To be less glib, I think the article makes it clear just how inordinately difficult blockchains make their lives when they have to build, from scratch, a reliable definition of time.
If you could have a trusted time source, you could at a stroke get rid of one of the most egregious flaws in bitcoin, its vast wastage of energy, because of its 'proof of work' mining. Bitcoin miners are running at full pelt 24/7, picking random numbers and doing math on them in the hope of striking lucky and discovering the next block. The mining difficult is artificially picked so that blocks are discovered about every ten minutes.
However, imagine if bitcoin miners could all declare a cease-fire, for 9m59s of those ten minutes, i.e. they just do nothing for that long, consuming virtually no energy, and then they all furiously mine at full speed for the last second (with the difficulty adjusted so the global mining should take a second). This process would be just as fair as the current one; if you have more/faster hardware, you will still mine more, in the same proportion as before. The total energy usage would be reduced 600-fold!
But - the reason you can't do this is that there's no way of stopping cheating. Who can tell if the other miners are really idling for those 9:59? This is where the time source comes in. Imagine you have a trusted time source: it could, every ten minutes, broadcast a random number. Miners would have to listen for this number, then mine a block containing it, to prove that they didn't start work early. Problem solved!
Back to the real world: just about everyone can agree on time; we have NTP and can even use certificates to authenticate clock sources, we can even use multiple sources to make it harder for time to be faked. So why can't blockchains do the same thing? Why don't they use multiple time oracles to stop the colossal energy wastage?
And, when bitcoiners tell you that relying on a centralised source, or even a quorum of sources, is completely unacceptable, why then are the same people happy to use smart contracts where the use of centralised oracles is apparently both acceptable and commonplace?
> The total energy usage would be reduced 600-fold!
It wouldn't. If X$ worth of bitcoin is handed out every block, then miners competing for that prize are willing to collectively spend up to X$ per block on average.
If they could only mine for part of the time, then they'd simply acquire more hardware and mine at a higher hashrate during the shorter time.
Good point! We'd be living in a world where the lights flicker every ten minutes as gigawatts of power are momentarily switched on and off :) Or miners would have to install gigantic capacitors to fill with charge, just to power their machines for the brief instant of usage!
My example is also missing the obvious next step though - once you are using a trusted source of data (or even a wide selection of trusted sources), the whole blockchain idea becomes pointless, you don't need to do any mining at all, you can let the trusted sources run a distributed database...
> And, when bitcoiners tell you that relying on a centralised source, or even a quorum of sources, is completely unacceptable, why then are the same people happy to use smart contracts where the use of centralised oracles is apparently both acceptable and commonplace?
I think you're largely describing two separate camps within bitcoin hodlers. Some are 'gold-bug' types that value security and individual liberty above all else, and so are very conservative in their attitude towards Bitcoin development. Others are 'cyberpunk' types that value technological capability and functionality, and are much more liberal and exploratory in what they'd like to see Bitcoin become.
When you say "same people", I think they are rare, and this statement makes a bit of a false lack-of-dichotomy.
> Proof of History is a sequence of computation that can provide a way to cryptographically verify passage of time between two events. It uses a cryp- tographically secure function written so that output cannot be predicted from the input, and must be completely executed to generate the output. The function is run in a sequence on a single core, its previous output as the
current input, periodically recording the current output, and how many times its been called. The output can then be re-computed and verified by external computers in parallel by checking each sequence segment on a separate core.
Data can be timestamped into this sequence by appending the data (or a hash of some data) into the state of the function. The recording of the state, index and data as it was appended into the sequences provides a timestamp that can guarantee that the data was created sometime before the next hash was generated in the sequence. This design also supports horizontal scaling as multiple generators can synchronize amongst each other by mixing their state into each others sequences. Horizontal scaling is discussed in depth in Section 4.4
I think you’re right on, but good luck with provable timestamps. You’re trying to coordinate and validate a measurement which in itself denies the reality of space time physics at least subtly. Time precision across space is hard enough, but adding bad actors and gravitational time dilation into the equation means... well I wouldn’t want that to keep track of my assets.
On the bright side, if approaching the speed of light would give you a viable attack on the bitcoin blockchain I'm sure our space propulsion technology would transform overnight!
The nice thing about relativity (special and general) is that all of the weird seeming-paradoxes 'sort themselves out' eventually. In particular, whilst we lose a total ordering for events, we never lose causality; i.e. two events can only appear in a different order to different observers if those two events are independent (no information has travelled between them, and hence neither one can influence the other).
In the winter I ride my bike down streets lined with cars idling because their owners don't want to ride in the cold for a few minutes.
In a way I appreciate bitcoin for its absurd and unambiguous wastefulness. It's sort of the perfect expression of consumerism, destroying the precious and irreplaceable earth for something immediately disposed of.
And then when an exploit finally gets worked out, OR the governments being 'replaced' wage war on bitcoin and its ilk sufficient to obliterate its value (largely based on its acceptance in whatever form and the promise that it WILL replace government currency, in time), all the destruction will have been literally for nothing.
It's fiat currency combined with total energy crisis. It only retains value as long as people are willing to tolerate exponential destruction of resources by the already wealthy who can afford to bankroll any possible conversion of energy directly into 'money', no matter what workaround is required.
If it becomes 'the miners run for one second every day' and there is no way to cheat, these are the people who simply take the same amount of energy they were draining before, and come up with a way to store it the whole day… that or the world blacks out every day, because miners.
Bottom line is unless they get everything they want and dream of, including the eradication of government currency, the escalation will inevitably lead to a collapse where all the work becomes meaningless, valueless. All that energy will have been burned for NOTHING.
We just don't know when that will happen. Bitcoin is time, all right: time running out. Don't be caught still holding it when it pops.
> It's sort of the perfect expression of consumerism
On the other hand, the finite supply/deflationary aspect of it is also the perfect antithesis of consumerism, in that it favors hoarding (spending less) instead of spending your paycheck as you get it.
I think people generally want to enjoy their lives. I have a friend that keeps his house at 60F in the winter. I think you can argue that I'm not going to die at those temperatures or experience hypothermia. It's quite unpleasant nonetheless. During the summer if it's hot indoors I feel miserable and tired.
A lot of us could live a more simple life (i.e. no cars, fewer children). But humans are attracted to comfort and the ability to pursue their dreams.
Bitcoin is the most durable money we've had, it can never be disposed of. Lost, perhaps.
Energy consumption != energy production. Bitcoin is incentivizing reusable energy and moving energy to cheaper locations, further from cities. I suggest you look into how it's actually quite positive for the Earth.
There's nothing about Bitcoin that incentives mining with green energy sources more than dirty one. If coal electricity is cheaper, then bitcoin incentives burning coal. The only somewhat valid rebutals to the energy consumption arguments I know of are:
- a lot of it is spare power that would be wasted otherwise (only partially true).
- it uses less energy overall than governments spend protecting their fiat money's value (not that comparable since fiat can also be used as currency).
- the gold industry uses a lot of energy too (but I doubt Bitcoin will reduce the energy spent on gold, it will probably just add up).
EDIT: completed gold mining point following comment
> gold mining uses a lot of energy too (but I doubt Bitcoin will reduce the energy spent on gold mining, it will probably just add up
Why do people keep making the comparison to gold mining? It's inappropriate.
Gold mining is bad for the value of gold, because it increases the amount of gold in the world. Eventually, the gold coffers on Earth will deplete and there will be no more gold mining.
Bitcoin mining is necessary for the value of bitcoin, otherwise there can be no certainty of the blockchain. After most of the bitcoins get minted, the mining will still have to continue out of transaction fees.
The cost of mining bitcoin needs to be compared to the cost of gold storage and handling of gold transactions, not gold mining.
> gold mining uses a lot of energy too (but I doubt Bitcoin will reduce the energy spent on gold mining, it will probably just add up).
I'm not sure it will add up. It seems to me that different stores of value compete directly with each other, because you can store value one way or the other way.
You know we have a limited amount of green energy production right now, right? It's not exactly green if your bitcoin mining is using wind energy, while a bunch of other stuff is stuck with coal.
We also know that this theory is really, really stupid: The kind of self-justifying idiocy that people don't come up with unless they're already deeply committed to a point of view come what may, logic and fact need not apply.
I was going to add a disclaimer to my post along the lines of "not saying I believe or disbelieve this theory", but I was tired of adding disclaimers to all my posts.
> Are you really going to claim that there isn't a demand for green energy already?
Is a disingenuous argument. Of course there is already demand for green energy. Meanwhile, Bitcoin increases the demand so much that people are apparently outraged by the increase.
> Of course there is already demand for green energy. Meanwhile, Bitcoin increases the demand so much that people are apparently outraged by the increase
Assuming that you think you're serious: Increasing the demand for energy (and it's not "demand for green energy" it's demand for energy, period) is not, has not been and never will be a green strategy in itself.
This is easy to understand, unless you choose not to.
1. Wind/solar energy are being trumpeted around the world as the cheapest source of electricity available.
2. Bitcoin miners' profits are directly `sale price of BTC - buy price of electricity`. Other costs are marginal in comparison.
3. BTC mining is a extremely competitive, trivially mobile, trivially liquid, global market.
4. Given 1, 2 & 3 there is a lot of fretting that BTC is creating a coal-powered financial system.
With the recent spike, the currently reasonable cost for a fast, median-sized transaction is $10.46 [1] [2] According to the fretting articles I read, that is enough to power an average home for a 23 days and motivates sending over 300kg (700lb) of C02 into the air [3] That's 35 gallons of gasoline at 20lb CO2/gallon.
:/
For what it's worth, I get the concern. But, I also see equal shares of BTC hate|BTC fanboyism everywhere I go. Latching on to the environmental concerns of BTC is trendy right now. It's hard to argue against without sounding like an asshole and it's not entirely false. But, it's not entirely honest either. Everything I read and calculate shows that BTC makes total sense as a defacto green energy subsidy. But, that does not spark outrage. So, instead there is a lot of fretting about the second rise of a coal-powered economy.
IMHO, the way Ethereum is going is great: Bootstrap with POW then switch to POS after enough investment is built-up that staking actually means something. It's arguable that the best use of BTC at this point is to burn them all to bootstrap more POS tokens. We just need alternatives that inspire enough confidence to motivate people to convert their BTC over.
> Everything I read and calculate shows that BTC makes total sense as a defacto green energy subsidy.
Then you must be reading in a bubble, as this is nonsense. Self-justifying fantasising.
Throwing energy away (which from an outside POV, this is merely an example of) is not and never has been a green energy strategy. I mean that very literally: the green people are very keen on electricity demand reduction, always have been, and are not going to change this. Because they're not wrong.
Key terms to google: Energy conservation, Energy Efficiency, energy demand reduction, Negawatt
Crazy, I know. But, these are not contradictory strategies.
You can have everyone work hard to reduce their energy usage. You can have tax-funded subsidies to motivate green supply increase despite targeting reduced demand. And, that's all lovely and great.
At the same time, you can have a voracious, highly mobile demand for the cheapest energy around. You know, the kind that solar and wind is supplying, but sometimes in mildly inconvenient locations. This does not actually reduce the supply for everyone else. It's not a zero-sum game. Supply follows demand. This horrendous cadre of buyers directly pay for increased production of cheap green energy that otherwise would not have been set up at all. Thus, ramping up equipment production and economy of scale. And, motivating the creation of supply that otherwise would have been too risky to invest in.
Supply follows demand is basic economics. Buy up green energy and the suppliers will use your money to build more supply in order to expand their operations to fit the larger market.
Bitcoin has a strong base of advocacy not based on any logic or utility but solely sprung from the mule stubbornness of those who profited from their speculation.
1. Bitcoin is environmentally damaging. It produces 37 megatons of CO2 per year and consumes 78 terawatt-hours of electricity annually. Much of that electric consumption is powered by coal. Not all energy consumption or CO2 output is bad, but value should be provided commensurately to society for the damage incurred. And yet:
2. It is a terrible currency. Promoters claimed we could pay for things with Bitcoin, that it'd replace fiat currency. But the design of Bitcoin in particular makes it an awful currency. To prevent deflation, a currency should be able to increase its supply to maintain reasonably constant velocity as demand increases for it as a medium of exchange. With its limited number of coins, Bitcoin cannot increase supply to maintain velocity: its only solution is to fractionalize, a form of deflation. And deflation is what we get. Massively: everything you own, and all your income, constantly becomes worth less expressed in Bitcoin, day after day.
3. It's a terrible currency, part two: currencies should have very low transaction costs. Bitcoin transaction costs exceed $20. The response to this is to recentralize it in the form of services that cheaply transact Bitcoin rights management through traditional databases. Eliminating the very value proposition of Bitcoin.
4. After having given up on defending it as a currency, the next claim is that it's a "store of value." But stores of value should have some degree of consistency of value: volatility is not a virtue. Bitcoin supporters are right that fiat currency, to the degree it is exposed to inflation, is at risk of not being the best store of value, which is why we don't normally keep huge amounts of resources piled up as cash. But Bitcoin is an awful store of value because it has no fundamental utility that moderates its price swings. Normal assets - real estate, bonds, gold - have some sort of fundamental utility or cash flow that helps to moderate price action over time. The asset must have some sort of use first, then it can become a good store of value. Because of the above flaws, Bitcoin has no good use, which thusly makes it a poor store of value.
None of this is a fundamental problem of crypto, just Bitcoin. Crypto could be very useful! But with many millionaires minted from a lucky speculation and their entire ego reliant on deceiving themselves that their speculation was clairvoyance, critiques of Bitcoin are invariably met with a flea market of intellectually mangy defenses that ultimately boil down to saying "well, look at its price!"
You have many severely fundamentally misunderstood ideas about Bitcoin.
Bitcoin is "money" and not a "currency." Bitcoin works very wonderfully as money.
Bitcoin is not very wasteful in energy, contrary to the pushed narrative by those that want everyone to believe this is truth. Bitcoin uses a tiny fraction, currently around 7-9% of the electricity that the global banking system currently uses. Bitcoin uses a very large portion of renewable energy sources, and will continue to balance it's energy use towards efficiency and optimizations.
Your part 2/3 etc, it's not a currency. Bitcoin is pure money. We also do not really ever use gold for currency. It is money. Bitcoin is a better money than gold. Once you stop drumming on the wrong path, you'll more easily understand the differences and stop banging your head about how it's a bad currency. It's not a great currency, while it is the very best form of money.
Your whole bit about meandering into defending it's value as currency or store of value, is just highlighting your total misunderstanding of the value of gold, or the new digital version of gold as money. Money IS a store of value.
Lastly, Bitcoin really has no fundamental problems. Nobody that knows about bitcoin gives a flying fuck about the price.
It's sad reading comments like this from bandwagoners who haven't read a single academic or technical whitepaper on the technology, let alone the hundreds of them that have emerged which prove / annotate / express / clarify, in exhausting detail, all of the "fundamental problems" that Bitcoin's PoW protocol have, as well as far superior approaches that are in the process of being implemented.
But it's cute. You like Bitcoin. You're a good cheerleader.
I've actually read every single paper on Bitcoin, on Proof of Work, and on Proof of Stake I've ever found. I've been involved in Bitcoin since mid 2010. What is sad is that you wrote what you just did as if that dismisses me, or as if you are in any way authoritative on the subject. Your snide passive-aggressive writing is not cute. I am not a Bitcoin cheerleader, and I'd just prefer not talk to anyone about Bitcoin. It's been years since I have done so, I no longer go to conferences or even talk to family members about Bitcoin, and it's much the same way I quit telling people about linux maybe a decade ago. HFSP.
Sometimes you come across communities that look, from the outside, like a Disney theme park. You enter the gates and you're in a different reality. Everyday words have different meanings, and there are stories built up about their definitions, completely divorced from whatever happens in the outside world. Paid actors learn to complete this comprehensive alternate reality. But as you exit the gates, reality returns, and words reclaim their conventional meaning.
It's like that with Bitcoin fanatics.
"Money" and "currency" do have definitions built up over time by economists and financiers over the past centuries. They are not the same as is used, apparently, in the Bitcoin-Disney fantasy park.
Conventionally - and by conventionally, I mean as it is used by all economists and financiers for centuries - currency is a subset of money. A currency is the dollar, the Euro, the yuan. It doesn't have to be fiat, but today usually is. Money is any type of highly liquid asset typically used for the payment of debts, which includes currencies but can include short term bank notes as well. Although there have been times in history where gold was used as money, it is generally not used as money now, although like most assets it can be converted into money. Bitcoin can be money too, but it's a crappy money, for the reasons I described above. Generally, economists don't spend a lot of time splitting hairs about money and currency, because they're very similar concepts.
"Money" is not a synonym for "store of value." You will not find that in any economic textbook, or even Wikipedia for that matter.
Even if you wanted to use the fantasy park definition of money as anything with a store of value, you chose not to even defend Bitcoin as a store of value. Possibly because it's a terrible store of value.
Again: this is just Bitcoin. Crypto can be designed better. The fact that Bitcoin fanatics obsess over Bitcoin in particular is just proof that they're talking their book.
Which is by design, to encourage investments elsewhere. The rise of Bitcoin and the stock market are probably an indication that the policy worked. People indeed are willing to burn their money in crypto rather than keeping them in savings/bonds
I keep reading about how we need to discourage consumerism, wastefulness, mindless consumption. Recycle and reuse.
Yet fiat enthusiasts keep parroting that the linear and intentional destruction of value through inflation, in order to encourage further mindless consumption, is a good thing? What is so bad about a currency that maintains its value throughout time? This would allow someone to actually save, rather than be forced to buy some stupid widget they don't need, or become a part-time fund manager trying to decide between a series of risky assets. As it stands, simple savings accounts pay zero and lose money to inflation, so if you don't become a one-man hedge fund or pay someone else to become one for you, you just lose your money.
Every currency’s goal is to be stable in terms of value. The mechanics of achieving so are complicated though since you will need to exactly calibrate the supply of new money to match your economic activity. We are at the point where we don’t even agree what economic activity is lol.
Nah. It motivates rational beings to spend that capital on anything at all, as fast as possible, because the alternative is a net loss of purchasing power.
Deflationary currencies on the contrary motivate actors to think before spending, because any spending has to be balanced with the future gains that won't come from holding it and seing it accumulate value over time.
I don't see it as waste, I see it as the cost of decentralized trust (no such thing as free lunch).
The way I see it, it's either "burn" the energy in proof of work (the machines leave behind only heat and bitcoin) or let a closed institution take this energy to provide this trust.
In the end, it's all tradeoffs and incentives decided by politics and made possible by technologies.
It's just natural, that people are salty about proof-of-work that leads to computation devices scarcity. No one asked for this and it's really scary - society can economically decide, that distributed ledger protection is more important, than gaming and science. Just like we economically can decide that global warming is not important.
Is there a name for the situation where you assume X of someone else because that’s how you feel? Is that projection?
I discussed gambling on Bitcoin, considered it carefully, right near the beginning. Didn’t bother. Don’t regret it. I mean, why should I be enriched by Bitcoin? It’s not clear that Bitcoin is a good thing. I could have invested in cigarettes or oil companies but I wouldn’t do those things. I have no regrets about not buying Bitcoin, just as I have no regrets that I haven’t gone to work for Facebook and accumulated lots of cash.
I find it so odd that people would assume I’d regret it. Life isn’t about finding easy ways to collect money, why would you think it is?
Because it’s enormous? A colleague just finished putting together a 125MW BTC mining operation. That’s sheer insanity. Nobody has ever been able to explain how Bitcoin saves the world from climate catastrophe by using 0.3% of all electricity.
> Nobody has ever been able to explain how Bitcoin saves the world from climate catastrophe by using 0.3% of all electricity.
Why would you think that Bitcoin needs to accomplish that particular task? As far as I know ending climate change has never been mentioned as a goal or desirable outcome of the project.
The maintainers of Bitcoin could make changes to the mining protocol that reduce its reliance on energy. By choosing to not do so, they are directly contributing - in a substantial way - to civilization-ending climate catastrophe. I do think that Bitcoin's maintainers have an obligation to do their part, considering that they are very materially a part of the problem.
Ethereum is at least working hard on other algorithms that are energy efficient. But in the Bitcoin space, the tremendous investment in energy-intensive mining equipment means that the entrenched players have an interest in persisting the way that things currently work, rather than seeking an energy conserving replacement.
It uses orders of magnitude more energy than the "legacy" financial institutions it competes with, to process a fraction of the transactions, and has tenuous practical benefits unless you're a ransomware gang or an early mover getting rich from the hype.
In an absolute sense it uses much less energy. If you divide that by the current rate limit of transactions, it looks bad comparatively in that sense, on a per-transaction basis. But the energy usage of Bitcoin isn't related to the transaction rate, and the rate could be increased without affecting the energy consumption at all. There just hasn't been enough demand for that increase.
The core operating principle of Bitcoin is to waste energy. That's what "mining" is: wasting electricity to find useless numbers, such that the hash of each block starts with a certain number of zeros (a useless task).
This silly task (called HashCash https://en.wikipedia.org/wiki/Hashcash ) was chosen not because those numbers are somehow important to the algorithm or network, but rather as a way to slow down the rate of block creation: forcing people to waste energy on finding these numbers, in order to have their blocks accepted by the network.
It is important for bitcoin's security that the block chain can only grow slowly, since conflicts (like double-spending) are resolved by choosing the longest chain; if someone makes their own block chain that's longer than the main bitcoin chain, the network will switch to that and any payments on the previous chain will be forgotten. Using HashCash to slow down block creation makes this harder to pull off.
The difficulty of the HashCash task (the required number of zeros for the next block's hash) changes depending on how long it took to find the last block, such that it always takes about 10 minutes to find a block, regardless of how much energy is spent on this task, or any technology improvements (e.g. CPU vs GPU vs ASIC). In other words, wasting more energy on mining bitcoin, or making more efficient bitcoin mining hardware, will not find blocks any faster; the mining task will become harder to compensate, so it still takes about 10 minutes per block.
Bitcoin allows transactions to contain a 'fee' with a blank recipient, and each block can also contain a small payment 'from nowhere' as a reward/incentive. Miners create blocks which send these fees and rewards to themselves, then try to solve the HashCash task to make the block valid. Whoever solves it first sends their block to the network, it gets accepted as the longest chain, and hence that miner has received the fees and reward.
Miners can't make more money by solving HashCash faster, since it always takes about 10 minutes for a block's HashCash to be solved, at which point everyone starts looking for a following block (since that will form the longest chain), which may be even harder to find. Instead, wasting more energy on mining makes it more likely that a miner will be the one who finds the next block; since, on average, someone performing X% of all mining will find X% of all new blocks (and hence receive X% of the fees and rewards).
This creates a competition between miners, to try and waste more energy on HashCash than each other. This race-to-the-bottom breaks even when the energy wasted finding a block costs the same as all of the fees and rewards in that block; i.e. when all of those wasted megawatts are being spent for literally nothing (net).
There are other ways to slow down the creation of blocks, or to resolve conflicts which don't incentivise long chains; other cryptocurrencies are experimenting with such things.
> That's right, all criticism of bitcoin or cryptocurrencies is necessarily down to jealousy, and therefore can be safely dismissed.
It all depends on the audience, but on HN in particular you are right. The site is rife with people who could not fathom the value at launch and who've been in denial since without ever putting the work to learn about the ecosystem.
Notice how "debates" around cryptocurrency on HN never delve into technical arguments, and compare that peculiarity with discussions on Reddit for example.
It takes 1/10th the time to initiate a funds transfer via crypto (eg. Bitcoin) as it does to effect the same wire transfer or ACH using most banks's treasury management systems. This, and the fees can be less depending on the token used; but are considerably less if the transfer is cross-currency. The transit time is about the same if BTC is used, less if one were to use XLM (Stellar) for example.
Furthermore, there are not "blockchains," there is one blockchain, and then there are a thousand or more scams trying ride Bitcoin's shoulders. They are entirely pointless systems that are not made to solve anything, they don't solve anything, and they were not made by mathematicians or cryptographers.
