However, if we're going to green wash (https://en.wikipedia.org/wiki/Greenwashing) a cryptocurrency, we need to focus on more than power consumption.
Given that power is getting cheaper and cleaner through solar[1, 2], this is asking people to further accumulate more waste and precious metals in the form of fixed drives. This is not eco-friendly and it's dubious to assert such.
This is one of the most problematic statements ever made in Econ.
The 'value' of a product is different for everyone, and it's what you (or anyone else) will pay for it.
The idea that 'work = value' is one of the most distortionary ideas in business, even today.
Just had a discussion today about pricing a product, and it was derived from component prices. Trying to convince a room of people that 'price is not a function of cost' ... in 2017.
Yes - when things are commodities, often, price is a function of cost, because competitive pricing means just a small margin above cost, which will roughly be the same for most.
Labor is what's gone in, use is the inherent/intrinsic value in the object, and exchange value is what people will trade in exchange for it. That's a bad summary, and there's a lot more to the dialectic examination of them.
Reading Capital (along with David Harvey's lectures) is worth it if you find these things interesting, it's a deep analysis of markets and capital.
You're probably right about it's use in understanding a capitalist market, Marx spends no shortage of time on how capitalists warp that basic idea.
Also - it's entirely possible that you make spectacular wine with the same effort I make bad wine.
They are somehow 'equal' in value?
It's just ridiculous. Labour theory of value just doesn't have a lot of meaning.
Explain how it is possible, and how the situation does not immediately solve itself with you stopping doing something you hate and are bad at.
As many have pointed out, "value" is subjective. Your terrible wine may be loved by someone. Or you may really enjoy making wine. As wine has zero intrinsic value, it is a luxury good, it's very possible for both wines to be just as valuable.
It has plenty of meaning, it just doesn't explain "profit."
Yes - of course people will have differing opinions - but aggregate market demand can be different for something made with the same amount of labour - that is not an issue of scarcity.
i.e. 'most people' can view one wine as better than the other with equal amounts of labour.
Again - surely you can, if you want get into issues of 'scarcity' i.e. you can talk about production volumes etc. but that's kind of a second order issue.
"Aggregate market demands" are capitalism, where wine is a status symbol and "good" wine generally refers to price. You are continuing to view this only in the eyes of capitalism and considering "value" to include "profit."
No - what I meant by 'aggregate market demand' was really just 'average price / perception of value' - and 'good' does not refer to 'price' - good wine literally is better.
I am not equating value and profit. I am equating value and price.
Some goods are generally better than others (i.e. most people will think one is better than the other) and require the same labour - this is my point - and it's unrelated to scarcity.
Price is value plus profit, thats the only reason to distinguish between the two.
If you could produce infinite quantities of Chateau-Petrus, it would be extremely cheap. But since it depends on being produced at a specific location, with a specific know-how, the quantities are limited. In this case, the amount of labour involved has little effect on the price of the wine.
Back on topic, "expensive" and "price" again add the concept of profit to the value produced. The only value of wine is enjoyment, so even Petrus wine has little more value than similar wines.
That increase in value is largely labor from learning the trade and long running slow maintenance. The only part that is scarce is the soil composition, something that could be recreated with a large amount of labor. Similarly, discovering that that area produced quality wine was labor intensive as well.
No - not at all.
Good wine can be 'more expensive' simply because it is better!
There's more willingness to pay, i.e. better demand curve!
Doesn't need to be less supply!
Point being: not all labour is equal, ergo, the idea of something being valued upon the 'amount of labour' put into it is really not useful.
Given how much our labour is amplified by machines, energy, machine intelligence, parts, equipment, R&D, support - it's not a very helpful way to think about anything.
It's also very unhelpful when considering prices of IP related things.
You study your whole life to become a great actor, you make a film - it only takes a month. Is it only a 'one month film'? Equivalent to the quality of a newby actor?
Almost everything requires at least some skill ...
Because I bet the price changes drastically, and that's the labor-value represented in object.
Marx did not dispute that. His point, rather, was that workers are paid significantly less than the actual value of the work that they do (because said value is directly measured by how much their product sold for, minus all the non-labor expenses).
And from there he concluded that the difference is the economic rent that the owner of the means of production is effectively extracting from those workers, by virtue of his ownership giving him the monopoly on them (or rather, by virtue of the capitalist class collectively having a monopoly on the means of production).
And that, being pure rent, it does not serve any useful purpose in the economy, except for the one collecting it - i.e. things would be more efficient if people couldn't collect rent like that, which he proposed to achieve by rejecting the notion that means of production can be privately owned in a way that also bestows ownership of whatever is produced by them.
“Profit motive” was bunk psychology created by 19th century economists to explain away this discrepancy.
10 years and 1000's of lawyers to find out whether Microsoft is a monopoly? Give me a break! Just look at their income statement!
Profit margins of 30% and more for 30 or more years? Do you seriously believe nobody would or could do the same for 20% profits?
A real market economy would tax away most of the excess profits after a certain number of years (depending on industry?). But then you would not have Apple and Microsoft and all your other beloved monopolists.
I'm a bit undecided but maybe it's OK for luxury products to not be part of the market. If you want to pay $200 more for an additional 1 GB on your iPhone when the price for 1 GB is $20, then it's no skin of my nose.
But please make sure Apple pays their taxes.
How do you define 'excess profits'.
And BTW - yes - I really do believe 'nobody can compete with Microsoft'.
Do you realize how sophisticated those products are?
And for every MS product, there are tons of competitors.
MS doesn't just make a 'widget' - they depend upon the talent (and ability to evolve that), deep value chain integration, R&D - it's a constantly moving team.
The creator gets a time limited monopoly to pay for his efforts. Nobody ever thought having an unlimited monopoly was good for society (well except for the guys actually having the monopoly, cuz you know it trickles down somehow).
Regarding the quality of MS products, why it's obvious that they used some of their monopoly rents to hire smart people to work on it.
But the point still stands that they were and still are a monopoly. Otherwise someone equally smart would have broken into their market and pushed profit margins down.
Can't generate AI, websites, etc with the computing infrastructure.
No software patents if no computers to create software.
Whereas in cryptocurrency, that's split. The miners provide security and integrity for the chain. They also take their own very specific fee.
Skip to 32m: https://www.facebook.com/hackdays4all/videos/533001907045477...
AFAIK nuclear so far has the smallest fatality per kWh ratio. For certain, salt reactors need a lot more research, but so do many of these other "green" energies. Are we even clear on the full environmental impact of the various "green" energies when factoring in secondary and tertiary costs?
I feel like China probably has the right idea of dumping a bunch of R&D into LFTR and whatnot instead of riding the Eco Friendly TM train.
The world would be all over a nuclear fuel cycle that doesn't produce waste that needs very-long-term storage.
Wind and solar seem to address both of these problems. Very likely faster, cheaper, safer availability and goes a long way to decentralizing distribution and easing the "long wires everywhere" problem.
Nuclear probably still has some very compelling use cases in niche areas but on the whole, its time as "the power of the future" seems past.
But in the last 15 years solar prices have come way the heck down. And are going to go down even further in the coming 15 years. Everyone will get solar panels, they will be just that cheap.
Perceived tail risk.
Solar energy being a great solution to power generation is backed by a lot of research, as well as a good economic situation. It's not just a bandwagon.
Does that include the uranium miners?
Given the half life of waste, ignoring that risk is ludicrous.
His answer is a bit hand wavy though (or maybe I'm just being slow).
Also, they can be reasonably recycled...
Power expended on mining must remain constant or ever increasing lest the whole thing collapse.
People want simplicity, people want convenience. People don't want to risk losing their life savings because they get scammed or because their secret keys become compromised or destroyed.
People want banks, or at least a subset of what banks do. People want insurance, people want chargeback. People want to get loans to buy houses and cars.
Bitcoin solves a tiny portion of the service provided by banks.
A lot of what bank does is getting automated anyway, now you have banks that are only available online who probably need a lot less personnel and obviously fewer buildings. Armored vehicles and printing money can be replaced by credit and debit cards, no blockchain needed. I personally use cash less and less, and I know it's a trend in many (albeit not all) countries.
Simpler and more convenient than Visa? What if I buy something online and the other party scams me by not delivering the goods?
There's more to the economy as a distributed ledger. If bitcoin was to replace fiat entirely it'd still need 3rd parties to settle disputes, provide insurance, distribute the risks etc... In other word banks, or "central storage with insurance" as you prefer to call them.
The cost of the PoW algorithm is on top of all of that, not an alternative to it. It's not the problem it's solving.
PoW is there to solve the "distributed ledger without trust" issue. Except that if you end up having to trust your bitcoins to a "central storage with insurance" anyway I'm not sure I see the added value over the current solution.
There's nothing special about blockchains that will mean people suddenly won't use physical money, have a bank on their high street etc.
Can it be improved: Yes, wholeheartedly, for me BTC died a little when I wanted to give the money for a beer back in BTC to a friend, as we used to do in the old days... but soon I realized that the transfer cost is 2 times the cost of a beer. Somethings has to change.
Why would an alternative consensus mechanism that doesn't involve finding a low target hash make it useless?
That's not "green". It is perhaps more practical, assuming one considers crypto-mining practical, but not green.
The same can be said of this new "Chia" network, but it's much easier to call it "green" in relative terms compared to other existing crypotcurrencies, at least.
That depends on your definition of "useful". It looks like you don't think bitcoin adds value, but I'm pretty sure many people think the opposite and as such bitcoin is useul.
It is possible for a heater to be over 100% efficient by removing heat from an external environment, but heat pumps require significant supporting infrastructure.
With the proof of chia being used in storage, does that imply a lower power cost? I'm not sure what proof of time is either...
Does anyone know more about this and can clarify things?
It does incentivize a buildup of physical disk drives. And if it becomes successful, it'll likely spur specialized datacenters and hardware (think specialized tape drives) to try to outcompete in space, so it might end up just as centralized as bitcoin mining.
But the power costs will be much lower.
There also is a proof-of-time component, that does computation, but it is designed to not be parallelizable, which means that throwing additional power at the problem doesn't help you as much. Instead, imagine that each participant must spend a deterministic length of time to compute a solution, and the person closest to the internet backbone wins. But this proof-of-time component is also smaller subsidiary role to the proof-of-space.
So overall, it's a hybrid proof. Bram didn't go into enough detail explaining the actual proof-of-time or space in his talk, so I'm not sure if it all works, but if it does, then you can expect it to use less power.
Proof-of-Stake should use even LESS power, though.
I wish I could give a further critique, but I'm not familiar enough with the subject. There have been several persuasive comments posted to HN on the brittle nature of Proof of Stake, and the lack of hard answers to basic problems. Tacking it on as "this would use even less power" is a sign that perhaps these alternate schemes (including the one in the article) should be taken with a dash of salt and pepper.
Remember, the whole point of proof of work is to make it too expensive for "bad guys" to amass enough work to force their skewed version of the ledger.
As long as you have the constant rate of coin production, and difficulty adjustments to ensure it, you have the exact same arms race. Miners might not use more energy, but they'll still take away workers, land, metal, etc. from the real economy.
 They can't forge transactions, but they can publish empty blocks, effectively shutting it down.
 Although even that's doubtful: when you throw money at a problem, you generally end up throwing a proportional amount of energy at it too.
Interesting you don't consider this real economy. Do you think banking is also not part of the 'real economy'
Resources spent on PoW are effectively an arms race (outrunning attacks on the network that other systems don't need to deal with). It's meaningful to distinguish between resources devoted to zero-sum arms races vs. positive-sum satisfaction of human desires. Resources spent on PoW take from the latter and add to the former (at the macro level).
Edit: So yes, in that categorization, I would count (at least some) banking as in the positive sum part: they identify which opportunities for investment will pay back, and help enforce the agreement, thereby increasing over capital allocation efficiency and therefore wealth.
I think you got your point across fine. Obviously it doesn't look like 'real' work since there's so much power being spent, seemingly unnecessarily. But I think it is easy to underestimate how effectively it can replace the current financial system.
Why do you think wealth can't be generated with digital currency? What part of 'positive-sum satisfaction of human desires' you think current digital system can't satisfy? And I think you're looking at the resources spent on digital currency and the current financial system in a different way. There's no need of people spending lots of time and energy to safe guard big lock rooms.
Banking can move to the digital ecosystem just fine. And it is just in its first iteration.
I didn't say that. I said that the marginal unit associated with mining can't be credited with the wealth gains of digital currency applications. The criticism was of the mining costs you need to make this work, not the stuff you can layer on top of the currency itself. For it to be a social net positive, all those benefits would have to outweigh the mining costs.
>And I think you're looking at the resources spent on digital currency and the current financial system in a different way. There's no need of people spending lots of time and energy to safe guard big lock rooms.
Of course the financial system has to pay for similar "defense", but the comparison is not favorable to Bitcoin/PoW. The costs of securing conventional centralized mechanisms (or bank vaults) ramp up much slower than Bitcoin per dollar or per unit of wealth secured.
>The costs of securing conventional centralized mechanisms (or bank vaults) ramp up much slower than Bitcoin per dollar or per unit of wealth secured.
Actually I think the costs are much less, because after a certain point, you're not working to secure the network but racing to make more bitcoin. The network can be secure with much less resources than what is currently being spent.
It is a misconception to think that effort to mine is to fight external attacks. It is more like fight between banks to transact faster.
So banks would be defined as not real economy since they are transacting in debt, savings, and other instruments that exist on balance sheets, while Bitcoin mining would be defined as real economy since it bottlenecks on an energy input.
What century was that? I think financial services fit very well into the proper functioning of the real world. I believe it does provide very 'real' value and I'm ready to disagree with the definition of 'real value'.
>while Bitcoin mining would be defined as real economy since it bottlenecks on an energy input.
Bitcoin mining isn't competing with the wealth transaction part, but the wealth creation part. The wealth transaction part was secured a long time ago and now there are efforts to make it more efficient without dealing with the race for creation - like Lightning Network.
Still a lot of implementation details to be revealed, but looks really interesting.
So for bitcoin, if miners get X on average to mine it, they will spend X-ε in electricity (in bitcoins case), where ε is a tiny profit margin (or perhaps paying back investment).
This will remain true for any other coin and its proof scheme. The amount spent on generating it will asymptotically approach the amount received. The difference is that it might be possible for the byproducts to be useful.
The electricity costs of mining are about 20% of the price of Bitcoin - now as it was in 2011. https://medium.com/modern-money-matters/the-cost-of-bitcoin-...
The value of the token is what it costs to get it. You won't let it go for any less than that.
We'll also waste money to power empty hard drives.
Or is it sort of like mining bitcoin where a gpu is wholly used for mining?
I can imagine proof of space implemented by requiring nodes to store terabytes of random bytes, and compute the hash of specific subsets of this huge blob based on the last block in the ledger.
http://primecoin.io/ and a detailed article about it https://bitcoinmagazine.com/articles/primecoin-the-cryptocur...
I really wish coins like these would catch on more than they have. Proof-of-work is, to the best of my knowledge, the only system that provably works. If we could just harness that computational power to do useful work, we'd be in a great place.
This point keeps getting brought up and is patently ridiculous. It is computing something - a hash that is not easily reproducible that prevents attackers from modifying the ledger. And there is no other known way to do this, including proof of stake.
I think people who say this are just naysayers that are implying that crypto currencies have no use or value.
It doesn’t take the entire output of a coal-fired generator to handle trillions in trade volume on traditional exchanges. Minting coins doesn’t require an entire nuclear plant dedicated to it. Even for newfangled cryptocurrency, the human race can handle a hundredish billion dollar market cap without using that much energy. It’s incredibly wasteful and destructive to our planet. How do you think the Chinese are throwing cheap electricity at all that mining gear? Provinces covered in solar panels? (For that matter, how do you think the Americans are?)
Literally the entire concept of mining is brute force through the SHA2 problem space for nothing (to create the currency of value; nobody is saying bitcoin is worthless). Imagine if, instead, you dumped that energy into storage or even useful computation (again: proof of work, not the currency, is useless computation), and what you could do with it. There needs to be acknowledgment that brute force cryptographic hashing is a pretty serious design flaw. We just happen to be working around it now that bitcoin is a Big Deal.
To drive this home, Bitfury is building out 30+ MW mining facilities that require immersion cooling in 3M Novec, because state-of-the-art datacenter CRACs aren’t capable of rejecting waste heat from that kind of power density. We are talking 150+ kW cabinet-equivalents, where anything over 15-20 kW per cabinet with CRAC is currently considered noteworthy. AIUI, they have to underclock their gear when relying on datacenter air. Two-phase immersion is a cool, efficient technology that will probably reimagine the datacenter and should be developed further, but machine learning and science workloads are barely starting to crack that nut. Bitcoin ran directly to the front of the line of “incredibly power-intensive workloads that we haven’t encountered in datacenter design before.” That’s good and bad.
Try this as a habit: If in response to something someone else has said, you find yourself thinking, "That would be ridiculous! Who would think that?", then follow up by answering your own question: "That would be ridiculous, so the person I'm responding to probably doesn't think that."
Pondering how ridiculous it would be for you to choose to believe that someone else actually believed the first ridiculous thing is an exercise you can pursue at your own option.
Yes, the end result is a secured ledger. The path to that secured ledger is entirely wasted computing. Bitcoin is wasteful solely based on this fact. How can you consider Bitcoin wasteful as I do and also claim people who point this flaw out are naysayers who don’t get it? Your argument makes no sense.
It's not doing nothing. It's searching - searching for a hash that can be used to protect the ledger from attacks.
Saying it's doing nothing is like saying Dijkstra's algorithm is doing nothing until it finally finds the shortest path. That's just plain wrong. Sorry.
wrong, bitcoin network brute forces through sha2 to find the one that secures the distributed ledger and transaction platform on top of it. the rest is irrelevant since it's based on wrong assumption.
this really comes down to question whether you think the distributed, writable by anybody ledger is useful to humanity. personally i think it absolutely is. do you?
Say I have one watt of power. I apply it to a computer for however long and it spends that energy folding a protein, simulating a gravitational system, or modeling a hurricane. I apply it to another computer and it spends that watt for however long computing a double SHA256 and throwing away the result. If, at the end of both calculations, I have worked toward proof of work on a secure ledger, which energy was better spent for humanity? That’s the difference: while the secure blockchain is a noble goal, what the computer is doing during that time is something we badly need to rethink. “The double-hash of these bytes is <foo>” isn’t even useful if we collected it. It’s meaningless computing. Yes, we ascribe meaning when blocks are made, but it’s a very irresponsible technical decision to waste energy in order to prove that work was done.
This would be fine if it were a low amount of energy, but it isn’t. We are talking gigawatts that are potentially being spent on this, which is part of the point I was trying to make. Electricity isn’t free, and it’s important to consider our planet. Bitcoin essentially puts computers in a busy loop, and it’s a very hamfisted means of achieving its goal. We have already seen alternative concepts, including this one, that illustrate there is potentially another way to achieve what we want without throwing a small star’s worth of energy at the computing infrastructure behind it.
Coming after people and assuming they’re criticizing cryptocurrency as a concept whenever a specific piece is questioned is tough to discuss against. I think cryptocurrency can do better, and there are undoubtedly better ways to come up with to secure a distributed ledger. I’m alarmed that the adoption of bitcoin has exploded our utilization of resources and that people feel that worry about this is an indictment of the whole concept; this polarization makes it difficult for all of us to improve.
So, no, it isn’t obvious what value I should see out of a computer spinning itself through SHA2 for no benefit aside from securing a ledger. In any other domain, we’d consider such a design ridiculous. There has to be another way, one where that same (intensive) calculation can benefit humanity for the power that we are throwing at it, and we still end up with a secure blockchain. I’m not smart enough to invent it. I hope we can support the people who are, and perhaps admit that bitcoin’s proof of work scheme is a mistake in the larger landscape.
I worry that given how deep we are into ASIC development, arguments against what I’m saying are only going to get louder as time goes on. We are probably long past the point of no return with bitcoin already.
1. Admit that you think that crypto currency is not worth the energy cost. Even if you believe that, it's just wasted breath on your part because they are absolutely not going to go away.
2. Propose another solution. No one else on earth has found a better solution than proof of work. Do you have something better?
Wrong question. It implies energy can only be used exclusively for single purpose. The right question is given X watts, what is the ideal distribution for Y purposes and the answer is that we dont know but we tend to value some things more than others and that will be reflected in the distribution
> no benefit aside from securing the ledger
This is the crucial point that many who raise the same objection dont get: proof of work has to be futile by design. In fact it is misnomer and the correct name should be Proof of energy spent, as the energy is the ultimate resource we’re paying for security of the ledger. If we accept that ledger security must be tied to solving some more “important” problem, and there indeed was a non futile problem space, some f(candidate) that yields two results: (candidate-ok?, problem-solved?), the incentive to search that space drops to zero because it is no longer tied to solving the “important” problem. And suddenly the ledger is useless.
If you know how to resolve this conflict - publish a paper and you will be the next Satoshi.
No. Both computers did hard work, and earned credit toward proof of work in my example. I’m rather repeatedly saying energy can be used for two purposes (securing a ledger with a difficult computation that also means something), and I have no idea how else to explain this.
I’m not sure why your incentive would drop to zero. Say I swap in a universal simulation from the Big Bang instead of SHA2. A miner simulates a portion it chooses, which involves quintillions upon quintillions of gravitational fields. Eventually it simulates a rare event, like two black holes colliding or something. It somehow notates this as proof that it worked on the problem for a while, hashes that proof combined with the transactions, and boop, mined a block. Meanwhile, all along, we have learned science. I could think of other problems that work: SETI@home and the other BOINC apps come to mind, as does LHC analysis. Large search space, demanding algorithm, rare thing to find (SETI/Higgs candidates), and valuable science along the way. Some issues I could see are unpredictable nature of block time, verifiability being expensive, and problem spaces that move forward in time, like my first example. But I don’t see those as insurmountable.
Why would incentive drop to zero to search the space? I’m not following that claim, nor why you’re scare quoting important.
they both did work, they didn't yield any proof of it.
> Say I swap in a universal simulation from the Big Bang instead of SHA2
if you have an idea - express it in pseudocode. what is your `f(candidate)` here? what is the return value? how does return value ties in "is candidate valid" and "simulation data" in a way that prohibits modifying source code to only do "is candidate valid" part?
you're trying to handwave your way through some of the most complex questions in computing. "what if we just swap sha2 for blah, where blah is something that solves humanity's problems" - well sure, let's do this, show me the code.
> Why would incentive drop to zero to search the space?
because the axiom we're operating with is: though shalt not run ledger security code without "useful" code. as soon as the problem is solved - nobody secures the ledger anymore.
> why you’re scare quoting important
because you're forcing upon me what i should consider important problems humanity has to solve. your opinion is that distributed ledger isn't one of them. your opinion is wrong.
How many times do I have to say in a single thread that this is not, and will never be, my opinion?
- acknowledge the fact that ledger has value and therefore corresponding amount of resources are OK to be assigned to that valuable problem
- admit that no resources should be assigned to ledger problem because there are more important ones
- present your formulation of compound "important" and ledger problem such that it satisfies the conditions i mentioned above
am i missing anything?
It seems tough to argue that a 2 trillion dollar GDP doesn't merit a 2% increase in power output.
I mean, Apple is close to a 1 trillion dollar market cap. I'd argue a 1% increase in world power output simply for Apple to store its money and make transactions would be a remarkably poor use of power.
Edited: fixed mis-use of "world GDP" to GWP as per tantalor's comment below. Thanks!
If anything, my "GDP" comparison was off the mark because GDP typically represents a country's total wealth, and bitcoin can't have a GDP. But it's a useful abstraction that comes pretty close.
Those bitcoin paper millionaires are investing in startups like Pinkapp, and Pinkapp is hiring programmers. All of this is happening outside the legal system. What does that say to you about bitcoin's ability to affect the world?
No, that's not how economies work. "Bitcoin benefits all who hold it" is like saying "the USD benefits everyone who has a USD". It's a completely meaningless statement.
> But it's a useful abstraction that comes pretty close.
No, it doesn't come close at all. Bitcoin's market cap has absolutely nothing to do with the value that Bitcoin adds to society, and thus it is a completely meaningless metric to look at if you are trying to decide if it "merits" use of our resources.
>Those bitcoin paper millionaires are investing in startups like Pinkapp, and Pinkapp is hiring programmers. All of this is happening outside the legal system. What does that say to you about bitcoin's ability to affect the world?
Nothing? I don't know what you're trying to say with this. Just because people made money off of bitcoin and now can use that money to hire other people does not mean it is affecting the world any more than anything else that people make money off of.
I also have no idea what you mean when you say "All of this is happening outside the legal system." That is another completely meaningless statement. I assure you that investments in startups and hiring of programmers all happens firmly within the bounds of all applicable legal systems. But even if it wasn't, it still says nothing about bitcoin's "ability to affect the world".
You need to stop drinking the bitcoin koolaid, bro. You're spouting nonsense in an attempt to defend it.
This doesn't follow.
I also have no idea what you mean when you say "All of this is happening outside the legal system." That is another completely meaningless statement. I assure you that investments in startups and hiring of programmers all happens firmly within the bounds of all applicable legal systems.
You haven't done even the most cursory search for Pinkapp. It's outside of the legal system, i.e. criminal.
You need to stop drinking the bitcoin koolaid, bro. You're spouting nonsense in an attempt to defend it.
Please re-read the site guidelines:
It's important on HN to comment civilly and substantively or not at all.
World GDP is around 100 trillion.
So by your own figures, if it were denominated in BTC or equivalent cryptocurrency, we'd require more than 100% of the world's current power output just to store and send people's money.
That's more power output than is currently required for all the world's homes, factories, hospitals, transportation networks and all the world's computing power, everything. Which also benefits everyone who uses it, and creates jobs for a few billion people
Do you now see why people don't think current crypto tech is a particularly optimal use of power?
The world's currency isn't ever going to be 100% bitcoin. It's an invalid basis to start from.
I kind of see what you're trying to hint at, but it would be helpful for discussion if you could think of a more persuasive example.
(It may be difficult though, because it seems true to say that if Bitcoin starts becoming a significant fraction of the world's GDP then it's fine if it uses a little power. Where "little" is relative to the ratio of BTC's wealth vs the world's wealth, vs BTC's power usage to the world's power usage.)
If that's your metric then bitcoin gets an F- right now. Its world power usage fraction is much much higher than its world wealth fraction.
Broadly speaking, Central banks today feed this growth by printing money (i.e. increasing the money supply), hence inflation. A deflationary currency like bitcoin would have to grow in unit value accordingly because of its cap, if it were to become the de-facto new gold standard. How much power consumption is appropriate for mining needs to be considered in relative terms vs how much mower hungry is gold mining, for example. I am not sure how power hungry is printing and managing cash (incl. security, transport...).
Also, all these activities (gold mining, bitcoin mining, cash printing) also contribute to GDP. Eventually if the power source is renewable and generation capacity is kept at appropriate level (e.g no one dies of cold because power must be prioritized to mining) does it matter? Or am i missing something?
I'm not sure how true that will turn out to be, but it's an interesting attempt.
The point of the economy is to create value for humans. There is plenty of non-value-creating activity that can be denominated in dollar terms, but that doesn't make it actually valuable. For example, this season's hurricanes will cause something like $200bn in economic activity. But that doesn't mean we should have more hurricanes.  People bet at least tens of billions annually on sports, but getting people to double or triple that doesn't actually make anybody richer. Similarly, Bitcoin is only a true economic positive to the extent that it actually creates new value for humans.
If Bill Gates went on a Bitcoin buying spree, he could easily drive the nominal market cap way up. But we'd have no more economic value in the world. If Bitcoin enthusiasts got bored and turned off all the servers, we'd have little less economic value in the world. That's because most Bitcoin use is not economically productive. Most of it is, like gambling, just moving existing economic value around between people.
I go on at length like this because it's vital that startup people understand the difference between creating value and just shuffling who controls existing value. Only the former is sustainable.
 To think otherwise is the broken window fallacy: https://en.wikipedia.org/wiki/Parable_of_the_broken_window
We can have $2 trillion in GDP with paper money, too, and that uses 0% of the world's power.
I don't get it. Why won't you complain about monitor pixels, that don't display content using/wasting power or various unused/reserved bits transmitted every second (https://tools.ietf.org/html/draft-abhi-covert-00) that also waste power. Proof of work uses energy to meet some strict guarantees.
This reminds me of complaining that SSL is computationally expensive and therefore plain HTTP is better. 10 years ago of course.
A system like bitcoin but that only uses (all of) the CPU 10% of the time incentivizes a lot of cheap compute power for projects that need it. As an example. Algorithms that have similar loads to conventional software encourages more powerful general purpose computers instead of more powerful custom bitcoin ASICS.
There are much better things to incentivize.
This needs a proper source. As far as I understand currently only Proof of Work is sound enough to use in real-world scenarios. Also see: http://www.truthcoin.info/blog/pow-cheapest/#is-a-work-indep...
It seems like people would want to bend thermodynamics and require that benefit is produced without spending energy...
By the way mining is already used to heat houses in Siberia: https://qz.com/1117836/bitcoin-mining-heats-homes-for-free-i...
If a bitcoin costs $6000 people will spend physical resources worth $6000 (in theory) to obtain it through mining.
Let's assume you are a miner in siberia and have a heating bill of $100 every month and spend $1000 of electricity to get $1100 worth of bitcoin. You now only pay $900 to get $1100 bitcoin. You will spend the excess savings of $100 on more electricity for mining. Now suddenly everyone starts heating their houses with bitcoin mining to save $100 until difficulty rises to account for the saved money.
Every dollar you spend on the most efficient mining setup will only give you one dollar worth of bitcoin plus a small profit.
> Every dollar you spend on the most efficient mining setup will only give you one dollar worth of bitcoin plus a small profit.
That sounds just like any other investment, or am I missing something?
Increasing the amount of money in the world does not increase the amount of goods and services in the world. Thus turning energy into bitcoins will increase any other goods and services but instead results in more money chasing the same amount of goods and services.
Just as one gets apparent economic benefits from paying people to dig holes and fill them, one can get some appearance of benefit from resources being diverted to bitcoin mining. This is OK as long as we imagine an unlimited external resource world we exploit however we want but once you get to a world we have finite atmosphere, finite biosphere etc and pumping enough C02 into these can kill all of us, this sort of approach is becoming untenable.
- pixels are being optimised, with displays going closer and closer to true-off all the time
- pixels: even whitespace is important next to information
- RFC: we're wasting a few bits as a tradeoff for less complicated hardware and less processing power. Not sure if applicable anymore, but reserved fields and consistent parsing saved us some power/materials historically.
- SSL provides security and privacy in your communication at a cost reasonable for the outcome.
It's only logical they if we don't need to spend the energy to mine coins, we should stop doing that sooner then later.
And protecting money is not important?
> - RFC: we're wasting a few bits as a tradeoff for less complicated hardware and less processing power. Not sure if applicable anymore, but reserved fields and consistent parsing saved us some power/materials historically.
Well so the RFC reserved bits are waste but also a benefit? Maybe the same is true w.r.t Bitcoin mining?
> - SSL provides security and privacy in your communication at a cost reasonable for the outcome.
The cost is reasonable in SSL case but unreasonable in Bitcoin case based on what criteria exactly? Remember that SSL relies on PKI that has a lot weaker security guarantees (see Symantec, DigiNotar and your favourite Chinese CA in your OS's trust store).
Next to nonexistent cost per connection in standard case of SSL. We can saturate gigabit links using modern hardware with AES-NI. Outside of special deployment cases, the cost is a rounding error. We can't provide this capability in a cheaper way at the moment (or we would do that)
On the other hand, we've got Bitcoin which chugs energy/money by design, while other solutions like proof of stake / space / ... exist and are much more energy efficient. People concisely decide to burn money to keep this system running - that's why it's unreasonable.
They are only proposed solutions, not implemented in any existing systems so it's not fair to compare them. Proof of stake for example has numerous drawbacks: https://en.wikipedia.org/wiki/Proof-of-stake#Criticism
And Bitcoin does not provide service that is valuable to all parties?
> Bitcoin mining is done by people who want to get rich by not doing anything.
Calculating SHA256 is hardly anything because we wouldn't be arguing about that, right?
> What if Bitcoin were to fail for some reason?
You're not concerned about SSL failing for some reason? Heartbleed?
That's highly speculative. Besides Ethereum has several failures already and it's still doing fine because there are serveral mechanisms that can be used to resolve such problem (e.g. hardforks).
That is a totally different use case. A display is supposed to always be on, while a cpu should turn off while not in use. When a cpu has no work it slows down to conserve power and reduce heat output. What happens when a monitor has no input data? It goes to sleep. It doesn't just display the last thing and continue processing a stream of data from it's input.
or the Sun, what a waste of energy that is
It is unclear to me what Chia brings to the table that is really new.
While Lisk, Nav, Dash, etc do use alternatives to proof of work, what Chia is doing, from my understanding of what they're saying, is using the lowest cost alternative to proof of work, which is proof of storage (disclaimer, I don't know the math behind proof of storage, just that it's their alternative to PoW). However, proof of storage alone has some inherent vulnerabilities so they compensate with another mechanism, proof of time (again, not sure of the math).
When I saw Bittorrent and storage I think my brain immediately jumped to the storage based tokens.
Curious to read about and see how that works
I can't elaborate either on the merits of proof-of-capacity vs. proof-of-capacity plus proof-of-time.
That said, Filecoin does use some form of proof of storage:
Watching https://www.facebook.com/BerkeleyBlockchain/videos/200606982... I love when he talks about the off by one error in Bitcoin's difficulty reset calculation and how almost all other blockchains have mindlessly copied this :)
The proof of time is probably best described as being federated. Any peer can join, but it realistically will only be run by a very few peers with specialized hardware. This mistakenly trips up a lot of people as a "bad" thing, when it shouldn't.
The only purpose of the proof-of-time servers is to make replay attacks impractical. As in, if the network is 10 years old, an attacker would actually have to spend 10 provable years to manipulate it.
What if they collude with the time server? Well, they'd have to collude with all of them, which is unlikely, even if there are only a few. And second, it isn't worth the time server's work.
Again, the details are a lot more complicated, but hopefully that is a quick off-the-top-of-my-head explanation that gives some intuition.
1. Power consumption. Bram brought up a good point if we take Bitcoin to its ultimate extreme, that it will be people with access to nuclear energy (aka governments) that will take over mining bitcoin, since that is the cheapest route. This does not look like a decentralized future, exactly the opposite.
2. Proof of Time. There are attacks that can happen against purely storage based proofs. Bram's brilliant addition here is a proof of time to get around those problems. I can explain more if people want. NOTE: Filecoin's "Proof of Time and Space" has nothing to do with, nor is remotely related to, Bram's.
3. Decentralized Storage. Despite Bram's prolific work in decentralized storage systems, Chia has nothing to do with storing end user data (like Storj, Sia, Maidsafe, etc.). The data that is stored is junk, but that is okay (see below).
4. Storage waste. One of Bram's points is that this will start an arms race to build better harddrives. If people are successful at that, this will only make Chia better, and also make storage in general cheaper for everyone. So sure, maybe the proofs are wasting storage space, but it will make storage in general more economical.
Anything else I can answer in more detail?
Here is the presentation he (and I) did at Berkeley:
What's the incentive to process transactions?
Built from scratch, proof of importance, featureful (contracts, notary, supports currencies creation, fast..)
It’s well tested in the banking sector...
Chia announce sounds like : « hi, I’m another sh*tcoin with lots of big money from the crypto bubble »
* As others have asked, how much is bitcoin supposed to use? What's the right amount and why? How is that number better/worse than the amount of resources spent on existing financial infrastructure?
* We are rapidly progressing towards an era of free (extremely cheap) clean power. Just today (https://electrek.co/2017/11/08/chilean-solar-down-26-as-impo...) incredibly low bids for solar projects were submitted in Chile at 2.15c/kWh. That's insanely cheap. We're not there yet in having ubiquitous cheap clean power obviously, but neither is bitcoin "there" in being able to replace much of traditional financial infrastructure. But the point still stands: will bitcoin's energy usage still matter in the not-too-distant future?
Likewise, if the price of Bitcoin goes up, the amount of energy used will go up accordingly.
The reward amount will decrease over time and mitigate this, but not enough by a long shot IMO.
Higher energy costs mean higher transaction fees, which mean a disincentive to transact, and vice versa. The end state of bitcoin is a hash rate which corresponds to how much people are willing to pay for transactions. It may be a lot lower than it is today.
Something approaching zero joules per transaction seems like the number to try to achieve.
There is also a chicken and egg problem: if Bitcoin was actually to be used for normal day to day financial activities then it could be more excused (as you say, financial transactoins don't come for free today). But as long as it's basically a ponzi scheme of processor farms and the transactions used are basically either illegal or speculative - then it doesn't provide the same vale that "existing financial infrastructure" does. So while I do think there may be a future for cryptocurrencies , I certainly don't hope Bitcoin (or any PoW currency) is it. And to be honest I'm not optimistic about the idea of "anonymous" money.
> We are rapidly progressing towards an era of free (extremely cheap) clean power.
That's great. And we need to speed that up. And while we are making progress, we are suddenly eating a lot of that progress by computing hashes for a currency used mainly for speculation.
I think it's a cool concept but it must be one of the stupidest things humans have done in recent years.
Once we do have cheap clean energy I'm all for using it for whatever. But right now we keep adding demand for energy (which then includes dirty energy prices also go up, which means it's economical to keep running coal plants a while longer, and so on).
Be careful when you compare to existing infrastructure, because bitcoin has to do all that too, plus mining costs on top.
This is false, or at best a deceptive statement.¹ A transaction does not consume energy. It's like saying each bit on a CD-ROM "use fuel" when it's shipped on a mail truck. Miners work on a hash of a block, so the number of transactions in the block is independent of energy use.
For example the transaction rate could double tomorrow, without increasing energy consumption.
[¹] Also, this metric is derived from Digiconomist, which is flawed as it overestimate consumption by a factor of 2: http://blog.zorinaq.com/serious-faults-in-beci/
It would be equally fair (and it would be fair) to say that the shipping cost of a CD is equal to its mass- or volume share of the cost of the truck delivery, and indeed, that's how you'd correctly quantify e.g. the environmental cost of Netflix's DVD-by-mail (it doesn't work to just say "one more disc doesn't cost any more so the environmental cost is zero"):
Therefore your analogy is incorrect: if the cargo capacity of a truck is increased, it will certainly impact its fuel consumption.
It's at least partly a technical limit, because there are technical issues faced by scaling the Bitcoin network to the arbitrarily large number of transactions/sec you think it can handle. Each scaling solution has its tradeoffs, and therefore, to the extent that there's no "free [scaling] lunch", then there is inherent scarcity to what the miners can support, and therefore transactions should be attributed their proportional share of that limit when accounting for them.
It only appears as a political limit because a) users generally don't want a fragmented network, and b) there's persistent disagreement on what tradeoffs are acceptable when scaling.
>Therefore your analogy is incorrect: if the cargo capacity of a truck is increased, it will certainly impact its fuel consumption.
What is that responding to? The issue was how to account for the cost of one unit that takes up a scarce slot in a known-cost thing. The fair (IMHO) solution, per previous comment, is "blame" each unit for its share of the total cost.
How does an increase in the truck's capacity refute the analogy? The same logic would hold: if trucks could carry more Netflix DVDs at the same [environmental or whatever] cost, it would be reasonable to say that the cost per DVD shipped also went down. If trucks had infinite capacity, then it would be fair to say that the DVDs have no cost, since the cost inputs are independent of problem size (number of DVDs to ship). But -- per  and above -- we don't live in that world.
 For example, if you simply said "each block can hold as many transactions as miners are willing to tolerate" , that risks making the ledger (blockchain) freakishly large. Since each node has to store the full ledger, that blowup, in turn, risks [excessive] centralization, where only a few miner-datacenters can run nodes, defeating the (or a major) point of Bitcoin.
 which you think would make transaction capacity non-scarce
 Wiki page for discussing the issues: https://en.bitcoin.it/wiki/Scalability
A higher transactions rate might result in more transaction fees being paid which indirectly increases energy use.
Why do we need an ICO. Can't we just do it like bitcoin and download a client to start 'mining'?
But I can (somewhat) sympathize with their desire to be rewarded. What if someone just aims their ASICs/GPUs/cloud cycles at their new coin for the first months after the announcement and reaps the lion's share of the rewards? While that seems unfair to them, it is traditionally the fairest/most honest method.
Computational proofs take a long time for the development team to get funded, and this delays go to market strategies. Look at the graveyard of mineable projects before this year's ICO boom, broke underfunded devs with no ability to mobilize a community to fund the tiniest things. Pitiful bounty systems where the payouts can't even motivate the imagined Indian developer.
If you don't think current ICOs align economic incentives well ENOUGH, then discuss that particular nuance instead.
Only if you didn't RTFA
Specifically, a (well constructed) Proof of Stake system will cause people to work to get a piece of the value by having them purchase the coin used for staking. This will cause the value of the coin on the open market to rise, which will increase the equilibrium market cap of the coin in relation to the world.
Because "money is a veil" , this won't create or destroy any actual goods or services. It will just transfer value from some persons to other persons. Therefore, Proof of Stake is more efficient than Proof of Work, because it moves cryptocurrency from negative-sum (electricity wasted) to something that's approximately zero-sum.
Another way of saying this is that you can't PRODUCE value by creating any currency with zero intrinsic value. However, you can WASTE value in this activity, and Bitcoin, as currently constructed (along with all possible Proof of Work systems) is wasteful. Proof of Stake wastes less value than Proof of Work.
1 - https://en.wikipedia.org/wiki/Veil_of_money
It's not very obvious how exactly a proof-of-stake scheme should work though. Many past attempts have been pretty flawed. I'm excited to watch Ethereum's progress in this area.
The idea is that a double-spend attempt by a cartel of validators could be included in a new block as cryptographic proof to used take away their stake entirely ("slashing" it). Where a BTC miner would merely lose the cost of an attempted double spend block, and could keep mining more bad blocks; removing their stake completely is like burning down their rig.
In order to prevent that punishment, they'd have to control >2/3 of the staked coins on the network. Which means as long as total amount staked grows in value proportional to the network, this will be incredibly expensive. By adding rewards for staking, this further incentives long-term holders to stake part of their holdings, to secure the network.
If we could use all that extra space that nobody is using, we get it for "free".