I would argue that the benefit of decentralization is not worth the price.
If all the super computers on the world started mining Bitcoins, it would take them 10 minutes (or so) of calculation to mine a block. The 10 minutes are fixed, it doesn't get faster even if you get faster computers. Just the power waste gets higher.
Every 2016 blocks the difficulty adjusts so that ON AVERAGE a block is found every 10 minutes. If the hashing power of the network is increasing over time, the amount of time it takes to find a block goes down (can be less than 10 mins) as it approaches the next difficulty adjustment (and vice versa).
But you are correct that as the hash rate increases, the total power consumption increase along with it -- at the moment there is no proven alternative.
You're incorrect to state that crypto is "controlled by a much smaller number of unaccountable people" -- Bitcoin and Bitcoin Cash are decentralized networks with lots of different stakeholders (miners, developers, exchanges, wallets, users) and no single group is in control. Quite the opposite -- there has to be broad consensus among all the groups for a cryptocurrency to survive long term. Not possible to fork your own currency off of the USD or the EURO!
I still fail to see how bitcoins would let us get rid of either crime or war, nor downsize the army or LEOs.
Same for the "conventional power politics", it's hardly a new thing, put a 100 random people on a island and you'll see the same mechanisms at play.
If a currency were to arise with no political group can control, this mechanism of domination would be short-circuited. I don't doubt that there would still be organized violence, but there's good reason to hope it wouldn't be on the scale we see today.
The hand-wringing over Bitcoin's energy consumption, and suggestions of sacrificing decentralization for it, I'm not sure are justified just yet.
Electricity is very fungible, and hydro locations are limited. This means that when the (very limited) hydro energy is converted into heat to mine bits because it is easier to colocate some ASICs next to the dam than an aluminium smelter - then the smelter will run on slightly-pricier coal instead. The marginal carbon emissions can still be blamed on the coin mining.
Where we are right now is that the news aggregators aren't that good, and the interested communities are currency specific who will downvote censor any potentially negative discussion because of their investment.
Its very NIMBY
Due to this relative nature, I don't think that is valid reason to shut your mind off to discussion by trivializing other network's sizes.
Cryptocurrencies gets attacked all the time. Much smaller and more insecure cryptocurrencies are double-spent where possible, because these "bug bounties" are still worth several hundred thousand dollars.
Its not international news when it happens. It happens.
I think that in reality, PoW systems become more centralized over time. You can already see that with Bitcoin. Eventually the gatekeepers become those with the largest energy resources available to them, and "we the people" will be in the noise when it comes to hashing power.
I'd rather take energy efficient centralization than faux decentralization that also happens to destroy the environment.
It's not healthy for a society when people start self-censoring their actions like that. If nothing else, it places banks in a privileged position where they can get away with more predatory behavior, because people are more likely to see them as a necessity.
It's for this reason that anonymous transactions are valuable. You really should be able to buy legal marijuana or books about firearm construction without worrying that people might judge you. Neither is illegal, if you want one (or both) you should have the freedom to purchase them. However, many people would choose not to buy them, simply because they know the bank might see it on their balance sheet if they ever have to call the support line, and they're worried about follow-on consequences to their insurance premiums or their job if knowledge about that purchase ever circulates. That's a chilling effect in action.
On some stuff you cannot put a price tag - like mastercard ads say, some stuff is priceless.
Bitcoin's mining reward halves every couple of years. When the Bitcoin block reward becomes negligible, as it certainly will in within a few decades, the only thing funding Bitcoin miners will be transaction fees, so the entire cost of Bitcoin mining will be borne directly by users of the network.
The amount of money spent on electricity for mining is exactly the same as the (perceived) value of the mining rewards. Therefore, in the future the amount of money spent on electricity for mining will certainly go down as a percentage of Bitcoin's value.
If Bitcoin becomes very popular and valuable, transaction fees may be significant in absolute terms, but they will always be a very small percentage of the total, and likely smaller than the percentage of economic output consumed by the traditional financial system (in the future when the block reward is small).
The network will, as a result, centralize over time to a select few that have access to cheap and plentiful energy. These "big energy" :) companies will control most of the hashing power.
You can already trace this with bitcoin by looking at who the early miners were versus who the miners are now.
For this to happen, you need this to be a fiat currency.
Other wise the rest of the world has no obligation to trade in a currency where there already exist people who own bulk of the wealth and others enter poor by default. The non-bitcoin crowd can go to a new currency, which doesn't have mining kind of a setting.
At that point in time bitcoin will lose its value rapidly and all the money spent mining and acquiring bitcoins would have gone for nothing.
There is reason why currencies have to be backed by governments with massive militaries. If they didn't the poor can simply walk out the current scheme, leaving the existing ecosystem in tatters.
Fiat currency is a necessary evil. People who come later, care nothing for people with prior advantage. Bitcoin's goals are too ideal to work in the real world.
I simply don't want to invest in mining considering how much people have already mined. There's deflationary pressure for many reasons, but definitely because of the rewards being cut in half every couple of years. And currency deflation is highly unappealing for those who don't have large amounts of that currency.
Psychologically this is bad design, and it turns a lot people off from it. It makes it feel like a scam. That's good enough to piss enough people off about it to never use it, including me.
For an individual investor making a decision about which currency to hold, all else being equal, deflation is always better than inflation. Not sure what you're trying to say exactly.
Under what definition?
Is this definition a standard that couldn't be applied to other currency systems or asset classes that you respect?
There's a reason I ask so specifically
I don't think this logic is sound. The cost of bitcoin mining is already borne by users of the network (aka miners)? What does the diminishing block reward have to do with anything? The end result is that if you do calculations, and perform proof-of-work, you receive bitcoin. It shouldn't matter to the miners if it comes from block reward or transaction fees.
The point is that transaction fees will never be as high as current block rewards. The cost of bitcoin mining is currently subsidized by inflation of the Bitcoin money supply. That inflation will end, and it will not be fully replaced by transaction fees.
Just let everyone mine as much as they want. Don't limit the rate or the amount. All of a sudden, miners will have to self-regulate their output lest the currency become hyperinflated.
You might not like that outcome, but if you say that is going to be the endgame anyway after a few decades, why not let it happen now?
If you're asking why the inflation schedule had to be fixed in advance, that's because otherwise there is no trustless way to ensure it stays in check. The genius of Bitcoin is the way it uses incentives to enforce rules in a distributed system made up of selfish and even malicious participants. As you say, miners would have to self-regulate against their own self interest, and that would not be stable.
Also think about the cost of normal money. Just printing currency costs the US over $700 million per year: https://www.federalreserve.gov/faqs/currency_12771.htm . This is not to mention the rest of the infrastructure.
Last point, Bitcoin mining won't get much more energy intensive. Why? Because the amount of energy used in mining is directly proportional to the value of mining a block. As soon as segwit is activated tomorrow, the value of mining will drop. As soon as the lightning network funnels 99% of transactions off the blockchain, the value of mining will drop. As soon as bigger block sizes are allowed, the value of mining will drop. Bitcoin doesn't have to be any more "wasteful" than is needed to secure the blockchain.
So while people reading this headline would think "wow, that's the total energy use of a town like San Francisco!", in reality, it's more like the total energy usage of a town like Fremont. Less spectacular for sure.
Remember to use this! If you're pro-environment, always express your energy consumption numbers in terms of "homes", for a 4x more impressive result. After all, who care about the truth when the planet is going to shit (note: the anti-environment folks, or whatever they call themselves, do the exact same thing but I can't come up with a nice example right now).
This also means that if you see someone express energy usage in terms of N homes, you know they're ok with twisting the numbers to make a point. Read the rest with a grain of salt.
The big issue with making a POW is not making something hard to calculate, but making something hard to calculate and easy to verify. As far as I can tell, useful tasks that satisfy those conditions are very hard to find.
Recaptcha and co are gimmicks compared to this.
PoW has proven itself in the field for years, while PoS is still untested at scale. Being able to piggyback scientific/medical/environmental computation over a PoW scheme would provide significant value as opposed to a fairly useless compute problem such as the double-SHA256.
The key here is to be able to re-interpret/re-state a problem in terms of the PoW algorithm with the following characteristics:
- Expensive to calculate, cheap to validate
- Dynamically-adjustable difficulty
An ideal implementation of this would be similar to an OS running an idle process (double SHA256), and switching to running user-processes (medical/scientific computation) when needed/instructed.
Sounds like NP-completeness 
The chart https://twitter.com/FatTailCapital/status/899714838796148745 was produced as described in the footnote (mining hashrate × efficiency linearly declining from 1.5 to 0.2 J/GH), which IMHO fairly represents the "upper bound" of the energy consumption. The real consumption is likely lower. For example my study estimates the current efficiency is between 0.100 and 0.195 J/GH.
To give you an idea, "1M US homes continuously" is roughly the annual electricity consumption of decorative Christmas lights in the US.
Also it doesn't seem to me that Scandinavian countries are particularly active in mining. Understandably, since electric energy there isn't cheap.
I think the argument is you can put that energy to better use than mining bitcoins.
I did some research, and it doesn't seem that the mining farm in Iceland is even comparable to Chinese ones in terms of hashrate. Do you have any source?
(Then you have the philosophical question about what is a reasonable comparison target.)
I mean, as a matter of principle, the transaction fees of a bitcoin transaction are always cheaper than any credit card swipe, ATM withdrawal, or wire transfer.
It would be pretty strange if bitcoin had a noticeable effect
> That means 1.2% of the Sahara desert is sufficient to cover all of the energy needs of the world in solar energy.
Nearly all other animals on the planet survive entirely on solar energy.
On the other hand, resistive heaters deliver 1W of heat for 1W of consumed electrical power.
This is the difference between "waste heat" (e.g. resistive heating) and heat pumps.