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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

#141

Post by sethg »

reedlaw wrote: post #128
vladd wrote: post #123

Earlier quoted context omitted.

In economic terms what you're describing is called deflation. During deflation prices keep falling, which causes consumers to post-pone their purchases (tomorrow they'll be able to get that TV at a lower price so there's no point in buying it today) and investors sit on the money since they'll be more valuable tomorrow. This is the exact opposite of inflation, which causes people to convert 'today' money into goods s…

If deflation is so dangerous I wonder why anyone buys consumer electronics which, despite currency inflation, continue to decline in price due to advances in technology. If we experienced the full effect of deflation, today's iPad would cost a much tinier percentage of yesterday's Apple II. Would that have stopped people from buying either? I doubt it.

If we experienced the full effect of deflation, then average wages would be falling, as well as the average prices for everything (not just for consumer electronics, which make up a very small percentage of the average person’s expenditures). This would be particularly bad news for any person or business that carried, or expected to carry, debt. You wouldn’t want to take out a mortgage on a house (or have your company borrow money to build a factory) if you expected that the nominal resale value of the house would go down and your nominal income would go down while your nominal monthly payments would stay fixed.

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

#142

Post by caf »

DavidSJ wrote: post #119
bdhe wrote: post #96

Earlier quoted context omitted.

Bitcoin is not quantum-hard. When quantum computing reaches a certain threshold, bitcoin will lose its uniqueness and collapse. Could you elaborate which aspect of bitcoin has efficient quantum algorithms? The proof-of-work system requires you to invert hashes and quantum algorithms only give you a quadratic speed up (brute force takes time O(\sqrt{size of range}) rather than O(size of range)). Right now there is no…

Could you elaborate which aspect of bitcoin has efficient quantum algorithms? BitCoin uses public key cryptography for its digital signatures. That in turn relies on the difficulty of factoring large numbers, for which there are efficient quantum algorithms.

Bitcoin actually uses ECDSA for its digital signatures, which relies on the difficulty of calculating discrete logarithms rather than factoring. However I believe that there are efficient quantum algorithms for that, too.

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

#143

Post by sethg »

jncraton wrote: post #85
cynicalkane wrote: post #83

Earlier quoted context omitted.

Scarcity of money is not the most desirable end, because the supply and demand for money threatens to change the value of money . Even if all the money in the world were fixed, you would see inflation and deflation, more inflation than you've ever seen on a properly managed fiat money system. This is not mere economic theory, it's a matter of history.

> more inflation than you've ever seen on a properly managed fiat money system While this may be true, a scarce money system does produce better result than poorly managed fiat money systems. You won't see the kind of hyperinflation that we saw in Zimbabwe with the gold standard.

A poorly managed money system is one symptom of a government that is poorly managed, period, and living under a poorly managed government is always going to suck. If armed thugs loyal to the ruling party come to kick you off your land, steal your valuables, and discourage you from voting for the opposition, you’re not going to be able to pay them off with Bitcoin. (ETA: ...or if you can, the ability to do so is not going to make that country a pleasant place to live.)

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

#144

Post by cheez »

weavejester wrote: post #112
cheez wrote: post #43

Earlier quoted context omitted.

My solution is to expire the BTC to force circulation.

I'm not sure how you expect that to work. How would expiring bitcoins increase circulation?

"You will have 10 BTC expire next month"

So you spend it.

Also, once the BTC expire, they don't disappear. They are made available for mining. This is possible because the block chain has full history.

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

#145

Post by cheez »

yrral wrote: post #84
cheez wrote: post #43

Earlier quoted context omitted.

My solution is to expire the BTC to force circulation.

If what you're suggesting is that coins can only sit in one address for a limited amount of time, then that would not do anything because people would just create new addresses to send the coins to.

Yes, I thought that would be one thing. Fine with me.

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

#146

Post by cheez »

nazgulnarsil wrote: post #99
kragen wrote: post #92

Earlier quoted context omitted.

The standard Silvio Gesell expiring-money scheme doesn't have anything to do with where the money is at any given time. The way it works is that for the government to accept a note, it must be up-to-date with stamps, one stamp for every month since it was issued. The stamps (traditionally, bought from the government) cost 10% of the value of the note. Nobody wants to be sitting on a pile of this sort of cash at the e…

this is one of the worst ideas I've ever heard. the amount of wealth that would be destroyed is beyond all measure.

As the other poster said, money != wealth. Wealth is things that make life better. Money is a medium of exchange.

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

#147

Post by cheez »

nazgulnarsil wrote: post #114
kragen wrote: post #103

Earlier quoted context omitted.

Wealth consists of things like cured diseases, tasty and nourishing meals, being dry when it rains, and seeing the people you love as often as you want; and the resources and skills we use to create those other kinds of wealth, such as antibiotics, bread mold, spices, beans, houses, corrugated steel, iron ore, blast furnaces, airplanes, kerosene, and CAD software. Gesell's scheme does not destroy any of those things;…

it was reported to be beneficial by its proponents. what a surprise. call me back when you have a control group.

You can hardly expect anyone but a proponent to advocate for an idea...

Also, asking for a control group in an artsy fartsy field like economics is too much. Where is the control group that guides the decisions of the central banks? There is none! OMG GREAT DEPRESSION!

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

#148

Post by kragen »

JoeAltmaier wrote: post #137
kragen wrote: post #95

Earlier quoted context omitted.

Based on my minimal understanding, you need about 0.99% to defect (and collude!) to win all the coins, not just one miner.

The defector(s) are using 2 orders of magnitude more CPU time to solve problems. So they win almost all of the time (all of the coins).

There are two mechanisms by which defectors could win coins.

First, they could simply mine more coins. For them to win almost all the (new) coins this way, they have to do almost all the mining. Say, 80% of it, although it's really a matter of what you mean by "almost all".

Second, they could collude and subvert transaction audit trails so that the Bitcoin system transfers ownership of all existing coins to them. For them to win all the (new and old) coins this way, they only have to do more than 50% of the mining.

So, if collusion is feasible, the second approach is easier; so let's forget about the first one for the moment.

The point at which the defectors, each using 2 orders of magnitude more CPU time, are doing more than 50% of the mining, is when they control more than about 0.9901% of the network's total raw computing power, because at that point, the cooperators control only 99.0099% of the network's total raw computing power, and the cooperators are using only 0.990099% of the network's total raw computing power to prevent counterfeiting.

If a single defector controls only, say, 0.5% of the network's computing power, they will get only about a third of the new bitcoins mined, and will not be able to subvert the network.

Only needing to have 0.99% of the network collude in defection to break the system is a pretty bad problem, but it's not nearly as bad as any single person being able to break the system.

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

#149

Post by prodigal_erik »

kragen wrote: post #103
nazgulnarsil wrote: post #99

Earlier quoted context omitted.

this is one of the worst ideas I've ever heard. the amount of wealth that would be destroyed is beyond all measure.

Wealth consists of things like cured diseases, tasty and nourishing meals, being dry when it rains, and seeing the people you love as often as you want; and the resources and skills we use to create those other kinds of wealth, such as antibiotics, bread mold, spices, beans, houses, corrugated steel, iron ore, blast furnaces, airplanes, kerosene, and CAD software. Gesell's scheme does not destroy any of those things;…

I don't understand the rationale for penalizing saving. The car I couldn't afford on this month's paychecks alone is wealth. Food and shelter after I'm too old to work will be wealth.

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

#150

Post by weavejester »

pash wrote: post #139
weavejester wrote: post #138

Earlier quoted context omitted.

Your solution is bootstrapping in the very literal and very impossible sense. You can't use bitcoins as votes to verify transactions, because until you verify the transaction chain, you don't know how many bitcoins anyone has.

The question was how to allow clients to form a new consensus. I did not suggest using Bitcoins to verify transactions; rather, I suggested using verified transactions to verify the will of the Bitcoin community.

Forming a consensus isn't the problem; the problem is enforcing honest application of the new rules. Assuming the majority of people in the network are honest, you need some way of determining what that majority decides, within the network itself.
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