Time is money. Bitcoin is wasted time. And wasted money. And wasted energy.
If you could have a trusted time source, you could at a stroke get rid of one of the most egregious flaws in bitcoin, its vast wastage of energy, because of its 'proof of work' mining. Bitcoin miners are running at full pelt 24/7, picking random numbers and doing math on them in the hope of striking lucky and discovering the next block. The mining difficult is artificially picked so that blocks are discovered about every ten minutes.
However, imagine if bitcoin miners could all declare a cease-fire, for 9m59s of those ten minutes, i.e. they just do nothing for that long, consuming virtually no energy, and then they all furiously mine at full speed for the last second (with the difficulty adjusted so the global mining should take a second). This process would be just as fair as the current one; if you have more/faster hardware, you will still mine more, in the same proportion as before. The total energy usage would be reduced 600-fold!
But - the reason you can't do this is that there's no way of stopping cheating. Who can tell if the other miners are really idling for those 9:59? This is where the time source comes in. Imagine you have a trusted time source: it could, every ten minutes, broadcast a random number. Miners would have to listen for this number, then mine a block containing it, to prove that they didn't start work early. Problem solved!
Back to the real world: just about everyone can agree on time; we have NTP and can even use certificates to authenticate clock sources, we can even use multiple sources to make it harder for time to be faked. So why can't blockchains do the same thing? Why don't they use multiple time oracles to stop the colossal energy wastage?
And, when bitcoiners tell you that relying on a centralised source, or even a quorum of sources, is completely unacceptable, why then are the same people happy to use smart contracts where the use of centralised oracles is apparently both acceptable and commonplace?
It wouldn't. If X$ worth of bitcoin is handed out every block, then miners competing for that prize are willing to collectively spend up to X$ per block on average.
If they could only mine for part of the time, then they'd simply acquire more hardware and mine at a higher hashrate during the shorter time.
My example is also missing the obvious next step though - once you are using a trusted source of data (or even a wide selection of trusted sources), the whole blockchain idea becomes pointless, you don't need to do any mining at all, you can let the trusted sources run a distributed database...
It's reasonably straightforward to build systems under such constraints; e.g. see https://en.wikipedia.org/wiki/Relativistic_programming
This just isn’t true. Only a vanishingly small fraction of these people has ever touched smart contracts.
https://solana.com/solana-whitepaper.pdf
The core insight, I think, is this:
> Proof of History is a sequence of computation that can provide a way to cryptographically verify passage of time between two events. It uses a cryp- tographically secure function written so that output cannot be predicted from the input, and must be completely executed to generate the output. The function is run in a sequence on a single core, its previous output as the current input, periodically recording the current output, and how many times its been called. The output can then be re-computed and verified by external computers in parallel by checking each sequence segment on a separate core. Data can be timestamped into this sequence by appending the data (or a hash of some data) into the state of the function. The recording of the state, index and data as it was appended into the sequences provides a timestamp that can guarantee that the data was created sometime before the next hash was generated in the sequence. This design also supports horizontal scaling as multiple generators can synchronize amongst each other by mixing their state into each others sequences. Horizontal scaling is discussed in depth in Section 4.4
I think you're largely describing two separate camps within bitcoin hodlers. Some are 'gold-bug' types that value security and individual liberty above all else, and so are very conservative in their attitude towards Bitcoin development. Others are 'cyberpunk' types that value technological capability and functionality, and are much more liberal and exploratory in what they'd like to see Bitcoin become.
When you say "same people", I think they are rare, and this statement makes a bit of a false lack-of-dichotomy.
In a way I appreciate bitcoin for its absurd and unambiguous wastefulness. It's sort of the perfect expression of consumerism, destroying the precious and irreplaceable earth for something immediately disposed of.
Energy consumption != energy production. Bitcoin is incentivizing reusable energy and moving energy to cheaper locations, further from cities. I suggest you look into how it's actually quite positive for the Earth.
We also know that this theory is really, really stupid: The kind of self-justifying idiocy that people don't come up with unless they're already deeply committed to a point of view come what may, logic and fact need not apply.
I was going to add a disclaimer to my post along the lines of "not saying I believe or disbelieve this theory", but I was tired of adding disclaimers to all my posts.
> Are you really going to claim that there isn't a demand for green energy already?
Is a disingenuous argument. Of course there is already demand for green energy. Meanwhile, Bitcoin increases the demand so much that people are apparently outraged by the increase.
Assuming that you think you're serious: Increasing the demand for energy (and it's not "demand for green energy" it's demand for energy, period) is not, has not been and never will be a green strategy in itself.
This is easy to understand, unless you choose not to.
https://davidgerard.co.uk/blockchain/2020/06/03/guest-post-t...
1. Wind/solar energy are being trumpeted around the world as the cheapest source of electricity available. 2. Bitcoin miners' profits are directly `sale price of BTC - buy price of electricity`. Other costs are marginal in comparison. 3. BTC mining is a extremely competitive, trivially mobile, trivially liquid, global market. 4. Given 1, 2 & 3 there is a lot of fretting that BTC is creating a coal-powered financial system.
With the recent spike, the currently reasonable cost for a fast, median-sized transaction is $10.46 [1] [2] According to the fretting articles I read, that is enough to power an average home for a 23 days and motivates sending over 300kg (700lb) of C02 into the air [3] That's 35 gallons of gasoline at 20lb CO2/gallon.
:/
For what it's worth, I get the concern. But, I also see equal shares of BTC hate|BTC fanboyism everywhere I go. Latching on to the environmental concerns of BTC is trendy right now. It's hard to argue against without sounding like an asshole and it's not entirely false. But, it's not entirely honest either. Everything I read and calculate shows that BTC makes total sense as a defacto green energy subsidy. But, that does not spark outrage. So, instead there is a lot of fretting about the second rise of a coal-powered economy.
IMHO, the way Ethereum is going is great: Bootstrap with POW then switch to POS after enough investment is built-up that staking actually means something. It's arguable that the best use of BTC at this point is to burn them all to bootstrap more POS tokens. We just need alternatives that inspire enough confidence to motivate people to convert their BTC over.
[1] https://awebanalysis.com/en/convert-satoshi-to-dollar-usd/ [2] https://bitcoinfees.earn.com/ [3] https://digiconomist.net/bitcoin-energy-consumption/
Then you must be reading in a bubble, as this is nonsense. Self-justifying fantasising.
Throwing energy away (which from an outside POV, this is merely an example of) is not and never has been a green energy strategy. I mean that very literally: the green people are very keen on electricity demand reduction, always have been, and are not going to change this. Because they're not wrong.
Key terms to google: Energy conservation, Energy Efficiency, energy demand reduction, Negawatt
You can have everyone work hard to reduce their energy usage. You can have tax-funded subsidies to motivate green supply increase despite targeting reduced demand. And, that's all lovely and great.
At the same time, you can have a voracious, highly mobile demand for the cheapest energy around. You know, the kind that solar and wind is supplying, but sometimes in mildly inconvenient locations. This does not actually reduce the supply for everyone else. It's not a zero-sum game. Supply follows demand. This horrendous cadre of buyers directly pay for increased production of cheap green energy that otherwise would not have been set up at all. Thus, ramping up equipment production and economy of scale. And, motivating the creation of supply that otherwise would have been too risky to invest in.
It makes no sense to talk about something being limited "right now". Limits are about the future.
Can you please rephrase and clarify?
- a lot of it is spare power that would be wasted otherwise (only partially true).
- it uses less energy overall than governments spend protecting their fiat money's value (not that comparable since fiat can also be used as currency).
- the gold industry uses a lot of energy too (but I doubt Bitcoin will reduce the energy spent on gold, it will probably just add up).
EDIT: completed gold mining point following comment
I'm not sure it will add up. It seems to me that different stores of value compete directly with each other, because you can store value one way or the other way.
Why do people keep making the comparison to gold mining? It's inappropriate.
Gold mining is bad for the value of gold, because it increases the amount of gold in the world. Eventually, the gold coffers on Earth will deplete and there will be no more gold mining.
Bitcoin mining is necessary for the value of bitcoin, otherwise there can be no certainty of the blockchain. After most of the bitcoins get minted, the mining will still have to continue out of transaction fees.
The cost of mining bitcoin needs to be compared to the cost of gold storage and handling of gold transactions, not gold mining.
A lot of us could live a more simple life (i.e. no cars, fewer children). But humans are attracted to comfort and the ability to pursue their dreams.
It's fiat currency combined with total energy crisis. It only retains value as long as people are willing to tolerate exponential destruction of resources by the already wealthy who can afford to bankroll any possible conversion of energy directly into 'money', no matter what workaround is required.
If it becomes 'the miners run for one second every day' and there is no way to cheat, these are the people who simply take the same amount of energy they were draining before, and come up with a way to store it the whole day… that or the world blacks out every day, because miners.
Bottom line is unless they get everything they want and dream of, including the eradication of government currency, the escalation will inevitably lead to a collapse where all the work becomes meaningless, valueless. All that energy will have been burned for NOTHING.
We just don't know when that will happen. Bitcoin is time, all right: time running out. Don't be caught still holding it when it pops.
On the other hand, the finite supply/deflationary aspect of it is also the perfect antithesis of consumerism, in that it favors hoarding (spending less) instead of spending your paycheck as you get it.
1. Bitcoin is environmentally damaging. It produces 37 megatons of CO2 per year and consumes 78 terawatt-hours of electricity annually. Much of that electric consumption is powered by coal. Not all energy consumption or CO2 output is bad, but value should be provided commensurately to society for the damage incurred. And yet:
2. It is a terrible currency. Promoters claimed we could pay for things with Bitcoin, that it'd replace fiat currency. But the design of Bitcoin in particular makes it an awful currency. To prevent deflation, a currency should be able to increase its supply to maintain reasonably constant velocity as demand increases for it as a medium of exchange. With its limited number of coins, Bitcoin cannot increase supply to maintain velocity: its only solution is to fractionalize, a form of deflation. And deflation is what we get. Massively: everything you own, and all your income, constantly becomes worth less expressed in Bitcoin, day after day.
3. It's a terrible currency, part two: currencies should have very low transaction costs. Bitcoin transaction costs exceed $20. The response to this is to recentralize it in the form of services that cheaply transact Bitcoin rights management through traditional databases. Eliminating the very value proposition of Bitcoin.
4. After having given up on defending it as a currency, the next claim is that it's a "store of value." But stores of value should have some degree of consistency of value: volatility is not a virtue. Bitcoin supporters are right that fiat currency, to the degree it is exposed to inflation, is at risk of not being the best store of value, which is why we don't normally keep huge amounts of resources piled up as cash. But Bitcoin is an awful store of value because it has no fundamental utility that moderates its price swings. Normal assets - real estate, bonds, gold - have some sort of fundamental utility or cash flow that helps to moderate price action over time. The asset must have some sort of use first, then it can become a good store of value. Because of the above flaws, Bitcoin has no good use, which thusly makes it a poor store of value.
None of this is a fundamental problem of crypto, just Bitcoin. Crypto could be very useful! But with many millionaires minted from a lucky speculation and their entire ego reliant on deceiving themselves that their speculation was clairvoyance, critiques of Bitcoin are invariably met with a flea market of intellectually mangy defenses that ultimately boil down to saying "well, look at its price!"
Bitcoin is "money" and not a "currency." Bitcoin works very wonderfully as money.
Bitcoin is not very wasteful in energy, contrary to the pushed narrative by those that want everyone to believe this is truth. Bitcoin uses a tiny fraction, currently around 7-9% of the electricity that the global banking system currently uses. Bitcoin uses a very large portion of renewable energy sources, and will continue to balance it's energy use towards efficiency and optimizations.
Your part 2/3 etc, it's not a currency. Bitcoin is pure money. We also do not really ever use gold for currency. It is money. Bitcoin is a better money than gold. Once you stop drumming on the wrong path, you'll more easily understand the differences and stop banging your head about how it's a bad currency. It's not a great currency, while it is the very best form of money.
Your whole bit about meandering into defending it's value as currency or store of value, is just highlighting your total misunderstanding of the value of gold, or the new digital version of gold as money. Money IS a store of value.
Lastly, Bitcoin really has no fundamental problems. Nobody that knows about bitcoin gives a flying fuck about the price.
But it's cute. You like Bitcoin. You're a good cheerleader.
It's like that with Bitcoin fanatics.
"Money" and "currency" do have definitions built up over time by economists and financiers over the past centuries. They are not the same as is used, apparently, in the Bitcoin-Disney fantasy park.
Conventionally - and by conventionally, I mean as it is used by all economists and financiers for centuries - currency is a subset of money. A currency is the dollar, the Euro, the yuan. It doesn't have to be fiat, but today usually is. Money is any type of highly liquid asset typically used for the payment of debts, which includes currencies but can include short term bank notes as well. Although there have been times in history where gold was used as money, it is generally not used as money now, although like most assets it can be converted into money. Bitcoin can be money too, but it's a crappy money, for the reasons I described above. Generally, economists don't spend a lot of time splitting hairs about money and currency, because they're very similar concepts.
"Money" is not a synonym for "store of value." You will not find that in any economic textbook, or even Wikipedia for that matter.
Even if you wanted to use the fantasy park definition of money as anything with a store of value, you chose not to even defend Bitcoin as a store of value. Possibly because it's a terrible store of value.
Again: this is just Bitcoin. Crypto can be designed better. The fact that Bitcoin fanatics obsess over Bitcoin in particular is just proof that they're talking their book.
They can’t all be negative in real terms.
Nah. It motivates rational beings to spend that capital on anything at all, as fast as possible, because the alternative is a net loss of purchasing power.
Deflationary currencies on the contrary motivate actors to think before spending, because any spending has to be balanced with the future gains that won't come from holding it and seing it accumulate value over time.
Yet fiat enthusiasts keep parroting that the linear and intentional destruction of value through inflation, in order to encourage further mindless consumption, is a good thing? What is so bad about a currency that maintains its value throughout time? This would allow someone to actually save, rather than be forced to buy some stupid widget they don't need, or become a part-time fund manager trying to decide between a series of risky assets. As it stands, simple savings accounts pay zero and lose money to inflation, so if you don't become a one-man hedge fund or pay someone else to become one for you, you just lose your money.
The way I see it, it's either "burn" the energy in proof of work (the machines leave behind only heat and bitcoin) or let a closed institution take this energy to provide this trust.
In the end, it's all tradeoffs and incentives decided by politics and made possible by technologies.
Why would you think that Bitcoin needs to accomplish that particular task? As far as I know ending climate change has never been mentioned as a goal or desirable outcome of the project.
Ethereum is at least working hard on other algorithms that are energy efficient. But in the Bitcoin space, the tremendous investment in energy-intensive mining equipment means that the entrenched players have an interest in persisting the way that things currently work, rather than seeking an energy conserving replacement.
This silly task (called HashCash https://en.wikipedia.org/wiki/Hashcash ) was chosen not because those numbers are somehow important to the algorithm or network, but rather as a way to slow down the rate of block creation: forcing people to waste energy on finding these numbers, in order to have their blocks accepted by the network.
It is important for bitcoin's security that the block chain can only grow slowly, since conflicts (like double-spending) are resolved by choosing the longest chain; if someone makes their own block chain that's longer than the main bitcoin chain, the network will switch to that and any payments on the previous chain will be forgotten. Using HashCash to slow down block creation makes this harder to pull off.
The difficulty of the HashCash task (the required number of zeros for the next block's hash) changes depending on how long it took to find the last block, such that it always takes about 10 minutes to find a block, regardless of how much energy is spent on this task, or any technology improvements (e.g. CPU vs GPU vs ASIC). In other words, wasting more energy on mining bitcoin, or making more efficient bitcoin mining hardware, will not find blocks any faster; the mining task will become harder to compensate, so it still takes about 10 minutes per block.
Bitcoin allows transactions to contain a 'fee' with a blank recipient, and each block can also contain a small payment 'from nowhere' as a reward/incentive. Miners create blocks which send these fees and rewards to themselves, then try to solve the HashCash task to make the block valid. Whoever solves it first sends their block to the network, it gets accepted as the longest chain, and hence that miner has received the fees and reward.
Miners can't make more money by solving HashCash faster, since it always takes about 10 minutes for a block's HashCash to be solved, at which point everyone starts looking for a following block (since that will form the longest chain), which may be even harder to find. Instead, wasting more energy on mining makes it more likely that a miner will be the one who finds the next block; since, on average, someone performing X% of all mining will find X% of all new blocks (and hence receive X% of the fees and rewards).
This creates a competition between miners, to try and waste more energy on HashCash than each other. This race-to-the-bottom breaks even when the energy wasted finding a block costs the same as all of the fees and rewards in that block; i.e. when all of those wasted megawatts are being spent for literally nothing (net).
There are other ways to slow down the creation of blocks, or to resolve conflicts which don't incentivise long chains; other cryptocurrencies are experimenting with such things.
Furthermore, there are not "blockchains," there is one blockchain, and then there are a thousand or more scams trying ride Bitcoin's shoulders. They are entirely pointless systems that are not made to solve anything, they don't solve anything, and they were not made by mathematicians or cryptographers.