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I have a hard time reconciling the social justice goals of some cryptocurrencies with this initial period where people are basically creating wealth out of thin

I have a hard time reconciling the social justice goals of some cryptocurrencies with this initial period where people are basically creating wealth out of thin air by doing useless computations at the cost of enormous electricity. How are we any better for it? A select group gets rich, there is rampant speculation and fraud... but we're fighting "the man" so it's all good? I can't see how society is better for this (or ever will be). I've mined some BTC and ETH while thinking about these issues and I can't see a future where anything is different so I've stopped. It seems we'll replace bankers and oil millionaires with miners and early adopters... and the average Joe is where it was always. Sorry for thinking out loud all these disconnected thoughts. I really want to believe but I'm having a hard time. Meanwhile, it seems I'm doing better for society if I donate my spare resources to some distributed computing project to research cancer, AIDS, etc. Where do you see the future in 50-100 years if cryptocurrencies take off for good?

jstanley 9y ago
> doing useless computations at the cost of enormous electricity. The "cost of enormous electricity" is important - this is proportional to the amount it will cost to reverse transactions or double spend. > It seems we'll replace bankers and oil millionaires with miners and early adopters... and the average Joe is where it was always. Miners and early adopters don't get to create coins out of thin air. That's the key difference. EDIT: And furthermore, there's absolutely nothing stopping the "Average Joe" from becoming an early adopter. Bitcoin is open to everyone.
- tboyd47 9y ago
  Or, technically, they do, but only according to a predetermined schedule.
  - jstanley 9y ago
    Sure, but not for free :). Having social status as a "miner" doesn't grant you any privileges. Expending time, effort, and money on mining gives you a chance of mining blocks.
    - omarchowdhury 9y ago
      There was a point made that 4 groups of mining pools can perform a 51% attack if they were orchestrated. That's not really decentralization is it if such a thing is possible already?
      - jstanley 9y ago
        People often make observations like this, about lots of things. "It's not 100% perfect so what's the point?". The point is it's closer to 100% perfect than any other system we have. Incremental improvements are still improvements even if they aren't all things to all men.
        Nursie 9y ago
        Many see it as a step backwards, not closer to perfect. Irreversible transactions with huge associated energy costs.
        omarchowdhury 9y ago
        I never said, "what's the point?" I asked, is it really decentralization?
        jstanley 9y ago
        Decentralisation isn't black and white, it's all relative. Bitcoin is more decentralised than fiat currencies and traditional banking. Isn't that obvious?
      - Frogolocalypse 9y ago
        Nodes control consensus in bitcoin. If miners attempt to circumvent the will of the users, the Proof-of-work algorithm can be changed, making useless all of the miner hardware. They know this, which is why they can't force the issue. Decentralization of mining is an issue, but decentralization of nodes is a far more important thing to maintain.
rb808 9y ago
BTC is great, you can't say there is no social value. Not only are people getting rich like you say but its also useful for stuff like buying drugs online and to get around pesky government money laundering regulations.
- AndrewBissell 9y ago
  Or donating to organizations to which your government has severed other payment channels because they find them inconvenient. Or escaping bail-ins and bank holidays. Or skipping out on central bank attempts to force consumption and punish savings with negative interest rates and cash bans.
- TylerE 9y ago
  Wealth isn't being created. For every person getting rich there's someone else buying in at the current price which is.... euphoric for a "digital commodity" with no inherent value.
  - Frogolocalypse 9y ago
    The same logic could be applied to any forex purchase.
    - TylerE 9y ago
      So? Forex is gambling.
      - Frogolocalypse 9y ago
        what you call gambling other people call liquidity.
  - ahartman00 9y ago
    "The greater fool theory is the theory that states it is possible to make money by buying securities, whether overvalued or not, and later selling them at a profit because there will always be someone (a bigger or greater fool) who is willing to pay the higher price" http://www.investopedia.com/terms/g/greaterfooltheory.asp http://www.investopedia.com/terms/g/greaterfooltheory.asp
DINKDINK 9y ago
>where people are basically creating wealth out of thin air by doing useless computations at the cost of enormous electricity The only way this statement is different than how the Federal Reserve works is that Bitcoin is voluntary (You only join the economic model that you desire to participate in) / non privileged (you don't have to be born into certain groups to participate in how the system works), the system parameters (inflation, etc) are not coercible (The US President can't nominate a Federal Reserve Chairperson to bitcoin to favor policy that favors one special interest group). >creating wealth out of thin air The Federal Reserve literally creates money out of nothing for the Treasury Department. Due to seigniorage, Fed banks make money on the inflated currency before the last man on the street can. >doing useless computations at the cost of enormous electricity The thousands of servers that run FedWire, ACH, VISA, MasterCard Paypal, Venmo, ApplePay and the Cash-transport Trucks, Physical banks, all waste energy preventing people from trying to steal money too. How is the current monetary policy better? Relevant reading: Nothing is Cheaper than Proof of Work 04 Aug 2015 http://www.truthcoin.info/blog/pow-cheapest/ http://www.truthcoin.info/blog/pow-cheapest/
- Ologn 9y ago
  > The only way this statement is different than how the Federal Reserve works is that Bitcoin is voluntary Not at all. Until 1971, a dollar bill was just a piece of paper. However, the US government would redeem it for gold. The US had thousands of tons of gold at Fort Knox. It held tons of gold elsewhere as well. It also has and had the ability to tax, and collect taxes, the world's largest military and so forth. In 1971, the gold window was shut. Dollar/commodity ratios did not immediately change much. Why? Because an announcement that the gold window was opening up again would end any problem. The US still holds thousands of tons of gold at Fort Knox. Germany is repatriating its gold back to Germany. Why? Why spend so much guarding gold? The answer is the gold implicitly backs the dollar. Any currency panic can be immediately stemmed by an announcement that the gold window is open. I mean since 2008 there's been plenty of discussion of how the US financial sector grows not only by FDIC assurances, but the implicit assurance that when banks are in trouble, like the 1980s S&Ls, or the 2008 banks, that the taxpayer will bail out the banks. There has been a lot of literature on this, and you can read it if you want. If banks are implicitly backed by the US government, as they obviously are, then dollar convertibility is even more backed by the US government, even if it is not official policy. Otherwise, why does the taxpayer pay to guard tons of gold in Fort Knox?
hudon 9y ago
The arguments for Bitcoin are the same arguments for cash with respect to censorship resistance. The gist of it being that sometimes the law and what is legitimate diverges to a point where there are legitimate value transfers that are outlawed. It is only by having a way to do these legitimate value transfers that these things will ever be revealed. So in a sense, it keeps the law "in check". See the comment here https://news.ycombinator.com/item?id=14572940 https://news.ycombinator.com/item?id=14572940 for a more eloquent explanation. From the link: "The individual ability to buy anything, much like the individual ability to read anything, is both an important personal freedom and an engine for social progress specifically in the areas where society's mores are wrong."
campbelltown 9y ago
Not all good things come in beautiful packages. This is the economic consequence of creating a system that no one entity can fully control. Without a central backing, it's value cannot be manipulated and, therefore, the supply cannot increase equally with demand. This has the harsh consequence of facilitating excess reward mechanisms amongst early adopters. I agree. It does sort of suck when you realize that the rich are again getting richer, but the point of Bitcoin, and crypto as a whole (minus the scams), is not to redistribute wealth, but rather, make finance open and permissionless. The question is, are the economic consequences of adoption worth the benefits of it's mainstream use? I, and many others, believe so.
julian_1 9y ago
> ... wealth out of thin air by doing useless computations at the cost of enormous electricity. This is not a new observation or a universal property of crypto projects. Alternatives to POW, are an active subject of research, and are very important to several active crypto projects. You don't even have to look too far down the market-cap listings to find them.
- bumblebeard 9y ago
  What are some of them? I'm not too up on the latest research in this area so it would be interesting to know how you can do a cryptocurrency that doesn't depend on proof-of-work calculations.
  - joshschreuder 9y ago
    Proof of stake. ETH has an ongoing project called Casper to switch to PoS. PoS has many of its own problems, but I think it is undeniably better from a waste point of view.
    - Frogolocalypse 9y ago
      The issue with PoS is that it introduces trust into the element. There doesn't seem to be a way (yet?) where you can introduce PoS without lowering the security of new adopters.
      - whiskers08xmt 9y ago
        How does PoS introduce trust into the system?
        Frogolocalypse 9y ago
        PoS works on the premise that rewards will be given to holders. Unlike PoW, PoS has a single incentive structure where the management of the networks is aligned with the holders of the tokens. If you are not a large holder, the existing holders can re-write the rules to their advantage. You have to trust that large holders won't do this, even though the incentives align with that outcome.
aaron695 9y ago
The article is specifically about "early adopters in tech" do we really need to change the topic to are cryptocurrencies good or bad and rehash old tired arguments?
mrb 9y ago
I've been into Bitcoin since 2010 and it is very obvious to me crypto currencies are making the world better. Fundamentally, because they are censorship-resistant and permissionless financial networks, they allow people to have access to economic opportunities they wouldn't otherwise have. Concrete examples: escaping hyperinflation in Venezuela, donating to charities censored by authorities, escaping unethical laws (eg. civil forfeiture in the US), removing financial transaction friction (no more "sorry the bank is closed on weekends!"), finally being able to TRULY send money internationally near instantly (absolutely no other system does this!). And so on. It's like the invention of the internal combustion engine. In the early days (late 19th century) someone might look at it and wonder how noisy polluting engines can make the world better. A hundred years later, it's very obvious that making transportation easier and faster enormously contributed to improving the world's economy.
- demxzy 9y ago
  Give bitcoin another 5 - 10 years, and it will be centralize into the hands of a very very few powerful players (crypto equivalence of Facebook, Google, Amazon etc) making it easier for government to track/monitor/censor etc. On escaping hyperinflation, while this is possible and also a good thing, you can still loose a huge part of your savings by running to a currently speculative currency/commodity. In Nigeria, a lot of people did that and Bitcoin crashed in value and the local currency appreciated about 30% in the black market where a lot of common folks source their foreign currencies. It is still interesting to see where all these developments lead.
  - freeflight 9y ago
    Isn't this already an issue due to the massive Chinese influence on the BC market? I remember reading an article a while ago detailing how the network could work transactions faster if some value was changed, but Chinese farmers refused to change the value for whatever reason and because they represent such a large share of the network the whole network is stuck with those sub-optimal values.
  - mrb 9y ago
    I think you don't understand how Bitcoin works. It's already possible to fully "track/monitor" (without centralization) because all transactions are recorded permanently in the blockchain. As to "censor" it would not be possible even if Bitcoin was mostly centralized (I assume you are talking about miners centralization). As long as some miners are honest, even if it's a small fraction, your transactions that others attempt to censor will still eventually be confirmed, whenever these honest miners find a block, because given the P2P nature of the Bitcoin protocol, all transactions can reach all nodes.
AgentME 9y ago
Bitcoin isn't intended to be an egalitarian redistribution of wealth; it's supposed to be a way for digital cash to exist that doesn't involve depending on trusted authorities like banks, and proof-of-work mining happens to be the only solid solution to that that anyone has come up with so far.
alexchantavy 9y ago
> creating wealth out of thin air by doing useless computations at the cost of enormous electricity. Yeah, I'd personally feel better about cryptocurrencies if they were computing something huge and actually arguably useful like SETI or the Human Genome or something.
davidgerard 9y ago
> I have a hard time reconciling the social justice goals of some cryptocurrencies with this initial period where people are basically creating wealth out of thin air by doing useless computations at the cost of enormous electricity. > How are we any better for it? A select group gets rich, there is rampant speculation and fraud... but we're fighting "the man" so it's all good? Any "social justice" goals are misconceived or a lie. Bitcoin was literally created to implement a gold standard based on goldbug conspiracy theories about the Federal Reserve. https://davidgerard.co.uk/blockchain/the-conspiracist-gold-bug-economics-of-bitcoin/ https://davidgerard.co.uk/blockchain/the-conspiracist-gold-b...
- zer0tonin 9y ago
  This article is just basing itself on a single paragraph out of the quite long Nakamoto publication. Also stating that traditional currencies require a lot of trust in banks, especially central banks is a fact.
  - davidgerard 9y ago
    It's based on considerably more. Literally everything about the design of Bitcoin only makes sense in the context of the anarchocapitalism of the Cypherpunks list and its successors. They largely accepted goldbug crank economics as completely normal. This is why Bitcoin economics is so weird and doesn't work in the real world. The process is: 1. If you buy into this weird ideology, you'll get rich for free! 2. Don't worry if you don't understand it or it doesn't make sense - just keep doing the things and you'll get rich for free! This is why the worst Bitcoin advocates come across as fanatical cultists, and why they got the social reputation they have.
remline 9y ago
I don't understand why we aren't moving toward useful computation as a proof of work.. As an example, while it might take complex rounds to turn desired SETI analysis into verified SETI analysis work, with more payout/work going to winning verification rounds than the analysis rounds, I would presume 1-5% of all future SETI coinage would be the actual past computations cost for that public good, that is going to be a lot of computations for the public good. If many future coins are really backed by different useful work, we could then have a decentralized way to achieve global computation projects, and the currency market becomes a means to vote on the large scale human endeavours with ones liquidity. What I find destructive in Bitcoin is that the removal of the central banks should not just prevent the abuse and printing benefits governments get when their currency is used by throwing all of it in energy value down the toilet. The value should be going to public good computations in each coinage so we can vote on global projects with our wallets.
- CJefferson 9y ago
  The short answer is, it's really hard to make that work with the maths. The way that bitcoin, and most block chains, work is that almost all of the work has to be wasted, because you want someone to find "the best" answer for a very hard problem. Also, some part of the answer to that problem has to involve the transactions. You could do something like: Find the best match to (say) a polynomial of the SETI data of today, if I randomly corrupt it with the hash of some bitcoin transactions, except that isn't useful if the corruption destroys the problem you really care about, and it isn't useful (for bitcoin) if the transactions don't significantly effect the problem.
  - remline 9y ago
    Decoupling doesn't seem like the hard problem to me.. I.e. if you somehow have a separate SETI chain of verified claims about the hashes of sectors then it is easy to change the satisfiability problem to one where you need to buy your solution to the transaction chain hash as an inclusion a reference to a portion of a cycle in the other chain (which determines the payout of new coins, leaving you transaction fees.)
csense 9y ago
> the social justice goals of some cryptocurrencies Which cryptocurrencies have social justice goals? IMHO the cryptocurrency movement's politics are mainly libertarian -- get government out of the way (by establishing a means of payment outside government control), so people are more free to transact with each other as they please. Social justice is almost the opposite platform -- give government more control over how resources are spent, so resources can be targeted toward disadvantaged populations.
brighton36 9y ago
The burning of electricity is neither useless or wasteful. It is the conversion of value from a registered form (Your electric bill) to an anonymous form (bitcoin). If you balk at the CO2 output, petition your government to stop placing a premium on anonymous value. ie, let users buy drugs and gamble using their credit cards.

jstanley 9y ago

> doing useless computations at the cost of enormous electricity. The "cost of enormous electricity" is important - this is proportional to the amount it will cost to reverse transactions or double spend. > It seems we'll replace bankers and oil millionaires with miners and early adopters... and the average Joe is where it was always. Miners and early adopters don't get to create coins out of thin air. That's the key difference. EDIT: And furthermore, there's absolutely nothing stopping the "Average Joe" from becoming an early adopter. Bitcoin is open to everyone.

tboyd47 9y ago
Or, technically, they do, but only according to a predetermined schedule.
- jstanley 9y ago
  Sure, but not for free :). Having social status as a "miner" doesn't grant you any privileges. Expending time, effort, and money on mining gives you a chance of mining blocks.
  - omarchowdhury 9y ago
    There was a point made that 4 groups of mining pools can perform a 51% attack if they were orchestrated. That's not really decentralization is it if such a thing is possible already?
    - jstanley 9y ago
      People often make observations like this, about lots of things. "It's not 100% perfect so what's the point?". The point is it's closer to 100% perfect than any other system we have. Incremental improvements are still improvements even if they aren't all things to all men.
      - Nursie 9y ago
        Many see it as a step backwards, not closer to perfect. Irreversible transactions with huge associated energy costs.
      - omarchowdhury 9y ago
        I never said, "what's the point?" I asked, is it really decentralization?
        jstanley 9y ago
        Decentralisation isn't black and white, it's all relative. Bitcoin is more decentralised than fiat currencies and traditional banking. Isn't that obvious?
    - Frogolocalypse 9y ago
      Nodes control consensus in bitcoin. If miners attempt to circumvent the will of the users, the Proof-of-work algorithm can be changed, making useless all of the miner hardware. They know this, which is why they can't force the issue. Decentralization of mining is an issue, but decentralization of nodes is a far more important thing to maintain.

rb808 9y ago

BTC is great, you can't say there is no social value. Not only are people getting rich like you say but its also useful for stuff like buying drugs online and to get around pesky government money laundering regulations.

AndrewBissell 9y ago
Or donating to organizations to which your government has severed other payment channels because they find them inconvenient. Or escaping bail-ins and bank holidays. Or skipping out on central bank attempts to force consumption and punish savings with negative interest rates and cash bans.
TylerE 9y ago
Wealth isn't being created. For every person getting rich there's someone else buying in at the current price which is.... euphoric for a "digital commodity" with no inherent value.
- Frogolocalypse 9y ago
  The same logic could be applied to any forex purchase.
  - TylerE 9y ago
    So? Forex is gambling.
    - Frogolocalypse 9y ago
      what you call gambling other people call liquidity.
- ahartman00 9y ago
  "The greater fool theory is the theory that states it is possible to make money by buying securities, whether overvalued or not, and later selling them at a profit because there will always be someone (a bigger or greater fool) who is willing to pay the higher price" http://www.investopedia.com/terms/g/greaterfooltheory.asp http://www.investopedia.com/terms/g/greaterfooltheory.asp

DINKDINK 9y ago

>where people are basically creating wealth out of thin air by doing useless computations at the cost of enormous electricity The only way this statement is different than how the Federal Reserve works is that Bitcoin is voluntary (You only join the economic model that you desire to participate in) / non privileged (you don't have to be born into certain groups to participate in how the system works), the system parameters (inflation, etc) are not coercible (The US President can't nominate a Federal Reserve Chairperson to bitcoin to favor policy that favors one special interest group). >creating wealth out of thin air The Federal Reserve literally creates money out of nothing for the Treasury Department. Due to seigniorage, Fed banks make money on the inflated currency before the last man on the street can. >doing useless computations at the cost of enormous electricity The thousands of servers that run FedWire, ACH, VISA, MasterCard Paypal, Venmo, ApplePay and the Cash-transport Trucks, Physical banks, all waste energy preventing people from trying to steal money too. How is the current monetary policy better? Relevant reading: Nothing is Cheaper than Proof of Work 04 Aug 2015 http://www.truthcoin.info/blog/pow-cheapest/ http://www.truthcoin.info/blog/pow-cheapest/

Ologn 9y ago
> The only way this statement is different than how the Federal Reserve works is that Bitcoin is voluntary Not at all. Until 1971, a dollar bill was just a piece of paper. However, the US government would redeem it for gold. The US had thousands of tons of gold at Fort Knox. It held tons of gold elsewhere as well. It also has and had the ability to tax, and collect taxes, the world's largest military and so forth. In 1971, the gold window was shut. Dollar/commodity ratios did not immediately change much. Why? Because an announcement that the gold window was opening up again would end any problem. The US still holds thousands of tons of gold at Fort Knox. Germany is repatriating its gold back to Germany. Why? Why spend so much guarding gold? The answer is the gold implicitly backs the dollar. Any currency panic can be immediately stemmed by an announcement that the gold window is open. I mean since 2008 there's been plenty of discussion of how the US financial sector grows not only by FDIC assurances, but the implicit assurance that when banks are in trouble, like the 1980s S&Ls, or the 2008 banks, that the taxpayer will bail out the banks. There has been a lot of literature on this, and you can read it if you want. If banks are implicitly backed by the US government, as they obviously are, then dollar convertibility is even more backed by the US government, even if it is not official policy. Otherwise, why does the taxpayer pay to guard tons of gold in Fort Knox?

hudon 9y ago

The arguments for Bitcoin are the same arguments for cash with respect to censorship resistance. The gist of it being that sometimes the law and what is legitimate diverges to a point where there are legitimate value transfers that are outlawed. It is only by having a way to do these legitimate value transfers that these things will ever be revealed. So in a sense, it keeps the law "in check". See the comment here https://news.ycombinator.com/item?id=14572940 https://news.ycombinator.com/item?id=14572940 for a more eloquent explanation. From the link: "The individual ability to buy anything, much like the individual ability to read anything, is both an important personal freedom and an engine for social progress specifically in the areas where society's mores are wrong."

campbelltown 9y ago

Not all good things come in beautiful packages. This is the economic consequence of creating a system that no one entity can fully control. Without a central backing, it's value cannot be manipulated and, therefore, the supply cannot increase equally with demand. This has the harsh consequence of facilitating excess reward mechanisms amongst early adopters. I agree. It does sort of suck when you realize that the rich are again getting richer, but the point of Bitcoin, and crypto as a whole (minus the scams), is not to redistribute wealth, but rather, make finance open and permissionless. The question is, are the economic consequences of adoption worth the benefits of it's mainstream use? I, and many others, believe so.

julian_1 9y ago

> ... wealth out of thin air by doing useless computations at the cost of enormous electricity. This is not a new observation or a universal property of crypto projects. Alternatives to POW, are an active subject of research, and are very important to several active crypto projects. You don't even have to look too far down the market-cap listings to find them.

bumblebeard 9y ago
What are some of them? I'm not too up on the latest research in this area so it would be interesting to know how you can do a cryptocurrency that doesn't depend on proof-of-work calculations.
- joshschreuder 9y ago
  Proof of stake. ETH has an ongoing project called Casper to switch to PoS. PoS has many of its own problems, but I think it is undeniably better from a waste point of view.
  - Frogolocalypse 9y ago
    The issue with PoS is that it introduces trust into the element. There doesn't seem to be a way (yet?) where you can introduce PoS without lowering the security of new adopters.
    - whiskers08xmt 9y ago
      How does PoS introduce trust into the system?
      - Frogolocalypse 9y ago
        PoS works on the premise that rewards will be given to holders. Unlike PoW, PoS has a single incentive structure where the management of the networks is aligned with the holders of the tokens. If you are not a large holder, the existing holders can re-write the rules to their advantage. You have to trust that large holders won't do this, even though the incentives align with that outcome.

aaron695 9y ago

The article is specifically about "early adopters in tech" do we really need to change the topic to are cryptocurrencies good or bad and rehash old tired arguments?

mrb 9y ago

I've been into Bitcoin since 2010 and it is very obvious to me crypto currencies are making the world better. Fundamentally, because they are censorship-resistant and permissionless financial networks, they allow people to have access to economic opportunities they wouldn't otherwise have. Concrete examples: escaping hyperinflation in Venezuela, donating to charities censored by authorities, escaping unethical laws (eg. civil forfeiture in the US), removing financial transaction friction (no more "sorry the bank is closed on weekends!"), finally being able to TRULY send money internationally near instantly (absolutely no other system does this!). And so on. It's like the invention of the internal combustion engine. In the early days (late 19th century) someone might look at it and wonder how noisy polluting engines can make the world better. A hundred years later, it's very obvious that making transportation easier and faster enormously contributed to improving the world's economy.

demxzy 9y ago
Give bitcoin another 5 - 10 years, and it will be centralize into the hands of a very very few powerful players (crypto equivalence of Facebook, Google, Amazon etc) making it easier for government to track/monitor/censor etc. On escaping hyperinflation, while this is possible and also a good thing, you can still loose a huge part of your savings by running to a currently speculative currency/commodity. In Nigeria, a lot of people did that and Bitcoin crashed in value and the local currency appreciated about 30% in the black market where a lot of common folks source their foreign currencies. It is still interesting to see where all these developments lead.
- freeflight 9y ago
  Isn't this already an issue due to the massive Chinese influence on the BC market? I remember reading an article a while ago detailing how the network could work transactions faster if some value was changed, but Chinese farmers refused to change the value for whatever reason and because they represent such a large share of the network the whole network is stuck with those sub-optimal values.
- mrb 9y ago
  I think you don't understand how Bitcoin works. It's already possible to fully "track/monitor" (without centralization) because all transactions are recorded permanently in the blockchain. As to "censor" it would not be possible even if Bitcoin was mostly centralized (I assume you are talking about miners centralization). As long as some miners are honest, even if it's a small fraction, your transactions that others attempt to censor will still eventually be confirmed, whenever these honest miners find a block, because given the P2P nature of the Bitcoin protocol, all transactions can reach all nodes.

AgentME 9y ago

Bitcoin isn't intended to be an egalitarian redistribution of wealth; it's supposed to be a way for digital cash to exist that doesn't involve depending on trusted authorities like banks, and proof-of-work mining happens to be the only solid solution to that that anyone has come up with so far.

alexchantavy 9y ago

> creating wealth out of thin air by doing useless computations at the cost of enormous electricity. Yeah, I'd personally feel better about cryptocurrencies if they were computing something huge and actually arguably useful like SETI or the Human Genome or something.

davidgerard 9y ago

> I have a hard time reconciling the social justice goals of some cryptocurrencies with this initial period where people are basically creating wealth out of thin air by doing useless computations at the cost of enormous electricity. > How are we any better for it? A select group gets rich, there is rampant speculation and fraud... but we're fighting "the man" so it's all good? Any "social justice" goals are misconceived or a lie. Bitcoin was literally created to implement a gold standard based on goldbug conspiracy theories about the Federal Reserve. https://davidgerard.co.uk/blockchain/the-conspiracist-gold-bug-economics-of-bitcoin/ https://davidgerard.co.uk/blockchain/the-conspiracist-gold-b...

zer0tonin 9y ago
This article is just basing itself on a single paragraph out of the quite long Nakamoto publication. Also stating that traditional currencies require a lot of trust in banks, especially central banks is a fact.
- davidgerard 9y ago
  It's based on considerably more. Literally everything about the design of Bitcoin only makes sense in the context of the anarchocapitalism of the Cypherpunks list and its successors. They largely accepted goldbug crank economics as completely normal. This is why Bitcoin economics is so weird and doesn't work in the real world. The process is: 1. If you buy into this weird ideology, you'll get rich for free! 2. Don't worry if you don't understand it or it doesn't make sense - just keep doing the things and you'll get rich for free! This is why the worst Bitcoin advocates come across as fanatical cultists, and why they got the social reputation they have.

remline 9y ago

I don't understand why we aren't moving toward useful computation as a proof of work.. As an example, while it might take complex rounds to turn desired SETI analysis into verified SETI analysis work, with more payout/work going to winning verification rounds than the analysis rounds, I would presume 1-5% of all future SETI coinage would be the actual past computations cost for that public good, that is going to be a lot of computations for the public good. If many future coins are really backed by different useful work, we could then have a decentralized way to achieve global computation projects, and the currency market becomes a means to vote on the large scale human endeavours with ones liquidity. What I find destructive in Bitcoin is that the removal of the central banks should not just prevent the abuse and printing benefits governments get when their currency is used by throwing all of it in energy value down the toilet. The value should be going to public good computations in each coinage so we can vote on global projects with our wallets.

CJefferson 9y ago
The short answer is, it's really hard to make that work with the maths. The way that bitcoin, and most block chains, work is that almost all of the work has to be wasted, because you want someone to find "the best" answer for a very hard problem. Also, some part of the answer to that problem has to involve the transactions. You could do something like: Find the best match to (say) a polynomial of the SETI data of today, if I randomly corrupt it with the hash of some bitcoin transactions, except that isn't useful if the corruption destroys the problem you really care about, and it isn't useful (for bitcoin) if the transactions don't significantly effect the problem.
- remline 9y ago
  Decoupling doesn't seem like the hard problem to me.. I.e. if you somehow have a separate SETI chain of verified claims about the hashes of sectors then it is easy to change the satisfiability problem to one where you need to buy your solution to the transaction chain hash as an inclusion a reference to a portion of a cycle in the other chain (which determines the payout of new coins, leaving you transaction fees.)

csense 9y ago

> the social justice goals of some cryptocurrencies Which cryptocurrencies have social justice goals? IMHO the cryptocurrency movement's politics are mainly libertarian -- get government out of the way (by establishing a means of payment outside government control), so people are more free to transact with each other as they please. Social justice is almost the opposite platform -- give government more control over how resources are spent, so resources can be targeted toward disadvantaged populations.

brighton36 9y ago

The burning of electricity is neither useless or wasteful. It is the conversion of value from a registered form (Your electric bill) to an anonymous form (bitcoin). If you balk at the CO2 output, petition your government to stop placing a premium on anonymous value. ie, let users buy drugs and gamble using their credit cards.