Replacing Gold and Scaling Bitcoin

lauch3d(65)

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dear gold-bugs pls dont be mad at me, dont throw with gold

Steem as a democratic consortium chain with skin in the game

In yesterday’s article, we have seen why there is such a discrepancy in blockchain speed:
Blockchains designed by @Dan-Larimer (Steem, Bitshares, Eos and its clones Wax and Telos) are leading the field in peak-performance and daily transactions, because they are based on delegated proof-of-stake (dPOS) they are subject to the same scalability trilemma as every distributed crypto ledger. What they do, is not being a public consensus-mechanism based blockchain, but a consortium chain. In this case the consortium is voted by the users.

So in a fully public blockchain like Bitcoin, every full-node is a witness. In a consortium chain you delegate consensus to a bounded, permissioned set of validating block producers (stability point), which we call delegates or witnesses.

This is decentralisation builds on trust. Heavily clustered but not centralised. I still think its quite a cool compromise.

The problem with scaling is not the structure of the graph (whether it is “Blockchain”, “Tangle”, “Hashgraph”, …it doesn’t make the trilemma disappear). Yes, the graph can be a bottleneck when it comes to make fully use of the network-resources, but the bottleneck behind the fundamental and non-naive scalability problem is:

>>that in a fully decentralized system, every node has to process the transaction. Otherwise it is not fully decentralized/p2p.<<

Further we have learned that transactions per second (TPS) are not synonymous for scalability. Because also data scale and band-with play a role in scaling networks.

The scaling roadmap from Ethereum points to 2022-2025 for final scaling (super quadratic sharding) and if someone needs a useful degree of scaling now, he/she can use Steem, Bitshares and Eos, but he will pay the trade-off that he have to trust the witnesses.

But lets leave the space of decentralized computing and high throughput transaction-/payment- systems and lets go to a simpler and more primitive use-case: Store-of-Value

the holy grail of Store-of-Value

[after Universa Investments (Fund-Manager: Mark Spitznagel) see sources]

As I wrote in an earlier article, store-of-value can have many properties: it can be a

safe-haven store-of-value (this is when the asset is uncorrelated to market-crashes)
and/or it can be a tail hedge (when the asset is negatively correlated to market-crashes).

Who needs this stuff? Well, the banking-, off-shore- and hedge-fund-industry? Do we need those industries? Let’s say we are dependent on the wellbeing of at least the banks. If big banks go bust, then the economy can be harmed like in 2008. Ok here in Germany most people were "unaffected" but some lose their jobs. What happens if this leads to harm in the world-economy? Hmm, maybe something like a world-war? Last time it was like that!
So yes, we are in urgent need for store-of-value safe-havens and as you can see, gold is not really a good store-of-value safe-haven. At least not over the full spectrum of market-movements.

A digital gold needs maximal decentralization --> temper resistance --> hence Steem or Eos can’t be digital gold. They could be good micro-transaction payment systems for the internet (if they scale). So pls don’t be naive, don’t compare apples with oranges.

Apples, Oranges, ...

Ok, so there will be need for:

extreme high throughput-systems handling the nano-payments of the IoT
There will be a use-case for micro-transactions (PayPal is to expensive) for the social media and the internet economy of information products (Likes, music, apps, in-game).
And there will be a use-case for cross border mega-payments (Banks, offshore, stock-markets, forex-market)

But plz how2 scale?!, want2 go moon, want lambo!

well, one could go fully private ... ...
Ok lets skip this :D one could implement MimbleWimble! Yeaaa

in the comments under the last Article we wondered if nature has a solution for the scalability issue. @urdreamscometrue mentioned the brain as a computation network which is able to store information. The brain works with updating algorithms and bayesian inference. If some observation violates the set of believes it gets updated. And you could indeed forget old blocks. But this introduces a "incentive cliff" everybody strong enough to rewrite the last month stored in the chain, is now able to attack the network.

MimbleWimble does it a little bit different: it keeps the skeleton of the chain intact (the block-headers) but throws away the transaction contend. So @urdreamscometrue not a bad idea.

I actualy have some vague ideas/guesses, how one could use markov-blanket/entropy minimisation principles.

Sources: