[kenneth]

As an engineer, it saddens me to see the huge inefficiencies inherent to cryptocurrency mining these days. Surely, when we're spending in the billions on wasteful hashing, we could dedicate a small fraction of that to engineering better consensus algorithms.

Unfortunately, we have an ecosystem where everyone is incentivized to ignore the problem because they're too invested in maintaining the price of Bitcoin and other PoW cryptocurrencies. They often don't pay for the externalities — environmental costs. The specialization of mining also severely hurts the distributed and decentralized nature of these crypto-currencies.

I'm a huge fan of crypto-networks, and have made a career in the space. But, I want Bitcoin to die off and leave room for newer generation technology.

[vernon99]

This is a one-sided comment. There’s a lot of research going into different variations of proof-of-stake. 4 out of 10 largest crypto (by market cap) are PoS. There’s a lot of work Ethereum community (Casper), Cardano folks, Tendermint etc are doing to create better consensus models.

[nosuchthing]

Proof-of-Stake statistically equates to "Give the rich more money".

Consider Ethereum's stats (and other similar PoS minting methods):

  Presale ICO / Premine ( max cost $0.50 USD per ETH  )
  = 72,009,990 ETH
  
  Total Supply today (Feb 23rd 2018)
   = 97,800,000 ETH

  Source:
  https://etherscan.io/stat/supply

Now imagine a financial system where all the wealthy have to do simply own money (spawned from software or premine) to get more money. Or where voting is done by merely by controlling a large sum of money/tokens.

[bitL]

PoS is not going to be very popular as it removes the literal "money out of thin air" that was happening with GPUs in the past few years (coming to end in medium term). PoS strongly favors already well capitalized owners, instead of allowing new ones.

[mrb]

The ugly truth is that proof-of-stake systems, at least current ones, give up decentralization properties. Users with the most funds (stakes) can effectively validate and rewrite the blockchain. Or in the case of a network split, the 2 chains can no longer be merged (because they implement "safety" mechanism such as preventing nodes from rewriting more than X blocks.)

[undersuit]

I'm more concerned that it takes something "wasteful" like mining to make people wake up. What about DRM techniques like HDCP? Even with hardware acceleration we've been wasting power for at least a decade to encrypt every single video stream so that we can stop piracy. Piracy still exists. Mining most definitely uses more power than video encryption but only one of them has really produced anything of value.

[nradov]

Can you quantify the energy wasted on HDCP? My understanding is that it's typically handled by efficient custom circuits.

[umanwizard]

What of value has bitcoin mining (or for that matter, anything relating to bitcoin) produced?

DRM makes it harder to pirate, which is something of value in my opinion.

[goldenkey]

The encryption doubles as compression. Its not wasting power..

[snitko]

Have a sense of proportion. Think about how much electricity, paper, waste and money is spent to keep up the banking industry, anti-fraud departments, AML/KYC compliance teams, clerks and all that show. Bitcoin is actually an improvement.

[wmf]

It's funny you mention anti-fraud departments and AML/KYC compliance teams since Bitcoin does not provide those and thus their cost exists in addition to the cost of mining.

[umanwizard]

But Bitcoin doesn’t provide the services that the banking industry does. Bitcoin is more comparable to physical gold than to a modern bank account. Banking was built on top of gold (and later fiat) because it provides valuable services. If bitcoin becomes a widely-used currency then the same banking system will be built on top of Bitcoin.

[drngdds]

I feel like preventing fraud and money laundering (incidentally, two things you can't prevent when using cryptocurrency) is actually not wasteful

[Nursie]

Nope, Bitcoin is much worse than that.

[wyager]

> we could dedicate a small fraction of that to engineering better consensus algorithms.

I wish people would dedicate a few minutes to reading about theoretical limits on consensus mechanisms.

[umanwizard]

Got any links?

[bogomipz]

>" we could dedicate a small fraction of that to engineering better consensus algorithms."

Can you elaborate on what the shortcomings of the current consensus algorithms are?

[nosuchthing]

Immense waste, and lack of egalitarianism.

Proof-of-Work consensus algorithms (so far) work by wasting more and more energy.

  Max efficiency peaks in the network with a very basic CPU 
  PoW algorithm merely sets a lottery number granting write access for a single computer
  Every additional increase in processing power reduces efficiency by increasing the size of the number to be guessed 

All PoW does is increase the capital cost for any user who joins after x-amount of time has passed.

[curyous]

Bitcoin mining seems inefficient now, but when the network is carrying 100x more or 10,000x more transactions, won't it be extremely efficient? (On a per-transaction basis)

[proofofmoon]

O(n) total world energy expenditure on Bitcoin scales to O(1) transactions, so it currently only gets worse as more energy is poured into the system for the same transaction output.

There's a few solutions proposed:

- off-chain transactions (Lightning Network) - unknown complexity

- increased block size (Bitcoin Cash) - O(n) -> some larger O(1)

- a different consensus system (proof of stake blockchain, distributed proof of stake blockchain, Tangle, etc.) - varies

It's possible that the Bitcoin ecosystem will adopt one of these solutions in the future, but there doesn't appear to be a silver bullet right now.

[curuinor]

There have now been about a half-dozen various suggestions to get the network to carry more transactions, all of which are mostly failures, except for Lightning Network, which is now in the process of becoming a failure.

[sradu]

Which projects would you consider as a potential replacement for Bitcoin?

[zallarak]

http://za1.co/2018/02/10/proof-of-work.html

[kerng]

I have been wondering if an algorithm of Proof of Spending could somehow be in the mix. People should be rewarded for spending their money to enable a healthy economy. Of course something like this couldn't be the main part of an algorithm, but maybe somehow be considered. Not sure if there has been any research in that area.

[umanwizard]

What's to stop you from just sending the same money back and forth between addresses you control?

[hiccuphippo]

I wonder what happened to primecoin. Could Bitcoin switch to such a PoW in the future?

[undersuit]

Switch, no. The ASIC miners would never vote for something that would destroy half of their investment. A fork could totally happen. That's what Bitcoin Gold did by forking the blockchain to using the Equihash algorithm.

[shepardrtc]

Ripple, one of the top three cryptocurrencies uses a consensus algorithm. There are some others, further down the rankings, too.

[JustAnotherPat]

95% of people wouldn't be interested in crypto if it didn't make them money. You're asking people to give up the money to improve the system for what? So they can't make as money?

Crypto isn't charity. If you want better tech, you have to prove why it is worth it.

[testdeep]

Then shill your friends about Nano. Free Instant Transfers. No mining.

[noddy1]

This 4 billion dollars and all the money wasting on power and ASIC chips is a direct tax on the bitcoin ecosystem. This is the incentive you and your currency/consensus model have to beat bitcoin. In addition to the engineering problem, the number of people worldwide who prioritize environmental preservation mean that a currency that can preserve or even improve the environment are going to be preferred. What if we changed proof of work to be proof of not-cutting-down rainforests? 100 secure micro-satellites circle the globe taking pictures of areas prone to deforestation and distribute currency based on the areas not being logged?

[cocktailpeanuts]

This means you're an "engineer" but not yet an economist.

Try to study economics if you're really serious about your career in cryptocurrency area, you'll find yourself thinking completely differently. At least you'll get to a point where you don't make a wholesale criticism like this but can say "I know it would be better to have a tech that consumes less energy, but I also understand why it's not a trivial issue, because physics and economics."

One of the biggest fallacies in the history of economics that repeats itself over and over and over again is that people make decisions based on what they can see but they neglect what they can't see that happens as a result of what they can see.

As much as I would like to see PoS work, it may just be the case is that at the end of the day, PoS and PoW are the same in the grand scheme of things, not because of some greedy people with financial interest but because of physics. It's hard to make sense of this unless you study economics, no matter how great of an engineer you are.

[Edit] I hope my comment works as a wakeup call for those of you who are open minded enough to learn a piece of the puzzle that's obviously missing from your mindset (I shared it because once I learned it, I was so regretful for not having studied even a little bit of economics in my life until now), but looking at all the downvotes, looks like most people don't like to hear what they don't like to hear. I don't really mind, suit yourself. But just remember "Cryptocurrency" is "Crypto" + "Currency", which means it's not just CS, but also economics.

[mrep]

As I am reading your comments more, it seems like you just don't understand this trifecta of software engineering, security, and economics. All blockchains that run code on untrusted nodes have the extremely difficult problem of securely verifying other nodes transactions which usually devolve into solutions that solve O(constant) problems on O(N) nodes with N/2 majority consensus governing the network. That is literally the worst solution you can come up with in computer science because it does not scale whatsoever.

Contrast this with running code on nodes you trust which scales linearly and you should be able to see why everyone says blockchains are a solution in search of a problem.

> "I know it would be better to have a tech that consumes less energy, but I also understand why it's not a trivial issue, because physics and economics."

So thus I ask, what "physics and economic" problems do blockchains solve better than current solutions bar illegal markets?

[slewis]

What do you mean “the same in the grand scheme of things”? By what metric?