As a Bitcoin miner (https://toom.im), while I appreciate the work put into it, this particular metric of "transactions per kW" might not work the way you expect.
The main point that you should understand is that a PoW blockchain's energy usage is not proportional to its transactions.
I'll say that a different way: the transactions themselves do not use any energy in mining.
I'll say this in a third way: it takes exactly the same amount of energy to mine an empty block as it does a 1GB block of transactions, as it does a 1,000,000,000 PB block.
In reality, transactions are all hashed together in a mining pool into a single numeric hash before miners ever see them. It doesn't matter how many transactions are included in the hash. The hashpower just has to find a magic number matching that hash.
On the other hand, the #1 factor that increases a blockchain's energy usage is its price per coin. The price of a coin is how much that coin is worth to be mined, which is the incentive for miners to dump energy into mining it. In steady state, miners will dump energy into mining a coin until the cost of energy = the value of the coins coming out.
This is why you can see Bitcoin SV at the top of the list -- it's worth the least of the Bitcoins.
And it's also misleading to compute the second factor -- transactions per second -- by counting the actual transactions on the blockchain, rather than looking at the transaction capacity. Because blockchains only cost something per transaction once they reach capacity. This is misleading with Bitcoin SV, for instance, because that coin artificially creates bogus transactions on its blockchain in order to make it look popular and demonstrate the vision of large blockchains. Bitcoin Cash, on the other hand, can handle a thousands of transactions per second (on testnet) but doesn't clog its live blockchain with them.
So, in sum, if you send a transaction on Bitcoin Cash, it will cost 0 kW of electricity, even though it says 31.3 Txs/MWh (which equates to 31.9kW/Tx) in this chart. This is because transactions do not cost anything in electricity. Electricity only goes to preventing double-spends. A better metric would be "energy use per double-spend that was prevented."
"Energy used / total value secured" is a better measurement. "Double-spend prevented" isn't calculable.
Important to remember that the energy used on mining both secures current and *PAST* transactions, that's the entire point of the blockchain. I think "total value secured" captures this point.
I find it frustrating that crypto-currencies are judged by their energy usage, meanwhile traditional fiat currencies are secured by massive banking industries, governments, and militaries. The total energy required to maintain a secure and stable fiat currency is likely orders of magnitude greater than that of Bitcoin today. The problem is one is easier to calculate, so it generates easy headlines from lazy journalists.
Fundamentally energy usage isn't a worthy argument for or against a currency. It's the wrong measurement to use. It seems to be the go-to straw-man argument for those who already made up their minds about cryptocurrency before hand.
Yes, Proof-of-Stake exists, but notably it does not exist at a reasonable scale yet. If it could work as well as Proof-of-Work then it eventually would displace it. All attempts so far have not lived up to their hype.
> traditional fiat currencies are secured by massive banking industries, governments, and militaries
This argument makes no sense. Bitcoin doesn't obviate the need for militaries, banks, or governments, those things would exist regardless of the type of currency being used. Furthermore, these institutions have functions that go far beyond "securing fiat currency", not to mention the fact that bitcoin's existence relies on the massive infrastructure that facilitates the power grid and internet (which are secured by governments and militaries). Beyond that, bitcoin's value is inextricably linked to the utility of government issued currencies since bitcoin is not a suitable unit of exchange in a real economy due to its miniscule transaction capacity. In a world where fiat currencies collapsed the value of bitcoin would also plummet due to the fact that bitcoin's poor throughput could not sustain the the market for staple goods such as food, water, and medicine.
The end of gold backed currencies in the 70s and replacement by fiat currencies hinged on the middle east oil states agreeing to sell oil in USD, in return for global policing by the US[1]. There is thus an intimate relationship between the current system and fossil fuels and the military, which goes beyond just ‘existing infrastructure’ arguments. This doesn’t mean we should countenance burning coal to mine bitcoin, but we shouldn’t forget history either, and as such the argument of the OP has some merit.
Second point is about transaction volume. Compared to total global money, the transaction volume of fiat is also very small. The recent money printing should make this obvious. The amount of fiat in fixed income markets and derivatives is staggering compared to what you mean by ‘transactions’[2]. Bitcoin has payment solutions in the works, it is likely that transaction volume and unit of exchange utility will increase over time. Additionally, if we take an actual example of a collapsing fiat as occurred in the hyperinflationary period in Brazil in 1994, the Government fixed the problem by inventing a new currency [3]. It is quite possible that in the current era, countries with collapsing fiats would use cryptocurrencies for this purpose, as there are some obvious advantages.
> There is thus an intimate relationship between the current system and fossil fuels and the military
Even granting this premise, the argument still makes no sense. Governments, banks, and militaries existed for centuries prior to the existence of even the U.S. itself, so the suggestion that these institutions are somehow a product of U.S. monetary policy in the 70s is absurd on its face. I also think it's important not to "forget history" and the history of these institutions far exceeds what that argument grants.
> Compared to total global money, the transaction volume of fiat is also very small.
This is also beside the point. Bitcoin's value is highly dependent on the utility of government issued currency so that people can obtain staple goods and services that have inherent value, bitcoin is simply not able to fill this role.
> Bitcoin has payment solutions in the works, it is likely that transaction volume and unit of exchange utility will increase over time
There is always a myriad number of solutions in the works, but they don't actually mean anything until they solve the problem.
That’s a common misconception. Selling oil in any currency has minimal impact on the US or USD, a buyer needs USD just long enough for a transaction and the seller gets rid of USD ASAP. The value is if 3rd parties need to hold some value worth of USD and the USD has inflation, then those 3rd parties need to constantly buy more USD to make up for inflation. In effect the US gets to print money and get stuff for free.
As to long term hyper inflation, you can only get long term hyper inflation if the country prints more currency. Suppose 1 trillion USD was worth 1 apple, and the US economy was even 1% as large as today, and their was the same number of USD in circulation, and the IRS only accepted taxes paid in USD. Now suddenly a lot of people really really want USD to pay taxes as their hypothetical tax bills are larger than the amount of USD possible to acquire. Except people constantly need to pay taxes so that can’t happen. What can happen is significant shifts in USD’s vale, aka it can go up or down within a range or the US can print a lot more currency.
>> I find it frustrating that crypto-currencies are judged by their energy usage, meanwhile traditional fiat currencies are secured by massive banking industries, governments, and militaries. The total energy required to maintain a secure and stable fiat currency is likely orders of magnitude greater than that of Bitcoin today.
1. By that logic bitcoin is also supported by the military, education system, banking industries etc. It relies on a secure society that has power and internet and computers and wealth for citizens to have and use these things as a prerequisite.
2. The military etc you mention actually is the basis of alot more in society than just fiat currency. So your formula "Energy used / total value secured". If you want to include those things in "energy used" then under "total value secured" you need to include basically all value ever created by humans in western countries which is in the hundreds of trillions (if not more). Not just fiat currency. And actually if we went back to the gold standard all those institutions would still need to exist to secure society. (banks, governments, and militaries existed long before we abandoned the gold standard.)
>>> meanwhile traditional fiat currencies are secured by massive banking industries, governments, and militaries.
Crypto-currencies are also secured by those things in their present state. So long as crypto remains a small portion of the overall economy, it depends on the mainstream economy for its existence. For instance, it can't exist without an economic infrastructure that can develop and produce computer chips, telecommunications, the electric grid, and so forth.
The energy cost of Crypto is on top of the cost and externalities of the present day economic infrastructure.
But computer chips, telecommunications, the electric grid, etc., don't require for governments to exist for them to exist and work. I would even argue that they would work better and more efficiently under a free market economy, so governments, in general, are holding back progress.
> I would even argue that they would work better and more efficiently under a free market economy
That sort of argument would need some extraordinary evidence, given the sort of chaotic, crime-ridden, violent state places without governments tend to devolve into.
I didn't say "no government" or "no laws", I asked for free market. For a free market to work one of the important aspects is open competition with low barriers of entry. I believe most governments today do the opposite: their laws add barriers to competition, leading to inefficiencies that are in detriment of the general public. Examples are all around us, from cities forbidding Uber as a competition to taxi companies to states restricting use of cryptocurrencies as a method of payment. If you compound everything the damage that most governments do to the economy, and therefore to the wellness of humankind, is immense.
> I believe most governments today do the opposite
You're entitled to your beliefs, OTOH I believe that the free market cannot work unfettered. Monopolistic behaviour of large corporations shows us this again and again and again, as do environmental and Labour abuses and a million and one things people will do to screw each other over for a fast buck.
I think you confuse free market with "no rules, everything is allowed", which is not what I am proposing. Those monopolies you mention in the abstract are largely possible because laws make it much more difficult than it could be for competitors to arise. In a free market most monopolies are unstable and don't last long. Milton Friedman's Capitalism and Freedom and Thomas Sowell's Basic Economics both have chapters dedicated to monopolies and how states are the main reason they can be sustained.
Negative externalities, like environmental damage, should ideally be internalized, although I grant that this is not always easy. Private ownership of all land might help, as public ownership dilutes responsibility.
> I think your view is extremely naive.
Isn't it interesting that I think the same about your view? :)
> Those monopolies you mention in the abstract are largely possible because laws make it much more difficult than it could be for competitors to arise.
This is just more libertarian apologetics. There have been more than enough examples (cough intel *cough) of monopolistic practices caused by unfair market practices. Using dominance to force suppliers to exclusive use of your products is not a practice enabled by the state.
> Private ownership of all land might help
Rivers too? And then what? I can sue you for polluting my downstream, but it's OK if a company just buys up the whole river, then they can ruin it to their heart's content?
> There have been more than enough examples (cough intel *cough) of monopolistic practices caused by unfair market practices. Using dominance to force suppliers to exclusive use of your products is not a practice enabled by the state.
Microchip fabrication is a very lucrative business, so why aren't there more competitors to Intel? I can think of at least two reasons:
1. It's a very capital-intensive industry. Here all government disincentives to saving, investment and business operation apply, mostly in the way of taxes, but also things like the SEC "accredited investor" qualification, restrictions to investment from foreign sources, barriers to crowdsourcing, licenses and bureaucracy, and a long etcetera.
2. Patents and copyright. Because of these government-granted monopolies competitors cannot copy products, so they represent another barrier to entry. Granted the idea behind patents is to incentivize private-funded research, but the drawback is reduced competition for the time the patents lasts. I believe patents are too long-lived in a world that moves at an ever-increasing pace.
If there were more real competitors there would be more suppliers willing to not sign with Intel. There would also be more competitors in the supplying space, of course.
>> Private ownership of all land might help
> Rivers too? And then what? I can sue you for polluting my downstream, but it's OK if a company just buys up the whole river, then they can ruin it to their heart's content?
People rarely ruin their own property, on the contrary they make an effort to preserve it and keep their value high. Public-owned property, on the other hand, has no such incentive. This is why people don't treat a hotel room or AirBnB with the same care as their own house. Like it or not humans are moved by incentives, not by ideals, so we should take that into account when designing our policies. In other words: policies should be judged by their results, not by their intentions.
In the case of the river it might make sense to have some kind of joint ownership by people and/or companies involved with it. Please notice that private ownership doesn't mean individual. Even assuming that a single company or individual owns the river and that they have more to gain by polluting the river than keeping it clean, they couldn't just dump whatever they want in there, as it gets to the sea. An effort should be made to factor in all negative externalities.
> This is just nonsense.
I don't think so, and neither do many renowned economists. I think you lack imagination or are misconstruing the libertarian proposals. The idea is not "get rid of every and all regulations", but being aware that regulations, taxes and centralization of the economy have rippling effects that, when combined, greatly reduce the wealth generation for all of us.
> so why aren't there more competitors to Intel? I can think of at least two reasons:
So, just completely ignore the anti-competitive contracts it forced on suppliers, and other market-dominating tactics it was convicted of, in favour of some handwaving about patents.
Good, honest argumentation there.
> People rarely ruin their own property
Again, utterly naive given what we know happens in the real world. Companies can and will act like utter sociopaths in pursuit of short term gain.
> I think you lack imagination
And I think you lack any attachment to what people and companies actually do, here in the real world, rather than what you imagine economic incentives might make people do.
You aren't even wrong here, you are incoherent. You say "government is the problem" then say "externalities must be factored in" (yet give no hint as to how)
You say "libertarian" but then you reject intellectual property.
Does free market mean getting rid of corporations? It has always occurred to me that the institution of corporations, notably liability limitation, as at once an intrusion into an ideal free market but also the only way to enable the funding of great ventures such as semiconductors.
“The total energy required to maintain a secure and stable fiat currency is likely orders of magnitude greater than that of Bitcoin today.”
No way. You hear this argument all the time — that fiat currency also uses tons of energy - but I just don’t think it’s true (relative to the amount of transaction throughout, and also in absolute terms). Bitcoin mining uses something like 0.5-0.6% of global electricity consumption for a tiny, tiny fraction of (purely speculative, not economically meaningful) transactions. What % do you think fiat uses?
That is one of the important points point made by jtoomin in the first post of this thread: the energy consumption of a PoW blockchain if not proportional to the number of transactions. This means we could have everyone, everywhere, using a PoW blockchain with the same percentage of energy consumption as today (although it would probably rise as price would arguably also rise as demand increases, but it would eventually find an equilibrium, it will never "consume all electricity").
Didn't bitcoin have the chance to double their transactions-per-second for a constant amount of power consumption, in the form of Segwit2x, and decide not to do so?
The fact Bitcoin could be more efficient and chooses not to isn't really an improvement over being unable to be more efficient IMHO - in fact arguably it's worse.
I completely agree, increasing the maximum block size is the simplest way to scale. Bitcoin BTC refused to do that, keeping the 1 MiB maximum block size instituted by Satoshi Nakamoto in 2010 as a spam-prevention measure, which led to raising transaction fees as users compete for the scarce block space. That is also the reason why Bitcoin Cash BCH was born in August 2017: to raise the maximum block size and allow the Bitcoin blockchain to process more transactions per second while keeping fees low.
At the technical level BCH has showed that the network is stable in production with 20 MiB blocks, but the goal and ongoing work is to support gigabyte and eventually terabyte blocks so it would scale to worldwide usage while keeping transaction fees low. The counterargument by Bitcoin BTC is that large blocks centralize the network, as not everyone can afford to run a full node. That's a different debate that I would be happy to discuss, but I want to start by pointing out that keeping the block size low also centralizes the network, as many users will not be able to afford the increasing transaction fees (which rose to $50 at recent times). Does it make sense to restrict the network so anyone can run a $50 node but not be able to transact on it? I think decentralization is a means to an end (electronic P2P cash), not a goal in itself. In other words, blockchains should be decentralized enough that no single entity can take control of the network, but too much decentralization is inefficient, so an equilibrium must be found.
> In other words, blockchains should be decentralized enough that no single entity can take control of the network, but too much decentralization is inefficient, so an equilibrium must be found.
I believe that is the hardest problem that bitcoin didn‘t solve. The hashrate is governed by the price and a arbitrary halving schedule. There is no mechanism to regulate the hashrate to a certain setpoint where attacking the network is not feasible. This issue becomes even more severe when the block reward is dominated by fees in the future. In that scenario the hashrate is not so much determined by the price anymore but the available block space and the utility of on-chain transactions. It is really hard to judge bitcoins security model considering all these variables. But for now the solution seems to be to vastly overcommit hashrate
It's not becoming more efficient if you are just allowing blocks to be filled with frivolous data that wouldn't have otherwise ever been put on the blockchain.
It's easy to increase the block size, but it's very unlikely it would ever be decreased again, so it makes sense to wait until there is no other option.
Bitcoin strength and value is on decentralization. If you increase the block size, it will be seized by governments or large corporations. This has long being debated, and the reason it is like it is today, is that everyone really vested into it agreed (in a distributed way) to keep it as so.
> If you increase the block size, it will be seized by governments or large corporations.
That doesn't make any sense. Any actor, like for example a government, might seize (control) a blockchain by having overwhelming mining majority (51% attack), but that has little to do with the size of the blockchain itself.
The only reason one might have to think that way is believing the false narrative that a BTC "full node" does anything to secure the network. Only mining nodes secure the network, having a copy of the full blockchain is not enough.
today with a raspberry pi and a 1TB hard drive you can have a node and be one of the validators. If hardware is unattainable by the users interested in helping with decentralization (and there are few enough of those) large corporations or governments will be the only validators and defeat the purpose of decentralization
This is only the case of you would arbitrarily increase the number of potential transactions per block.
But as far as I know the maximal number of transactions is capped in practice.
Furthermore the security of PoW is based on it being far more expensive to mess with it then to mine it. But if you push more mommy through the same number of blocks it's at some point breaking apart.
Lastly no one says it will ever consume all energy. That works be absurd. It's about the required energy (and hardware cost) in relationship to the provided value being unhinged and for security you need steadily increasing energy costs for increased usage.
> But as far as I know the maximal number of transactions is capped in practice.
What do you mean? There are no hard technical impediments to Bitcoin being able to scale to worldwide usage with basically the same structure as today. It's a matter of optimizing software and having powerful hardware (that is available today, and will be even cheaper in the future). This article by Johannes Vermorel [1] goes over it in detail.
If you have any evidence that goes counter to this I would love to read more about it.
I don’t think you’re going to be able to secure the blockchain without those governments and militaries. Maybe you replace the massive banking industry with a new massive crypto financial industry?
“The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.”
Do you have an estimate of energy used / total value secured ? If I am understanding correctly, an upper bound on "total value secured" would just be the total transaction volume moved in a block?
Each block secures the entire chain. The lower bound of the total value secured is market cap of the coin. In the case of Bitcoin, the upper bound is the value of the entire "crypto" ecosystem, including all tokens, companies, jobs, infrastructure, etc.
I agree about the suggestion to look at transaction capacity, however:
- Bitcoin is operating at capacity and has shown unwillingness to adjust capacity, so the "kWh/tx" is valid for Bitcoin.
- Transaction fees increase the block reward, and as a consequence, the energy that can be used for mining before it becomes unprofitable. This is currently only about 10% of the total reward miners get for mining a block on the Bitcoin (BTC) blockchain, but it is something to consider. The corresponding part of the energy usage would, at a fixed fee, be proportional to transactions.
> Bitcoin is operating at capacity and has shown unwillingness to adjust capacity, so the "kWh/tx" is valid for Bitcoin.
Bitcoin's layer 1 is operating at capacity - different networks make different tradeoffs. Bitcoin has gone the "less change" and "more decentralization" route by keeping layer 1 small, with the goal of moving transaction volume to layer 2.
Bitcoin introduced a number of changes like SegWit that are way more complex than adjusting a constant on layer 1, plus a huge amount of complexity on layer 2 that makes using layer 2 just as complicated as (or more complicated than) using a different cryptocurrency.
Whether it leads to "more decentralization" when everyone can run their own (L1) node but a single L1 transaction costs as much as the node hardware is quite debatable IMO. By making L1 transactions unaffordable, it encourages _centralized_ solutions where IOUs are shuffled around entirely off-chain.
By making L1 transactions cheap, it's basically like giving away cheap, permanent, verifiable storage to anyone which is constantly replicated across the globe.
Even if second layer solutions become highly centralized, the risk is significantly mitigated if you just don't keep your savings on them. If popular second layer solutions become untrustworthy then it would be easy to switch to different ones.
And to be complete, there are other ways that PoW blockchains can compete on energy efficiency:
1) Inflation rate
2) PoW function
3) Transaction cost after blocksize limit reached
The inflation rate determines the incentive given to miners. With less incentive, the energy use will go down. This comes at the cost of increasing the ease of a double-spend, but there is already far more than enough difficulty to double-spend at the current mining rates.
The PoW function determines the capital cost required to buy the miners themselves. If you increase the capital costs (e.g. with a memory-hard PoW function, or requiring less-efficient GPUs instead of more-efficient ASICs) then miners will be able to spend less of their costs on energy. This is one way in which Eth does well by the above metric, and is a valid way to reduce energy usage in PoW.
Of course, transitioning to proof-of-stake (as eth is doing) will eliminate the energy problem entirely.
Finally, some blockchains (e.g. BTC, ETH) have reached their capacity of transactions per second, and then users can add a fee to each transaction to incentivize mining pools to include them in a block. These fees do add incentive for miners to dump energy into their blocks. However, they are a much smaller portion of the incentive than you would expect.
On your website that you linked says "We conduct our business in a way that protects ... our planet's climate against warming." Can you elaborate how providing infra to mine Bitcoin is helping the planet against global warming? Aren't you doing the exact opposite? If you are using 100% green energy, that energy can be used for something productive not providing PoW. Note Bitcoin alone currently consumes 0.55% of world's TOTAL electricity production and this is going to get even worse with more adoption.
>If you are using 100% green energy, that energy can be used for something productive not providing PoW
You can say the same thing about ANY activity that isn't an arbitrarily defined form of altruism. Sports? Concerts? Video games? All vast wastes of time, money, and energy that could be spent fighting poverty or feeding the poor. This betrays the intention of criticizing bitcoin's energy usage because it moves the goal post of "...but but it's not using renewable energy" to "...but but that renewable energy is not being used for what I want it to be used for".
But almost any other activity only benefits from getting more efficient. Compare today's efficient LED lighting technology with what was available a few decades ago. With proof-of-work on the other hand, efficiency is actively counteracted. If a proof-of-work cryptocurrency holds its price, its energy usage can only go up.
You are also assuming that only renewable energy will be used for mining in the first place. I don't think that is a given: As long as it stays profitable no matter how, miners will exploit any resource that is available to them, literally burning resources for money in their wallet. Cryptocurrencies are decentralized by design, so while the US for example can stop the use or import of inefficient stadium lighting technologies, there is no way to apply a carbon tax or stop the "import" of cryptocurrency mined through "dirty" means.
This isn't as clear cut as it sounds. The Jevons paradox: as enegry efficiency goes up, enegry demand goes up by more. Or, put another way: humans wasted less electricity 20 years ago with incandescent bulbs than we do now with LEDs. One could also say that LED efficiency is counteracted by tech improvements. But in reality, we may be using more energy, but we're also doing more, and doing things we couldn't have done 20 years ago.
I'm skeptical of assigning a value judgment to things that a lot of people find valuable. LEDs are used for bigger, brighter advertisements. If I don't personally like ads, does that mean energy efficient LEDs are a waste? Bitcoin mining is used to secure a ledger from attackers with the resources of a nation state. If I don't personally care about a secure ledger, does that mean mining is a waste?
And about profitability, this is important, and new within just the past few years: renewable energy is the cheapest energy. [1] Anyone mining with coal is behind the times and will be competed out of the market in due time. The more incentive people have to seek out the cheapest energy, the higher the demand for renewables will be, and the faster the world will get on board. I for one welcome this catalyst.
I'll admit that based on my limited knowledge of PoW I was unaware of this disincentive against efficiency. I'll have to study more about how PoW works.
That's perfectly understandable, I think relatively few people looked at proof-of-work in detail. I can give you a quick overview of how proof-of-work works (I understand it well enough to actually be able to do it by hand on paper), but nevertheless doing your own research always helps:
To "mine" a block, a miner attaches a random number to the content of the block (the content mostly being the actual transactions), performs a difficult calculation on the entirety (i.e. block and random number), and checks whether the result of that calculation matches a prescribed goal. The goal is to have at least a certain amount of leading zeroes in the resulting number, and it is (to everyone's best knowledge) impossible to know how many leading zeroes there will be without performing the calculation. That is the literal goal, not an analogy.
In the massively overwhelming majority of tries, this goal is not reached. The calculation was useless, and the miner tries again with a different random number attached to the block. There is no other value to the calculation than to reach the arbitrary goal. If the goal is reached, the miner has won the lottery: All participating nodes in the network accept the result (the calculation is easy to verify) and the miner may claim the rewards for themselves.
The amount of leading zeroes to achieve is directly tied to the mutually agreed upon "difficulty". If mining becomes easier and the lottery is won too quickly (say because new faster ASICs flood the market, or more miners participate), the network adjusts the difficulty up, meaning more leading zeroes, so that the overall chances of winning the lottery within a given time frame stays stable.
> If a proof-of-work cryptocurrency holds its price, its energy usage can only go up.
The cost of proof-of-work is paid by the network participants. When you transact on Bitcoin or Ethereum, you pay massive fees to proof of work miners that significantly limits the number of things you can do productively. Dozens of interesting use cases on Ethereum are made completely non-viable by fees that sometimes break $100 per transaction.
Proof of work cryptocurrencies however exist in a competitive environment with other cryptocurrencies. If a new cryptocurrency launches that can provide the same utility and security guarantees at a lower cost (either through less work, or through some other means) you will have a natural migration of users from the more expensive cryptocurrency to the cheaper cryptocurrency.
At equilibrium (which we may not be at, given all the hype currently), a proof of work cryptocurrency is only sustainable if its cost structure is competitive. There is an active incentive applied to the entire space to invent more efficient means to transact in a decentralized way, so that participants don't have to pay such high transaction fees and inflation costs to update a decentralized ledger.
> Cryptocurrencies are decentralized by design, so while the US for example can stop the use or import of inefficient stadium lighting technologies, there is no way to apply a carbon tax or stop the "import" of cryptocurrency mined through "dirty" means.
This approximately applies to all manufacturing though. What percentage of US goods are manufactured in regions that have limited regulation regarding the environment? Most of them, because if you don't use those regions, you are going to have trouble competing in the marketplace. It IS a problem for Bitcoin, but it's also a problem for all global production in general.
> If a new cryptocurrency launches that can provide the same utility and security guarantees at a lower cost (either through less work, or through some other means) you will have a natural migration of users from the more expensive cryptocurrency to the cheaper cryptocurrency.
This seems to be purely theoretical.
In the real world, most people stick with the recognised names regardless.
Total energy costs from PoW mining won’t rise to exceed PoW mining revenues unless miners are willing to mine at a loss. In an efficient market, one where PoW mining profits have been driven down to zero, total energy use should remain constant if market price is held constant. PoW mining energy efficiency may increase, though.
The rest of your post could be read as a criticism against incomplete application of hypothetical carbon taxation regimes. It seems weird to single out PoW cryptocurrency as the one and only benefactor to a patchwork carbon taxation regime globally.
How can efficiency increase in a way that decreases energy use?
Let's say a new ASIC comes out that mines twice as efficiently, i.e. 2x less energy per calculation. Because miners can now afford to run twice the amount of ASICs on the same energy budget, this means that eventually miners are mining twice as fast.
The network however needs to keep the block rate constant (6 blocks per hour in Bitcoin), so it counteracts by adjusting the difficulty. In this case, mining a block becomes twice as difficult. In summary, everyone has now twice the amount of ASICs consuming the same amount of energy, still mining at 6 blocks per hour.
The misconception is that the "work" in "proof-of-work" is meaningful by itself. It is actually not, it is a lottery whose probability to win is adjusted exactly so that statistically, all miners in the world together will mine 6 blocks per hour on average.
As for "mining at a loss": I am not convinced there is a general principle that only allows for absolutely clean energy to make mining profitable, across the whole world and in any situation. We have already seen a coal plant being ramped up for the purpose of mining in New York, and hash rate going down when coal plants in China got flooded.
It can spike up when new miners join the game, possibly in remote locations of the world with defunct governments that decide that mining Bitcoin for a select few is a more "important" use of their non-clean energy source. The network will react, miners in other parts of the world where regulations do not allow the same may scale their operation down, but there was a spike, and much more importantly you now incentivized burning resources by whatever means available where regulations do not stand in the way.
> that energy can be used for something productive
A decentralized/borderless/censorship-resistant/virtual currency is one of the most productive things we can use energy for. It might not be as apparent in the US or the developed world, but Bitcoin is a life-saver for many people in countries with crumbling currencies. We waste a lot of energy on things that are far more more useless (like christmas lights for example[1]).
We should just put carbon tax on everything with environmental side effects and let the market decides what's a productive use case vs one that isn't.
I don't believe mining Bitcoin quite falls into the category of "most productive things we can use energy for". Drug discovery, carbon capture, agriculture, construction, etc. etc. come to mind as slightly more useful. Financial transactions in traditional banking systems which Bitcoin mining is more comparable with consume far far far less energy. Also Bitcoin is designed to adjust PoW difficulty based on network's average mining performance. In other words, the more compute power you provide the less efficient it becomes.
> A better metric would be "energy use per double-spend that was prevented."
Not for a general audience. The purpose of a currency is to enable transactions. Internally, I get why people involved might fuss about the metric. But from the societal perspective it's reasonable to ask, "What does it cost per unit of value created?"
Okay as far as it goes, but it doesn't explain how to fix the problem. We need to drum up interest for a solution.
The way I like to explain it is that Bitcoin is collectively giving away about $1.5 billion a month in prize money to miners. That's the root of the problem. Miners will spend up to $1.5 billion a month on electricity (mainly) and their other expenses. Currently it's about 10x Google's electricity usage.
Total revenue is proportional to the block reward (an algorithmic parameter) and Bitcoin price. So to fix this, either they could reduce the block reward ahead of schedule (won't happen) or something could happen to crash Bitcoin's price. More transaction volume would actually be better if it were due to a fire sale.
Taxing holdings of Bitcoin would be a way to convince people and businesses to sell and discourage buying, at least for those that pay their taxes.
Or who knows, maybe threatening to do this would result in enough consensus to accelerate the block reward halving schedule?
The saddest or the most idiotic part of this whole story is the "bitcoin to the moon" crowd. Bitcoin price almost directly increases the effort spent on mining - if you're going into bitcoin now hoping it will 2x this literally means you're hoping it will 2x the hardware and energy consumption.
Great point! For what it's worth, they could easily spend more than that $1.5 billion. Or at least cause to be spent. There's well known theft of electricity and computation for mining. Give the opaqueness of the industry, it's totally plausible that there are under-the-table deals or power diversions at large scale. Some people will be in the grip of sunk-cost fallacy or irrational optimism about Bitcoin's future gains. And then of course there are the negative externalities from things like pollution.
In one sense the solution is PoS. But Bitcoin will never ever ever adopt PoS, so we need to somehow convince hodlers and traders to switch to another cryptocurrency in a way that doesn't look like discrimination (e.g. outright banning PoW). A global carbon tax is an obvious yet oh so difficult possibility. Some kind of memetic warfare might be more feasible.
The way the bitcoin network works, as far as I understand it, is by running a lottery every 10 minutes. The thing is there are many ways of running a lottery that don't involve burning tons of electricity in the process. In fact most lotteries don't burn any energy at all. Why the inventors of bitcoin decided to do it this way is beyond me.
The lottery isn't the point, it's a side effect. The network needs consensus on what transactions have happened and which haven't. The main difficulty in getting this when you can't trust the nodes that someone can just spin up an arbitrary number of nodes to overwhelm the consensus, if the consensus just goes by majority vote. If you want to prevent this you need to tie the consensus to something which is scarce, which is what proof of work does. As a side effect of how this is implemented, it becomes a lottery.
If you implement proof of stake, for example (where the scarce resource becomes the currency of the network itself, which is a lot trickier to implement and especially quite hard to bootstrap from nothing because in the early days of a currency there's going to be only a few people owning it), then there's no need for the reward process to be a lottery (though it still can be).
It's still a lottery, except the way you buy tickets is by wasting electricity. The more electricity wasted the more lottery tickets you have. It doesn't need be like this, just buy the tickets with effing bitcoins and you achieve the same result without wasting electricity.
It’s not that easy. You can’t secure Bitcoin with a lottery run on Bitcoin, because then you could forge your own tickets and forge the drawing, too.
The proof of stake proposals don’t seem to work that way. They seem to be more a matter of stakeholders having machines that vote about who is trustworthy.
I don't think you would be able to forge your own ticket. For example, the lottery tickets could be "purchased" by sending some amount of BTC to a special/nonexistent address, and these transactions would be required to be present in the block being validated for the block to be considered valid. Admittedly I haven't thought about all the details but it would surprise me if there wasn't an obvious alternative to the proof-of-waste system currently in place.
> there are many ways of running a lottery that don't involve burning tons of electricity in the process
You need something to be the limiting factor on the amount that you can try to win such a lottery. With proof of work, it's electricity. (assuming everyone is about as efficient as each other)
Early on, they talked about it being proportional to cpu-time. That has become more abstract since.
But what's the cost of the lottery ticket? Is it a certain amount work done? That's "proof of work". Is it an amount of the currency? That's "proof of stake", kinda.
I haven't heard of any cryptos that require you to risk your coins to mine. Sounds like a neat gimmick, but hard to implement.
There is already massive interest in finding more efficient ways to solve the problem. It's a difficult problem to solve (as Elon Musk will likely learn in the coming year).
The cost of proof of work is paid in two forms. The first is in the form of inflation. Merely holding onto Bitcoin means eating dilution as new Bitcoins are printed to fund the mining ecosystem. And the second cost is in terms of transaction fees. At times, it can cost $20+ to send a transaction over the Bitcoin network, and a more efficient / higher throughput system could significantly reduce these fees.
The users of Bitcoin are already themselves naturally incentivized to look for better solutions, even completely absent any care about the environment.
> To get action from enlightened self-interest, there needs to be leadership for making changes. (Ethereum seems to have this?)
Knowledge preceedes enlightenment. For example, Git is also green-friendly, and shares a virtually identical consensus model to pure PoS consensus designs. It’s just that “green-friendliness” wasn’t a design goal of cryptocurrency — creating a lasting store of value sans institutions, exchangeable pseudonymously over the internet, was.
As it were, pure PoS consensus suffers from the misfeature of not even having a quantitative fork ranking protocol — i.e. it lacks a way to objectively compare the truthfulness of divergent blockchains [1]. In PoW networks, cumulative hashing power can be simply and easily mathematically compared to produce cold, quantitative consensus. In PoS networks, there is no hashing power, and human intervention is required — just like Git.
Which begs the question, why do PoS networks even need a blockchain? I think we all know the reason for that, though — Git doesn’t have a hype train. Git just isn’t good enough at separating the general public from their hard-earned money.
Saying "just use git" seems simplistic. But I could imagine a Debian-like organization that chooses a pool of trusted servers run by independent organizations in multiple countries, where they all have to agree, and with a full transparency log like DNS.
One way would be to simply start to do CO2 offsets of the total estimated energy spent per block mined. It’s a fun thing to calculate & dream about but enforcement would be hard.
Not all transactions are created equal. Some transactions are more valuable than others, and there is also value in just maintaining a steady state (holding wealth).
Something that also seems to get lost in the mix frequently is the fact that bitcoin owners themselves are the ones paying for the electricity. The security benefit comes at a cost - manifested as inflation (not just transaction fees) - and that cost is borne by all of the owners of Bitcoin. To that extent, the participants in Bitcoin are actually incentivized to use more efficient systems, because it means the inflation cost of being a participant is lower.
That they don't use cheaper systems indicates (though there are plenty of confounding factors) that they see value in paying the larger cost of holding Bitcoin.
With no transactions, the wealth stored is valueless, like deeds to property on the moon. People store wealth in currencies only because they think they can get it out later. That's in contrast to assets like houses or land, which have use value.
And Bitcoin users are only paying the fraction of the cost paid for energy. But that ignores negative externalities like the pollution that's the subject of the article.
Of course, you need _some_ amount of transactions. But that could theoretically be 500 a year and still adding just as much value as bitcoin today, so long as the transactions were sufficiently significant.
> But from the societal perspective it's reasonable to ask, "What does it cost per unit of value created?"
Then you have to define value. I don't think it's transactions. Any random bank can make transactions. People can transact with cash.
Cryptocurrencies create value by providing other properties such as decentralization, trustlessness, privacy. For example, Monero enables private and untraceable transactions and for privacy enthusiasts it has essentially infinite value.
With this definition of value, we can see how bitcoin isn't providing much. By now it's centralized, has no privacy, has high fees... It sucks basically. The only reason it's still the number one currency seems to be inertia. It's the most frustrating thing about this market honestly. Not only is bitcoin still king but it drags down better coins when its value plummets.
Economic value is measured by how much people are willing to pay for it. Transactions have economic value, because people are willing to pay a fee in return for having a transaction processed. And cryptocurrencies are transaction processing systems. So it absolutely makes perfect sense to measure how efficient these systems are processing transactions, and the way to measure that is by looking at how much it costs to process a transaction with each of these systems.
If you wanted to know how much people are willing to pay for decentralisation, trustlessness and privacy (most certainly not an infinite amount of money) you could also do that, but that's answering a different question.
> Transactions have economic value, because people are willing to pay a fee in return for having a transaction processed.
Why transact via cryptocurrencies instead of other systems? Because of these other desirable properties. They're the value cryptocurrencies add to the world and the reason why people choose to them despite the inefficiency. People transact in Ethereum because they want to run smart contracts. People transact in Monero because they want privacy.
> So it absolutely makes perfect sense to measure how efficient these systems are processing transactions, and the way to measure that is by looking at how much it costs to process a transaction with each of these systems.
I don't think so. People measure this in order to compare with traditional banking systems which are centralized, require trust in institutions and affords no privacy. This is not a fair comparison.
The fact that some people don't care about efficiency doesn't mean we shouldn't measure it. For example, a lot of people buy cars that are fuel-inefficient. Does that mean we should stop measuring car efficiency? No, that's a ridiculous argument. If you don't care about efficiency because you care more about other stuff, at least you should be aware of the trade-offs, and also have the intellectual honesty to admit that you don't care about efficiency, instead of pretending that efficiency is not important.
I didn't say you shouldn't measure it. I said people are buying other things for their money. Simply measuring transactions/energy ignores all that. Monero provides decentralized trustless private untraceable transactions, Ethereum provides decentralized trustless transactions that execute smart contracts. The energy consumption is merely the cost of all those features.
> Economic value is measured by how much people are willing to pay for it.
That's an ok general rule, but it breaks down in a lot of circumstances. Look at scams, for example. People pay quite a lot for them, but at a societal level, they have strong negative value.
> For example, Monero enables private and untraceable transactions [...]
So so...
> Cryptocurrencies create value by providing other properties such as decentralization, trustlessness, privacy.
Let's add "a largely unregulated gambling area where people with too much money can bet their excess money on being among those who pull out before the music eventually stops" to that list, shall we?
That's also where your frustration comes from: Bitcoin is perfectly fine for this kind of "value proposition", hence it stays King of the Hill.
> The speculation is a separate thing from the coins themselves. People also speculate with fiat currencies, stocks, real estate.
No, speculation is the primary use case for all of these coins right now.
And crypto currency has some advantages over the other speculation options you mentioned:
- more people can participate because of them being unregulated (compare: forex trading, which has much higher barriers of entry)
- it is rather easy to not pay taxes on crypto gains in many countries, especially if you're staying below certain limits
And the most important of them all: the crypto cake is still expanding and has been expanding for over ten years now. That is the crucial difference between classic forex trading and crypto - in forex, the comparative value of different currencies usually stays within a certain range. It goes up and it goes down. In crypto, the crypto just has been getting more and more valuable over the long term. It goes up, and up, and down, and further up than before again, and then some more up.
As long as this continues, any gambler betting on crypto has an edge and will win more than he loses. Of course it can't continue like this forever, but that's easy to ignore when looking at a ten year history of unbelievable gains.
Further the purpose of mining is to enable mutations to the chain as quantized into transactions. If you stop permitting mutations energy use drops to zero, ergo energy use per transaction is totally reasonable.
That would be like saying "you need light to your math homework so we will measure how many math problems you can do per lumen of light".
The throughput of transactions is not coupled to the amount of electricity used to mine. They are two elements in the system, that doesn't mean they move proportionally in any way.
A better analogy would be trying to use a 7-seater dump truck as a school bus, then complaining when the 'haters' analysis is based on "gallons of gasoline per available seat-day." As if the fact the gallons of gasoline per seat-day changes based on external factors (i.e. with the weather or traffic) makes any difference? It legitimately does not matter that (i) not all 7 seats may be populated each day or that (ii) the gas required varies day to day based on externalities. That's why we invented averages and spot measurements.
So fine, "kWh per available transaction-second" may be a more apt moniker however that's strictly what I've been talking about. Since 100% of electricity usage is attributable to mutations, this is a completely fair quantization. As blocks have been overwhelmingly full for years, the point on discrepancy is pretty much moot.
And further, the point is a dump truck is totally unsuitable for use as a school bus.
You are more than welcome to measure Wh of electricity used per math question in regards to the lighting setup. You'll find that number small and irrelevant, however. On the other hand if it requires a few thousand kWh worth of light to do a math question, you're well within your rights to ask (a) why you're doing math questions in what must be a stadium setting and (b) whether there's a more efficient lighting solution.
Which are exactly the questions we're asking here.
No one is complaining and no one said "haters", these are things you hallucinated. I'm not defending bitcoin, I'm just pointing out that you have huge misunderstanding about how it and cryptocurrency works in general even though these things have been explained to you over and over.
Bitcoin's electricity use it because of its sustained price. If the miners could not consistently sell for high prices the overall electricity use would go down. Price/electricity usage going up or down does not affect throughput over the long term.
Bitcoin's throughput is from being artificially crippled to sell a second layer. If the maximum block size was raised, it would have more throughput. The max block size does not change the amount of electricity used from the block reward.
The same way that you would not measure your internet connection on mb per kw/hr since the energy used by 10mbs service is going to be the same as 1000gbs service. The two things are barely correlated.
Energy per transaction is barely correlated. I know it is simple and easy to look at two numbers and pretend they depend on each other, but that isn't the dynamic here, which is why everything you are saying is nonsense.
> No one is complaining and no one said "haters", these are things you hallucinated.
> ... which is why everything you are saying is nonsense.
You're being rude again. Once again this is against the site terms. I'm happy to engage in any civil conversation with you that doesn't involve name-calling, as I'm sure you've seen a number of times. This thread, however is closed.
No one is being rude to you. If you don't want someone to mention that you made up something they didn't say, then don't do that. If you say the same things over and over that have been explained to you to be false, don't be surprised if that gets brought up. If you can confront what I'm saying with something true, feel free.
You may wanna chat with your mother for a second opinion ;)
> No one is complaining and no one said "haters", these are things you hallucinated.
I didn't say you said 'haters' that's a stylized/flourished way of saying an opposing viewpoint. That's why it's in quotes. If anything it was self-deprecating/deferential with respect to my biases. Jumping in with "that's not how logic works" is certainly a valid thing to call out as whining or complaining because again it's not particularly civil. Off the basis of your misinterpretation you once again accuse your counter-party of 'hallucinating.'
As I said this thread is over and should in the future you decide to have a civil conversation I'll happily engage.
You said it makes sense to put something in terms of a ratio even though they are uncorrelated except for a binary neccesity. That's like saying movies need sound and movies make money so let's measure movies by volume to dollars. It is literally broken logic.
You seem happy to engage on how something is being said, but not so much on what is being said.
> You seem happy to engage on how something is being said, but not so much on what is being said.
Of course, because I'm here to have an interesting conversation about an idea on its own merits, not be accused of hallucinating when you misinterpret something I've said. If you stop attacking the speaker, assumed some good faith, and have a civil conversation I suspect you'd have a better time.
Normally I have much more tolerance for shenanigans but you've demonstrated a pattern in our interactions.
I think if you had something of substance to say backing up what you originally said, you would have said it already instead of constantly calling yourself a victim as a diversion.
> The throughput of transactions is not coupled to the amount of electricity used to mine. They are two elements in the system, that doesn't mean they move proportionally in any way.
We know that. This is not an argument against cost per transaction being an adequate measure of efficiency for a transaction processing system.
Cost per transaction to the users is important, but it is mostly separate from the cost of mining. The cost of mining is dictated by the price. Conflating the two doesn't make sense, because they aren't correlated and the costs are taken on by different groups of people.
Not only that, but not all cryptocurrencies are even trying to optimize for this. I would say that bitcoin is actually in the opposite direction and trying to be as expensive per transaction for both the miners and users as possible.
> In steady state, miners will dump energy into mining a coin until the cost of energy = the value of the coins coming out.
Exactly, that's why if you're using this list to somehow decide coin X is more "efficient" than coin Y, then it's a foolhardy exercise.
For proof of work to actually work, the cost of the electricity has to be proportional to the total market cap of the coin. Otherwise, if the amount of work was low compared to the value of the network, it would be a strong incentive for someone to try to attack it.
"Efficient" could also be read as "I am willing to sacrifice x Wh to the gods of crypto wealth, where do I get the biggest return?"
That might even be a tolerable mindset if you happen to live in a cold place and the only tool available to keep you from freezing to death was electricity.
I’ve gone back and forth on this myself, but I think it is valid to consider the cost of the entire network as a matter of carbon accounting. After all, one of Bitcoin’s selling points is the difficulty of a double-spend. This wouldn’t be the case if Bitcoin mining was not subsidized from the pool of unmined coins.
Ultimately the money comes from people buying in to Bitcoin and many of them are not aware of the power consumption or the fact that it's possible to achieve number go up with virtually no energy.
The people buying Bitcoin don't need to be aware that it costs 6 GW of power, any more than they need to be aware of the electricity costs associated with the manufacture of plastic, electronics, or other goods and services.
If we as a society feel like there is too much energy being consumed, we should regulate the production, and let the market come to equilibrium on a fair price for the cost of electricity. If you don't like the fact that coal plants are spewing millions of tons of CO2 into the atmosphere, regulate the coal plants, not Bitcoin. Regulation of electricity will increase the cost of electricity, which will naturally reduce the total amount of electrify that Bitcoin uses - Bitcoin's energy use is proportional to the price of energy, not to the actual quantity of energy.
> The people buying Bitcoin don't need to be aware that it costs 6 GW of power, any more than they need to be aware of the electricity costs associated with the manufacture of plastic, electronics, or other goods and services.
But people do need to be aware of the environmental costs of such things, because society does not account for negative externalities.
> regulate the coal plants, not Bitcoin. Regulation of electricity will increase the cost of electricity
What if society actually thinks it's reasonable to discriminate on energy use? What if we want to provide cheap-ish energy for end-consumers, for essential services like the medical sector, but not for cryptocurrencies?
I think a more thorough societal discussion about what our goals are given tight carbon budgets is what they're getting at, not the individual decision of someone to mine it.
I agree in general, but it makes the analysis more complicated, I think, especially when considering marginal usage/activity from the perspective of an end user/consumer.
For example, one could naively believe that there's absolutely no marginal emission from deciding to get on a plane. The plane is emitting basically the same amount whether there's 99 people on board or 99 + 1 (you) on board, and the plane's going to make that particular flight whether or not you get on. However, you're funding the airline industry and increasing demand (and therefore supply) for flights along that route and perhaps also indirectly helping pay for other things the airline is doing, so that could probably be considered a marginal emission contribution.
If you ignore transaction fees for a moment, it seems like this logic doesn't quite work for cryptocurrency networks. It seems like a closer analogy would be something like a contrived scenario with an airline that has routes which are absolutely static and predetermined (e.g. a contrived scenario where an airline decides it's going to fly a passenger plane a certain route once per day every day at the exact same time for a year no matter what, even if no one's aboard, and also the tickets are free if assuming no transaction fees). There are still the indirect issues with supporting the network, but it seems like there's less of a marginal emission concern if you're someone who's just making transactions, or arguably even no marginal emission concern.
In reality, you are adding some marginal emissions due to transaction fees (direct incentive to mine), and the indirect incentives could maybe be broken down into something marginal as well (no one using the network = no incentive to mine since the currency would probably have no value), but basically it kind of feels like there's less of a direct marginal emission concern as an end user of the network compared to something like getting on a plane, especially if you take transaction fees out of the equation. In that sense, it feels like abstaining is somewhat more of a moral protest rather than a direct economic "vote" or boycott.
Am I wrong about any of this? I probably am; this is just a random thought. Maybe the transaction fees are the crux of it (even if the block rewards are much more lucrative), so eliminating them from the equation for the sake of argument makes the whole point moot?
Another technologically interesting very low energy coin is NANO but it has his own challenges because with the feeless transactions the spamming costs almost nothing.
But still at one point it confirmed more transactions than BTC + ETH + LTC combined without tx fees and sub-second confirmation time:
Thanks for highlighting why scaling is what matters and how BSV is obviously the only chain worth anything. And no, price is meaningless when it's 80% wash traded ponzi money
You just wrote an entire thread on why BSV is the ONLY system capable of anything... Lol? That's the point toom -- the more TXs in the block, the more efficient the system. That's why Merkel's, that's why small-world... That's why no CTOR or check points. Because SCALING. BSV is O(1), none of the other "projects" are or even come close to O(1) which is what this site is very elegantly showing
THIS, THIS THIS THIS.
How does Toom, not understand this. Not only does it scale but then miners get more fee's from more transactions.
It baffles me the keyboard gymnastics against BSV, while showing exactly why BSV is the best.
oh totally going to tell some random dude on the internet how much I've invested in any asset lmao.
Regardless i have more portfolio in ETH as im riding the trend, however long term, BSV is the ONLY option. actually scales, its cheaper for the end user and the miners capatalise on more transaction fees. its a win win win game.
Indeed, I'd say this Tx/power is the most misleading metric here. Bitcoin is slow (7tx/s) compared to what for example Algorand boasts they will achieve at the end of the year (25000tx/s).
Interesting angle -- but it's really not a defense of POW so much an argument for networks like Saito (https://saito.io) that replace mining with routing work and get cost-of-attack from the electricity spent running the servers / routing infrastructure.
Sooo you tell me effectilfy not to worry because bitcoin doesn't consume terrawats of energy as a whole system?
We don't need all those miners like you and mining and consuming terrawats of energy?
And at the end of the day, when i own bitcoins or take part in bitcoins in any form i have a green thumb and our planet is not additonally getting destroyed through the massive amount of energy consumed into finding the right hash?
Did you finnaly convince yourself that just because you consume water energy what you are doing is okay?
"We believe that Bitcoin and other CryptoCurrencies will play an important role in the future of finance, technology and governance. We conduct our business in a way that protects the blockchain against plurality attacks, and our planet's climate against warming."
Let me ask you a few questions to your statement:
Why do you support Bitcoin in particular and name bitcoin and don't use something like etherium which is potentially switching to PoS?
The energy you consume (apparently already 2 mega watts) how do you know that this energy couldn't have been used for something which creates direct and longlasting value?
Do you make any investments into renewable energy?
How do you feel about bitcoin using as a whole system (where you part of) a lot of energy?
How do you feel about bitcoin using a lot of dirty energy?
What is your take on how bitcoin can help global warming (and i actually mean cooling down the planet not activly heating it)?
Do you use your waste heat in any form or do you heat the environment with it?
Have you / your company invested in any form of research or change to bitcoin itself to reduce its 'energy consumption for preventing double-spend'?
Do you believe in the future of PoW or PoS? If you believe in PoS why do you support currently bitcoin?
Biden (after other countries have done this much earlier) is now back on climate change support and targets 0 emissions. How do you think the future with bitcoin and 0 emission will look like?
And at the end of the day: Based on your FAQ and the increase of power prices, will you able to consume that much energy for bitcoin in the long run?
Blockchains all have a bottleneck. All transactions in the world have to go through the miner. And the situation is actually worse than that because we don't know who will solve the useless Proof of Work hashcash function ahead of time, so EVERY potential transaction is gossipped to EVERY potential miner, and then the miners ALL go to town wasting electricity. How great!
Anyway, because of this architecture (preventing double-spending by literally aggregating all ambiguities into N potential histories of EVERYTHING, and then having them duke it out with PoW or PoS or any other way), we literally have a cap on how many "TPS" (Transactions Per Second) can go through.
Before Bitcoin, no one ever asked how many transactions per second an Internet protocol could support. It would be ridiculous to ask that of HTTP, or FTP or SMTP because there is no central bottleneck: the number of websites, files and emails that can be sent increases with the number of computers on the network.
With Bitcoin, Ethereum and other blockchain-based networks, this is not the case. The max number of transactions that fit inside a block is the most throughput you're going to get. The best thing to come out of these blockchains is Microsoft's Sidetree protocol championed by @csuwildcat but that's for identities, not currencies. So basically, you have a payment system which is super-secure and also super-wasteful.
It's as if BitTorrent required every computer to seed every movie, and BitTorrent maximalists called everything else that used a Kademlia DHT a ShitTorrent.
Except here, it's actually worse because you're not doing Proof of SpaceTime (like FileCoin) but you're requiring a growing number of computers to participate in a lottery proving they burn electricity and get rewarded sometimes. And this amount of computers is growing, just so we can do one operation (transfer money) 10 times a second. At least Ethereum made it into virtual machine capable of executingmore than one operation, thus enabling Turing-complete programming languages like Solidity, and smart contracts. Still, the way it's designed as a "world computer" it's basically a glorified mainframe, and gas is basically paying for time on the mainframe. It is the reason "flash loans" are even possible, they are artifacts of the idea that literally ONE transaction in the entire world can happen at any given time. Nice for atomicity guarantees, I guess, but overall not so great for almost every real world application.
Blockchains with global consensus about every transaction in the world are NOT what I would think of when I think "decentralized" in the sense of having no central bottlenecks. Actually @vbuterin wrote a great article years ago about the different senses of the word "decentralized".
Almost all IP traffic goes through an Internet backbone router which can process 100Gbps+. It's no problem. I suggest people think of Bitcoin miners like this in the future. These would be big operations, yes, but they are economically incentivized to honesty, and there will be plenty of competition. Once you use your imagination, or try to build a node yourself, you'll see the only real bottleneck in Bitcoin's architecture is the updating of the UTXO set, and this can be made extremely fast - eventually in hardware. All other transaction and block validation and propagation can be parallelized or removed as a bottleneck. Users share transactions p2p and settle them onchain, and apps and services create sub-networks of transactions they care about. It all works. But to do that people need to drop the assumption that home users need to run a node - it's a broken idea that holds Bitcoin back. The original design of Bitcoin was remarkable in its ability to scale, which was written about by Satoshi and ignored, and this is being demonstrated again in Bitcoin SV. On the other hand, almost every other cryptocurrency has deviated from that simple design. Ethereum for example requires a global state database and cannot parallelize this way.
No. In this design users don't trust miners. Users trust Bitcoin. This is important. Banks can censor. Banks can go down. Banks can be forced to confiscate your money by a single court. But if one miner were to act up, other miners around the globe could keep them in check, and apps and users could switch around as desired. It's an incentivized complete system that you can't reduce this way.
A single transaction on the blockchain most likely corresponds to thousands if not millions of transactions in another layer.
Unless you buy straight from a miner, the Bitcoin you buy changed hands many times before reaching you and those transfers didn't all occur on the blockchain (could have happened on an exchange, could have happened on lightning network, could happen on another blockchain like eth).
If you look at actual transactions on the blockchain, you'll see that they have an average value of ~300-400K [1] per transaction which means it's acting as final settlement.
You right. It's written in the FAQ of the page that metric is not really that important. But most of the treads in HN talk about tx/kw anyway... However, if Bitcoin had more transactions, I think a lot less discussion would be right now.
Basically, yes. There are minor improvements to be made to keep the reward for miners as low as possible. In the end the energy consumption comes down to burning energy proportional to the block reward.
Interesting but I’m not sure of the point. PoW by design is not energy efficient. The incentive is just not in the correct place. Interesting but if the goal is to show more energy efficient coins we need to be looking at different tech such as PoS. Although this might have just been a fun project someone put together in which case nice job.
Efficiency doesn't even make sense since mining can take up close to no, or infinite power.
The amount of energy a PoW coin uses entirely depends on the cost of electricity, hardware, and profitability. When a coin spikes in value, the profitability goes up so more miners join in. A single PC would have enough processing power to run the bitcoin network. All of this power usage goes towards solving useless tasks which get more difficult the more people there are trying to solve them.
If the coin's point is to become valuable to the point that people want it to trade it, then a PoW coin does have to require more overall compute power to crunch the numbers on the ever-increasing amount of transactions that might be attempting to double-spend on the chain. This is all because of PoW's lack of focus on efficiency when there is that much demand and that many transactions happening at once. Electricity, hardware, and profitability are all externalities that are the result by the amount of usage of a PoW coin, not the cause of it.
> When a coin spikes in value, the profitability goes up so more miners join in. A single PC would have enough processing power to run the bitcoin network.
well, yes, but then a single miner could and would control the entire network since 'why would any give up their compute power for free to ensure the network is not being hit by double-spend attacks, when someone else is already doing it'. The whole point of a PoW coin having huge fees and thus returns for the miners is to incentivize a decentralized ledger. I don't think Satoshi intended for it to eventually consolidate into just a few huge mining companies which theoretically could perform a double-spend attack, but it's not something that could have been protected against with a few more if statements (although, if this happened, the coin would tank in value, which is probably the inherit safeguard).
Agreed. It's a really nice idea and I'd love to see at least the top 10 coins by market cap and the top 10 most and least efficient on the list. Crypto is here to stay, so if this site can promote coins that are the most energy efficient then it can have some real environmental impact.
This is true, but things are changing. If you look at the top coins:
- #2 ethereum is moving to PoS
- #3 binance is PoS (tendermint)
- #4 cardano is PoS (ouroboros)
- #6 tether is a token
- #7 XRP is BFT-based (I think PoA?)
- etc.
Basically there's only Bitcoin, Dogecoin (lol), and Bitcoin Cash in the top 10 that are still proof of work. If you look at the top 50 it's even more biased towards non-proof of work.
Interesting to see how much of an outlier Bitcoin is.
The middle tier currencies in this list (USDC, USDT, etc) are built on Ethereum, so once Ethereum finishes its switch over to proof-of-stake, both they and Ethereum will drop down to almost nothing in terms of power used per transaction.
Are they double-counting the Ethereum tokens like Chainlink, Uniswap, etc? Ethereum hashing inherently includes ERC20 transactions. ERC20s are just state changes on the Ethereum blockchain and don't affect hashing use or non-use.
ETH2 (proof-of-stake) already has 16 billion dollars of ETH locked into it, and has been running for months. The proof-of-stake switchover seems to be on a good track and should work form technical standpoint.
Programming language upgrades are not the same as blockchain upgrades. Blockchains work on consensus, so you need a majority of nodes to agree with your changes to the chain or you risk a hard fork. At any rate, ETH2 proof-of-stake is already live, the last remaining piece is The Merge, which merges the existing proof-of-work chain into the already live and operational ETH2 proof-of-stake validator nodes.
People have largely switched already. Py2 is gone from default installs these days. So yes, even if it takes a while, people often do switch to better solutions.
It seems like Python 2 is still pretty prevalent, with over 40% of new downloads taking place as of last year. And people forget Python 3 was originally introduced in 2008. So the transition is taking decades, not years.
The last place I worked was still using Python 2 as of last year, and they were a startup without all the bureaucracy of a big company. They also had plenty of money and engineers. Python 2 is still the default for everybody I know.
PyPI stats for "six", the second most popular package, that's used for 2/3 compatibility in tons of libraries, shows 80% of its millions of daily downloads are for Python 3. [1] The proportion for "requests", a building block for a ton of long-standing packages, is even higher.
Anyone using Python 2 at this point are either supporting legacy software, getting their runtimes/packages from distros rather than PyPI, or otherwise completely checked out of the modern Python ecosystem.
That statistics end at most interesting time: December 2019.
Starting with January, python 2 was officially EOL, and many packages dropped support for it. Right now developing for Python 2 is kind of tough, because most dependencies won't work.
Ethereum's original logic bomb was set to trigger in 2017. Then later it was updated to trigger in 2017. And then later it was updated to trigger in 2018, and then 2020, and currently I believe it's set to trigger in 2022.
But there's no political reason to believe that they won't just push it out again. It's just a ceremony at this point.
I mean if you don't touch your code it will continue to work but if you have to maintain it, you quickly realize that a lot of your dependencies will refuse to work.
It might be easy to fix them to work again, but with time it will be more and more work to do.
No, proof-of-stake has been live since December. The final remaining migration is The Merge, which is estimated to occur towards the end of this year, March 2022 at the absolute latest. For more info, see: https://ethmerge.com/
It's the kind of thing where if it fails, it's going to fail explosively and unexpectedly.
Proof-of-stake is vulnerable to various miner collusion attacks that Bitcoin is not vulnerable to. The gist of it is that casting multiple conflicting votes (sometimes way after you cast your original vote) doesn't require any additional resources in a proof-of-stake system, whereas casting additional votes in a proof-of-work system is very expensive.
This is a massive over-simplification of the problem. A strong proof of stake construction has to consider all forms of Sybil attacks, all forms of wealth concentration (a significant problem in most cryptocurrencies - the top 3 exchanges often hold more than 30% of the supply of the token), low participation rates, outsourced participation (most large crypto holders hire the same small set of groups to do the staking process on their behalf), among other significant issues.
Network participants are free to ignore the results of provably random selection procedures and “re-roll”. In general there is no known way to impose real cost on protocol violations like this. This is the genius of PoW; it uniquely associates real-world expenditures with protocol actions. It’s probably impossible to replicate this in a more efficient, but still secure and reliable, way.
I'm not sure if this is how it works, but it should be possible to avoid the "re-roll" problem:
Each node picks a random value, and publishes the hash of it to the blockchain, then, when the network has reached finality on what all the hashes are, the nodes publish the random values themselves, and the network takes the XOR of all of them.
Nodes can simply choose not to publish their value if the result is unfavorable to them, and this tanks the whole procedure. This isn’t a problem unique to your scheme; they all suffer from things like this.
If a node publicly commits to providing a random value, but then doesn't follow the protocol by actually revealing it, then that node's stake can be distributed to the honest nodes and the procedure started again.
The protocol could even increase the stake needed to be one of these random value providing nodes, every time such a failure occurred, to make such an attack more and more expensive.
I think you're suggesting that a rogue node disobeying the protocol creates a chain split, allowing the node to just orphan the chain where they got caught.
That's probably true in general, but I was assuming that the random number generation would be decoupled from the process of actually building the consensus.
As long as the loss of stake can happen and be finalised as part of the transaction history, then eventually the attackers will run out of money and the random number generation process can catch up and start generating more entropy.
We will see how proof of stake will work, and in FAQ is a paper about it. POS have one big problem, that you only have to buy coins once and stake them and you will get richer every day by doing nothing without any additional investment. Basically it will make rich richer and more centralized. We will see how it will works in future.
POS has a big problem when a coin starts as proof-of-stake. I agree with this. Because there's no fair way to do distribution. Many proof-of-stake coins happen to start out with the majority of supply owned by the core devs or VCs. It ends up becoming a cartel, which is not decentralized.
I think Ethereum's approach is interesting, because after 6 years of Proof-of-Work and several up and down markets, the distribution is widespread at this point. For example, even the co-founder Vitalik, only has about 300K of 115M circulating supply. So now I feel like they can migrate to proof-of-stake and it will not lead to excessive centralization.
Which is why I find it inevitable that any future cryptocurrency project will either have to start with Proof-of-Work during an initial minting phase then switch to Proof-of-Stake, OR use an existing blockchain to bootstrap itself, either as a fork or through airdropping. To these effects, any alternative consensus mechanism that is based on tying up a resource that's not the coin itself could be considered akin to Proof-of-Work (Such as Chia and its proof-of-capacity).
Anything resembling an ICO is a non-starter if it were to survive, especially with a shifting regulatory landscape. I was among the opponents to Ethereum's initial distribution (premine) but to wit, ETH has no supply cap so Vitalik's slice has shrunk over the years.
I would argue that auctions (ICOs) are fairer than mining. Devs can give themselves coins directly or they can have a dev tax (e.g. Zcash) or they can fail; I don't think it makes sense to hold crypto devs to a higher standard than, say, startups.
No, an ICO + POS is not fair at all. It might make sense for a crypto startup but not for a layer 1 blockchain currency. The base layer has to be plausibly neutral, or it defeats the purpose and you might as well open a Robinhood account.
Censorship resistance, plausible neutrality, decentralization, antifragility, uptime, and security are features of layer 1 blockchain systems like Bitcoin and Ethereum.
If a dev team starts off with 80% of supply they aren't going to ever achieve any of the above.
> Censorship resistance, plausible neutrality, decentralization, antifragility, uptime, and security are features of layer 1 blockchain systems like Bitcoin and Ethereum.
I completely agree, all the the above must come before throughput in an L1 blockchain. So many of the so called ETH killers sacrifice on some or all of the items you listed. Do you think anything else ticks all the boxes and can stand alongside BTC and ETH as a legitimate L1?
They're both unique because they're both the first of their kind. And they were doubted for years before they were shown to have value and staying power. The copycats have a problem especially when they hype themselves to $40B market caps before they have even grown a sustainable ecosystem or fair distribution.
The file storage chains like Filecoin, Sia, Chia, etc. may tick this box, but they aren't competing with Bitcoin or Ethereum. Any other unique proof of work algos that can't be easily hashed by ASICs or GPUs might qualify but I don't know. I don't see any others with a real grassroots ecosystem of activity.
This is not true, you have to run a validator to get rewarded. Rewards will be much less than miners get now, and the whole "rich get richer" is literally how investment works in basically anything, even Bitcoin mining
Yes, running a validator will cost some money. I will explain how I think. If the rich want to get richer he have to make good investment decisions and some work. In POS you don't have to do anything at all, just buy and hold. So in POS, you don't need to innovate your business model. In POW, you always have to innovate to be a leader. Bitcoin ASIC innovation in last years shows how strong competition is. And competition makes innovation. In POS you just keep coins and stake them. Thats it
This is often claimed to be an advantage of PoS: you can't get an extra increase in rate of profits by being richer (beyond the linear increase you'd expect). With PoW on the other hand, the richest have the best access to the most innovative technology and so you get superlinear profits the richer you are.
Real world case: Intel had the most advanced chip and more money, until one day AMD got better. In POS this scenario is impossible. First will always be first.
> This is often claimed to be an advantage of PoS: you can't get an extra increase in rate of profits by being richer (beyond the linear increase you'd expect). With PoW on the other hand, the richest have the best access to the most innovative technology and so you get superlinear profits the richer you are.
And yet, anyone who buys these proof-of-stake coins now, years after they were launched, suffers from having a cost basis orders of magnitude higher than that of the early investors. Yeah, they’re all superficially earning “the same staking ROI”. But in relative terms, the earliest investors are mopping the floor with the later investors, because the earliest investors can stake orders of magnitude more coins.
The earliest stakers become by far the biggest miners. They’re given an outsized influence over the network, and it’s sadly telling — and a bit unsurprising — that early PoS investors astroturf their coin by focusing on irrelevant minutia, e.g. “open access to staking ROI”, or whataboutism, e.g. “but what about ASIC miner distribution”. That is a classic Red Herring.
“Rate of profits” doesn’t matter more to fairness than, say, premining half or more of the outstanding supply of a given coin to give early investors absurd ROI advantages. “Fair access to yield” doesn’t matter more to fairness than exclusive pre-ICOs rounds which only prestigious investors have access to.
> And yet, anyone who buys these proof-of-stake coins now, years after they were launched, suffers from having a cost basis orders of magnitude higher than that of the early investors. Yeah, they’re all superficially earning “the same staking ROI”. But in relative terms, the earliest investors are mopping the floor with the later investors, because the earliest investors can stake orders of magnitude more coins.
Sure, but how is that any different than proof-of-work early adopters becoming rich and being able to afford more mining hardware and electricity?
> Sure, but how is that any different than proof-of-work early adopters becoming rich and being able to afford more mining hardware and electricity?
You have to spend money on mining hardware and electricity to get those yields. To do that on a large scale requires a datacenter and enormously expensive long-term power contracts with utility companies.
But with PoS mining, little to no effort is required. Click a button, and start earning yield in perpetuity.
Put yourself in the shoes of an early adopter of any PoW coin. At what point do you decide to spend millions of dollars ordering mining rigs from Asia, and setting up a datacenter with power contracts? Whereas with PoS this is simply a matter of clicking a button, which costs almost nothing and can be done more or less instantly. It’s a night and day difference.
So is your argument that the profit from mining PoW currencies is actually sub-linear with the initial investment because it's more expensive per unit to get larger quantities of hardware and electricity, and so that counteracts the gain that early adopters have had?
That doesn't seem right to me, economics of scale suggest it should be cheaper per unit to get larger quantities (even if there are additional difficulties doing so at a big scale).
The difference with PoW mining is it involves more than just clicking a button.
Conversely, with PoS, people — and particularly insiders who are in on the ICO, pre-ICO or premine — can click a button and earn X% per annum in perpetuity. Which they do.
Bitcoin has many problems, it just doesn’t have this particular one.
> But in relative terms, the earliest investors are mopping the floor with the later investors, because the earliest investors can stake orders of magnitude more coins.
PoS networks are typically not going to be minting coins in perpetuity. Most PoS networks aim to reach a "zero issuance" state where the network can sustain itself on TX fees alone. It's also typically in a networks interest to decentralise TX verification as much as possible (in contrast to banking, which tends lean towards the opposite).
Ideally a PoS network will reach a steady-state where TX verification is profitable enough that people will be willing do it for TX fees alone, but efficient enough that you can be market competitive regardless of how you choose to run your validator nodes (ie. costs should not be prohibitively high as to prevent geographical distribution).
There will always be rich and poor people - PoS networks don't aim to solve that - but the question will be is a rich person able to participate in the network more efficiently than a poor person.
> Most PoS networks aim to reach a "zero issuance" state where the network can sustain itself on TX fees alone.
Whether ICO investors are stakemining coins issued through inflation or transaction fees doesn’t matter — they’re still mining orders of magnitude more coins, at the end of the day. Their artificially low cost basis translates into them reaping outsized profits which dwarf that of later investors.
(And frankly, it’s absurd the PoS astroturfing has gotten so out of hand that this needs to be pointed out at all.)
> If you bought $1000 of AMZN shares 20 years ago you'd have orders of magnitude more voting power than someone who buys $1000 of AMZN shares today.
Equities typically aren’t masquerading as global currencies. Fairness does matter, here.
It’s absolutely material that the pseudonym “Satoshi Nakamoto” had no reasonable expectation of profit at the time of launching Bitcoin c. 2009, for instance.
It’s also material that Bitcoin miners couldn’t continue mining bitcoin absent continuously ordering new ASIC miners from Asia, whereas PoS miners can plop down cash on day one, and mine the same proportion of coins forever at little to no additional cost.
AMZN investors aren’t typically peddling narratives involving fairness the way PoS investors are. These people are claiming PoS is “more fair” than Bitcoin. It’s profoundly incorrect, but also rather unsurprising.
I don't think anyone here is saying that PoS is somehow solving world poverty. The people who claim PoS is better than PoW typically do so because it is more power efficient and still capable of running an effective monetary network (at least what we've seen so far). I don't know anyone who says PoS is "more fair" although I would argue that delegated staking is certainly more geographically friendly than PoW (and to an extent, PoS) which will inevitably end up geographically focused in areas with low cost of operation (cold areas with the cheapest power and rent). PoS could be done on a Raspberry Pi plugged into your modem.
> It seems like that argument could equally apply to PoW or startups.
It isn’t clear to me what you meant to say here. Early investors tend to be by far the biggest winners in general, crypto or not. However, we were discussing mining revenue, not profits in general.
Importantly, early PoW miners had to source new ASIC mining rigs from China year after year, pay to install those ASICs in datacenters, and pay for the electricity to power them. For the better part of a decade. Only then would they have continued earning bitcoin mining revenue at all.
Conversely, PoS staking yield requires little more than showing up with cash on day one. From then on out, PoS stakers earn mining revenue in proportion to their holdings. It costs them almost nothing to do this in perpetuity.
In addition, PoS is sadly linked with ICOs, pre-ICOs and pre-mines. These financial shenanigans allow early investors to stake disproportionately more coins than later investors. IMO it’s highly misleading to present this situation as being somehow “more fair” than PoW mining.
>However, we were discussing mining revenue, not profits in general.
If you are talking about mining revenue then you are completely wrong about what you have been saying so far, because the rate at which you receive mining rewards is usually around 5-10% pa.
What you're trying to do is have your cake and eat it too. You admit that you are not talking about early adopter profits in general, but you complained above about cost basis of early adopters being low (that's how early adoption typically works).
This is the same as complaining about someone investing in 10 year government bonds and then the underlying currency increasing in buying power.
You could go buy Argentinian or Venezualan bonds right now and hope the peso or bolívar goes up in value. It's no different, all you need is seed money to get started.
In spite of what PoS investors commonly claim, stakemining $COIN isn’t “fair” merely because Joe Bob can earn the same X% per annum that $BIG_VC can earn, where $BIG_VC was able to invest at pennies on the dollar in an ICO, pre-ICO or pre-mine.
PoW mining is fundamentally more fair than PoS mining because $BIG_VC has to spend money to mine at all. To mine a PoW coin, $BIG_VC needs to pay for electricity, for ASICs and for datacenter running costs. Conversely, in PoS, there is no true “mining” — investors essentially park their cash and start earning a yield on it cost-free. Ergo it adversely impacts fairness of mining when a PoS coin is 50% premined by investors at pennies on the dollar.
It’s an incredibly dubious narrative that the situation with PoS mining here is as fair as Bitcoin mining, let alone more fair than Bitcoin mining.
By that logic, diligent savers who put their money in a savings account to earn interest isn't "fair". It's fundamentally more fair to invest in expensive heavy machinery and dig precious metals out of the ground.
> By that logic, diligent savers who put their money in a savings account to earn interest isn't "fair". It's fundamentally more fair to invest in expensive heavy machinery and dig precious metals out of the ground.
If by “diligent savers” you mean the Queen of England who was given 10% of the total supply of British pounds on day one, then yes, it very much isn’t fair. The Queen’s fortunate genetics in relation to her preferential access to British pounds, and the interest income generated from that preferential access is just one step removed from $BIG_VC getting in on an ICO, pre-ICO or premine by virtue of having insider connections.
Also: of course digging up gold out of the ground is more fair than effortlessly profiting from your country’s political system.
In PoW coins you permanently lose the "stake". So that just means that to achieve the same level of security in a PoS coin, you have to stake a lot more (since you are only losing the time value of the stake).
> In PoW coins you permanently lose the "stake". So that just means that to achieve the same level of security in a PoS coin, you have to stake a lot more (since you are only losing the time value of the stake).
PoS network security reduces down to top-down human intervention: because PoS networks are unmined, they lack all hashing power which could otherwise be used to build a quantitative fork ranking protocol. When forks occur in PoS, the network stewards have to “pick” a winning forked chain, and enforce that decision on the entire network.
Because there’s by definition no hashing power involved in reaching that decision, it’s a bit of a wonder why PoS networks rely on blockchains at all. PoS security doesn’t really depend on anything other than the level of trust you have in the centralized authorities who control the PoS network. In the best of cases, it’s akin to trusting a Debian-like organization to annoint a specific branch of a Git repository as containing the true history of changes during any project-level dispute.
Unfortunately it's more complex than that. You can't rely on number of stakers for anything because of sybil attacks. You also can't rely on amount of stake because some of it could be double-staked (you can detect this but it still may not help you choose which fork is legit). The solutions to PoS fork choice don't really fit in an HN comment.
You're assuming that PoS is divorced from competition and innovation. Those who innovate tend to earn capital, be it fiat, or let's say Ethereum here. You're assuming those that have Ethereum didn't innovate in some way up the line to be able to buy their earned share. And if you want more shares for PoS, well, you innovate and earn to buy more shares. Your model only works if you assume a very closed and proprietary economic system.
>And if you want more shares for PoS, well, you innovate and earn to buy more shares.
If the devs have a 51% share of staked ETH and they never sell any ETH then even if you buy all ETH on the market you will never get beyond 49%. The only way that can happen is if the devs to decide to hand over control to you voluntarily.
>Your model only works if you assume a very closed and proprietary economic system.
What you are assuming is that the economy exists for the sake of Ethereum, people work and exist so that they can buy ETH shares for POS but reverse doesn't apply because owning ETH only entitles you to earning more ETH, nothing more.
This is a trap that a lot of cryptocurrency enthusiasts fall into. The decentralized nature of blockchains doesn't extend into reality. You cannot have a house deed on the blockchain because it would require a central authority outside of the blockchain to recognize the deed. Therefore information can enter the Blockchain and be stored there, but it cannot have impact outside the blockchain because the world isn't being simulated inside a decentralized blockchain.
In that regard the blockchain is similar to a sandbox, the only thing that exists is the sandbox itself and all the data you have decided to store inside it and since a lot of the data is meaningless, the focus is put on the sandbox being a goal in itself.
Another common trap is to build a programming language where the only significant project written in that language is the compiler.
>If the devs have a 51% share of staked ETH and they never sell any ETH then even if you buy all ETH on the market you will never get beyond 49%. The only way that can happen is if the devs to decide to hand over control to you voluntarily.
In that case the currency loses value to other currency competition because currency, Eth in this case, doesn't exist in its own ecosphere. The big holders still have an incentive to sell some portion of it.
PoS signifies the power of currency just as PoW does. The whole basis of PoW is to expend work and in return exchange and project power. Stake is projected power earned, sometimes not because not everyone is said to earn what they get, from other expended power. The whole world works on powers, be it financial, physical, etc and we're all exchanging one for another. As long as those powers have power to project themselves and protect themselves enough to propagate well, either through military or math (through the network), they are valid. The network is its own authority (much as the military or government is a network) and through various governments, hard powers, cryptocurrencies have also recently earned some legitimacy that way.
To me this all seems silly. You can trade sticks and if someone imbues them with symbolic powers and everyone agrees, it can just as well become a currency. We can disagree from here to the moon on what currencies or methods therein should or shouldn't have legitimacy but if no one cares, you have little to no power to change it. If you can get a big network behind it, there's legitimacy of authority whether you agree or not.
> Therefore information can enter the Blockchain and be stored there, but it cannot have impact outside the blockchain because the world isn't being simulated inside a decentralized blockchain.
And to reiterate, economic predictions are very hard due to us not living in a closed economic system, other powers influence economics, they don't exist just within their own sphere. You seem to imply this but seem to forget that your same argument could also be applied to traditional fiat. Blockchains may be decentralized but they have their own authorities and realities to which they're bound to. What happens in the crypto world very much affects the non-crypto world as we've seen.
>Another common trap is to build a programming language where the only significant project written in that language is the compiler.
The common theme here seems to be that you're railing against domain discretion, which itself, is a valid strategy within certain domains but I've reiterated that it has its own negatives in that nothing is totally discrete in reality, you can't have your own perfect domain without influence of other domains. Eth in this case, or PoS specifically, doesn't and can't exist within its own reality, it's no more a feedback currency than traditional fiat which is exemplified in that the rich tend to get richer, a theme which exists in many other domains, power attracts power, there's no escaping that. Yet there is a universal fairness in that more power for individual benefit means more power that can turn against you, which is a whole other topic. I think you're trying to argue against something more universal and it's pointless because it's so embedded in the universal machine. PoW, PoS, whatever, both require vigilance to acquire and maintain power that are ultimately derived from some form of work in the real world, regardless of method. PoS is old money, it can perpetuate decadence in the real world by relying on what's done while PoW, new money, may exemplify newness and chaos by relying on change or what's to become, both can work as methods of power transactions in crypto just as in the real world.
Silly argument, I spent way too much time talking about this so guess that means I'm silly, no doubt about that.
>Basically it will make rich richer and more centralized.
So PoW doesn't have this problem? It costs money to run mining hardware and supply electricity. The more valuable a PoW coin is, the greater incentive there is to run more hardware. With Bitcoin specifically the block rate is limited via the difficult adjustment. With this in mind it sounds like whoever is mining will get richer faster and centralize the competition.
PoS just abstracts all of this into the code itself. I don't buy the quoted argument.
You right, but I will write how I think. Incentive in not only to run more hardware, but to run more effective hardware. This incentivises innovation. In POS you don't need to do anything else. Just stake coins. No innovation, you can always be a monopoly if you have the cash to make a one-time investment. In POW you always have to invest to be competitive and have the most competing hardware.
While you need to be rich to be able to mine Bitcoin, you also have to dump those mined coins on the exchanges to cover your running costs (electricity, hardware, server operators, etc).
> While you need to be rich to be able to mine Bitcoin, you also have to dump those mined coins on the exchanges to cover your running costs (electricity, hardware, server operators, etc)
You don’t have to be rich to mine physical bitcoins, you just won’t mine very many of them. Same as it works in PoS — join a mining pool.
Or buy mining equities, e.g. Blockstream’s BMN token (not an investor).
It’s funny how much flak PoW networks take from PoS investors, and it’s pretty blatantly due to investors investing in things which aren’t PoW. None of the PoW criticisms in play today save for the environmental ones — and even those are subject to considerable astroturfing [1] — are supported by fact. In spite of what PoS investors commonly tout, PoS as a technology is neither theoretically sound, nor practically proven in any sense [2].
It literally codefies "the rich gets richer" deep into the protocol. While I'm pro-eth, this makes it a lot less "fair" in my opinion.
With PoW, miners can't really hold on to the coins for very long, so they have to dump it to cover electricity and hardware costs which always creates supply whereas with PoS, a staker can just hold on to the coins they get forever at no cost and their share of the pie keeps getting larger and larger forever.
To be clear, I'm not complaining, if eth decides to pay me 5-10% per year based on my holdings for a simple cryptographic signature, I'm not gonna say no, but it definitely creates a weird dynamic where new entrants will have to buy at the price the stakers decide to sell, which could be sky high since we have no pressure to sell.
The difference is that anyone can stake. It's going to be the default way to store ETH akin to a savings account for most people so pretty much everyone is going to share in that PoS issuance. This also doesn't affect new buyers as they are buying ETH to use it most likely so it's not being held long term. If they decide to buy long term then they also get the PoS issuance so everyone wins.
The base protocol uses 32 ETH for technical reasons but yes, as you said, pools like RocketPool, Lido, etc along with exchanges like Coinbase, Kraken, and even everyday banks also allow staking any amount of ETH by anyone to take advantage of the stable staking returns. In a practical sense there's no barrier to staking ETH and it'll likely be the default way to hold ETH long term as a low risk savings vehicle.
It wont be 5-10% for long. At steady state, it'll be a tug of war between staking Ether in the beaconchain, or depositing Ether into defi protocols. While it might seem like your ETH are just passively earning, actually staking 32 ETH today can be quite involved, so it's not exactly passive at the protocol layer.
That paper is quite old, and I believe its objections are addressed by new PoS systems. In particular "costless simulation" is addressed by using cryptographically verifiable randomness, e.g. the VRF-based lottery in Algorand, and the VDF in Eth 2.0.
No one is getting richer in PoS. The currency inflates at the same rate. It's similar to stock split. You get more shares in the same ratio as the value is reduced.
In PoW, energy is used to mine more coins. Thus, total value of the currency grows.
There's a difference between inflation from thin air, and inflation from added energy / work.
Market caps aren't everything, because, let's say I mint a new token and there's 10 trillion supply of this new token. If I sell 1 for $1, that implies a $10T market cap, doesn't it?
So Bitcoin SV is a fork of BTC (or BCH, can't remember), and what that means is a large part of the supply is untapped, because most BTCers (or BCHers) haven't even interacted with the chain. Their BTC (or BCH) balance is still there in the fork, based on whatever they held in their wallets prior to the fork. But maybe they don't even know the esoteric fork exists. So a large part of the supply is locked up due to ignorance alone, or due to relative lack of liquidity on exchanges.
At any rate, if you really want to know what people are using, when it comes to crypto, look at how much they're spending to use the chain or application: http://cryptofees.info/
Market caps get extra weird for cryptocurrencies which are created as forks of an existing chain, because everyone who held the original coin at the time of the fork technically holds an equal number of the forked coins, even if the owners of those coins have never interacted with the fork.
I'm also assuming that these transparency reports don't count when an asset has been bridged to another network.
A big chunk of USDC and USDT floating around on smaller PoS networks have been bridged from ERC20, so would appear to be idling on ERC20 but could actually be exchanging hands on a completely separate network.
PoW in conjunction with blockchain is anti-efficiency by design. It’s a principle of the ledger’s security and an inevitability that mature networks waste energy in exchange for that.
Anyone serious about this topic needs to think beyond blockchain into fundamentally different technologies, like Nano, or things which forego decentralization entirely.
This chart is nice, but you need to include the difficulty of the algorithm (difficulty to attack), the size of the blockchain (hard for anyone except rich people to participate if you need a server farm just to verify a transaction), developer activity, and each coin should have a collapsable subset of “layer-2” options (eg. Lightning and liquid for Bitcoin), and their statistics as well.
Most importantly, A “transaction” on a blockchain is not a “transaction” in the colloquial sense.
I was going to comment on this as well - different coins made different decisions on how to scale their blockchains. Some have an expensive base chain with the intent of moving most transactions to layer 2. Some have a cheap layer 1 with lots of transactions. Some have a mix of the 2. There are different tradeoffs for each approach, but I'd love to see some of these scaling attempts included rather than just assuming that layer 1 transactions are the only ones that matter.
This actually points out why Tesla not accepting bitcoin for environmental reasons is silly: 134.0 kg of CO2 per transaction about as much CO2 as a tank of gas. This is ridiculously inefficient, but it's a car; the energy inputs are already high.
The real issue is the interest Musk created when Tesla bought bitcoin a few months ago and how he grew a conscious suspiciously fast.
Of course it’s a valid metric. The whole point of this is that most crypto is not used to transact, but to speculate, and so a high price and therefore high carbon footprint with a low transaction throughput is often the whole point of these analyses.
Transactions aren't the only thing which makes cryptocurrencies useful, and even then, cryptocurrency transactions aren't directly comparable to each other or to transactions in traditional financial systems since they can have a much different risk profile.
Furthermore it's not obvious that increased transaction rates are necessary yet in most cryptocurrencies and so it might not make sense to optimize for that yet. There is no point encouraging frivolous data to be added to the blockchain permanently if the demand to make useful transactions isn't there yet.
It's valid for Bitcoin since it doesn't scale on-chain, thus it cannot raise it's efficiency.
Also, BCH and BSV aren't "totally insecure" as that's far too black and white. If they were, then they would've been attacked and destroyed long ago and no exchanges would touch them.
It's proportional to the value a miner is awarded (ie: block reward + transaction fess) for mining a block not the price of the coin. Saying it is the price of the coin is like saying Berkshire Hathaway is worth more than Apple because their share price is a lot higher.
No, I think you misunderstand. The rewards are predictable, and fees are generally a tiny fraction of the total reward (a few percent or less). The exchange rate vs the price of electricity is what determines whether it's profitable to consume electricity to hash for a PoW chain. There are some efficiency hacks like merged mining that improve the situation a bit, but essentially the person you're downvoting is totally correct.
for Ethereum, my understanding is that the proportion from fees has been a substantial proportion (like, over 15%? idr the exact proportion, but I'm reasonably sure it is at least 15% ) for over a year.
Larger blocks means that they take longer to propagate across the network, meaning there is a much longer period where two or more miners might find alternative "next blocks", which could be exploited by tricking miners into including a different transaction in each split of the chain. This means that you basically have to wait much longer before you can be sure that your transaction will not be reversed.
On top of that, larger blocks also means that home users, or small businesses can no longer run their own fully verifying nodes, meaning that we have to move to relying on larger businesses to take care of attacks on the network, and not to collude to change the ruleset.
In reality, Bitcoin Cash and Bitcoin SV have not taken off in popularity, due to these issues as well as serious character flaws in their most vocal proponents, meaning that for now their blocks remain small, and the possibility of these attacks isn't actually realized. But if they were to become more popular it would not last long.
Yes, due to the 2nd layer solutions it's going to bring along. You have the same idea in Bitcoin called lightning network (with growing adoption: 1ml.com).
Note that Bitcoin SV is completely controlled by miners, a 51% attack can change the rules. In the original Bitcoin, a 51% attack can only reverse recent transactions, not change the rules or compromise stored funds.
Yea if you want to spend millions if not billions to 51% attack it and the public nature of bitcoin is such that everyone would know who attacked it leaving them legally liable then be my guest. There is more incentive not to attack it than there is to attack it. when will people realize this.
Bitcoin SV was the result of a sociopath who lied about being Satoshi Nakamoto and supporters of Bitcoin core encouraged it because it fit their political goals.
Kind of a self-defeating list. As a PoW cryptocurrency becomes more popular, the value of a single coin goes up, so the mining reward will go up in terms of USD. As a result, the equilibrium energy usage in mining goes up proportionally to the increase in value. So if people start using a cryptocurrency because it is more efficient, it will stop being efficient.
PoS-based cryptocurrencies use thousands of times less electricity than PoW-based ones, so all PoW cryptos would be above all PoS cryptos in the ranking. It wouldn't be an interesting chart.
PoS still encourages using more powerful hardware and faster internet because it equates to more transactions. That said, I've seen people use Pi's as stakers. But you can still test the current draw per transaction much the same as with PoW currencies.
More power doesn’t equate to more throughput in PoS schemes, unless everyone is increasing their power and communication isn’t your bottleneck, but even then there’s a quick ceiling you’ll reach.
Not really, you can evaluate PoS-based by the bandwidth and the message complexity of their consensus mechanism and the space required to sync and run a node.
There's probably enough data out already on how long hard drives last while mining Chia to make a reasonable estimate. It kills hard drives fast enough that a large percentage of hard drives which were mining at genesis are now dead.
There actually is an estimate of this floating in the chia Keybase channel. I remember it being very low, but there are many variables. Even at 100x the estimate it came down to less than 10 million USD in CO2 offsets.
> It is great to see effort being put into researching cleaner alternatives. Unfortunately, there is no working PoS-based system that does not rely on some degree of centralization in its security model.
This is false. See Algorand, Cardano, Mina, etc.
Proof-of-work is very much a technology of the past. It's the fossil fuel of cryptocurrencies.
Algorand isn't currently decentralized. They have a list of approx 100 relays required for the network to function that they control tied to a centralized single domain.
Do you have a good source on that? This is not the first time I hear this. Btw I’ve studied the consensus protocol and it fulfills promises of decentralization so I’m wondering why they are using some single points of failure pieces (it is decentralized from a safety perspective: you can’t double spend, but it’s possible that some pieces are centralized). My guess is efficiency.
Who manages the list of relay nodes? What about decentralization?
> Currently, the Algorand Foundation manages the official list of relay nodes...
> We are working on a model where the decisions on relay nodes will be done in a more decentralized way.
As for the centralized domain, you can look it up in the source code but essentially it gets the list of relays from a SRV record on the algorand.network domain:
Total noob, but I'm wondering since generating the blockchain (at least with bitcoin) is about finding match (or should I say) partial match of a specific hash.
Could that information be somehow used to cracking encryption that relies on cryptographic hashes?
I’m not sure whether Stellar Lumens (XLM) counts as POW, POS or something else but it sure is energy efficient. It’s also the 3rd most popular cryptocurrency on Coinbase.
A fascinating thought experiment would be to have a further breakdown by "non-speculative" transaction. It's difficult/impossible to compute whether a transaction's purpose is speculation, but given that that's most of what these coins are currently used for, it would surprise me if less than half of these transactions are for the purpose of price speculation. This is going to make these coins compare substantially less favorably compared to e.g. credit cards or cash money.
For the vast majority of cryptocurrencies, especially once you get beyond the "big two" of Bitcoin and Ethereum, I suspect that virtually all (>99%) transactions are speculative in nature.
So basically they're all bad except for SV? 1 Gallon of gas makes 2.4 kg emissions, so instead of swiping a card its burning a few gallons of gas, or 50 gallons for BTC.
Rather, they are all bad. Proof of stake cryptocurrencies is the state of the art in consensus protocols today, not proof of work. This is mostly a ranking of who’s the worst among the worse technologies.
Are there any coins with a reasonable transaction cost? It seems shocking to me the USD-normalized cost per transaction given that the actual cost should be near zero.
Visa/MC has a cost of like $.25+some percent so I suppose represents the cost of having a trusted oracle with fraud, review, etc.
This seems like it should be the standard to beat for whether a currency can actually be used for anything normal and necessary to get wide uptake.
Largely meaningless numbers, because energy efficiency scales inversely (loosely speaking) with network size. You can do some nice tricks to improve efficiency, but the scaling will never be good, as these networks all use the same consensus algorithms. The only project I've seen with fundamentally superior scaling is Avalanche, but it's new technology and I'm not yet entirely convinced.
There will be a time, where we have legislation to ban energy-inefficient crypto-currencies from being traded on regulated exchanges. This would make any proof of work currency essentially useless in the legislated areas. My bet is, EU will start, others will follow.
This will lead to pressure to convert BTC, ETH etc. finally to proof of stake variants.
How did you include all the transactions made on the cryptocurrencies various lightning networks? I guess that could be quite hard to measure, since they aren't stored on the blockchain, although are equally valid transactions on the network.
There is a lot of ignorance going around here.
Bitcoin SV is cheaper because it can handle vastly more transactions per block, making it more efficient.
Bitcoin SV believes in unrestricted scalability. Yes mostly this means miners will tend to agglomerate, and specialize I to big data center. Well know public entities that must follow law. but we believe all miners also have an incentive to not let any other gros past 50%. Today none is more than 38%, so we're safe.
And also we have had big blocks with hundred of thousand of transaction. these block generate a lot of transaction fee, sometimes more than the mining reward ! Which we all know will decrease over time, to only rely on tx fee. Which BSV embraces. The node has been worked on to support Tera Node, with Tera Block, and billions of tx, the world of tomorrow, the enterprise grade blockchain. Yes indeed it's more environmental friendly to be more efficient.
If one had Bitcoin in an exchange instead of an offline wallet, does that mean that when forks occur, the exchange does not give you coins in the fork?
Also, what about PoS coins? Aren't those vastly more efficient than any of these?
> If one had Bitcoin in an exchange instead of an offline wallet, does that mean that when forks occur, the exchange does not give you coins in the fork?
In most cases you do get new coins post-fork. Exchange will announce whether they support the fork or not before it happens, so you can react.
Ethereum's move to proof of stake (in process now) should improve its carbon profile. Further, with the Polygon Commit Chain working with Ethereum, I believe that carbon emission will not be a major concern.
It doesn't mention any PoS solution (which are, compared to PoW) extremely energy efficient. They do mention in the FAQ that they're not included since they still depend on some sort of centralization, but as far as I know this is not true for, for example, avalanche (https://avax.network)
It's not really clear who is behind this site and if there's some hidden agenda.
Let's assume not (but with crypto you can never be sure) and that they will properly consider PoS blockchains if they are as decentralized (or more) as the listed PoW chains.
I think Ethereum 2.0 is currently demonstrating at scale that proof of stake works fine and can be secure against hordes of very incentivized hackers trying to cheat. That should hopefully bury the whole proof of stake is centralized argument.
The notion of centralization has its roots in a different concept: permissioned vs. permissionless blockchains. Ethereum (1 and 2) and Bitcoin are both permissionless in the sense that anyone can become a node in the network and start earning gas. Ethereum 2.0 does not change that. You can still join and earn gas on it.
Permissioned blockchains such as Stellar, Ripple and a few other networks are more closed. You can join the network but you don't have the same status as the core nodes in the network that are explicitly configured to trust each other. This makes e.g. 50% attacks from the outside impossible. E.g. Stellar works this way. You can become a stellar validator but nodes have to specify which other nodes they trust and that gives the first nodes a lot of power.
In the case of Stellar there are only a few dozen validators run by organizations working with the Stellar foundation. Stellar has indicated that they want to gradually open up and eventually become permissionless. But as of yet they are too small to make that work and are relying a lot on a small set of validators run by just a handful of companies. There's a list of active nodes here: https://stellarbeat.io/nodes
Such permissioned networks are great for e.g. banks that need to make sure they aren't doing transactions via some dodgy nodes in North Korea, Iran, etc. Technically, blockchains like this are not that different from public blockchains. There's nothing stopping these from opening up except that they choose not to. For a lot of businesses, that's a feature not a bug.
> I think Ethereum 2.0 is currently demonstrating at scale that proof of stake works fine and can be secure against hordes of very incentivized hackers trying to cheat. That should hopefully bury the whole proof of stake is centralized argument.
This is really shakey ground to prop up an argument in favor of cryptocurrency: AFAICT no cryptocurrency ever dies until people stop trading it, which virtually never happens.
I’m reminded of the saga of “stable coins” — stable coins of the non-IOU sort. Every major example of one has imploded at least once during times of high market volatility, no exceptions. Including as recently as 2020. You’d think after enough of these implosions the concept would be disproven on a fundamental level, but no.
(Many have considered these unstable stablecoins theoretically unsound ever since the concept’s inception — bitUSD IIRC — with clear parallels to PoS.)
Developers and VCs have been deeply invested in PoS consensus for many years now, mostly because they were attractive financial bets to make. There’s no use in my even opining on the theoretical flaws of PoS, because implosions of cryptocurrencies seem to not even matter to investors.
Anyway, at some point, the people funding and developing these PoS systems evidently shifted into abject promotion mode for obvious financially motivated reasons based on really nothing aside from investor expectations. Nothing has ever been proven about PoS aside from the fact traders are willing to hold speculative positions in these coins — no different from the reasons they’ve held any other cryptocurrency. And even if PoS were a fundamentally discredited concept disproven as many times over as “unstable stablecoins” have been, it would change absolutely nothing about investor behaviour.
I'm talking about it scaling; not about the value of the token. Ethereum 2 tackles scalability through PoS and sharding. Hence the reported energy advantage. Ethereum 2 will be one of the largest proof of stake networks once it launches both by market value and by number of users and validators. The longer that stays up without incidents; the better. The market value means that every known angle towards possibly abusing/hacking the network will be pursued by countless very incentivized hackers. Them failing to get anywhere increases the level of trust people have in these networks.
In think your point of view is a bit comparable to late stage skeptics arguing against dot com companies 20 years ago. They were mostly right and yet the FANG companies booted (or rebooted) straight out of that. So clearly they were also wrong. Very wrong. Because those companies are now worth trillions. Looking at what came out of that bubble, it is hard to argue that there was nothing there. Of course there was. But of course there were many failures as well and lots of investors backing the wrong companies for all the wrong reasons. But the technology from that era bootstrapped a multi trillion dollar industry.
The blockchain space is very similar. Lots of obvious scams, naive companies, poorly thought through business ideas, half-assed technology, etc. And lots of investors getting rich on being there early and losing other people's money (which, lets face it, is how that greed fueled behavior works). It's a symbiotic relation ship between mediocre investors and mediocre entrepreneurs. That hasn't changed in the last 20 years. That bubble is going to pop at some point. But that does not mean it will drag all blockchains with it.
The thing with Ethereum is that is mostly not directly dependent on VC cash. And that's one of it's strong points. The wider ecosystem is of course. But people like Vitalik Butarik and his friends are not reporting to anyone financed by a VC because they are already financially independent. That's also the reason they have been moving slowly and carefully with Ethereum 2 for years rather than rushing it to market in a few months. They've been talking about proof of stake and sharding for years already. Before the first bitcoin bubble even (four years ago or so).
Blockchains are as strong as those running them. Ethereum 2 right now looks like it is happening and has staying power and will have quite a bit staked among quite a few users. I'd argue most of the Ethereum 1 value is actually based on that future potential.
For a technology to be falsifiable, there needs to be an agreed upon method of measuring its fundamental failure.
Even in cases like stablecoins where investors are provably losing millions of dollars on repeat oweing to fundamental design faults of the underlying protocol, the coins continue being traded nonetheless. The coins are still worth money despite the many instances of clear technical failures — “being worth money” appears to be the sole arbiter of “validity”.
How can the underlying tech really be disproven? Cryptocurrency is an effectively unfalsifiable technology. You could be selling a one-wheeled tricycle, and investors would still trade it based on one narrative or another. That is more or less the case with PoS.
if a huge hydro power generator in a remote location on a far away continent wastes local energy, does my city power bill go up? because of BTC ? tell me more
Might be. If the hydro generator isn't supplying enough energy to the local area because of BTC, then presumably a higher load falls on petro energy to fill in the gap in supply.
That influences the global market a tiny amount. Your power bill likewise is affected, presuming your provider has any petro in its supply mix, which it likely does (even if only as a backup).
The impact is tiny to nonexistent at a scale of 1, but for numbers greater than 1 the impact likewise increases.
Or more succinctly: Electricity tends to be fungible and move over geographically large networks, so most of it is probably interchangeable even over large areas/distance.
I think this is less true for purely renewable grids separated by large continents. The amount of concrete and steel needed to move solar from the Sahara to Finland makes the energy very much not green anymore.
Petro energy- natural gas, diesel plus coal- don't really concern themselves with CO2 and can use existing transportation to get to remote areas, so the energy produced is very much more fungible on a global scale.
PoW doesn't make transactions. The purpose is to secure the network. It's useful to compare this to the cost of attack: https://www.crypto51.app (this data is somewhat outdated)
Also, this doesn't take off-chain transactions into account. There's way more actual financial transactions on Bitcoin when every L2 transaction is counted. Lightning network scales to billions of transactions per second, without adding PoW energy consumption.
>As with Proof of Stake we are aware of no existing, alternative protocol that has solved the problem of distributed consensus. Usually these approaches have resulted in some form of centralized authority becoming an important factor in the security model.
>Of course a centralized systems can achieve a far greater energy efficiency. Here we want to compare only distributed systems and their properties.
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Everyone should know by now that Ripple is a company not a blockchain.
And the XRPL is fully decentral with no authority at all.
Ripple is pretty much fully centralised last I checked - there's a list of nodes controlled by the company and a few other companies involved in setting it up which decide which version of transaction history is valid, and nodes outside that list have no say in their decisions. In theory you can use your own list of nodes, but it's a bad idea to ever do so. Since who you choose to trust has no effect on the Ripple-sanctioned set of transactions and you really don't want your version of history to ever diverge from theirs because then you'll disagree with everyone else on the planet about which transactions are valid, diverging from their chosen trusted list has only downsides.
Did you read the post? Ripple is a company ofc its centralized.
The XRPL is the "blockchain" and its NOT controlled by Ripple. They maintain the open source code that does not give any control over the running network at all.
>Ripple-sanctioned set of transactions
Thats a made up thing. There is not a single Tx that has ever been "sanctioned" on the XRPL Its also simply not possible. You are completely misinformed or intentionally spreading FUD.
The time when Ripple ran the whole network is long gone.
Does XRPL no longer have a unique node list that is mostly under the control of Ripple (because they maintain the default that clients automatically use)?
Could the system still be decentralized in practice? Sure. But the fact that the Ripple CTO claimed XRP might be more decentralized than BTC or ETH makes me take the rest of their claims with huge buckets of salt.
Unique node lists (UNLs) are simply lists of nodes someone provides that they think meets their standards. Everyone can publish an UNL, it doesn't give any power or requires any privilege. If you run a node you can use one or many UNLs or make you own. There are 3 UNLs published at the time of writing.
>Ripple CTO claimed XRP might be more decentralized than BTC
Hows that relevant he can assume whatever he wants ryt? We can not measure decentralization in a meaningful way. His guess is as good as yours. BTW hes a Bitcoin developer.
Also I assume what he meant to say with that is that China could gain control over 50+% of the mining power.
On the XRPL no country could seize control or more accurately they could but it would not have any effect. Double spends are not possible by gaining control over 50+%. You could only trick the nodes you control which is literally as useless as it sounds.
And ofc all other nodes would simply ignore any node that is assumed to be compromised or malfunctioning.
The BTC network cant "ignore miners". If it would be know that someone has 50+% hash power there would be no solution.
>Unique node lists (UNLs) are simply lists of nodes someone provides that they think meets their standards. Everyone can publish an UNL, it doesn't give any power or requires any privilege. If you run a node you can use one or many UNLs or make you own.
doesn't using your own UNL basically equate to a hard fork in the event that the nodes don't agree?
>doesn't using your own UNL basically equate to a hard fork in the event that the nodes don't agree?
Short answer: No, if one or a few dont agree they are just ignored. If the majority (>50%) does then it halts and if a quorum is reached (>80%) it could fork.
long answer: Its complicated. Under normal conditions nothing happens but in edge cases (large node outages/physical disconnection/like if and undersea cable is cut) it could fragment.
This can be avoided if the core of the nodes mostly has each other on the UNL. But since we cant and most importantly should not enforce that its encourages to create and publish an UNL if you think the existing UNLs are not good.
Its also encourages to use an UNL with large overlap to other UNLs
This leads to the assumption that almost everyone uses one of the published UNLs with minor changes (mostly additions) else if you had mayor changes you would publish an UNL to convince other to also drop/add specific nodes (after all if you have a reason you probably want to tell everyone)
Since the UNLs overlap the real nodes UNLs should too and forking is not possible with large overlap.
On a high overlap it could only halt if too many nodes are separated/offline which is the wanted behavior rather than making uncertain progress.
There is a amendment coming (most likely) for negative UNL where nodes can signal that they lost contact to a node and temporary remove it form the UNL. This would reduce the risk of halting if large percentage of nodes are temporary lost. Instead of 20% it would tolerate more nodes to go offline before the network would halt. It basically adjust the 80% quorum requirement down with every node that goes offline but has a minimum of 60% of the original 100%. 60% is the minimum to prevent forking/fragmenting again. only 51% would be needed if the UNLs would had perfect 100% overlap, so its a bit higher to compensate for the fact that UNLs dont have 100% overlap.
People that complain that PoW cryptos spend too much energy don't understand that it's just another form of conversion of energy, just like every other action human take.
Average Joe has a manual labor, his physical energy is converted into labor, which converts to fiat currency. The food that Joe ate also require some amount of energy to grow and become Joe's food.
PoW mining converts raw electric energy into a digitally transmissible currency
You don't understand the point that you're arguing against.
Producing fiat currency through manual labor uses a mix of renewable resources, and value is provided. You can't just dig in the ground and get paid for it. You have to do something that improves someone's business or life.
Producing crypto is just turning coal (or whatever) into numbers. There is no intrinsic value created in that chain.
If the crypto loses value, you may have even destroyed resources in the world for no reason. It's a net-negative.
The cost of producing fiat currency is not the same for everybody.
Producing crypto keeps a secure ledger, claiming it's just producing useless numbers is the same as claiming that a TLS session is just playing around with numbers.
The value of fiat always goes to 0, resources have been destroyed in the world for no reason
If I pay someone to build me a house, I have a house and they have fiat. We converted energy into a house and fiat.
If I convert the same amount of energy into crypto, I have nothing with intrinsic value.
And before you say that fiat has no intrinsic value, consider that most people have fiat debt (loans, taxes, wages, etc.) that they can pay off with it. Currently very few people have any crypto debt.
The most important thing to watch out for in this type of articles is for this push by certain anti-market interests to not succeed in a mining or even an outright Bitcoin ban in the West. They are using both environmental angle and an terrorist angle to justify a potential action, that can range from a new type of mining tax to an outright Bitcoin ban.
You've left out PeerCoin (PPC) the original PoW cryptocurrency which has been in constant operation and development since 2013. It is by far the most energy efficient, as that was one of the main goals in the design of PeerCoin.
Get the signals or stay poor. Elon Musk said that BTC should increase the block. Who is the only person who has worked to increase the bitcoin block? obviously Dr Craig Steven Wright ... Current block is 638MB
Worked? All he did was raise a number in the code. Bitcoin could have raised that number too, but they chose not to, because the higher the number is raised, the harder it is to verify the Bitcoin blockchain on consumer hardware.
The main point that you should understand is that a PoW blockchain's energy usage is not proportional to its transactions.
I'll say that a different way: the transactions themselves do not use any energy in mining.
I'll say this in a third way: it takes exactly the same amount of energy to mine an empty block as it does a 1GB block of transactions, as it does a 1,000,000,000 PB block.
In reality, transactions are all hashed together in a mining pool into a single numeric hash before miners ever see them. It doesn't matter how many transactions are included in the hash. The hashpower just has to find a magic number matching that hash.
On the other hand, the #1 factor that increases a blockchain's energy usage is its price per coin. The price of a coin is how much that coin is worth to be mined, which is the incentive for miners to dump energy into mining it. In steady state, miners will dump energy into mining a coin until the cost of energy = the value of the coins coming out.
This is why you can see Bitcoin SV at the top of the list -- it's worth the least of the Bitcoins.
And it's also misleading to compute the second factor -- transactions per second -- by counting the actual transactions on the blockchain, rather than looking at the transaction capacity. Because blockchains only cost something per transaction once they reach capacity. This is misleading with Bitcoin SV, for instance, because that coin artificially creates bogus transactions on its blockchain in order to make it look popular and demonstrate the vision of large blockchains. Bitcoin Cash, on the other hand, can handle a thousands of transactions per second (on testnet) but doesn't clog its live blockchain with them.
So, in sum, if you send a transaction on Bitcoin Cash, it will cost 0 kW of electricity, even though it says 31.3 Txs/MWh (which equates to 31.9kW/Tx) in this chart. This is because transactions do not cost anything in electricity. Electricity only goes to preventing double-spends. A better metric would be "energy use per double-spend that was prevented."