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Comment by ozmbie | Hacker News Reader

If you can invent a reliable alternative to proof-of-work distributed consensus there is a multi-billion dollar opportunity there. It’s inefficient, but before bitcoin came along there was no way to even do it. An inefficient way is better than no way at all.

Some other cryptocurrencies are trying alternatives. But none have been as “battle hardened” as bitcoin.

Follow the core developers and you’ll see their focus is on creating an open distributed platform. It’s up to us to figure out what to use it for.

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> An inefficient way is better than no way at all

Really, why?

IMHO, there's a pretty compelling argument to be made that Bitcoin and the other cryptocurrencies have had a significantly net-negative impact on the world, from facilitating scams and other illegal activity to now having to worry that sites we visit will monetize by stealing CPU cycles to the significant impact on climate change, these technologies have caused a lot more harm than benefit. And all the while, they haven't even figured out how to build a ledger that can scale to day-to-day transactions. My bet is that the whole thing ends up being a tax on people who've forgotten their 17th century Dutch history.

We should've drawn the line in the sand back with 56 bit key limits

> from facilitating scams and other illegal activity

The same was said over and over on the nascent days of the internet, about how it facilitated anonymity so easily and how it would be used by criminals.

> by stealing CPU cycles

Difficulty in bitcoin mining is raising all the time (because of the competition among miners). This is why nobody mines nowadays with CPUs or GPUs but with ASICs. The fact that some sites are trying to achieve some decent mining hashrate by pulling the amount of visitors of a website is a naive move that will soon be off-set by even more raising levels of difficulty. Soon this will not be profitable at all, even if your website was the 1st in Google's page rank.

> to the significant impact on climate change

I like that skeptics raise this point, because:

1) The cryptocurrency mining industry is the fastest one to chase energy-efficient solutions. As soon as a device consumes less electricity, it's adopted widely because of the huge incentives to do so (e.g. CPU->GPU->ASIC).

2) Compare the electricity spent by the entire banking industry with the electricity spent by the entire crypto-mining industry. Now guess what's more efficient.

> The same was said over and over on the nascent days of the internet, about how it facilitated anonymity so easily and how it would be used by criminals.

There's 2 things I want to say about this comment:

1. Those accusations were not wrong. In the same sense that we have pretty clear evidence that a lot of the value injected into bitcoin and stored there is via money laundering.

2. Unlike proof of work currency blockchains, the internet clearly delivered and had no direct theoretical challenges to its very existence that people subsequently and fervently denied.

Proof of work is a bad idea. It's been discredited. It doesn't do what people thought it did. And it's MUCH too expensive to keep doing.

Proof of Work is the only way for people to transact in which they don't have counterpary-risk problems before transacting.

Before PoW was invented, there was no way of doing this.

Now, thanks to layer2 technologies, PoW will start becoming much more (orders of magnitude more) energy efficient.

How is that a bad idea? Make something possible, and later make it sustainable. So long as there's demand for that something, then it's a good idea.

There are two sides to a trade, and typically Bitcoin only handles one of them. Buy some food with Bitcoin and it still might taste bad or make you ill.

Even for purely financial transactions, any kind of loan or investment still has counter-party risk.

So even if a crypocurrency worked perfectly, it doesn't solve very much.

> There are two sides to a trade, and typically Bitcoin only handles one of them. Buy some food with Bitcoin and it still might taste bad or make you ill.

You have this same problem with any form of money. The problem I raised is counterparty-risk when holding your assets (before transacting).

> Even for purely financial transactions, any kind of loan or investment still has counter-party risk.

Yeah, that's why maybe loans should have higher interest (right now, the low interest is artificial, because the bank is really making more money from the fact that it's working as a fractional reserve, not from the interest it gathers from loaning you money).

> So even if a crypocurrency worked perfectly, it doesn't solve very much.

It solves just one thing. Granted, it's not a silver bullet. But there are never silver bullets. Every single invention that humanity achieves, just improves the world a little tiny bit. Cryptocurrency does this as well.

It does not solve anything. It's true that cash and bitcoin both avoid a narrow slice of counterparty risk. But that's not a whole problem, just part of one. As a currency, Bitcoin is an abject failure. Even big proponents admit that: http://avc.com/2017/08/store-of-value-vs-payment-system/

Bitcoin made no practical dent in existing legal financial transactions because it's not better for the great majority of use cases.

Because PoW doesn't have an answer to selfish mining attacks?

> Proof of Work is the only way for people to transact in which they don't have counterpary-risk problems before transacting.

> Before PoW was invented, there was no way of doing this.

If I pay with my credit card and am scammed, I just let them roll back the transaction and let the other side prove their case.

With Bitcoin, that mechanism is _impossible_.

We're not talking about Bitcoin here. I've personally created cryptoassets on the ethereum blockchain that support enforcement freezing and reversing transactions.

The fact that Bitcoin doesn't is primarily down to the ideology of early adopters, not technology reasons.

Genuinely curious: how much does it cost per transaction and how many transactions per second can you execute?

It always puzzles me when people point out that cryptocurrencies are used for illegal activities.

Cyptocurrencies were not designed to facilitate illegal activities. Yet every fuddite makes it seem so.

Every single fiat currency in the world is/can be used for illegal activities. Do we discard them? Care to wager which currency, USD or BTC; is used more for illegal activities? No, I didn't think you would. But media and fudders will repeatedly point out that it's cryptos that are used to transact illegal things.

> The same was said over and over on the nascent days of the internet

Do you shysters read from a script or something? Is this the counter argument you guys always use to try to squelch criticism?

Bitcoin is more than 10 years old. That is ancient in tech. It has yet to be used for anything besides an excellent vehicle for running scams.

>Bitcoin is more than 10 years old. That is ancient in tech

It's also a blink of an eye for a paradigm shift.

> If you can invent a reliable alternative to proof-of-work distributed consensus there is a multi-billion dollar opportunity there.

But Bitcoin only does 7 transactions per second. You can't say it's an alternative to something extremely larger.

The efficiency of mining on CPUs doesn't matter if you don't pay for the electricity.

> My bet is that the whole thing ends up being a tax on people who've forgotten their 17th century Dutch history.

Tulip Mania lasted 6 months

I have a sneaking suspicion that if tulips allowed masses of investors in less-than-open markets around the world to stash/protect assets from their overbearing governments, as well as facilitate the purchase of AK47s and money laundering, that the online tulip trade would be ongoing.

Fundamentally: people aren't buying BTC because online coins are pretty, they're investing in an alternative distribution model whose value is 'fixed' by willing parties on the other side who also rely on that distribution model. Yes, it is the Tinkerbell Effect, but a Tinkerbell Effect backed by centuries old markets of surprising strength (weapons and drugs, just to start with).

The value isn't the thing being exchanged, it's the ability to exchange.

> If you can invent a reliable alternative to proof-of-work distributed consensus there is a multi-billion dollar opportunity there.

Trust.

Just use any authentication/authorization solution, contracts, the rule of law, reputation, everything we've always used to deal with varying degrees of trust.

Utter lack of trust is not a problem people have.

If you want to apply blockchain technology to anything real world (as opposed to coins that only exist _in_ the blockchain), then you need trust anyway whenever there is interaction (e.g. when someone inputs data, you need to trust its true anyway).

It's really only useful for coins, that are themselves less useful than existing money.

It was an interesting mathematical puzzle to solve, shouldn't have been made reality.

This is the right answer. It's frustrating that folks can't see it.

And how is that working out?

I agree that it doesn't seem useful outside of money, but when it comes to money, feel free to trust this. I don't: https://global.spdrs.com/content/dam/spdrs/etf-blogs-images/...

> creating an open distributed platform. It’s up to us to figure out what to use it for.

This is putting the cart very much before the horse.

I have no objection to people researching, experimenting, playing. Godspeed. Spending billions creating a technology that sounds cool but may be useless, though, is absurd.

We didn't get the Internet because somebody said, "Hey, let's spend billions wiring up a lot of computers and see if it's good for anything." The Internet's growth was driven by an expanding set of very specific use cases.

Or you can just use graph theory to make PoW efficient & more secure[1][2]. Skip to page 11 of [1] for a quick visual summary.

[1] http://kadena.io/docs/chainweb.pdf

[2] https://www.youtube.com/watch?v=p1OFJOrgRWw

This looks really interesting. Thanks!

Can I also invent a system that's been proven to not safely guarnatee consensus for years, and trust everyone to ignore it?

If so, I've got a thrilling investment opportunity for you.

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