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This is a misleading argument. Yes, miners will always spend more until marginal revenue == marginal cost. The problem with the proof of work system of bitcoin
by jcfrei 9y ago
This is a misleading argument. Yes, miners will always spend more until marginal revenue == marginal cost. The problem with the proof of work system of bitcoin (and many others) is its inefficiency that only allows for a low transactions throughput. Proof of work has no inherent value for the system, it's simply a way to cap the network throughput to about 1MB per 10 minutes because anything lower than 10 minutes will make the network increasingly vulnerable to adversarial attacks [1]. There's got to be a way to increase network throughput beyond this while maintaining
censorship resistance and decentralization.
[1] C. Decker, Information Propagation in the Bitcoin Network: http://www.tik.ee.ethz.ch/file/49318d3f56c1d525aabf7fda78b23fc0/P2P2013_041.pdf http://www.tik.ee.ethz.ch/file/49318d3f56c1d525aabf7fda78b23...
- tylersmith 9y agoThe point is expend work to create signatures, creating a crytoeconomic cost to state changes.
- jcfrei 9y agoThe purpose of PoW is to reduce the number of forks and also making double spending attacks very expensive. Why can't the computing power of the entire network be used to just verify the integrity of all transactions and skip the nonce finding part? This would immensely increase network throughput. The reason is because Bitcoin's PoW implementation can't provide the same level of consensus and security with a higher number of transactions. Newer PoS systems might.