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Comment by Ono-Sendai | Hacker News Reader

Such an incredible waste of power and hardware, for a payment system that does something like 3 transactions per second globally.

Off the top of my head idea:

What about a system that uses a bit of real-world, legal responsibility to generate consensus. Something a bit like ICANN and the domain name system.

Take 10 or so trusted people or organistions worldwide, get them to each run a node, each of which coordinate via the Raft protocol or whatever. A distributed ledger is agreed on by each of those 10 nodes.

This should use far less power and be able to handle more transactions per sec than bitcoin.

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Or we could all switch to Ethereum, which will have Proof of Stake (low electricity costs) instead of Proof of Work (insanely high electricity costs) mining soon.

POS networks already exist. No need to way 3+ years while the Ethereum team reinvents the wheel.

See PeerCoin ( https://peercoin.net/ ) which has been around for quite some time and has a POS/POW combination.

High electricity costs needed to rewrite the blockchain is a feature of proof-of-work, not a bug.

We could all switch to proof-of-stake, but then anyone would be able to create a valid-looking blockchain in a few minutes, and the only way to get the right chain would be to connect to nodes you know or trust, at which point a blockchain becomes meaningless in the first place.

The challenge is about coming to agreement. Reaching agreement on information which determines how much money people own is hard. Proof-of-work reaches consensus by having a vote -- on which transaction history is correct -- constitute something that cannot be forged: energy.

Bitcoin is not a payment system. It's essentially a digital commodity with built-in ownership transfer. Bitcoin payments can be cleared off-chain, like VISA payments can be cleared without using SWIFT.

Most importantly, though, it's decentralized. It's simple to implement a fast, centralized currency and payment system. But Bitcoin's main attraction is that it values decentralization greater than efficiency and throughput, thus making it, primarily, a store of value, as opposed to a means of payment.

> Bitcoin payments can be cleared off-chain, like VISA payments can be cleared without using SWIFT.

The whole point of SEPA transfers was to move all transfers to be cleared directly via the main ledger, in a matter of seconds, across different countries and currencies.

If Bitcoin is inferior to an existing payment system used by 500 million people, then it’s worthless.

Bitcoin is global and decentralized while SEPA is EU-only and centralized. The two are not in competition; neither is an alternative to the other.

> If Bitcoin is inferior to an existing payment system used by 500 million people, then it’s worthless.

If Bitcoin is strictly inferior to an existing payment system used by 500 million, then it's worthless.

IMO the major value proposition of bitcoin is that no one can exert influence to invalidate tx or blacklist certain users. Payment systems that have this property will always have some utility for organizations that nation state actors are trying to stop, e.g. ransomware, any darknet market provider, political dissidents, freedom fighters/terrorists, people trying to participate in a market in a controlled economy etc.

https://bitcoin.org/bitcoin.pdf makes it clear that Bitcoin is definitely a payment system, a distributed one. But it's not only a payment system, and using it like one right now is pretty dumb because of the absurdly high transaction fees, but high fees are entirely a temporary artifact as the system scales. (Edit: removed hostility.)

Bitcoin will never work as a consumer-to-merchant payment system. Even with 1GB blocks (1000 times today), it would max out at ~7,000 TPS, where VISA does 200,000 during peak. We need something off-chain to be able to scale to +100k TPS (unless you consider 100 GB blocks realistic).

I believe you're off by 2 orders of magnitude for Visa's seen-peak and about 1 order off for their network's designed max peak. Unless you've got sources more recent than https://en.bitcoin.it/wiki/Scalability uses; maybe you're confusing the number with the network handling all transactions world-wide which Visa doesn't do?

100 GB blocks is politically unrealistic in the foreseeable future but technologically not really, especially because network and storage continue to get better and cheaper even if CPUs are stalling. Nodes don't need to store the full chain, and 10 years of that size of block would only be about 50 PB. Gigabit networks are only becoming more and more common, a 1 Gb connection will let you get 75 GB over 10 minutes (and using the math from the wiki you only need 0.76 Gbps to handle 200k tps). Also not every node needs to see every transaction, the effective bandwidth can be much lower, just like the effective storage.

And as the wiki points out, PayPal has a much lower TPS than Visa or others but is still widely used as a direct consumer-to-merchant or friend-to-friend payment system. In addition, the better straw argument against Bitcoin as a payment system has always been "who is going to wait 10 minutes on average, sometimes much longer, especially if you want the gold-standard 6 confirms, to buy a stupid pack of gum?"

Efficiency was and never will be the primary goal of bitcoin. It is meant to provide you with permissionless ownership. In a permissionless system if what you own_ is worth X dollars, than it will take some amount, say Y, dollars to secure this ownership. In the case of bitcoin we do not have a way to arbitrarily stake y dollars in the system (see proposed proof of stake in ethereum). Instead you can indirectly assume that Y is supplied by the miner investment in hardware and electricity. By stressing known hardware limitations, we can force miners to act more and more and more competitively as more total value is held on the network.

So the increasing cost has nothing to do with use (aka transactions). It is a consequence of providing security to a growing amount of value on the network. There is simply no better way to do this currently assuming you want a permissionless architecture. It is step 1 towards creating an open finance system. Other steps like proof of stake will eventually solve this problem.

> Such an incredible waste of power and hardware, for a payment system that does something like 3 transactions per second globally.

Bitcoin does a few transactions per second on-chain, however those few transactions per second support many more transactions per second on systems built on top of Bitcoin in a similar way to how the tx-per-second Canada's inter-bank transfer system does is quite low, but those settlement transactions support orders of magnitude more transactions per second on systems built on top of that settlement system.

An example of exactly what you proposed is Blockstream's Liquid sidechain technology, which maintains a high-speed ledger secured via multi-party signing between various exchanges to allow high speed, highly efficient, off-chain transactions backed by on-chain Bitcoins.

So, we should use a system that’s inferior to actual simple wire transfers, which are less than 20 seconds, free transactions, directly via the ledger?

I’m sorry, but I don’t see the value in Bitcoin if it is worse than SEPA transfers.

It is not worse.... That the point. There are significant advantages over a wire transfer.

With bitcoin you can send money to anywhere in the world for 20cents. Thats cheaper than a 30$ wire transfer.

Also, the censorship resistant part of bitcoin is really important, and is being used by the Venezuelans right now.

And there are technologies being built on top of it that will make it even better.

This is like 1994 internet right now. Even though it works, and has significant benefits, there are still a whole lot more stuff to come that is being worked on.

That's the thing, I can send money with bitcoin for 20ct, or with a SEPA transfer for free. 0ct. And it's faster.

Looks like current fees are closer to 1 USD than 0.2 USD, but that's not the point, the fees are not a core feature of bitcoin. It's the censorship/manipulation bit that's the core feature IMO.

There's no need to trust neither the processor or the issuer, only the protocol & distribution of hashing power.

Bitcoin feels like one of the biggest scams around. It feels like it's propped entirely by speculators at this point.

> Take 10 or so trusted people or organistions worldwide, get them to each run a node, each of which coordinate via the Raft protocol or whatever. A distributed ledger is agreed on by each of those 10 nodes.

then I'd argue it is still centralized - you have this 10 nodes acting as the traditional bank.

check out bitshares, steemit and eventually EOS. Their DPoS model uses exactly that -- users vote on the witnesses that will produce blocks. Every witness gets a shot at producing the next block. If the witness fails to produce a block, they will be voted out by the users.

Scales to 100k tx/sec, supposedly.

I wonder if it would be possible for 90% of users to come to agreement on assigning the balance of the wealthiest account to themselves. Without proof-of-work, there'd be no way to prove this has happened, since it would be easy to create a new blockchain copy which just assigns the coins from the wealthiest account to all other accounts.

Don't you lose decentralization then?

Nothing is as decentralized as proof-of-work when it comes to cryptocurrencies. It ensures you can know what the right chain is as long as only a single node you connect to tells the truth.

Where were you 8 years ago?

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