[HN Gopher] What if cryptocurrencies ranked by number of nodes i... ___________________________________________________________________ What if cryptocurrencies ranked by number of nodes instead of marketcap? Author : donmezgel Score : 86 points Date : 2022-09-05 18:42 UTC (4 hours ago) (HTM) web link (chainparrot.com) (TXT) w3m dump (chainparrot.com) | saurik wrote: | I would claim that would be just as bad if not even worse, as the | biggest sin in the marketing of cryptocurrencies is that people | create a circular value pump that starts with VC money to | subsidize "rewards" for people running nodes and then they claim | "we already have hundreds of nodes!!" which causes the value of | their token to go up... which then means they have more value to | continue providing subsidies. These rewards are paid out using | the token, and to run a node--and thereby earn rewards--you have | to "lock up" (aka, commit to not selling in the near future) a | bunch of the token, which means people like to "reinvest" their | rewards (to earn more rewards, which they mentally be model as an | APY on their capital) rather than converting it immediately back | into another currency. | | This causes a massive--and very unsustainable--"pump" in the | value of the token, as more people rush to invest in the token so | they can get paid rewards by staking it (to set up more nodes and | earn more rewards), which is then used to market the product | saying "look how many more nodes we have! we keep getting more | and more nodes!" causing others to rush to invest in the token to | speculate on the value increase, which adds up to the value of | the token going up and thereby either the value of the treasury | held by the company going up or the value that can be extracted | via inflation going up, which can then be used to pay for more | rewards. | | The ONLY correct metric by which to judge a cryptocurrency | project is by the amount of legitimate--not "I am going to | subsidize our nodes by acting as a client and using the network a | ton randomly to make it look like there is a lot of usage"... | which, yes, means this is a difficult metric to correctly measure | --traffic, as probably measured by _revenue_ (but maybe | "untainted income" or something would work? I have stared at the | question some but never managed to figure out what the best exact | figure is... which is of course even harder of a problem than | valuing a normal stock/company). | | To draw an analogy: would you want to decide the value of a | restaurant chain by the number of locations they have around the | world--or a gig economy company by the number of people | _providing service_ --if you knew the company took a billion | dollars in VC money and could quite literally just be paying | people to set up locations or drive in circles without a single | user in sight? You'd want to know how much people were actually | willing to _pay_ for the food people are buying or how much they | are willing to _pay_ for the rides they are getting, and if that | answer were somehow not only $0 but NEGATIVE--as cryptocurrencies | often set up unsustainable VC /pump-funded incentives focused on | the USER as well!!--you'd hopefully be skeptical of the company. | | (But, of course, I use those examples to explicitly include the | ilk of Uber or DoorDash, as the question for SOME of these | cryptocurrencies is "if we can get enough providers in enough | places, only then can we unlock revenue and value". But that is | then more of a progress check on their ability to build out their | network as opposed to a real understanding of whether their | product has any value or not... an ecosystem where you have a ton | of supply and almost no actual demand is not an ecosystem which | is functioning or one which will be sustainable.) | loxias wrote: | Always surprised at how few nodes there are relative to how loud | the noise is about crypto. I don't mind deploying a service and | running things myself, it seems there are only a few thousand of | us in the world. Even Tor only has "a few thousand" nodes. | | It might be cute to also see some derived statistics like "market | cap/node", average size of transaction, and "estimated cost of | 51% attack". ;-) | overtonwhy wrote: | Or "estimated cost to DDoS nodes". For a 51% attack can you | DDoS rival nodes offline? | mrsnowman123 wrote: | EddySchauHai wrote: | It's surprisingly complex to run a node unless you're a | seasoned developer, and even then when you add things like | updates and potentially even slashing for mistakes it's not | worth it. I spent around two years contracting building test | infra for different crypto companies by creating throwaway | networks with potentially up to three different cryptos (for | bridges) and it was a nightmare. There's a definite startup | idea there to make it easier like spinning up VMs | c0mptonFP wrote: | Compared to the shit sysadmins normally have to deal with, | setting up nodes and spinning up custom nets is a breeze in | recent years. | TakeBlaster16 wrote: | > estimated cost of 51% attack | | Someone already built that one here: https://www.crypto51.app/ | password1 wrote: | These numbers are really low, I think I'm missing something | otherwise I don't understand why 51% aren't a common issue. | TakeBlaster16 wrote: | Those prices are derived from a site called NiceHash that | tries to commodify hashpower. Most people who want to | monetize their mining hardware, just... use it to mine, not | lease it to a reseller. So both the supply and demand are | low. It's a weird market imo. | | The last column is important to understand. It's answering | the question: if you rented NiceHash's entire supply of | compute power, how close would that get you to launching an | attack? For any crypto worth caring about, the number is 0% | or close to it. And for the others where it's >= 100%, | attacks are a common issue for exactly this reason. | drexlspivey wrote: | That's just how much electricity it will cost you to | sustain the attack for 1 hour. You still need to find the | hardware. You'll also need to find someone to accept your | transaction (that needs to be bigger than those 2 costs | combined to make it profitable) and give you cash in | return. Then you can defraud them keeping the cash and | coins by reversing the transaction. | latchkey wrote: | It is a common issue. ETC was 51'd 3 times in a month not | too long ago... that said, with the upcoming merge, it'll | soon be the largest hash GPU/ASIC coin. | | https://www.coindesk.com/markets/2020/08/29/ethereum- | classic... | cowtools wrote: | If I recall, the problem was that they were using the | same PoW function as etherium was, so people could just | use their old ETH hardware to attack ETC. Pretty sure the | fix was to switch to a slightly different PoW that | entails re-designing the ASICs. | mandarax8 wrote: | Is it 'illegal' to attempt a 51% attack? | wyldfire wrote: | It seems very likely it would be considered theft or fraud. | cowtools wrote: | I mean maybe if you try to double-spend on purchases that | you make with cryptocurrency, but small reorgs happen all | the time and they would have to prove you intentionally | caused the reorg in order to double spend. | sparkie wrote: | The count is "reachable nodes", which is a fraction of the | number of total nodes. Most people don't open a port to allow | incoming connections and their node will only make outgoing | ones. Bitcoin has closer to 50k users running Bitcoin Core, | with many others using SPV wallets like Electrum. | | https://luke.dashjr.org/programs/bitcoin/files/charts/histor... | dangero wrote: | You can run a thousand nodes virtually from a single pc | [deleted] | risho wrote: | Wait isn't each collection of 32 eth considered a separate | validator no matter the source? If that's the case then wouldn't | that mean that coinbase and other exchanges make up the massive | overwhelming majority of those validators? If that's the case is | it really good faith to claim that there are 400+ thousand | validators and then arbitrarily put ethereum in first place? | TakeBlaster16 wrote: | At a minimum I would group PoW and PoS coins separately, as the | incentives for each category are quite different. This site | acknowledges that in a way with separate lists at the top for | "nodes" and "validators", but underneath they still have the | main list sorted by max(apples, oranges) | rvz wrote: | 1. Yes. | | 2. Yes. | | 3. It is not in good faith. | [deleted] | joyfylbanana wrote: | The point is the shilling as always | Taek wrote: | Yes, its not genuine to say Eth has 400,000 validators as many | of them are the same entity. | | It's a similar story for nodes as well. A ton of the reported | nodes are actually running on AWS and ultimately its a fairly | worthless metric. | | For a while the crypto community valued node count as a | meaningful number for measuring decentralization, and naturally | from that moment forward people have been fully shameless about | running hundreds (at some points in history tens of thousands) | of nodes just to boost metrics. | beaned wrote: | Is this measurable? Is it possible to tell which nodes are | running in the cloud, and count them? | ahtihn wrote: | > A ton of the reported nodes are actually running on AWS | | So? That doesn't mean anything, Amazon doesn't control the | nodes just because they are running on its infra. | terrio wrote: | Guess what would happen if Amazon would just block certain | type of traffic. | | US gov or the CIA/fbi just forces AWS to do so. | | Since Snowden not unreasonable. | mhluongo wrote: | Depends on the custodial setup! | latchkey wrote: | Because, tomorrow, they could decide to make it against the | ToS if they wanted to. Hetzner has already done this. | | https://news.ycombinator.com/item?id=32607728 | dakial1 wrote: | Newbie question, how do you know how many nodes are under the | same entity, to avoid somebody compromising the distributed | system? | drexlspivey wrote: | You can't, that's why miners vote with their computing power | (or their staked coins in PoS) instead of the number of nodes. | The second metric is gameable by spinning up many nodes (Sybil | attack). | bitcurious wrote: | Chia is famously decentralized when using "number of nodes" as | the measure and yet is missing from this list. | guilhas wrote: | Chia sounds like the biggest lost opportunity ever. Why not use | the drives for cloud storage? | | Destroying a lot of HDDs and SSDs for nothing | [deleted] | 1024wq wrote: | Chia currently has 123398 full nodes | https://dashboard.chia.net/d/em15uQ47k/peer-info?orgId=1 | dbv1 wrote: | Massive premine on Chia, didn't know that. I have a hard time | believing that many nodes are reachable, there are probably | about that many users in general, if that. Looking at the | latest dozen blocks right now, they're completely empty. | mjmj wrote: | Their software runs a full node and a wallet, so most users | are a node by default (if I'm not mistaken) and rewards are | double for the first couple years. You can run their | software and just about anything, low powered CPU's, pi's, | NAS, etc. So I don't doubt their numbers are too far from | the truth, esp considering how much China supports them. | Nodes have been slowly dropping over time as the crypto | boom cycle has died down. | | As far as real transactions, they've got a way to go. Just | releasing NFT support a few months ago. | 1024qw wrote: | In the beginning everyone had to run a full node even if | they weren't farming (in Chia instead of mining it's 2 | stages, first plotting and then farming) but earlier this | year Chia released a new light wallet which doesn't run a | full node. Now it should be mostly actual farmers that | run full nodes. Chia currently has 22 EiB of netspace | which would be more than 1.5 million of 14 TB hard | drives. | 1024qw wrote: | Chia Network explains the reason for the prefarm and how | it's going to be used in their whitepaper | https://www.chia.net/assets/Chia-Business- | Whitepaper-2022-02... | | Also worth checking about Chia Network projects with | WorldBank and InternationalFinanceCorporation for carbon | credits market https://www.chia.net/2022/08/17/bringing- | transparency-and-ef... about some real use that is | launching very soon. | rocket_surgeron wrote: | I think cryptocurrencies should be ranked by the mass in | kilograms of the actual, real, physical products and the weight | of people performing actual, real, services that have been paid | for using them. | | Arbitrage and exchange, and all of the people and infrastructure | surrounding those, would have no mass in this ranking system. | dskloet wrote: | Where does this get its data? Dash has close to 4,000 nodes but | here it's listed with 27. | donmezgel wrote: | It's from active connections here: | https://explorer.dash.org/insight-api/status | mjmj wrote: | Where is Chia? They might out rank all of these. | _xander wrote: | Was just about to say the same. Chia is at 123k full nodes. | | Source: https://dashboard.chia.net/ | guilhas wrote: | If you google Chia launch it says it started with more than | 100k nodes already | | If you zoom out that dashboard it says at one point 200k | nodes that than very sudden changes but in a general trend | downwards. Data might not be accurate | | I don't understand much of Chia or other coins, but it does | not look very organic | donmezgel wrote: | Couldn't find their api to get the numbers.. | sigmar wrote: | https://www.chia.net/2022/04/06/announcing-chia- | dashboards.e... | O__________O wrote: | Anyone able to comment on why Bitcoin nodes started using TOR | around January 2020? | | https://bitnodes.io/dashboard/7y/ | swivelmaster wrote: | Can someone explain to me why any of these values truly matter? | | My background is in game development both on Facebook and mobile, | and I spent a lot of time paying close attention to the growth of | the web and its various startups. Number of nodes and market cap | both look a lot like vanity metrics to me - numbers that sound | good in a market/tech-specific way but don't actually reflect the | true value or growth potential from a business perspective. | | Cryptocurrency, AFAIK, has network effects, so the true value | should likely be measured in common KPI's like DAU, MAU, and some | kind of replacement for ARPU - likely average transaction volume | per daily/monthly user. | | The numbers I've seen for crypto games - DAU in the tens of | thousands - are absolutely laughable compared to the numbers on | Facebook and mobile games even in the first year or two of the | platforms. If crypto was truly going to be a revolutionary mass- | market phenomenon, I would expect to see hundreds of thousands to | millions of DAU on any individual currency and AFAIK that's just | not happening. | cowtools wrote: | The number of nodes doesn't really matter as long as it's | sufficiently high. The network security is mostly based on how | decentralized the hash-power is (or staking-power) is. | | You're right that better measures are number of transactions- | per-second, merchant acceptance, etc: | | https://mempool.space/lightning | https://bitinfocharts.com/comparison/transactions-btc-eth-lt... | https://moneroj.net/merchants/ | | I agree that crypto games have been pretty pitiful in their | current incarnation, outside of gambling applications (thanks | to provable fairness). They have a bad reputation of being too | centralized and pay-to-win, which is really the only problem | cryptocurrency is supposed to solve. | otikik wrote: | ollybee wrote: | I think Goodhart's Law will kick in pretty quickly | Taek wrote: | It's been in effect for this metric since the block size wars | of 2016. Node count (and also validator count) has not been | useful for a very long time. | system2 wrote: | Likely only HN would care about the node number so I don't see | a problem. | nr152522 wrote: | Chia is missing from this list. | Cypher wrote: | You can rank it however you want. The problem with nodes is that | anyone can them up cheaply without having any impact on the | security of the network. | jgarzik wrote: | Answer (12 yr crypto dev & veteran): | | Number of nodes is a poor metric that is easily gamified (pumped | up), presenting an artificial picture. If a blockchain's | economics purposefully incentivizes nodes, then number-of-nodes | is entirely subsidized, in one common example. | | Further, the "Sybil" factor - which one party controls many nodes | - and other centralizing factors - e.g. 90% of nodes are on Big | Cloud - also complicates the number-of-nodes use as a simple | metric and useful comparator. | lawn wrote: | It's funny because the whole point of proof-of-work (and proof- | of-stake etc) is because the number of nodes is a completely | untrustworthy. If a there are very few nodes then that's a sign | the crypto isn't very popular/decentralized, but other than | that there's not much to say. | SilasX wrote: | >Number of nodes is a poor metric that is easily gamified | (pumped up), presenting an artificial picture. If a | blockchain's economics purposefully incentivizes nodes, then | number-of-nodes is entirely subsidized, in one common example. | | I'm not sure that this dynamic would compromise the metric's | usefulness. A cryptocurrency can only offer such incentives in- | protocol if it's made the currency have real-world, persistent | value. So any _ability_ to bribe users to run nodes would | itself be a validation of the cryptocurrency 's | success/influence/etc. | | (That is, being paid 1000 ScamCoins a week to run a node won't | be much of an incentive if they're only worth trillionths of a | penny each.) | | I do agree your next paragraph identifies a real problem | though: | | >Further, the "Sybil" factor - which one party controls many | nodes - and other centralizing factors - e.g. 90% of nodes are | on Big Cloud - also complicates the number-of-nodes use as a | simple metric and useful comparator. | | It's definitely hard to identify how truly independent the | nodes are. | cowtools wrote: | Even if the nodes are independent, I don't think it really | matters as much as the distribution of the hash-power. The | non-mining nodes will not be able to resist a re-org by | antagonistic miners. | mbesto wrote: | Answer (0 yr crypto dev & veteran): | | I start a new coin call $FOO. I release 1,000,000 coins. I sell | one coin to a friend for $1,0000, and keep the remaining | 999,999 coins for myself. The market cap is now $100M. | | > Number of nodes is a poor metric that is easily gamified | (pumped up), presenting an artificial picture. | | You can game either one. | throw101010 wrote: | Firstly I don't understand who you are "answering" to, the GP | didn't talk about Market Cap as a relevant metric. | | Secondly, Market Cap is only relevant when reported by | popular metrics websites which vet their data sources a | little... nobody relevant is listing your coin anywhere, | sorry if it disappoints you. | | Thirdly, I'm sure that in your first year as a _veteran_ you | will learn to care for coins /token which have | liquidity/volume either on reputable CEXs or in | tokens/networks with a good track record on DEXs. | | You can't really game liquidity for long without risking your | capital. | | I know this is HN, so I would expect less low brow | criticism... but who am I kidding this is about | cryptocurrencies, rules don't apply. | [deleted] | mbesto wrote: | > Firstly I don't understand who you are "answering" to, | the GP didn't talk about Market Cap as a relevant metric. | | No but they were clearly refuting the alternative | suggestion (nodes) was game-able. That was my point. | | > Market Cap is only relevant when reported by popular | metrics websites which vet their data sources a little | | > you will learn to care for coins/token which have | liquidity/volume either on reputable CEXs or in | tokens/networks with a good track record on DEXs. | | This is hilarious, because your idea is that: | | - It's a popular metrics website | | - You believe they are vetted | | by a _centralized_ web site, is the exact antithesis of | cryptocurrencies. What happened to decentralization? | | > You can't really game liquidity for long without risking | your capital. | | Sure, but why is that relevant here? We're not talking | about liquidity as being the relevant metrics, we're | talking about market cap. | | Market cap is such a hilarious concept for cryptocurrencies | because it converts everything to a fiat, which, again, is | the antithesis of cryptocurrency. | | > I know this is HN, so I would expect less low brow | criticism... but who am I kidding this is about | cryptocurrencies, rules don't apply. | | Meeting low brow comments with low brow comments, chapeau! | fogof wrote: | This is why I think network fees are a good metric. As long | as anyone can become a block creator, you can't pump it | without losing money. | meltedcapacitor wrote: | Only works on congested networks, or those that burn fees: | in original bitcoin style, without congestion, generating | dummy transactions is free for miners (the fees come back | in block reward). | NavinF wrote: | > 0 yr crypto dev & veteran | | 0yr experience with all investments? | | > The market cap is now $100M. | | Look up "closely-held shares" vs "floating stock" and how | free-float market cap is calculated. | | Btw your comment has nothing to do with the one you're | replying to. Why derail the thread instead of starting your | own? | mgraczyk wrote: | If there's a public order book, it's very easy to see through | this. Harder to do that with nodes. | vlovich123 wrote: | And yet so many instances of crypto coins that did this. | I'm pretty sure they all had public books. The challenge | isn't I sell one coin. It's wash trading. You create | sufficient volume from multiple different anonymous | accounts continuously. That's impossible to decipher | because ownership is impossible to untangle. | mgraczyk wrote: | This only works if the exchange is in on it. That has | happened many times but it's much harder to do than | faking node activity. | mbesto wrote: | It's much easier to fake the initial activity, then start | to have "real" users pile on. The only value I created in | my ICO was that I created fake demand and the lemmings | followed. | giaour wrote: | Why does the exchange need to be in on it? If it's not a | KYC exchange, they would have no way of knowing all the | Sybil accounts doing the wash trading were being run by | the same individual. | mgraczyk wrote: | Almost all limit order books required posting the assets | on the book and take a fee on trades. You can read off | the amount paid to generate the fictional market cap and | judge for yourself if it's likely to be fake activity. | For thinly traded books with low liquidity, it's cheap. | For thick books with high volume, it's expensive. | | Also exchanges that are not participating in scams, | actively or passively, will attempt to detect wash | trading and stop it. | jkaptur wrote: | Is there a metric that quantifies this? Some sort of market | cap * daily liquidity or something? | SilverBirch wrote: | A public ledger only ensures that you can see through this | if you can verify ownershp of wallets, because as we've | seen repeatedly, you can programmatically create an entire | eco-system of fake wallets trading back and forth. What's | the cost? I can trivially create a series of bots that just | trade their coins back and forth with each other forever. | It'll create huge volumes. Now the reason you don't do this | on real chains is because the transaction costs will | cripple you. But transaction costs aren't real if the | currency you're paying them in was entirely fictional to | start with. | | From the outside there is no way of verifying that any | chain has any real activity without verifying ownership of | the wallets. | mgraczyk wrote: | Your counterargument here only applies when exchanges | participate in the scam. Of course that does happen, and | for a long time you could even pay OKeX to do this for | you. But it's much less common than obscure coins faking | volume off-exchange or faking node activity. | literallyWTF wrote: | colinsane wrote: | cmroanirgo wrote: | What is valuable to one person may not be to another. Does that | make it a scam? Most people are adamant that gold is a | fundamental unit of value, and yet it's paper value (by volume) | is 10x the real thing1. Does that make gold a scam? | | Personally, I'm much more interested in the value inherent in | the Human Spirit, but others place almost no value on human | life. Insurance companies place a dollar value on human life. I | look at words like _human resources_ and see how it | collectivises individuals and turns them into cattle, putting a | dollar value on something I think is priceless. | | People addicted to power are really interested in how many | people they can control. Using this metric, managers, ceo's, | etc are all buying into the scam that people have value but | they're worth less than themselves. Using this metric any job | is a scam, & it rides on the back of the notion that a piece of | paper with $100 marked on it, formerly backed by gold, is | actually worth anything. | | 1 https://intelligent-partnership.com/paper-gold-volumes-vs- | ph... | SirLJ wrote: | Aces! | ChainOfFools wrote: | Number of nodes always and necessarily > number of people in | control of those nodes, never the other way around. Node count is | an extremely cheap pseudo-signal that implies decentralization of | control, but is in no way correlated with it. | avnigo wrote: | Another question is what percentage of those is hosted on AWS? | ahtihn wrote: | Why is that question relevant? | AustinDev wrote: | Single point of failure well not single but we've seen AWS | disrupted across many regions before. | jfghi wrote: | Relevant I'd say because AWS can ban anyone, any time, for | any reason | primeblue wrote: | globalreset wrote: | Ethereum "validators" are just an address with 32ETH. They are | nothing like a separate "node". | Geee wrote: | I think this is misleading, because every 32 eth stake is | considered a validator. If you look at the top depositors by | entity, you see that there are just a few entities controlling | most of the stake, i.e. there's only a few validator nodes with | most of the stake: https://etherscan.io/dashboards/beacon- | depositors | | Also, the number of nodes doesn't actually matter that much. It's | more important that people _can_ run nodes. | soulofmischief wrote: | > Any observed statistical regularity will tend to collapse once | pressure is placed upon it for control purposes. | | https://en.wikipedia.org/wiki/Goodhart%27s_law ___________________________________________________________________ (page generated 2022-09-05 23:00 UTC)