The average time to become unprofitable sums up to less than 1.29 years.This of course causes Bitcoin's massive e-waste problem. But David Gerard links to a fascinating blog post entitled The problem with bitcoin miners in which Paul Butler describes a more immediate problem it causes. The explanation is below the fold.
Tuesday, May 31, 2022
One thing that has been true since the first GPU hit the market is that a better one is close behind. The same has been true since the first mining ASIC hit the market. I first wrote about this in 2018's ASICs and Mining Centralization. Recently, Alex de Vries and Christian Stoll estimated that:
Thursday, May 26, 2022
A major criticism of Bitcoin is that its blockchain processes only around 230K transactions/day, of which only about 10% are "economically meaningful. That is less than 5 "economically meaningful" transactions between individuals' wallets per minute. 90% are wash trades, and 7.5% transactions between exchanges.
As I described in Fixed Supply, Variable Demand, when the limited supply of Bitcoin and Ethereum transactions meets spikes in demand, the result is huge spikes in fees. This has made cryptocurrency boosters such as Vitalik Buterin unhappy:
Buterin didn’t predict the rise of NFTs, and has watched the phenomenon with a mixture of interest and anxiety. ... their volume has overwhelmed the network, leading to a steep rise in congestion fees, in which, for instance, bidders trying to secure a rare NFT pay hundreds of dollars extra to make sure their transactions are expedited.The solution is obvious, greatly increase the rate at which the system can process transactions. Ethereum 2 is proposed to implement sharding, allowing parallelism. Avalanche claims 3400 transactions/sec with 1.35sec finality. Problem solved! Not so fast. Follow me below the fold.
Tuesday, May 24, 2022
My most recent post was on the metastability of "algorithmic stablecoins", as amply demonstrated by the UST/LUNA pair on May 8th. This post is about the other kind of stablecoin, ones like Tether that claim to be backed by reserves at least as valuable as their "market cap". For different reasons, these also turn out to be metastable. Below the fold, I explain.
Thursday, May 19, 2022
There is certainly a strong argument that the extraordinary boom in tech stocks over the past decade was largely fueled by the unprecedented low-interest-rate policies in response to the global financial crisis of 2008. With capital becoming a commodity, it made sense for opportunistic companies such as Uber to grab as much cash as VC firms would give them to “blitzscale” their way to market domination.Below the fold, I look at how this is now all unwinding.
This madcap expansion was accelerated by funding provided by a new class of non-traditional, or tourist, investors, including Masayoshi Son’s SoftBank and “crossover” hedge funds such as Tiger Global.
Tuesday, May 17, 2022
This is part 3 of my storage update; see Part 1, on DNA storage, and Part 2, on SSD reliability. This is Part 3, on the 2022 Library of Congress "Designing Storage Architectures" meeting. The agenda with links to the presentations is here. Below the fold I have comments on some of them.
Tuesday, May 10, 2022
How could I refuse to not just "earn up to 38% APY" but also receive "significant price appreciation" from the "fastest-appreciating digital asset in history"? It is a "blockchain Certificate of Deposit" and I know that Certificates of Deposit are issued by banks and are:
a safer and more conservative investment than stocks and bonds, offering lower opportunity for growth, but with a non-volatile, guaranteed rate of return.Middleman Hex.com says:
This common investment tool is used by hundreds of millions of people worldwide with a market value in the trillions.The top national guaranteed rate for a 5-year bank CD is currently 3.15%, so clearly eliminating the bank middleman who seems to be taking a 35% cut means a blockchain CD guaranteed by middleman Hex.com is a winner with no additional risk!
HEX uses blockchain technology to offer the same concept without the middleman.
Below the fold I look this gift horse in the mouth.
Thursday, May 5, 2022
In our 2003 SOSP "Best Paper" Preserving Peer Replicas By Rate-Limited Sampled Voting (also here, expanded version here) we introduced a number of concepts. The most important was consensus based on sampling the electorate at random, in contrast to the traditional Byzantine Fault Tolerance (BFT), which at every step solicits votes from the entire electorate. The advantages of this mechanism are so significant that, a decade and a half later, it was re-discovered and improved upon in the context of a blockchain protocol. Below the fold I explain our original consensus system, and describe how the basic idea has been adopted and enhanced.
Tuesday, May 3, 2022
|BTC transaction fees
Buterin didn’t predict the rise of NFTs, and has watched the phenomenon with a mixture of interest and anxiety. ... their volume has overwhelmed the network, leading to a steep rise in congestion fees, in which, for instance, bidders trying to secure a rare NFT pay hundreds of dollars extra to make sure their transactions are expedited.Last Saturday evening I looked at Molly White's invaluable timeline Web3 is going just great and saw that the top two entries summed up this problem to a tee. Below the fold, I explain