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Proof of Work is the only way for people to transact in which they don't have counterpary-risk problems before transacting. Before PoW was invented, there was

Proof of Work is the only way for people to transact in which they don't have counterpary-risk problems before transacting. Before PoW was invented, there was no way of doing this. Now, thanks to layer2 technologies, PoW will start becoming much more (orders of magnitude more) energy efficient. How is that a bad idea? Make something possible, and later make it sustainable. So long as there's demand for that something, then it's a good idea.

skybrian 9y ago
There are two sides to a trade, and typically Bitcoin only handles one of them. Buy some food with Bitcoin and it still might taste bad or make you ill. Even for purely financial transactions, any kind of loan or investment still has counter-party risk. So even if a crypocurrency worked perfectly, it doesn't solve very much.
- siwatanejo 9y ago
  > There are two sides to a trade, and typically Bitcoin only handles one of them. Buy some food with Bitcoin and it still might taste bad or make you ill. You have this same problem with any form of money. The problem I raised is counterparty-risk when holding your assets (before transacting). > Even for purely financial transactions, any kind of loan or investment still has counter-party risk. Yeah, that's why maybe loans should have higher interest (right now, the low interest is artificial, because the bank is really making more money from the fact that it's working as a fractional reserve, not from the interest it gathers from loaning you money). > So even if a crypocurrency worked perfectly, it doesn't solve very much. It solves just one thing. Granted, it's not a silver bullet. But there are never silver bullets. Every single invention that humanity achieves, just improves the world a little tiny bit. Cryptocurrency does this as well.
  - wpietri 9y ago
    It does not solve anything. It's true that cash and bitcoin both avoid a narrow slice of counterparty risk. But that's not a whole problem, just part of one. As a currency, Bitcoin is an abject failure. Even big proponents admit that: http://avc.com/2017/08/store-of-value-vs-payment-system/ http://avc.com/2017/08/store-of-value-vs-payment-system/ Bitcoin made no practical dent in existing legal financial transactions because it's not better for the great majority of use cases.
KirinDave 9y ago
Because PoW doesn't have an answer to selfish mining attacks?
Scarblac 9y ago
> Proof of Work is the only way for people to transact in which they don't have counterpary-risk problems before transacting. > Before PoW was invented, there was no way of doing this. If I pay with my credit card and am scammed, I just let them roll back the transaction and let the other side prove their case. With Bitcoin, that mechanism is _impossible_.
- kybernetikos 9y ago
  We're not talking about Bitcoin here. I've personally created cryptoassets on the ethereum blockchain that support enforcement freezing and reversing transactions. The fact that Bitcoin doesn't is primarily down to the ideology of early adopters, not technology reasons.
  - edoloughlin 9y ago
    Genuinely curious: how much does it cost per transaction and how many transactions per second can you execute?

skybrian 9y ago

There are two sides to a trade, and typically Bitcoin only handles one of them. Buy some food with Bitcoin and it still might taste bad or make you ill. Even for purely financial transactions, any kind of loan or investment still has counter-party risk. So even if a crypocurrency worked perfectly, it doesn't solve very much.

siwatanejo 9y ago
> There are two sides to a trade, and typically Bitcoin only handles one of them. Buy some food with Bitcoin and it still might taste bad or make you ill. You have this same problem with any form of money. The problem I raised is counterparty-risk when holding your assets (before transacting). > Even for purely financial transactions, any kind of loan or investment still has counter-party risk. Yeah, that's why maybe loans should have higher interest (right now, the low interest is artificial, because the bank is really making more money from the fact that it's working as a fractional reserve, not from the interest it gathers from loaning you money). > So even if a crypocurrency worked perfectly, it doesn't solve very much. It solves just one thing. Granted, it's not a silver bullet. But there are never silver bullets. Every single invention that humanity achieves, just improves the world a little tiny bit. Cryptocurrency does this as well.
- wpietri 9y ago
  It does not solve anything. It's true that cash and bitcoin both avoid a narrow slice of counterparty risk. But that's not a whole problem, just part of one. As a currency, Bitcoin is an abject failure. Even big proponents admit that: http://avc.com/2017/08/store-of-value-vs-payment-system/ http://avc.com/2017/08/store-of-value-vs-payment-system/ Bitcoin made no practical dent in existing legal financial transactions because it's not better for the great majority of use cases.

KirinDave 9y ago

Because PoW doesn't have an answer to selfish mining attacks?

Scarblac 9y ago

> Proof of Work is the only way for people to transact in which they don't have counterpary-risk problems before transacting. > Before PoW was invented, there was no way of doing this. If I pay with my credit card and am scammed, I just let them roll back the transaction and let the other side prove their case. With Bitcoin, that mechanism is _impossible_.

kybernetikos 9y ago
We're not talking about Bitcoin here. I've personally created cryptoassets on the ethereum blockchain that support enforcement freezing and reversing transactions. The fact that Bitcoin doesn't is primarily down to the ideology of early adopters, not technology reasons.
- edoloughlin 9y ago
  Genuinely curious: how much does it cost per transaction and how many transactions per second can you execute?