A financial model based on burning energy is ok, because for only 140m users its a fraction of the TW/h burden of the world.
But if you scale it up, to be financially relevant to the worlds transactional need, which is (ahem) more than 140m participants, and significantly more financial events than BTC currently encode.. There is a consequence: it won't be a rounding error any more.
What Appears missing is a nuance about cost:benefit.
It should be noted that the bitcoin network does not need to consume more energy to scale up:
- Using more energy does not translate to more transactions committed to the ledger. Second and third layer solutions can handle the world's transactional need with minimal energy usage, still using the security provided by the bitcoin network.
- The security of the bitcoin network is not dependent on the amount of users, and mostly driven by financial incentives. However, the more energy it uses, the more secure it is against attacks. As it is, the bitcoin network does not need to use more energy, and here's [0] a succinct explanation as to why.
Those are very big assertions. If you think indirect transactional chaining is secure, then why do we need the level of blockchain activity we have? If you think there is a direct mapping from energy use (POW) to security, then you are asserting POS has no value?
I prefer written non-succinct statements to videos.
> So, at any given time, there are millions of bitcoin mining machines around the world looking to solve the puzzle and create the next block, and there’s a natural feedback mechanism to ensure that blocks are created on average every ten minutes, regardless of how many miners are on the network.
> We recently saw in the first half of 2021 that China banned crypto mining, and approximately half the network went offline and started moving elsewhere. Bitcoin’s payment network briefly slowed down a bit, but otherwise kept working with 100% uptime.
It's no assertion that the transaction amount is not proportional to the energy being used. That energy only serves as the network's security through proof-of-work.
Proof-of-stake you referred to is also mentioned in the article, as follows:
> Besides a larger amount of complexity, trust, and attack surfaces, the main issue with proof-of-stake is that it can be prone to centralization. The more coins you have, the more voting power you have, and those with the coins are also the ones earning the new coins from staking. Since they don’t need to expend resources to stake, they can simply increase their overall staking amount as they earn ongoing coins from staking rewards, and exponentially grow their influence on the network over time.
PoS, although more complex to implement, has value, but it's more likely to become centralized when compared to PoW due to the reasons mentioned.
But if you scale it up, to be financially relevant to the worlds transactional need, which is (ahem) more than 140m participants, and significantly more financial events than BTC currently encode.. There is a consequence: it won't be a rounding error any more.
What Appears missing is a nuance about cost:benefit.