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Mining profitability as a requirement

The following is a discussion to implement a seemingly simple adjustment into an existing statement within the article. To clarify, this applies only to the validity of the statement alone. My goal is to amend the existing statement in order to clarify limitations of the system.

The existing statement reads: "Miners have a financial incentive to maintain the security of a cryptocurrency ledger."

The new proposed statement, in accordance with the proof below to read: "Miners have a financial incentive to maintain the security of a cryptocurrency ledger while mining is profitable."

Reason for the adjustment: the existing statement implies that the miners may have an infinite financial incentive to maintain the ledger. Any infinite call to action is false by default. In addition, the existing statement is grossly inaccurate, because it allows for a possibility that miners will continue to provide mining in the event mining process delivers a consistent financial loss. Economic principles do not accommodate for loss as an incentive. The existing statement must therefore be amended to include the limitation of profitability as a requirement for miners’ participation in the maintenance of the ledger.

Facts: miners are required to expense hard costs of mining; mining revenue is the sole financial incentive to miners; mining is the only revenue source engaged as a financial incentive to maintain the ledger.

Evidence: an independent article that shows hard costs are mandatory to mining.

Assumptions: all economic principles are expressed in long term.

Proof: lets begin with an established equation - revenue less expenses equal to profit (EBIT) or loss as a relationship to the financial incentive to maintain the ledger. This equation now combined with hard costs expense requirement, presented as evidence, in turn, allows to include hard costs as a mandatory value in the expense variable. In turn, revenue and a profit must also become mandatory variables of said equation, in order for the equation to balance. In turn, mining must be profitable in order to comply with mandatory variables and assumed long term economic sense. Therefore, when the system requires miners to acquire mandatory costs, miners have a financial incentive to maintain the ledger only while mining is profitable. Hence, no further proof is required.

Let me know your thoughts, support and/or counter-arguments on this issue with specific references, thanks. @Ladislav Mecir: @C.Fred:

References

Litesand (talk) 01:48, 15 January 2018 (UTC)

• Disagree:

"the existing statement implies that the miners may have an infinite financial incentive to maintain the ledger." - the statement does not say that, it is only you who claims it does.

Ladislav, thanks for the reply. The existing statement allows for infinite financial incentive as an option and thus I am mitigating this issue. I am not adding above-mentioned statement into the article, this is only my reasoning for changing the statement. I am allowed to state my reasons when proposing a change. --Litesand (talk) 02:10, 16 January 2018 (UTC)

This supports the current wording as is: "why bother to be part of it at all? Because the third thing the puzzle-solving step adds is an incentive." There is no need to "correct" the wording in a way you deem "correct" - see WP:OR, in particular: "Wikipedia's content is determined by previously published information rather than by the personal beliefs or experiences of its editors. Even if you're sure something is true, it must be verifiable before you can add it." Ladislav Mecir (talk) 00:57, 16 January 2018 (UTC)

Ladislav, this is why I added proof of my reasoning that is based on verifiable facts and evidence. I'd like to see an alternative proof that topples mine, this would help me evaluate this objection. In the meantime, I am going to add the following as evidence that shows that current statement is insufficient at the very least.

Source says “This mining equilibrium leads us to an interesting conclusion about Bitcoin: because mining resources must currently be purchased with currencies other than Bitcoin, the value of the mining reward fluctuates with the exchange price of Bitcoin. Thus, if the Bitcoin price falls substantially, so too does the incentive to mine. This leads to the possibility of a death spiral in which loss of confidence in Bitcoin could cause the Bitcoin price to go down, a falling price lowers the incentive to mine and the equilibrium mining rate, lower mining rate leads to the currency being easier to subvert, and this leads to a further loss of confidence in the currency.”

Thanks.--Litesand (talk) 02:10, 16 January 2018 (UTC)

A "proof of your reasoning" is just WP:OR. The relativized claim that "Miners have a financial incentive to maintain the security of a cryptocurrency ledger while mining is profitable." assumes that at any given time (e.g. at present), mining either is profitable or it is not profitable. The reality is more complicated. Your own sources prove that different miners have different expenses, depending on costs of electricity and other factors. Therefore, different miners have different profitabilities, and even if some miners are not profitable, it still does not mean that mining is not profitable in general. Ladislav Mecir (talk) 02:46, 16 January 2018 (UTC)

Ladislav, thanks for another reply. WP:OR only applies to the article itself, I am not bound by WP:OR rules in the Talk section, or at least I shouldn't be. My assumptions clearly state that all economic principles are expressed in long term. This means that, as part of my proof, I am not obligated to determine if the mining is profitable at any specific time, because profitability issue is in the long run. Profitability, nonetheless, can also fluctuate rapidly, "leading to the possibility of a death spiral." Its an important distinction, so if it resolves your objection, the "Miners have a financial incentive to maintain the security of a cryptocurrency ledger while mining is profitable in the long run" wording may be easily used.--Litesand (talk) 03:57, 16 January 2018 (UTC)

Ladislav, provided WP:OR is your main concern, this change in statement may work for you: "Miners have a financial incentive to maintain the security of a cryptocurrency ledger. However, because mining resources must currently be purchased with real currencies, the value of the mining reward fluctuates with the exchange price. Thus, if the price falls substantially, so too does the incentive to maintain the security of a cryptocurrency ledger. This leads to the possibility of a death spiral in which loss of confidence could lower the incentive to mine and the equilibrium mining rate, lower mining rate leads to the ledger being easier to subvert, and this leads to a further loss of confidence and security of the ledger." This statement is WP:OR compliant and it also accomplishes my goal to clarify long-term profitability as a system's requirement. Thanks. --Litesand (talk) 05:59, 16 January 2018 (UTC)

Indeed, such a change could improve things. However, there is also WP:CRYSTALBALL. To respect that, a wording not predicting future events that are not very likely to happen should be preferable:

Miners have a financial incentive to maintain the security of a cryptocurrency ledger. However because as of 2013, mining resources must be purchased with fiat currencies, the value of the mining reward fluctuates with the exchange rate of the cryptocurrency. If the exchange rate decreases significantly, so too does the incentive to maintain the security of a cryptocurrency ledger.

Ladislav Mecir (talk) 09:51, 16 January 2018 (UTC)

Ladislav, this makes sense. Nobody is an a position to predict when or if the long-term profitability will fall below required threshold to maintain the ledger, especially in an environment that operates high-risk activities that generally are able to sustain an incredibly high rate of loss and continue to remain viable (tax avoidance, money laundering etc.) I would like to use your proposed version, but also add one more sentence to clarify that the security of the ledger is also vulnerable to a possibility of future change in consensus among miners:

Miners have a financial incentive to maintain the security of a cryptocurrency ledger. However because as of 2013, mining resources must be purchased with fiat currencies, the value of the mining reward fluctuates with the exchange rate of the cryptocurrency. If the exchange rate decreases significantly, so too does the incentive to maintain the security of a cryptocurrency ledger. Although miners currently follow the original rules to maintain the security of the ledger, this behavior is stable only by consensus and the rules could be changed at any time.

Thanks. --Litesand (talk) 16:59, 16 January 2018 (UTC)

Your edit was premature. There was no consensus with your latest sentence, since you did not allow us to discuss it. The problems with the sentence are:

• It is not clear what the sentence is supposed to say:
  • The source mentions three types of consensus, and you did not communicate which one do you mean.
  • It is not clear what does "follow the original rules" mean (What are "original rules" in the general context of cryptocurrencies?) I do not even think that such a claim makes sense.
• The use of the word currently violates the WP:Wikipedia is not a newspaper priciple.
• The sentence seems to forecast change(s) of rules of cryptocurrencies. Changes of rules occurred in various cryptocurrencies. Some of them resulted in chain splits, some did not. Nevertheless, it is not clear how is that related to the previous two sentences. Ladislav Mecir (talk) 06:19, 17 January 2018 (UTC)

Ladislav, the statement can be re-worded, but the main objective is to state a possibility of a change in mining incentives with a change in rules (such as payout incentives), not specific to any one cryptocurrency. The reason is that the rules that govern the mining incentive can be overridden by the mining community with a potential to favor of miners first and security of the ledger second, specifically in case if the ledger is about to collapse and the future of mining profits is no longer an option. This version may work better for you:

Miners have a financial incentive to maintain the security of a cryptocurrency ledger. However because as of 2013, mining resources must be purchased with fiat currencies, the value of the mining reward fluctuates with the exchange rate of the cryptocurrency. If the exchange rate decreases significantly, so too does the incentive to maintain the security of a cryptocurrency ledger. Rules that govern financial incentives to maintain the security of the ledger are not fixed.

Thanks. --Litesand (talk) 07:26, 17 January 2018 (UTC)

Now it looks more understandable, indeed. I think, though, that it may make sense to simplify the text to be easier to understand:

Miners have a financial incentive to maintain the security of a cryptocurrency ledger. However because as of 2013, mining resources must be purchased with fiat currencies, the value of the mining reward fluctuates with the exchange rate of the cryptocurrency. If the exchange rate decreases significantly, so too does the incentive to maintain the security of a cryptocurrency ledger. Rules that govern financial incentives to maintain the security of the ledger can also be changed.

Ladislav, ok, however "can be changed" brings us back to miner "consensus" discussion, and it is prohibitive to go into further detail in an overview section, meaning the question comes "who can change them?" etc. Perhaps the alternative is to use "subject to change" wording that is both easier to read and focuses on the passive nature of the rules themselves.

Miners have a financial incentive to maintain the security of a cryptocurrency ledger. However because as of 2013, mining resources must be purchased with fiat currencies, the value of the mining reward fluctuates with the exchange rate of the cryptocurrency. If the exchange rate decreases significantly, so too does the incentive to maintain the security of a cryptocurrency ledger. Rules that govern financial incentives to maintain the security of the ledger are subject to change.

Thanks.--Litesand (talk) 16:54, 17 January 2018 (UTC)

The "subject to change" formulation means that the change is likely. I know that the change is possible, but the claim that it is likely does not reflect the known facts or sources, in my opinion. Ladislav Mecir (talk) 19:10, 17 January 2018 (UTC)

Ladislav, yes, "subject to change" implies a more likely possibility than "something can change." The source clearly references a very real possibility formation of a mining cartel as well as general trend towards pool mining by larger entities. Currently, mining pools own the majority of mining capacity and are based primarily in China. Having to build a 51% consensus to modify incentive rules of the system in this environment is a substantial possibility and the source clearly addresses it as a fact. As barriers to entry increase, so as do odds of a mining monopoly that can easily act to modify any of the rules it wants. "Subject to change" is a neutral statement among these facts.

Thanks.--Litesand (talk) 05:25, 18 January 2018 (UTC)

No, Litesand, taking into account that the strongest claim in the cited source is that "the rules could be changed" (see the Conclusion section), it is not true that the source claims that the rules are likely to change. Moreover, the source relativizes the claim further by saying "Even if a regulator forces the developers to incorporate changes into the Bitcoin rules and reference software, the rest of the Bitcoin community will be able to fork the rules and carry on under the ruleset of its choice.", demonstrating that there is a possibility to resist any effort even if a poverful actor seems to be able to enforce a rule change otherwise. Ladislav Mecir (talk) 12:58, 18 January 2018 (UTC)

Ladislav, the claim you mentioning is related to a much weaker option - government or third-party interference. The stronger reasoning to support the change in statement is that the network is built with an inherit flaw of having no self-regulations or government controls against monopolizing itself. Powerful pools of miners have a real ability to change the rules of the ledger, this is not a future prediction. Mining monopoly behavior is already changing the rules that, in turn, directly affect the security of the ledger. I am including this article (http://fortune.com/2017/08/25/bitcoin-mining/) as additional evidence to support "subject to change" statement.

Thanks.--Litesand (talk) 16:24, 18 January 2018 (UTC)

Not really. "Subject to change" looks like your own opinion. It is not present in the source you refer to which discusses a specific case unrelated to mining reward, mentions the influence of a miner as only a possibility, and explains that any accusations may turn out to be unfounded. Ladislav Mecir (talk) 19:45, 18 January 2018 (UTC)

Ladislav, here is another alternative: "Collusion trends among some of the miners also systematically undermine the ability for mutually distrustful miners to maintain the security of the ledger." I think adding a simple statement that the ledger is a "subject to change" is more neutral, however, this alternative statement is directly supported by the evidence and is in line with WP:OR and WP:BALL. An example of a personal opinion is: without anti-trust regulations, mining is a dead-end technology that runs a lot of expensive heaters.

Thanks.--Litesand (talk) 20:11, 18 January 2018 (UTC)

Re "subject to change is more neutral" - that is where I disagree all the time. I am sure it is not neutral. It would be neutral to mention that change is possible as the sources do, but "subject to change" is not a neutral representation of that. Ladislav Mecir (talk) 05:57, 19 January 2018 (UTC)

Ladislav, “can be changed” version is ok, I don’t see that much difference between that and “subject to change.” I’d like to expand on the reason why the ability to change the rules of the ledger is critical due to lack of regulations within the system to discourage collusion. Currently, there are about five mining pool that control 60-80% of the ledger; these five cartels can agree or change anything at any time, mainly for their own benefit. The idea of a “mutually distrustful miners” is great, but its inaccurate since miners best option is always to collude and pool resources, instead of pure completion. The only thing that stops collusion is either inherit system built-in protections (there are none,) or securities regulations, (also none.) This is the great flaw of the system – without any built-in alternative, the system assumes that protections offered by the centralized entities such as pyramid and anti-trust laws are benign, and they are in actuality the only tools that hold real currencies and securities in check. Once miners were able to effectively collude in small groups, blockchain process has lost all of its inherit advantages and the ledger can no longer be considered independent or secure. Hence, this would be my proposed statement:

Miners have a financial incentive to maintain the security of a cryptocurrency ledger. However, because as of 2013, mining resources must be purchased with fiat currencies, the value of the mining reward fluctuates with the exchange rate of the cryptocurrency. If the exchange rate decreases significantly, so too does the incentive to maintain the security of a cryptocurrency ledger. Rules that govern financial incentives to maintain the security of the ledger can also be changed. Further, collusion strategies (pool mining) among some of the miners systematically undermine the ability for mutually distrustful miners to maintain the security of the ledger.

Quotes from the publication I used as reference:

“Mining is now generally organized into pools of coordinating miners who partition the search for proof-of-work puzzle solutions and who share in the mining rewards ... Furthermore, as mining becomes increasingly specialized (with specialized hardware such as application-specific integrated circuits (ASICs) for efficient hashing and the need for powerful computers to validate transaction blocks, the barriers to entry increase, effectively concentrating the mining power among a few powerful players who are less accountable to the (much larger) set of all Bitcoin holders.” … “We observe that a cartel can change any rules which are enforced by consensus and players who are not in the cartel will likely be obliged to follow. For example, a cartel can choose any strategy in the mining game. Players who continue to use the old strategy risk having their newly-mined blocks ignored as forks of the consensus branch and thereby risk losing the mining reward payments associated to those blocks. Thus, if the cartel announces its mining strategy, it can shift the equilibrium chosen by the non-cartel players.” … “An interesting facet of mining cartels is that they can censor certain transactions. The cartel can choose to ignore any transaction it does not want appended to the log. Further, the cartel can choose to treat any blocks appended by others to the log as forks which it will not attempt to extend. Thus, other players will naturally also abandon these transactions, possibly even consciously if the cartel announces that certain transactions (or transactors) are disfavored.”

Quotes from the article (my ease-of-use changes are in brackets):

(a blockchain expert), who recently wrote an editorial for Fortune questioning the viability of (a hard fork) … believes (a mining pool) is engaging in shenanigans to secretly undermine the integrity of (the blockchain ledger). “(A mining pool) does have a lot of control for now, and much of that is simply due to mining centralization. (A mining pool) is so vertically integrated, from selling ASICs, to operating mining farms, to running mining pools, he can prevent network upgrade and attempt to hijack the (the blockchain ledger) brand with things like (a hard fork),” (a blockchain expert) said by email … the real world market implications may also give pause for ordinary (cryptocurrency) buyers—many of whom are likely unaware of the emergence of mining cabals that are able to sway the future of (cryptocurrency).

Thanks.--Litesand (talk) 21:56, 19 January 2018 (UTC)

@Litesand: The last sentence you propose ignores this part of the cited source: "We naturally ask, therefore, what a mining cartel could do if one ever comes to exist." In other words, the last sentence using terms like "systematically undermines", etc. violates WP:CRYSTALBALL. You seem to want to synthesize the claims from the articles to obtain these strong formulations, but that is not allowed by WP:NOR. Ladislav Mecir (talk) 08:58, 20 January 2018 (UTC)

Ladislav, agreed, "systematically undermines" does somewhat combine both sources and is a recent development that needs more research. Hence, a proposed revision:

Miners have a financial incentive to maintain the security of a cryptocurrency ledger. However, because as of 2013, mining resources must be purchased with fiat currencies, the value of the mining reward fluctuates with the exchange rate of the cryptocurrency. If the exchange rate decreases significantly, so too does the incentive to maintain the security of a cryptocurrency ledger. Rules that govern financial incentives to maintain the security of the ledger can also be changed. Further, collusion strategies (pool mining) among group of miners and companies with a joint hash rate in excess of 50% can undermine the ability for mutually distrustful miners to maintain the security of the ledger.

Thanks.--Litesand (talk) 17:26, 20 January 2018 (UTC)

Re "collusion strategies (pool mining) among group of miners and companies with a joint hash rate in excess of 50%" - I cannot help but think that this formulation suggests that such colluding groups already exist. Such a claim is controversial, at best. Ladislav Mecir (talk) 09:09, 22 January 2018 (UTC)

Ladislav, if the statement implied that such group already exists, then it would state it as a fact and reference that group. The revised statement warns of a strong possibility of collusion and its affect on the security of the system, exactly as does the source, hence its in line with WP:OR rules. The recent article also states expert's opinion that it is already happening, but I already agree that "systematically undermines" is pushing the line of combining the two sources, hence my revision. Having almost 80% of a joint hash rate in hands of only five pools (https://blockchain.info/pools) is also a fact. However, to address your concern, we can add "potentially" to that sentence. Also, going back, I can't find anywhere a reference to year 2013 in the statement "However, because as of 2013, mining resources must be purchased with fiat currencies." Where did you find the 2013 year reference?

Miners have a financial incentive to maintain the security of a cryptocurrency ledger. However, because as of 2013, mining resources must be purchased with fiat currencies, the value of the mining reward fluctuates with the exchange rate of the cryptocurrency. If the exchange rate decreases significantly, so too does the incentive to maintain the security of a cryptocurrency ledger. Rules that govern financial incentives to maintain the security of the ledger can also be changed. Further, collusion strategies (pool mining) among group of miners and companies with a joint hash rate in excess of 50% can potentially undermine the ability for mutually distrustful miners to maintain the security of the ledger. As of 2018, almost 80% of a joint hash rate is estimated to be in control of only five mining pools.

Thanks.--Litesand (talk) 16:58, 22 January 2018 (UTC)

"Where did you find the 2013 year reference?" - that is a "translation" of the word "currently" taking into account that the source is dated to 2013. Ladislav Mecir (talk) 18:30, 22 January 2018 (UTC)

Ladislav, I think the solution with the 2013 reference is to neither mention "2013" nor use the "currently" reference. The 2013 reference implies that this date has significance outside the date of the publication. Hence, revised version:

Miners have a financial incentive to maintain the security of a cryptocurrency ledger. However, because mining resources must be purchased with fiat currencies, the value of the mining reward fluctuates with the exchange rate of the cryptocurrency. If the exchange rate decreases significantly, so too does the incentive to maintain the security of a cryptocurrency ledger. Rules that govern financial incentives to maintain the security of the ledger can also be changed. Further, collusion strategies (pool mining) among group of miners and companies with a joint hash rate in excess of 50% can potentially undermine the ability for mutually distrustful miners to maintain the security of the ledger. As of 2018, almost 80% of a joint hash rate is estimated to be in control of only five mining pools.

Thanks. --Litesand (talk) 23:24, 23 January 2018 (UTC)

No, Litesand, since a 2013 source mentions "currently", and due to WP:NOTNP, it is a standard practice in Wikipedia to use the {{as of}} template to mark the statement which, per its source is potentially dated. The generalization you propose is not allowed, since it is not confirmed by the source.

Re "Further, collusion strategies (pool mining) among group of miners and companies with a joint hash rate in excess of 50% can potentially undermine the ability for mutually distrustful miners to maintain the security of the ledger." - this is a complicated sentence, not really related to the previous two. It also does not really make sense, since pooled mining refers to pooling resources among individual miners, while the "collusion" term you use is probably meant to refer to collusion between several mining pools. The fact that you use two sources to confirm it suggests that it is a synthesis, which is also not allowed per WP:NOR. Ladislav Mecir (talk) 06:17, 24 January 2018 (UTC)

Ladislav, the 2013 reference is odd, but since wiki has WP:NOTNP rule, its very rarely enforced with the date of the publication like that, however, I wont object to it; in fact, lets do that to every reference on wiki and see how fast it confuses everyone. The source clearly draws the parallel between mining pool and collusion: "cartel... that is, no coordinating group of miners (or a single player) can hold more than 50% of the network’s mining (puzzle-solving) capacity. However, this assumption is questionable: mining is now generally organized into pools of coordinating miners who partition the search for proof-of-work puzzle solutions and who share in the mining rewards." There is no synthesis in the statement, however I can revise it state "pool mining strategies" "instead collusion strategies (pool mining)." The sentence is necessary because it further brackets an unlimited proposition that "mutually distrustful miners" have the power to maintain the security of the ledger, the statement clarifies that there is "unchecked collusion possibility" within the system that makes any healthy competition among miners - futile.

Miners have a financial incentive to maintain the security of a cryptocurrency ledger. However, as of 2013, because mining resources must be purchased with fiat currencies, the value of the mining reward fluctuates with the exchange rate of the cryptocurrency. If the exchange rate decreases significantly, so too does the incentive to maintain the security of a cryptocurrency ledger. Rules that govern financial incentives to maintain the security of the ledger can also be changed. Further, pool mining strategies among groups of miners and companies with a joint hash rate in excess of 50% can potentially undermine the ability for mutually distrustful miners to maintain the security of the ledger. As of 2018, almost 80% of a joint hash rate is estimated to be in control of only five mining pools.

Thanks. --Litesand (talk) 18:40, 25 January 2018 (UTC)

Oppose The last two sentences are just a synthesis. Ladislav Mecir (talk) 23:01, 25 January 2018 (UTC)

Ladislav, how exactly do you explain the synthesis for last two sentences? Last sentence "As of 2018, almost 80% of a joint hash rate is estimated to be in control of only five mining pools." is taking data from a reliable source and summarizing it as a fact, nothing more nothing less. What part of the sentence is synthesized here? The sentence beforehand addresses "51% cartel constraint" of the system on the same terms as described by a completely separate source. If you oppose anything, do the wiki community a favor and explain what exactly the objection is - on actionable terms. Words "just a synthesis" means nothing to anyone here.

Thanks. --2601:646:4101:4740:B4B9:D746:5B88:BE5C (talk) 02:39, 26 January 2018 (UTC)

The claim that "As of 2018, almost 80% of a joint hash rate is estimated to be in control of only five mining pools." is indeed confirmed by an independent source. On the other hand:

• The claim is not related to the decentralized nature of the cryptocurrency—even if the joint hash rate of the five mining pools was 100%, it would still not mean that the currency is centralized.
• The claim is related only to bitcoin, i.e. not to cryptocurrency in general. In this sense, the claim is unconfirmed as far as the subject of this article is concerned.
• The overwhelming majority of the sources claim that bitcoin is decentralized. This is pushing a particular point of view, for which only one or two sources can be found. Moreover, such sources are bitcoin-specific, i.e. they do not discuss other cryptocurrencies.
• The "51% cartel constraint" really holds for bitcoin and cryptocurrencies copying its design, the rest of that sentence is questionable. Ladislav Mecir (talk) 07:02, 26 January 2018 (UTC)

Ladislav,

• The claim is not related to the decentralized nature of the cryptocurrency—even if the joint hash rate of the five mining pools was 100%, it would still not mean that the currency is centralized.
  • • The claim does not imply that the currency suddenly becomes “centralized”, it only states the current mining equilibrium: five pools control 80%. A completely separate claim states that the security of the ledger could be compromised if a cartel is formed, as does a separate source. If a cartel is formed, the currency will still remain “decentralized”, but the ledger itself could no longer be maintained by “mutually distrustful miners.” I added clarification that the currency remains decentralized by design.

• The claim is related only to bitcoin, i.e. not to cryptocurrency in general. In this sense, the claim is unconfirmed as far as the subject of this article is concerned.
  • • Well, the entire Overview section does the same thing, bitcoin is really difficult to separate from this issue. However, I modified the claim to reference bitcoin only, since the source only provides bitcoin statistics.
• The overwhelming majority of the sources claim that bitcoin is decentralized. This is pushing a particular point of view, for which only one or two sources can be found. Moreover, such sources are bitcoin-specific, i.e. they do not discuss other cryptocurrencies.
  • • The claim does not weight on the decentralization issue, only issue of mining pools. I added clarification that the currency remains decentralized.
• The "51% cartel constraint" really holds for bitcoin and cryptocurrencies copying its design, the rest of that sentence is questionable.
  • • OK, yes, however my goal is to only address limitations of the ledger control provided by mutually distrustful miners. I added the proof-of-work clarification to address this point.

As of September 2017, over a thousand cryptocurrency specifications exist; most are similar to and derive from the first fully implemented decentralized cryptocurrency, bitcoin. Within cryptocurrency systems the safety, integrity and balance of ledgers is maintained by a community of mutually distrustful parties referred to as miners: members of the general public using their computers to help validate and timestamp transactions, adding them to the ledger in accordance with a particular timestamping scheme. However, decentralized proof-of-work cryptocurrencies, such as bitcoin, are not subject to financial regulations, and pool mining strategies among groups of miners and companies with a joint hash rate in excess of 50% can potentially undermine the ability for mutually distrustful miners to maintain the security of the ledger. Even though cryptocurrency remains decentralized by design, as of 2018, almost 80% of a joint hash rate for bitcoin, is estimated to be in control of only five mining pools. Miners have a financial incentive to maintain the security of a cryptocurrency ledger. Because, as of 2013, mining resources must be purchased with fiat currency, the value of the mining reward fluctuates with the exchange rate of the cryptocurrency. If the exchange rate decreases significantly, so too does the incentive to maintain the security of a cryptocurrency ledger. Rules that govern financial incentives to maintain the security of the ledger can also be changed.

Hopefully, this resolves your objections. Thanks.--Litesand (talk) 21:13, 26 January 2018 (UTC)

"Hopefully, this resolves your objections." - unfortunately, it does not. As I said, the majority of sources claim the bitcoin is decentralized. The text you propose this time contains a huge blob of minority-sourced (at best) text trying to suggest otherwise. For example, "decentralized proof-of-work cryptocurrencies, such as bitcoin, are not subject to financial regulations" is unsourced, known to be incorrect and, in fact, unrelated. The claim that "five pools control 80%" is also unrelated, and smells as a synthesis attempt. Also, the claim that miners have an incentive to maintain the security of the ledger confirmed by huge majority of the sources is now buried into the huge blob of synthesis attempts. Ladislav Mecir (talk) 07:45, 27 January 2018 (UTC)

Ladislav, as I said, neither the source, nor proposed statements claim the currency becomes "magically" centralized; this is a very odd objection you yourself invented and keep pressing, even after I added clarifications that the currency is decentralized by design. My main goal is to limit erroneous statements with regards to "community of mutually distrustful miners," that without any limitations, have full control of the ledger and have an unlimited incentive to mine. There are very specific pitfalls of the system that the source addresses independently, without me having to synthesize anything. Currently, I am only aware of US-IRS regulations with regards to status of the speculation proceeds from crytocurrency, these are not financial regulations. Nonetheless, I don't much care if there are regulations somewhere trying to somehow regulate unregulated systems, this is irrelevant to my goal, so Im removing this reference to clarify the statement. The claim that "five pools control 80%" is a fact, it is not synthesis, and is allowed under WP:OR, even if it smells like something to you, it remains true and is directly related because it addresses the state of the "community of mutually distrustful miners" as it stands today. "Community of mutually distrustful miners" does not readily translate into five mining pools to a reasonable person and this is why this clarification is needed. The claim that miners have an incentive to maintain the security of the ledger is generally correct, but ONLY up to a defining point, this is exactly why a separate clarification is also needed. Unless you have specific WP: policy objection, unfortunately, your personal opinion is not something I am able to resolve. My goal is not to blob or blurry anything, it is to clarify how existing statements are broad and over-ambitious: the system has inherit limitations when it comes to security of the ledger, exactly as described by the source to directly address your past WP:OR policy objections.

As of September 2017, over a thousand cryptocurrency specifications exist; most are similar to and derive from the first fully implemented decentralized cryptocurrency, bitcoin. Within cryptocurrency systems the safety, integrity and balance of ledgers is maintained by a community of mutually distrustful parties referred to as miners: members of the general public using their computers to help validate and timestamp transactions, adding them to the ledger in accordance with a particular timestamping scheme. However, pool mining strategies among groups of miners and companies with a joint hash rate in excess of 50% can potentially undermine the ability for mutually distrustful miners to maintain the security of the ledger of decentralized proof-of-work cryptocurrencies. Even though cryptocurrency remains decentralized by design, as of 2018, almost 80% of a joint hash rate for bitcoin, is estimated to be in control of only five mining pools. Miners have a financial incentive to maintain the security of a cryptocurrency ledger. Because, as of 2013, mining resources must be purchased with fiat currency, the value of the mining reward fluctuates with the exchange rate of the cryptocurrency. If the exchange rate decreases significantly, so too does the incentive to maintain the security of a cryptocurrency ledger. Rules that govern financial incentives to maintain the security of the ledger can also be changed.

Thanks. --Litesand (talk) 17:45, 29 January 2018 (UTC)

"have full control of the ledger" - Let me inform you that this is a formulation that is in no source nor is it contained in the article.

"have an unlimited incentive to mine" - This is also a formulation that is in no source nor is it contained in the article.

"There are very specific pitfalls of the system that the source addresses independently, without me having to synthesize anything." - the majority of sources, even the academic ones, claim otherwise. One source claiming there may be some possibilities in one specific case do not suffice - per WP:NPOV we should not give the same or greater weight to a source that considers just some distant possibilities of some consensus failure as we give to the majority of sources that mention different facts.

Re '"five pools control 80%" is a fact' of course it is a fact. But it is a fact unrelated to the fact that miners have an incentive to maintain the cryptocurrency ledger. Your claim that these two facts are related makes the whole a synthesis.

"Currently, I am only aware of US-IRS regulations with regards to status of the speculation proceeds from crytocurrency, these are not financial regulations." - Consult WP:OR, please.

"The idea of a “mutually distrustful miners” is great, but its inaccurate since miners best option is always to collude and pool resources, instead of pure completion." - I do not understand why you think that "pure completion" is required in this case. This is also unrelated to the fact that miners have an incentive to maintain the ledger, unless you want to make a synthesis somehow. The claim that "miners best option is to always collude" is a WP:OR, and it is also unrelated to the fact that miners have an incentive to maintain the ledger.

'Community of mutually distrustful miners" does not readily translate into five mining pools' - Why should it, unless you want to base some synthesis on the requirement for it to "readily translate"?

"Even though cryptocurrency remains decentralized by design" - It not just remains decentralized by design. It remains decentralized. I know that you are trying to claim otherwise, but that is a claim contradicting the majority of available sources. Rest assured that there is no consensus to give undue weight to such minority opinions. Ladislav Mecir (talk) 23:18, 29 January 2018 (UTC)

Ladislav Mecir I think some of your prior recommendations were excellent, especially having to do with WP:OR and WP:BALL policy, and have been noted and contributed to the revised version. Nonetheless, this subject was brought up here with a single goal to archive user consensus on proposed edits in accordance with wiki rules and the research done by others, this is not to debate. You had adequately voiced your opinion and its time to demonopolize this discussion by seeking input from other users. Hence, Im going to start a new subheading to seek further input. For you to effectively step back from participation, in my opinion, is a constructive solution to help gain consensus and receive independent suggestions from others.

Thanks. --Litesand (talk) 21:46, 30 January 2018 (UTC)

Hi, Litesand. The fact is that your "Mining profitability as a requirement" suggestion did not achieve consensus per WP:NOR. Your request for me "to effectively step back from participation" is not a constructive solution to help gain consensus - quite the opposite is true. All your attempts at slipping your "Mining profitability as a requirement" in were found problematic, and you trying to continue with them is now WP:ICANTHEARYOU. Ladislav Mecir (talk) 06:17, 31 January 2018 (UTC)

Thanks Ladislav Mecir, you misunderstood, I will keep looking for constructive feedback and keep this issue open until WP:CONS is reached. Disruptive editing is at all not applicable here, your accusation is false, specifically after I had addressed your WP:OR recommendations. You seem to want to WP:OWN this discussion by turning a simple edit proposal into a debate. My request for you to "step back" from this discussion is an effort to hear from other users with regards to their take on the WP:SYNTH and WP:OR constructively. It you find it problematic, it only further proves my point.--Litesand (talk) 08:26, 31 January 2018 (UTC)

Theoretical profitability

• What you are saying is quite clearly correct and should be included. If miners do not gain anything from mining then they have no incentive to mine (this is the point of fees and block rewards). The current form of the statement gives the impression that there is always an incentive to mine, even if a cryptocurrency is worthless, which is not the case. It is not too hard to find sources showing this: [1][2]. Laurencedeclan (talk) 01:51, 16 January 2018 (UTC)

No, the current wording says that there "is an incentive", and, in this sense, it reflects what The Economist says. It is not a claim that there "will always be an incentive". Also note that the relativization of the claim proposed by Litesand does not reflect (misrepresents) what The Economist says. Ladislav Mecir (talk) 02:00, 16 January 2018 (UTC)

That is where we disagree. The current statement makes a bold assertion that miners have financial incentives. It does not include the (factually correct) qualifier that mining must be profitable and does not detail any exceptions, therefore implying that miners are always incentivised. Laurencedeclan (talk) 05:24, 16 January 2018 (UTC)

It is not factually correct that mining must be profitable. The fact is that mining is unprofitable with inadequate equipment and in places with high prices of electricity. That does not mean, though, that the same miner could not acquire a more efficient equipment and move to a place where electricity or other facilities are more affordable. Ladislav Mecir (talk) 09:51, 16 January 2018 (UTC)

If miners cannot make money from mining, then they will not mine. This is not a difficult concept to understand. When I say "mining must be profitable", I am not saying "mining must be profitable anywhere with any equipment". I am saying that it must be theoretically profitable. If the market value of a cryptocurrency is $0 and miners are reimbursed in that currency then there is no incentive to mine, contrary to the current statement in this article. Laurencedeclan (talk) 10:21, 20 January 2018 (UTC)

As said above, your claim is just a WP:OR, actually contradicting The Economist saying "why bother to be part of it at all? Because the third thing the puzzle-solving step adds is an incentive." without the additional part saying anything about your "theoretical profitability". What your "theoretical profitability" even is? Any miner can be either profitable or not, the general knowledge is that mining is generally unprofitable unless the miner acquires very efficient equipment and moves to a place where electricity and other facilities are cheap. Ladislav Mecir (talk) 11:27, 20 January 2018 (UTC)

Revised proposal (January 30, 2018)

The following is a continued discussion to implement a seemingly simple adjustment into an existing statement within the article. My goal is to amend the existing statement in order to clarify limitations of the system.

The existing statement reads:

As of September 2017, over a thousand cryptocurrency specifications exist; most are similar to and derive from the first fully implemented decentralized cryptocurrency, bitcoin. Within cryptocurrency systems the safety, integrity and balance of ledgers is maintained by a community of mutually distrustful parties referred to as miners: members of the general public using their computers to help validate and timestamp transactions, adding them to the ledger in accordance with a particular timestamping scheme. Miners have a financial incentive to maintain the security of a cryptocurrency ledger.

The new proposed statement, in accordance with sources:

As of September 2017, over a thousand cryptocurrency specifications exist; most are similar to and derive from the first fully implemented decentralized cryptocurrency, bitcoin. Within cryptocurrency systems the safety, integrity and balance of ledgers is maintained by a community of mutually distrustful parties referred to as miners: members of the general public using their computers to help validate and timestamp transactions, adding them to the ledger in accordance with a particular timestamping scheme. However, pool mining strategies among groups of miners and companies with a joint hash rate in excess of 50% can potentially undermine the ability for mutually distrustful miners to maintain the security of the ledger of decentralized proof-of-work cryptocurrencies. Even though cryptocurrency remains decentralized, As of January 2018, almost 80% of a joint hash rate for bitcoin, is estimated to be in control of only five mining pools. Miners have a financial incentive to maintain the security of a cryptocurrency ledger. Because, As of 2013, mining resources must be purchased with fiat currency, the value of the mining reward fluctuates with the exchange rate of the cryptocurrency. If the exchange rate decreases significantly, so too does the incentive to maintain the security of a cryptocurrency ledger. Rules that govern financial incentives to maintain the security of the ledger can also be changed.

Reason for the adjustment: the existing paragraph implies that the miners may have an infinite financial incentive to maintain the ledger and miners have an infinite ability to maintain the ledger in a form of a “mutually distrustful” group. The existing paragraph is grossly inaccurate due to omission of a number of limiting factors built into the system. First, it allows for a possibility that miners will continue to provide mining in the event mining the value of the mining reward delivers a consistent financial loss. Economic principles do not accommodate for loss as an incentive. Second, it also refers to a “community of mutually distrustful parties” that maintain “safety, integrity and balance of ledgers” without mentioning a possibility of collusion (pool mining) by miners that can effectively seize control and remove “mutually distrustful” relationships within the group.

Evidence: an independent research paper, current statistics on the bitcoin pool mining.

Assumptions: all economic principles are expressed in long term.

Let me know your thoughts, support and/or counter-arguments on this issue with specific references, thanks. @C.Fred: @Laurencedeclan: @NeilN:

Thanks. --Litesand (talk) 21:46, 30 January 2018 (UTC)

Adding a "Crypto Sign" to represent cryptocurrency

This design proposed by artist Johnson Rice is a symmetrical generic "crypto sign" for representing cryptocurrencies in a generalized fashion. This design was specifically created to be released into the public domain. It has been used by several organizations including the controversial investment ratings company Weiss Ratings, the first nationally syndicated radio talk show to ever accept cryptocurrencies "Free Talk Live", and a smaller regional organization promoting localized crypto usage, the "Monadnock Decentralized Currency Network"

There is a stark lack of visual representation of crypto when referred to in a general or generic way. A logo design has been created to represent it which was released into the commons as CC0 and been used by the first podcast and major globally syndicated radio talk show named Free Talk Live, and the design was also used by the controversial financial ratings agency Weiss Ratings which recently launched their cryptocurrency ratings. (These have been very controversial amongst crypto investors)

There are signs for other major currencies e.g., $£€¥, there should be an accepted symbol for cryptocurrencies. I believe this should be added to the page.

TempusInfernus (talk) 19:26, 2 February 2018 (UTC)

What matters is what is stated in the words of a reliable source. None of the provided refs actually state this symbol is representative of cryptocurrency. Since Wikipedia does not accept original research, just linking to various company logos is not a valid source to support the use of the symbol here. Also, even if reliable sources can be found that state this symbol is representative of cryptocurrency, the puffery of who created it and why is non-encyclopedic, it's irrelevant to the article so doesn't belong in the caption. --- Barek (talk • contribs) - 22:14, 2 February 2018 (UTC)

I agree with your comments about the puffery, and stated it because this blurb is that it is about a PROPOSED design / logo for CryptoCurrency, as there is not an accepted universal crypto sign yet, and the Free Talk Live reference actually does state that it is a design for cryptocurrency, but in audio format as it is a podcast / radio show. All of these sources ARE in fact fairly clearly using this logo to represent and discuss cryptocurrency, but I take it the authors here will only accept someone who has written an article about the symbol itself? I'm sure I could talk to some people at Bitcoin Magazine and Bitcoin Talk and see if they want to cover it. :: TempusInfernus (talk) 21:24, 7 February 2018 (UTC)

Non-existent symbols as of February 2018 per WP:OR; Talk Page content only.

Its an interesting direction, however, I doubt it will make it into the main article due to WP:OR rule. You will need to have this symbol accepted and published elsewhere first. The overall design you propose is difficult to replicate: currency design must be simple and easy to write. If you had asked me to come up with a symbol for cryptocurrency, I would say that it can’t be done. At least two separate symbols must be utilized: one is for proof-of-work and another ia for proof-of-stake. At this point, I would refer to the Columnarios for twin worlds inspiration, as does the USD. The double column design “support” is quite brilliant. My best guess from there is an “upside down” pyramid for proof-of-work designation and the “upside” pyramid for proof-of-stake designation. The “upside down” pyramid is relevant due to decentralized nature of the system and the fact that support is required to exist in the world of the real currency. The “upside” pyramid is self-explanatory. Again, if ONLY to break all WP:OR can you actually add anything right now. I do like your efforts to resolve this, keep at it.--Litesand (talk) 00:34, 4 February 2018 (UTC)

Challenges section

Can we add a section titled "Challenges" highlighting the challenges cryptocurrencies are facing at the moment? Such as The Scalability problem (the blockchain of a particular coin may exceed the size of commercial Hard Drive thus decreasing independent nodes) and Quantum Processors (that may be able to deduce the Private Key from a Public Key much faster in a matter of minutes than the regular cpu in approx. 3 years) (Alexceltare2 (talk) 12:40, 16 March 2018 (UTC))

If it is reliably sourced then yes, otherwise no. Prince of Thieves (talk)

• Alexceltare2 Thank you for suggesting to add content. The best way to proceed is for you to add your proposed information with sources in the format you would like it to be added to the body of the article. The two "challenges" you are proposing are somewhat odd. Hard drives are hardly an issue for scalability; instead - the cost of mining, pool mining fees, lack of oversight and the long-term security of the ledger are main challenges with all proof-of-work decentralized cryptocurrencies. Quantum processing isn't really a problem either, since miner will always take the most profitable route, as long as it is able to collect fees, any algorithm can follow. The challenge with cryptocurrencies is human, not a machine, hence the stopgap of the blockchain. You may obliviously have some bright ideas on the issue and great sources to support it, so please present it with specifics. Cheers!--Litesand (talk) 20:51, 17 March 2018 (UTC)