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How do you say Bitcoin didn't succeed? The currency currently has a market cap of about $4,300,000,000 USD, processes transactions equivalent to $300,000,000 U

How do you say Bitcoin didn't succeed? The currency currently has a market cap of about $4,300,000,000 USD, processes transactions equivalent to $300,000,000 USD daily and can be used globally by anyone. It's been running completely decentralized for 6 years without compromise. It has probably succeeded far beyond most expectations for it.

mizzao 11y ago
If only we could harness the computational power wasted on Bitcoin mining as heat, for useful distributed computing.
- deleted 11y ago
  [deleted]
- pera 11y ago
  I don't understand this recurrent point: computer power is "wasted" almost everywhere. At least Bitcoin use this power to build a decentralized currency.
  - scott_karana 11y ago
    > computer power is "wasted" almost everywhere. At least Bitcoin use this power to build a decentralized currency. Pinning a GPU or ASIC at 100% undeniably draws more power than an everyday user idling around Facebook on their Macbook Air (~21W MAXED, so likely 7W) Whether it's worth it is the question. A back-of-the-envelope calculation gives me $12Mn USD per day as the approximate global cost of electricity given the current global hashrate of 375Mn GH/s, for 0.05¢/kWh, assuming everyone is using reasonably modern, efficient (?) ASICs like a Spondoolies SP35 Yukon at 5.5TH/s for 3850W. If that's for a $300Mn USD daily market, that's not particularly efficient. Nor particularly inefficient either, admittedly. Democratic, for sure ;) EDIT: initially forgot to include some time units, thanks jsprogrammer!
    - jsprogrammer 11y ago
      >$12Mn USD per what? This number is pretty meaningless without knowing what timeframe that amount of costs are incurred.
      - scott_karana 11y ago
        Oops, good save. Thanks! It's per day. (I think. :P) Today's average hashrate is ~397Mn GH/s, and I used 375 instead, to be conservative/fair. https://blockchain.info/charts/hash-rate https://blockchain.info/charts/hash-rate
        jsprogrammer 11y ago
        The spot price of BTC has been steadily rising. Someone must be getting more than $12,000,000 USD / day in value out of it.
    - pstrateman 11y ago
      > A back-of-the-envelope calculation gives me $12Mn USD per day 3600.00 BTC or $1m is paid as subsidy per day. Are you saying that people are spending 12x that on power? I dont think so.
      - scott_karana 11y ago
        Do your own calculation and see what you find, instead of think. This is HN after all. :) You have all the relevant numbers in my post after all: maybe I made a mistake? That certainly possible :P, since you seem to be right about the rewards paid per day. Or maybe people willingly factor in power costs as a price of speculating on a volatile, trending currency? Or maybe most power costs are actually carried in low-cost areas rather than North America and Europe, so my $0.05/kWh is an overestimate?
  - wmf 11y ago
    It's wasted relative to other methods (e.g. proof of stake, Stellar) that many people believe can provide close enough to the same properties.
- tromp 11y ago
  The best you could hope for in an alternative proof-of-work scheme is a shift from dominating electricity costs and rapid hardware obsolescence to use of commodity hardware, dominated by memory latency instead of computation. That's what my Cuckoo Cycle PoW scheme aims for... https://github.com/tromp/cuckoo https://github.com/tromp/cuckoo On the other hand, some people argue that reducing waste is counterproductive as it also lowers the cost of a history rewriting attack. Ethereum's PoW, while requiring 1GB of memory for efficient mining, remains so compute intensive that it only runs well on GPUs. Its inefficiency on CPUs is a conscious design choice to deter botnets.
  - optimiz3 11y ago
    How is Ethash compute intensive relative to Cuckoo Cycle? EDIT: Ethash does 1 SHA3 at the beginning, 1 SHA3 at the end, and 64 rounds of FNV1-32 x 32. Verification considers the intermediate digest, so really 1 SHA3 to verify. You do more SHA3 rounds if you don't store the dataset, but this is a memory trap-door (and would require ignoring the mixDigest); the verification cost is still negligible. In our mining pools, verification of hash values doesn't even account for 1% of of our overall CPU consumption (and this is with Scrypt). SHA3 is also far more lightweight than SHA2, and much more parallelizable. EDIT #2: If we want to talk about weaknesses in Ethash, I'm not sure it is FPGA resistant, given many FPGAs have DDR iterfaces on die and the access pattern of Ethash is read-only.
    - tromp 11y ago
      "Compute bound" refers to proof generation (mining), not to verification. It looks like ethash does the following computations per random memory access: p = fnv(i ^ s[0], mix[i % w]) % (n // mixhashes) * mixhashes newdata = [] for j in range(MIX_BYTES / HASH_BYTES): newdata.extend(dataset_lookup(p + j)) mix = map(fnv, mix, newdata) I admit this doesn't look much more involved than Cuckoo's single siphash-2-4, but perhaps we can measure it. How much faster does this run if you leave out the actual memory access. i.e. replace dataset_lookup(p + j) by (p+j)? In Cuckoo Cycle's case, avoiding the memory lookups reduces runtime by a factor 3.
- drcode 11y ago
  You will be happy to know then that ethereum 1.1 will no longer use computational power for security. When ethereum 1.1 is released, the total electricity requirement of the network will drop by orders of magnitude.
Touche 11y ago
Is 90% of the market still speculation? Call me when it's not.
- maaku 11y ago
  What does that even mean? If I were to add up every single transaction involving USD, what percentage do you think would be HFT and other Wall St speculation?
  - jsprogrammer 11y ago
    Even better, if you add up every spendable unit of USD you'll find that the vast majority of it originates in a bank loan. All of that HFT and Wall St. speculation is using leveraged bank credits.
  - Touche 11y ago
    A fraction of the same type of transaction for Bitcoin.
jMyles 11y ago
To clarify: I meant that bitcoin didn't, and probably won't, for reasons attributable to the limitations of the implementation, supplant fiat currency and become a basis for deprecating the federal reserve, which I agree is a laudable goal. Bitcoin did, however, succeed in proving that a distributed consensus mechanism can exist as a store of value. As you point out.
- jsprogrammer 11y ago
  >I meant that bitcoin didn't, and probably won't, for reasons attributable to the limitations of the implementation, supplant fiat currency and become a basis for deprecating the federal reserve, which I agree is a laudable goal. That expectation is not described anywhere in the system's proposal[0]. I'm not sure that was ever a real expectation except among the biggest believers. [0] https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
  - jMyles 11y ago
    The very first words of the introduction: > Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. The bitcoin whitepaper unambiguously describes a system for deprecating "financial institutions." It doesn't mention the federal reserve only because it is not nation-specific. Furthermore, of course, the genesis block contains the following text: 'The Times 03/Jan/2009 Chancellor on brink of second bailout for banks'
    - jsprogrammer 11y ago
      It doesn't call for or notify of deprecation. It acknowledges that "the system works well enough for most transactions". Bitcoin is an attempt to replicate a similar system of "cash" in a completely decentralized (in that, anyone* can participate) manner. *With sufficient knowledge and technical resources.

mizzao 11y ago

If only we could harness the computational power wasted on Bitcoin mining as heat, for useful distributed computing.

deleted 11y ago
[deleted]
pera 11y ago
I don't understand this recurrent point: computer power is "wasted" almost everywhere. At least Bitcoin use this power to build a decentralized currency.
- scott_karana 11y ago
  > computer power is "wasted" almost everywhere. At least Bitcoin use this power to build a decentralized currency. Pinning a GPU or ASIC at 100% undeniably draws more power than an everyday user idling around Facebook on their Macbook Air (~21W MAXED, so likely 7W) Whether it's worth it is the question. A back-of-the-envelope calculation gives me $12Mn USD per day as the approximate global cost of electricity given the current global hashrate of 375Mn GH/s, for 0.05¢/kWh, assuming everyone is using reasonably modern, efficient (?) ASICs like a Spondoolies SP35 Yukon at 5.5TH/s for 3850W. If that's for a $300Mn USD daily market, that's not particularly efficient. Nor particularly inefficient either, admittedly. Democratic, for sure ;) EDIT: initially forgot to include some time units, thanks jsprogrammer!
  - jsprogrammer 11y ago
    >$12Mn USD per what? This number is pretty meaningless without knowing what timeframe that amount of costs are incurred.
    - scott_karana 11y ago
      Oops, good save. Thanks! It's per day. (I think. :P) Today's average hashrate is ~397Mn GH/s, and I used 375 instead, to be conservative/fair. https://blockchain.info/charts/hash-rate https://blockchain.info/charts/hash-rate
      - jsprogrammer 11y ago
        The spot price of BTC has been steadily rising. Someone must be getting more than $12,000,000 USD / day in value out of it.
  - pstrateman 11y ago
    > A back-of-the-envelope calculation gives me $12Mn USD per day 3600.00 BTC or $1m is paid as subsidy per day. Are you saying that people are spending 12x that on power? I dont think so.
    - scott_karana 11y ago
      Do your own calculation and see what you find, instead of think. This is HN after all. :) You have all the relevant numbers in my post after all: maybe I made a mistake? That certainly possible :P, since you seem to be right about the rewards paid per day. Or maybe people willingly factor in power costs as a price of speculating on a volatile, trending currency? Or maybe most power costs are actually carried in low-cost areas rather than North America and Europe, so my $0.05/kWh is an overestimate?
- wmf 11y ago
  It's wasted relative to other methods (e.g. proof of stake, Stellar) that many people believe can provide close enough to the same properties.
tromp 11y ago
The best you could hope for in an alternative proof-of-work scheme is a shift from dominating electricity costs and rapid hardware obsolescence to use of commodity hardware, dominated by memory latency instead of computation. That's what my Cuckoo Cycle PoW scheme aims for... https://github.com/tromp/cuckoo https://github.com/tromp/cuckoo On the other hand, some people argue that reducing waste is counterproductive as it also lowers the cost of a history rewriting attack. Ethereum's PoW, while requiring 1GB of memory for efficient mining, remains so compute intensive that it only runs well on GPUs. Its inefficiency on CPUs is a conscious design choice to deter botnets.
- optimiz3 11y ago
  How is Ethash compute intensive relative to Cuckoo Cycle? EDIT: Ethash does 1 SHA3 at the beginning, 1 SHA3 at the end, and 64 rounds of FNV1-32 x 32. Verification considers the intermediate digest, so really 1 SHA3 to verify. You do more SHA3 rounds if you don't store the dataset, but this is a memory trap-door (and would require ignoring the mixDigest); the verification cost is still negligible. In our mining pools, verification of hash values doesn't even account for 1% of of our overall CPU consumption (and this is with Scrypt). SHA3 is also far more lightweight than SHA2, and much more parallelizable. EDIT #2: If we want to talk about weaknesses in Ethash, I'm not sure it is FPGA resistant, given many FPGAs have DDR iterfaces on die and the access pattern of Ethash is read-only.
  - tromp 11y ago
    "Compute bound" refers to proof generation (mining), not to verification. It looks like ethash does the following computations per random memory access: p = fnv(i ^ s[0], mix[i % w]) % (n // mixhashes) * mixhashes newdata = [] for j in range(MIX_BYTES / HASH_BYTES): newdata.extend(dataset_lookup(p + j)) mix = map(fnv, mix, newdata) I admit this doesn't look much more involved than Cuckoo's single siphash-2-4, but perhaps we can measure it. How much faster does this run if you leave out the actual memory access. i.e. replace dataset_lookup(p + j) by (p+j)? In Cuckoo Cycle's case, avoiding the memory lookups reduces runtime by a factor 3.
drcode 11y ago
You will be happy to know then that ethereum 1.1 will no longer use computational power for security. When ethereum 1.1 is released, the total electricity requirement of the network will drop by orders of magnitude.

Touche 11y ago

Is 90% of the market still speculation? Call me when it's not.

maaku 11y ago
What does that even mean? If I were to add up every single transaction involving USD, what percentage do you think would be HFT and other Wall St speculation?
- jsprogrammer 11y ago
  Even better, if you add up every spendable unit of USD you'll find that the vast majority of it originates in a bank loan. All of that HFT and Wall St. speculation is using leveraged bank credits.
- Touche 11y ago
  A fraction of the same type of transaction for Bitcoin.

jMyles 11y ago

To clarify: I meant that bitcoin didn't, and probably won't, for reasons attributable to the limitations of the implementation, supplant fiat currency and become a basis for deprecating the federal reserve, which I agree is a laudable goal. Bitcoin did, however, succeed in proving that a distributed consensus mechanism can exist as a store of value. As you point out.

jsprogrammer 11y ago
>I meant that bitcoin didn't, and probably won't, for reasons attributable to the limitations of the implementation, supplant fiat currency and become a basis for deprecating the federal reserve, which I agree is a laudable goal. That expectation is not described anywhere in the system's proposal[0]. I'm not sure that was ever a real expectation except among the biggest believers. [0] https://bitcoin.org/bitcoin.pdf https://bitcoin.org/bitcoin.pdf
- jMyles 11y ago
  The very first words of the introduction: > Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. The bitcoin whitepaper unambiguously describes a system for deprecating "financial institutions." It doesn't mention the federal reserve only because it is not nation-specific. Furthermore, of course, the genesis block contains the following text: 'The Times 03/Jan/2009 Chancellor on brink of second bailout for banks'
  - jsprogrammer 11y ago
    It doesn't call for or notify of deprecation. It acknowledges that "the system works well enough for most transactions". Bitcoin is an attempt to replicate a similar system of "cash" in a completely decentralized (in that, anyone* can participate) manner. *With sufficient knowledge and technical resources.