5 ms·

What a depressing business. Making money out of noise, and warm air ...

by big_paps 12y ago

criloz2 12y ago
What a naive comment...
- LunaSea 12y ago
  Explain how he's wrong ?
imaginenore 12y ago
And processing transactions. And increasing security.
- raverbashing 12y ago
  Increasing security how? It seems a pointless waste of electricity and human effort, but justifiable with the current bitcoin prices.
  - mcintyre1994 12y ago
    The security of the whole system depends on no one entity controlling >50% of the hash rate in the whole network (that is, the energy being used to mine). Further attackers with below 50% can impact the blockchain with a lower probability of success. More information better written at [0] and [1], but they'd be able to reverse their own transactions (and double spend), and also stop any other transactions being confirmed. So essentially these miners are making it more difficult for anybody to attack the blockchain, thus they're providing security. [0] http://bitcoin.stackexchange.com/questions/658/what-can-an-attacker-with-51-of-hash-power-do http://bitcoin.stackexchange.com/questions/658/what-can-an-a... [1] https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_computing_power https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_...
    - raverbashing 12y ago
      True, I had forgotten about this aspect. Of course, this only works if they're (or someone else is) not big enough to control more than 50% of the hash rate (not sure how much they would have to grow to do that)
- ceejayoz 12y ago
  > And increasing security. Only for the Bitcoin network, which is like saying that putting a fence and armed guards around a plot of industrial wasteland is inherently good because it increases security.
  - dragontamer 12y ago
    I'm not a BTC enthusiast... but it's no less wasteful than Fort Knox.
    - saalweachter 12y ago
      Fort Knox is fairly economical. While obviously the depository and its guards cost something, most of the security is circumstantial: Fort Knox is an active US military base in the middle of the continent. The fear at the time was that the Germans could do a stealth smash-and-grab on New York and steal all of our gold. So they moved it all across a mountain range to the middle of an Army base (in fact, they used to train tank crews there). Even in peace-time, the prospect of being chased by the entire US military across a thousand miles of US territory is sufficiently daunting that the depository itself doesn't need to be that impressive.
      - mike_hearn 12y ago
        The overheads of the existing financial industry aren't really things for physical security at Fort Knox. They are: • All the employees, regulators and effort put into the auditing and compliance needed to make fractional reserve lending slightly less risky • The leakage and losses due to carding fraud which goes unfixed because banks have little incentive to fix it • The mind-blowing resource misallocations that result from misguided but well intentioned economic interventions, like the Spanish housing estates that were built then knocked down without ever being occupied ... and so on. Yes, Bitcoin mining is pretty wasteful today. It's a misallocation of resources caused by monetary inflation - the fact that you get to print money by solving SHA256 preimage puzzles diverts lots of energy and effort into doing so even though it makes no real sense. But Satoshi knew inflation caused harmful resource misallocation which is why he scheduled it to halve every four years (some inflation at the start is needed to actually issue the currency into existence, of course). Now think about the wastefulness of mining, but on a massively larger scale, and without any end in sight. That's other currencies.
- ryanlol 12y ago
  You don't need miners to process transactions.
emiliobumachar 12y ago
True enough, but how does it compare to literal mining, as in gold mines? I would guess that Bitcoin mining is greener.
- lmm 12y ago
  Gold miners have incentives to be more efficient about it. And realistically the 21st-century alternative isn't gold bullion, it's Visa - which I'd submit is a whole lot greener.
  - gambiting 12y ago
    I remember this one post on HN some time ago, where someone calculated how much electricity the entire Bitcoin network was using per month...and then someone who runs operations at a large coal mine came around and said that his mine uses that much electricity....daily.
    - emiliobumachar 12y ago
      Well, coal is different. It's mined for energy, not store of value. But I suppose gold and silver would be in the same ballpark.
  - emiliobumachar 12y ago
    I believe Bitcoin miners have every incentive to be efficient, as they pay for their hardware and energy. Am I missing something?
    - wpietri 12y ago
      The value of gold mining is gold, which has various personal and technical uses. The value of Bitcoin mining is to support the blockchain. The value of which is, honestly, still unknown, but so far appears mainly to be transferring money. So if we're measuring ecological efficiency of Bitcoin, it'd be something like cents or watt-hours or grams CO2 per financial transaction. I've never seen a rigorous comparison, but I wouldn't be at all surprised if Visa and Paypal are more ecologically efficient than Bitcoin.
deleted 12y ago
[deleted]
exo762 12y ago
Comparing to amount of waste (cost of operations) of regular banking system and direct harm from banking system to society (influencing politics, strong-arming rest of players on the market), cost of bitcoin as network is a chump change. I'm not saying that it replaces banking system and two numbers should not be compared directly, but I believe that it can heal it banking system by introducing greater transparency and taking away control of money from banks.
kruczek 12y ago
Well, it's about as depressing as assigning arbitrary value to gold or silver (or paper!) and using it as money.

What a depressing business. Making money out of noise, and warm air ...

criloz2 12y ago

What a naive comment...

LunaSea 12y ago
Explain how he's wrong ?

imaginenore 12y ago

And processing transactions. And increasing security.

raverbashing 12y ago
Increasing security how? It seems a pointless waste of electricity and human effort, but justifiable with the current bitcoin prices.
- mcintyre1994 12y ago
  The security of the whole system depends on no one entity controlling >50% of the hash rate in the whole network (that is, the energy being used to mine). Further attackers with below 50% can impact the blockchain with a lower probability of success. More information better written at [0] and [1], but they'd be able to reverse their own transactions (and double spend), and also stop any other transactions being confirmed. So essentially these miners are making it more difficult for anybody to attack the blockchain, thus they're providing security. [0] http://bitcoin.stackexchange.com/questions/658/what-can-an-attacker-with-51-of-hash-power-do http://bitcoin.stackexchange.com/questions/658/what-can-an-a... [1] https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_computing_power https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_...
  - raverbashing 12y ago
    True, I had forgotten about this aspect. Of course, this only works if they're (or someone else is) not big enough to control more than 50% of the hash rate (not sure how much they would have to grow to do that)
ceejayoz 12y ago
> And increasing security. Only for the Bitcoin network, which is like saying that putting a fence and armed guards around a plot of industrial wasteland is inherently good because it increases security.
- dragontamer 12y ago
  I'm not a BTC enthusiast... but it's no less wasteful than Fort Knox.
  - saalweachter 12y ago
    Fort Knox is fairly economical. While obviously the depository and its guards cost something, most of the security is circumstantial: Fort Knox is an active US military base in the middle of the continent. The fear at the time was that the Germans could do a stealth smash-and-grab on New York and steal all of our gold. So they moved it all across a mountain range to the middle of an Army base (in fact, they used to train tank crews there). Even in peace-time, the prospect of being chased by the entire US military across a thousand miles of US territory is sufficiently daunting that the depository itself doesn't need to be that impressive.
    - mike_hearn 12y ago
      The overheads of the existing financial industry aren't really things for physical security at Fort Knox. They are: • All the employees, regulators and effort put into the auditing and compliance needed to make fractional reserve lending slightly less risky • The leakage and losses due to carding fraud which goes unfixed because banks have little incentive to fix it • The mind-blowing resource misallocations that result from misguided but well intentioned economic interventions, like the Spanish housing estates that were built then knocked down without ever being occupied ... and so on. Yes, Bitcoin mining is pretty wasteful today. It's a misallocation of resources caused by monetary inflation - the fact that you get to print money by solving SHA256 preimage puzzles diverts lots of energy and effort into doing so even though it makes no real sense. But Satoshi knew inflation caused harmful resource misallocation which is why he scheduled it to halve every four years (some inflation at the start is needed to actually issue the currency into existence, of course). Now think about the wastefulness of mining, but on a massively larger scale, and without any end in sight. That's other currencies.
ryanlol 12y ago
You don't need miners to process transactions.

emiliobumachar 12y ago

True enough, but how does it compare to literal mining, as in gold mines? I would guess that Bitcoin mining is greener.

lmm 12y ago
Gold miners have incentives to be more efficient about it. And realistically the 21st-century alternative isn't gold bullion, it's Visa - which I'd submit is a whole lot greener.
- gambiting 12y ago
  I remember this one post on HN some time ago, where someone calculated how much electricity the entire Bitcoin network was using per month...and then someone who runs operations at a large coal mine came around and said that his mine uses that much electricity....daily.
  - emiliobumachar 12y ago
    Well, coal is different. It's mined for energy, not store of value. But I suppose gold and silver would be in the same ballpark.
- emiliobumachar 12y ago
  I believe Bitcoin miners have every incentive to be efficient, as they pay for their hardware and energy. Am I missing something?
  - wpietri 12y ago
    The value of gold mining is gold, which has various personal and technical uses. The value of Bitcoin mining is to support the blockchain. The value of which is, honestly, still unknown, but so far appears mainly to be transferring money. So if we're measuring ecological efficiency of Bitcoin, it'd be something like cents or watt-hours or grams CO2 per financial transaction. I've never seen a rigorous comparison, but I wouldn't be at all surprised if Visa and Paypal are more ecologically efficient than Bitcoin.

deleted 12y ago

[deleted]

exo762 12y ago

Comparing to amount of waste (cost of operations) of regular banking system and direct harm from banking system to society (influencing politics, strong-arming rest of players on the market), cost of bitcoin as network is a chump change. I'm not saying that it replaces banking system and two numbers should not be compared directly, but I believe that it can heal it banking system by introducing greater transparency and taking away control of money from banks.

kruczek 12y ago

Well, it's about as depressing as assigning arbitrary value to gold or silver (or paper!) and using it as money.