How Monero's proof of work works

https://blog.alcazarsec.com/tech/posts/how-moneros-proof-of-work-works

51•alcazar•1h ago

Comments

dgacmu•38m ago

If folks are interested in the old Monero PoW function (and, uh, the reason they changed it), I wrote up a thing about it a long time ago:

https://da-data.blogspot.com/2014/08/minting-money-with-mone...

The history of people trying to design GPU or ASIC-resistant proof-of-work functions is long and mostly unsuccessful. I haven't looked into RandomX; it's possible they've succeeded here (or possible that with the alt-coin market mining profitability tanking after Ethereum moved to proof-of-stake, it just wasn't worth it).

alcazar•22m ago

This was a super interesting read, and it highlights exactly the strength of cryptocurrencies. They turn game theory in their favor, so egoistic players (I don't mean this in an offensive tone) contribute to making it stronger and safer for everyone else.

Thank you for sharing!

dgacmu•18m ago

They kinda do - I'll admit honestly that the final game I played in the cryptocurrency space I played solely to profit. (It was a minor, uh, **coin that didn't have a lot of redeeming value to start with). Though it turns out the incentives remained somewhat aligned: I ended up providing the developer with some security bug fixes to make sure someone couldn't mess with the cash cow. :)

add-sub-mul-div•35m ago

Prolific.

How Monero's proof of work works (alcazarsec.com)

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j4cobgarby•30m ago

I never quite understand this stuff, maybe someone can help.

Are cryptocurrencies supposed to be a potential replacement for real life cash? This was my understanding of the motivation behind Bitcoin, at least.

If so, why does it make sense that people can "generate" cash by proving some amount of work done? This of course cannot be done with normal cash.

Is the main functionality of these cryptocurrencies supposed to be "people can send currency to each other", or "people generate currency -- a number -- and sell this currency for real life money"?

gear54rus•28m ago

> If so, why does it make sense that people can "generate" cash by proving some amount of work done?

Because you need an incentive for 'miners' to participate in transaction processing.

Main functionality is transactions which are not controlled by any single entity (like the government).

Most of it is speculation unfortunately, which gives it a bad name, drowning out real usecases.

ourmandave•19m ago

So now I'm wondering, why wouldn't they just charge a transaction fee in Monero?

Why mine at all?

If you want to scale up to Mastercard levels.

tony69•26m ago

Broken Money by Lyn Alden is a good book on the topic

yosamino•24m ago

> If so, why does it make sense that people can "generate" cash by proving some amount of work done?

Think of it this way: If you pay with physical cash, there are people somewhere who do the work of digging ore out of the ground, smelting it, shaping it into coins, cutting and printing paper and so on. All these people do that, because they get paid in the same currency that they themselves have minted.

It turns out that nobody has yet found a way to create a digital decentralized currency that that works without incorporating a similar concept of incentivizing the creation of currency.

Hilliard_Ohiooo•20m ago

ETH is trying right now with proof of ownership.

littlecranky67•5m ago

Which automatically makes in possibly centralized (you can never ever guarantee that not a single entity - or group of colluding entities - hold the majority stake and thus excert control).

Hilliard_Ohiooo•21m ago

yes, Bitcoin was hijacked by the company, Blockstream and they injected the SegWit and RBF attacks to kill it as a currency, Bitcoin Cash still functions as Bitcoin however.

Monero is similar to Bitcoin Cash, a useful replacement for cash in most cases.

ulrikrasmussen•18m ago

It's just a mechanism to incentivize mining. The alternative is that miners are paid only via fees, but that risks making it prohibitively expensive to transact. Minting new coins distributes the cost of mining over all holders by inflating the currency a little bit. Fees are still necessary to avoid spamming.

earnesti•18m ago

> This of course cannot be done with normal cash.

Normal cash is just printed out from thin air by those who have the power. In that sense (some) cryptocurrencies are better because at least the process is open.

ArchieScrivener•12m ago

Yes, Bitcoin is a replacement for central banking currencies. Its the first few lines of the white paper.

This is how money works. If you use a medium of exchange and unit of account for goods and services then that medium must increase at the same rate as the increase in goods and services otherwise you get second and third order effects such as inflation, contraction, rising unemployment, etc., directly impacting its ability to act as a unit of account.

In Bitcoin you don't generate cash, you earn block rewards for acting as a consensus broker which otherwise would require a central banking settlement layer. This activity, tied directly to the transaction layer, acts to maintain the equilibrium between increases in goods and services and expansion of the money supply.

Wall Street got ahold of it and now Bitcoin is primarily acting as a Store of Value for the purpose of speculative investments. Driven primarily by the fear of missing out and market manipulation since Bitcoin is heavily centralized.

MithrilTuxedo•8m ago

They're meant to replace the bank.

Cryptocurrencies allow market participants to communicate value to each other without having to trust other market participants or an institution. Mining verifies transactions and commits them to the public record, earning the miner a fee for their work.

Aeroi•27m ago

you guys can downvote this, but it's a useless waste of compute, detrimental to resource scarcity and energy constraints, not really solving problems in society.

Hilliard_Ohiooo•24m ago

You'll get nothing but up votes here on HN, a lot are still angry they missed the boat.

But solving the problem of how to transfer value trustlessly and anonymously, instantly anywhere in the world is one of the biggest breakthroughs since the Internet.

Amazing how in a few short years kids started growing up with Bitcoin and don't understand how it work or why it exists :(

jayd16•4m ago

If it's actually a transformative technology, there's no boat to miss.

But it's still mostly about the speculation, it seems.

mothballed•2m ago

It was mainly the early wall street types that cashed in big. If it was used as suggested by satoshi, then you were using it as spending cash, in which case you shouldn't have made much money on it.

dgellow•2m ago

It’s an interesting technical problem to solve. But after 15y still has no meaningful benefits for our societies. Other than gambling/speculation/illegal stuff

littlecranky67•23m ago

Absolutely true, no one needs monero when you can have bitcoin (and lightning for private instant bitcoin payments).

Hilliard_Ohiooo•19m ago

Lightning Network, ready in 18 months for the last 5 years! Lol.

earnesti•16m ago

I have used LN quite a lot for the last 3-4 years or so. Seems to work good enough for quite many use cases.

littlecranky67•15m ago

What exactly are you missing that i.e. PhoenixWallet or Electrum is providing? The only thing missing is merchant adoption - but bitcoin is far ahead monero in this field.

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