The work is useful. It randomly selects a participant out of potentially billions or more to commit the next block, but only the next block, and no others to the blockchain. This ensures the chain remains fair because any potentially malicious actor cannot sustain an attack involving malicious blocks for long - it costs them too much electricity.
There is no known alternative system which is capable of randomly selecting a participant out of the entire pool of participants. Every other "solution" works by limiting the participation, because it is impossible for a network wide agreement at this scale to be done (would require every node communicating with every other node in the network and having a unanimous agreement on who has the legitimate authority to commit the next block).
Any system which doesn't require work to be done to prove that the correct participant was selected is vulnerable to Sybil attacks, where people control more network nodes in attempt to gain more leverage over others. The idea of staking some money doesn't fix this either, because proof-of-stake has the "nothing at stake" problem where stakers aren't actually spending money because they're guaranteed to get it back for being honest. Running many nodes is also fairly cheap and has the "not much at stake" problem. Only proof-of-work has the "much at stake" problem because the irreversible spending of money on electricity happens prior to any reward which may be received, like a lottery.
You might consider Bitcoin as a whole to be a bad idea. However, with recent "printing" in the tune of trillions of dollars, and with Bitcoin providing an inviolable fix for inflation, I think it might just be worth the effort - at least for anybody sensible who wants to save money for the future.
In terms of Monero, which doesn't fix inflation, it is useful for evading unwarranted financial surveillance. I suspect this will be fine for some time to come, but there will be eventually be enough privacy features on Bitcoin to make it unnecessary. For now: save in Bitcoin, spend in Monero.
The work is useful only in the context of it being useful to preserve and propagate the distributed, trustless consensus. If you don't give a crap about distributed consensus, it's not useful.
> However, with recent "printing" in the tune of trillions of dollars, and with Bitcoin providing an inviolable fix for inflation
The "printing" of money is a useful feature of national currencies, which can temporarily support an economy in peril, or be used to keep currency values approximately stable. I wouldn't want to be in a country where currency was like Bitcoin, it is deliberately less useful.
By the way, your cryptocurrency ecosystem also appears to have a money printer, in the form of Tether, which is run purely for the benefit of its owners. But sure, that's far better!
> I think it might just be worth the effort - at least for anybody sensible who wants to save money for the future.
If you have enough money that a small amount of inflation is going to affect you, you don't keep it in cash, you invest. That's not what money is for.
The work is useful only in the context of it being useful to preserve and propagate the distributed, trustless consensus. If you don't give a crap about distributed consensus, it's not useful.
So you don't care about Bitcoin, but you want to leech of the electricity being used to secure it in order to perform something which you think is useful? Right.
The "printing" of money is a useful feature of national currencies
Theft is never a useful feature. There is always a loser. Money printing is theft - it is stealing wealth from those who have money saved, those who earn low wages, and those who own property. The beneficiaries of the printed money are those who first receive it - the government, the banks, the corporations who take loans from those banks. It increases wealth inequality. All of this is achieved without democratic consent - taxation without representation. Truly evil.
which can temporarily support an economy in peril
The economy is in peril because nobody has credit, only debt. Bitcoin is credit. If you are sensible and accumulate credit, you don't need to bailed out when the unexpected inevitably occurs. The ability of your government/central bank to print money is what created their failure to begin with. If they had credit, they wouldn't need to print. The printing begets more printing. It can only go one way, which is for the printing to keep accelerating until it can no longer be sustained and hyperinflation makes the currency worthless.
They could attempt to reverse the process by reducing the currency supply during prosperous times, but you won't see it, because the people involved have self-interest and super high time preferences and are not able to think in the long term. Printing money is truly kicking the can down the road - an experiment which will end in disaster.
or be used to keep currency values approximately stable
There is absolutely nothing "stable" about the dollar. Bitcoin is absolutely stable because 1BTC=1BTC, regardless of time and place. Its value relative to other commodities has more or less consistently increased over its 11 year lifetime. The value of the dollar is always changing. In its short 49 year lifetime, it has consistently lost value relative to other commodities. The value of other commodities changes in response to devaluation of the dollar. The trick you've fell for is to believe that they're adjusting the quantity of dollars to account for changes in other commodities - the reversal of cause and effect.
By the way, your cryptocurrency ecosystem also appears to have a money printer, in the form of Tether, which is run purely for the benefit of its owners. But sure, that's far better!
Who is "your"? Cryptocurrency means nothing to me - I've called out these scams as much as anyone. Only Bitcoin matters. Tether has nothing to do with Bitcoin. It has something to do with companies which trade with Bitcoin and no more. Bitcoin is much bigger than any of these transient schemes which attempt to attach themselves to its brand. Bitcoin will survive all of these attempts to weaken it and these schemes will all be forgotten about.
If you have enough money that a small amount of inflation is going to affect you, you don't keep it in cash, you invest.
Inflation affects everyone, whether it is a small or large amount. You still lose a proportional amount of purchasing power. You might argue that people with smaller amounts of money are harder hit that those with lots of money, because they don't have as large safety net if unexpected circumstances arise. Additionally, low earners do not see their wages increase in tandem with the inflation - it usually lags, reducing their purchasing power over time.
Also, "investing" is increased risk taking, where saving is intended to be a low risk method of retaining purchasing power over time. Low earners often cannot afford to take these risks, especially when their limited options for investing are markets full of fraudsters, and whose potential returns are still highly dependent on the monetary policy of the central bank.
Keeping earnings in cash is not an option for dollars, but it is for Bitcoin. This is the game changer. People are now able to make long term savings without making risky investments. They can ensure that they have a safety net for unexpected circumstances, and then better plan for the future.
That's not what money is for.
The value of all commodities is subjective. Money is merely one kind of commodity. Its use is whatever the owner wishes it to be used for. Saving (accumulating capital) is a perfectly good use case for sound money.
So you don't care about Bitcoin, but you want to leech of the electricity being used to secure it in order to perform something which you think is useful? Right.
No, I want the world's energy and carbon footprint to reduce, rather than have people with a decentralisation fetish invent new ways to incentivise thrashing.
Theft is never a useful feature. There is always a loser. Money printing is theft
Yeah never mind, you're clearly very deep down this particular rabbit hole and nothing anyone says is going to change that. Best of luck, but I'm glad your views aren't all that prevalent.
Tether has nothing to do with Bitcoin
Tether has everything to do with the bitcoin markets and the price of bitcoin, which is the only thing basically anyone is interested in.
No, I want the world's energy and carbon footprint to reduce, rather than have people with a decentralisation fetish invent new ways to incentivise thrashing.
Then any way to dismantle the existing consume-everything-to-make-a-profit economy, which is caused by archaic and inefficient monetary systems, should be good, right?
How much energy is wasted / burned because of our existing monetary policies?
cryptocurrency PoW is bajillions times more efficient than, i dunno, exerting currency dominance by shows of military power or shipping goods all over the world because its "cheaper" to make things here and sell things there.
any way? No, and particulary one that, for instance, encourages competitive.burning of power for profit and uses the power demands of a small country to service the transactional needs of a town.
How much energy is wasted / burned because of our existing monetary policies?
Probably quite a lot. But then they do so much more than cryptocurrency can, so the comparison is nonsense.
"bajillions" being code for "I have no idea at all" renders your argument at the end there pretty moot.
Tether has everything to do with the bitcoin markets and the price of bitcoin, which is the only thing basically anyone is interested in.
Tether has become the proverbial suitcase of IOUs. The GP is outraged about the government stealing money through inflation, when the Tether printing press has been merrily siphoning actual USD out of the markets, a half billion at a time.
It would still be a massive drain in a world that's trying to cut down its energy footprint. There really isn't such thing as "spare" power when the world burns as much coal and gas as it does right now.
Adding a currency that relies on the competitive waste of power to the mix is a hideous idea.
But doesn't Bitcoin have the 'problem' of not being legal tender? i.e. why would people choose to buy Bitcoin, giving loads of money to existing Bitcoin owners, when it's not so hard to create a brand-new cryptocurrency?
Ok it's wrong to say "nothing". But I don't really see consensus nor reliability in crypto currencies. Specially the consensus seems to be missing, if you look this phenomena far enough.
Comments
Proof of work is anyway bad idea (work for nothing), unless the work is something useful.
The work is useful. It randomly selects a participant out of potentially billions or more to commit the next block, but only the next block, and no others to the blockchain. This ensures the chain remains fair because any potentially malicious actor cannot sustain an attack involving malicious blocks for long - it costs them too much electricity.
There is no known alternative system which is capable of randomly selecting a participant out of the entire pool of participants. Every other "solution" works by limiting the participation, because it is impossible for a network wide agreement at this scale to be done (would require every node communicating with every other node in the network and having a unanimous agreement on who has the legitimate authority to commit the next block).
Any system which doesn't require work to be done to prove that the correct participant was selected is vulnerable to Sybil attacks, where people control more network nodes in attempt to gain more leverage over others. The idea of staking some money doesn't fix this either, because proof-of-stake has the "nothing at stake" problem where stakers aren't actually spending money because they're guaranteed to get it back for being honest. Running many nodes is also fairly cheap and has the "not much at stake" problem. Only proof-of-work has the "much at stake" problem because the irreversible spending of money on electricity happens prior to any reward which may be received, like a lottery.
You might consider Bitcoin as a whole to be a bad idea. However, with recent "printing" in the tune of trillions of dollars, and with Bitcoin providing an inviolable fix for inflation, I think it might just be worth the effort - at least for anybody sensible who wants to save money for the future.
In terms of Monero, which doesn't fix inflation, it is useful for evading unwarranted financial surveillance. I suspect this will be fine for some time to come, but there will be eventually be enough privacy features on Bitcoin to make it unnecessary. For now: save in Bitcoin, spend in Monero.
The work is useful only in the context of it being useful to preserve and propagate the distributed, trustless consensus. If you don't give a crap about distributed consensus, it's not useful.
The "printing" of money is a useful feature of national currencies, which can temporarily support an economy in peril, or be used to keep currency values approximately stable. I wouldn't want to be in a country where currency was like Bitcoin, it is deliberately less useful.
By the way, your cryptocurrency ecosystem also appears to have a money printer, in the form of Tether, which is run purely for the benefit of its owners. But sure, that's far better!
If you have enough money that a small amount of inflation is going to affect you, you don't keep it in cash, you invest. That's not what money is for.
So you don't care about Bitcoin, but you want to leech of the electricity being used to secure it in order to perform something which you think is useful? Right.
Theft is never a useful feature. There is always a loser. Money printing is theft - it is stealing wealth from those who have money saved, those who earn low wages, and those who own property. The beneficiaries of the printed money are those who first receive it - the government, the banks, the corporations who take loans from those banks. It increases wealth inequality. All of this is achieved without democratic consent - taxation without representation. Truly evil.
The economy is in peril because nobody has credit, only debt. Bitcoin is credit. If you are sensible and accumulate credit, you don't need to bailed out when the unexpected inevitably occurs. The ability of your government/central bank to print money is what created their failure to begin with. If they had credit, they wouldn't need to print. The printing begets more printing. It can only go one way, which is for the printing to keep accelerating until it can no longer be sustained and hyperinflation makes the currency worthless.
They could attempt to reverse the process by reducing the currency supply during prosperous times, but you won't see it, because the people involved have self-interest and super high time preferences and are not able to think in the long term. Printing money is truly kicking the can down the road - an experiment which will end in disaster.
There is absolutely nothing "stable" about the dollar. Bitcoin is absolutely stable because 1BTC=1BTC, regardless of time and place. Its value relative to other commodities has more or less consistently increased over its 11 year lifetime. The value of the dollar is always changing. In its short 49 year lifetime, it has consistently lost value relative to other commodities. The value of other commodities changes in response to devaluation of the dollar. The trick you've fell for is to believe that they're adjusting the quantity of dollars to account for changes in other commodities - the reversal of cause and effect.
Who is "your"? Cryptocurrency means nothing to me - I've called out these scams as much as anyone. Only Bitcoin matters. Tether has nothing to do with Bitcoin. It has something to do with companies which trade with Bitcoin and no more. Bitcoin is much bigger than any of these transient schemes which attempt to attach themselves to its brand. Bitcoin will survive all of these attempts to weaken it and these schemes will all be forgotten about.
Inflation affects everyone, whether it is a small or large amount. You still lose a proportional amount of purchasing power. You might argue that people with smaller amounts of money are harder hit that those with lots of money, because they don't have as large safety net if unexpected circumstances arise. Additionally, low earners do not see their wages increase in tandem with the inflation - it usually lags, reducing their purchasing power over time.
Also, "investing" is increased risk taking, where saving is intended to be a low risk method of retaining purchasing power over time. Low earners often cannot afford to take these risks, especially when their limited options for investing are markets full of fraudsters, and whose potential returns are still highly dependent on the monetary policy of the central bank.
Keeping earnings in cash is not an option for dollars, but it is for Bitcoin. This is the game changer. People are now able to make long term savings without making risky investments. They can ensure that they have a safety net for unexpected circumstances, and then better plan for the future.
The value of all commodities is subjective. Money is merely one kind of commodity. Its use is whatever the owner wishes it to be used for. Saving (accumulating capital) is a perfectly good use case for sound money.
No, I want the world's energy and carbon footprint to reduce, rather than have people with a decentralisation fetish invent new ways to incentivise thrashing.
Yeah never mind, you're clearly very deep down this particular rabbit hole and nothing anyone says is going to change that. Best of luck, but I'm glad your views aren't all that prevalent.
Tether has everything to do with the bitcoin markets and the price of bitcoin, which is the only thing basically anyone is interested in.
Then any way to dismantle the existing consume-everything-to-make-a-profit economy, which is caused by archaic and inefficient monetary systems, should be good, right?
How much energy is wasted / burned because of our existing monetary policies?
cryptocurrency PoW is bajillions times more efficient than, i dunno, exerting currency dominance by shows of military power or shipping goods all over the world because its "cheaper" to make things here and sell things there.
any way? No, and particulary one that, for instance, encourages competitive.burning of power for profit and uses the power demands of a small country to service the transactional needs of a town.
Probably quite a lot. But then they do so much more than cryptocurrency can, so the comparison is nonsense.
"bajillions" being code for "I have no idea at all" renders your argument at the end there pretty moot.
Tether has become the proverbial suitcase of IOUs. The GP is outraged about the government stealing money through inflation, when the Tether printing press has been merrily siphoning actual USD out of the markets, a half billion at a time.
I take it you're OK with nuclear energy then?
If Bitcoin were fully powered by nuclear or other clean or renewable energy, I'm sure you'd find something else to complain about, no?
It would still be a massive drain in a world that's trying to cut down its energy footprint. There really isn't such thing as "spare" power when the world burns as much coal and gas as it does right now.
Adding a currency that relies on the competitive waste of power to the mix is a hideous idea.
But doesn't Bitcoin have the 'problem' of not being legal tender? i.e. why would people choose to buy Bitcoin, giving loads of money to existing Bitcoin owners, when it's not so hard to create a brand-new cryptocurrency?
It's not work for nothing, because it gives you consensus and reliability. Maybe you meant to say that there's better solutions...
Ok it's wrong to say "nothing". But I don't really see consensus nor reliability in crypto currencies. Specially the consensus seems to be missing, if you look this phenomena far enough.
Having a proof of work function that did something useful outside of minting new blocks would be awful for a cryptocurrency.
Why?