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As an engineer, it saddens me to see the huge inefficiencies inherent to cryptocurrency mining these days. Surely, when we're spending in the billions on wastef
by kenneth 9y ago
As an engineer, it saddens me to see the huge inefficiencies inherent to cryptocurrency mining these days. Surely, when we're spending in the billions on wasteful hashing, we could dedicate a small fraction of that to engineering better consensus algorithms.
Unfortunately, we have an ecosystem where everyone is incentivized to ignore the problem because they're too invested in maintaining the price of Bitcoin and other PoW cryptocurrencies. They often don't pay for the externalities — environmental costs. The specialization of mining also severely hurts the distributed and decentralized nature of these crypto-currencies.
I'm a huge fan of crypto-networks, and have made a career in the space. But, I want Bitcoin to die off and leave room for newer generation technology.
- testdeep 9y agoThen shill your friends about Nano. Free Instant Transfers. No mining.
- sradu 9y agoWhich projects would you consider as a potential replacement for Bitcoin?
- vernon99 9y agoThis is a one-sided comment. There’s a lot of research going into different variations of proof-of-stake. 4 out of 10 largest crypto (by market cap) are PoS. There’s a lot of work Ethereum community (Casper), Cardano folks, Tendermint etc are doing to create better consensus models.
- bitL 9y agoPoS is not going to be very popular as it removes the literal "money out of thin air" that was happening with GPUs in the past few years (coming to end in medium term). PoS strongly favors already well capitalized owners, instead of allowing new ones.
- twiceaday 9y agoDoesn't PoS generate money out of thin air? It's just a matter of putting your dollars into stake vs hardware and electricity.
- JustAnotherPat 9y ago5% a year. You're better off keeping it on an exchange in case of a pump.
- coralreef 9y agoWhat's this 5% figure from?
- nosuchthing 9y agoOnly for the largest account holders, whom statistically will receive most of the newly generated money (and even more as they continue to accumulate newly printed PoS tokens).
- twiceaday 9y agoPoW distributes block rewards proportionally to hash power and these proceeds can be used to buy more hash power to achieve a compounding effect. From what I understand all of the viable PoS systems offer a fixed rate of return on the stake. This is like PoW forcing everybody to use the exact same hardware; a benefit to the little guy at the expense of the large account holders.
- aoeusnth1 9y agoI'm confused - what's your objection? Should capital put into PoS not provide a constant reward? Or are you under the impression that larger pools of capital provide disproportionate rewards?
- tlrobinson 9y agoTransitioning from PoW to PoS seems like a possible solution. Or shortcut the PoW phase by seeding your coin with snapshots of one or more existing coins that had a “fair” distribution phase.
- nosuchthing 9y agoProof-of-Stake statistically equates to "Give the rich more money". Consider Ethereum's stats (and other similar PoS minting methods): Presale ICO / Premine ( max cost $0.50 USD per ETH ) = 72,009,990 ETH Total Supply today (Feb 23rd 2018) = 97,800,000 ETH Source: https://etherscan.io/stat/supply Now imagine a financial system where all the wealthy have to do simply own money (spawned from software or premine) to get more money. Or where voting is done by merely by controlling a large sum of money/tokens.
- zodiac 9y agoWhat's your proposal for a more egalitarian reward model for block producers (in any consensus model)?
- nosuchthing 9y agoEqual payment for the same work/processing power.
- zodiac 9y agoWhat does that concretely mean?
- curyous 9y agoProof of work, it requires continual investment if you want to get the rewards, not just sitting there watching the cash roll in.
- aoeusnth1 9y agoHow is that more egalitarian? It's still a conversion between capital and income. It's like saying stocks that give dividends are more "egalitarian" because you have to reinvest them in order to gain the same return on investment. Absurd.
- trophycase 9y agoThis is basically how it is now. There is a non-zero risk to staking as well as the stock market/bonds
- deleted 9y ago[deleted]
- mrb 9y agoThe ugly truth is that proof-of-stake systems, at least current ones, give up decentralization properties. Users with the most funds (stakes) can effectively validate and rewrite the blockchain. Or in the case of a network split, the 2 chains can no longer be merged (because they implement "safety" mechanism such as preventing nodes from rewriting more than X blocks.)
- bogomipz 9y ago>" we could dedicate a small fraction of that to engineering better consensus algorithms." Can you elaborate on what the shortcomings of the current consensus algorithms are?
- nosuchthing 9y agoImmense waste, and lack of egalitarianism. Proof-of-Work consensus algorithms (so far) work by wasting more and more energy. Max efficiency peaks in the network with a very basic CPU PoW algorithm merely sets a lottery number granting write access for a single computer Every additional increase in processing power reduces efficiency by increasing the size of the number to be guessed All PoW does is increase the capital cost for any user who joins after x-amount of time has passed.
- trixie_ 9y agoIf all the power eventually comes from renewables. Is it still wasteful?
- DaiPlusPlus 9y agoI like that analogy: “setting a lottery number” - that feels more accurate than the typical way the lay media explains mining, usually a variation of “solving lots of puzzles”. “Puzzle” implies some cognition is required to come to a solution - not that effort is being wasted by brute-forcing something.
- VMG 9y agoIt's only wasted if there was a cheaper alternative. There isn't.
- bogomipz 9y agoThanks for elaborating, these are interesting points and observations. I am curious are there any proposals floating about for achieving greater efficiency or more egalitarianism? It seems like a great area of research. Might you or someone else have any resources you could share if this is an active area of research? Cheers.
- JustAnotherPat 9y ago95% of people wouldn't be interested in crypto if it didn't make them money. You're asking people to give up the money to improve the system for what? So they can't make as money? Crypto isn't charity. If you want better tech, you have to prove why it is worth it.
- noddy1 9y agoThis 4 billion dollars and all the money wasting on power and ASIC chips is a direct tax on the bitcoin ecosystem. This is the incentive you and your currency/consensus model have to beat bitcoin. In addition to the engineering problem, the number of people worldwide who prioritize environmental preservation mean that a currency that can preserve or even improve the environment are going to be preferred. What if we changed proof of work to be proof of not-cutting-down rainforests? 100 secure micro-satellites circle the globe taking pictures of areas prone to deforestation and distribute currency based on the areas not being logged?
- shepardrtc 9y agoRipple, one of the top three cryptocurrencies uses a consensus algorithm. There are some others, further down the rankings, too.
- zallarak 9y agohttp://za1.co/2018/02/10/proof-of-work.html http://za1.co/2018/02/10/proof-of-work.html
- undersuit 9y agoI'm more concerned that it takes something "wasteful" like mining to make people wake up. What about DRM techniques like HDCP? Even with hardware acceleration we've been wasting power for at least a decade to encrypt every single video stream so that we can stop piracy. Piracy still exists. Mining most definitely uses more power than video encryption but only one of them has really produced anything of value.
- goldenkey 9y agoThe encryption doubles as compression. Its not wasting power..
- umanwizard 9y agoWhat of value has bitcoin mining (or for that matter, anything relating to bitcoin) produced? DRM makes it harder to pirate, which is something of value in my opinion.
- curyous 9y agoBitcoin mining seems inefficient now, but when the network is carrying 100x more or 10,000x more transactions, won't it be extremely efficient? (On a per-transaction basis)
- curuinor 9y agoThere have now been about a half-dozen various suggestions to get the network to carry more transactions, all of which are mostly failures, except for Lightning Network, which is now in the process of becoming a failure.
- proofofmoon 9y agoO(n) total world energy expenditure on Bitcoin scales to O(1) transactions, so it currently only gets worse as more energy is poured into the system for the same transaction output. There's a few solutions proposed: - off-chain transactions (Lightning Network) - unknown complexity - increased block size (Bitcoin Cash) - O(n) -> some larger O(1) - a different consensus system (proof of stake blockchain, distributed proof of stake blockchain, Tangle, etc.) - varies It's possible that the Bitcoin ecosystem will adopt one of these solutions in the future, but there doesn't appear to be a silver bullet right now.
- snitko 9y agoHave a sense of proportion. Think about how much electricity, paper, waste and money is spent to keep up the banking industry, anti-fraud departments, AML/KYC compliance teams, clerks and all that show. Bitcoin is actually an improvement.
- drngdds 9y agoI feel like preventing fraud and money laundering (incidentally, two things you can't prevent when using cryptocurrency) is actually not wasteful
- Nursie 9y agoNope, Bitcoin is much worse than that.
- wmf 9y agoIt's funny you mention anti-fraud departments and AML/KYC compliance teams since Bitcoin does not provide those and thus their cost exists in addition to the cost of mining.
- umanwizard 9y agoBut Bitcoin doesn’t provide the services that the banking industry does. Bitcoin is more comparable to physical gold than to a modern bank account. Banking was built on top of gold (and later fiat) because it provides valuable services. If bitcoin becomes a widely-used currency then the same banking system will be built on top of Bitcoin.
- wyager 9y ago> we could dedicate a small fraction of that to engineering better consensus algorithms. I wish people would dedicate a few minutes to reading about theoretical limits on consensus mechanisms.
- umanwizard 9y agoGot any links?
- hiccuphippo 9y agoI wonder what happened to primecoin. Could Bitcoin switch to such a PoW in the future?
- undersuit 9y agoSwitch, no. The ASIC miners would never vote for something that would destroy half of their investment. A fork could totally happen. That's what Bitcoin Gold did by forking the blockchain to using the Equihash algorithm.
- cocktailpeanuts 9y agoThis means you're an "engineer" but not yet an economist. Try to study economics if you're really serious about your career in cryptocurrency area, you'll find yourself thinking completely differently. At least you'll get to a point where you don't make a wholesale criticism like this but can say "I know it would be better to have a tech that consumes less energy, but I also understand why it's not a trivial issue, because physics and economics." One of the biggest fallacies in the history of economics that repeats itself over and over and over again is that people make decisions based on what they can see but they neglect what they can't see that happens as a result of what they can see. As much as I would like to see PoS work, it may just be the case is that at the end of the day, PoS and PoW are the same in the grand scheme of things, not because of some greedy people with financial interest but because of physics. It's hard to make sense of this unless you study economics, no matter how great of an engineer you are. [Edit] I hope my comment works as a wakeup call for those of you who are open minded enough to learn a piece of the puzzle that's obviously missing from your mindset (I shared it because once I learned it, I was so regretful for not having studied even a little bit of economics in my life until now), but looking at all the downvotes, looks like most people don't like to hear what they don't like to hear. I don't really mind, suit yourself. But just remember "Cryptocurrency" is "Crypto" + "Currency", which means it's not just CS, but also economics.
- slewis 9y agoWhat do you mean “the same in the grand scheme of things”? By what metric?
- cocktailpeanuts 9y agoNewton's 3rd law: Proof of Work and Proof of Stake both waste tons of energy, and of course, the entire economic system both of them are trying to replace also waste tons of energy. The problem is, Proof of Work is very objective and measurable, which is why most people criticize Bitcoin for its waste of energy since it's so easy to measure. But proof of stake and the legacy economic system both lack such objective measures, which is why it's hard to compare them. The term "stake" itself is subjective and doesn't take into account the economic ripple effect it can trigger as a result. And these ripple effects DO exist, it's just that most people are not aware of them and just take for granted. Which is why I think it's crucial that you study the history of money before you can confidently say you understand "how money works". This is not to say proof of stake won't work. It's just saying that there's a high chance that there's hidden cost to proof of stake which in the long run can map to the amount of energy wasted by proof of stake, which is backed by newton's 3rd law. You can't create energy. Everything that happens on earth is simply a transfer of limited amount of energy from the sun. If this sounds all woo-woo to you, that's why I suggest studying economics. I personally think the only way to overcome energy consumption is to come up with innovation that's as different from newtonian physics to quantum physics.
- kerng 9y agoI have been wondering if an algorithm of Proof of Spending could somehow be in the mix. People should be rewarded for spending their money to enable a healthy economy. Of course something like this couldn't be the main part of an algorithm, but maybe somehow be considered. Not sure if there has been any research in that area.
- umanwizard 9y agoWhat's to stop you from just sending the same money back and forth between addresses you control?
- doots 9y agoNEM implements an algo like Googles anti SEO / anti sybil it's closed source though