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BitTorrent inventor announces eco-friendly Bitcoin competitor Chia (techcrunch.com)
504 points by chriskanan 11 months ago | hide | past | web | favorite | 294 comments

I understand the argument regarding power consumption.

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.

[1] https://www.bloomberg.com/news/articles/2016-06-22/solar-pow... [2] https://www.bloomberg.com/news/articles/2017-01-03/for-cheap...

Bitcoin adjusts difficulty based on how many people mine it. So cheap power doesn't reduce the cost, since it will just mean even more mining.

Exactly, the amount of money spent on energy to mine is equal to the amount of mining revenue. Energy consumption is more closely related to price.

Nod - I'm coming to the conclusion that the effective store of value is the mining infrastructure. Even if it's not that explicit, they move in lock-step.

This is the exact same conclusion Marx came to about labor.

Could you expand on this?

The value of a product is equivalent to the amount of labour exerceted in its production.

"The value of a product is equivalent to the amount of labour exerceted in its production"

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.

Exactly, which is why Marx uses the concept of a labor value, use value, and exchange value.

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.

It still ignores scarcity and arbitrarily picks one specific limiting resource in the production process as essential. Labor theory of value might be interesting from a philosophical standpoint but really has no practical application when it comes to understanding the market. And it introduces a major can of worms when it presumes stuff like intrinsic value.

It doesn't ignore scarcity, scarce goods are inherently more labor intensive. And it doesn't presume intrinsic value, the labor necessary is a subjective concept so the value must be as well.

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.

How are scarce goods more labour intensive ? It doesn't take any more labour to make a good wine than a bad one.

Then why are bad wines made? Making better wine requires more training, more time, better tools, and/or better grapes. All four require more labor.

That has little to do with 'scacity'.

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.

If your example isn't scarcity I don't know what to tell you, if better wine is "scarce" those labors are what is needed to make better wine.

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."

One wine being generally better than another, is not about 'scarcity'.

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.

I also found the wine example peculiar, as good wine and scarce wine aren't often the same, but I kept with it as it was brought up. Mistakenly I thought you had brought it up, sorry.

"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."

""Aggregate market demands" are capitalism, where wine is a status symbol and "good" wine generally refers to price"

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.

Like I said, someone else brought up the wine example and I just continued it despite finding it clumsy.

Price is value plus profit, thats the only reason to distinguish between the two.

I think my original point about wine was misunderstood. Good wine is not good because it is scarce, it is good because it is good, but it is more expensive because it is scarce.

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.

First, and this isn't really relevant, price and scarcity play a much bigger role in what is considered "good wine" than you're saying.

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.

" Good wine is not good because it is scarce, it is good because it is good, but it is more expensive because it is scarce."

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.

I am not doing a strong job explaining this subject, but you are dismissing it out of hand without an understanding of it. I recommend taking codemac's advice and reading some of Marx's work. Even if you disagree with him it provides a greater understanding of how the economy works.

I don't think the 'labour' concept of value has any meaning at all.

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 ...

It depends -- how would we price things when everything takes 0 labor from humans?

Because I bet the price changes drastically, and that's the labor-value represented in object.

> The 'value' of a product is different for everyone, and it's what you (or anyone else) will pay for it.

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.

The part he missed was there was value in risk taking, innovation, experimentation. The profits aren’t always completely a rent (though they can be in an uncompetitive market). Profit often covers real costs in a dynamic economy.

“Profit motive” was bunk psychology created by 19th century economists to explain away this discrepancy.

This isn't a problematic statement in economics, its a problematic statement in capitalism where the equation is "value=labor+profit." Subjective value isn't a problem as finding someone who values it a certain amount takes more labor.

The product you seem to be talking about is not part of 'the market'. Otherwise competition would drive the price down to intrinsic cost + small profit (remember the 'invisible hand'?)

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.

Ps: 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.

"tax away most of the excess profits"

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.

Taxing excess profits should be somewhat analogous to patents. (Well, except for the huge mess that patents these days are, but I am more talking about the conceptual reasoning behind them).

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.

Except this ignores scarcity. And also ignores post-scarcity; this is the time period when robots do all work and farm all resources leaving humanity to decide the value of things divorced from rarity and labour. I will concede to Marx one aspect of his maxim; that is, scarcity is directly correlated with human effort towards a reseller market. So it still applies even if indirectly. For example, there is less labour spent trying to skim off the top of automotive mechanics work than labour spent reselling gold or limited edition Nike Airheads, etc....

The problem with mining rigs is that they have high upfront cost AND a short life span. Once a faster rig comes out, NOT upgrading is effectively a tax against future profits

Sad but true

Isn't that true of basically any computing task?

Can't generate AI, websites, etc with the computing infrastructure.

No software patents if no computers to create software.

At a really abstract level, yes. However, many computing tasks generate results that can be used near-infinitely. For example, that supercomputer that generates the weather can distribute the results to every person in the region.

Whereas in cryptocurrency, that's split. The miners provide security and integrity for the chain. They also take their own very specific fee.

The real problem is that when miners are competitive they'll always add cost (in electricity, equipment and whatever) up to the level of the revenues. So if you have a block reward - it will approximate the cost of the system. There is a famous post on this subject: Nothing is Cheaper than Proof of Work http://www.truthcoin.info/blog/pow-cheapest/ (even though I believe that Proof of Stake can be cheaper: https://medium.com/@zby/proof-of-stake-can-be-cheaper-than-p... - by reducing the block reward).

You can see Bram announce this a month ago at the local Crypto Builders Meetup[0]. He talks about it in depth.

Skip to 32m: https://www.facebook.com/hackdays4all/videos/533001907045477...

I don't get why PV, wind, geothermal &c get so much more love than the various nuclear fuel cycles.

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.

For many people it's fatalities, yes. For others like me, it's about not leaving nuclear waste around for many thousands of years. That is, "factoring in secondary and tertiary costs", including ones not necessarily expressed in today's dollars.

The world would be all over a nuclear fuel cycle that doesn't produce waste that needs very-long-term storage.

Nuclear's great but even if we could magik up a few dozen reactors tomorrow, our distribution infrastructure still sucks (in the USA at least).

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.

If this was 15 years ago I'd be saying "Nuclear, hell yeah".

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.

> I don't get why PV, wind, geothermal &c get so much more love than the various nuclear fuel cycles.

Perceived tail risk.

Among other things, nuclear has a ridiculous cost overrun problem. We can't wait for it to be cheap, we have to deploy the working renewables now while waiting for "better" nuclear to be researched and built.

full lifecycle studies are constantly being done on all power sources, the idea of factoring in the entire process has almost always been there.

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.

> AFAIK nuclear so far has the smallest fatality per kWh ratio.

Does that include the uranium miners?

More importantly, does that includes the projected fatalities due to power plants being destroyed and nuclear waste being unearthed and released in the environment?

Given the half life of waste, ignoring that risk is ludicrous.

He seems to have thought about this and answers a question on it here (at about 1hr8mins in): https://www.facebook.com/BerkeleyBlockchain/videos/200606982...

His answer is a bit hand wavy though (or maybe I'm just being slow).

Praising solar and being concerned about accumulating wastes in the same sentence is pretty ironic imo.

Get your startup plan in order. In 20 years you can become the "Uber" of solar panel disposal. Because you can't even throw away a fluorescent bulb with most garbage collection services. Imagine the amount of toxic chemicals we will need to get rid of when these solar panels start to wear out en masse.

Why would you throw out a paid for PV system? It's a sunk cost unless you're running out of roof space and need more power. The efficiency only drops some 20% over 20 years.

Also, they can be reasonably recycled... http://www.renewableenergyworld.com/articles/2016/06/solar-p...

Maybe because after some time they eventually die.

When there are no more bitcoins to mine, will the power consumption drastically fall? There will be fees to mine, but I can't imagine everyone is going to be fighting that much on fees, but I don't really know..

You would hope that in 140~ years we have the power problem sorted out, if not, Bitcoin mining is probably the least of our worries.

The power expended on mining directly correlates to the value of bitcoins. If the amount of power expended on mining decreases to far then it becomes cost effective to attack the network.

Power expended on mining must remain constant or ever increasing lest the whole thing collapse.

This is where it gets interesting. Bitcoin miners only reward then are transaction fees. So these must go up.

No. They will flee to mining other crypto currencies. If all of this turns out to be e big Ponzi scheme or becomes illegal and just about everyone loses interest in mining crypto currencies, maybe then will power consumption fall.

As difficulty rises bitcoin payouts will decrease asymptotically. The idea is to let the market do its work and have the price make up for it.

I work in energy efficiency, so bitcoin makes me cry. Any sane clean energy transition plan requires significant savings (no you can't just build a bunch of PV). But while we are killing ourselves trying to get people to adopt green buildings and low energy appliances, along comes Bitcoin where people just burn energy for nothing.

it is not for nothing but for wealth protection, it is impossible to do a DDOS attack because you have to burn energy as a collateral, people will exploit anything when it comes to money so this is the only fair one

It doesn't sound like you really understand how Bitcoin works. If Bitcoin were to become widely adopted and supplant traditional financial institutions, the environmental impact would be enormously net positive. Sure, it takes energy to confirm transactions. But, we could massively decrease energy consumption by eliminating the need for: bank buildings, armored vehicles, physically printing money, etc.

I don't believe that at all. The idea that everybody would walk around with their own hardware wallet and sign transactions directly when buying bread seems as likely to me as having the average public drop facebook chat for IRC.

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.

The wallet app I use is the very definition of simplicity, both paying and receiving are as simple as scanning a QR code, many people already do that when paying with the European Ideal system. As for safety, central storage with insurance and a police that understands cyber crime will still have a role in a BTC(-like) economy.

>The wallet app I use is the very definition of simplicity

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.

The iDeal payment system is great. Unfortunately it is only used in the Netherlands. Not quite a European system yet.

But you could eliminate all of those things without bitcoin, and they are actively being reduced already.

There's nothing special about blockchains that will mean people suddenly won't use physical money, have a bank on their high street etc.

Banks are not going anywhere regardless of what happens with bitcoin. Physically printed money is not going anywhere; people need to be able to buy and sell when the power is out or the internet is down, bitcoin is something new, it will not replace existing financial infrastructure.

Unless Bitcoin becomes more efficient by orders of magnitude, it will still take far more energy than bank buildings, armored vehicles, etc. when everyone is using it.

If you think it's for nothing you don't understand bitcoin. If it would require no energy to create Bitcoin it would be completely useless. Moreover, banks also burn energy. Arguably Bitcoin is potentially even more green than other carriers of value because it can be completely produced from natural resources such as wind and sun, whereas mining gold or other precious metals often requires more damaging techniques.

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.

It's for nothing as in, energy is consumed and nothing of value to society is produced. When a bank uses energy to run its services, those computers actually achieve something (like, for instance, managing to process more than a handful of transactions per second). Bitcoin's 'proof of work' is just a very complicated heating system. You are literally going through the whole rigmarole just to increase the entropy of the universe. Considering the effort we are putting in to squeeze more efficiency out of everything from washing machines to jumbo jets, this is kind of waste is pretty shocking.

Nothing of value? For real? Currency and a means of transacting it is produced. Being able to move your wealth outside of China is produced.

> If it would require no energy to create Bitcoin it would be completely useless.

Why would an alternative consensus mechanism that doesn't involve finding a low target hash make it useless?

Yeah, isn't the heavy computational work what's provide value and security to the blockchain?

The parent commenter literally discounted your 'even more green' argument in his comment but you still made it as a rebuttal? Ye gods.

How many megawatts are being consumed by electric heaters up north? Replacing those heaters with GPUs seems to be a “green” mining strategy.

All you're suggesting is replacing an electric heater with ... an electric heater.

That's not "green". It is perhaps more practical, assuming one considers crypto-mining practical, but not green.

It’s green if the 1:1 conversion of a “useless” heater into a money-generating heater, partially displaces the logistics pipeline of the US Mint, no? No matter how efficient it is to dig up/farm materials and process them into coins and bills, it can’t be 100% efficient.

Until cryptocurrency proves that it can use less energy than our current system while being equally useful at the same time, it's hard to argue that it's an improvement.

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.

Or you could do the same with a data centre or supercomputer that runs useful services, like hosting websites or doing research (in fact there are already projects to use heat from servers for district heating).

> Or you could do the same with a data centre or supercomputer that runs useful services, like hosting websites or doing research (in fact there are already projects to use heat from servers for district heating).

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.

while computers give off heat, they are terribly inefficient creators of heat and in no way make a good replacement for dedicated electric heaters

Computers are well over 99% efficient as heaters. The only energy they emit is a tiny amount of EM from LEDs, clock signal and the transformer, and a minuscule amount of fan noise (which is almost all absorbed by the immediate environment anyway). Electric heaters similarly emit EM and noise, so I wouldn't be surprised if some are actually less efficient as heaters than the average computer.

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.

One of the only things I dislike about bitcoin and other cryptocurrencies is the flagrant use of power that doesn't necessarily compute anything.

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?

Yes, I watched Bram's talk in Berkeley two weeks ago. It indeed runs with much lower power costs. The cost is the power to do a hard-disk seek every long once in a while, rather than to compute sha256 over and over again.

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.

Proof of Stake is worth being highly skeptical of. The fact that most people blindly support the idea when it seems to leave fundamental questions swept under the rug is worrying.

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.

What is proposed here is not proof of stake. Proof of stake relies on either random selection (lottery) or wealth/age of investment(equity). This is a new beast.

The final sentence of your GP was that PoS would use even less power. Probably that is what your parent was responding to.

I don't think that approach avoids the core problem; it just shoves it onto a different resource; the same fraction of general economic output is still incentivized to convert from "satisfying human needs" to "mining". It will just manifest in difference ways.

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[1].

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[2], but they'll still take away workers, land, metal, etc. from the real economy.

[1] They can't forge transactions, but they can publish empty blocks, effectively shutting it down.

[2] 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.

>real economy

Interesting you don't consider this real economy. Do you think banking is also not part of the 'real economy'

I may have been imprecise in terminology, but that's no reason to pearl-clutch about my choice of words.

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 may have been imprecise in terminology, but that's no reason to pearl-clutch about my choice of words.

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.

>Why do you think wealth can't be generated with digital currency?

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.

Fair point. I guess something only like PoS can avoid that problem, if it is infallible, which might not be the case.

>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.

In economics jargon, financial services are explicitly defined as not the real economy as an outcome of how "real value" is defined. Finance deals primarily with nominal(price) values, versus real ones(cost of inputs, utility to consumer). There is some imprecision to this, of course: banks do use paper and labor, but not in the same way that a factory uses pig iron and labor.

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.

> In economics jargon, financial services are explicitly defined as not the real economy as an outcome of how "real value" is defined

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.

Did you mean to reply to the parent?

I believe this is the recording of that Berkeley talk: https://www.facebook.com/BerkeleyBlockchain/videos/200606982...

Still a lot of implementation details to be revealed, but looks really interesting.

So instead of just using energy we'll be wasting physical resources on making hard drives? Doesn't sound eco-friendly to me. It does sound like a good way to drive up costs for the NSA to store everyone's data. That's a really clever way to fight mass surveillance.

One might make a general claim that as any coin stabilizes, the money spent on generating it will always approach the amount of money received.

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.

It's rather more interesting than that. The amount of resources thrown at mining causes the price to be what it is in USD terms.

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.

The NSA gets their money from the taxpayer so you're only looking at more taxes to sustain they're storage costs.

We'll also waste money to power empty hard drives.

Thanks for the explanation. Does the proof of storage allow that storage to continue to be used?/does the proof use the space on a disk?

Or is it sort of like mining bitcoin where a gpu is wholly used for mining?

Certainly the latter.

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.

There were some attempts at actually doing useful work with all that proof of work:




http://primecoin.io/ and a detailed article about it https://bitcoinmagazine.com/articles/primecoin-the-cryptocur...

I'll add Gridcoin, which is a cryptocurrency that rewards BOINC participation:


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.

Aren't curecoin and foldingcoin both centralized? Isn't that a bad property to have as a cryptocurrency?

> flagrant use of power that doesn't necessarily compute anything.

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.

I read someone’s estimate — rough, I’ll grant you — that mining bitcoin (just bitcoin) consumes as much total electrical energy as an entire medium-sized nation. Divide network hashrate into how much power the most efficient ASICs use, and I don’t think it’s an unfair estimate. You can’t dismiss the argument that maybe we can do better as “naysaying,” nor that there is something about cryptocurrency that the people making the argument do not understand. How many joules go into making a bitcoin block? (Really, I’m curious.)

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.

straw man. I was responding to the statement that the computation is doing nothing, and not arguing one way or another that the energy used is reasonable for the benefits gained.

Try responding to the most charitable interpretation of others' comments. It's clear that nerdponx is referring to the same thing that jsmthrowaway went into greater detail about.

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.

While I grant that you may be correct in this case, this isn't a tenable position to take in general. An overwhelming amount of people do believe patently ridiculous things, and frequently talks about them as if they make sense.

I would agree with you if this conversation were taking place anywhere other than HN. This community isn't infallible, but I argue that the level of discourse here is far above the mean.

No, I actually agree with the person. Cryptocurrency is horrendously wasteful. But that person ignored what I said because that's not what I was discussing. That's the straw man argument I mentioned.

How am I building a strawman? I didn’t ignore anything you said; I’m responding directly to it. The computation does nothing. Until the brute force finds a hash that meets difficulty, it’s computing literally nothing of value. That’s computation and energy we do not get back. You’re not folding proteins, you’re not rendering climatological models, you’re not training machine learning. You are hashing, then throwing it away. It’s a “nope, not it, next.” There is no measurable value until by chance you find one, then the energy you threw away getting there gains value in that you threw it away. Millions and millions of watts of absolutely zero computation of benefit to humanity.

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.

> . Until the brute force finds a hash that meets difficulty, it’s computing literally nothing of value

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.

> brute force through the SHA2 problem space for nothing

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.

OK. Of what utility to mankind is SHA256(SHA256(candidate)) after it is discarded by the miner? What do we get from that?

isn't that obvious? it is of utility of verifying that candidate can't secure the ledger.

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?

Not quite. It most certainly doesn’t come down to that, and it’s a reduction of what I’m saying. I’m drawing a distinction between the specific way bitcoin verifies its ledger versus cryptocurrency and distributed ledgers themselves. I took pains to enunciate that repeatedly, so let me try to illustrate with an example:

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.

There is no other way to secure a distributed ledger at the moment other than using large amounts of power. That leaves two choices:

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?

It’s not wasted breath to say it’s not worth it. The point is that distributed ledgers will not be the future of currency and banking - they’re not worth it. They’ll surely exist as a niche technology or religious artifact for the libertarian set.

> which energy was better spent for humanity?

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.

> Wrong question. It implies energy can only be used exclusively for single purpose.

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.

> earned credit toward proof of work in my example

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.

> 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?

3 options here, pick one:

- 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?

And that hard to reproduce hash represents computational trust, which is a new type of resource that just happens to be very expensive in energy cost using our current technology.

It would be expensive by design no matter what the technology.

Proof of chia would use disk storage which at idle wouldn’t require processing . So yes because the other way is to use GPUs which would have higher costs for electricity than a disk.

You can always create a token basket which could be made up of crypto's that are more eco-friendly. Systems for doing this are described here https://medium.com/@alexanderwestin/3-crowdsales-leveraging-...

If Bitcoin reached 2 trillion dollars, it would use about 2% of the world's power.

It seems tough to argue that a 2 trillion dollar GDP doesn't merit a 2% increase in power output.

Do you mean a 2 trillion dollar market cap? That's not the same as GDP.

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.

This is a helpful way to view it. Apple's 2016 revenue of 215B was about 0.2% of gross world product (GWP)... Which means the power draw if extended globally would be 5x our current global use. Of course, it wouldn't actually happen that way, because Bitcoin itself would then cause the price of power to increase.

Edited: fixed mis-use of "world GDP" to GWP as per tantalor's comment below. Thanks!

It's "gross world product", not "world GDP".


Unfair comparison. Bitcoin benefits all who hold it, not a single corporation.

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?

> Unfair comparison. Bitcoin benefits all who hold it, not a single corporation.

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.

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

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.

OK, let's do it the other way. Let's pretend (in BTC's favour) that market cap and GDP are the same thing.

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?

This is a strawman argument. I'm trying to think of a charitable interpretation, but it's difficult.

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.)

> 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.

GDP is more akin to a Country's income rather than wealth (for simplicity: the sum of all salaries and corporate profits generated by the country's residents, either physical or legal entities; imports and exports of goods and services have an impact too but let's ignore it for the sake of simplicity). So the similitude with Bitcoin would be with the added coins in one year. Just for some reference. In 2016 Italy had a GDP of 1.8 Trillion USD, 2.5% of Global GDP, close to the 2T of comments here ( https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi... ). In 2012 it had share of 1.5% (321 / 20,900 PWh) of total electricity power ( https://en.wikipedia.org/wiki/Electric_energy_consumption , let's assume that share has not changed much since 2012). Global GDP growth is around 3.5% in 2016-17 (a bit more than 1.5 Italies get added to the Global economy).

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?

Oh man, the legal system is gonna surprise anyone who thinks they are operating outside of it. And not in a good way.

Sure. But also look up all the dark markets the FBI busted.

The interesting thing is, this founder has apparently put in contingency plans in case they mess up. The organization can continue.

I'm not sure how true that will turn out to be, but it's an interesting attempt.

Many groups of criminals have had contingency plans. Some worked out, some not.

Your argument that bitcoin is worth wasting a large fraction of the worlds energy is that it lets you get a hooker easier?

GDP is (hopefully) creation of value per unit time, so as others point out, comparing it with the notional value of a currency at a point in time is not sensible. It's like comparing watts versus KWh, or your annual income with your bank balance. But there's a bigger mistake here.

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. [1] 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.

[1] To think otherwise is the broken window fallacy: https://en.wikipedia.org/wiki/Parable_of_the_broken_window

Bitcoin's total value being 2 trillion dollars is not the same thing whatsoever as bitcoin being responsible for 2 trillion dollars of GDP. There is no "merit" here.

We can have $2 trillion in GDP with paper money, too, and that uses 0% of the world's power.

To be fair, paper money requires banks & bank employees, bullet-proof transportation trucks, government regulation, anti-counterfeit research & technology, and perhaps more.

Whataboutism is a form of propaganda, not of fairness.

Comparing the consequences of alternative solutions to a problem is not whataboutism.

Not 0% if you count the resources required to enforce that paper money.

Market cap and GDP contribution are different things. The market cap for the USD is very very high, but we don't consider all of those dollars to count as GDP nor would it justify a comparably large power cost.

Solid point. Unless of course we can do it with 1% of the world's power, which is what I hope something like proof of space would allow.

> flagrant use of power that doesn't necessarily compute anything.

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.

If bitcoin's power usage is like a massive drain in the middle of the ocean sucking down millions of gallons of water per second, your comment is like complaining about the drip on your kitchen faucet.

Maybe not exactly on my kitchen but rather all kitchens around the world as we all use monitors, TCP etc...

The problem is that coin incentivizes* the use of electricity, which is a dumb thing to incentivize. Sure, we can incentivize the use of electricity, but we can also decide to incentivize something else.

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.

> but we can also decide to incentivize something else.

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...

Uh, power that isn't used for bitcoin mining could be used to improve human lives in innumerable way - or not used at all and allow a decreased production of greenhouse gases.

Why do you think the power is not already being used to bring useful services for people?

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...

It doesn't really work this way...

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.

Well it's obvious you can't heat your house and earn money at the same time continuously. Bitcoin is no magic perpetuum mobile zero-point energy bending-physics solution but it's true that you can minimize the waste.

> 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?

Bitcoin basically is money (a store of value and medium of exchange, with some speculation on increasing future value thrown in that won't change the logic here).

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.

The comparisons fall short.

- 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.

> - pixels: even whitespace is important next to information

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).

> The cost is reasonable in SSL case but unreasonable in Bitcoin case based on what criteria exactly

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.

> while other solutions like proof of stake / space / ... exist and are much more energy efficient.

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

Filecoin did some good improvements in cpu/energy usage and PoSpace

You can't possibly be comparing SSL with bitcoin mining. SSL provides a service that is immediately valuable to all parties. Bitcoin mining is done by people who want to get rich by not doing anything. The price of bitcoin is EXTREMELY speculative no matter how you look at it. What if Bitcoin were to fail for some reason? All the computation dedicated to mining coins which were never spent would be wasted. Entirely different scenarios here.

> SSL provides a service that is immediately valuable to all parties.

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?

> What if Bitcoin were to fail for some reason?

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).

What are you even getting at here?

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.

Well Bitcoin is always on because people are constantly using it so it can't "conserve power" just as a constantly on display or CPU can't.

> Why won't you complain about monitor pixels

or the Sun, what a waste of energy that is

Yeah, we gotta get on that dyson {sphere,swarm,etc} thing.

Bitcoin would happily consume it...

There are already blockchains that do not require proof of work (Lisk, Nav, Dash, NEO, etc) and already storage based blockchains (Filecoin, Storj, Sia, Maidsafe, etc).

It is unclear to me what Chia brings to the table that is really new.

The storage based blockchains don't use storage space as a means of verification- they're storage product focused (you buy/rent/use/sell storage space on the platform as a commodity). That's not what Chia does; it seems like its primary use will be store of value/transactions like Bitcoin. It's the "green" alternative to BTC- I wouldn't call Filecoin, Storj, Sia, Maidsafe, etc. competitors to Bitcoin (and I don't think they're trying to be that).

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).

Edit: punctuation

Ahhhh. I somehow missed that while reading the article. Thanks that makes more sense.

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

My understanding is that your computer computes the answer to a difficult calculation ahead of time and stores the output up to a specified size (ex. 1GB worth of digits of pi) . Proof-of-Space asks you to respond with a segment of the output at a certain offset. The amount of time given to respond is less than the amount of time it would take to calculate the output, and so by replying you prove that you had it stored already.

Thanks for this, I'm planning on watching Bram's talk but haven't had the time just yet. It's definitely an interesting idea, so I'm eager to see how it plays out.

See the 'how it works' section for a brief description of Burstcoin's proof-of-capacity mechanism [1].

[1] https://bitcointalk.org/index.php?topic=731923.0

Yeah, same. Competing with Bitcoin is a tall order, but Bram is a pretty smart guy so there's definitely a lot of potential here. Thanks to dpiers for the description below, too!

I'll note here that at least one "proof-of-capacity" coin already exists:


I can't elaborate either on the merits of proof-of-capacity vs. proof-of-capacity plus proof-of-time.

burstcoin does proof of storage already.

Beyond the tech, it brings a somewhat famous person, which is not to be underestimated. Hype is important, it makes this coin pop out a little bit more than some of the others competing for the same mind share.

Filecoin and sia are not proof of storage. They are both proof of work, in fact filecoin runs on Ethereum. Not sure about Storj or Maidsafe.

I was confused. I thought chia was going to be also a storage mechanism. I was pointing out those coins that are built around the idea of storage.

That said, Filecoin does use some form of proof of storage:


You need the proof of replication to show that a storage contact is being fufilled, not to secure the chain of blocks. proof of replication could be adapted to protect the chain, but that's not how it works at the moment. At least as far as I can tell.

This is a copy of Burstcoin[1], this "inventor" had many other "ideas" in last years that all were copies of other people ideas and were total disasters, he is riding his reputation he got from bittorrent. It will probably end with ICO, people will invest money treating that just as financial instrument that you can speculate on, then when implementation will come it will end like all those others alt coins.


Just the fact it's Bram Cohen behind this is enough to get me excited.

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 :)

Hey, I was there at the event (I did the lightning talk at the beginning). Would love to answer any questions about Chia that anybody has, that I learned first-hand from Bram.

Going to watch the video in a bit but I've got a question: could I turn my home NAS into a farmer for this blockchain simply by reserving some of my storage space for it or does it still require a lot of computing power (CPU/GPU)?

That should work :) although it would need to be connected up to the network so it could reply to proof queries and "thread the needle" of the time servers.

How does the proof of storage work and will proof of time be decentralised across all nodes in the network, or a subset of trusted nodes?

The paper on storage proof is here: https://eprint.iacr.org/2017/893

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.

I met Bram just last week (and had the honor to do a lightning talk before his Chia presentation!), and I want to clear up some things that people seem confused about:

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:


One fundamental question, whose answer I must have missed:

What's the incentive to process transactions?

Any opinion on Nem ?

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 »

so this has been an issue that keeps coming up for a while, but i don't really understand the issue.

* 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?

The problem is that with a competitive mining market, Bitcoin energy use will rise until the cost of mining a block is equal to the reward for that block (i.e. market equilibrium). So if the cost of energy goes down but the price of Bitcoin stays constant, the amount of energy expenditure will be (approximately) equal.

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.

This is a key observation. Now apply it to the "eco-friendly" and PoS schemes. The same economics apply. For Bram's coin and PoS systems, the costs spent will rise to equal the block reward. So, you are basically doing something more complicated to end up with the same amount of economic waste. In the proof of space version, maybe you will be building millions of hard drives, running them to failure and then throwing them away.

This answer written by the Ethereum team addresses why cost spent won't necessarily rise to equal block reward in their PoS formulation. https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ#doe...

Mining rewards will be gone in a couple of years, then all that's left are fees to pay for mining - meaning, for securing the blockchain.

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.

I haven't seen the hashrate drop when the price drops. We may be more limited by supply of ASICs than the price of electricity.

> 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?

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).

Ideally >99% of the power used by bitcoin would be in sharing and storing the blockchain and pending transactions. The security mechanism would use as few resources as possible.

Be careful when you compare to existing infrastructure, because bitcoin has to do all that too, plus mining costs on top.

The energy consumption of the incumbent financial infrastructure is extremely difficult to measure, and so it has never been seriously considered a "problem." There hasn't been an alternative. What does it cost to put a roll of quarters into the hand of a laundromat customer in Faibanks? ¯\_(ツ)_/¯

within roughly 5 years or so (very rough guess on my part), all of the available Bitcoin will have been mined. At that point, the mining part of the equation will be moot, leaving only the blockchain infrastructure to consider. Note that this may not hold true for various "forks" of the bitcoin blockchain, or for other cryptocurrencies.

Not true at all. The security of the bitcoin blockchain is fundamentally based on mining; after the inflation schedule runs low enough that it's not the major component of mining rewards (which won't be for decades), miners will continue mining, but for the transaction fees instead.

No need to guess, the reward schedule is written into Bitcoin:


«A bitcoin transaction wastes as much electricity as it takes to power an American home for a week»

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/

You're right, in a sense. However, mining is using a certain amount of energy per block, and each block has a limited amount of transactions. So it's reasonable to amortize the cost of the bitcoin network over the transactions and so, in another sense, each transaction maps to its share of the power consumed in a block.

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"):


But the limit in the number of transactions is not a technical limit, it's a political limit. We chose arbitrarily to set the limit to 4 million segwit weight units, however it could be changed to anything without impacting energy consumption.

Therefore your analogy is incorrect: if the cargo capacity of a truck is increased, it will certainly impact its fuel consumption.

>But the limit in the number of transactions is not a technical limit, it's a political limit. We chose arbitrarily to set the limit to 4 million segwit weight units, however it could be changed to anything without impacting energy 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[1][3], 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 [1] and above -- we don't live in that world.

[1] For example, if you simply said "each block can hold as many transactions as miners are willing to tolerate" [2], 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.

[2] which you think would make transaction capacity non-scarce

[3] Wiki page for discussing the issues: https://en.bitcoin.it/wiki/Scalability

The limits are primarily political, as there are other blockchains doing thousands of times more transactions.

Which ones are you talking about? Litecoin and ETH, the closest PoW competitors, are on the same order of magnitude as Bitcoin. (Ripple might do more but is not PoW.)

>For example the transaction rate could double tomorrow, without increasing energy consumption.

A higher transactions rate might result in more transaction fees being paid which indirectly increases energy use.

Wouldn’t doubling the transaction rate require forking the network?

No. If segwit use jumped to 100% (currently stands at ~10%) then the transaction rate capacity would roughly double.

Didn’t segwit result in a fork?

Yes (soft fork). But it already took place, so there is currently network capacity to double the tx rate without another fork (although it will likely take 1-2 years for Segwit use to approach 100%).

Given how imprecise "an American home" is, quibbling over a factor of 2 seems pointless. So if the network went all-in on segwit, a single transaction could instead power a smaller American home for a week? Goodie.

Sounds like IPFS.

Why do we need an ICO. Can't we just do it like bitcoin and download a client to start 'mining'?

We don't. But dev teams keep creating them. It's IMO much more appropriate for new coins to make an announcement, provide a whitepaper + source, and start the network at time X.

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.

Because nobody skilled is going to build this without payment? this thinly veiled criticism of ICOs has that obvious logical flaw.

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.

Also, mining implies PoW, whereas this is not always guaranteed to be the case. It's my favorite, but it's falling out of fashion, unfortunately.

> Sounds like IPFS

Only if you didn't RTFA

Why would they do all that work for free?

Why wouldn't they just pre-mine a bunch of coins and reap benefits that way?

What are "proof of space"/"proof of work" ? How do they compare to proof of work/proof of stake ?

"Beyond Hellman's time-memory tradeoffs with applications to proofs of space" https://eprint.iacr.org/2017/893.pdf

Any ideas about the proof of time which Bram references?

Yay, after pushing GPU prices into madness, now we push storage prices there as well!

In the long run it will make them both cheaper.

YAY a GPU from a year ago that had 100% GPU usage for full 11months with cheap cooling is on sale now for 20% of its initial price!

I think s/he means more volume leads to lower prices (in the long run)

and we see that on GPU marker were prices are going up all the time since 2 years ago...

I don't see how this is better. It sounds like we have to waste power running hard drives now. Isn't Ethereum's Proof of Stake better?

I thought so too until I read this http://www.truthcoin.info/blog/pow-cheapest/#is-a-work-indep... and, maybe there's counter arguments? But it seemed like a pretty good argument to me.

Your linked argument is poorly formed. It's true that any system which periodically emits value will cause people to work towards achieving that value. However, it's not true that the work in question will necessarily be wasted in an arms race.

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" [1], 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

How does proof of stake prevent double spending if there are no miners to validate blocks? I must be missing something here...

Stakers take act like miners, but instead of staking computation time through proof-of-work, they stake an amount of cryptocurrency which gets burned if they ever double-vote (and maybe if they vote for the losing chain, etc, depending on the scheme).

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.

Not that I'm totally sold on it, or grok it fully, but from my rough understanding the very highest level (for Ethereum's Casper)...

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.

The idea is that there are already a bunch of hard drives being wasted.

If we could use all that extra space that nobody is using, we get it for "free".


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