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Resources are being utterly and completely wasted on mining bitcoins

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

#51

Post by iwwr »

caf wrote: post #46
iwwr wrote: post #32

Earlier quoted context omitted.

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.

It would only be extended with new transactions, not blocks. Computational resources will be devoted to verification rather than brute-forcing hashes (a much less computationally intensive matter).

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

#52

Post by weavejester »

wccrawford wrote: post #42
weavejester wrote: post #15

Earlier quoted context omitted.

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.

You'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.

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

#53

Post by caf »

iwwr wrote: post #51
caf wrote: post #46

Earlier quoted context omitted.

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

It would only be extended with new transactions, not blocks. Computational resources will be devoted to verification rather than brute-forcing hashes (a much less computationally intensive matter).

No, blocks are still created in exactly the same way, the only difference is that no new bitcoins are created as a side-effect. It is necessary for new transactions to be locked into the block chain with a bruteforced hash, as it's this expenditure of processing power that makes the transactions permanent and prevents double-spending.

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

#54

Post by alphadogg »

michael_dorfman wrote: post #35
joezydeco wrote: post #33

Earlier quoted context omitted.

There's a lot to say. I personally think the Bitcoin debate is interesting because it's making a lot of people question the concept of money - especially in the current state of the world economy. It's also a new and interesting intersection of technology, economy, and personal trust.

All those things are true. But I still am not seeing any points raised in the discussion here that haven't already been made in any of the countless other discussions that have already played out here on HN in the past few weeks. It's not that Bitcoin isn't new and interesting-- it is-- but that there is nothing new and interesting to say about it today that wasn't said (here) yesterday.

..and no one has just started reading HN in the last few weeks, huh?

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

#55

Post by palish »

michael_dorfman wrote: post #35
joezydeco wrote: post #33

Earlier quoted context omitted.

There's a lot to say. I personally think the Bitcoin debate is interesting because it's making a lot of people question the concept of money - especially in the current state of the world economy. It's also a new and interesting intersection of technology, economy, and personal trust.

All those things are true. But I still am not seeing any points raised in the discussion here that haven't already been made in any of the countless other discussions that have already played out here on HN in the past few weeks. It's not that Bitcoin isn't new and interesting-- it is-- but that there is nothing new and interesting to say about it today that wasn't said (here) yesterday.

I didn't see any Bitcoin discussion yesterday.

To be blunt, you're doing more harm than good by complaining about the discussion. For every person that cries "dupe", there are ten more who are grateful for that dupe. Dupes are a good thing.

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

#56

Post by pbreit »

masklinn wrote: post #34
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…

> Except for the guarantee of uniqueness. There are a few more actually: gold is one of the least putrescible materials out there (it's one of the least reactive elements available and as one of the royal metals very few acids can attack it), it has a distinctive look, and it has a very high density (most denser metals were only discovered in or after the 19th century, and are generally more valuable) which makes it…

The idea that gold has no real value is bizarre.

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

#57

Post by iwwr »

caf wrote: post #53
iwwr wrote: post #51

Earlier quoted context omitted.

It would only be extended with new transactions, not blocks. Computational resources will be devoted to verification rather than brute-forcing hashes (a much less computationally intensive matter).

No, blocks are still created in exactly the same way, the only difference is that no new bitcoins are created as a side-effect. It is necessary for new transactions to be locked into the block chain with a bruteforced hash, as it's this expenditure of processing power that makes the transactions permanent and prevents double-spending.

I just imagined that the bitcoin world post-mining (after or near the 21M BTC is reached) would just consist of the transactional interfaces and not need the specialized GPU miners.

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

#58

Post by scott_s »

pbreit wrote: post #56
masklinn wrote: post #34

Earlier quoted context omitted.

> Except for the guarantee of uniqueness. There are a few more actually: gold is one of the least putrescible materials out there (it's one of the least reactive elements available and as one of the royal metals very few acids can attack it), it has a distinctive look, and it has a very high density (most denser metals were only discovered in or after the 19th century, and are generally more valuable) which makes it…

The idea that gold has no real value is bizarre.

They pointed out on the Planet Money podcast that gold may be in a 4,000 year-old bubble.

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

#59

Post by DennisP »

I was worried about this so I worked out the math. It wasn't as bad as I expected.

Let's say it's 20 years from now, the total size of the bitcoin economy is $1 trillion, and there are 10 million bitcoins in existence. (We could find the number of bitcoins exactly, but 10 million makes the math easy and it's within a factor of 2 of the ultimate limit. There are about 6 million coins right now.)

$1 trillion / 10 million coins = $100K per coin, so we can expect people to spend almost that much money to generate a coin.

The rate of coin production is currently 50 per 10 minutes, dropping in half every four years, giving us 9 coins per hour in 2031.

That's 78K coins per year, at $100K per coin, or $7.8 billion in computer time and energy spent per year.

Let's say half of that is energy, call it $4 billion, including the energy to make the dedicated mining computers. At ten cents per kilowatt-hour, we're talking 40 billion kilowatt-hours per year. Divide by the number of hours in the year and we get 4.5 gigawatts.

In other words, a $1 trillion bitcoin economy can be run on the output of roughly five typical nuclear power plants (assuming it's 20 years from now).

If we get to $1 trillion in only 12 years, energy usage will be four times higher, since coins will be worth about the same but four times as many will be generated per hour.

If people use custom ASICs to generate coins, they'll be costly but more energy-efficient, weighting expenditures more heavily on hardware than energy.

People can grant transaction fees to miners to make their transaction go through faster. If transaction fees become prevalent, resource usage will be higher, since there will be additional reward for completing blocks. But $7.8 billion is already almost one percent of the bitcoin economy. If the average bitcoin changes hands once per year with a one percent fee, or ten times per year with a 0.1 percent fee, we add $10 billion to mining rewards and approximately double our resource usage.

Edit: $1 trillion is about equal to the amount of U.S. currency in circulation: http://en.wikipedia.org/wiki/Money_supply

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