Comment by decentralised | Hacker News Reader

Comment by decentralised | Hacker News Reader

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There are plenty of consensus protocols that don't waste energy but I think it's important to understand why PoW relies on an unproductive algorithm.

Mining fulfils two roles:

- identity management: To identify who is a trustworthy block producer in an anonymous and trustless network, mining introduces a cost to the block generation process and we use a game theory assumption that it serves as a barrier for attackers. This doesn't mean there aren't validation checks performed by other nodes in the network and the consensus forming rules themselves of course.

- consensus formation: In a distributed network, nodes are bound to disagree on which is the canonical chain out of two or more competing forks. The most common algorithm calculates the accumulated computational effort of each chain of blocks and picks the "heaviest" one, ie the one with the most work done on it. This has the nice side effect of ensuring economic finality for the transactions in those blocks.

Now, regarding decentralisation you state that "the cryptocurrency people" use it wrong, but the definition you gave is incorrect. As a cryptocurrency person, Vitalik Buterin described decentralisation here: https://medium.com/@VitalikButerin/the-meaning-of-decentrali...

> There are plenty of consensus protocols that don't waste energy but I think it's important to understand why PoW relies on an unproductive algorithm.

DPoS consensus used by Bitshares/STEEM & EOS seems to the most advanced among the models and they also have the highest TPS

Replacing mathematically provable cryptographic assurances with a human fallible cabal of BPs hardly seems like an advancement.

In any case, Bitshares TPS was less due to DPoS and owed more to the limitations of what tx were supported.

Ethereum chose to support greater contract flexibility which turned out to be what the community of users wanted more, at least then.

We've yet to see a real solution to the problem of having to tradeoff performance for decentralization (while keeping security.)

All consensus protocols make tradeoffs between three properties:

- Finality Latency: how fast is a block finalised after it’s been proposed

- Decentralisation: how many consensus-forming nodes can exist in the network

- Resource Overhead: how many blocks per second do consensus-forming nodes need to verify

dPoS protocols sacrifice decentralisation and compromise in resource overhead for apparent performance, ie many transactions processed by a few very powerful servers.

The game-theory and security aspects of a blockchain like its censorship resistance, immutability or who can produce the next block are also relaxed to a level that many blockchain professionals consider unacceptable. Case in point the formation of cartels is incentivised by the dPoS delegation of vote mechanism. Corruption is baked in.

I wrote a short intro to consensus protocols a while back if you're interested in knowing a bit more: https://medium.com/@jpa_of_snc/consensus-casper-and-cryptoec...

PoW isn't wasting anything. PoS is not cheaper that PoW. this myth just won't die..

I don't think you understood what I wrote.

PoW is wasteful in that the vast majority of the product of it's algorithm (hashes) is discarded. This means that block producers can be trusted because they wouldn't be spending energy / electric power to produce blocks for any reason other than gaining the block rewards, which they can only get if the block is valid.

If PoW did some sort of useful work (gene folding, seti, etc) then there would be no reason to trust block producers since all of their blocks are useful and therefore they can be "mining" for reasons other than obtaining the block reward.

Hope that helps.

i don't think you understand the technology at all..

> PoW is wasteful in that the vast majority of the product of it's algorithm (hashes) is discarded

do you know what "PoW" means? it's 3 words: proof, of, work. what you consider "discarded" and "waste" is the Work in PoW.

miners convert energy into blockchain security and every block signature is the proof that certain amount of energy was spent to find it.

if there was another "useful" activity (gene folding, seti, etc) it would have created additional "value" for miners, making mining more valuable, creating incentive for more miners to mine and subsequently raising the difficulty to mine matching the additional "value" from "useful" activity.

it's trivial econ and i really do hope it helps you better understand what you're arguing about.

We might be arguing about the meaning of words here but the work in PoW is it's output and the hashimoto algorithm in PoW discards all computed hashes that fail to meet the difficulty requirement. I suppose you know how consensus algorithms work, but if you don't I'd suggest you start by reading this https://medium.com/@jpa_of_snc/consensus-casper-and-cryptoec.... If cryptoeconomics is interesting to you I can also recommend the best list of learning resources available, here: https://github.com/jpantunes/awesome-cryptoeconomics

The concept of a useful PoW algorithm has been debated a number of times and the consensus view is what I wrote earlier: If there are incentives to mining other than the block reward, the security assumption provided by hashrate majority is lost and blocks producers cannot be trusted.

I'm a blockchain developer for a couple of years now, and I often write about it as you can see by the links I shared above.

(edit: typos)

> arguing about the meaning of words here

isn't that the most important thing?

> work in PoW is it's output and the hashimoto algorithm in PoW discards all computed hashes that fail to meet the difficulty requirement

you've used few specific words in your comments: "work" and "product". i agree that work in PoW is hashing and most of hashes are discarded, but product of PoW is the signature that satisfies the difficulty. if finding the signature didn't require going through lots of energy - it wouldn't have been proof of work.

> If there are incentives to mining other than the block reward, the security assumption provided by hashrate majority is lost and blocks producers cannot be trusted.

amazing, so you do understand this and yet you keep saying PoW is wasteful. if security is the product of PoW, then PoW is wasteful only if security is worthless.

Waste is the security mechanism. Since the hash results are wasted it is risky to mount an attack on the network; if the hash results were not wasted then the cost of mounting an attack would be mitigated by the value inherent in useful work produced by the algorithm. Your rebuttal actually supports this conclusion because "useful work" would become the "common denominator" cost built into securing the network thus bringing us right back to where we started (i.e. a situation where wasted work is the only useful kind for securing the network)

> Waste is the security mechanism

not really, consumption of energy is. and even if we accepted this weak statement, how does it follow that PoW is therefore wasteful? waste isn't the product of PoW, valid blocks are.

> consumption of energy is

Yes. That's the "waste" part. The only product of spending the energy is a proof that the energy was spent. This is obviously wasteful because there is no relationship between the absolute energy spent and the utility of the network. The higher the difficulty the more energy wasted in order to maintain the status quo. Perhaps the most obvious sign of PoW's wasteful nature is the fact that the introduction of more efficient hardware into the network increases overall energy consumption because everyone else without cutting edge ASIC technology has to increase their energy output to compensate for the increase in hash rate.

> The only product of spending the energy is a proof that the energy was spent

yes, and if that proof has value - then it's not a waste!

> there is no relationship between the absolute energy spent and the utility of the network

of course there is - security of the blockchain is proportional top energy spent mining it.

> higher the difficulty the more energy wasted in order to maintain the status quo

you got this backwards, difficulty goes higher because more energy is spent (or there is breakthrough in mining efficiency like cpu->gpu, gpu->fpga, fpga->asic, see next paragraph). and miners spend more energy because market tells them it values the security / utility / w/e of the bitcoin more.

> introduction of more efficient hardware into the network increases overall energy consumption because everyone else without cutting edge ASIC technology has to increase their energy output to compensate for the increase in hash rate

this makes no sense.. introduction of more efficient hardware increases the difficulty, not total energy spent. inefficient miner will remain inefficient and not-profitable no matter how much energy they will be spending.

Using electricity as a proof of investment is still a waste of electricity.

Proof of work is to establish that money is being spent. A less wasteful system wouldn't convert money into electricity to feed into computations to prove that.

Proving that you lit heaps of cash on fire would be less wasteful.

Just because a process is wasteful doesn't mean it isn't valuable. Air freight is wasteful but is also valuable.

> Proof of work is to establish that money is being spent

nope. it's a proof that energy was consumed. money is human concept, energy is universal absolute.

> Just because a process is wasteful doesn't mean it isn't valuable

energy consumption is inherently wasteful activity (as in there is some amount of "waste" in the world produced for the energy to become consumable). by this definition literally everything is wasteful and the label loses it's meaning.

but labels are useful and i (and the official definition) prefer using the term wasteful for something that is intentionally or unnecessarily inefficient.

bitcoin is neither - every joule spent mining bitcoins is necessary to provide the level of security demanded by the market. you can't spend less energy to provide same level of security, because in bitcoin they are pretty much the same.

Agreed. "Proof of Waste" seems to be a more accurate description of what's actually measured and involved in the algorithm, though it doesn't market as well.

sure, if your goal is to denigrate the project. but if you go by definition of waste - it doesn't apply to bitcoin at all.

Just that something is effective doesn't mean it's efficient. For years the lightbulb was the most effective way of producing light, and we took for granted that it cost a lot of energy. But you would be a fool if you claimed it wasn't wasteful just because the product (light) is so valuable.

Bitcoin mining is wasteful, it literally produces waste, and there is no proof at all that it is an optimal way if achieving security, in fact I feel there are signs that point towards the contrary.

> But you would be a fool if you claimed it wasn't wasteful just because the product (light) is so valuable.

you're missing the fact that bitcoin difficulty adjusts. ultimately bitcoin mining is an activity that converts energy into blockchain security. market establishes the required level of security by assigning value to bitcoin. if you replace bitcoin algorithm to anything more "efficient" - it will simply mean that miners will churn through more iterations of hashing but amount of energy consumed will not change because it's dictated by the market.

> Bitcoin mining is wasteful, it literally produces waste

wrong. bitcoin mining produces blockchain security. waste (and more correctly - energy consumption) is just the mechanism.

I'm not missing any facts, and you're just ignoring my argument. What's your game?

Your argument is invalid exactly because you’re missing the fact that difficulty adjusts. Lightbulb produces light by consuming energy just like bitcoin miner produces hashes by consuming energy, but hashes aren’t the product we’re after, the valid block signature is. If difficulty was static we could be arguing that there is more efficient way to convert energy into valid blocks, but since difficulty adjusts - energy efficiency doesn’t matter, market says X amount of energy should be spent and so it will be spent no matter which hashing algorithm or how efficient the hardware is.

Lightbulbs produce light and waste. Bitcoin produces block security and waste. It varies the amount of waste it produces with the value that's being secured, and in practice that just means it produces more waste when there's more value. That the amount is adjusted according to market demand does not matter, because the market is not interested in minimizing waste, it is interested in maximizing value.

My metaphor was intended to show you that with innovation we might find better alternatives that have similar or better value, at lower cost. It could be that we can get the same or similar security Bitcoin offers, but without the cost of the enormous energy expenditure.

> Lightbulbs produce light and waste. Bitcoin produces block security and waste

all consumption of energy produces waste, the question with lightbulbs is whether we can get more light with less energy and certainly from 100 years ago there was lots of progress.

the same question simply doesn't apply to PoW currency, because energy expenditure is the goal since it directly converts into security. you can't ask for more security with less energy if security is defined in terms of energy. and that's exactly the case with bitcoin.

if you want your metaphor to work - imagine a lightbulb that has a dimmable enclosure and it automatically dims proportionally to how many lumen is emitted so that luminosity of the whole device is constant. no matter how much energy you throw at it or how efficient you make the lightbulb - the apparent outcome is the same, therefore there must be something else this process gives you to justify expending this or that amount of energy.

I think what @decentralised is arguing isn't that PoW is wasteful, but that there are certain by-design inefficiencies that outsiders consider a waste from an economics standpoint. (A high economic cost to perform PoW)

Certainly you could argue that this economic cost is necessary and therefor not wasteful. Indeed I agree that it is central to the idea.

direct quote from him: "There are plenty of consensus protocols that don't waste energy"

i'm not entirely sure what do you consider inefficiencies in PoW, it is by design supposed to convert energy into a proof that similar amount of energy was spent producing the proof. the only inefficiency involved is how far we are from Landauer limit.

ultimately i don't think it matters which specific hashing algo is used - there will simply be more or fewer iterations per block, but for the same level of security as bitcoin provides, similar amount of electricity would be consumed.

saying that PoW has high economic cost is pretty much a truism. PoW produces very real economic value, so of course it will have a similar economic cost. if the value wasn't matching the cost - there would be more/less of PoW going on and that's exactly what the hashrate chart shows over the last 8 years of price discovery.

PoW uses energy to produce blocks in a process known as mining that consists of trial and error attempts at producing a “special” hash that meets a given difficulty target expressed in the number of leading zeroes. The difficulty target reflects the speculative work needed to produce valid blocks at regular intervals given the available hashrate. When more hashrate is added to the network the difficulty adjusts such that on average the block interval is kept around 10 minutes.

The product of PoW's work is largely wasted since all hashes produced for a given block height, other than the next valid blockhash, have no value and are discarded with the winning miner being paid the full block reward for its work. This means that not only are the hashes useless but they are also expensive to create and return 100% of the reward to the winning block producer at the cost of all other block producers. Bitcoin’s hashrate is what I refer to as an “economic firewall” in that it becomes increasingly more expensive to acquire the hardware needed to control a significant portion of the network's hashrate (eg: 51% attack), or even mine a single block, the more interest there is in the block reward tokens. Having said that, there is no causality relationship between the cost of producing blocks with PoW and the token’s price which is set in open markets were no single Exchange or a “bitcoin ceo" is a counter-party.

In other words, PoW keeps a blockchain safe because it’s wasteful and expensive. Only someone who can afford to run a mining rig would join and its costs are not covered unless their blocks are added to the canonical chain.

If the consensus protocol performed useful work, the incentive to "mine" on this chain would not only the block reward but also include ulterior motives so attackers could try to produce invalid blocks and their effort would still be justified by the value of the work done.

Hope this helps. Find me on telegram if you want to keep this discussion up, I'm always happy to discuss cryptoeconomics.

you're not telling me anything i dont know. you're just using wrong words to describe things.

PoW's work is hashes and they are discarded. PoW's product is valid block signatures and transitively - blockchain security. something is wasteful if the product is worthless. discarded hashes are worthless but valid signatures aren't worthless.

if somebody was running bitcoin miner and discarding all hashes - their work would have been a waste. people running bitcoin miners with purpose of finding valid blocks aren't wasting anything by definition:

wasteful ˈweɪstfʊl,ˈweɪstf(ə)l adjective (of a person, action, or process) using or expending something of value carelessly, extravagantly, or to no purpose.

there is purpose and value in bitcoin mining.

Producing fraudulent blocks (ie, containing double-spends) is the same as "discarding all the hashes" because the consensus mechanism (the fork choice rule) will ensure that the block is rejected, unless the attacker can also provide 51% of the current network hashrate to force this bad block into the canonical chain.

I defend PoW as the most secure consensus protocol for the major public blockchains precisely because the cost of an attack is so high right now. The wastefulness of PoW guarantees that there won't be reason to get involved in the mining business unless one intends to produce valid blocks and get paid for it.

edit: I would argue that producing fraudulent blocks is a "strictly dominated strategy" in game-theory terms, because its outcome is always worse than following the protocol rules and producing a valid block. From that perspective I believe it is the same as "discarding all the hashes".

> Producing fraudulent blocks (ie, containing double-spends) is the same as "discarding all the hashes"

no, it's not the same, it has the purpose of Producing fraudulent blocks. you're contradicting yourself within single sentence..

> The wastefulness of PoW guarantees

there is no wastefulness. there is energy consumption with purpose of securing the blockchain.

it would have been wasteful if difficulty was fixed and miner was spending 100 times more energy than necessary to create a block every 10 minutes, but since difficulty adjusts - there is zero waste in PoW. every joule spent was necessary and provided value.

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