"Bitcoin may bring us closer to a Kardeshev Type I energy civilization... After reaching Type I status, there is less of a need to restrict the growth of energy consumption, which increases the standard of living for everyone." kurzweil style trolling https://t.co/ieMNmjHMEs
RT @Melt_Dem: for anyone who believes #bitcoin’s proof of work is wasteful, this excellent overview by @danheld is a thoughtful, nuanced argument as to why expending electrons for sound money is not wasteful.
Really interesting and optimistic thread about #Bitcoin PoW energy usage. You've probably heard "Bitcoin mining will soon consume all world electricity and coal mines are reopening and things are looking grim". This is a worthwhile counterperspective. https://t.co/4PszqNGJp4
for anyone who believes #bitcoin’s proof of work is wasteful, this excellent overview by @danheld is a thoughtful, nuanced argument as to why expending electrons for sound money is not wasteful.
RT @dhruvbansal: Article by @danheld:
1) Data-driven analysis of energy usage by blockchains.
2) Tantalizing prospect that PoW arms-race is what will *finally* incentivize scalable nuclear fusion (as Earth fucking dying apparently not enough...)
3) Kardashev scale.
You can not just compare whole baking sector/gov energy to bitcoin mining. There are different functions of banks and not just money transaction cost.
Money is worthless in digital form until it has use. Its should flow like email with minimum cost in digital world. If BTC has value because people believe it will scale and be used in future and will end up having more efficient.
Pow WILL be replaced at some point. This is a fact. Securing a 10 trillion dollar BTC market cap with pow is just ridiculous and as price goes up will become more and more so. Pow maximalists will never acknowledge this so I won't bother arguing how research is slowly chipping away at anti pow talking points.
why is it ridiculous? Bitcoin unleashes stranded energy assets (eg hydro in dams that would otherwise be wasted, or vented methane from oil wells that would otherwise be released into the atmosphere). at $10t, and, say, 1% miner reward, that's a $100b subsidy to whoever can find the cheapest unused energy sources. (today the subsidy is $4.5b). that's just multiplying the current state of affairs by a factor of 20. Add in the fact that mining probably uses about 0.15% of global energy consumption, that takes it to 3%, assuming no new energy sources are found DUE to bitcoin.
But of course, Bitcoin monetizes otherwise-wasted energy, so the vast majority of that energy intake will come from previously stranded assets, monetized by Bitcoin.
Very likely, most of that 3% of global consumption is NEW energy, not previously part of the grid.
Who told you it utilizes wasted energy? I'd like to see that study. Pretty sure most miners are running their rigs almost every hour of the day to get a return on their hardware costs. Regardless we can't have most miners turning off their machines during peak energy demand (when activity is highest). So unless miners ae really hurting and hunting only for the cheapest electricity prices during the day, I only see them adding to the demand and not helping use otherwise wasted electricity.
Also, assuming market cap equals total value of mining infrastructure, why would miners work for 1% when they can get a better return on their investment elsewhere?
I don't see how staking isn't vastly superior given there isn't a middle man, the power company, taking its massive cut. Assuming a valid or good enough POS will most likely be available.
I think the reason why some people see Bitcoin mining as a waste of energy is that they think that there are better ways to achieve the benefits of Bitcoin without wasting that much energy.
In a perfect system, the goal is to always make things work in the ultimate efficient way, and this is possible because we're dealing in a perfect system. Our world is not a perfect system because humans are part of it, so even though we can imagine how the ultimate efficient way of doing something should be, it can't be done because, we imperfect humans are part of this system.
In a perfect world, everyone is equal in everything, so their achievement in life is equal, so for example they will end up having equal wealth. But in the real world, people are very different from each other, so we have different people with different amount of wealth. If you try to redistribute wealth so that everyone would have the same amount, you will end up with no wealth to redistribute.
Bitcoin is about people trusting the same ledger, in a perfect world, people are very honest and they have no problem in trusting each other, so having a decentralized trust-less ledger like Bitcoin or having a centralized ledger is virtually the same. However, in the real world this is different, people can't just trust each other, and for now we need to spend $4.5 Billions annually so that we can trust that the history of the ledger transactions are correct. Is this perfect? no, but this goes for many other systems where humans are involved.
TLDR; In a perfect world, trust is free. In the real world, for humans to agree that the history of a decentralized ledger (Bitcoin) has the correct history, we need to spend $4.5 Billion/year.
People think PoW is a waste because bitcoin is only a protocol and the money they are used to is printed for free.
It is very well accepted that physical goods require resources in the production. But this is not limited to physical goods. Think of the energy that is used to broadcast shitty TV shows around the world.
This is absurd. I do think that mining finds some previously untapped efficiencies (I defended that here: https://redd.it/4r1iiw), but that article takes it up to a stupid level.
No, demand alone will not make fusion happen faster. We already have the top experts working on it, and it is something that is "fifty years away" (as it was already said fifty years ago), making new demand for it will not significantly accelerate the scientific discoveries that are still missing to make it a reality. Also, if anything, it will be investing energetic resources directly on fusion research, not burning them to create proof of work, what will help it.
In essence, his entire article hinges on the claim that PoW is the only adequate consensus mechanism, yet I fail to see any good evidence for why that is the case. It is true that PoW works very well in securing bitcoin, however there are other up and coming mechanisms such as PoS that the article mentions but in my opinion fails to discount. PoS is not as simple and elegant as PoW, it can't be because it tries to avoid precisely what makes it simple: relying on consumption which is inherently hard to fake. But more and more of its shortcomings such as the nothing-at-stake problem is being addressed and we're nearing an implementation that is very sound and robust both from a technological and game-theory perspective.
If a cryptocurrency can be properly secured in a different way that doesn't expend energy, such as PoS, then PoW is indeed wasteful. If two solutions that accomplish same thing, with one using a ton of energy, and the other using none, then the former is inefficient by definition. At one point he talks about how mining will get more and more efficient because of economic incentives, well in my mind the end-goal of that would be to scrap PoW altogether because that is the ultimate efficiency and thus economic incentive.
He goes through a few points that can help with the efficiency of PoW such as its incentivisation to build out energy efficient plants by acting as arbitrage of power prices, but this can at most mitigate the waste, not eliminate it. He also talks about the far future when we have abundant clean energy via fusion plants etc, but this is frankly irrelevant, because the main point of trying to eliminate energy waste is to mitigate climate change, and that is urgent. In fact it's probably even too late, but we could probably at least avoid total extinction if we pull our act together pretty fast. And the bitcoin network is not helping with that.
> In essence, his entire article hinges on the claim that PoW is the only adequate consensus mechanism, yet I fail to see any good evidence for why that is the case.
I think there's a plenty of evidence it is not. Currently there's a handful of individuals who can conspire to do a double-spend. This is bad.
> It is true that PoW works very well in securing bitcoin
So far. It only worked for 10 years, that's not much. There's plenty of things which lasted as much as several hundred years, and then disintegrated. Many cryptographic constructs & protocol failed after 10-20 years. So the fact that it worked for 10 years doesn't say much about the future.
> PoS is not as simple and elegant as PoW, it can't be because it tries to avoid precisely what makes it simple
Not quite, more importantly, PoS attempts to decentralize it much more evenly. Currently 4 big pools have >50% of Bitcoin's hashpower. So number of important block-producers is low. PoS attempts to scale to hundreds or thousands of active block producers.
PoS is not so much an answer to energy efficiency, but to lack of decentralization in PoW.
You've missed the point completely.
\- In the first paragraph of the Medium post: "*\*I’d like to caveat that I’m not saying the current implementation of PoW is perfect, nor that it won’t be replaced by a more optimal PoW/PoS"*
\- Everything requires energy (first law of thermodynamics). Claiming that one usage of energy is more or less wasteful than another is completely subjective since all users have paid market rate to utilize that electricity.
\- Until very recently, securing something meant building a thick physical wall around whatever is deemed valuable. The new world of cryptocurrency is unintuitive and weird — there are no physical walls to protect our money, no doors to access our vaults. Bitcoin’s public ledger is secured by its collective hashing power: the sum of all energy [expended](https://medium.com/@dergigi/bitcoins-energy-consumption-6dd7d7a2e463) to build the wall. And through its transparent costly design, it would take an equivalent amount of energy to tear it down ([unforgeable costliness](http://unenumerated.blogspot.com/2008/08/)).
>Claiming that one usage of energy is more or less wasteful than another is completely subjective since all users have paid market rate to utilize that electricity.
Of course it's technically subjective, but if one type of waste contributes to humanity's downfall, and the other doesn't, it baffles me that anyone would prefer the former.
As for your first and last quote I don't know what you are trying to say that contradicts my posts.
It's actually much worse that. The output of energy is limited technologically and geographically, so y creating a useless demand, bitcoin is actually increasing the price of energy and putting out of market other consumers which cannot afford increased electricity costs. Since it's happening mostly in poor countries let's think who could those be? Local companies, that barely make ends meet that can no longer pay their bills? "Yay, bitcoin! Let's make world greener by burning all the coal as soon as possible. Evolution, baby!".
Yes, bitcoin could actually be good for growth, but that would require certain regulations in countries, which usually don't have enough technological capacity. Governments should simply regulate mining rigs and force them onto renewables, to stimulate that market MATERIALLY. But it's not realistic to assume it will actually happen. Until then, bitcoin it's just another cancer on our planets organism.
The big benefit of walls is that once they are built, their maintenance cost is minimal, easily less than 5% of original investment. With bitcoin you need to keep spending more and more (proportionally to the size of network). You don't provide real value arguments, but just rationalizations. No single institution would allow for such a waste, as it would be inefficient, but somehow we agree to pay the horrendous cost for the distribution as if it was actually providing some material value.
And I think you've answered what that value is already in the article. Loose quote "if there was no value, people would not be buying into it.". Reminds me of tulips ;)
Proof of Stake is not new or very interesting, and exists as a form with fiat currency already.
Proof of stake has many more attack vectors(nothing at stake attacks, long range attacks, short range attacks , stake grinding attacks) than proof of work and ultimately is either less efficient or less secure.
Further reading -
There doesn't seem to be any foreseeable solutions to making proof of stake secure either besides obscuring the flaws. Bitcoin is deliberately made inefficient with proof of work as using provable work that is external to the blockchain is the only means to create real costs where the game theory supports a model where it is both profitable to secure BTC and extremely costly to attack it.
With PoW (proof of work) you would need to be a tremendous amount of effort in order to censor 1-2 blocks with building many asic mining farms, and than burning the electricity continuously in order to attack bitcoin.
With Proof of stake all I need to do is be an early adopter(s) , hack/kidnap an early adopter(s) , or convince many users to join a interest bearing bank account by staking their coins with my company(done many times before) to attack the network. Since Proof of work involves outside resources one can always objectively see and measure the hashrate and sources in realtime and one can cutoff such an attack because it involves outside resources.
There are many different variations of proof of stake but the simplest way to understand this is by looking at those blockchain's as a democratic consensus mechanism where everyone's vote is weighted based upon how many coins or stake they control. Their staked coins than have an opportunity to create a block without proof of work and a dev controlling 51% of the coins gets to virtually mint ~51% on average of all the blocks . This presents another concern as the coins typically need to be in "hot wallets" to do so instead of cold storage leading to a more insecure environment.
Since most PoS coins have massive premines where only a small number of devs control most of the coins this also presents another concern as those devs can be targeted by states , hackers, or attackers or as we often see with altcoin devs they pump and dump a project and than move onto a competing project to repeat this cycle over and over again thus have an incentive to attack their old project.
With Proof of work , seizing the coins or stake of any individual or group of people doesn't effect the process of mining or securing the network directly at all . They can only try and spook the market by dumping coins at a discount while individuals like myself will happily buy up all the discounted coins.
PoS is being sought because it is a clever marketing ploy to attract environmentalists who are concerned about the electricity used in PoW mining. They may have valid concerns that I also share but they fail to see all the external costs in PoS.
It is akin to not adding up all the inefficiencies in coming to a consensus in a democratic presidential election.
Watch this video -
There is a fallacy which rests on a false assumption that total amount electricity burnt must always correlate with the price of bitcoin. In reality the **cost** of electricity burnt will tend to correlate with the price of bitcoin.
This means that as bitcoin continues to compete with all other forms of electrical demand worldwide the price per kW across the board will rise and thus decreasing the amount of electricity needed for bitcoin even if the price of bitcoin continues to rise and making bitcoin more and more efficient. This also has the side effect of encouraging more and more efficient and greener forms of cooling and electrical production.
I have read several of those articles and responded in other posts already. You say that PoS is not new, but that detracts from your argument as you don't seem to be up to date on the tremendous amount of new research that have been made on it in just the last year and two. Most of your points are outdated, such as attack vectors like nothing at stake etc being all but solved. As for centralization of voting power, how is it any different than PoW? Currently just four pools control over 50% of the mining power, and at some points in history it has been close to just one pool controlling the majority. To do an attack on the network you just need to hack/kidnap one of these pool managers, as your example. Besides, it's not like if you have a lot of coins you automatically have a lot of power, you need to actually stake them first, and that requires locking up the funds for a long time, and an attack will most likely end up with you losing all those funds in the end as the network corrects itself.
> tremendous amount of new research that have been made on it in just the last year and two.
This new research and work simply attempts to solve the underlying security problems by adding complexity which is typically disastrous for a secure platform without addressing the underlying weakness. It is critically important for there to be a tangible, objective, and external cost to security.
>As for centralization of voting power, how is it any different than PoW?
If even 100% of the BTC hashrate attempts to change or modify the rules this has absolutely no effect upon my full node. Miners simply order txs and economic full nodes validate txs and blocks.
Also as explained there is an objective external cost with PoW that doesn't exist with PoS.
>To do an attack on the network you just need to hack/kidnap one of these pool managers, as your example.
You would have to physically hold hostage these people and managers which would be noticeable, unlike with PoS.
No, it's more like nitpicking: it's totally fine downloads implementation from bitcoin.org, but got forbid that hash of a month-old block, which we include anyway, is used for consensus -- that's bloody murder!
Or even more precisely: In case of an attack which is highly theoretical in nature, a cryptocurrency implementation can rely on a safeguard mechanism added by developers. OMG ITS SO CENTRALIZED, COMPLETELY UNACCEPTABLE.
Meanwhile, Bitcoin node bootstrapping is vulnerable to practical network-level attacks which costs less than $100k to mount, and nobody gives a flying fuck.
Have not you learned anything from Ripple? It is not that we have not tried the "pragmatic way"; we have, and we know that it fails.
You know that it is all about the open, peer-reviewed process, that it is unimportant who are the actual people releasing.
> Bitcoin node bootstrapping is vulnerable to practical network-level attacks which costs less than $100k to mount, and nobody gives a flying fuck.
Block broadcasting satellites look like a significant effort and, yes, they are actually flying.
> Have not you learned anything from Ripple?
Ripple is very different. From the start it owned all the coins, and led the consensus. I don't think it's correct any conclusions from Ripple to PoS system.
> It is not that we have not tried the "pragmatic way"; we have, and we know that it fails.
Well again, it is not like developers decide on each block or transaction. All they need is to include a hash of the block several weeks or months old. It's extremely non-contentious, and it's something they ALREADY do now.
The only difference is how this hash is used. It will not affect in any way affect people who _already_ run a node, it will only affect people who are new. And they can cross-check this hash from many sources:
* block explorers
* on forums, twitter, IRC, etc.
* in person
So this is a non-issue.
Figuring out some anchor block from which you can bootstrap is no harder than figuring out whether Bitcoin Core or Bitcoin Cash is the real Bitcoin, and where to download it from, is it?
(Note that Ouroboros Genesis claims it solved "weak subjectivity" issue, but I still haven't reviewed that, so I'm assuming "subjectivity" is necessary.)
> You know that it is all about the open, peer-reviewed process, that it is unimportant who are the actual people releasing.
No, it is actually important, since I'm not going to review all source code for every release. I gotta trust people who made Gitian builds.
People who actually do not rely on trust are like 0.001% of community. And for those people things won't change, since, again, it makes no difference for nodes which are already running.
Then again, for Bitcoin a better solution would be PoW+PoS hybrid which doesn't really have subjectivity problem...
> Block broadcasting satellites look like a significant effort and, yes, they are actually flying.
LOL yeah a whopping 0.00001% of the user base is SAFE NOW, assuming you can trust the satellite feed.
What if attacker jams the satellite feed?
Ethereum premined most of the issuance; they only left a small part left to get mined later on. So, yes, it is actually very similar to Ripple.
They cannot solve "subjectivity" issue, because that is inherent to stake system (see again andytoshi's paper above). Similar with grinding issue (which presupposes uncensored access).
Ultimately, and unlike with POW, POS sets up a system of undethronable stakeholders that only get richer, which degenerates into a ~zero entropy distribution. You end up replicating EOS only that in an obfuscated way.
> They cannot solve "subjectivity" issue
This issue is a non-issue.
> Similar with grinding issue
Solved years ago.
> Ultimately, and unlike with POW, POS sets up a system of undethronable stakeholders
Utter bullshit, it's the opposite.
You CANNOT get rid of BitMain if Bitmain wants to kill Bitcoin, for example:
1. They can do 51% mining at loss. Other rational miners will sell their equipment at a low price, so realistically they will have NO competition whatsoever.
2. If you change PoW they can make mining equipment for that new PoW, since they already have the capital, competent designers, contracts, etc.
3. So if one company can obtain 51% of hardware, it can totally just destroy Bitcoin if they want to.
Same thing if e.g. Bitmain wants to implement censorship -- no way other miners can do anything, and if you change PoW Bitmain will be first to implement censorship on your new chain.
On the other hand, PoS stakeholders are dethronable -- the community can simply fork to exclude them. In fact it might be just a soft fork, so pretty easy to organize.
So if PoS stakeholders want to implement censorship, just fork them off.
Also they have a lot more to lose than PoW miners.
So PoW is superior to PoS only if:
1. You ignore actual, real threats affecting PoW
2. You make up some bullshit imaginary threats affecting PoS
In other words, intellectual dishonesty.
> This issue is a non-issue.
only if you are already centralized (and in that case, better use Hashgraph or Avalanche, there is little reason to stick with bongchain)
> Solved years ago.
RANDAO? LOL. There is no such thing as intrinsic randomness if the system has no computational cost.
> Utter bullshit, it's the opposite.
Yeah, keep slashing 😁
Gedankenexperiment: If we went back to 2009, how far do you think that Bitcoin would have gone if released under POS system?
> You CANNOT get rid of BitMain if Bitmain wants to kill Bitcoin
Bitmain will pass, just like GHash and Deepbit before did in the past when they tried to play political games. On the other hand, Ethereum founders will have permanent control of it forever.
> In other words, intellectual dishonesty.
Yet it is you who is handwaving on pragmatisms.
> only if you are already centralized
No. There are no scenarios in which it would matter.
> There is no such thing as intrinsic randomness if the system has no computational cost.
I don't think randomness even matters -- by all means, make blocks deterministically, what's the issue?
> If we went back to 2009, how far do you think that Bitcoin would have gone if released under POS system?
PoW is good for initial coin distribution, but not for consensus of the running system.
> Bitmain will pass, just like GHash and Deepbit
GHash were just pool, easy to replace.
Bitmain is a miner/equipment manufacturer which has tremendous amount of capital.
And anyway, what makes you sure Bitmain will pass? Just a guess?
This is very common with PoW cultists -- it's fine for them to make faith-based statements, but the other side has to be able to address the most arcane theoretical issues.
> Ethereum founders will have permanent control of it forever.
How much control do they have?
> How much control do they have?
Definitive. Vitalik just mandated what should be the next issuance profile.
He can probably freeze and reverse too, next time he gets hacked, as the DAO precedent proved.
The folklore conjecture in this paper is just that - a conjecture. It sounds true, but it appears that the Edinburgh Uni folks sponsored by IOHK have disproven that conjecture in their ouroboros genesis paper. Mind you that paper is pretty long and involved and presupposes a lot of earlier work, so I wouldn't vouch for its correctness nor that it means what they say it means. But it reads pretty valid to me and I've so far unsuccessfully tried to get more competent people in the space to comment. /u/andytoshi?
I can't download that document because their website encryption is misconfigured.
>Even Vitalik admits that his design's consensus is intrinsically subjective and can only work by centralization.
Notice the stupid bcash-like rhetoric on gatekeepers and validity rule setting. Vitalik is entirely OK with devs deciding on validity, this is, with him being at the center of his "decentralized" system.
I see, but do you disagree with what his point is though, that PoW also relies fundamentally on trust/centralization in the same way, except to a slightly less degree? And while that specific aspect might require more trust, PoS has other advantages in terms of decentralization, such as a reduced "economy of scale" effect in mining/staking enterprises, which naturally clusters mining horsepower into the hands of the few.
Yes, I totally disagree. Vitalik thinks that dev kabal with one or a handful of gatekeeper is what defines consensus (which explains why he pamping Bcash). It is not. It is all about having a public, open peer-review process and nearly unanimous rule changes.
So, no, "you need some trusted source to tell you what the consensus rules" is simply not true. You do not need to trust someone, just trust that the open process works, which is a categorically distinct thing.
> Yes, I totally disagree. Vitalik thinks that dev kabal with one or a handful of gatekeeper is what defines consensus
I don't see where you get this from. All he is saying is that it is reasonable to extend the trust necessary to assume that the wallet client you are downloading has implemented the rules of the blockchain correctly, to the assumption that it is also programmed to initially download a blockchain that complies with these rules, as well.
Ethereum does have a public, open, peer-review process. Any and all changes are discussed as Ethereum Improvement Proposals in the exact same way as bitcoin does with Bitcoin Improvement Proposals.
In the DAO fork, it became quite clear that he dictated what should be the consensus rules so that he would bailout his ass and that of his buddies. Similar thing happened when he got many of the opcode costs wrong and had to arbitrarily reprice all the incentives.
Vitalik presumes that he could fork the consensus ruleset in any arbitrary way. He is even redefining the entire issuance profile, even against previous promises. It is of course in that scenario, but only in it, where the subjectivity of "trust someone for old history" becomes quite equivalent to "trust devs for the ruleset in their mood".
> Ethereum does have a public, open, peer-review process. Any and all changes are discussed as Ethereum Improvement Proposals in the exact same way as bitcoin does with Bitcoin Improvement Proposals.
They are not equivalent. The Ethereum policy is to hardfork by default and decision of change by majority. In Bitcoin, it is conservative by default and change only if there is rough consensus (and even then users decide with their nodes).
That is not true, in the DAO and other cases there was extensive discussion in the community and it only happened because of a clear majority consensus. And nothing stopped the few that disagreed from continuing their own fork: ETC. Vitalik does not have as much power as you make it seem. If he and only he wanted something, he would absolutely not get his way.
And yes, Ethereum has relatively many hardforks to introduce new features, but that does not make a difference in the fact that that process is open and peer-review in the same way as with bitcoin.
But the bigger question is what does all that have to do with PoS vs PoW? It feels like you are trying to change the subject.
It hardforked on *simple majority preference*, not consensus, and the unmodified chain had to change the name, because Ethereum's name is the property of a centrally owned, centrally managed "foundation".
That is what is all about. Bitcoin is what its users want it to be, while Ethereum is what its founders decide it to be.
This is why POS is possible in Ethereum, because it is already centralized: As Vitalik says, the *nothing at stake* problem is irrelevant, because long-range finality is fully analogue to founders checkpointing as part of the validity rules. And this is also why POS is impossible in Bitcoin, because "dirty subjectivism" equals centralized management.
And, at that point, it makes zero sense that Ethereum wants to still keep the blockchain. It is totally pointless. They could substitute it with something that is intrinsically more efficient, like HoneybadgerBFT, or even Hashgraph or Avalanche.
> [2018-08-16 01:25 +00:00](https://twitter.com/VitalikButerin/status/1029901952346279936)
> 11. But to us dirty subjectivists, it did not seem like a big deal; you need some trusted source to tell you what the consensus rules of the blockchain are in any case (and don't forget software updates), so the additional trust required by this PoS assumption is not large.
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>however there are other up and coming mechanisms such as PoS
I don't see the problem, after having read this. He is saying that PoS and other mechanism are obscured PoW schemes. This is fine, as long as the obfuscation involves transforming the wasted work into something other than pure energy that contributes to climate change. He is talking strictly about economic efficiency, while I am talking efficiency in terms of greenhouse gas emissions and pollution, which is often in direct odds with efficiency in productivity/economy at all cost. He says that the waste in PoS is mainly lost liquidity, in other words being unable to take economic action. The waste in PoS is essentially equivalent to sitting still, twiddling thumbs, for a while. This is actually great for the environment. And the author even admits that he is not trying to argue against the environmental effects of either consensus mechanism.
And precisely because PoS is an obscured form of PoW, it works pretty much just as well in terms of securing the network, as long as the problems introduced by the added complexity is accounted for.
I appreciate your perspective, and I'm curious about how best to handle this debate. Personally, I believe PoW really is the best way, and I don't see the energy expenditure as a "waste." But I recognize that many people do see it that way, including people who, like me, share a big concern about climate change and the role our energy industry plays in it.
I believe that Bitcoin, including its PoW and energy demands, is a very good thing in the world, even considering the issue of climate change. I am not sure of the best arguments to offer in support of that. I think the author of this article offered some good ones, but clearly you were not convinced. It's a challenging topic. I hope to keep exploring it.
> I believe that Bitcoin, including its PoW and energy demands, is a very good thing in the world, even considering the issue of climate change. I am not sure of the best arguments to offer in support of that.
Of course I too agree that bitcoin, or more precisely cryptocurrency in general, is a good thing of course. But the point is that it can be even better, if it drops the energy expensive mining. It's not good because of PoW, it's good in spite of PoW. Is it so good that it's worth it even with PoW? Maybe, but climate change is such a serious problem that I am really unsure despite how important crypto has the potential to be.
You’re flat out wrong and you don’t understand the first thing about Bitcoin. Bitcoin is PoW. It’s not good in spite of it. Bitcoin without PoW does not work. It’s like saying computers are failing to live up to their potential because of their electricity consumption or their binary signal system.
Stop repeating this garbage. You have no clue what you’re talking about.
I guess I see PoW as the best possible answer to the question, "what is unforgeably costly?" The essence of what makes things hard, or valuable, is the expenditure of energy. So, tying the monetary system directly to the expenditure of energy is purest, most essential thing we can do. I read one [article](http://www.truthcoin.info/blog/pow-cheapest/) that said "all proposed PoW-alternatives could be relabeled 'obscured proof of work.'" By tying the system directly to energy, we aren't increasing costs per se, we are just removing layers of obscurity and complexity, and getting straight down to the essence.
Gold is matter based currency and bitcoin is an energy based currency. E=mc^2 so more or less that is all there really is. I suppose it is possible to crack the public key as I understand it with quantum computing. I’m not sure how existing bitcoin will end up dealing with this issue. Gold on the other hand requires serious celestial events to produce (interesting theories on this actually). Gold may be rare in general, not just on Earth. While I am uncovinced (FUD?) that bitcoin will still be prominent 50 years from now, in the short run there is no comparable network effect. Personally long btc.
Remember, there’s one thing you buy with BTC that you can only buy with BTC and nothing else - access to the Bitcoin blockchain, secured by all that real-world computational power. 50 quintillion hashes per second worth.
How much is that access worth to you?
What might that enable in the future?
Do you understand the signifgance of that unstoppable distributed trust framework?
Bitcoin is something new. Something new in a space where nothing fundamentally new has happened in a very, very long time.
Hodl. These are very early times. Archie early. Gopher hasn’t even happened yet.
The network is stoppable if people find no reason to perform transactions. As inflation shrinks miners will depend increasingly on fees. Bitcoin's liquidity needs to be continually expanding to offset the shrinking inflation or there won't be enough fee-paying transactions to cover the cost of security. Holding Bitcoin alone is not enough of a use case to sustain the network.
if you had to guess, what do you think the average fee paid on BTC is right now, per $ spent on chain?
Care to guess an order of magnitude?
I'll tell you. To send $1 on Bitcoin, the average fee today is $0.00006. That's 6 cents to send $1000.
What does this mean? That Bitcoin can easily tolerate an increase in fees to cover security costs.
Bitcoin today pays about $4.5b to secure the chain, mostly funded through inflation of the monetary base.
Total annualized throughput on BTC today, adjusted for change, is about $912b. Let's say BTC can increase this by a single order of magnitude to $10T a year.
Then the relationship between throughput and fees (assuming we kept the subsidy constant) would be about 1:2200. Recall that the fee ratio today is about 1:15000.
To simulate what sufficient fees would be like, just multiply current fees by 6.75. So your fee to send $1000, in order to generate a fee subsidy of $4.5b a year, if bitcoin can throughput $10T a year, would be about 40 cents.
Can you deal with a fee of 40 cents to send $1000? That's a percentage fee of four basis points. That's all it will take to secure the chain at today's miner subsidy, in a world where we can scale up usage by a single order of magnitude.
Concerns over the reduction in block reward vs transactions not compensating miners is overblown. Given Bitcoin's transparent monetary policy, all future worries regarding supply have been factored into the current price.
As evidenced by [linked](https://imgur.com/a/HW4viIe) chart, we're seeing total fee revenue slowly trend up in BTC into the coming decades (possibly to \~1% of circulating supply value / year - market will decide).
In economics, the Jevons paradox occurs when technological progress increases the efficiency with which a resource is used (reducing the amount necessary for any one use), but the rate of consumption of that resource rises due to increasing demand. We'll likely see the same paradox occur with lightning/layer 2.
Regarding on-chain layer 1 fees, most FUDers ignore scaling, and the idea that if Bitcoin became the world reserve currency it becomes the risk-free rate of return. Which means the future "flow" is not just cash flows but all future risk free rate of return (compounded) discounted back to the present.
>Holding Bitcoin alone is not enough of a use case to sustain the network.
This will eventually be true, but for the next several years while the inflation rate is relatively high, holding is quite sufficient. Holding and hoarding is how we support Bitcoin in becoming a highly desired collectible, and then store of value, which are necessarily the first stages of development for a new money.
Claiming *fact* on something as inane as "most people think" is a pretty weak argument.
Also I'm not sure why anyone thinks it's their job to educate these unwashed masses you speak of. Let them toil in their own ignorance, for they do not matter.