Resources are being utterly and completely wasted on mining bitcoins • Hacker News Board

Re: Resources are being utterly and completely wasted on mining bitcoins

#41

Post by dualogy » Tue, May 31, 2011, 1:26 PM UTC

iqster wrote: post #25

The way I understand bitcoins might be flawed but would certainly appreciate clarification ... My problem with bit coins is that early people who start mining have a greater advantage than later ones. While that's not the classic definition of a Ponzi scheme (in the classic definition, payouts at each round are funded by new participants), it is a feature bitcoin shares with them. If someone started mining bitcoin wh…

"these people are getting a significant proportion of value for simply being early adopters"

I'm not one of them but have no gripes with that. What you describe is also commonly known as the entrepreneurial taking-unknown-risks for an unknown-future-reward.

It's the same with government currencies -- the government/banking complex gets newly created money first, and gets to spend it when the new money supply still has the purchasing power of the old money supply, ie. before inflation. This is their bonus for successfully defending their monopoly on money creation. Not that I'm in favour of such a privilegue. Which is the appeal to a growing number of users: yes, early adopters may be rewarded in proportion to how early they adopted, BUT no-one can unilaterally create new Bitcoins at the push of a button or by signing some law and even the early adopters could not initially create more bitcoins or faster than prescribed by the open source peer to peer protocol.

Re: Resources are being utterly and completely wasted on mining bitcoins

#42

Post by wccrawford » Tue, May 31, 2011, 1:27 PM UTC

weavejester wrote: post #15

wccrawford wrote: post #2

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.

That'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.

I 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.

Re: Resources are being utterly and completely wasted on mining bitcoins

#43

Post by cheez » Tue, May 31, 2011, 1:28 PM UTC

iqster wrote: post #25

The way I understand bitcoins might be flawed but would certainly appreciate clarification ... My problem with bit coins is that early people who start mining have a greater advantage than later ones. While that's not the classic definition of a Ponzi scheme (in the classic definition, payouts at each round are funded by new participants), it is a feature bitcoin shares with them. If someone started mining bitcoin wh…

My solution is to expire the BTC to force circulation.

Re: Resources are being utterly and completely wasted on mining bitcoins

#44

Post by BarkMore » Tue, May 31, 2011, 1:35 PM UTC

iqster wrote: post #25

The way I understand bitcoins might be flawed but would certainly appreciate clarification ... My problem with bit coins is that early people who start mining have a greater advantage than later ones. While that's not the classic definition of a Ponzi scheme (in the classic definition, payouts at each round are funded by new participants), it is a feature bitcoin shares with them. If someone started mining bitcoin wh…

The situation is not much better with inflating fiat currencies. Those who are closer to the money spigot have an advantage over those who are further way.

Re: Resources are being utterly and completely wasted on mining bitcoins

#45

Post by joezydeco » Tue, May 31, 2011, 1:38 PM UTC

iwwr wrote: post #38

joezydeco wrote: post #26

Earlier quoted context omitted.

How 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.

Printing 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).

Unless 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.

Re: Resources are being utterly and completely wasted on mining bitcoins

#46

Post by caf » Tue, May 31, 2011, 1:44 PM UTC

iwwr wrote: post #32

iqster wrote: post #25

The way I understand bitcoins might be flawed but would certainly appreciate clarification ... My problem with bit coins is that early people who start mining have a greater advantage than later ones. While that's not the classic definition of a Ponzi scheme (in the classic definition, payouts at each round are funded by new participants), it is a feature bitcoin shares with them. If someone started mining bitcoin wh…

Alternatively, maintaining a hard limit on the number of BTC saves resources, compared to a system that allowed for a fixed growth. Once the 'mining' stage ends, no new computational resources are invested. The system accumulates a kind of computational capital (a mathematical problem difficult enough to be intractable) which needs no further upkeep, other than a network presence to provide verification.

Even after the mining phase ends, the hash chain continues to be extended, requiring the same computational resources.

Re: Resources are being utterly and completely wasted on mining bitcoins

#47

Post by caf » Tue, May 31, 2011, 1:49 PM UTC

joezydeco wrote: post #45

iwwr wrote: post #38

Earlier quoted context omitted.

Printing 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).

Unless 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.

...and in most other places, even the notes aren't paper/cotton anymore.

Re: Resources are being utterly and completely wasted on mining bitcoins

#48

Post by m__ » Tue, May 31, 2011, 1:53 PM UTC

vladd wrote: post #6

Any system of checks and balances will have its price. Look at what we do with gold: we dig it from a hole in Africa, we transport it in other countries, we dug holes or build vaults and throw it there. Like Warren Buffett said, it has no utility, if Martians were to look at the process they would scratch their heads. Except for the guarantee of uniqueness. Which is one of the most powerful invariants against corrupt…

Exactly. It is a feature of money if it is costly to produce.

The alternative is inflation (and economic instability) as soon as people start generating income by producing money for basically nothing.

Re: Resources are being utterly and completely wasted on mining bitcoins

#49

Post by api » Tue, May 31, 2011, 1:53 PM UTC

vladd wrote: post #6

Any system of checks and balances will have its price. Look at what we do with gold: we dig it from a hole in Africa, we transport it in other countries, we dug holes or build vaults and throw it there. Like Warren Buffett said, it has no utility, if Martians were to look at the process they would scratch their heads. Except for the guarantee of uniqueness. Which is one of the most powerful invariants against corrupt…

Bitcoin is not quantum-hard. When quantum computing reaches a certain threshold, bitcoin will lose its uniqueness and collapse.

There are post-quantum algorithms that are computable on ordinary computers, but they're still under research and they'd make Bitcoin's data set considerably larger.

Re: Resources are being utterly and completely wasted on mining bitcoins

#50

Post by [deleted] » Tue, May 31, 2011, 1:55 PM UTC

cheez wrote: post #43

iqster wrote: post #25

The way I understand bitcoins might be flawed but would certainly appreciate clarification ... My problem with bit coins is that early people who start mining have a greater advantage than later ones. While that's not the classic definition of a Ponzi scheme (in the classic definition, payouts at each round are funded by new participants), it is a feature bitcoin shares with them. If someone started mining bitcoin wh…

My solution is to expire the BTC to force circulation.

[deleted]