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Comment by gglon | Hacker News Reader

I would argue that only some fraction x of the work should be wasteful. If the work would cost c on the market, it cost (1 + x)c on the network. Then if 51% attack total cost = (1 + x)c then only (x c) is wasted while c is recovered from the market. But just having (x c) is not enough to attack since you have to gain access to (loan) c which is an additional entry barrier.

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I also think "wastefull" is the wrong word. It simply has to not benefit the miner MORE than everyone else.

For example, if there was a pure public good project that could provide random input / output, then it would still work.

Primecoin is an example of that. While finding those specific primes is of extremely minimal value, it would still work even if solving those primes had considerable value - because it would be equally valuable to all.

Primecoin in particular turns out not to be a proof-of-useful-work system because the creators manually reward people for their work (the work isn't directly a form of mining on the chain).

And keep in mind, even for bitcoin, some of the work is useful, since the computer chips it uses will heat up, and that has value for HVAC. It’s certainly not as cheap per unit of heating as you can get with equipment built for that purpose, but there is still a positive value c there.

Then that fraction would distort the incentive value of the work, in a way that compromised the Blockchain's security. (Proportionately).

Yes, but not proportionately since an access to capital would be an additional cost. Eg. Imagine 2 situations when you can earn $100 by investment:

1. Buy sth for $100 end sell for $200

2. Buy for $1mln end sell for $1 000 100

Option 1. seems much more accessible.

This is equivalent to burning the cost of interest for that loan as wasted PoW. Any sophisticated attacker will have effectively unlimited capital at prevailing interest rates.

That would be the whole gain: set of attackers would be filtered down to sophisticated ones. That would be advantageous for the network since the more centralized potential attackers are, the easier it is to deal with them.

> the more centralized potential attackers are, the easier it is to deal with them.

The opposite of this is true, as you are talking about "centralised" in the context of "a smaller group of people" and not "a smaller cluster of attacking machines". The most sophisticated adversaries are the hardest to deal with.

Still it is harder to deal with sophisticated AND not sophisticated attackers than with "only" sophisticated ones.

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