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Proof of Work, Proof of Stake, Proof of Importance ... How much evidence fell on the heads of ordinary people who did not require any proof. And why are they all needed (proof, not ordinary people)?
As we all know, cryptocurrency is an absolutely virtual thing. And even not having any expression in paper portraits of various famous people. And the numbers in the computer, as we all know, are generally very simple to draw. How is it that people are ready to pay tens of thousands of dollars for some tsiferki, while others do not cost a dime?
We know that numbers are also drawn on bank accounts. There is no gold behind the corrupt bank souls for a long time, so you can draw any amount. In theory. And so, by the way, they do, and it is called - "credit issue". If you briefly describe it, then, for example, the bank has one million dollars, and he issues loans for ten million, simply drawing numbers on his accounts. An interesting thing, but this is not a technology of money, but the device of a banking business, so we will not go deeply. By the way, this ratio (ten to one in our example) is called the "credit multiplier", and its maximum value is set by the central bank, i.e. he shortens the wishlist for banks with the help of laws and orders. The swinging state apparatus of violence.
I just wanted to show you that there are no special expensive or cheap numbers. They are essentially all the same. What banks have, what is in cryptocurrencies, what is in a calculator ... And all these numbers are just drawn. Somewhere from the ceiling, somewhere from a lower height. But some numbers have value, while others do not. What gives them value? You can, of course, answer in a pompous way "an agreement between the participants in the exchange of money." But, although I am an idealist by nature, I do not lose touch with reality and I will not allow you. At least in this matter.
Whenever we think about numbers in connection with bank accounts, we understand that there is something significant behind them. Not as heavy as a precious metal. Something lighter physically, but no less monumental in terms of sensations. And it's not about authority, of course, although it's about him too. Looking at the situation in the most abstract way, there are several important resources behind the value of numbers in bank accounts. Somewhere material (the authorized capital of the bank, limiting the size of legal banking fraud, bank property, etc.), somewhere administrative and legal (requirements of the law, the apparatus of violence), somewhere social and psychological. And it is very important that these resources are difficult to access. The more difficult to access the resources (regardless of their abstractness!), The stronger the value of the numbers that are backed up by them.
And only after some resource is recognized as difficult to access, it is possible to somehow agree on the specific cost of the figures confirmed by it. And only then an agreement becomes possible!
For a long time, precious metals were such a resource. Their inaccessibility lies in their low prevalence in the environment. By the way, the high profitability of the resource extraction is also important here. ( I just remembered the metals scandium and technetium, which have phenomenal technical characteristics and are at the same time widespread in the environment, but are incredibly expensive and difficult to mine and therefore do not have the technical value that they could have. )
In modern realities, humanity uses a different resource - administrative and legislative, backed up by the state apparatus of violence. It confirms the value of money - both paper and non-cash, which the bank draws on its own accounts. That is why this usual money is called fiat or fiduciary. I will not bore you with linguistics, both words mean approximately "value declared by the state".
Cryptocurrencies, on the other hand, have neither physically tangible resources (natural resources), nor administrative and legislative ones. Moreover, cryptocurrencies were originally conceived as values free from any influence of states, authorities, individuals, and as independent from any physical medium.
And here, I hope, you have already begun to guess why these same Proof-Of-something are needed. If not yet, then I'll tell you. Damn, worthy of emphasis in the text.
But what exactly is proved in different versions of "Proof-of -..." - this is the subject of a surprisingly interesting history of human development. Yes, for me this is exactly the story of the development of mankind. Because the search for these tasks can be described as the search for "the most fair way for all participants in the distribution of wealth." Cryptocurrency wealth. In conditions when each participant does not trust everyone else and pulls the blanket only for himself. But at the same time, the fairer the algorithm works, the more interest in it among the crypto exchange participants. We learn to build justice without being fair ... God, I believe in humanity! Who knows, maybe the solutions found will penetrate into the rest of our life ... There is also such a tendency. I promise to tell you later.
Historically, the first way to prove something was associated with algorithm of proof of work "Proof-of-work". If translated into a kid's language, then the meaning of this proof is "to prove that you butted yourself properly." To accomplish this task, the participant performs absolutely stupid, but definitely very hard work. The problem is structured in such a way that there is no easy solution in it. By the way, this algorithm was invented not for cryptocurrencies, but to limit spam. To send a letter to the addressee, the sender had to solve a math problem, spending time and resources of his computer; this would make spam an unprofitable business. And the ideologues of cryptocurrencies just adopted this idea.
But the problem with this algorithm is the waste of external resources (electricity in the first place). And so people began to look for more nature-friendly algorithms.
And this tale, perhaps, is worthy of a separate article. For the sim I take my leave for today.
As we all know, cryptocurrency is an absolutely virtual thing. And even not having any expression in paper portraits of various famous people. And the numbers in the computer, as we all know, are generally very simple to draw. How is it that people are ready to pay tens of thousands of dollars for some tsiferki, while others do not cost a dime?
We know that numbers are also drawn on bank accounts. There is no gold behind the corrupt bank souls for a long time, so you can draw any amount. In theory. And so, by the way, they do, and it is called - "credit issue". If you briefly describe it, then, for example, the bank has one million dollars, and he issues loans for ten million, simply drawing numbers on his accounts. An interesting thing, but this is not a technology of money, but the device of a banking business, so we will not go deeply. By the way, this ratio (ten to one in our example) is called the "credit multiplier", and its maximum value is set by the central bank, i.e. he shortens the wishlist for banks with the help of laws and orders. The swinging state apparatus of violence.
I just wanted to show you that there are no special expensive or cheap numbers. They are essentially all the same. What banks have, what is in cryptocurrencies, what is in a calculator ... And all these numbers are just drawn. Somewhere from the ceiling, somewhere from a lower height. But some numbers have value, while others do not. What gives them value? You can, of course, answer in a pompous way "an agreement between the participants in the exchange of money." But, although I am an idealist by nature, I do not lose touch with reality and I will not allow you. At least in this matter.
Whenever we think about numbers in connection with bank accounts, we understand that there is something significant behind them. Not as heavy as a precious metal. Something lighter physically, but no less monumental in terms of sensations. And it's not about authority, of course, although it's about him too. Looking at the situation in the most abstract way, there are several important resources behind the value of numbers in bank accounts. Somewhere material (the authorized capital of the bank, limiting the size of legal banking fraud, bank property, etc.), somewhere administrative and legal (requirements of the law, the apparatus of violence), somewhere social and psychological. And it is very important that these resources are difficult to access. The more difficult to access the resources (regardless of their abstractness!), The stronger the value of the numbers that are backed up by them.
And only after some resource is recognized as difficult to access, it is possible to somehow agree on the specific cost of the figures confirmed by it. And only then an agreement becomes possible!
For a long time, precious metals were such a resource. Their inaccessibility lies in their low prevalence in the environment. By the way, the high profitability of the resource extraction is also important here. ( I just remembered the metals scandium and technetium, which have phenomenal technical characteristics and are at the same time widespread in the environment, but are incredibly expensive and difficult to mine and therefore do not have the technical value that they could have. )
In modern realities, humanity uses a different resource - administrative and legislative, backed up by the state apparatus of violence. It confirms the value of money - both paper and non-cash, which the bank draws on its own accounts. That is why this usual money is called fiat or fiduciary. I will not bore you with linguistics, both words mean approximately "value declared by the state".
Cryptocurrencies, on the other hand, have neither physically tangible resources (natural resources), nor administrative and legislative ones. Moreover, cryptocurrencies were originally conceived as values free from any influence of states, authorities, individuals, and as independent from any physical medium.
And here, I hope, you have already begun to guess why these same Proof-Of-something are needed. If not yet, then I'll tell you. Damn, worthy of emphasis in the text.
All "Proof-of-something" options are a way to make sure that the owner of new cryptocurrency values has some hard-to-find resource (a solution to an intractable mathematical problem). Traditionally, it is the class of such problems that is of particular interest for cryptography and serves as its basis. Therefore, in all these mathematical problems, you will find cryptographic calculations of all kinds. Moreover, the problem should be difficult to solve in the presence of an unknown parameter, and the solution should be easily verified. This is also very common in the class of cryptographic computing.
But what exactly is proved in different versions of "Proof-of -..." - this is the subject of a surprisingly interesting history of human development. Yes, for me this is exactly the story of the development of mankind. Because the search for these tasks can be described as the search for "the most fair way for all participants in the distribution of wealth." Cryptocurrency wealth. In conditions when each participant does not trust everyone else and pulls the blanket only for himself. But at the same time, the fairer the algorithm works, the more interest in it among the crypto exchange participants. We learn to build justice without being fair ... God, I believe in humanity! Who knows, maybe the solutions found will penetrate into the rest of our life ... There is also such a tendency. I promise to tell you later.
Historically, the first way to prove something was associated with algorithm of proof of work "Proof-of-work". If translated into a kid's language, then the meaning of this proof is "to prove that you butted yourself properly." To accomplish this task, the participant performs absolutely stupid, but definitely very hard work. The problem is structured in such a way that there is no easy solution in it. By the way, this algorithm was invented not for cryptocurrencies, but to limit spam. To send a letter to the addressee, the sender had to solve a math problem, spending time and resources of his computer; this would make spam an unprofitable business. And the ideologues of cryptocurrencies just adopted this idea.
But the problem with this algorithm is the waste of external resources (electricity in the first place). And so people began to look for more nature-friendly algorithms.
And this tale, perhaps, is worthy of a separate article. For the sim I take my leave for today.
