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Comment by kybernetikos | Hacker News Reader

I get that the energy is being used for something useful and cool, but when the energy cost to secure a single transaction could power 5 households for a day, then something is wrong and needs to be fixed.

Surely even fans can agree there's a level at which it just doesn't make sense any more.

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That energy is not just confirming the transactions in the existing block, it is protecting all transactions in the blockchain history, adding security to each of them. That represents a history of more than $70 billion in value. Suddenly it doesn't seem so expensive anymore.

That's actually revealing.

First people try to argue that all this gigantic energy expenditure "buys" security.

And then – in the fine print – you are learning that you don't actually "buy" security, you have been sold a subscription. This gigantic waste of energy doesn't do anything unless you follow up with even more energy.

So the calculations that x amount of energy "secures" y amount of economic value is flat out wrong. Because x should be x + x' + x'' ad infinitum.

Oh, and the longer you stay in, the more difficult is getting out, because "sunk cost" isn't a fallacy in this scheme, it's actually real.

Yeah, the inflation is a tax more or less. It's a tax on your holdings to pay for the security and integrity of the network, and to make sure things keep moving forward.

Bitcoin is nearing the point where most security will be paid by fees instead of inflation, but imo inflation is the more fair model to pay for security.

Yes, there is a level at which it doesn't make sense any more. In a sufficiently efficient market, that is the point we are at, at any given point in time.

I believe the bitcoin mining market is efficient enough already that we're more or less there.

That shows the primary failings of putting all trust in an efficient market. The "makes sense" breaking point in an efficient market is when it stops making financial sense for the miners. It relies on rational miners who don't don't succumb to the sunk cost fallacy after investing large sums upfront in mining rigs. While it also ignores the negative externalities involved in increasing global electricity usage like climate change.

Yeah, I hadn't really considered how simple economics essentially forces this to grow to exactly the point where the externalities are unsupportable based on the benefit provided.

> something is wrong and needs to be fixed

It's already fixed with PoS... IMO the winner of the cryptocurrency-race will be a PoS-based coin.

PoS deserves research but it's far from shown itself to be viable as the dominate consensus mechanism.

A lot of research was done by heavyweights for PoS in 2012 and 2013. The consensus was that it was a fruitless pursuit and that PoS could not match PoW in terms of security and decentralization.

Several papers have been written about it.

https://download.wpsoftware.net/bitcoin/pos.pdf

I'm just trying to not be absolutest by stating it can't work. I'm in the camp that believes it's just obfuscated PoW.

Well, as you may know it's currently being used in some coins like bitshares [0] and it works fine, Ethereum also is migrating to PoS [1]. So the consensus for a lot of people in the ecosystem is that it works.

[0] https://bitshares.org/technology/delegated-proof-of-stake-co...

[1] https://www.coindesk.com/ethereum-casper-proof-stake-rewrite...

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