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Proof of work (like most cryptography) is a mechanism to bootstrap social trust using computation as a substitute for human interaction. The question is not wh

Proof of work (like most cryptography) is a mechanism to bootstrap social trust using computation as a substitute for human interaction. The question is not whether society does fine without proof of work, but whether the PoW mechanism generates marginal trust at a lower cost than the existing social and institutional mechanisms. Lawyers, police, and the legal and state apparatus are expensive, centralized, and slow. Humans (especially educated, first world humans) are also energetically expensive to run! Basically, you are only accounting for the cost of PoW, which are trivial to measure, but not carefully accounting for the benefits, which are difficult.

tscs37 9y ago
At the current usage level, bitcoin uses as much power as about 280'000 homes (US, 340 Megawatts total, [1]). You can put an awful lot of lawyers, police, legal and state apparatus in 280'000 homes. It is sufficient to house all state and full-time employees of the state of Illinois [0] entirely, which unlike bitcoin can do more than transfer wealth. Illinois has a population of 12'800'000 people [2], bitcoin.info "claims" 23 Million wallet users, however that is a poor number since it only seems to count the number of wallet addresses ever used, the number of unique addresses used is closer to 500'000 and the number of daily users is 200'000 at the current date, which with some rough statistics yields a more realistic 3-8 million users. In conclusion: Employing humans to do the entire state things allows to service 1.5 to 4 times as many people as bitcoin is currently doing and it also includes a much much broader range of services than bitcoin. [0]: http://www.governing.com/gov-data/public-workforce-salaries/states-most-government-workers-public-employees-by-job-type.html http://www.governing.com/gov-data/public-workforce-salaries/... [1]: https://www.thebalance.com/how-much-power-does-the-bitcoin-network-use-391280 https://www.thebalance.com/how-much-power-does-the-bitcoin-n... [2]: https://suburbanstats.org/population/how-many-people-live-in-illinois https://suburbanstats.org/population/how-many-people-live-in...
- tlrobinson 9y ago
  I don’t think you can directly compare the two since the price of bitcoin, and thus value of the block rewards, is speculation on the future usage of bitcoin.
- smallnamespace 9y ago
  340 Megawatts, at $0.12 / kWh, works out to around $340mm / year, or a permanent army of 2500 lawyers or so. I agree that bitcoin's PoW mechanism as it is today has relatively poor bang for your buck, but there are many potential mechanisms for increasing efficiency by an order of magnitude or more (dPoS, state channels, sharding, etc.). Ethereum has a lot more potential to not just be a distributed ledger, but a distributed secured computer. If all you are interested in is moving around value, something like Nano might achieve that while burning far less computation that the Bitcoin network would require per transactions. We should keep in mind that when discussing Bitcoin we're comparing the first version of a nascent technology to mature financial institutions that have developed over hundreds of years.

tscs37 9y ago

At the current usage level, bitcoin uses as much power as about 280'000 homes (US, 340 Megawatts total, [1]). You can put an awful lot of lawyers, police, legal and state apparatus in 280'000 homes. It is sufficient to house all state and full-time employees of the state of Illinois [0] entirely, which unlike bitcoin can do more than transfer wealth. Illinois has a population of 12'800'000 people [2], bitcoin.info "claims" 23 Million wallet users, however that is a poor number since it only seems to count the number of wallet addresses ever used, the number of unique addresses used is closer to 500'000 and the number of daily users is 200'000 at the current date, which with some rough statistics yields a more realistic 3-8 million users. In conclusion: Employing humans to do the entire state things allows to service 1.5 to 4 times as many people as bitcoin is currently doing and it also includes a much much broader range of services than bitcoin. [0]: http://www.governing.com/gov-data/public-workforce-salaries/states-most-government-workers-public-employees-by-job-type.html http://www.governing.com/gov-data/public-workforce-salaries/... [1]: https://www.thebalance.com/how-much-power-does-the-bitcoin-network-use-391280 https://www.thebalance.com/how-much-power-does-the-bitcoin-n... [2]: https://suburbanstats.org/population/how-many-people-live-in-illinois https://suburbanstats.org/population/how-many-people-live-in...

tlrobinson 9y ago
I don’t think you can directly compare the two since the price of bitcoin, and thus value of the block rewards, is speculation on the future usage of bitcoin.
smallnamespace 9y ago
340 Megawatts, at $0.12 / kWh, works out to around $340mm / year, or a permanent army of 2500 lawyers or so. I agree that bitcoin's PoW mechanism as it is today has relatively poor bang for your buck, but there are many potential mechanisms for increasing efficiency by an order of magnitude or more (dPoS, state channels, sharding, etc.). Ethereum has a lot more potential to not just be a distributed ledger, but a distributed secured computer. If all you are interested in is moving around value, something like Nano might achieve that while burning far less computation that the Bitcoin network would require per transactions. We should keep in mind that when discussing Bitcoin we're comparing the first version of a nascent technology to mature financial institutions that have developed over hundreds of years.