Battle of the Blockchain

After bitcoin block 15323 was solved, more than 24 hours passed before the next block.  This is quite a bit longer than the target time of ten minutes.  Looking through the blocks at that time we see that they are mostly all empty, and there isn't much action with the difficulty.  Even a full day of the network and - not a single transaction.  This was the first year of mining and a lot of people just happened to turn their computers off for a spell.

Fastforward to 2016, now looking at the Woodcoin block chain.  In some sense we see a similar phenomenon, some long periods sans blocks.  This is a small coin, barely worth more than bitcoin was worth in 2009 at the time of block 15323.  However the mechanics here were very different:  a real battle over the blockchain.  Here's a chart showing some of the action:


You can see that most of the time, the network produces blocks near the target time of 2 minutes, which is 720 blocks per day.  However starting in late 2015, and continuing off and on until early 2017, the number of blocks per day drops quite a bit.  What was happening?

Drive-by Hashing

What was happening was that unknown miners were dropping a large amount of hashpower on the network, waiting for the difficulty to go up, and then leaving the network.  The rest of the miners then were forced to mine at much lower profitability as they struggled to solve blocks at a fraction of the usual rate.  For much of this time period a mining rig of 10 or so nvidia GPUs may have been enough to dominate the network and pull off such a disruption.

While waiting longer than usual for your transactions to clear with an anonymous exchange might be annoying, it isn't a disaster.  Transactions eventually go through, and are inherently unalterable so shouldn't cause any worry.  However some other shenanigans also appeared on the network during this time.

Rewinding the Drive-by

Although it isn't visible in the block chain today (which keeps only the longest chain demonstrating the most skein work), there was in fact another interesting battle occurring on the woodcoin blockchain in 2016.  Some might remember that large chain reorganizations occurred during this time as well.

Why the reorganizations?  It appears that somebody found a way to battle the drive-by hashers by simply not accepting the rapid blocks they published to the network.  Instead, a second group of miners mined in private on the chain of the previous (lower) difficulty.  Because the drive-by miner always left and then didn't continue to mine woodcoin blocks, eventually this new party was able to surpass the work of the driveby-hasher's chain and then submit their new longer chain to the network, claiming these blocks for themselves.

This caused some trouble, as pools suddenly saw all their winnings orphaned.  They complained and in one case even dropped support for woodcoin.  However, this was an amazing test of byzantine consensus and robustness of the woodcoin network using the satoshi protocol.  Consider it a stress test.

Could something like this happen today?  Well maybe.  The hash rate is a lot higher today however:

As the hashrate grows, it becomes harder and harder to play these kind of games in a profitable manner.  While this is great for the health of the woodcoin network it's a drag for those of you looking for blockchain battles and associated drama.  Well we can't please everyone can we.






ASIC Resistance : wtf is that?

Hello Everyone!

Maybe some of you have heard the claims of "ASIC resistance" amongst some proponents of this or that new proof-of-work algorithm, or even some non-work centralized algorithm.  "ASIC Proof" even.

Lets talk about what this might mean.

First off, it's worth pointing out that doing the appropriate hash function faster will make you more profit as a miner.  It's a computational problem, how fast can we compute these functions.

Consider some somewhat similar computational problem, that of factoring an integer or determining the discrete logarithm of some large number.  Here we have a nice history to look at, and we see that two areas have sped up this computation:  1)  Hardware    and     2)  Algorithm development (software).

There is no reason to suspect that hashing for proof-of-work public networks will be any different.  The algorithms and software WILL improve, and the hardware WILL improve.  This viewpoint might come from somebody who was alive during the peak stages of Moore's law, but still - that's really the way it is.  Software will improve, hardware will improve.

Provided of course that the network in question provides enough rewards to incentivize us to improve!

If the network hash remains worthless, then sure - we might not bother to get specially improved software or hardware.

So does "ASIC-Restistant" then mean that the coin will be worthless?  That would do the trick, but then again "resistance" implies that somebody was trying to break into the house, not that the materials visible through the windows were not worth bothering with.

That's probably not the type of ASIC resistance those who throw term about are going for.

But what else could it mean?  Several coins have now had proponents claim "ASIC Resistance" and have gone on to have promising futures :  Litecoin (and other Scrypt coins), Bytecoin (with Monero et al.),  Ethereum (Equihash et al.), and others.  However a quick search will show that dedicated mining hardware is available for all of these coins.

Is there any room for a valuable computable which cannot have a specific integrated circuit for its application?  I don't see any.  What am I missing?




Addressing the Energy Consumption Issue

Hello everyone!

A young wizard named Forrest took me aside at a new years eve afterparty and told me his concerns about the energy use of cryptocurrency.  He was very passionate about this problem and so I dedicate this post to him.  We really ought to address this as carefully as we can, and with an open mind to this problem.  After all there could be real danger of a "Economics 2.0" situation a la Charles Stross's book "Accelerondo", in which economic competition drives some rather nasty developments which eventually leads to the building of a Dyson sphere around the sun, taking all the energy available in our star and using it towards some financial processing.  Scary stuff indeed!

First off, lets try to recognize the factors that are involved.

When we see a line of thousands of idling cars waiting on a packed highway, as we do all too often, each with a single occupant, spewing carbon dioxide and worse into the atmosphere, we don't immediately say "cars are evil".  Nor do we do so when we see a crushed armadillo or frog or human lying mangled by automotive impact.  We know that there is more to this problem than might at first meet the eye.  The price of gas and the history of the oil refinement industry are part of this story, as are the social factors that went into the construction of the highways, and the adoption of drive-to-work suburban mentality, and the fiat empire that watches over and feeds this hierarchy that makes it possible.  It's easy to have sympathy with the "cars suck" viewpoint, and cars are often compared to cryptos for pedagogic reasons.

When we see that people are being murdered over marijuana deals, we don't immediately say "the plant known as cannabis is evil".  We know that prohibition is the evil thing here, and drug abuse, and lack of education, and various other factors.

So to see a ton of electrical power being used by bitcoin miners, lets just say this is power that might have gone to something more useful, or perhaps carbon that might have remained in the ground.  It the heat isn't being used, it's wasted.  Like the nuke plant that dumps the tepid water in the river, or the flare-off at the local oil field.

Why are these folks using so much electricity and isn't it wasteful?  How could it be avoided?

That's the problem in a nutshell.

Before we continue with looking at answering this question, lets look at some metrics to define the problem.


Many commentators state that bitcoin miners use as much power as a small country, or give some numbers to describe the amount of power being used.  However this belies the difficulty of analyzing the issue: in fact we don't know how much power is being used.  It might be enough power for 100 countries, or it might be a lot more or less.  The only way we can estimate is by looking at the efficiency of commercially available miners and making some assumptions about what people are using.  Technically, there is the possibility that a big fraction of mining is being done by one guy in a closet with a set of AA batteries.  However we know from all the mining porn we've watched that there are indeed large farms spinning lots of fans and at least making it look as if they are big power-hungry mining ops.  And logic says there would be, as there is spare capacity and people who want to turn it into money.

If we want to know how much energy is being used by the miners, we need to know something about the efficiency of their machines.  This is a little difficult because we know for sure that somebody is out there now mining with some old x86 CPUs powered with a diesel generator, while others are mining with stealth super-efficient technology which we don't know the name of yet.

So what can we say?  Well a good order-of-magnitude estimate is the upper bound on rational miners in the steady state : they aren't going to be using more energy than the mining reward provides.  For BTC today that's about 13 BTC per block (12.5 in coinbase and half a coin or so in fees) or 1872 BTC per day.  Let's call it about 2 million dollars a day.  To find some comparison for this figure we can look at the earnings of Exxon-Mobil [XOM] which are declared to be something like 53 million dollars per day.  So that's kind of the hard cap on energy consumption of Exxon-Mobil (not the energy you use when you buy it, but what they use).

The argument here is that marginal cost = marginal revenue is the upper limit of the cost, as presented by Paul Sztorc.  This is an economic equilibrium so I argue it is unlikely to be actually reached, however it is as good an estimate as we can come by.  The actual power use will be somewhere between 0.01 and 0.99 of what we calculate as all the miners block reward spent on electricity at some nominal price.  Since we are speaking in order of magnitude one-significant-digit terms here lets call it ~ 1 million USD per day spent on electricity.

Wasteful?  Perhaps.  However it's worth pointing out that this is peanuts compared to some other energy sinks.  For example, US military energy costs are estimated to come to some 20 billion USD annually, or near ~60 million USD per day in energy costs (apparently down quite a bit recently as measured in real units).  3000% higher than bitcoin miners, and probably much more.  How about street lights?  Cars?  Airplanes?  The waste goes on and on.  But before we get carried away, lets try the analysis of Paul Sztorc on the energy requirements of fiat issuance.

How much fiat is issued daily?  Well of course we don't even know that much, that's the nature of the beast.  But we can look at some estimates.  My quick search of FED stats suggests that the figure is close to 3/4 of a billion USD per day.  What are the costs associated with this production?  At first one is tempted to dismiss out of hand Paul Sztorc's claim that marginal revenue tends to equal marginal costs here.  What are the costs of issuing fiat currency?  Basically nothing, as no energy or cost is a associated with fiat issuance.  However, this leaves off the associated indirect waste of the process.  Sports cars rotting away in garages, empty mansions being heated, massive development projects that are unneeded or worse, and of course warfare, fascism, monopoly business and destruction of free markets towards even greater inefficiencies.  All these things produce waste far beyond what the measly 2m usd per day of BTC rewards can do.

While this comparative analysis is useful in the present day, we should be clear it doesn't necessarily work in future economic conditions.  The energy costs and potential wastes of proof-of-work in other political conditions also needs careful consideration.  Back to that later.


OK so by now we've addressed how energy use is certainly a concern, we've put an upper bound on the problem and compared it to some other problems.  Now lets take a look at some other folks discussing this badly:


What nonsense! The bitcoin network has NO minimum energy requirement per transaction. People are choosing to use whatever spare capacity they can find to mine as they see fit, as this is how the system is designed to run - on spare power capacity. Tying money to energy results in LESS energy waste, not more. Maybe we should turn the lights off after all, now that money doesn't grow on trees and every joule could be satoshis in the wallet. Which scenario are you more likely to watch carefully your fossil fuel usage: 1- fuel price tied to fiat which you can issue to yourself in arbitrary quantities at no cost 2- fuel price tied to bitcoin which nobody can issue privately and is tied to energy use ? Go on answer the question as to which scenario you are more likely to be efficient about your fuel usage.

Another example, this one from an in-color whitepaper that pushes a 100% premined proof-of-stake coin:

All four points are dubious here.

So there are many examples of people incorrectly stating the nature of this problem, but does that help us?

In fact many people push the agenda that proof-of-work is an out of control energy disaster requiring tons of energy, when in fact the networks function at any level of energy and are designed to run on spare capacity.  The issue is not that proof-of-work is somehow an energy hog, but that people are choosing to put their energy into mining rather than into other projects.  This is the issue we need to address.

Another opinion is that a tie from currency to energy would be a huge boon to the energy budget of humanity, leading to far less wasted energy.  How would this work?  Well once there are tools that let us turn energy directly into money, and once we cannot get money from nothing by knowing the right people, we will be much more careful with our energy usage.

Such a future is that which many public coin users hope for.  Ask yourself who is more likely to waste energy, somebody who can issue currency or get it very cheaply and trade it for energy?  Or somebody who had to use energy to get currency.

Let's review:

1 - The excessive use of energy by miners of POW coins is both a problem itself and a symptom of other problems inherent in our financial system.

2 - This problem is often misunderstood and misportrayed by people pushing their own agenda

3 - The rise of public proof-of-work coins has a potential to vastly decrease the waste of energy currently occuring during the anthropocene extinction

4 - The energy and other wastes produced by private currency issuance are vastly worse than those produced by public currency issuance

5 - The jury is out on whether other techniques of public ledger maintenance could be improvements


That's all for now.  Tune in later for an updated quantitative analysis of satoshis-per-joule.

Stop buying centralized coins!

Seriously.  Decentralized coins are borderless, censorship resistant, and public, in a way that centralized coins cannot be.  They are unstoppable in a way the centralized coins cannot be.  It's easy to tell the difference: decentralized coins have a mechanism that allows them to be secured by the public.  They can be mined.  Without this mechanism, they can only be secured by the company - the owners of the initial distribution.

This company, or said owners, now have a responsibility to vet users of the network.  They have the power to be corrupted.  This power could be used for personal or political gain and even if said owner is a saint they are now vulnerable to extortion by all would-be extorters.  They could even change the rules of the coin, diluting the supply or confiscating your money.

Your duty as a citizen is to use a coin that supports the type of society that you want to see, and leaves you better off.  It's called exercising your political power.  Do you want to support a tyrannical dictator because you think it might give you short term wealth?  Well then you're a moron.  You are chasing an oasis put there by a company trying to fool you.  Does the tyrannical dictator really have your long term interests at heart?  Of course not.  Even if they did, their role can and will be taken over by somebody else who does not.

Stop buying centralized coins already!

Luckily has a way to filter them out easily (select coins -> filter non-mineable).  Use it!  Thanks for your attention.


Bitcoin Carols only Sung By Zhou Tonged

The Rise of the Company Coins

There have been a number of dominant company coins over the last 800 years or so, all privately issued.  Most of these however have been maintained as monopolies over certain geographical regions.  Some people call them national currencies or fiat.  However many other company coins have tried to get in on the game:

The trouble with this market is that a monopoly is tightly maintained by the issuer of the dominant coin in a region.  Witness in recent history the takedown of e-gold, Liberty Reserve, and of the Liberty Dollar.  While these takedowns were made with allegations of criminality, the truth is very clear: these folks were doing the same thing the dominant currency issuers were doing.

And so things would remain, if not for the pesky little issue of a decentralized coin technology emerging.  The difference with a decentralized public coin is that there's nobody to arrest to stop its use.  This means that now there are thousands of alternative coins for people to use.  The game has changed.

And since the door was opened by bitcoin et al., now - there is at least some room for new company coins.  And they have arrived in droves.  Ripple, Iota, ZCash (perhaps not an exact example of a company coin but certainly with some characteristics thereof), Stellar, Cardano Ada, and many more companies are issuing coins and promoting their use now that they don't fear the immediate wrath of the fiat issuers.  Some of these coins are at least partially public coins.

The public coin purist will of course recommend public and decentralized coins like Bitcoin, Litecoin, Woodcoin, and many others.

However, these company coins - while corruptible in some sense - may provide certain advantages.

Is it possible that in a world in which nobody fears the monopoly issuer will be one dominated by competing company coins?  OK, domination is probably far too strong a word here at a time when bitcoin dominance is still over 60% but at the very least we should keep an eye on this phenomenon: the rise of the company coin.


Scaling by Forking

By now you are probably familiar with the latest coins coming out which fork the BTC chain, effectively making an airdrop instead of a premine (or with a premine as well for the case of e.g. Bitcoin Gold).  The first that I know of to do this was CLAMS.  The biggest one is Bitcoin Cash.  What's the deal?  Who's doing this and why?

Basically this represents an acceptance of the by now well-known answer to the question of how bitcoin scales: altcoins.  Other coins enable all the scaling one could want and much much more.  Don't like the fees and congestion?  Move to another chain.  This solution is simple, cheap, and already works.  Altcoins have been around since day one and are the heart of the public coin ecosystem.

This is all well and good but once this was accepted by some of the big BTC holders (these guys got the nickname "nouveaux douche" over in the trollbox) they realized: why not get in on some of this action using our existing keys?  If we can build altcoins to take up some of the slack, in which we are already big holders, this is better for us than people jumping to coins that we didn't take stake in.  Plus if they fail, we didn't lose anything getting into the game.  Win - win, right?

So now you see the motivation behind this kind of coin launch.  Of course there are the other potential motivations which exist in any coin launch: to improve some aspect of the technology, and to enrich the founders (usually by way of a premine which is sold as an ICO).

Sadly a lot of coin users get all upset and imagine that coins other than the ones they hold are bad, because you know, fear the other or some childish thing like that.  In fact, public coin is public coin.  Giving people a chance to make an educated choice is always going to leave us better off.



Insane Facts About Bitcoin Infographic

By request, here's a nice large format infographic, for us to reminisce about the first 9 years of public coin.  Enjoy!  And follow the link at the bottom for more from


62 Insane Facts About Bitcoin [Infographic – Updated October 2017]


The Trouble with ICOs

The trouble in general is that it should be ICCOs.  There's an elided "colored" in "Initial coin offering".  It would more properly be called "Initial colored coin offering".  But hey, it's too much of a mouthful and perhaps has not as nice a flavor coming off the tongue so people went with the shorter but less accurate ICO.

Originally, this property of public coin (that it provided a means of tokenization) was called "colored coin".  The simplest architecture for such a scheme is that a certain chunk of coin can be labeled or "colored" such that it can be traded as distinct from other coin.  This would enable you to use it as a security, a frequent flyer mile, or whatever other use case you could dream up for such a limited supply public token.  Very useful wouldn't you say?

Newer architectures enable what is basically the same thing, a publicly auditable asset built on top of a public coin.  Notice that this isn't a new coin, it is an asset built from an existing coin, hence the name Colored Coin.  The most common such tokens are built on Ethereum as ERC20 tokens, or on Bitcoin as Mastershares or Omni tokens (like Tether-USD).  Let me propose a few other potential names for this thing that are less confusing:

Publicly Auditable Security

Blockchain Asset Offering

Blockchain Secured IPO

Initial Token Offering

You see, a coin is not an investment in a company, so an ICO shouldn't be an investment in a company.  Yet, often that is exactly what people are actually talking about.  A trade-ready public-audit-ready, investment in a company.

So how did we arrive at this state of affairs?

Well, the problem is that there were in fact some real ICOs.  The first big one was Etherium.  Etherium was started with a premine, which means a big chunk of coin was created right at the start to be taken by the developer.  This is traditionally considered poor form in the public coin community, but hey - there's just no telling what some people will buy.  It turned out to be a very wise investment indeed.  Premine the coin, and offer it for sale before your coin is even running.  It's the old "prebuy" idea fresh from the butterfly labs era.  If your product is popular enough, it just might work.  The point here is that this is actually a coin - not a token built on a coin - but a coin itself.  So "ICO" is not a mistaken label in that case.

And on the heels of success comes imitators.  So other folks wishing to sell their tokens have chosen the same name, despite their product not being the same thing.

OK it's likely there are other problems with that ICO you are considering buying into, but I just wanted to get this one off my chest for now.


Three Years of Woodcoin

On this occasion, let's go through why the LOGarithmic bitcoin we know as woodcoin is still alive after three years, has increased in value steadily, and is set up for further increase in value:

1) Decentralized

There is no woodcoin company, no woodcoin premine, no woodcoin ICO.  Like bitcoin, there's no person or group of persons who can take a fall, get bought out, compromise, or tarnish this coin.  There's no system of checkpoints, no coordinator, no foundation, and no login page.

2) Logarithmic Release

The logarithmic release is still the only crypto monetary policy with a long term plan that doesn't eventually either implode or explode.  Despite the existence of public coin, in which monetary policy is a real verifiable thing rather than a question of trusting some people with special titles and suits, there has been markedly little experimentation in monetary policy.  Lets look at the alternatives which have come up in public coin offerings:


Many coins (litecoin, bitcoin, monero, ..) use a geometric curve to increase the supply.  This will quickly leave these coins in a state where their transaction confirmations (mining) will need to be supported by fees.  At that point, there will be a market force, namely the desire to make transactions without paying too much, which will force holders to make at least small investments in other coins.  While a geometric series coin looks great to the early adopters, we can say at that at the very least there will be negative market pressure on these coins as they asymptotically near their supply cap.


Many other coins (doge, eth, eth classic, ..) use a linear curve - simply paying a fixed amount to miners every block.  This has the advantage that it avoids the problem of the geometric series - there will always be payment for the miners, so the fees will be low.  However it introduces another problem - unlimited supply.  Without a supply cap to point to, it becomes difficult to convince an investor that this is a great store of value in the long term.


Some coins, usually proof of stake coins, add a certain percentage of the total supply to the current supply every year.  This leads to an exponential growth in the money supply.  This is done to reward stakers.  While fees certainly will remain low in this scheme, and there is some early potential to benefit from price as people clamor to get some of the valuable initial capital, this scheme often implodes as a ponzi, or becomes centralized.

Delta function

Some coins (NEXT, ripple... ) simply issue all the currency up front in a 100% premine.  This leads to a centralized system, as the only people with the incentive to mine are those who wish to see the system continue, which are those who hold the coin.  Without a miner subsidy there is no other incentive to secure the network.  Such coins can indeed be public, but they are not so decentralized.  This leaves them vulnerable to issues of centralization.


The logarithmic release schedule gives us a middle ground.  We have a capped supply (for the case of woodcoin, there will never be more than 28 million), so we don't lose the trust of those folks who are inflation averse.  However we also have a slowly decreasing reward schedule, which provides for non-vanishing coinbase rewards in the very long term future.  We also don't lose the folks who are high-fee averse.

3) Proof of Work

Woodcoin is the highest hashpower coin using solely the Skein hash function.  Proof of work is real value in a way that proof of stake cannot provide.  This is the original basis for decentralized consensus.  It represents an incentive to save energy, understand software algorithms, and build better hardware.

4) Public  

Woodcoin is a public coin like bitcoin.  Anyone can see how many coins are outstanding and every LOG creation event is auditable by all parties.  This means counterfeiting and other money supply fraud is not possible.

5) No Counterparty Risk

Like bitcoin and other decentralized coins, it is possible to make a long distance transfer with no counterparty risk.  While holding precious metals also can be done without counterparty risk, the transfer of value over large distances is more problematic.


I'd love to say other benefits of woodcoin such as the ecologically aware community, their efforts to end financial colonialism and orcish patriarchy, and how they are good looking responsible and educated people.  However while this stuff is true, it isn't really part of the coin itself.

Comments please 🙂