1/ It’s already been said, but I’m saying it again.
@LaurentMT’s four-post series on Bitcoin’s PoW is a must read:
@LaurentMT’s four-post series on Bitcoin’s PoW is a must read:
2/ Metrics pointing at PoW inefficiency are wrong.
To measure economic value secured by the system, we must use UTXO as the object of value. How long would a UTXO remain secure if X% computing power was used to rewrite the history?
From there, we can measure PoW efficiency.
To measure economic value secured by the system, we must use UTXO as the object of value. How long would a UTXO remain secure if X% computing power was used to rewrite the history?
From there, we can measure PoW efficiency.
3/ “In a sense, PoW is similar to Gravity (to a homogeneous gravitational field to be more specific) which has a simultaneous influence over all bodies in its field, with a cumulative effect on their individual speed.”
medium.com/@laurentmt/gra…
medium.com/@laurentmt/gra…
4/ A decreasing Price-Performance Ratio of Bitcoin PoW (PPR) can be used to suggest Bitcoin's growing efficiency.
Price & PPR are strongly interrelated, as hodling & mining behaviors impact both. More generally, PPR follows a series of cycles associated to bitcoin’s market cycle
Price & PPR are strongly interrelated, as hodling & mining behaviors impact both. More generally, PPR follows a series of cycles associated to bitcoin’s market cycle
5/ "For each cycle, it can be observed that after a temporary period of degraded efficiency, the system has become more efficient."
medium.com/@laurentmt/the…
medium.com/@laurentmt/the…
6/ Once PoW efficiency has been defined, we can explore system optimization by introducing the idea of an optimal age of the UTXOs
At the highest level, beyond a certain point, it is sub-optimal to sacrifice activity for the diminishing marginal security provided by older PoWs.
At the highest level, beyond a certain point, it is sub-optimal to sacrifice activity for the diminishing marginal security provided by older PoWs.
7/ "The more existing bitcoins are concentrated around the optimal age, the closer the system is from its optimum."
medium.com/@laurentmt/cli…
medium.com/@laurentmt/cli…
8/ But is it worth it?
Efficiency gains need context.
Alternatives come at a lower "cost" but at the expense of incumbents' ability to dominate indefinitely.
Bitcoin PoW creates a dynamic playing field far more immune to unilateral political decisions than any other system.
Efficiency gains need context.
Alternatives come at a lower "cost" but at the expense of incumbents' ability to dominate indefinitely.
Bitcoin PoW creates a dynamic playing field far more immune to unilateral political decisions than any other system.
9/ "PoW is intrinsically an open system. No coalition of incumbents can prevent a new actor from entering the game or even from becoming a leading player. Not even a coalition of 100% of the participants."
medium.com/@laurentmt/ele…
medium.com/@laurentmt/ele…
