I hope this is not the case. Bitcoin demands a massive energy investment (every watt used by the attacker must at least be matched by a watt used by the honest parties), and in the future we are going to need to be more careful about power utilization.
To emphasize the point, this isn't just true to the extent that energy is scarce:
"the Earth has only one mechanism for releasing heat to space, and that’s via (infrared) radiation. We understand the phenomenon perfectly well, and can predict the surface temperature of the planet as a function of how much energy the human race produces. The upshot is that at a 2.3% growth rate (conveniently chosen to represent a 10× increase every century), we would reach boiling temperature in about 400 years. And this statement is independent of technology. Even if we don’t have a name for the energy source yet, as long as it obeys thermodynamics, we cook ourselves with perpetual energy increase."
It's too early for anyone to say whether this concern is a real problem, but here are a few points that you should analyze further:
1) ASICs. In the early days of Bitcoin, one of the biggest concerns was: "Now that computational power is worth real money, aren't malicious hackers going to become rich and powerful by harnessing botnets? And more normal people's computers will join botnets as hackers are directly incentivized, by bitcoin mining, to exploit users more often."
With the rise of the Bitcoin-specific ASIC, that suddenly became a total non-issue. It's completely worthless for a normal desktop PC to mine for bitcoins now: their total computational power, as measured in SHA256 hashes per second, is a tiny drop in the ocean compared to the high-end ASICs that are mining today.
Problem solved.
Though governments will try to get involved, and no one can definitively predict the winner in advance -- I believe it's most likely that private industry, incentivized by Bitcoin's mining rewards, will create the most advanced specialized chips for Bitcoin. They're already pushing much lower nanometer processes than general purpose CPUs!
2) Energy expense of current monetary system. People, computers, ATMs, POS's, paper, time expenditure, inflation/hyperinflation, uncertainty, economic/debt crises, counterfeiting, unemployment - all problems that could be reduced or eliminated by Bitcoin.
3) Future technology. Before cars were invented, one of the biggest concerns was: "How are we going to get rid of the horse manure that's piling up in the world's densest cities?"
Infrared radiation isn't the only way to release heat to space. And even if it were, no one could say that it's not possible for humans+technology to amplify/improve this process.
1) ASICs generate a lot of heat, so that problem is not solved.
2) People, computers, POS, time expenditure, currency fluctuation, uncertainty, economic crisis, and unemployment are problems which are either not addressable by Bitcoin or not meaningfully impacted by it. Bitcoin isn't some magical economic cure-all. It's just a means of exchange.
3) This is a straw man. Horse manure disposal was not a primary concern before cars were invented. The primary concern was how to transport goods before they spoiled. Improved cargo transportation technologies and refrigeration technologies changed the economic landscape, not cars.
4) Infrared radiation is the primary way in which heat is released in to space. The sum of all other means of heat loss from the Earth is currently a rounding error compared to heat loss by radiation. It would take an absolutely massive investment in technology to change that.
2. Parent was simply comparing the infrastructure supporting the bitcoin netwrok with the infrastructure supporting credit card processing. The question isn't "is Bitcoin wasteful?", the question is "Is Bitcoin more or less wasteful than the current payment infrastructure?"
3 is historically inaccurate; in the timeframe when horses were widely used, a fairly large amount of effort was expended in removing manure (& human waste, for that matter) in major cities like New York and London.
ASICs are not the solution to the Bitcoin energy problem. If you can devote 1kW to CPU mining, you have every reason to devote 1kW to ASIC mining. Future technology is irrelevant -- every reduction in the power required per hash will result in an equivalent increase in the hash rate.
Note that the current monetary system has a very different incentive structure. If VISA needs to devote 1GW of power to process all its transactions today, and tomorrow a new technology comes along that allows VISA to process the same number of transactions with 100MW, VISA has every reason to reduce its power consumption to 100MW. For mainstream payment systems, power use always reduces profits -- so the incentive is always to use the minimum power necessary for processing transactions and detecting fraud.
1) Two words: Landauer Limit. No matter what your incentives or process improvements are, efficiency for non-reversible computation (and we are talking about crypto here) has fundamental limits.
2) The first bit is a potentially fair point -- I don't know what the energy costs and waste heat contributions of a transaction is under the current system.
The second bit? "inflation/hyperinflation, uncertainty, economic/debt crises, counterfeiting, unemployment - all problems that could be reduced or eliminated by Bitcoin" Mostly sounds somewhere between naive and unhinged, but show the work if you can.
3) I guess the horse manure analogy implies we're going to come up with different technology that doesn't produce waste heat? Are we talking about a revolutionary breakthrough in thermodynamics, or just a shift to more renewables (say, from automobiles to horses)?
The talk about whether infrared radiation is the only way to release heat to space is related, and addressed in the article I linked:
"E: Could not technology pipe or beam the heat elsewhere, rather than relying on thermal radiation?
P: Well, we could (and do, somewhat) beam non-thermal radiation into space, like light, lasers, radio waves, etc. But the problem is that these “sources” are forms of high-grade, low-entropy energy. Instead, we’re talking about getting rid of the waste heat from all the processes by which we use energy. This energy is thermal in nature. We might be able to scoop up some of this to do useful “work,” but at very low thermodynamic efficiency. If you want to use high-grade energy in the first place, having high-entropy waste heat is pretty inescapable."
In other words, it seems to me you're talking about either a fundamental breakthrough in thermodynamics again.
As I see it, there is only one solution - the Malthusian solution. Have less children.
Population rates in developed countries are plummeting. And just in time too. If only we could make the developing countries do the same thing -- but instead of condoms, careers and consumerism, they have poverty and religion which prohibits condoms.
We should be figuring out ways to handle economic problems such as those Ukraine and Japan will face: an aging, graying population for a few decades followed by less people and more robots doing work. We tax the robots and distribute Basic Income to everybody. Instead, we are worried about sustaining an exponentially growing economy, and how will the kids pay for the parents. On a global scale this is the most dangerous thing on the planet! Pollution and heat!
Other cryptocurrencies use "proof of stake" instead of "proof of work". Notably, Peercoin. This doesn't use energy.
It's quite possible at some point that one of those will supersede Bitcoin, and/or Bitcoin will alter to proof of stake (perhaps when nearly all coins are mined).
Proof of stake requires that you are holding coins, making miners personally invested. If a fork occurs, consensus is driven by the fact that stakeholders would lose value if they allow the fork to continue, so they will form consensus quickly.
When you chose a side of a fork, you risk having chosen the wrong one. So it seems rational not to chose. Let the other miners take the risk. After all, they won't let the currency collapse right?
It seems that the Nash equilibrium for this game will then be that none of the miners take the risk, consensus is lost, and the currency does collapse. Perhaps I'm missing something though.
When you choose the side that everyone else ends up choosing as well, you end up profiting from the block reward and also collecting the transaction fees. If you mined the side that ended up being shorter, then your block rewards are part of a transaction that the network considers to be invalid, as in, it never occurred. So there is incentive to try to figure out which side of a fork is the most beneficial and also which side is going to be preferred by other miners based on their affiliations with the addresses in the transactions for either side of the fork.
Also consider what has been risked - electrical energy, a small amount of bandwidth, and the ever-present risk of hardware failure. The return is in units of a deflationary currency. In practice the number of wasted blocks is quite low since the network ends up being in consensus most of the time. In the past it has been quite profitable to mine using GPUs and FPGAs.
That's really not true. There's boundless, practically unlimited energy all around us, and we're increasingly able to capture and utilize it. We should plan for more novel methods of utilization, not less.
Ripple's consensus algorithm is a much more energy efficient process that achieves the same result, i.e. getting the network to reach consensus about a distributed database.
Have they solved the "you need the whole blockchain" bit? Like do blockchain-based apps still require you to download the whole she-bang to participate? I know for bitcoin the blockchain is like 14GB or so, and that's for (only most of the) financial transactions for a small (on a global scale) community. If you want to do something with a bigger target audience or more complex data needs, are you going to wind up needing a separate hard drive to participate after a year or two?
>"Have they solved the 'you need the whole blockchain' bit?"
Yes.
Ripple servers only need the current state of the ledger (as opposed to requiring the entire history of transactions, as Bitcoin does). This eliminates the problem of needing to download GBs of history to run a server. You can optionally download the full ledger history if you want access to the data, but it is not required for your server to participate in transaction processing. It's a much lighter weight design in general.
Ripple allows you to move USD, BTC, or any currency using distributed ledger system. You dont need to use "the coins" created by Ripple.
As a separate point -- by your logic, bitcoin is a complete scam created by Satoshi Nakamoto who created a currency then gave himself $400mm worth of it. [1]
And Google is a complete scam created by Larry and Sergei, who created equity and gave themselves all of it.
I don't know anything about ripple, but that's true of everything ever made. He'll, I've made my own currency and have all the coins. Trading them for real stuff is kind of hard, though.
A lot of transactions can be pruned out of the Bitcoin blockchain (this isn't actually done today, but it is possible), so other blockchain-based systems would be wise to design their data formats to allow efficient pruning.
She's saying some subtle things about what a "system" is. BitCoin and BitTorrent have almost nothing in common as protocols go.
At a high level, BitTorrent's DHT uses some notion of consensus to communicate between peers about who is on the network and where they and their files are. There is never system-wide coherence of the DHT, but the algorithm (Kademlia) doesn't require anything like that. BitCoin's notion of consensus requires that coherence in all but the last ~10 minutes worth of the blockchain.
Zooming out even farther, BitCoin requires the entire network for anything to happen at all. BitTorrent leverages the entire network to speed up interactions between two individual nodes.
If you're still not convinced, consider what happens if 40% of the network is cut off from the rest for a large period of time. After the extended network partition ends, and the two big swarms rejoin, what do users find is different?
Bitcoin as is, is more like a cloud service - you need the whole chain to be updated everywhere. You can do that P2P but you need full consistency. That's not a great property if you only have weak connections between nodes.
I think bitcoin is probably the closest thing we truly have to a "cloud".
P2P requires seeds and peers. The structure of the Bitcoin network means that as long as there are miners, any information stored on the blockchain will continue to exist. This, in my opinion, makes it much more similar to the idea of a "cloud" than either bittorrent, or a corporate-controlled data server that hosts your information.
I also don't really understand WHY you need all that massive expenditure of energy for a distributed timestamp server to work.
All you need is a network of computers that agree to run timestamp services, and then sign any info with enough timestamps from enough computers. That will give an uppsr bound on the time something was signed. The lower bound is trivial to provide by the transaction originator - simply sign something using enough timestamp services values as a salt.
A timestamp service simply outputs a random number for each previous minute and is available to sign things using the next number.
In order to defeat this scheme, an attacker needs to execute a Sybil attack against all the timestamp servers. The only time you really NEED to make something really expensive is to be let in as a timestamp server. This can be done on a reputation system, essentially proof of stake for new miners only. But not for each transaction!
