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Excellent article. I would only add that we're using a LOT of energy to create a fake (read: virtual) resource. The best part about virtual resources is that
by wccrawford 15y ago
Excellent article.
I would only add that we're using a LOT of energy to create a fake (read: virtual) resource. The best part about virtual resources is that they don't use many real resources, but this one is the opposite.
Granted, it's a 1-time cost, but as the article notes, it could be created with a much lower 1-time cost.
- weavejester 15y agoThat's not quite true. Bitcoins cost virtually nothing to create, but you are only allowed to create them if you succeed at securing a block of transactions. All of the processing power used in the Bitcoin network is designed to verify the transaction chain and prevent double-spending. The bitcoins generated as a result are just a reward to compensate people for their energy and hardware costs.
- wccrawford 15y agoI recently looked into generating bitcoins, and that's not really true. Very little power goes into generating a successful bitcoin, true... But a LOT of power is wasted by failing to generate them. That's why it takes days, weeks or months (depending on processing power) to generate a successul bitcoin, on average.
- weavejester 15y agoYou're confusing solving a block with creating bitcoins. The distinction is important (in my opinion), because it determines the reason all that processing power is needed. A frequent mistake is to assume that all that processing power is used to make bitcoins hard to create. This is incorrect; the processing power is used to verify the block chain. The bitcoins created as part of each block are just a reward to make it profitable to participate in the network.
- joezydeco 15y agoYou're trying to win a lottery. With everyone racing to create a "solution" that fits the difficulty criteria there's no guarantee that you'll even win a block if you throw enough horsepower at it. A newcomer with a 900Mhz Pentium could find the correct solution on his first cycle.
- joezydeco 15y agoHow much manpower and energy does it take to make a paper US dollar with nothing backing it up? [EDIT] Since I'm getting downvoted, I'll answer my own question: $0.042 every 18 months.
- iwwr 15y agoPrinting money has in itself a cost in shifting resources from the market to the government or the central banks (or the financial sector in general).
- joezydeco 15y agoUnless you live in Ted Kennedy's or Trent Lott's district, where the cotton farms and paper mills are. For decades these senators continuously sabotaged measures to eliminate the paper Dollar and get the US entirely on dollar coins. The US is probably the last major economy to still be using paper for such small denominations.
- caf 15y ago...and in most other places, even the notes aren't paper/cotton anymore.
- joezydeco 15y agoGood point. I have an Aussie bill somewhere in my drawer at home. That's a cool banknote.
- kragen 15y agoDepending on where you draw the line between "major" and "minor" economies, the US can be the only major economy to do anything at all, since its economy is bigger than that of any other country. However, in my recent and local experience, small-denomination paper is not so unheard of: Country Smallest paper bill in USD PPP GDP/year Argentina $2 0.50 $640B Brazil 2 reais 1.26 $2200B Uruguay $5 (now rare; usu.$10) 0.27 $41B