not involved is spending or receiving payments is of very little use. It helps to make sure network traffic is broadcast, and is another copy of the blockchain, but that is all (and is probably not needed in a healthy coin with many other nodes)
He gets it right (broadcasting transaction and keeping a copy of the blockchain) but he dismisses the importance of it
submitted by r0bo7 to btc [link] [comments]

All you need to know about Yield Farming - The rocket fuel for Defi

All you need to know about Yield Farming - The rocket fuel for Defi
Source
It’s effectively July 2017 in the world of decentralized finance (DeFi), and as in the heady days of the initial coin offering (ICO) boom, the numbers are only trending up.
According to DeFi Pulse, there is $1.9 billion in crypto assets locked in DeFi right now. According to the CoinDesk ICO Tracker, the ICO market started chugging past $1 billion in July 2017, just a few months before token sales started getting talked about on TV.
Debate juxtaposing these numbers if you like, but what no one can question is this: Crypto users are putting more and more value to work in DeFi applications, driven largely by the introduction of a whole new yield-generating pasture, Compound’s COMP governance token.
Governance tokens enable users to vote on the future of decentralized protocols, sure, but they also present fresh ways for DeFi founders to entice assets onto their platforms.
That said, it’s the crypto liquidity providers who are the stars of the present moment. They even have a meme-worthy name: yield farmers.

https://preview.redd.it/lxsvazp1g9l51.png?width=775&format=png&auto=webp&s=a36173ab679c701a5d5e0aac806c00fcc84d78c1

Where it started

Ethereum-based credit market Compound started distributing its governance token, COMP, to the protocol’s users this past June 15. Demand for the token (heightened by the way its automatic distribution was structured) kicked off the present craze and moved Compound into the leading position in DeFi.
The hot new term in crypto is “yield farming,” a shorthand for clever strategies where putting crypto temporarily at the disposal of some startup’s application earns its owner more cryptocurrency.
Another term floating about is “liquidity mining.”
The buzz around these concepts has evolved into a low rumble as more and more people get interested.
The casual crypto observer who only pops into the market when activity heats up might be starting to get faint vibes that something is happening right now. Take our word for it: Yield farming is the source of those vibes.
But if all these terms (“DeFi,” “liquidity mining,” “yield farming”) are so much Greek to you, fear not. We’re here to catch you up. We’ll get into all of them.
We’re going to go from very basic to more advanced, so feel free to skip ahead.

What are tokens?

Most CoinDesk readers probably know this, but just in case: Tokens are like the money video-game players earn while fighting monsters, money they can use to buy gear or weapons in the universe of their favorite game.
But with blockchains, tokens aren’t limited to only one massively multiplayer online money game. They can be earned in one and used in lots of others. They usually represent either ownership in something (like a piece of a Uniswap liquidity pool, which we will get into later) or access to some service. For example, in the Brave browser, ads can only be bought using basic attention token (BAT).
If tokens are worth money, then you can bank with them or at least do things that look very much like banking. Thus: decentralized finance.
Tokens proved to be the big use case for Ethereum, the second-biggest blockchain in the world. The term of art here is “ERC-20 tokens,” which refers to a software standard that allows token creators to write rules for them. Tokens can be used a few ways. Often, they are used as a form of money within a set of applications. So the idea for Kin was to create a token that web users could spend with each other at such tiny amounts that it would almost feel like they weren’t spending anything; that is, money for the internet.
Governance tokens are different. They are not like a token at a video-game arcade, as so many tokens were described in the past. They work more like certificates to serve in an ever-changing legislature in that they give holders the right to vote on changes to a protocol.
So on the platform that proved DeFi could fly, MakerDAO, holders of its governance token, MKR, vote almost every week on small changes to parameters that govern how much it costs to borrow and how much savers earn, and so on.
Read more: Why DeFi’s Billion-Dollar Milestone Matters
One thing all crypto tokens have in common, though, is they are tradable and they have a price. So, if tokens are worth money, then you can bank with them or at least do things that look very much like banking. Thus: decentralized finance.

What is DeFi?

Fair question. For folks who tuned out for a bit in 2018, we used to call this “open finance.” That construction seems to have faded, though, and “DeFi” is the new lingo.
In case that doesn’t jog your memory, DeFi is all the things that let you play with money, and the only identification you need is a crypto wallet.
On the normal web, you can’t buy a blender without giving the site owner enough data to learn your whole life history. In DeFi, you can borrow money without anyone even asking for your name.
I can explain this but nothing really brings it home like trying one of these applications. If you have an Ethereum wallet that has even $20 worth of crypto in it, go do something on one of these products. Pop over to Uniswap and buy yourself some FUN (a token for gambling apps) or WBTC (wrapped bitcoin). Go to MakerDAO and create $5 worth of DAI (a stablecoin that tends to be worth $1) out of the digital ether. Go to Compound and borrow $10 in USDC.
(Notice the very small amounts I’m suggesting. The old crypto saying “don’t put in more than you can afford to lose” goes double for DeFi. This stuff is uber-complex and a lot can go wrong. These may be “savings” products but they’re not for your retirement savings.)
Immature and experimental though it may be, the technology’s implications are staggering. On the normal web, you can’t buy a blender without giving the site owner enough data to learn your whole life history. In DeFi, you can borrow money without anyone even asking for your name.
DeFi applications don’t worry about trusting you because they have the collateral you put up to back your debt (on Compound, for instance, a $10 debt will require around $20 in collateral).
Read more: There Are More DAI on Compound Now Than There Are DAI in the World
If you do take this advice and try something, note that you can swap all these things back as soon as you’ve taken them out. Open the loan and close it 10 minutes later. It’s fine. Fair warning: It might cost you a tiny bit in fees, and the cost of using Ethereum itself right now is much higher than usual, in part due to this fresh new activity. But it’s nothing that should ruin a crypto user.
So what’s the point of borrowing for people who already have the money? Most people do it for some kind of trade. The most obvious example, to short a token (the act of profiting if its price falls). It’s also good for someone who wants to hold onto a token but still play the market.

Doesn’t running a bank take a lot of money up front?

It does, and in DeFi that money is largely provided by strangers on the internet. That’s why the startups behind these decentralized banking applications come up with clever ways to attract HODLers with idle assets.
Liquidity is the chief concern of all these different products. That is: How much money do they have locked in their smart contracts?
“In some types of products, the product experience gets much better if you have liquidity. Instead of borrowing from VCs or debt investors, you borrow from your users,” said Electric Capital managing partner Avichal Garg.
Let’s take Uniswap as an example. Uniswap is an “automated market maker,” or AMM (another DeFi term of art). This means Uniswap is a robot on the internet that is always willing to buy and it’s also always willing to sell any cryptocurrency for which it has a market.
On Uniswap, there is at least one market pair for almost any token on Ethereum. Behind the scenes, this means Uniswap can make it look like it is making a direct trade for any two tokens, which makes it easy for users, but it’s all built around pools of two tokens. And all these market pairs work better with bigger pools.

Why do I keep hearing about ‘pools’?

To illustrate why more money helps, let’s break down how Uniswap works.
Let’s say there was a market for USDC and DAI. These are two tokens (both stablecoins but with different mechanisms for retaining their value) that are meant to be worth $1 each all the time, and that generally tends to be true for both.
The price Uniswap shows for each token in any pooled market pair is based on the balance of each in the pool. So, simplifying this a lot for illustration’s sake, if someone were to set up a USDC/DAI pool, they should deposit equal amounts of both. In a pool with only 2 USDC and 2 DAI it would offer a price of 1 USDC for 1 DAI. But then imagine that someone put in 1 DAI and took out 1 USDC. Then the pool would have 1 USDC and 3 DAI. The pool would be very out of whack. A savvy investor could make an easy $0.50 profit by putting in 1 USDC and receiving 1.5 DAI. That’s a 50% arbitrage profit, and that’s the problem with limited liquidity.
(Incidentally, this is why Uniswap’s prices tend to be accurate, because traders watch it for small discrepancies from the wider market and trade them away for arbitrage profits very quickly.)
Read more: Uniswap V2 Launches With More Token-Swap Pairs, Oracle Service, Flash Loans
However, if there were 500,000 USDC and 500,000 DAI in the pool, a trade of 1 DAI for 1 USDC would have a negligible impact on the relative price. That’s why liquidity is helpful.
You can stick your assets on Compound and earn a little yield. But that’s not very creative. Users who look for angles to maximize that yield: those are the yield farmers.
Similar effects hold across DeFi, so markets want more liquidity. Uniswap solves this by charging a tiny fee on every trade. It does this by shaving off a little bit from each trade and leaving that in the pool (so one DAI would actually trade for 0.997 USDC, after the fee, growing the overall pool by 0.003 USDC). This benefits liquidity providers because when someone puts liquidity in the pool they own a share of the pool. If there has been lots of trading in that pool, it has earned a lot of fees, and the value of each share will grow.
And this brings us back to tokens.
Liquidity added to Uniswap is represented by a token, not an account. So there’s no ledger saying, “Bob owns 0.000000678% of the DAI/USDC pool.” Bob just has a token in his wallet. And Bob doesn’t have to keep that token. He could sell it. Or use it in another product. We’ll circle back to this, but it helps to explain why people like to talk about DeFi products as “money Legos.”

So how much money do people make by putting money into these products?

It can be a lot more lucrative than putting money in a traditional bank, and that’s before startups started handing out governance tokens.
Compound is the current darling of this space, so let’s use it as an illustration. As of this writing, a person can put USDC into Compound and earn 2.72% on it. They can put tether (USDT) into it and earn 2.11%. Most U.S. bank accounts earn less than 0.1% these days, which is close enough to nothing.
However, there are some caveats. First, there’s a reason the interest rates are so much juicier: DeFi is a far riskier place to park your money. There’s no Federal Deposit Insurance Corporation (FDIC) protecting these funds. If there were a run on Compound, users could find themselves unable to withdraw their funds when they wanted.
Plus, the interest is quite variable. You don’t know what you’ll earn over the course of a year. USDC’s rate is high right now. It was low last week. Usually, it hovers somewhere in the 1% range.
Similarly, a user might get tempted by assets with more lucrative yields like USDT, which typically has a much higher interest rate than USDC. (Monday morning, the reverse was true, for unclear reasons; this is crypto, remember.) The trade-off here is USDT’s transparency about the real-world dollars it’s supposed to hold in a real-world bank is not nearly up to par with USDC’s. A difference in interest rates is often the market’s way of telling you the one instrument is viewed as dicier than another.
Users making big bets on these products turn to companies Opyn and Nexus Mutual to insure their positions because there’s no government protections in this nascent space – more on the ample risks later on.
So users can stick their assets in Compound or Uniswap and earn a little yield. But that’s not very creative. Users who look for angles to maximize that yield: those are the yield farmers.

OK, I already knew all of that. What is yield farming?

Broadly, yield farming is any effort to put crypto assets to work and generate the most returns possible on those assets.
At the simplest level, a yield farmer might move assets around within Compound, constantly chasing whichever pool is offering the best APY from week to week. This might mean moving into riskier pools from time to time, but a yield farmer can handle risk.
“Farming opens up new price arbs [arbitrage] that can spill over to other protocols whose tokens are in the pool,” said Maya Zehavi, a blockchain consultant.
Because these positions are tokenized, though, they can go further.
This was a brand-new kind of yield on a deposit. In fact, it was a way to earn a yield on a loan. Who has ever heard of a borrower earning a return on a debt from their lender?
In a simple example, a yield farmer might put 100,000 USDT into Compound. They will get a token back for that stake, called cUSDT. Let’s say they get 100,000 cUSDT back (the formula on Compound is crazy so it’s not 1:1 like that but it doesn’t matter for our purposes here).
They can then take that cUSDT and put it into a liquidity pool that takes cUSDT on Balancer, an AMM that allows users to set up self-rebalancing crypto index funds. In normal times, this could earn a small amount more in transaction fees. This is the basic idea of yield farming. The user looks for edge cases in the system to eke out as much yield as they can across as many products as it will work on.
Right now, however, things are not normal, and they probably won’t be for a while.

Why is yield farming so hot right now?

Because of liquidity mining. Liquidity mining supercharges yield farming.
Liquidity mining is when a yield farmer gets a new token as well as the usual return (that’s the “mining” part) in exchange for the farmer’s liquidity.
“The idea is that stimulating usage of the platform increases the value of the token, thereby creating a positive usage loop to attract users,” said Richard Ma of smart-contract auditor Quantstamp.
The yield farming examples above are only farming yield off the normal operations of different platforms. Supply liquidity to Compound or Uniswap and get a little cut of the business that runs over the protocols – very vanilla.
But Compound announced earlier this year it wanted to truly decentralize the product and it wanted to give a good amount of ownership to the people who made it popular by using it. That ownership would take the form of the COMP token.
Lest this sound too altruistic, keep in mind that the people who created it (the team and the investors) owned more than half of the equity. By giving away a healthy proportion to users, that was very likely to make it a much more popular place for lending. In turn, that would make everyone’s stake worth much more.
So, Compound announced this four-year period where the protocol would give out COMP tokens to users, a fixed amount every day until it was gone. These COMP tokens control the protocol, just as shareholders ultimately control publicly traded companies.
Every day, the Compound protocol looks at everyone who had lent money to the application and who had borrowed from it and gives them COMP proportional to their share of the day’s total business.
The results were very surprising, even to Compound’s biggest promoters.
COMP’s value will likely go down, and that’s why some investors are rushing to earn as much of it as they can right now.
This was a brand-new kind of yield on a deposit into Compound. In fact, it was a way to earn a yield on a loan, as well, which is very weird: Who has ever heard of a borrower earning a return on a debt from their lender?
COMP’s value has consistently been well over $200 since it started distributing on June 15. We did the math elsewhere but long story short: investors with fairly deep pockets can make a strong gain maximizing their daily returns in COMP. It is, in a way, free money.
It’s possible to lend to Compound, borrow from it, deposit what you borrowed and so on. This can be done multiple times and DeFi startup Instadapp even built a tool to make it as capital-efficient as possible.
“Yield farmers are extremely creative. They find ways to ‘stack’ yields and even earn multiple governance tokens at once,” said Spencer Noon of DTC Capital.
COMP’s value spike is a temporary situation. The COMP distribution will only last four years and then there won’t be any more. Further, most people agree that the high price now is driven by the low float (that is, how much COMP is actually free to trade on the market – it will never be this low again). So the value will probably gradually go down, and that’s why savvy investors are trying to earn as much as they can now.
Appealing to the speculative instincts of diehard crypto traders has proven to be a great way to increase liquidity on Compound. This fattens some pockets but also improves the user experience for all kinds of Compound users, including those who would use it whether they were going to earn COMP or not.
As usual in crypto, when entrepreneurs see something successful, they imitate it. Balancer was the next protocol to start distributing a governance token, BAL, to liquidity providers. Flash loan provider bZx has announced a plan. Ren, Curve and Synthetix also teamed up to promote a liquidity pool on Curve.
It is a fair bet many of the more well-known DeFi projects will announce some kind of coin that can be mined by providing liquidity.
The case to watch here is Uniswap versus Balancer. Balancer can do the same thing Uniswap does, but most users who want to do a quick token trade through their wallet use Uniswap. It will be interesting to see if Balancer’s BAL token convinces Uniswap’s liquidity providers to defect.
So far, though, more liquidity has gone into Uniswap since the BAL announcement, according to its data site. That said, even more has gone into Balancer.

Did liquidity mining start with COMP?

No, but it was the most-used protocol with the most carefully designed liquidity mining scheme.
This point is debated but the origins of liquidity mining probably date back to Fcoin, a Chinese exchange that created a token in 2018 that rewarded people for making trades. You won’t believe what happened next! Just kidding, you will: People just started running bots to do pointless trades with themselves to earn the token.
Similarly, EOS is a blockchain where transactions are basically free, but since nothing is really free the absence of friction was an invitation for spam. Some malicious hacker who didn’t like EOS created a token called EIDOS on the network in late 2019. It rewarded people for tons of pointless transactions and somehow got an exchange listing.
These initiatives illustrated how quickly crypto users respond to incentives.
Read more: Compound Changes COMP Distribution Rules Following ‘Yield Farming’ Frenzy
Fcoin aside, liquidity mining as we now know it first showed up on Ethereum when the marketplace for synthetic tokens, Synthetix, announced in July 2019 an award in its SNX token for users who helped add liquidity to the sETH/ETH pool on Uniswap. By October, that was one of Uniswap’s biggest pools.
When Compound Labs, the company that launched the Compound protocol, decided to create COMP, the governance token, the firm took months designing just what kind of behavior it wanted and how to incentivize it. Even still, Compound Labs was surprised by the response. It led to unintended consequences such as crowding into a previously unpopular market (lending and borrowing BAT) in order to mine as much COMP as possible.
Just last week, 115 different COMP wallet addresses – senators in Compound’s ever-changing legislature – voted to change the distribution mechanism in hopes of spreading liquidity out across the markets again.

Is there DeFi for bitcoin?

Yes, on Ethereum.
Nothing has beaten bitcoin over time for returns, but there’s one thing bitcoin can’t do on its own: create more bitcoin.
A smart trader can get in and out of bitcoin and dollars in a way that will earn them more bitcoin, but this is tedious and risky. It takes a certain kind of person.
DeFi, however, offers ways to grow one’s bitcoin holdings – though somewhat indirectly.
A long HODLer is happy to gain fresh BTC off their counterparty’s short-term win. That’s the game.
For example, a user can create a simulated bitcoin on Ethereum using BitGo’s WBTC system. They put BTC in and get the same amount back out in freshly minted WBTC. WBTC can be traded back for BTC at any time, so it tends to be worth the same as BTC.
Then the user can take that WBTC, stake it on Compound and earn a few percent each year in yield on their BTC. Odds are, the people who borrow that WBTC are probably doing it to short BTC (that is, they will sell it immediately, buy it back when the price goes down, close the loan and keep the difference).
A long HODLer is happy to gain fresh BTC off their counterparty’s short-term win. That’s the game.

How risky is it?

Enough.
“DeFi, with the combination of an assortment of digital funds, automation of key processes, and more complex incentive structures that work across protocols – each with their own rapidly changing tech and governance practices – make for new types of security risks,” said Liz Steininger of Least Authority, a crypto security auditor. “Yet, despite these risks, the high yields are undeniably attractive to draw more users.”
We’ve seen big failures in DeFi products. MakerDAO had one so bad this year it’s called “Black Thursday.” There was also the exploit against flash loan provider bZx. These things do break and when they do money gets taken.
As this sector gets more robust, we could see token holders greenlighting more ways for investors to profit from DeFi niches.
Right now, the deal is too good for certain funds to resist, so they are moving a lot of money into these protocols to liquidity mine all the new governance tokens they can. But the funds – entities that pool the resources of typically well-to-do crypto investors – are also hedging. Nexus Mutual, a DeFi insurance provider of sorts, told CoinDesk it has maxed out its available coverage on these liquidity applications. Opyn, the trustless derivatives maker, created a way to short COMP, just in case this game comes to naught.
And weird things have arisen. For example, there’s currently more DAI on Compound than have been minted in the world. This makes sense once unpacked but it still feels dicey to everyone.
That said, distributing governance tokens might make things a lot less risky for startups, at least with regard to the money cops.
“Protocols distributing their tokens to the public, meaning that there’s a new secondary listing for SAFT tokens, [gives] plausible deniability from any security accusation,” Zehavi wrote. (The Simple Agreement for Future Tokens was a legal structure favored by many token issuers during the ICO craze.)
Whether a cryptocurrency is adequately decentralized has been a key feature of ICO settlements with the U.S. Securities and Exchange Commission (SEC).

What’s next for yield farming? (A prediction)

COMP turned out to be a bit of a surprise to the DeFi world, in technical ways and others. It has inspired a wave of new thinking.
“Other projects are working on similar things,” said Nexus Mutual founder Hugh Karp. In fact, informed sources tell CoinDesk brand-new projects will launch with these models.
We might soon see more prosaic yield farming applications. For example, forms of profit-sharing that reward certain kinds of behavior.
Imagine if COMP holders decided, for example, that the protocol needed more people to put money in and leave it there longer. The community could create a proposal that shaved off a little of each token’s yield and paid that portion out only to the tokens that were older than six months. It probably wouldn’t be much, but an investor with the right time horizon and risk profile might take it into consideration before making a withdrawal.
(There are precedents for this in traditional finance: A 10-year Treasury bond normally yields more than a one-month T-bill even though they’re both backed by the full faith and credit of Uncle Sam, a 12-month certificate of deposit pays higher interest than a checking account at the same bank, and so on.)
As this sector gets more robust, its architects will come up with ever more robust ways to optimize liquidity incentives in increasingly refined ways. We could see token holders greenlighting more ways for investors to profit from DeFi niches.
Questions abound for this nascent industry: What will MakerDAO do to restore its spot as the king of DeFi? Will Uniswap join the liquidity mining trend? Will anyone stick all these governance tokens into a decentralized autonomous organization (DAO)? Or would that be a yield farmers co-op?
Whatever happens, crypto’s yield farmers will keep moving fast. Some fresh fields may open and some may soon bear much less luscious fruit.
But that’s the nice thing about farming in DeFi: It is very easy to switch fields.
submitted by pascalbernoulli to Yield_Farming [link] [comments]

What Can We Expect in the Halving Market? 58COIN Exchange Beauty Executive Gives the Answer

What Can We Expect in the Halving Market? 58COIN Exchange Beauty Executive Gives the Answer


What are the effects of the third Bitcoin halving?
How to view the relationship between mining pools and exchanges?
Is the contract a road of no return?
What is the future trend of digital currency?


Q1: What does 58COIN expect from this Bitcoin halving?
Xiao Bei: On the macro level, reduction in the bitcoin production shows a more stable signal to the market. May 12th is the third halving in bitcoin’s history, before it, however, the daily production plunged from 1800 to 900, a reduction of around 30,000 bitcoins in a month. The selling pressure reduced significantly, which leaves the root impact on the gradual stability of the market.
The reduction not only brought us a bull market with a sustainable and long-lasting effect but greater opportunities as well. As an exchange, it should better improve itself and render stable and quality products to users. Currently, 58COIN’s mining pool ranks the top 5 in the world. After the reduction, based on the principle of survival of the fittest, the superior resources will be allocated to a larger and more stable mining farm, and the steady recovery of computing power is also anticipating.
Q2: As an exchange, why does 58COIN occupy more than 10% of the overall bitcoin’s computing power?
Xiao Bei: At present, our computing power share is about 7.8%, ranking among the top five in the world. Our recent goal is to have a stable computing power share of more than 10%.
The mining pool provides the main non-trading BTC source for the exchange, increases the supply of BTCs on the market, and injects liquidity into the market. The top ten exchanges are expected to receive more than 70% of the bitcoin in the mining pool, so all major exchanges have begun to layout the mining pool to compete for BTC.
58COIN has reorganized the layout and started the operation of the new mining pool (58COIN& 1THash) in 2019. We have a mature operation team with more than 6 years’ experience, and hope to better link the upstream and downstream industries in the next stage. This is also an important step in the strategic development of high-quality exchanges.
Q3: For an exchange, liquidity and redemption abilities are the absolute reflection of the user's sense of security. How does 58COIN ensure these two abilities that users care most?
Xiao Bei: In terms of liquidity, first of all, our registered users have exceeded 3 million, which provides sufficient trading liquidity and depth. Secondly, our matching transaction service with constantly upgraded technology and algorithm ensures that each matchmaking time is in the microsecond level, and easily achieve system 10,000-level throughput performance.
Concerning the redemption ability, non-trading digital assets held by the exchange serves as the foundation. The advantages of 58COIN's mining pool have accumulated abundant platform reserves for us. As of now, our risk reserve has exceeded 3.6 billion yuan.
Besides, the Exchange integrates account opening, transaction matching, and liquidation, and plays an important role in the secondary market. Most exchanges lack a high-quality intelligent risk control system, a comprehensive anti-money laundering mechanism, and insufficient open and transparent information disclosure and supervision. There may be acts of forgery of trading volume, joint price manipulation with the project party, and other actions that harm the interests of investors. If the liquidity itself is not good enough, the situation mentioned above is more likely to occur.
Q4: Which section does 58COIN values most? Contract Trading or Spot Transactions? What is the biggest advantage of trading contracts on 58COIN?
Xiao Bei: Both spot and contract boast their own advantages, separately lie in the exchange value through hoarded coins, and flexible use of fluctuations. 58COIN as the main contract exchange, contract trading is definitely our focus. In terms of spot, it is mainly based on mainstream currencies.
Compared with spot trading, the two-direction trading mechanism is more flexible. Also, leverage can increase the utilization rate of funds and amplify the profit, which is suitable for users with fewer funds to trade.
The biggest advantage of contract transactions, in addition to the just mentioned abundant platform reserves, complete risk control and huge user base, there are several points related to the user's vital interests:
  1. The lowest fee in the industry. For example, the handling fee of the perpetual contract is: “Taker 0.03%, Maker 0.015%”;
  2. The fixed maintenance margin of 0.5%;
  3. No funding fees. We have made every effort to reduce the principal consumption in each exchange, thus greatly lower the risk of liquidation;
  4. The platform insurance funds bear the full debt loss, and users do not have to worry about apportioning any risks.
In addition, the contract can also maintain the value of the existing mainstream spot of the user to minimize the risk of depreciation caused by spot fluctuations.
It is worth mentioning that in terms of wallet, we implement multi-level and multi-dimensional security risk control strategies such as hot and cold wallet isolation, multi-signature authorization, and regularly change of hot wallet addresses. Meanwhile, a manual verification process was added to ensure the safety of the assets. Since its establishment, there has never been any wallet accident, wallet stolen, or the loss of coin incidents.
Q5: In the contract transaction, what advice does 58COIN give to novice users?
Xiao Bei: Firstly, please remind that contract is not a devil, it is just a tool. What we should do is to make good use of the tool to make profits.
Secondly, the purpose of the investment is to withdraw, and suggestions are shown below:
1. Invest with the spare funds at hand;
2. In the spot transaction, hoard coins in the bear market and exchange in the bull market, do not follow the trend of buying in the bull market;
3. In the contract, set up operation points and positions, and perform secondary operations according to market conditions. (Do not be greedy)
4. Make a risk response plan during the investment process, such as a sufficient margin, value preservation plan, etc.
Finally, we must keep in mind: when doing spot transactions, choose assets with good liquidity in a way to get away from manipulation projects, risky exchanges, etc.
58COIN provides detailed descriptions for each business line, novice users should read them carefully before using. Besides, each contract trading page is designed with a calculator to help provide trading references to users before investment.
Q6: What are the new plans of 58COIN?
Xiao Bei: First of all, we will remain a sophisticated attitude in technology, risk control, and product experience, offering a stronger guarantee for users' transactions; second, we will further improve the ecological layout of 58COIN, from increasing investment in mining pools, gradually optimizing the hot and cold wallet system, enabling entities, focusing on community construction, etc., with better technical upgrades and preparations, to ensure that the entire 58COIN ecology can better link the upstream and downstream industries, providing our users with a more stable ecological background; We will launch some online activities in the near future, covering basic knowledge, candlestick chart learning, and industry analysis. We look forward to making joint efforts with our users in learning and making progress.
Q7: What does 58COIN want to say about the future cryptocurrency market?
Xiao Bei: The real big bonus in the cryptocurrency market has not yet been released, and Bitcoin has more imagination space than gold in the future. The cryptocurrency market is stepping toward a diversified, professional, and tangible direction, requiring more high-quality industries participation and landing. Though it is currently the fastest-growing field, financial attributes should not be the only factor entitled to cryptocurrencies, the future market should be more integrated and serve the real economy, such as the Internet of Things, financial systems, and personal privacy.
For more details, please log in to www.58ex.com or download our app: https://wap.58ex.com/?locale=en.
Website: https://www.58ex.com/
Twitter: https://twitter.com/58_coin
Facebook: https://www.facebook.com/coin.58COIN
Telegram: https://t.me/official58
Medium: https://medium.com/@58coin_blog/
submitted by 58CoinExchange to u/58CoinExchange [link] [comments]

Our first generation hardware wallets were made of military-grade aerospace aluminum. We’ve stripped all that down to just focus on air-gapping your private keys.

Our first generation hardware wallets were made of military-grade aerospace aluminum. We’ve stripped all that down to just focus on air-gapping your private keys.

https://preview.redd.it/0rogeunfujv41.png?width=1024&format=png&auto=webp&s=8a2cf5eff6f30a36fd7e86e16331eb40b4072627
Hey bitcoin! I'm Lixin, longtime bitcoiner and creator of Cobo Vault.
I come from a background in the electronic hardware industry, and experienced one of my products being featured in Apple Stores around the world. Back in 2018 Cobo CEO Discus Fish, who also co-founded F2Pool, invited me to help build Cobo’s hardware product line. As we had strong ties to miners in China, we naturally designed the 1st gen with them in mind. In China, mining farms are nearly always built in very isolated places where there is very cheap wind or water electricity. When we built our 1st generation Cobo Vault hardware wallet, we needed to maximize the durability of the device in addition to its security. We used aerospace aluminum rather than plastic and made it completely IP68 waterproof, IK9 drop resistant, and military standard MIL-STD-810G durable for the mining industry.
Things changed last year when I went to Bitcoin 2019 and talked to lots of hodlers in the States. I found that 95% of them don’t care about durability. I asked them if they were afraid of their home being flooded or burned down in a fire. The answer is - yes, they are afraid of these things, but see them as very low possibilities. Even if something were to happen, they said they would just buy another HW wallet for 100 dollars. From these conversations, it became more and more clear we should design a product around a normal hodler’s needs.
Our 2nd gen product compromises on durability but doesn’t compromise on security.
Most hodlers share some needs with miners:
  1. Hodlers want a more air-gapped solution so we kept QR code data transmission between your hardware wallet and the companion app which is also auditable.
  2. A Secure Element is the strongest wall of protection from physical attacks. We are the first hardware wallet - also maybe the first electronic product with SE - to have open source SE firmware.
  3. A battery can be a significant weak point. The 2nd gen continues the legacy of detachable batteries to prevent corrosion damage and will also support AAA batteries in case your battery dies someday.
  4. The 2nd gen also keeps the 4-inch touchscreen so you don’t need to suffer from tiny buttons and little screens anymore. Human error is one of the biggest reasons people lose their assets.
  5. We kept other features like the self-destruct mechanism and Web Authentication, which prevent side-channel and supply chain attacks.
If you'd like to read more about these features, check out our blog posts.
Aside from the legacy of the 1st gen, our 2nd gen product will have:
  1. Open source hardware wallet application layer and Secure Element firmware code. With the open source firmware code, you can see: random number generation, master private key generation, key derivation, and the signing process all happen within the SE and your private keys never leave.
  2. At the Bitcoin 2019 conference half the hodlers I met told me they own multiple hardware wallets which they use on the go. We added a fingerprint sensor you can use to authorize transactions without typing in your password. No need to worry about surveillance cameras when using your hardware wallet in airports.
  3. We will also support PSBT (BIP174) to be compatible with third-party wallets like Electrum or Wasabi Wallet in case people have need of using Cobo Vault with their own node or coinjoin. Multisig between Cobo Vault and other wallets will be realized to prevent single point failure with any brand of hardware wallet.
  4. By sacrificing the durability, we successfully controlled the price under 100 USD for the basic version.
  5. BTC-only firmware version for people who want to minimize the codebase for less of an attack surface.
We truly appreciate the support from the community and are giving away free metal storage Cobo Tablets with every purchase of our 2nd gen for a week! Add a tablet to your cart and place your order before May 5th, 8 AM PST to claim your free metal storage. Find us on Twitter CryptoLixin and CoboVault - any suggestions or questions are welcome!
submitted by Bright_Charge to Bitcoin [link] [comments]

We’ve been working on a new product release for a year and want to hear your opinions on the product. Read on for product information and our vision for hardware wallets.

TL;DR Key features of Cobo Vault 2nd gen we are going to launch:
Hey bitcoin! I'm Lixin, a longtime Bitcoiner and creator of Cobo Vault.
I come from a background in the electronic hardware industry, and experienced one of my products being featured in Apple Stores around the world. Although my interest goes back to 2010, my career intersected Bitcoin when Discus Fish (CEO of Cobo) invited me to help build Cobo’s hardware product line. Discus Fish is also the co-founder and CEO of f2pool, one of the largest mining pools currently in the world, and one of the earliest advocates of bitcoin in China.
Back in 2018 we built our 1st generation Cobo Vault hardware wallet. As we had strong ties to miners in China, we naturally designed the 1st gen with them in mind. For those who are not familiar with the mining industry in China, mining farms are nearly always built in very isolated places where there is very cheap wind or water electricity. As the miners would take their storage into these isolated regions, we needed to maximize the durability of the device in addition to its security. We used aerospace aluminum rather than plastic and made it completely IP68 waterproof. We also gave it a hardshell metal case you can put it in, which is IK9 drop resistant and passes the American military durability test MIL-STD-810G.
As for the electronic components inside the device, in order to maximize security, we made it as air-gapped as possible with QR codes. We see this as an important choice because USB cables and Bluetooth are not transparent and have a bigger attack surface. With QR codes you can see exactly what is going on and do not have to connect to a laptop which could have malware on it. QR code interaction needs a camera and a more complicated system which needs to be supported by high-level chips.
All these come with a cost, and the 1st generation isn’t as accessible for average hodlers. For more details on the product, visit here.
Things changed last year when I went to Bitcoin 2019 and talked to lots of hodlers in the States. I found that 95% of them don’t care about durability. I asked them if they were afraid of their home being flooded or burned down in a fire. The answer is - yes, they are afraid of these things, but see them as very low possibilities. Even if something were to happen, they said they would just buy another HW wallet for 100 dollars. From these conversations, it became more and more clear that the position for miners and hodlers is totally different.
After coming back from that conference, our team began the almost one year journey of designing our 2nd gen product. It compromises on durability but doesn’t compromise on security.
We designed the 2nd gen product all around a normal hodler’s needs.
Obviously hodlers share some common needs with miners:
If you'd like to read more about these features, check out our blog posts here.
Aside from these legacies from the 1st gen, our 2nd gen product will have some other big improvements:
Personally, I am a bitcoin maximalist and also a big fan of the KISS principle. We will also release a BTC-only firmware version for people who want to minimize the codebase for less of an attack surface.
Thank you for reading until here. More details like final price would be released later when we officially release the product in late Apr. Any suggestions or questions are welcome. Also you can find me @CryptoLixin or @CoboVault on Twitter! Ears are widely open!
submitted by Bright_Charge to Bitcoin [link] [comments]

Why I choose Bitcoin Cash over Bitcoin

A few days ago I posted my doubts and criticism about BTC vs BCH, but now I have made my mind up after a lenghty research yesterday and today, I have chosen BCH.
Disclaimer: I have already owned BCH before that.
So I was already on board BCH, but I had my doubts about it, and certainly the noise the other side makes, it made me doubt myself whether I made the best choice or not. After all it's about money, and the first thing that comes into a person's mind is that it worries about losing it. So if BCH would have been inferior to BTC then there would have been a strong chance of losing that money, through the price doing down like with the other fake coins Bitcoin Gold, Bitcoin Diamond, etc...
Because from an investment standpoint I shouldn't care about sides, I just want the one that has a better future and more potential in it. So if I would have found out that BTC is better I would have sold my BCH for BTC obviously, I would have no sentimental attachment to either of them, I just want to be on the right side. Eventually hedge, but hedging is like the game of uncertain people, and there is no uncertainty here, all the evidence shows one side to be much better than the other. It's not even like 70-30, it's more like 99-1.
Now I did a lenghty research, read all the comments on my posts, and compared them to the claim BTC makes on their websites and influential BTC people have stated, asked questions, used logic, and it's now objectively clear to me that BCH is the right side to be on.
   

FEES

I was already doubtful about BTC, that is why I have switched to BCH about a year ago, I saw their shady activities, but the final nail in the coffin was probably the massive FEE problem, that started last November and ended in February. That made me totally dislike BTC.
However now that the fees are normal in BTC, I had a doubt in my mind that what if they are right? What if the fee spike was just a coordinated attack on BTC, and now that it's over, BTC is just as good as BCH.
I mean if the fees are normal now, and about the same last I looked (maybe BTC is like 20% more expensive but still low like 60 cents), it gives some credibility back to BTC.
There are theories that the coordinated attack was a conspiracy against BTC, but then again BTC has it's own conspiracies too, so why not just ignore the conspiracy theories and look at the facts.
The fact is that it doesn't matter what it was, the mere fact that it happened, and it crippled the network for 4 months, shows that BTC has serious flaws. And it can happen again. So it doesn't matter who did it, it happened, and the network was crippled.
Now if a network can be crippled like that, and if you want this network to host a global payment system, then we will have huge problems.
BCH can defend against such attack much more effectively because it costs more to fill up a 32MB block than a 1MB block, 32x harder. Plus a 32MB block is so small that anyone can handle that right now, even if a 4 month period attack would happen against BCH, and it would be 32x more costly, so it would be harder to pull off.
However if a bigger budgeted attacker would attack again BTC with a 32x budget, then it would cripple BTC for 10 YEARS!!! That would literally make Bitcoin literally die.
   

Non Mining Nodes

One aspect that the BTC people say is that non miner "full nodes" are sacrosanct, and that we need them to keep miners in check, but I haven't heard any coherent answers as to why.
I have read the whitepaper twice, once today and once yesterday, and it states there clearly what the real truth is. You should definitely download and archive the whitepaper because some people tried to rewrite it, Orwellian style, so grab the original one here:
https://blockchair.com/bitcoin/whitepaper
[Download it and save it on your own computer SHA256: b1674191a88ec5cdd733e4240a81803105dc412d6c6708d53ab94fc248f4f553, these Orwellian trolls might try to gaslight you eventually and rewrite the past!]
The whitepaper mentions 3 times that:
The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes.
Subsequently:
The proof-of-work also solves the problem of determining representation in majority decision making. If the majority were based on one-IP-address-one-vote, it could be subverted by anyone able to allocate many IPs. Proof-of-work is essentially one-CPU-one-vote. The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it. If a majority of CPU power is controlled by honest nodes, the honest chain will grow the fastest and outpace any competing chains.
This is word for word how the whitepaper says it. So this alone disproves the full node myth, it's complete nonsense. The miners have total control, and the nodes don't matter. Satoshi designed a 1 CPU 1 vote system, where every node is a miner node. He could not forecast large farm ASIC miners, but then again that isn't resolved by just running non miner nodes.
Furthermore the full node system doesn't have any collective benefit only individual one, which we will get into next, and it might even be a drag:
Instead of going from A->D, you have to go to A->B->C->D with a full node system, adding extra inefficiency and latency. Keep in mind, this is not a medieval pidgeon relay messaging system, the information travels at the speed of light, so there is no need for extra relays, in fact adding extra relays just creates extra latency.
You eventually have to communicate with a miner, so what is the point in having extra "bus stops" along the way? It's just a waste of resources.
We do need many miners to secure the network, and instead of wasting resources on non-mining nodes, they should just spend that on mining if they really want decentralization.
   

SPV Wallets

Another claim that they make is that SPV wallets are insecure. Which is somewhat true, but out of perspective. For general users SPV wallets are totally fine. And I don't think SPV security is lower than what anyone except a billionaire who keeps all his coins in 1 address (very stupid) would need.
This explained well in the whitepaper in the page 5/ paragraph 8 "Simplified Payment Verification" section. The SPV is probabilistically secure, because it fetches blocks that are already agreed upon, so unless a big conspiracy is taking place, miners rewriting the chain, this gives people a probabilistic security.
Most SPV wallets are well implemented so they use the best tools to keep your coin history reasonably accurate, so they fetch data from multiple random servers and compare against it. Certainly Electrum/Electron Cash does this well.
One thing I might add is that it's good to use a VPN too with SPV wallets, in case your are personally targeted by a criminal, so your IP address is randomized too for extra security, so you won't download honeypot blocks that are specifically targeting your IP.
But other than that SPV is just reasonably secure, and by that I mean that it's probably below 0.1% that your coin history can be deceitful, and even then if you wait for 10-15 confirmations and shuffle your VPN IP address around enough times, you can be absolutely sure that the history is accurate.
So their fear is overblown and they are just fearmongering on this, the same way people fearmonger about asteroid impact or alien invasion, it's just not reasonable.
   

Lightning Network

Now as you can see already that a lot of these claims have been utterly debunked, and they don't have coherent arguments to address the rebuttals, in fact in most cases they resort to ad hominems and insults (which I have experienced, just for asking questions). But the coup de grace happens when you realize how inefficient LN is. And for that here are some references, it's mostly technical:
And perhaps it's explained in more simpler terms in youtube videos but the point is that there is real scientific proof that the LN will have awful consequences for the decentralization of BTC, and it inserts and unnecessary middleman into the mix that is a massive point of failure.
It essentially creates a KYC regulated bank network on top of a settlement layer, and the governments around the world will have total control over that. Well the LN nodes are essentially money transmitters because they directly facilitate the transfer of money, so AML/KYC/Tax reporting/Surveillance will happen by default on these nodes. And given that LN can't be a decentralized system but a hub & spoke system, due to the need to keep your wallet online at all times, it will literally become a 3rd party custodian based banking system, literally.
So all of the essence of Bitcoin [word for word quote from the whitepaper]:
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.
Will literally cease to exist, and it reverts BTC back into a government regulated banking system, literally.
   
   
There are other arguments too, but these are the main ones, and researching them thoroughly and understanding the issues made me lose all my doubts about Bitcoin Cash and all my faith in Bitcoin.
It can't be any more clear to me now that Bitcoin Cash is the true version of Bitcoin, the real vision of Satoshi and the genuine implementation of it, with all the technical genius-ity that Satoshi had laid out in the whitepaper which is still relevant.
Satoshi laid out everything in the whitepaper, and all of it is implemented geniusly in Bitcoin Cash except for paragraph 7 on page 4 "Reclaiming Disk Space" which talks about block pruning, I am not sure if this is Xthin Blocks or Compact Blocks or Thin Blocks (please explain in the comment section), otherwise it should be implemented, it would be a much better way for scaling than LN.
But other than that BCH is technically superior. Now I don't know whether better things win in politics, but in engineering, if your design is shitty, it will inevitably fall apart. You can't have a skyscraper built on quicksand, it's inevitable disaster.
So look, BCH is obviously risky, it has less users, less merchants; but because it has a solid foundation and probably the 3rd biggest community after ethereum, it has maaaaaaaaaaaaassive opportunity in it to become the best cryptocurrency (because ethereum has the same or worse issues than BTC).
There is no question now whether BCH is better, the only question now is, how long will it take for people to realize this.
 
So I choose to stay with BCH, and now I am 101% supportive of it! Long Live Bitcoin Cash!!
submitted by alexander7k to btc [link] [comments]

Nodes vs. Mining - Is bitcoin still resilient today?

Hi bitcoin folks,
I have been reading a lot about bitcoin and still haven't got the answer to one question in my head: could bitcoin today not already be very easily destroyed by an authoritarian government taking control over few mining farms?
Let me give you my underlying understanding of bitcoin fundamentals first (and let you verify whether these are correct):
- In the original bitcoin concept by Santoshi, nodes are all be mining; decentralized mining + PoWs are a fundamental source of resilience for the bitcoin design overall (no single player controlling enough of the bitcoin system overall to impair it)
- today, because of the increased difficulty of mining, nodes usually don't mine anymore, but this is done by big mining farms with specialized hardware such as ASICs.
- some of the mining farms have massive combined power, and the biggest mining pools are concentrated (as predicted by Santoshi) in some areas where electricity is cheap to obtain; these areas of concentration happen to be also geographically in tightly politically controlled areas, i.e. china, russia. most people believe that the governments in these areas would have no difficulty forcing any company, individual or institution to follow their orders. hence, the miners or mining pool operators sitting in these geographies would obey such orders if pushed this direction by a secret service, government institution, etc.
- it is already seen that the combined mining power exceeds 50% of the total capacity in china (although not in one mining pool, multiple mining pools operating out of china are believed to have that power). without that capacity, there are no new blocks, and no transactions possible on the bitcoin network.
- miners themselves would not have an interest in destroying bitcoin (e.g. by 51% attack), as they have massively invested in it, as Santoshi has foreseen. but a government or government agency would already be able to take this influence over large pools and their miners at any point in time, and may have an interest in destroying or impairing bitcoin. effectively this means, mining power is centrally controllable easily for them (even if not controlled today)?
- it is highly unlikely that the unbalanced mining power distribution (with few very powerful mining players possessing the hardware) will ever reverse, since ASICs have emerged and such massive combined computing power is out there; while the bitcoin design still allows computing with ordinary desktop computers (block size and resulting memory etc. needs were designed that way), the difficulty is already so high that nobody does it anymore
My question is:
How would regular bitcoin nodes - such as nodes run on people's own, single machines - have any chance to maintain resilience of the network then as designed by Santoshi? Specifically: how is abuse of the centrally controlled mining power at all avoidable in today's reality, e.g. aiming at destabilizing or destroying the bitcoin system?
I would understand the future of bitcoin is basically already in the hands of those who could - if they wanted - take control over the majority of the mining hardware out there for it.
I am curious to hear your thoughts about this.
-- syd
submitted by sydrooz to Bitcoin [link] [comments]

What is ProgPoW? Why Ethereum needs it moving forward.

Update: ASIC Manufacture say they can make a ProgPoW ASIC

Disclosure, I'm a avid GPU miner with some 90 Nvidia GPUs running out of my garage. I've been in and out of the mining scene since 2011,2014, and recently 2017. I Hold BTC, ETH, RVN. I directly benefit from them moving to ProgPOW, but not without a good reason. Everytime I've gotten into home GPU mining ASICs comes out BTC, LTC, I've had to give up every time. I refuse to see it happen to another excellent coin.

I've been a proponent of Ethereum following there ASIC resistance stance outlined in the original white-paper. Now that ProgPOW has been given the "Green-light" by Hudson Jameson to move forward with ProgPOW. I really think its time to discuss the Algorithm. What it is, who created it, why Ethereum needs it and dismiss crazy theories such as Nvidia funding development.

Before we start highly suggest everyone watch BitsBeTrippin's video where she breaks down ProgPOW at devcon4.

A Quick breakdown of What is ProgPOW?
ProgPoW is a proof-of-work algorithm designed to close the efficency gap available to specialized ASICs. It utilizes almost all parts of commodity hardware (GPUs), and comes pre-tuned for the most common hardware utilized in the Ethereum network.

From reading the white paper listed on Github the main idea behind ProgPOW is NOT to achieve total ASIC-resistance. The idea is to kill the 50-1000x Efficiency gains from specialized ASIC hardware. Such as what we saw recently with Equihash 200/9 coins where 50x was achieved over GPUs. ProgPOW algorithm uses most of the GPU minus a few parts. It takes the original Eth-Hash algorithm and add more features.
The main elements of the algorithm are:
ProgPOW will Inherit Eth-Hash current DAG size meaning 2GB and 3GB will not be able to mine still. Additionally no advantage is given to Either Nvidia or AMD GPUs
ProgPoW has been designed to be a vendor-neutral proof-of-work, or more specifically, proof-of-GPU. ProgPoW has intentionally avoided using features that only one core architecture has, such as LOP3 on NVIDIA, or indexed register files on AMD.

According to Kristy, she has had direct contact with AMD and Nvidia on testing ProgPOW.
As part of its review process, ProgPoW was submitted to (and reviewed by) both AMD and NVIDIA engineers. The group known as IfDefElse — of which I am a part of — has been actively working with both companies to ensure this effectively closes the efficiency gap that we speak publicly of in our papers and articles
This does not mean one side is favored over the other. She's giving and getting input from the major GPU manufactures in order to support Crypto-mining. Additionally she says "AMD is actively working with us to optimize ProgPoW for their architectures.". Using ProgPOW optimized for GPUs rids us of bowing to Bitmain, innosilicon, halong and there scandalous ways for hardware.

ProgPOW IS NOT the "God-sent savior of all GPUS" Even Kristy understand that complete ASIC-resistance is a fallacy. This will never be achieved. However By working with GPU manufactures and Crypto Dev's we can make a coin where GPUs run along-side with ASICs, but the efficiency gains are diluted. Meaning the time and money invested into an ProgPOW ASIC machine does not make economical sense. Rather just buy the actual GPU.

Quote sources from Kristy's Medium article.

Why does Ethereum need ProgPOW?

I suggest reading Siacoin's good medium article on the subject of ASICs.
It's too much to cover here but in short why we need ProgPOW against current ASICs and future ASICs
At his point in time we actually don't need ProgPOW. However we do need it as time goes on. Early Bitcoin ASICs didn't dominate BTC however as time went on, they became better more efficient than GPUs, and started dominating BTC's network. The same fate happens to any "ASIC-Resistant coin" that decides it's not a big deal (looking at you ZEN). Without a set date on POS Ethereum would have suffered the same fate. As Siacoin Dev states;
We also had loose designs for ethash (Ethereum’s algorithm). Admittedly, ethash was not as easily amenable to ASICs as equihash, but as we’ve seen from products on the market today, you can still do well enough to obsolete GPUs.
What makes ASICs bad? Isn't it better to get Hash/watt ratio? This saves tons of electric. One of PoW biggest faults. I think there is nothing bad about the ASICs hardware. Equihash ASICs achieved 20 1080ti level hashrate at 1/20 of the power. That's impressive. The problem with ASIC hardware is who, where it comes from, and there shady business practices.

  1. "It’s estimated that Monero’s secret ASICs made up more than 50% of the hashrate for almost a full year before discovery, and during that time, nobody noticed." How much of ETH hashrate could be ASICs? We won't know till the fork.
  2. I've heard a lot that ASICs aren't all that big of a deal. Focus on POS. Take in account Siacoins own network hashrate which allowed bitmain/innosilicon ASICs on the network till they forked in favor of their own ASICs after just a year (Siacoins drops 96% network hashrate).
  3. "In the case of Halong’s Decred miner, we saw them “sell out” of an unknown batch size of $10,000 miners. After that, it was observed that more than 50% of the mining rewards were collecting into a single address that was known to be associated with Halong, meaning that they did keep the majority of the hashrate and profits to themselves." GPU manufactures would not and cannot be do the same.
ASICs destroy networks, centralize the pools, and hardware. Leading to them to be controlled by large entity in this case its Chinese companies. Anyone who thinks otherwise is fool. Of course this doesn't happen overnight, hence my original statement that we don't need ProgPoW now. In a years time that may totally change and it will be far to late.

GPUs allow anyone to support the network. Think of the crypto run-up. Fry's Electronics, Microceneter, online E-tailers were SOLD OUT OF GPUs. Think of that! People were buying GPUs to support the network for token rewards(worth money) How many new miners, people, got interested in crypto because of this? How about friends who saw the rigs and word of mouth spread that you could go out buy a graphics card, built a rig, and earn money? obviously we know the effects because it wasn't sustainable in the remotest. However it's an attest that GPU mineable coins makes it accessible to everyone.

For Ethereum to successfully go POS it cannot hand it network over to ASIC mining companies in the meantime. POS is on an unknown release date/timeframe. I understand Vitalk does not like PoW however that's what currently securing the network. Because of this Ethereum must maintain as much decentralization as possible with GPU mining. This is what ProgPOW does. It gives AMD and Nvidia GPUs the advantage they need over ASICs created by Bitmain or others. It allows me to continue to secure the Ethereum network with my 90 GPUs until full POS switch.

Conclusion
Did it have to be ProgPOW? No, as UBIQ has shown they created there own unique ASIC-resistant algorithm. ProgPOW was given to us by the Ifdefelse team completed. This required no work from the ETH devs at all. It's open source and has been reviewed by the Etheruem Dev team. If they haven't found any issues with it yet, I don't see why we cannot implement it.

An argument can be made that if we do switch we risk security, because we'll lose network hashrate and decrease the cost to attack the network. I have two things to say to that. One since ProgPOW is new, Nicehash has not added it to it's network to rent yet. I wouldn't know how long nicehash would take to it add it, but it gives us a short while to get people on new ETH POW network. Additionally to attack the network, they would need massive coordination from GPU mining farms. Such a thing has never been recorded.

The 51% attacks that have happened recently (BCD/BTG/ZEN) and as of 1/8/18, ETC. These were all ASIC mineable coins. In the case of equihash coins, an ASIC that achieved 50x more efficiency had just came to market. It's not proven, but it leads me to believe a bad actor with early access to ASICs was able to attack those coins. All except ZEN have switched to Zhash algorithm. Even ZCASH/Zelcash has funded ProgPOW development. While I disagree they should do this, because that's entirely the problem too many coins using too many of the same algorithm, in the end it's up to the devs.

TL:DR; ASIC-Resistance is futile and a fallacy. PoS or other solutions are needed but to get there we need to keep PoW as Decentralized as possible this is what ProgPOW does.


submitted by Xazax310 to EtherMining [link] [comments]

What is ProgPoW? Why Ethereum needs it moving forward.

Update: ASIC Manufacture say they can make a ProgPoW ASIC

Disclosure, I'm a avid GPU miner with some 90 Nvidia GPUs running out of my garage. I've been in and out of the mining scene since 2011,2014, and recently 2017. I Hold BTC, ETH, RVN. I directly benefit from them moving to ProgPOW, but not without a good reason. Every-time I've gotten into home GPU mining ASICs comes out BTC, LTC, I've had to give up every time. I refuse to see it happen to another excellent coin.

I've been a proponent of Ethereum following there ASIC resistance stance outlined in the original white-paper. Now that ProgPOW has been given the "Green-light" by Hudson Jameson to move forward with ProgPOW. I really think its time to discuss the Algorithm. What it is, who created it, why Ethereum needs it and dismiss crazy theories such as Nvidia funding development.

Before we start highly suggest everyone watch BitsBeTrippin's video where she breaks down ProgPOW at devcon4.

A Quick breakdown of What is ProgPOW?
ProgPoW is a proof-of-work algorithm designed to close the efficency gap available to specialized ASICs. It utilizes almost all parts of commodity hardware (GPUs), and comes pre-tuned for the most common hardware utilized in the Ethereum network.

From reading the white paper listed on Github the main idea behind ProgPOW is NOT to achieve total ASIC-resistance. The idea is to kill the 50-1000x Efficiency gains from specialized ASIC hardware. Such as what we saw recently with Equihash 200/9 coins where 50x was achieved over GPUs. ProgPOW algorithm uses most of the GPU minus a few parts. It takes the original Eth-Hash algorithm and add more features.
The main elements of the algorithm are:
ProgPOW will Inherit Eth-Hash current DAG size meaning 2GB and 3GB will not be able to mine still. Additionally no advantage is given to Either Nvidia or AMD GPUs
ProgPoW has been designed to be a vendor-neutral proof-of-work, or more specifically, proof-of-GPU. ProgPoW has intentionally avoided using features that only one core architecture has, such as LOP3 on NVIDIA, or indexed register files on AMD.

According to Kristy, she has had direct contact with AMD and Nvidia on testing ProgPOW.
As part of its review process, ProgPoW was submitted to (and reviewed by) both AMD and NVIDIA engineers. The group known as IfDefElse — of which I am a part of — has been actively working with both companies to ensure this effectively closes the efficiency gap that we speak publicly of in our papers and articles
This does not mean one side is favored over the other. She's giving and getting input from the major GPU manufactures in order to support Crypto-mining. Additionally she says "AMD is actively working with us to optimize ProgPoW for their architectures.". Using ProgPOW optimized for GPUs rids us of bowing to Bitmain, innosilicon, halong and there scandalous ways for hardware.

ProgPOW IS NOT the "God-sent savior of all GPUS" Even Kristy understand that complete ASIC-resistance is a fallacy. This will never be achieved. However By working with GPU manufactures and Crypto Dev's we can make a coin where GPUs run along-side with ASICs, but the efficiency gains are diluted. Meaning the time and money invested into an ProgPOW ASIC machine does not make economical sense. Rather just buy the actual GPU.

Quote sources from Kristy's Medium article.

Why does Ethereum need ProgPOW?

I suggest reading Siacoin's good medium article on the subject of ASICs.
It's too much to cover here but in short why we need ProgPOW against current ASICs
At his point in time we actually don't need ProgPOW. However we do need it as time goes on. Early Bitcoin ASICs didn't dominate BTC however as time went on, they became better more efficient than GPUs, and started dominating BTC's network. The same fate happens to any "ASIC-Resistant coin" that decides it's not a big deal (looking at you ZEN). Without a set date on POS Ethereum would have suffered the same fate. As Siacoin Dev states;
We also had loose designs for ethash (Ethereum’s algorithm). Admittedly, ethash was not as easily amenable to ASICs as equihash, but as we’ve seen from products on the market today, you can still do well enough to obsolete GPUs.
What makes ASICs bad? Isn't it better to get Hash/watt ratio? This saves tons of electric. One of PoW biggest faults. I think there is nothing bad about the ASICs hardware. Equihash ASICs achieved 20 1080ti level hashrate at 1/20 of the power. That's impressive. The problem with ASIC hardware is who, where it comes from, and there shady business practices.

  1. "It’s estimated that Monero’s secret ASICs made up more than 50% of the hashrate for almost a full year before discovery, and during that time, nobody noticed." How much of ETH hashrate could be ASICs? We won't know till the fork.
  2. I've heard a lot that ASICs aren't all that big of a deal. Focus on POS. Take in account Siacoins own network hashrate which allowed bitmain/innosilicon ASICs on the network till they forked in favor of their own ASICs after just a year (Siacoins drops 96% network hashrate).
  3. "In the case of Halong’s Decred miner, we saw them “sell out” of an unknown batch size of $10,000 miners. After that, it was observed that more than 50% of the mining rewards were collecting into a single address that was known to be associated with Halong, meaning that they did keep the majority of the hashrate and profits to themselves." GPU manufactures would not and cannot be do the same.
ASICs destroy networks, centralize the pools, and hardware. Leading to them to be controlled by large entity in this case its Chinese companies. Anyone who thinks otherwise is fool. Of course this doesn't happen overnight, hence my original statement that we don't need ProgPoW now. In a years time that may totally change and it will be far to late.

GPUs allow anyone to support the network. Think of the crypto run-up. Fry's Electronics, Microceneter, online E-tailers were SOLD OUT OF GPUs. Think of that! People were buying GPUs to support the network for token rewards(worth money) How many new miners, people, got interested in crypto because of this? How about friends who saw the rigs and word of mouth spread that you could go out buy a graphics card, built a rig, and earn money? obviously we know the effects because it wasn't sustainable in the remotest. However it's an attest that GPU mineable coins makes it accessible to everyone.

For Ethereum to successfully go POS it cannot hand it network over to ASIC mining companies in the meantime. POS is on an unknown release date/timeframe. I understand Vitalk does not like PoW however that's what currently securing the network. Because of this Ethereum must maintain as much decentralization as possible with GPU mining. This is what ProgPOW does. It gives AMD and Nvidia GPUs the advantage they need over ASICs created by Bitmain or others. It allows me to continue to secure the Ethereum network with my 90 GPUs until full POS switch.

Conclusion
Did it have to be ProgPOW? No, as UBIQ has shown they created there own unique ASIC-resistant algorithm. ProgPOW was given to us by the Ifdefelse team completed. This required no work from the ETH devs at all. It's open source and has been reviewed by the Etheruem Dev team. If they haven't found any issues with it yet, I don't see why we cannot implement it.

An argument can be made that if we do switch we risk security, because we'll lose network hashrate and decrease the cost to attack the network. I have two things to say to that. One, since ProgPOW is new, Nicehash has not added it to it's network to rent yet. I wouldn't know how long nicehash would take to it add it, but it gives us a short while to get people on new ETH POW network. Additionally to attack the network, they would need massive coordination from GPU mining farms. Such a thing has never been recorded.

The 51% attacks that have happened recently (BCD/BTG/ZEN) and as of 1/8/18, ETC. These were all ASIC mineable coins. In the case of equihash coins, an ASIC that achieved 50x more efficiency had just came to market. It's not proven, but it leads me to believe a bad actor with early access to ASICs was able to attack those coins. All except ZEN have switched to Zhash algorithm. Even ZCASH/Zelcash has funded ProgPOW development. While I disagree they should do this, because that's entirely the problem too many coins using too many of the same algorithm, in the end it's up to the devs.

TL:DR; ASIC-Resistance is futile and a fallacy. PoS or other solutions are needed but to get there we need to keep PoW as Decentralized as possible this is what ProgPOW does.


Update 10/10/19 See medium article on ProgPoW FAQs.
submitted by Xazax310 to gpumining [link] [comments]

Where is the resistance to changes that affect miners? Why is everyone just capitulating without a fight?

I don't get it. I seriously don't. Why is everyone just rolling over regarding the drop from 3 ETH to 2 ETH? Why is everyone accepting PoS as inevitable, or even the ice age?
Remember when "authorities" tried and raise the block size on bitcoin? Remember UASF? The people revolted, gave the authority the finger, and the biggest names in crypto, the ones trying to drive the future of the project towards their interests found out they didn't have the control that they thought they did, because that's how a decentralized system works.
And here everyone is, treating the whims of Vitalik as the word of god? Why? Everyone's just blindly following their "roadmap." Why? I didn't have any input in their roadmap.
How about fuck their roadmap instead? How about everyday miners built ETH up to what it is today, and we steer it in a direction that keeps it that way instead of handing it over to large mining farms? How about we pressure pools, who have just as much to lose, not to accept the hard fork that's "set in stone?"
Is there really consensus? Is it even a democracy? Was there a vote to reduce the block size that I wasnt aware of? Was there a vote for the difficulty bomb, or PoS?
Ultimately we're the ones that run the blockchain, right? Why take orders from them? Isn't this like the entire point of blockchain, that there needs to be consensus?
I certainly don't agree with the direction things are heading. So I'm declaring right now, that if this reduction to 2 ETH per block goes through, I'm done mining ETH. As an individual, that's all I can do until some large stakeholders in ETH mining step up to the fucking plate and stand against the powers that be and organize a resistance.
I'd very very very much prefer it if there was an organized resistance to this change. A change that threatens literally everyone here. It's not too late. I mean come on, there are million dollar businesses at stake here. Where are you guys? Get together and show the people a better alternative, and they will support you. It is not as hard to block a hard fork as you think. Fuck all these EIPs. Just get the pools together and just say no, we're not upgrading. We're just not. Start a campaign to help the everyday miner understand how they're about to get boned, but there's still a chance to stop it. This will cost you far less than you stand to lose if it goes through. A loosely organized collection of bitcoin users were able to blockade a change that by and large the mining community wanted. They did it against the will of the people actually physically running the network. That's how hard it is to change a blockchain. Imagine how much easier it would be for the miners themselves to stop dead in it's tracks something so blatantly against their interest.
It's very difficult to push a decentralized network in a certain direction. It's very, very easy to stop it from moving in any direction. The status quo protects the interest of miners. It's orders of magnitude easier to stop this change than it is for it to go through. That's the reality. Maybe you don't realize how much power you have as a miner. You have a lot. You can stop this. It wouldn't even be hard.
So why do you just allow an engineer to dictate the future of your business, your livelihood? Or even your hobby? He doesn't own Ethereum. He doesn't own your business. He doesn't own your rig. He doesn't own anything. You don't need to accept it. Stand up and fight, before it's too late. Who cares how influential they are. We've got the high ground here, it should be an uphill battle for them. We own the land, and they're telling us how its going to work from the outside? Give me a break.
submitted by Darius510 to gpumining [link] [comments]

Where is the resistance to changes that affect miners? Why is everyone just capitulating without a fight?

I don't get it. I seriously don't. Why is everyone just rolling over regarding the drop from 3 ETH to 2 ETH? Why is everyone accepting PoS as inevitable, or even the ice age?
Remember when "authorities" tried and raise the block size on bitcoin? Remember UASF? The people revolted, gave the authority the finger, and the biggest names in crypto, the ones trying to drive the future of the project towards their interests found out they didn't have the control over a decentralized system.
And here everyone is, treating the whims of Vitalik as the word of god? Why? Everyone's just blindly following their "roadmap." Why? I didn't have any input in their roadmap.
How about fuck their roadmap instead? How about everyday miners built ETH up to what it is today, and we steer it in a direction that keeps it that way instead of handing it over to large mining farms? How about we pressure pools, who have just as much to lose, not to accept the hard fork that's "set in stone?"
Is there really consensus? Is it even a democracy? Was there a vote to reduce the block size that I wasnt aware of? Was there a vote for the difficulty bomb, or PoS?
Ultimately we're the ones that run the blockchain, right? Why take orders from them? Isn't this like the entire point of blockchain, that there needs to be consensus?
I certainly don't agree with the direction things are heading. So I'm declaring right now, that if this reduction to 2 ETH per block goes through, I'm done mining ETH. As an individual, that's all I can do until some large stakeholders in ETH mining step up to the fucking plate and stand against the powers that be and organize a resistance.
I'd very very very much prefer it if there was an organized resistance to this change. A change that threatens literally everyone here. It's not too late. I mean come on, there are million dollar businesses at stake here. Where are you guys? Get together and show the people a better alternative, and they will support you. It is not as hard to block a hard fork as you think. Fuck all these EIPs. Just get the pools together and just say no, we're not upgrading. We're just not. Start a campaign to help the everyday miner understand how they're about to get boned, but there's still a chance to stop it. This will cost you far less than you stand to lose if it goes through. A loosely organized collection of bitcoin users were able to blockade a change that by and large the mining community wanted. They did it against the will of the people actually physically running the network. That's how hard it is to change a blockchain. Imagine how much easier it would be for the miners themselves to stop dead in it's tracks something so blatantly against their interest.
It's very difficult to push a decentralized network in a certain direction. It's very, very easy to stop it from moving in any direction. The status quo protects the interest of miners. It's orders of magnitude easier to stop this change than it is for it to go through. That's the reality. Maybe you don't realize how much power you have as a miner. You have a lot. You can stop this. It wouldn't even be hard. So why do you just allow an engineer to dictate the future of your business, your livelihood? Or even your hobby? He doesn't own Ethereum. He doesn't own your business. He doesn't own your rig. He doesn't own anything. You don't need to accept it. Stand up and fight, before it's too late. Who cares how influential they are. We've got the high ground here, it should be an uphill battle for them. We own the land, and they're telling us how its going to work from the outside? Give me a break.
submitted by Darius510 to EtherMining [link] [comments]

Iranian Bitcoiners Risk Fines, Jail Time as Government Regulates Mining

Iranian Bitcoiners Risk Fines, Jail Time as Government Regulates Mining


News by Coindesk: Leigh Cuen
The Iranian government has been cracking down on cryptocurrency mining operations over the past three months, pending new legislation for formal mining licenses.
Since authorities have not officially approved a mining license process, several sources told CoinDesk that bitcoin miners are now operating in a climate of perpetual fear.
In rare cases, they can be jailed for continuing to operate. More often, they face exorbitant fines or have their equipment sealed off.
“If the government learns about my equipment, they’ll seal it and turn it off,” one small-scale bitcoin miner, operating just 15 machines in Tehran, told CoinDesk, adding:
“I’d be arrested. … After six months of waiting [for licensing regulations], they still want to make miners seem like criminals.”
Another professional bitcoin miner estimated the government has confiscated 80,000 mining devices over the past four months. It’s hard to say what the real numbers are, since they are not publicized. But this second bitcoiner alone lost access to thousands of machines, as he was operating an industrial farm connected directly to a power plant. He said 30 households lost their income when the government shut down his operation.
Plus, he says he personally knows more than 15 bitcoiners who were jailed.
“We have to wait for the Ministry of Energy, and the [new] regulations, to make a protocol with tariffs for our business,” he said.
An anonymous bitcoin developer in Tehran, who often works with miners, told CoinDesk many bitcoiners surrender the deeds to their homes to get out of jail, because the fines themselves can be worth more than their annual salaries. He said the fines range from $2,000–5,000 per machine, which is several times their retail value.
“There are also fines on the price for electricity,” he added, explaining that the electricity fines are often four times the annual cost of power for the machines. For example, if the mining farm paid $5,000 for a whole year of electricity, the fine for using a subsidized electricity source could be $20,000.
In Iran, the state-controlled electricity prices vary according to use-cases and the category for bitcoin mining has yet to be formally established.
As for the second miner who lost access to his industrial-sized operation, he told CoinDesk his company has an “open case” in court over a fine. He expected to be charged twice the market value for thousands of machines. But he’s unsure how he will be able to pay.

Smuggled equipment

These bitcoin miners face compliance hurdles from multiple agencies, related to both smuggled equipment and subsidized electricity fees.
The anonymous developer said most computer equipment and luxury goods are technically smuggled, from air conditioners to televisions sets. He said foreign grey market products are usually cheaper and higher quality than those sold through official retailers.
“If [the government] really wanted to fine all the people in the country using or selling smuggled merchandise, they’d have to fine everyone in this country,” he said, adding:
“Yet in just one area in the southern part of Tehran, a dozen [mining] farms were [recently] closed.”
As reported by a Tehran-based journalist for Bitcoin Magazine, the acute focus on finding bitcoin miners is wreaking havoc on the Iranian crypto community.
A survey of 600 Iranian bitcoiners, conducted over the past two weeks by the market research firm Gate Trade, found that 40 percent of respondents said the lack of regulatory clarity was their “biggest challenge related to bitcoin.”
Another miner operating near Tehran, also tapping into an industrial power plant, said up to at least 30 people associated with his farm haven’t had income for over a month. Plus, he said people with smaller, personal miners are afraid to move their equipment these days.
“If you were caught by the police having mining equipment in your car, your equipment would be seized and you would be charged with a penalty for handling or moving illegally imported machines,” the third miner said.
Indeed, local news outlet Fars News reported in July that several unnamed individuals were arrested in the southwestern city of Saveh for transporting smuggled mining equipment.

Power battles

Given this context, the growth of Iran’s bitcoin mining sector is screeching to a halt, with some bitcoiners taking small operations deeper into the proverbial underground and others halting completely.
Just like the second miner, the third mining farm operator’s machines are now sealed under government control, as he too has a pending court case.
Both this third miner and the developer said there is no evidence to suggest the government is mining bitcoin with confiscated equipment, and they hope it will remain that way.
To be fair, the third miner also said many people steal electricity for bitcoin mining, though he said his operation had a contract with a power plant. He personally doesn’t know anyone who went to jail over the summer. Most of his associates either lost access to their equipment or had to stop working.
“All we want, as people living in Iran, is for our government to understand the importance of this opportunity,” the third miner said, speaking to the hope that Iran will become a hub for bitcoin mining operations.
The second miner agreed. Imagining a worst-case scenario, he added:
“Otherwise, we’d have to sell [our equipment] like garbage.”
Iran image via Shutterstock
submitted by GTE_IO to u/GTE_IO [link] [comments]

Addressing the many concerns related to Obelisk

Why make ASICs at all?

Our blog has a longer post on the subject, but the ultimate answer is that GPU mining is very insecure. For the vast majority of GPU mined coins out there (including Sia), it is the case that there are multiple, if not many, individuals who operate enough GPUs to execute a 51% attack against the coin all by themselves. There are some very large Ethereum GPU farms out there, and they are a threat to all small GPU-mined coins. (our market cap is a factor of 50 smaller than Ethereum - we are a small coin). And it's not just Ethereum farms to be afraid of, there are massive GPU farms dedicated to machine learning as well, and other big-data related use cases. All of those are potential sources for a 51% attack. Even worse, if the price of the coin tanks following such an attack, the attacker has nothing to lose, because the core purpose of their hardware is unrelated to Sia, and unaffected by a change in price.
Though it sounds terrible and unintuitive, a single centralized entity running ASICs would be a much more secure situation than this. Because with a single central ASIC entity, you get two huge advantages:
  1. There's only 1 entity capable of performing a 51% attack. This is much better than having multiple entities that are each individually capable of performing a 51% attack.
  2. If the price of the coin falls, the entity that has all of the hardware loses a lot of money. That hardware isn't good for anything besides Sia mining, so that entity is quite invested in propping up the siacoin price.
We chose ASICs over GPUs because even the worst case scenario is more secure and better for the coin than the situation with GPU mining.
But we also did not want a single entity owning and operating all of the ASICs. That's when we realized, if we were ASIC manufacturers ourselves, we could guarantee that at least one entity is selling chips to the larger community. The unfortunate fact is that either way, there is going to be a small number of chip manufacturers who have the power to sell chips to the community. Even so, this is a better situation than what you get with GPU mining.
We are making ASICs so that we can guarantee the first batch of ASICs will make it to the Sia community. Without that, we have no idea if the first batch of ASICs will be sold to the public or hoarded by some greedy investors who were able to pay the full price of manufacturing up-front.

Why are you doing the presale so early?

We, put simply, don't have enough cash even to do the early development of the chips. We need financing to pay for chip development.
Traditionally, we would find some private investors, have them front some millions, and in return promise them a very good deal on some hardware. The private investors would get the first stab at buying ASICs, they'd get a huge chunk, and they'd get them at an exclusive deal for taking on the risk early. We actually had private investors come forward offering this to us, with enough money to fund the full development and manufacture of the first batch of chips - this isn't a hypothetical, it's a real offer that the Sia team received.
This didn't seem fair to us. When we finally did get to the point where the miners were ready to be sold to the community, we would have to offer the community a worse deal. Less risky, but ultimately it would mean that the community was excluded from the opportunity of participating early, and the result is a huge chunk of the chips going to some private investors.
Such a situation is still better than GPU mining, but it didn't seem like the best that we could do. We felt that we could do better by opening the early presale to everyone.

Why not accept credit cards?

Payment processors are not friendly to Bitcoin products. We contacted Stripe and were told point-blank that they would not process payments for cryptocurrency miners. We appreciate everyone who pointed us towards Stripe as a bitcoin-friendly company, but they gave us a direct no.
Paypal has a long history of freezing merchant accounts with little warning, and when they do so they freeze your existing money in addition to freezing incoming payments - we would be unable to pay our bills if Paypal did this to us, and it would unquestionably cause delays. Visa and MasterCard are not much better in terms of track record.
Losing access to our accounts would unquestionably cause delays. ASIC hardware is already well known to suffer from serious delays, and we need to limit our exposure to delays.
We are in an industry that is unfortunately fraught with fraud. With revenue-generated devices such as miners, criminals are much more likely to try to target these devices as a way to cash in on stolen credit cards, stolen identities, hacked bank accounts, etc. The fraud rates are staggering, and as a result most payment processors outright refuse to deal with it. We are aware that Bitmain is partnered with Paypal, though we don't know the details behind how that came to be.

Why not accept Siacoin?

This was a harder decision. We could quite easily choose to accept siacoin, however we fear that Siacoin is not ready to handle such a massive presale. The market cap and daily volume of Bitcoin is a factor of 100 times as large as the Siacoin market cap and volume. Moving millions or tens of millions of dollars through Bitcoin is not likely to make much of a dent. Siacoin on the other hand, a sudden sell order for millions of dollars would likely tank the price. That not only means the ecosystem is unhappy with us, it also means that we might only be able to sell $2499 of siacoin for $2200.
A lot of people have accused us of not having confidence in our own coin. Unfortunately, this is true. Even at a $500 million market cap, Sia is not ready to handle a presale of this size. It's a pragmatic decision based on the fact that we don't want to dump our own coin. We know that people will be selling siacoin to buy the miners anyway, but we still feel that this situation is much better than us accepting siacoin directly.
This decision was a disappointment for us as well. We would love to accept siacoin, and if we weren't talking about processing millions of dollars in a single day, we absolutely would be accepting siacoin. And, as Sia continues growing up, the concerns above will become less and less.

What about this 5% gains/losses stuff?

Our intention was never to play fishy financial games with our users, and honestly this isn't even something that crossed our minds as a potential problem point. I think a big part of the issue was that people did not realize we will be converting to US dollars as fast as possible - we will be doing the conversion in minutes or hours as long as we can keep up with the order volume.
The rationale is very simple. If the price plummets before we are able to convert the Bitcoin, we won't have enough money to create the hardware. We really don't expect this to matter, because we don't expect the price to swing by more than $100 (which is what would be required) in the few hours that we're going to be sitting on the BTC. If it does, we'll need more coins or we can't produce the hardware - our costs are in dollars, which means we need to end up with the right amount of dollars in our account at the end of the day.
The original stance on not returning gains was also very simple. There's no transparency into when we sell the coins. If we sell the coins within 60 minutes of receiving them, and then 4 hours later there's a huge surge in the price, we will almost certainly have users emailing us and posting about how we owe them a refund. We won't have that refund, because we'll have sold the coins before the price rise.
There's not much we can do to provide transparency into this either. And we're likely to get requests for refunds even if it takes 3 months for Bitcoin to rise by 5%. This promise of returning gains that we've put forward is going to be a massive headache, because we're not expecting to have any gains, even if the price goes up by that much we'll have likely converted to USD faster than that. Our whole goal is to convert to USD as fast as possible.
We're sorry that we have to go through this headache at all. If we could get set up with a processor like Stripe, we could accept both Bitcoin and USD and let them deal with the conversion process, slippage risk, and all the other headache associated with using multiple currencies.

Why shipping a full 12 months away?

Before we set out to make Sia miners, we did a study of companies who had previously sold and pre-sold Bitcoin miners. This included talking to both Avalon and Butterfly Labs, and talking to professionals and advisors who have shipped hardware successfully in other industries. The core piece of advice we got was pretty consistent: expect delays. Expect lots of delays, and expect them to come from the most absurd setbacks. (Example: one of the people we talked to had to delay their product because there was a global shortage of power supplies, and they had to wait in line behind billion dollar companies to get some).
Our projections indicate that if all goes well, we should be able to ship the miners in 6-8 months. Nothing we are doing is new. Plenty of companies have gone through the process of developing a chip, manufacturing it, putting it in a box, and then shipping it to users. There is almost no innovation risk here. Sia's PoW algorithm is deliberately very ASIC friendly, even more than Bitcoin. We have advisors who have gone through this process before, and the types of challenges facing us are well known.
6-8 months is reasonable, except that every single person we've talked to has told us that unexpected delays is a guarantee, and that by nature of being unexpected, there's not really any way to prevent them by planning around them. Delays are just inherent to shipping hardware. So we chose to set our target at 12 months.
We will ship the miners as soon as they are ready. If we are a few months ahead of schedule, and have somehow managed to avoid the foretold delays, we will ship them months ahead of schedule. But we want our users to have a realistic understanding of the expected delays. We've baked a generous amount of time for setbacks into our shipping date. We'll almost certainly need at least some of it.

Why $2499?

Making chips is very expensive. We have to sell thousands of units to cover the cost of the chips. A nontrivial percentage of the price is going to go towards chassis, shipping, power supply, control board, fans, etc. Those costs are relatively the same even if we put in fewer chips, which means the total percentage of our budget going towards chips drops significantly. If we cut the price in half, we'll have to sell roughly three times as many units to break even on the cost of the chips. If we cut the price in half again, we'd need to sell a completely unreasonable number of units to break even on the cost of the chips. It's unfortunate, but the fixed costs of chip manufacture means that we really need vast majority of the price of the unit to be spent on chips, otherwise we simply won't be able to sell enough units.
There is a second reason as well. As stated in the section above, the industry is plagued by delays an unexpected expenses. We need a healthy budget to plan around potential setbacks, because we've been guaranteed that there will be multiple significant setbacks by those who have gone through this process before. If we bring down the price of the unit, we will also be reducing the amount of wiggle room we have for disaster if suddenly we have to replace parts, re-do designs, or otherwise perform expensive adjustments to our plans.

Are you guys qualified to be working on hardware?

Zach is a mechanical engineer, I've been in the Bitcoin space since before ASICs started shipping, and we have advisors who have successfully shipped hardware before. The team that is designing the chips for the miner has designed chips and shipped chips for Bitcoin miners previously - they are familiar with the whole process, and have done it before. The people in charge of designing the PCB board and other aspects of the miner are also all experienced with their respective tasks. We will be facilitating frequent and strong communications between everyone working on the various components of the miner.
The ultimate answer is that the Sia development team is not qualified to be making this type of hardware. However, the Sia development team is not the team working on the hardware. Most of the heavy lifting is being performed by teams with lots of experience in this industry, including experience that is directly related to cryptocurrency miners.
What we are doing is not new. Dozens of cryptocurrency miners have been created and shipped in the past, and we are not starting from day zero. We have many advantages over the previous rounds of pre-sale cryptocurrency miners, but the biggest is that it's no longer the wild west of hardware design. There is a standard, and there are tried-and-true methods for making reliable cryptocurrency miners. We get to fall back on the mistakes and successes of the many miners that have been built previously, and we will be leaning heavily on teams and people that have direct experience in this field as opposed to doing everything ourselves.

Does this mean that Sia is getting less attention from the developers?

Sia right now has four full time employees. Myself, Zach, Luke, and Johnathan. Zach was hired in June 2017, less than one month ago. He is not a programmer.
Luke and Johnathan will continue with the same responsibilities that they've always had. They helped out a little bit in setting up the website, and in setting up a secure database to process orders + payment information, however the majority of their time has been focused on Sia even as we set up this presale. Going forward, they will be almost entirely uninvolved in Obelisk.
I have had to allocate about 25% of my time to Obelisk. Slightly more this week, due to the PR meltdown we had from the initial announcement. But most of my time is still going towards Sia. Most people know I work over 100 hours per week (some weeks will eclipse 120), and that a quarter of my time is not a small amount.
Zach is closer to 50% Sia, 50% Obelisk at this point. We're expecting that to tone down once the presale is over - much of this time has been spent with banks, with lawyers, with payment processors, and we won't have to do that beyond the initial setup phase. Zach and myself will still be having weekly conversations with every part of the Obelisk supply chain, including the chip designers, chip manufacturers, control board designers, the miner assembly teams, and the fulfillment centers, so even after the presale there will be effort going towards Obelisk.
But nobody on the Sia team is doing chip design, nobody is doing control board design, most of the really heavy work is being done by experienced teams and suppliers that we've found and already spent weeks vetting and verifying. We incorporated Obelisk as a separate company precisely so that Obelisk would eventually have a completely separate team.
And finally, as Obelisk is wholly owned by Nebulous, a successful hardware company does mean revenue and income for the Sia team. Cryptocurrency mining tends to be low margin, so tens of millions in revenue for Obelisk does not necessarily millions in funding for the Sia team. But it is something, and it will give us more time to get the storage platform to the next levels of maturity.

Conclusion

I know that a lot of you are concerned about the miner presale that we are conducting. I hope that this post has helped to alleviate those concerns. I hope it makes sense why we are doing a public presale, instead of seeking private investment until we have a full prototype. I hope this post has clarified our decisions around payment methods, and around our price point. I hope you feel more confident that this is something we will be able to pull off. And finally, I hope I've reassured you guys that Sia is still our primary focus, and that we haven't suddenly pivoted into being a hardware company.
We are ultimately doing this to provide better security to the Sia network. GPU mined coins are frighteningly insecure, and Sia is now large enough where there is serious money on the line. We are doing this to gain security, and also to ensure as much decentralization as possible when it comes to chip manufacture.
We are typically viewed as one of the most reputable teams in cryptocurrency, and I know it's why a lot of you are here. We hope that the Sia ASIC that we are going to be manufacturing and selling strengthens this reputation, but ultimately we will not find out until the miners are actually being shipped.
We continue to be excited about this new product. We truly do feel that ASICs are the right direction for Sia, and we also feel that we are doing the right thing by bringing the opportunity to own a Sia ASIC to the broader Sia community. We are sorry for the fallout from our sloppy original announcement, and we hope that we have since made up for it.
Finally, we hope that you are interested in buying a miner. Even if we only sell a small batch, ASICs are going to utterly dominate the hashrate of Sia going forward. This is an egalitarian sale where everyone has equal opportunity to buy a miner - there's no cap, and we will ensure that small buyers are not shut out by larger buyers in any way.
submitted by Taek42 to siacoin [link] [comments]

What is a better investment, Bitcoin or Ethereum?

Ethereum.
Before I explain why, I need you to understand something. Bitcoin and Ethereum are at two completely different stages within their potential. They also do not share the exact same mission; therefore, you do have to understand their differences to form an opinion about which one has the biggest use.
Before we look at the coins in detail, let's start with the potential ROI (100% = 2x Original Investment).
Bitcoin’s current market cap is $193,165,354,468 in order for you to make 100% this number would need to double to just under $400 Billion.
Ethereum’s current market cap is $44,715,990,083 , roughly 1/5th of Bitcoins. In order for you to make 100%, the price would need to increase to just under $90 Billion. - This is obviously more probable.
This will not serve as the only variable in making a decision, we now need to break down their uses and differences.
Bitcoin
What is Bitcoin?
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without the burdens of going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as honest nodes control the most CPU power on the network, they can generate the longest chain and outpace any attackers. The network itself requires minimal structure. Messages are broadcasted on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.
Peer-to-Peer (P2P): is a technical way of saying computers (peers) that are connected together via the internet.
Timestamps: are a sequence of characters that identify exactly when a certain event occurred, giving the exact time and date.
Hashing: is the process of compacting large quantities of data into smaller fixed sizes.
Proof-of-work: is the verification that the individual peer created the said hash
Nodes: are computers that are connected to the blockchain
Bitcoin is a first generation cryptocurrency, that was created in 2009 with the intention to become the currency of the internet.
Its Applications
Safe Haven
Being that billions of people are under the control of a broke economy or volatile dictatorship, Bitcoin is beginning to become a medium in which people within underdeveloped countries feel as a more secure place to store their value.
Remittances
The current operation costs roughly $600B annually, all at the expense of separated families. Bitcoin can now serve as a tool that operates the exact same way and only costs 1/10th of the price.
A transaction on the Bitcoin network also processes faster therefore giving the people a strong reason to make the switch.
Currency
Bitcoin is recognized as an asset, but can also be identified as an efficient currency in which people can buy and exchange with. With this being an application of Bitcoin, as the market continues to decrease in volatility, the use for Bitcoin will increase within businesses and everyday people that transact on a daily basis.
These are just a few, but for the sake of answer length, let’s move onto some of the scalability issues with Bitcoin that hinder my decision of choosing Bitcoin over Ethereum.
Bothering Issues with Bitcoin
Energy
A study from Digiconomist found that each transaction on the Bitcoin blockchain uses 236 KWh worth of electricity, this amount is enough to power 8 U.S households for an entire day.
Scalability
Energy consumption will hinder the scalability issues of Bitcoin, however the other issue that arises with POW mining is that with the increase in cost associated with mining BTC it is less economical to mine Bitcoin. This would limit the distributed nodes (miners) globally and allow a larger percentage of control to the dominant mining pools / farms.
This would lead to a more centralized blockchain, where they can change the rules of BTC as they please.
The supply of Bitcoin is finite, capped at 21 million. Eventually (currently predicted for 2140) Bitcoin's supply will run out. Once this happens, miners will no longer receive rewards for completing blocks but instead will be given fees. The fees will be drastically high in relative terms, and people will stop using the blockchain.
Also, if miners decide that this is uneconomical for them to process the transactions and use their computing power elsewhere the speed of transactions for Bitcoin will drastically slow down, rendering one of the fundamental values of a Bitcoin (speed) useless.
Blue chip Companies
This is more so for all cryptocurrencies, but Bitcoin in particular. It’s not a matter of if but a matter of when a blue-chip company such as Facebook, Amazon or Google decides to implement their own cryptocurrency.
Another possibility is a potential ‘world coin’ which global governments will all agree on using, this may seem unrealistic but it is definitely not impossible and many benefits would arise from having such a currency.
Quantum Computing
Bitcoin is said to be Quantum resistant, on the whitepaper it mentions that:
‘To compensate for increasing hardware speed and varying interest in running nodes over time, the proof-of-work difficulty is determined by a moving average targeting an average number of blocks per hour. If they're generated too fast, the difficulty increases.’
This may seem quantum resistant but it is important to understand that the difficulty is changed every 10 minutes and this is more than enough time for QC to mine all of Bitcoin’s remaining coins.
Bitcoin Bubble
The last point of this section is to recognize that the Bitcoin bubble could pop loud enough to crash the market. Due to a whole lot of hype, and even more speculative and uneducated buyers, Bitcoin could face a peak in which a simple spark
Ethereum
What is Ethereum?
Ethereum is an open source platform with the mission to build and inspire next-generation decentralized applications. In other words, the applications being built on the Ethereum network would have no middle men. Users are able to interact safely with social and financial systems to transact peer to peer, therefore opening a new realm of opportunity within decentralized development on specifically the exchange of value.
Like the Bitcoin network exchanges Bitcoin, applications within the Ethereum network would exchange ETHER. Therefore, making the Ethereum network have its own digital currency or, cryptocurrency that these decentralized applications would run on.
On the Ethereum network, developers are able to build these decentralized applications simply, within this seemingly complicated new technology. Think of it as Shopify or Volusion, these are centralized networks in which users/developers can build e-commerce stores more efficiently and cost effectively.
Ethereum is similar in this aspect, the network was essentially created to assist and fuel the growth of decentralized blockchain applications within its network.
Smart Contracts
Now, what Ethereum is based on, is a thing called “Smart Contracts”
Developers are extremely excited about this tool, a smart contract is similar to how it sounds, it’s a digital contract that self-executes… Think of it as a virtual vending machine.
A smart contract is a digital contract between two people in which the technology or tool handles the management, performance, enforcement and payment of the agreement. The smart contract has its own digital bank account of ETHER and settles once the product is received or the service is completed therefore greatly improving the efficiency of data tracking, payment processing and user friendliness of each decentralized application.
Let’s dive into an example
Music
The first age of the internet brought quite a bit of disruption to the music industry… Idk if you knew, but if you we’re a songwriter 25 years ago and produced a hit song that got a million singles you would acquire royalties of up to $50,000. Now if you were to produce a hit song that gets a million streams you don’t get $50,000, you get $45… Enough to cover the first round at the bar.
In result, musicians are now finding other ways to produce revenue with their music. One being the utilization of a blockchain ecosystem like Ethereum. Music applications are now being built for musicians to reclaim their content, smart contracts are being implemented into the music itself, therefore the music protects the intellectual property rights of the artist.
You want to listen to the song? It’s free… or maybe a few micro pennies to download. You want to put the song in your video or movie? Make it your ringtone? These each cost a different price and presented at the point of purchase would be its underlying IP rights for the use of that piece of music.
Musicians are absolutely hyped about this because now, the song becomes a business. It’s out there on this platform marketing itself, protecting the rights of the author and because the song has a payment system; in the sense of a bank account, all of the money then flows back to the artist, and they control the industry rather than these powerful intermediaries.
This concept could apply not only to just songwriters but any creator of content, from art, to inventions, to scientific discoveries or the work from independent journalists. There are endless industries in which people do not gain fair compensation in which the underlying technology of Ethereum could benefit in a big way.
Other examples:
· A smart contract can be created to pay a worker for every hour they work, they log their hours on the blockchain and then after verification the funds are instantly transferred to them
· Buying goods internationally can be tracked and verified – reducing fraud.
· Property buying can be facilitated through the contract
· Every industry that has a contract in place will be able to use the blockchain of Ethereum
It is also worth noting that Ethereum is also a lot quicker than Bitcoin, average block time being 15 seconds for Ethereum opposed to 10 minutes for Bitcoin.
Personally, I am invested into both. If I HAD to choose, like I said it would be Ethereum simply because of where it is now in comparison to its potential as well as its very transparent, direct, opportunistic mission towards the hosting of decentralized blockchain applications.
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