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Ethereum's Proof of Stake will probably render all this moot eventually. For now, Bitcoin's Proof of Work electricity usage sounds high but how much electricit

Ethereum's Proof of Stake will probably render all this moot eventually. For now, Bitcoin's Proof of Work electricity usage sounds high but how much electricity and resources are used by brick and mortar banks, armored trucks, etc.?

jacobush 9y ago
I am not holding my breath waiting for Ethereum Proof of Stake. When is the switch? What are the incentives for nodes and miners to switch?
- AgentME 9y ago
  A lot of Ethereum users are excited for a solid proof of stake system. The incentive is visible in this thread: people want to feel they're not contributing to wasting electricity. And the incentive for miners ... well, Ethereum doesn't need them if it has proof of stake, so that part doesn't matter. They don't dictate the rules of the system.
  - jacobush 9y ago
    Within the system, they have not. External to the Ethereum network, I expect people heavily invested in mining infrastructure to fight tooth and nail to protect their investments.
- akvadrako 9y ago
  It won't happen anytime soon because PoS is still theoretical and might even be impossible to do securely.
randywaterhouse 9y ago
I've heard a number of conflicting arguments about the reliability of Ethereum switching to proof of stake... From "they will" to "this is difficult, why bother". There's also the other side of the equation - what's the value-add, and is it justified by the consumption? (e.g. the banks, trucks, etc. do something for the financial system, which has value. Is value / cost higher for BTC or lower?) I do not know.
cel1ne 9y ago
Not an expert, but it seems that proof of stake is just obscured proof of work. http://www.truthcoin.info/blog/pow-cheapest/ http://www.truthcoin.info/blog/pow-cheapest/
- DennisP 9y ago
  That assumes there's some way to grind through lots of computations to manipulate proof of stake, which isn't the case with the newest designs. Ethereum's proof of stake FAQ has responses to that article: https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ
  - hudon 9y ago
    Not really, it just assumes on the economic principle that your costs and your revenue will converge. In a free market, if you are spending 50$ for a chance of winning 100$, everyone else is incentivized to spend 51$ and more to have a higher probability than you. Eventually the people spending 99$ win every block. If the costs don’t manifest themselves in the protocol, they will be external costs. Hence, “obscured proof of work”. In other words, the problem is not that Bitcoin costs us X per unit produced, it is that we value Bitcoin at 8000$ per unit.
    - DennisP 9y ago
      That only works if there actually is a way to spend $51 and get a higher probability, and that's not necessarily the case. E.g. the Dfinity protocol uses threshold signatures so with any m-of-n stakers submitting, the same random number will be produced. Besides, in Casper at least there are internal costs: the locking and potential loss of stake.
kevingadd 9y ago
"How much is used by all banks and armored trucks put together" is kind of meaningless unless you factor in the immense transaction volumes those banks handle every day. Just consider the number of wire transactions that happen every day in a single country, or internationally. The amount of money handled by those transactions might even be smaller than the total BTC transacted daily, but the number of individual wires is enormous, and each one forms the basis of business transactions or charitable donations or government operations.
- visarga 9y ago
  > Just consider the number of wire transactions that happen every day in a single country, or internationally. It's only interesting to compare price per transaction.
  - RobertoG 9y ago
    Not really. What is the point of cheaper price per transaction if, for some reason, nobody it's using it?
  - kevingadd 9y ago
    If (random made-up numbers here) 90% of bitcoin transactions are BTC being shuffled between exchanges and 'washed' through mixers, but 90% of wire transactions are people paying for rent, food, and hospital expenses, would you really say that the distinction isn't meaningful? The societal implications of those two groups of transactions are very, very different. I would argue that the latter group's importance is much higher than the former's.
    - JetSpiegel 9y ago
      And yet, much less of 90% of current fiat money transactions are "people paying for rent, food, and hospital expenses". Bitcoin doesn't really solve capitalism.
- PeterisP 9y ago
  Looking at BTC stats it seems that we're talking about an order of magnitude of 300k transactions per day with a total volume of roughly 2 billion USD per day. Mastercard transacts roughly 200m transactions per day with a total volume of roughly 10 billion USD per day; so 600 times more deals than bitcoin, but with a lot of quite small transactions. USA fedwire has about 400k transactions per day (because in USA wire transfers aren't much used by ordinary people) with a total volume of roughly 2 trillion USD per day, so 1000 times more than bitcoin in terms of worth. EU retail payment systems ("wire transfers" in US terms but for consumers, not the very large settlements) have about 14 million transactions per day with a total volume of 100 billion, so something like 50 times more than bitcoin in both number and volume. So while Bitcoin is a serious factor, it still comprises a small (<0.1%) amount of the global transaction numbers and amounts; and we'd need at least a thousandfold growth in volume if bitcoin is to replace our current infrastructure.
mikeash 9y ago
When comparing energy usage to other financial systems, don't forget to also look at how many transactions they're able to handle. Bitcoin is tiny in terms of the number of transactions, so while the financial system as a whole no doubt uses more energy, it also facilitates orders of magnitude more activity. In terms of energy per transaction, Bitcoin is thousands of times higher.
- ryanjmo 9y ago
  Why isn't it then more expensive to hold and transfer then? Seems like those should be correlated.
  - mikeash 9y ago
    Sorry, I don’t understand what you’re asking. What isn’t what more expensive? What should be correlated?
runeks 9y ago
Proof-of-stake is not a replacement for proof-of-work, because PoS doesn’t solve the problem of which valid chain is the canonical one. That is, when given 50 different, valid chains, which is the right one? With PoS, the only way to agree on this is through voting (how many nodes present the various different chains — which is fragile, since bringing up additional nodes is cheap), and through centralization (central coordinator telling you which chain to choose — which adds nothing, since the double spend problem is easily solved using a central party). Fundamentally, PoS solves the wrong problem: the difficult problem is not who gets to extend the chain, it’s deciding which chain to extend in the first place.
- JohnJamesRambo 9y ago
  I'm sorry but it is and does. https://en.wikipedia.org/wiki/Proof-of-stake https://en.wikipedia.org/wiki/Proof-of-stake https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ
  - runeks 9y ago
    I’m well aware that it’s intended as a replacement for PoW, but I’m pointing out that they have very different security guarantees. For example: imagine there's a vulnerability in the reference client. With PoS, a payload can compromise nodes and replace their chain with another (valid) chain, leaving everyone wondering which chain is the right one. With PoW, no attacker can alter the chain without invalidating its proof-of-work.
- DennisP 9y ago
  Casper does have a fork choice rule. Basically the chosen chain is the one that destroys the least amount of staker ETH.
  - runeks 9y ago
    So the chosen chain will never include proofs-of-staker-fraud (since these destroy staker ETH)?
Taek 9y ago
There are a lot of unsolved problems with Proof of Stake, despite what it's proponents typically advertise, and many of them are believed by experts to be insurmountable. For example, one problem with proof of stake is that private keys only have value while you still hold onto them. Once you sell your coins, your private keys are no longer worth anything, which means you could potentially even sell these keys to an attacker with no risk to yourself. The attacker of course does have value though, if someone can gather enough private keys together for a specific snapshot in time, they can create an alternate history. Another big issue with proof of stake is that once you have a certain amount of stake, through diligence you are always guaranteed to preserve that amount of stake. And even further, if you are a validator who approves transactions, your permission is required when someone else wants to buy stake. An attacker who is able to gain enough stake to commit an attack for a short period of time can commit that attack forever. With PoW, hashrate requires heavy ongoing electricity expenses. Getting to 51% does not mean that you will stay at 51%, and there's little you can do to stop someone else from buying more chips to push you back below 51%. There are a lot of other fundamental issues with Proof of Stake, and a lot of good reason to believe that it will never be viable in the fully decentralized, fully trustless environment that bitcoin thrives in.
- 16th_hop 9y ago
  The criticism's in this post really make very little sense. What does that mean that "private keys only have value when you hold them." Private keys are worthless, they only give you access to the wallets that they unlock. Also, no, you are not guaranteed to stay at 51% forever. Vitalik has explicitly said that if a 51% attack happens, the community is expected to fork, and all of your funds will be isolated and slashed in the fork. If you want to attack again, you then need to collect another 51% of funds. This gets exponentially more difficult.
  - drcode 9y ago
    > What does that mean that "private keys only have value when you hold them." What he's saying is that people would sell their old private keys and an attacker could then use these to create a fake history of stakers- The existence of this attack is a valid criticism against POS, though one that can be easily prevented by just syncing to the network at regular intervals.
deleted 9y ago
[deleted]

jacobush 9y ago

I am not holding my breath waiting for Ethereum Proof of Stake. When is the switch? What are the incentives for nodes and miners to switch?

AgentME 9y ago
A lot of Ethereum users are excited for a solid proof of stake system. The incentive is visible in this thread: people want to feel they're not contributing to wasting electricity. And the incentive for miners ... well, Ethereum doesn't need them if it has proof of stake, so that part doesn't matter. They don't dictate the rules of the system.
- jacobush 9y ago
  Within the system, they have not. External to the Ethereum network, I expect people heavily invested in mining infrastructure to fight tooth and nail to protect their investments.
akvadrako 9y ago
It won't happen anytime soon because PoS is still theoretical and might even be impossible to do securely.

randywaterhouse 9y ago

I've heard a number of conflicting arguments about the reliability of Ethereum switching to proof of stake... From "they will" to "this is difficult, why bother". There's also the other side of the equation - what's the value-add, and is it justified by the consumption? (e.g. the banks, trucks, etc. do something for the financial system, which has value. Is value / cost higher for BTC or lower?) I do not know.

cel1ne 9y ago

Not an expert, but it seems that proof of stake is just obscured proof of work. http://www.truthcoin.info/blog/pow-cheapest/ http://www.truthcoin.info/blog/pow-cheapest/

DennisP 9y ago
That assumes there's some way to grind through lots of computations to manipulate proof of stake, which isn't the case with the newest designs. Ethereum's proof of stake FAQ has responses to that article: https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ
- hudon 9y ago
  Not really, it just assumes on the economic principle that your costs and your revenue will converge. In a free market, if you are spending 50$ for a chance of winning 100$, everyone else is incentivized to spend 51$ and more to have a higher probability than you. Eventually the people spending 99$ win every block. If the costs don’t manifest themselves in the protocol, they will be external costs. Hence, “obscured proof of work”. In other words, the problem is not that Bitcoin costs us X per unit produced, it is that we value Bitcoin at 8000$ per unit.
  - DennisP 9y ago
    That only works if there actually is a way to spend $51 and get a higher probability, and that's not necessarily the case. E.g. the Dfinity protocol uses threshold signatures so with any m-of-n stakers submitting, the same random number will be produced. Besides, in Casper at least there are internal costs: the locking and potential loss of stake.

kevingadd 9y ago

"How much is used by all banks and armored trucks put together" is kind of meaningless unless you factor in the immense transaction volumes those banks handle every day. Just consider the number of wire transactions that happen every day in a single country, or internationally. The amount of money handled by those transactions might even be smaller than the total BTC transacted daily, but the number of individual wires is enormous, and each one forms the basis of business transactions or charitable donations or government operations.

visarga 9y ago
> Just consider the number of wire transactions that happen every day in a single country, or internationally. It's only interesting to compare price per transaction.
- RobertoG 9y ago
  Not really. What is the point of cheaper price per transaction if, for some reason, nobody it's using it?
- kevingadd 9y ago
  If (random made-up numbers here) 90% of bitcoin transactions are BTC being shuffled between exchanges and 'washed' through mixers, but 90% of wire transactions are people paying for rent, food, and hospital expenses, would you really say that the distinction isn't meaningful? The societal implications of those two groups of transactions are very, very different. I would argue that the latter group's importance is much higher than the former's.
  - JetSpiegel 9y ago
    And yet, much less of 90% of current fiat money transactions are "people paying for rent, food, and hospital expenses". Bitcoin doesn't really solve capitalism.
PeterisP 9y ago
Looking at BTC stats it seems that we're talking about an order of magnitude of 300k transactions per day with a total volume of roughly 2 billion USD per day. Mastercard transacts roughly 200m transactions per day with a total volume of roughly 10 billion USD per day; so 600 times more deals than bitcoin, but with a lot of quite small transactions. USA fedwire has about 400k transactions per day (because in USA wire transfers aren't much used by ordinary people) with a total volume of roughly 2 trillion USD per day, so 1000 times more than bitcoin in terms of worth. EU retail payment systems ("wire transfers" in US terms but for consumers, not the very large settlements) have about 14 million transactions per day with a total volume of 100 billion, so something like 50 times more than bitcoin in both number and volume. So while Bitcoin is a serious factor, it still comprises a small (<0.1%) amount of the global transaction numbers and amounts; and we'd need at least a thousandfold growth in volume if bitcoin is to replace our current infrastructure.

mikeash 9y ago

When comparing energy usage to other financial systems, don't forget to also look at how many transactions they're able to handle. Bitcoin is tiny in terms of the number of transactions, so while the financial system as a whole no doubt uses more energy, it also facilitates orders of magnitude more activity. In terms of energy per transaction, Bitcoin is thousands of times higher.

ryanjmo 9y ago
Why isn't it then more expensive to hold and transfer then? Seems like those should be correlated.
- mikeash 9y ago
  Sorry, I don’t understand what you’re asking. What isn’t what more expensive? What should be correlated?

runeks 9y ago

Proof-of-stake is not a replacement for proof-of-work, because PoS doesn’t solve the problem of which valid chain is the canonical one. That is, when given 50 different, valid chains, which is the right one? With PoS, the only way to agree on this is through voting (how many nodes present the various different chains — which is fragile, since bringing up additional nodes is cheap), and through centralization (central coordinator telling you which chain to choose — which adds nothing, since the double spend problem is easily solved using a central party). Fundamentally, PoS solves the wrong problem: the difficult problem is not who gets to extend the chain, it’s deciding which chain to extend in the first place.

JohnJamesRambo 9y ago
I'm sorry but it is and does. https://en.wikipedia.org/wiki/Proof-of-stake https://en.wikipedia.org/wiki/Proof-of-stake https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ https://github.com/ethereum/wiki/wiki/Proof-of-Stake-FAQ
- runeks 9y ago
  I’m well aware that it’s intended as a replacement for PoW, but I’m pointing out that they have very different security guarantees. For example: imagine there's a vulnerability in the reference client. With PoS, a payload can compromise nodes and replace their chain with another (valid) chain, leaving everyone wondering which chain is the right one. With PoW, no attacker can alter the chain without invalidating its proof-of-work.
DennisP 9y ago
Casper does have a fork choice rule. Basically the chosen chain is the one that destroys the least amount of staker ETH.
- runeks 9y ago
  So the chosen chain will never include proofs-of-staker-fraud (since these destroy staker ETH)?

Taek 9y ago

There are a lot of unsolved problems with Proof of Stake, despite what it's proponents typically advertise, and many of them are believed by experts to be insurmountable. For example, one problem with proof of stake is that private keys only have value while you still hold onto them. Once you sell your coins, your private keys are no longer worth anything, which means you could potentially even sell these keys to an attacker with no risk to yourself. The attacker of course does have value though, if someone can gather enough private keys together for a specific snapshot in time, they can create an alternate history. Another big issue with proof of stake is that once you have a certain amount of stake, through diligence you are always guaranteed to preserve that amount of stake. And even further, if you are a validator who approves transactions, your permission is required when someone else wants to buy stake. An attacker who is able to gain enough stake to commit an attack for a short period of time can commit that attack forever. With PoW, hashrate requires heavy ongoing electricity expenses. Getting to 51% does not mean that you will stay at 51%, and there's little you can do to stop someone else from buying more chips to push you back below 51%. There are a lot of other fundamental issues with Proof of Stake, and a lot of good reason to believe that it will never be viable in the fully decentralized, fully trustless environment that bitcoin thrives in.

16th_hop 9y ago
The criticism's in this post really make very little sense. What does that mean that "private keys only have value when you hold them." Private keys are worthless, they only give you access to the wallets that they unlock. Also, no, you are not guaranteed to stay at 51% forever. Vitalik has explicitly said that if a 51% attack happens, the community is expected to fork, and all of your funds will be isolated and slashed in the fork. If you want to attack again, you then need to collect another 51% of funds. This gets exponentially more difficult.
- drcode 9y ago
  > What does that mean that "private keys only have value when you hold them." What he's saying is that people would sell their old private keys and an attacker could then use these to create a fake history of stakers- The existence of this attack is a valid criticism against POS, though one that can be easily prevented by just syncing to the network at regular intervals.

deleted 9y ago

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