Alephium Twitter Space — PoW and Decentralization, part III
Alephium hosted a Twitter Space on 24/01/2023 with Jordan from Nervos Network and Cheng Wang & Hongchao Liu from Alephium to talk about Proof of Work (PoW) and Decentralization.
This series reached the last part. You can find the part I here, part II here, and access the whole conversation here.
These are the topics covered in this post:
- Thoughts on Decentralization and why it matters;
- Where a developer can find information on how to build on both protocols;
- General Questions.
Decentralization
Question: It’s a bit of a trick question, but I’m interested in what you think makes for a good metric of decentralization. Do you believe in the Nakamoto coefficient? How do you define a decentralized-enough system?
Jordan: That’s a really tough question, and at Nervos, we’ve been trying to figure out how to measure it ourselves. We’ve explored a variety of metrics, but it’s such a nuanced topic that no single metric can fully capture the essence of each project. One metric we’ve considered is the Nakamoto coefficient, which could be a good starting point. However, I have some reservations about that metric because a Bitcoin maximalist created it to showcase a specific perspective and ensure its dominance in the field. While the concept has some merit, I don’t think it’s the best metric. Ultimately, we need to take a more comprehensive approach to measure the success of a project, and it’s a complex topic that requires careful consideration of many factors.
The question you raised, “What is a decentralized enough system,” is not straightforward and varies based on the nature of the project. For instance, a game might not require the same degree of decentralization as a currency would. This is because the currency is a fundamental aspect of how humans operate today, and any mishap in the system can have severe consequences.
In my opinion, when it comes to critical systems like currency, financial applications, and potentially future dApps, a system can be considered decentralized enough if it’s capable of withstanding an extended attack from a significant central party or even a government. This is a complex topic, and assigning specific metrics to measure decentralization is challenging. Ultimately, the goal is to create a robust, secure system to maintain its decentralization despite adversity.
Cheng: I agree that quantifying whether a project is decentralized can be difficult, but I want to share my personal perspective on this. When I evaluate a project’s decentralization, I consider two things. The first aspect is the cost involved in decentralizing the network. This involves examining how much it costs to run a full node and maintain the project’s core infrastructure.
To give you an example, when it comes to the cost of running a full node, Bitcoin is the benchmark because it requires the least amount of resources to run. As for the infrastructure side, Bitcoin does not require any specific infrastructure to be operational.
On the other hand, Ethereum doesn’t score as well in decentralization because most of the DeFi sector relies heavily on Metamask, Infura, and Etherscan. This means that a significant portion of the Ethereum network’s infrastructure is centralized and controlled by a few organizations or individuals.
Another way I evaluate a project’s decentralization is by looking at the cost involved in decentralizing the ecosystem. This refers to how easy it is to onboard new developers or build new applications on top of the project’s protocol. It cannot be considered decentralized if the protocol is highly dependent on a small group of entities for its ecosystem.
I measure this by looking at factors such as developer experience, tools, and infrastructure. These aspects are crucial for the future of the blockchain, as they can determine how accessible and open the ecosystem is to new participants.
Overall, this is how I assess the decentralization of a protocol in a more practical way. However, it’s important to note that this is a highly technical perspective, and other factors such as governance, ownership, and community involvement also play a role in determining a project’s level of decentralization.
Question: Jameson Lopp, a passionate decentralization/Bitcoin advocate, has written a compelling article called The death of decentralized email. He excruciatingly shows how convenience and centralization have triumphed over email’s technical yet decentralized beginnings. Do you think blockchain like ours can triumph over these centripetal forces of convenience, “it just works,” and regulations?
Jordan: I need to address two separate topics: regulation and convenience. Regarding whether we can triumph over convenience, my answer is no. Users won’t adopt inconvenient systems. Therefore, we must ensure that our systems are as convenient as centralized alternatives. We are slowly evolving towards easier-to-use, more self-custodial or custodial-based systems.
The convenience of blockchains will eventually rival that of centralized systems in many respects, and we will eventually begin to compete on cost. The innovations we see today are just the beginning of a long climb. Eventually, we will surpass the costs of traditional systems, and decentralized systems will be less expensive in the long run. This will spark a change of the tide, where everyone will want to switch to decentralized systems because they’re just as convenient and less expensive.
Talking about regulation is another important topic, and it sometimes scares me because of how certain entities like the SEC try to extend their scope of interest beyond what’s necessary. However, blockchains cannot be stopped by regulation. It could slow down their development by decades but cannot stop them. This is not something I want to challenge. Still, I actively push for regulators to see this technology as something we need to embrace because it’s never existed in the history of mankind before.
Blockchains are a platform that eliminates the need for trust, which is something we’ve seen throughout history we cannot rely on. This is truly remarkable, and it’s something we need as a society to continue existing with each other. Among regulators, there are good guys who support decentralization efforts, even though they may not always get the spotlight in the news. We must diligently support them because we could lose if we go to war with regulators. Let’s continue making our efforts the best way possible and supporting those who support decentralization.
Cheng: In my opinion, the centralized email system has failed due to many spam emails that flood our inboxes. Although the initial decentralized design for email did not succeed, utilizing blockchain technology, particularly layer 2 (L2), and implementing services on top of layer 1 (L1), can help solve the spamming issue by designing the proper incentives.
In terms of convenience, the crypto world is still in its early stages, and the infrastructure and technical side require significant improvement. However, with multiple chains and different design trade-offs, convenience, and user experience will not be a major issue in the future. It’s a matter of time and adoption, as the web 2.0 stack took many years to become user-friendly.
While I am not an expert in this area, I believe that regulation will evolve similarly to how it did for the internet. Regulators initially did not know how to handle the internet, but it has improved greatly over the last 10 to 20 years. The same will likely happen with blockchain and crypto, and I believe that we will see positive progress in this area as well.
Developer Experience
Question: Where do you go if you are a developer and want to start experimenting with Nervos and Alephium?
Jordan: Our go-to resources for those interested in building on Nervos are docs.nervos.org and nervos.com. If you want to build on our layer one, then docs.nervos.org is the place to start. On the other hand, if you’re more interested in EVM development on our chain, then nervos.com is a good starting point. We also have a recent article that can help you choose the right layer to build on, since it’s a complex topic that depends on many factors. While UTXOs may pose some challenges, we believe they hold great promise for the future. So I recommend checking out that article for more information. And if you’re focusing on EVM, our Godwoken layer provides a convenient Ethereum-compatible solution.
Cheng: If you’re a developer interested in joining Alephium, the best place to start is by visiting our website and checking out our user-friendly documentation at docs.alephium.org. I believe the best way to learn is by doing. So, I would encourage you to try building a simple dApp, experimenting with the SDK, running a full node, and playing around with the entire stack to see if it suits your needs for decentralization. We are still in the early stages of development, and there’s a lot of work to be done, particularly in building our virtual machine and language with unique security features. But I think that makes this model exciting; there’s plenty of opportunity to contribute and to make a difference. So, don’t hesitate to dive in and have some fun!
General Questions
Question: What excites you when you wake up and want to start building?
Jordan: I get excited every day seeing things being built with blockchain. It reminds me of the early days of the internet, where the most amazing website was Coca-Cola, with an animated bear sliding down a mountain. The internet has changed and improved the lives of nearly everyone on the planet, and I see the same potential in the blockchain. Over time, it might not be as noticeable, but everyone might eventually be using this technology.
In the future, people might not ask to pay with Bitcoin but just with their cell phone, similar to Apple Pay. One of the main currencies could be Bitcoin, Ethereum, Nervos, or Alephium. It could be any of these or all, and you could simply ask to pay with crypto.
There’s also a lot of potential for collaboration with decentralized systems. For example, in the gaming industry, multiple big companies and publishers compete with each other, but a decentralized platform could bring back the possibility of collaboration.
The most recent innovation that excites me is NFTs, where thousands of artists can monetize their work in new ways. I never thought it would catch on, but it continues to grow. This is what gets me up in the morning, the potential and innovation in this field. I’m always surprised by what’s next.
Cheng: As someone deeply invested in blockchain technology’s potential, I believe its decentralized nature has enormous potential for the future. One of the most exciting aspects of this technology is its ability to improve freedom. In my opinion, freedom is about having options, and blockchain technology and cryptocurrencies provide people with more options regarding finance. Traditional finance can be uncertain, with external events like the Fed’s announcements causing significant impacts on the stock market. I find this system to be unpredictable and unsettling.
In contrast, blockchain and crypto give people more control over their finances than ever before. With this technology, people can take ownership of their assets and have more autonomy in financial decisions. Furthermore, the crypto and blockchain industry is still in its early stages, with much room for growth and development. I’m passionate about exploring new ideas and working on exciting projects in this industry. It’s a dynamic field full of possibilities, and I’m eager to continue contributing to it. While I wish I could work on all of my ideas at once, focusing on one project at a time keeps things exciting and allows me to create a meaningful impact.
Hongchao: I completely agree with Cheng on the importance of options. Having alternative solutions is crucial, which is why I’m passionate about blockchain and crypto. This space is important and multidisciplinary, making it fascinating as it drives me to learn and explore many different things. That’s what draws me to this space.
Question: Could you explain briefly what “selfish mining” is and how you address the risk?
Jordan: Selfish mining is a technique that miners can use to gain an advantage over others by manipulating the transmission of the winning block. In my opinion, this should not be made illegal, but rather is a flaw in the early implementation of proof of work. At Nervos, we recognized this issue and changed our approach to de-incentivize selfish mining. Mining aims to decentralize the pools and ensure that anyone can win, but selfish mining disrupts this by allowing miners to gain additional rewards they don’t deserve. To address this, Nervos created NC-Max with a two-step feature that separates the transmission from confirmation, which improves block propagation and reduces the opportunity for selfish mining. If you want to learn more about this topic, you can check out the paper on our website, nervos.com.
