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I would dispute the assertion that hashing is wasteful. That implies it's inefficient or you're not getting something of equal value in return for what you're

• rothbardrand 9y ago
  I agree, but I want to break it down a little more: Effort -> You do a lot of hashing to try and win the 10 minute lottery by finding the magic hash that lets you make the next block. Rewards -> You win a block reward (or portion of one if you're pooling work with others) that has economic value. You win transaction fees for the transaction included in the winning block. Profitability -> If you are generating enough hash power per your operational expenses, these rewards are profitable, even though you don't win every block. Some may mine unprofitably because they are speculating on the future value of those rewards rather than the immediate value. Side Effects -> This scheme increases the security of the global ledger. Making it more viable and bolstering the value of the rewards you're getting above. If the overall system is valuable to society, that also bolsters the value of the rewards, but also has a value to society approximately equivalent to the value of the system. Thus, bitcoin, which does consume energy, is currently, in my opinion providing a better monetary solution at lower cost than the system it is disrupting (banks use power, employ people, etc. etc.) The perception that it is wasteful could only come, to my mind, if one thought bitcoin was not providing value to society, or that bitcoins were going to zero in economic value.
• xg15 9y ago
  It may have a lot of potential, but currently cryptocurrencies have at most as much social value as traditional currencies - which cost considerably less energy. (That's assuming they are actually used as currecies and not just as a hype and speculation vehicle) As for energy consumption, I see no fundamental reason why mining has to stay green. If the valuation should climb high enough that renting a nuclear plant becomes profitable then someone will probably do that. Even with hydro, the mining spends energy that could have been used for other things. Finally, what I find most worrysome is the combination of PoW and self-adjusting difficulty. The practical effect seems to be that not just is constant energy required to maintain the system but that energy demand is also steadily growing.
• canoebuilder 9y ago
  which has considerable potential social value, easily comparable to the cost of it. The value is 'potential,' the cost is real. What evidence or milestones are there to indicate this considerable potential social value panning out is increasingly more or less likely? What exactly is the social value that the average HNer could perceive firsthand, rather than some mythical "unbanked" or whatever? How long has bitcoin been around, a decade? Has anyone putting it to use in a sustainable, self-perpetuating use case that isn't a dark market or ransomware?
  • SkyMarshal 9y ago
    It's been around less than a decade and jury is still out whether it will even succeed or not yet, hence why I wrote "potential". But assuming it does prove sound and reliable over the long term, then its best value is as a hedge against governments screwing up their currency, like Venezuela and other distressed economies. There are already US dollar black markets in those places, and new cryptocurrency black markets are starting to form now too. As for "unbanked", I don't even know why you mention it unless you're setting up a strawman to knock down. But here, let me do that for you - people who are unbanked don't have access to financial services b/c they don't have money, b/c they live somewhere that economic norms, institutions, and growth all have problems that make it hard to create wealth. Solve those problems and the banks and finserve folks will come running and those people won't be unbanked anymore. But I have yet to see a good case for how cryptocurrency in its current incarnation will solve those problems.