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Blockchains Considered Harmful: Is Brute-Force Processing Replacing Good Design?

142 points by jcbeard 9y ago

dozzie 9y ago
> The underlying technology of blockchains to achieve distributed consensus has been touted as a solution to many challenges in decentralized systems. I hate blockchain hype and I hope the whole bubble around it dies soon, but even I can tell, judging from the title of the article and just the very first paragraph, that the author doesn't know a shit about how the thing works or why it is designed the way it is. Blockchain does not solve consensus problem. It's a timestamping service. Not a consensus solver. And then the author draws dumb statements about what blockchain is from all over the place. Why the hell would anybody think "proof of work" is a "solution to denial-of-service attacks"?
- pishpash 9y ago
  This is the author's area of expertise, so I wouldn't dismiss him just based on an article. However, this article could have been one sentence and says very little that is worth the entire read.
  - dozzie 9y ago
    > This is the author's area of expertise, so I wouldn't dismiss him just based on an article. Oh. Then I call him highly incompetent. I thought it was just a professor from barely related field talking about something he wasn't supposed to be versed in.
- Buttes 9y ago
  Maybe not DoS persay but I assume they meant anti-spam, which isn't totally inaccurate.
- acjohnson55 9y ago
  Your comment comes off as pretty angry, yet I don't really get the faults you're pointing out in the original article. > Blockchain does not solve consensus problem. It's a timestamping service. Not a consensus solver. Certainly Bitcoin seems to be a distributed consensus system. Is your complaint that it takes a whole system on top to provide the consensus aspect, which might be considered separate from the blockchain structure? > Why the hell would anybody think "proof of work" is a "solution to denial-of-service attacks"? Isn't it? You can exchange QoS for non-malicious users for protection from DoS.
  - dozzie 9y ago
    >> Blockchain does not solve consensus problem. It's a timestamping service. > Certainly Bitcoin seems to be a distributed consensus system. It is not. Bitcoin only tells which of the pair of documents was earlier (a document describes a single transaction). It doesn't allow to negotiate a value. If you swapped producing the proof of work with sending the transaction to a trusted third party for adding a timestamp, Bitcoin would work just as well. Go read "trusted timestamping" topic, Wikipedia has a good description. >> Why the hell would anybody think "proof of work" is a "solution to denial-of-service attacks"? > Isn't it? What service does blockchain protect against availability disruption? How?
    - acjohnson55 9y ago
      Still not sure what you're saying. What do you mean by "negotiate"? Because there are certainly rules for resolving conflicts. As long as we're using Wikipedia, the article for consensus in computer science explicitly mentions Bitcoin. Proof of work can be used to protect against denial of service. If you provide a web service, you can choose to require proof of work before serving a client to make the client commit some proportional amount of effort.
      - dozzie 9y ago
        > Still not sure what you're saying. What do you mean by "negotiate"? OK, then what do you mean by "consensus"? > As long as we're using Wikipedia, the article for consensus in computer science explicitly mentions Bitcoin. Yes, and wrongly, too. Especially that the specific problem of establishing consensus that the Wikipedia page talks about has, since its very first paper, the impossibility proof at 1/3 of the participants, compared to 1/2 for Bitcoin (which means that Bitcoin is something different than consensus with Byzantine faults).
        acjohnson55 9y ago
        > The consensus problem requires agreement among a number of processes (or agents) for a single data value. Some of the processes (agents) may fail or be unreliable in other ways, so consensus protocols must be fault tolerant or resilient. The processes must somehow put forth their candidate values, communicate with one another, and agree on a single consensus value. This seems to me to be exactly what Bitcoin does, where the "value" is the sum of all facts asserted on the blockchain.
- Rebelgecko 9y ago
  Why is that a dumb statement? Wasn't that the whole point of hashcash (my understanding is that bitcoin's proof of work is just hashcash with SHA-256 instead of SHA-1)?
qznc 9y ago
> “Proof-of-Work” exists because money is being created. It is, then, impossible to “create a new form of money” without invoking Proof-of-Work. > Satoshi’s design insight was to channel that inevitable work into a cumulative process, to optimally stablize a peer-to-peer clock in a cartel-resistant way. – Paul Sztorc http://www.truthcoin.info/blog/pow-cheapest/ http://www.truthcoin.info/blog/pow-cheapest/
- deleted 9y ago
  [deleted]
- acjohnson55 9y ago
  And yet, in some sense, cartels are exactly what we have, in the form of mining pools.
  - rothbardrand 9y ago
    less than perfect decentralization is still more decentralization than a monopoly. in this case the competition is a monopoly (eg fiat)
    - QAPereo 9y ago
      Anything that isn’t a monopoly is, “more decentralized than a monopoly.” ...
- xg15 9y ago
  How is something cartel-resistant that requires that entities must accumulate more and more capital (mining power) to still be able to participate?
  - tboyd47 9y ago
    Mining profitability is an equation with many variables. If the value of the reward climbs faster than mining technology advances, we might see mining open to regular people again. Also, the traditional cartel action of limiting supply to inflate price would not work in Bitcoin due to auto-adjusting difficulty.
pishpash 9y ago
"considered harmful" meme is tired and cliched, please retire.
- kilovoltaire 9y ago
  "considered harmful" considered harmful
  - robotpony 9y ago
    ""considered harmful" considered harmful" _considered harmful_
leashless 9y ago
Hi. I'm Vinay Gupta, the release coordinator for the Ethereum launch. Firstly, nobody believes that Proof of Work is here to stay - it's bleeding money from the currencies that use it at an astonishing rate, and as soon as Proof of Stake (or other algorithms) can replace it, they will. PoW is a direct financial drag on these economies, and it will not last long. Bitcoin will probably take longer to clean up its act than Ethereum, but that's largely for political reasons, not technical ones. Technically, it should be a lot easier to do than Ethereum, in fact. (It helps not being nearly Turing complete.) Secondly, brute force is how things begin. The Unix philosophy has always suggested using brute force first: premature optimization is the root of all evil, as they say. We are at the very earliest stages of designing global public heterogeneous parallel supercomputers, and we should not be surprised that the early approaches are brute force. It won't be that way for long.
- pishpash 9y ago
  Proof of work isn't a big concern if the hard problems are also economically valuable to solve; there are myriad such problems.
  - TylerE 9y ago
    No they aren't. For a PoW to be valuable it needs to be cheap to verify. Hard problems usually aren't.
    - Ar-Curunir 9y ago
      What you want are "moderately hard functions": functions that are neither easy nor excessively hard.
    - nambit 9y ago
      Most solutions to NP problems are cheap to verify.
    - setr 9y ago
      Isn't the entire NP class hard to solve, cheap to verify? Im sure some economically valuable problem can boil down to an NP problem...
gardnr 9y ago
It always puts me off when an article has "Considered Harmful" in the title.
- hunter2_ 9y ago
  I have to imagine some nonzero percentage of new CH essays are authored by people who agree (i.e. have seen https://meyerweb.com/eric/comment/chech.html https://meyerweb.com/eric/comment/chech.html and the like) but proceed anyway, since the clickbait nature of doing so surely gives a boost exceeding the loss from those who are put off.
- deleted 9y ago
  [deleted]
- cyraxjoe 9y ago
  If you ever come across a new one send it to: https://twitter.com/cons_harmful https://twitter.com/cons_harmful ;)
saas_co_de 9y ago
I agree with this and also fundamentally believe that trust is a feature in systems and not a bug. Building systems that work without trust (supposedly) is of very limited social utility since increasing trust is what makes for a healthy society and healthy economy.
- stale2002 9y ago
  Fortunately for you, there are numerous centralized trust money systems already. And if you want you should just go use one of those. The rest of us who disagree should have the option of not using them though.
  - feedjoelpie 9y ago
    Not to be all "both sides tho," but I think you're both right. I code on blockchain stuff from time to time, and it's both really awesome for the decentralized no-trust part and straight-up nonsense for entire categories of problems that would be better solved off-chain. The hype machine is crazy and driving things toward the blockchain that absolutely don't belong there. ("Uh, do you need a blockchain, or do you just need to cryptographically sign something, and you've never thought about cryptography before today?") There are still some very interesting untapped possibilities that aren't better-served by any centralized system yet.
    - stale2002 9y ago
      Oh, yeah definitely. Blockchains are for if you care about decentralized systems. And you pay a whole lot to get that one feature. If you don't care about that one feature, decentralized blockchains are strictly worse on a number of metrics.
  - saas_co_de 9y ago
    Of course individuals have the option to use whatever system best suits them. I am thinking more about how far blockchain can actually scale. Technical people assume that a system without trusted intermediaries is a universal good because it is logically superior (I have certainly thought this myself) but that does not jibe with how most people feel and act. The majority of people value trust to the extent that they will trust in things that seem absurd objectively simply because it makes them feel good. For them a system without trust is a negative. If the key feature of blockchain is a negative for the majority of the population that does not bode well for widespread adoption.
stale2002 9y ago
This person is effectively arguing that all of Bitcoins problems would be solved by just using a centralized system. This is correct, but it misses the point. The whole point of crytocurrencies is to order transactions WITHOUT a centralized system. There are many centralized systems already. If you want the benefits and tradeoffs of those, just go use one of them. The people who do NOT like those tradeoffs will stay with crytocurrencies.
- xg15 9y ago
  He also argues that those lofty ambitions come with a hefty bit of externalized cost - insanely high energy consumption - that is currently conveniently ignored but is harmful in the long run - for everyone, no matter if they use cryptocurrencies or not.
  - stale2002 9y ago
    It's not externalized costs though. It's just regular costs. People aren't stealing that energy (well, MOST miners aren't) . They are paying real money for it. How is spending money to buy something and then using that thing (energy in this case) an externality? Is me leaving the lights on at my house an externality? I don't think so. Im the one paying the costs. If you don't want to pay for crytocurrencies, you don't have to buy them.
    - techsupporter 9y ago
      In many parts of the world (and particularly the United States), electrical power is generated through ways that are rather unfriendly to the environment, especially when load is unexpectedly higher. Causing higher demand and, thus, more pollution, is a negative externality that the miner is pushing off onto the rest of the public. (Yes, some exceptions apply, like buying power from system operators that are primarily based around hydro or wind power.)
      - stale2002 9y ago
        > especially when load is unexpectedly higher Interestingly, this is actually the opposite situation for bitcoin mining. Bitcoin miners are usually located right next to massive solar power plants, or hydro generators. This way, the bitcoin miners use the excess energy, that nobody else was going to use, and they use this "free/excess" energy because it is cheaper. There is no reason at all to run your bitcoin miner during peak capacity, when electricity prices are high. You just shut off the miners, and start them back up again during the night or something. Bitcoin mining could even be considered a POSITIVE externality, in some situations, such as when power production is so high, that the power plants sell it for negative dollars (ie, the extra power disrupts the grid, so they need to get rid of it.).
earlz 9y ago
I agree, there are much better consensus methods than Proof of Work. It's just that PoW is by far the most simple to implement. If you just take a peak at the ecosystem, especially around 2013-2015, it seems like every "altcoin" project had created their own consensus system. Of course, many of these were terrible.. but it's a good sign that this space has been trying to get away from regular ol' PoW since people started really finding out about Bitcoin. Peercoin invented the core basis of the PoS algorithm in 2012 that was used throughout the 2013 and 2014 altcoin craze. This is still being used today in various projects, in augmented forms. Some projects tried to incentivize not just holding coins, but also making transactions (PoSV/proof of stake velocity, IIRC). Some projects tried making it so that you must burn coins to create blocks (proof of burn). And some projects tried doing genuinely useful computations instead of plain proof of work, such as doing protein unfolding (I think this was Curecoin?)... And then Dash invented the dBPF algorithm which is used by numerous coins today beyond just Dash and is similar to PoS but with a set number of stakers. (usually elected through an election on the blockchain) If you look beyond Bitcoin there is a ton of innovation taking place in this space, and there has been for some time now. A lot of it is mired in scams, trolls, shills, and FUD.. but there is some genuinely awesome innovation happening in this space to drive forward consensus algorithms. (source: co-founder of Qtum, a project in this space)
- dozzie 9y ago
  > I agree, there are much better consensus methods than Proof of Work. It's like saying that there are better grammar parsing methods than binary search. Blockchain is not a consensus protocol.
Thinkbiz 9y ago
Nice article. It is unfortunately woefully light, if not completely absent of alternatives. Yes, it is a massive waste of energy, but the ability to both prove and simultaneously detract counterfeits is brilliant as far as the creation of a store of value is considered. In the long run, I believe, that the optimization of ASICS + slowly decreasing power in the hands of a much larger set of miners will be the long-term winning factor defining legitimacy for POW algorithms. Until then the one who can burn energy faster and cheaper (a baseline commodity to begin with) will win.
- QAPereo 9y ago
  Do we have that much of a long run, especially at current projected levels of waste, never mind use?
nikolay 9y ago
It always bothered me how computer engineers who try to conserve energy and optimize all the time were excited by the wasteful Bitcoin implementation only because they see a potential in it to increase their wealth. It's like glorifying random sort because we haven't invented the bubble sort yet!
- feedjoelpie 9y ago
  If you're talking history, I don't think that's quite fair. The whole hash-based algorithm was just the most mathematically simplistic way to make the idea work. It still is. If you're talking present-day, yeah, mostly Bitcoin hoarders don't want to see any change that might make their currency start functioning like a currency instead of fake gold.
alistproducer2 9y ago
PoW sticks because as a consensus backbone because it's 1.) easy to understand and implement and 2.) it's guarantees distribution of updates to the distributed state. IMO there are better ways to trustlessly secure distributed state but like all things there's a trade-off. The dirty secret of blockchain tech is that it can't scale - not without supplementary protocols. Even when you get it to scale you still have to deal with the storage of the blockchain. Bandwidth constrains the size of the blocks, which in turn constrains the amount of transactions. Turn up the block creation frequency (a la ETH) and you solved one problemt (Tx throughput) but created another (chain size). I am fundamentally opposed to PoW because it wastes so many resources, but, for now, it's the most viable way to secure a chain. PoS is doomed to centralization and relies too much on game theory and incentives for my tastes. just my 2 cents
grondilu 9y ago
One thing governments could do is this: - Create a digital token system that can be exchanged and accounted freely via a centralized server. - Give it a name. Don't even call it a currency, let people use it as money if they want to. - Give a limited amount to any citizen who wants some. Or maybe sell it, whatever. Just figure out a way people can get some. It can't be so hard. - Promise there will never be more than some fixed amount in total. Only governments could do something like that because despite everything, most people trust them about money. It'd be kind of a mixed between the different money systems.
- abrkn 9y ago
  > - Create a digital token system that can be exchanged and accounted freely via a centralized server. This is a database > - Give it a name. Don't even call it a currency, let people use it as money if they want to. A token that is used as currency is currency > - Give a limited amount to any citizen who wants some. Or maybe sell it, whatever. Just figure out a way people can get some. It can't be so hard. How will the token have value if everyone receives it for free? > - Promise there will never be more than some fixed amount in total. No one will fall for this again. Governments always print money to fund its own projects > Only governments could do something like that because despite everything, most people trust them about money. Bitcoin's price goes up because people don't want to trust government with money
  - grondilu 9y ago
    > No one will fall for this again. Governments always print money to fund its own projects But if the total amount of money was publicly visible, things could be different. For better or worse, people build trust from the past. If they see that the government has not raised to the total amount for many years, they may believe it won't do it either during many more years. Kind of with treasure bonds. Despite the high level of debt most countries are in, investors keep believing the countries will pay back, because they have been for so long.
abrkn 9y ago
Proof-of-Work gives the token value because something was lost in order to create it
- schmidty 9y ago
  What you’ve described is labor theory of value and I don’t think it makes sense.
natural219 9y ago
Vinay Gupta thinks "nobody believes PoW is here to stay". Other commenters think "PoS might be impossible & no prominent cryptographer has some out in support of it". It's worth reminding people of the null hypothesis: Perhaps blockchains don't work.
narrator 9y ago
I don't like proof of stake because a large stake holder could be threatened privately by a third party into corrupting the whole system. With proof of work you need to spend a lot of money very publicly for a long time to break it.

142 points by jcbeard 9y ago

> The underlying technology of blockchains to achieve distributed consensus has been touted as a solution to many challenges in decentralized systems. I hate blockchain hype and I hope the whole bubble around it dies soon, but even I can tell, judging from the title of the article and just the very first paragraph, that the author doesn't know a shit about how the thing works or why it is designed the way it is. Blockchain does not solve consensus problem. It's a timestamping service. Not a consensus solver. And then the author draws dumb statements about what blockchain is from all over the place. Why the hell would anybody think "proof of work" is a "solution to denial-of-service attacks"?

pishpash 9y ago
This is the author's area of expertise, so I wouldn't dismiss him just based on an article. However, this article could have been one sentence and says very little that is worth the entire read.
- dozzie 9y ago
  > This is the author's area of expertise, so I wouldn't dismiss him just based on an article. Oh. Then I call him highly incompetent. I thought it was just a professor from barely related field talking about something he wasn't supposed to be versed in.
Buttes 9y ago
Maybe not DoS persay but I assume they meant anti-spam, which isn't totally inaccurate.
acjohnson55 9y ago
Your comment comes off as pretty angry, yet I don't really get the faults you're pointing out in the original article. > Blockchain does not solve consensus problem. It's a timestamping service. Not a consensus solver. Certainly Bitcoin seems to be a distributed consensus system. Is your complaint that it takes a whole system on top to provide the consensus aspect, which might be considered separate from the blockchain structure? > Why the hell would anybody think "proof of work" is a "solution to denial-of-service attacks"? Isn't it? You can exchange QoS for non-malicious users for protection from DoS.
- dozzie 9y ago
  >> Blockchain does not solve consensus problem. It's a timestamping service. > Certainly Bitcoin seems to be a distributed consensus system. It is not. Bitcoin only tells which of the pair of documents was earlier (a document describes a single transaction). It doesn't allow to negotiate a value. If you swapped producing the proof of work with sending the transaction to a trusted third party for adding a timestamp, Bitcoin would work just as well. Go read "trusted timestamping" topic, Wikipedia has a good description. >> Why the hell would anybody think "proof of work" is a "solution to denial-of-service attacks"? > Isn't it? What service does blockchain protect against availability disruption? How?
  - acjohnson55 9y ago
    Still not sure what you're saying. What do you mean by "negotiate"? Because there are certainly rules for resolving conflicts. As long as we're using Wikipedia, the article for consensus in computer science explicitly mentions Bitcoin. Proof of work can be used to protect against denial of service. If you provide a web service, you can choose to require proof of work before serving a client to make the client commit some proportional amount of effort.
    - dozzie 9y ago
      > Still not sure what you're saying. What do you mean by "negotiate"? OK, then what do you mean by "consensus"? > As long as we're using Wikipedia, the article for consensus in computer science explicitly mentions Bitcoin. Yes, and wrongly, too. Especially that the specific problem of establishing consensus that the Wikipedia page talks about has, since its very first paper, the impossibility proof at 1/3 of the participants, compared to 1/2 for Bitcoin (which means that Bitcoin is something different than consensus with Byzantine faults).
      - acjohnson55 9y ago
        > The consensus problem requires agreement among a number of processes (or agents) for a single data value. Some of the processes (agents) may fail or be unreliable in other ways, so consensus protocols must be fault tolerant or resilient. The processes must somehow put forth their candidate values, communicate with one another, and agree on a single consensus value. This seems to me to be exactly what Bitcoin does, where the "value" is the sum of all facts asserted on the blockchain.
Rebelgecko 9y ago
Why is that a dumb statement? Wasn't that the whole point of hashcash (my understanding is that bitcoin's proof of work is just hashcash with SHA-256 instead of SHA-1)?

qznc 9y ago

> “Proof-of-Work” exists because money is being created. It is, then, impossible to “create a new form of money” without invoking Proof-of-Work. > Satoshi’s design insight was to channel that inevitable work into a cumulative process, to optimally stablize a peer-to-peer clock in a cartel-resistant way. – Paul Sztorc http://www.truthcoin.info/blog/pow-cheapest/ http://www.truthcoin.info/blog/pow-cheapest/

deleted 9y ago
[deleted]
acjohnson55 9y ago
And yet, in some sense, cartels are exactly what we have, in the form of mining pools.
- rothbardrand 9y ago
  less than perfect decentralization is still more decentralization than a monopoly. in this case the competition is a monopoly (eg fiat)
  - QAPereo 9y ago
    Anything that isn’t a monopoly is, “more decentralized than a monopoly.” ...
xg15 9y ago
How is something cartel-resistant that requires that entities must accumulate more and more capital (mining power) to still be able to participate?
- tboyd47 9y ago
  Mining profitability is an equation with many variables. If the value of the reward climbs faster than mining technology advances, we might see mining open to regular people again. Also, the traditional cartel action of limiting supply to inflate price would not work in Bitcoin due to auto-adjusting difficulty.

pishpash 9y ago

"considered harmful" meme is tired and cliched, please retire.

kilovoltaire 9y ago
"considered harmful" considered harmful
- robotpony 9y ago
  ""considered harmful" considered harmful" _considered harmful_

leashless 9y ago

Hi. I'm Vinay Gupta, the release coordinator for the Ethereum launch. Firstly, nobody believes that Proof of Work is here to stay - it's bleeding money from the currencies that use it at an astonishing rate, and as soon as Proof of Stake (or other algorithms) can replace it, they will. PoW is a direct financial drag on these economies, and it will not last long. Bitcoin will probably take longer to clean up its act than Ethereum, but that's largely for political reasons, not technical ones. Technically, it should be a lot easier to do than Ethereum, in fact. (It helps not being nearly Turing complete.) Secondly, brute force is how things begin. The Unix philosophy has always suggested using brute force first: premature optimization is the root of all evil, as they say. We are at the very earliest stages of designing global public heterogeneous parallel supercomputers, and we should not be surprised that the early approaches are brute force. It won't be that way for long.

pishpash 9y ago
Proof of work isn't a big concern if the hard problems are also economically valuable to solve; there are myriad such problems.
- TylerE 9y ago
  No they aren't. For a PoW to be valuable it needs to be cheap to verify. Hard problems usually aren't.
  - Ar-Curunir 9y ago
    What you want are "moderately hard functions": functions that are neither easy nor excessively hard.
  - nambit 9y ago
    Most solutions to NP problems are cheap to verify.
  - setr 9y ago
    Isn't the entire NP class hard to solve, cheap to verify? Im sure some economically valuable problem can boil down to an NP problem...

gardnr 9y ago

It always puts me off when an article has "Considered Harmful" in the title.

hunter2_ 9y ago
I have to imagine some nonzero percentage of new CH essays are authored by people who agree (i.e. have seen https://meyerweb.com/eric/comment/chech.html https://meyerweb.com/eric/comment/chech.html and the like) but proceed anyway, since the clickbait nature of doing so surely gives a boost exceeding the loss from those who are put off.
deleted 9y ago
[deleted]
cyraxjoe 9y ago
If you ever come across a new one send it to: https://twitter.com/cons_harmful https://twitter.com/cons_harmful ;)

saas_co_de 9y ago

I agree with this and also fundamentally believe that trust is a feature in systems and not a bug. Building systems that work without trust (supposedly) is of very limited social utility since increasing trust is what makes for a healthy society and healthy economy.

stale2002 9y ago
Fortunately for you, there are numerous centralized trust money systems already. And if you want you should just go use one of those. The rest of us who disagree should have the option of not using them though.
- feedjoelpie 9y ago
  Not to be all "both sides tho," but I think you're both right. I code on blockchain stuff from time to time, and it's both really awesome for the decentralized no-trust part and straight-up nonsense for entire categories of problems that would be better solved off-chain. The hype machine is crazy and driving things toward the blockchain that absolutely don't belong there. ("Uh, do you need a blockchain, or do you just need to cryptographically sign something, and you've never thought about cryptography before today?") There are still some very interesting untapped possibilities that aren't better-served by any centralized system yet.
  - stale2002 9y ago
    Oh, yeah definitely. Blockchains are for if you care about decentralized systems. And you pay a whole lot to get that one feature. If you don't care about that one feature, decentralized blockchains are strictly worse on a number of metrics.
- saas_co_de 9y ago
  Of course individuals have the option to use whatever system best suits them. I am thinking more about how far blockchain can actually scale. Technical people assume that a system without trusted intermediaries is a universal good because it is logically superior (I have certainly thought this myself) but that does not jibe with how most people feel and act. The majority of people value trust to the extent that they will trust in things that seem absurd objectively simply because it makes them feel good. For them a system without trust is a negative. If the key feature of blockchain is a negative for the majority of the population that does not bode well for widespread adoption.

stale2002 9y ago

This person is effectively arguing that all of Bitcoins problems would be solved by just using a centralized system. This is correct, but it misses the point. The whole point of crytocurrencies is to order transactions WITHOUT a centralized system. There are many centralized systems already. If you want the benefits and tradeoffs of those, just go use one of them. The people who do NOT like those tradeoffs will stay with crytocurrencies.

xg15 9y ago
He also argues that those lofty ambitions come with a hefty bit of externalized cost - insanely high energy consumption - that is currently conveniently ignored but is harmful in the long run - for everyone, no matter if they use cryptocurrencies or not.
- stale2002 9y ago
  It's not externalized costs though. It's just regular costs. People aren't stealing that energy (well, MOST miners aren't) . They are paying real money for it. How is spending money to buy something and then using that thing (energy in this case) an externality? Is me leaving the lights on at my house an externality? I don't think so. Im the one paying the costs. If you don't want to pay for crytocurrencies, you don't have to buy them.
  - techsupporter 9y ago
    In many parts of the world (and particularly the United States), electrical power is generated through ways that are rather unfriendly to the environment, especially when load is unexpectedly higher. Causing higher demand and, thus, more pollution, is a negative externality that the miner is pushing off onto the rest of the public. (Yes, some exceptions apply, like buying power from system operators that are primarily based around hydro or wind power.)
    - stale2002 9y ago
      > especially when load is unexpectedly higher Interestingly, this is actually the opposite situation for bitcoin mining. Bitcoin miners are usually located right next to massive solar power plants, or hydro generators. This way, the bitcoin miners use the excess energy, that nobody else was going to use, and they use this "free/excess" energy because it is cheaper. There is no reason at all to run your bitcoin miner during peak capacity, when electricity prices are high. You just shut off the miners, and start them back up again during the night or something. Bitcoin mining could even be considered a POSITIVE externality, in some situations, such as when power production is so high, that the power plants sell it for negative dollars (ie, the extra power disrupts the grid, so they need to get rid of it.).

earlz 9y ago

I agree, there are much better consensus methods than Proof of Work. It's just that PoW is by far the most simple to implement. If you just take a peak at the ecosystem, especially around 2013-2015, it seems like every "altcoin" project had created their own consensus system. Of course, many of these were terrible.. but it's a good sign that this space has been trying to get away from regular ol' PoW since people started really finding out about Bitcoin. Peercoin invented the core basis of the PoS algorithm in 2012 that was used throughout the 2013 and 2014 altcoin craze. This is still being used today in various projects, in augmented forms. Some projects tried to incentivize not just holding coins, but also making transactions (PoSV/proof of stake velocity, IIRC). Some projects tried making it so that you must burn coins to create blocks (proof of burn). And some projects tried doing genuinely useful computations instead of plain proof of work, such as doing protein unfolding (I think this was Curecoin?)... And then Dash invented the dBPF algorithm which is used by numerous coins today beyond just Dash and is similar to PoS but with a set number of stakers. (usually elected through an election on the blockchain) If you look beyond Bitcoin there is a ton of innovation taking place in this space, and there has been for some time now. A lot of it is mired in scams, trolls, shills, and FUD.. but there is some genuinely awesome innovation happening in this space to drive forward consensus algorithms. (source: co-founder of Qtum, a project in this space)

dozzie 9y ago
> I agree, there are much better consensus methods than Proof of Work. It's like saying that there are better grammar parsing methods than binary search. Blockchain is not a consensus protocol.

Thinkbiz 9y ago

Nice article. It is unfortunately woefully light, if not completely absent of alternatives. Yes, it is a massive waste of energy, but the ability to both prove and simultaneously detract counterfeits is brilliant as far as the creation of a store of value is considered. In the long run, I believe, that the optimization of ASICS + slowly decreasing power in the hands of a much larger set of miners will be the long-term winning factor defining legitimacy for POW algorithms. Until then the one who can burn energy faster and cheaper (a baseline commodity to begin with) will win.

QAPereo 9y ago
Do we have that much of a long run, especially at current projected levels of waste, never mind use?

nikolay 9y ago

It always bothered me how computer engineers who try to conserve energy and optimize all the time were excited by the wasteful Bitcoin implementation only because they see a potential in it to increase their wealth. It's like glorifying random sort because we haven't invented the bubble sort yet!

feedjoelpie 9y ago
If you're talking history, I don't think that's quite fair. The whole hash-based algorithm was just the most mathematically simplistic way to make the idea work. It still is. If you're talking present-day, yeah, mostly Bitcoin hoarders don't want to see any change that might make their currency start functioning like a currency instead of fake gold.

alistproducer2 9y ago

PoW sticks because as a consensus backbone because it's 1.) easy to understand and implement and 2.) it's guarantees distribution of updates to the distributed state. IMO there are better ways to trustlessly secure distributed state but like all things there's a trade-off. The dirty secret of blockchain tech is that it can't scale - not without supplementary protocols. Even when you get it to scale you still have to deal with the storage of the blockchain. Bandwidth constrains the size of the blocks, which in turn constrains the amount of transactions. Turn up the block creation frequency (a la ETH) and you solved one problemt (Tx throughput) but created another (chain size). I am fundamentally opposed to PoW because it wastes so many resources, but, for now, it's the most viable way to secure a chain. PoS is doomed to centralization and relies too much on game theory and incentives for my tastes. just my 2 cents

grondilu 9y ago

One thing governments could do is this: - Create a digital token system that can be exchanged and accounted freely via a centralized server. - Give it a name. Don't even call it a currency, let people use it as money if they want to. - Give a limited amount to any citizen who wants some. Or maybe sell it, whatever. Just figure out a way people can get some. It can't be so hard. - Promise there will never be more than some fixed amount in total. Only governments could do something like that because despite everything, most people trust them about money. It'd be kind of a mixed between the different money systems.

abrkn 9y ago
> - Create a digital token system that can be exchanged and accounted freely via a centralized server. This is a database > - Give it a name. Don't even call it a currency, let people use it as money if they want to. A token that is used as currency is currency > - Give a limited amount to any citizen who wants some. Or maybe sell it, whatever. Just figure out a way people can get some. It can't be so hard. How will the token have value if everyone receives it for free? > - Promise there will never be more than some fixed amount in total. No one will fall for this again. Governments always print money to fund its own projects > Only governments could do something like that because despite everything, most people trust them about money. Bitcoin's price goes up because people don't want to trust government with money
- grondilu 9y ago
  > No one will fall for this again. Governments always print money to fund its own projects But if the total amount of money was publicly visible, things could be different. For better or worse, people build trust from the past. If they see that the government has not raised to the total amount for many years, they may believe it won't do it either during many more years. Kind of with treasure bonds. Despite the high level of debt most countries are in, investors keep believing the countries will pay back, because they have been for so long.

abrkn 9y ago

Proof-of-Work gives the token value because something was lost in order to create it

schmidty 9y ago
What you’ve described is labor theory of value and I don’t think it makes sense.

natural219 9y ago

Vinay Gupta thinks "nobody believes PoW is here to stay". Other commenters think "PoS might be impossible & no prominent cryptographer has some out in support of it". It's worth reminding people of the null hypothesis: Perhaps blockchains don't work.

narrator 9y ago

I don't like proof of stake because a large stake holder could be threatened privately by a third party into corrupting the whole system. With proof of work you need to spend a lot of money very publicly for a long time to break it.