Ripple Chief Critical of Bitcoin, Ethereum 'Wasteful ...

Is Bitcoin mining a waste of energy?

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05-24 19:44 - 'And they say that bitcoin mining is a huge waste of energy that damages the environment... 🤦‍♂️🤦‍♂️' (v.redd.it) by /u/spookiestevie removed from /r/Bitcoin within 156-166min

And they say that bitcoin mining is a huge waste of energy that damages the environment... 🤦‍♂️🤦‍♂️
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Author: spookiestevie
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FAQ about Bitcoin(3)

Transactions FMZ
Why do I have to wait for confirmation?
Receiving notification of a payment is almost instant with Bitcoin. However, there is a delay before the network begins to confirm your transaction by including it in a block. A confirmation means that there is a consensus on the network that the bitcoins you received haven't been sent to anyone else and are considered your property. Once your transaction has been included in one block, it will continue to be buried under every block after it, which will exponentially consolidate this consensus and decrease the risk of a reversed transaction. Each confirmation takes between a few seconds and 90 minutes, with 10 minutes being the average. If the transaction pays too low a fee or is otherwise atypical, getting the first confirmation can take much longer. Every user is free to determine at what point they consider a transaction sufficiently confirmed, but 6 confirmations is often considered to be as safe as waiting 6 months on a credit card transaction.
How much will the transaction fee be?
Transactions can be processed without fees, but trying to send free transactions can require waiting days or weeks. Although fees may increase over time, normal fees currently only cost a tiny amount. By default, all Bitcoin wallets listed on http://Bitcoin.org add what they think is an appropriate fee to your transactions; most of those wallets will also give you chance to review the fee before sending the transaction.
Transaction fees are used as a protection against users sending transactions to overload the network and as a way to pay miners for their work helping to secure the network. The precise manner in which fees work is still being developed and will change over time. Because the fee is not related to the amount of bitcoins being sent, it may seem extremely low or unfairly high. Instead, the fee is relative to the number of bytes in the transaction, so using multisig or spending multiple previously-received amounts may cost more than simpler transactions. If your activity follows the pattern of conventional transactions, you won't have to pay unusually high fees.
What if I receive a bitcoin when my computer is powered off?
This works fine. The bitcoins will appear next time you start your wallet application. Bitcoins are not actually received by the software on your computer, they are appended to a public ledger that is shared between all the devices on the network. If you are sent bitcoins when your wallet client program is not running and you later launch it, it will download blocks and catch up with any transactions it did not already know about, and the bitcoins will eventually appear as if they were just received in real time. Your wallet is only needed when you wish to spend bitcoins.
What does "synchronizing" mean and why does it take so long?
Long synchronization time is only required with full node clients like Bitcoin Core. Technically speaking, synchronizing is the process of downloading and verifying all previous Bitcoin transactions on the network. For some Bitcoin clients to calculate the spendable balance of your Bitcoin wallet and make new transactions, it needs to be aware of all previous transactions. This step can be resource intensive and requires sufficient bandwidth and storage to accommodate the full size of the block chain. For Bitcoin to remain secure, enough people should keep using full node clients because they perform the task of validating and relaying transactions.
Mining FMZ
What is Bitcoin mining?
Mining is the process of spending computing power to process transactions, secure the network, and keep everyone in the system synchronized together. It can be perceived like the Bitcoin data center except that it has been designed to be fully decentralized with miners operating in all countries and no individual having control over the network. This process is referred to as "mining" as an analogy to gold mining because it is also a temporary mechanism used to issue new bitcoins. Unlike gold mining, however, Bitcoin mining provides a reward in exchange for useful services required to operate a secure payment network. Mining will still be required after the last bitcoin is issued.
How does Bitcoin mining work?
Anybody can become a Bitcoin miner by running software with specialized hardware. Mining software listens for transactions broadcast through the peer-to-peer network and performs appropriate tasks to process and confirm these transactions. Bitcoin miners perform this work because they can earn transaction fees paid by users for faster transaction processing, and newly created bitcoins issued into existence according to a fixed formula.
For new transactions to be confirmed, they need to be included in a block along with a mathematical proof of work. Such proofs are very hard to generate because there is no way to create them other than by trying billions of calculations per second. This requires miners to perform these calculations before their blocks are accepted by the network and before they are rewarded. As more people start to mine, the difficulty of finding valid blocks is automatically increased by the network to ensure that the average time to find a block remains equal to 10 minutes. As a result, mining is a very competitive business where no individual miner can control what is included in the block chain.
The proof of work is also designed to depend on the previous block to force a chronological order in the block chain. This makes it exponentially difficult to reverse previous transactions because this requires the recalculation of the proofs of work of all the subsequent blocks. When two blocks are found at the same time, miners work on the first block they receive and switch to the longest chain of blocks as soon as the next block is found. This allows mining to secure and maintain a global consensus based on processing power.
Bitcoin miners are neither able to cheat by increasing their own reward nor process fraudulent transactions that could corrupt the Bitcoin network because all Bitcoin nodes would reject any block that contains invalid data as per the rules of the Bitcoin protocol. Consequently, the network remains secure even if not all Bitcoin miners can be trusted.
Isn't Bitcoin mining a waste of energy?
Spending energy to secure and operate a payment system is hardly a waste. Like any other payment service, the use of Bitcoin entails processing costs. Services necessary for the operation of currently widespread monetary systems, such as banks, credit cards, and armored vehicles, also use a lot of energy. Although unlike Bitcoin, their total energy consumption is not transparent and cannot be as easily measured.
Bitcoin mining has been designed to become more optimized over time with specialized hardware consuming less energy, and the operating costs of mining should continue to be proportional to demand. When Bitcoin mining becomes too competitive and less profitable, some miners choose to stop their activities. Furthermore, all energy expended mining is eventually transformed into heat, and the most profitable miners will be those who have put this heat to good use. An optimally efficient mining network is one that isn't actually consuming any extra energy. While this is an ideal, the economics of mining are such that miners individually strive toward it.
How does mining help secure Bitcoin? FMZ
Mining creates the equivalent of a competitive lottery that makes it very difficult for anyone to consecutively add new blocks of transactions into the block chain. This protects the neutrality of the network by preventing any individual from gaining the power to block certain transactions. This also prevents any individual from replacing parts of the block chain to roll back their own spends, which could be used to defraud other users. Mining makes it exponentially more difficult to reverse a past transaction by requiring the rewriting of all blocks following this transaction.
What do I need to start mining?
In the early days of Bitcoin, anyone could find a new block using their computer's CPU. As more and more people started mining, the difficulty of finding new blocks increased greatly to the point where the only cost-effective method of mining today is using specialized hardware. You can visit BitcoinMining.com for more information.
Security FMZ
Is Bitcoin secure?
The Bitcoin technology - the protocol and the cryptography - has a strong security track record, and the Bitcoin network is probably the biggest distributed computing project in the world. Bitcoin's most common vulnerability is in user error. Bitcoin wallet files that store the necessary private keys can be accidentally deleted, lost or stolen. This is pretty similar to physical cash stored in a digital form. Fortunately, users can employ sound security practices to protect their money or use service providers that offer good levels of security and insurance against theft or loss.
Hasn't Bitcoin been hacked in the past?
The rules of the protocol and the cryptography used for Bitcoin are still working years after its inception, which is a good indication that the concept is well designed. However, security flaws have been found and fixed over time in various software implementations. Like any other form of software, the security of Bitcoin software depends on the speed with which problems are found and fixed. The more such issues are discovered, the more Bitcoin is gaining maturity.
There are often misconceptions about thefts and security breaches that happened on diverse exchanges and businesses. Although these events are unfortunate, none of them involve Bitcoin itself being hacked, nor imply inherent flaws in Bitcoin; just like a bank robbery doesn't mean that the dollar is compromised. However, it is accurate to say that a complete set of good practices and intuitive security solutions is needed to give users better protection of their money, and to reduce the general risk of theft and loss. Over the course of the last few years, such security features have quickly developed, such as wallet encryption, offline wallets, hardware wallets, and multi-signature transactions.
Could users collude against Bitcoin? FMZ
It is not possible to change the Bitcoin protocol that easily. Any Bitcoin client that doesn't comply with the same rules cannot enforce their own rules on other users. As per the current specification, double spending is not possible on the same block chain, and neither is spending bitcoins without a valid signature. Therefore, it is not possible to generate uncontrolled amounts of bitcoins out of thin air, spend other users' funds, corrupt the network, or anything similar.
However, powerful miners could arbitrarily choose to block or reverse recent transactions. A majority of users can also put pressure for some changes to be adopted. Because Bitcoin only works correctly with a complete consensus between all users, changing the protocol can be very difficult and requires an overwhelming majority of users to adopt the changes in such a way that remaining users have nearly no choice but to follow. As a general rule, it is hard to imagine why any Bitcoin user would choose to adopt any change that could compromise their own money.
Is Bitcoin vulnerable to quantum computing?
Yes, most systems relying on cryptography in general are, including traditional banking systems. However, quantum computers don't yet exist and probably won't for a while. In the event that quantum computing could be an imminent threat to Bitcoin, the protocol could be upgraded to use post-quantum algorithms. Given the importance that this update would have, it can be safely expected that it would be highly reviewed by developers and adopted by all Bitcoin users.
FMZ
submitted by FmzQuant to u/FmzQuant [link] [comments]

FAQ about Bitcoin(3)

Transactions FMZ
Why do I have to wait for confirmation?
Receiving notification of a payment is almost instant with Bitcoin. However, there is a delay before the network begins to confirm your transaction by including it in a block. A confirmation means that there is a consensus on the network that the bitcoins you received haven't been sent to anyone else and are considered your property. Once your transaction has been included in one block, it will continue to be buried under every block after it, which will exponentially consolidate this consensus and decrease the risk of a reversed transaction. Each confirmation takes between a few seconds and 90 minutes, with 10 minutes being the average. If the transaction pays too low a fee or is otherwise atypical, getting the first confirmation can take much longer. Every user is free to determine at what point they consider a transaction sufficiently confirmed, but 6 confirmations is often considered to be as safe as waiting 6 months on a credit card transaction.
How much will the transaction fee be?
Transactions can be processed without fees, but trying to send free transactions can require waiting days or weeks. Although fees may increase over time, normal fees currently only cost a tiny amount. By default, all Bitcoin wallets listed on http://Bitcoin.org add what they think is an appropriate fee to your transactions; most of those wallets will also give you chance to review the fee before sending the transaction.
Transaction fees are used as a protection against users sending transactions to overload the network and as a way to pay miners for their work helping to secure the network. The precise manner in which fees work is still being developed and will change over time. Because the fee is not related to the amount of bitcoins being sent, it may seem extremely low or unfairly high. Instead, the fee is relative to the number of bytes in the transaction, so using multisig or spending multiple previously-received amounts may cost more than simpler transactions. If your activity follows the pattern of conventional transactions, you won't have to pay unusually high fees.
What if I receive a bitcoin when my computer is powered off?
This works fine. The bitcoins will appear next time you start your wallet application. Bitcoins are not actually received by the software on your computer, they are appended to a public ledger that is shared between all the devices on the network. If you are sent bitcoins when your wallet client program is not running and you later launch it, it will download blocks and catch up with any transactions it did not already know about, and the bitcoins will eventually appear as if they were just received in real time. Your wallet is only needed when you wish to spend bitcoins.
What does "synchronizing" mean and why does it take so long?
Long synchronization time is only required with full node clients like Bitcoin Core. Technically speaking, synchronizing is the process of downloading and verifying all previous Bitcoin transactions on the network. For some Bitcoin clients to calculate the spendable balance of your Bitcoin wallet and make new transactions, it needs to be aware of all previous transactions. This step can be resource intensive and requires sufficient bandwidth and storage to accommodate the full size of the block chain. For Bitcoin to remain secure, enough people should keep using full node clients because they perform the task of validating and relaying transactions.
Mining FMZ
What is Bitcoin mining?
Mining is the process of spending computing power to process transactions, secure the network, and keep everyone in the system synchronized together. It can be perceived like the Bitcoin data center except that it has been designed to be fully decentralized with miners operating in all countries and no individual having control over the network. This process is referred to as "mining" as an analogy to gold mining because it is also a temporary mechanism used to issue new bitcoins. Unlike gold mining, however, Bitcoin mining provides a reward in exchange for useful services required to operate a secure payment network. Mining will still be required after the last bitcoin is issued.
How does Bitcoin mining work?
Anybody can become a Bitcoin miner by running software with specialized hardware. Mining software listens for transactions broadcast through the peer-to-peer network and performs appropriate tasks to process and confirm these transactions. Bitcoin miners perform this work because they can earn transaction fees paid by users for faster transaction processing, and newly created bitcoins issued into existence according to a fixed formula.
For new transactions to be confirmed, they need to be included in a block along with a mathematical proof of work. Such proofs are very hard to generate because there is no way to create them other than by trying billions of calculations per second. This requires miners to perform these calculations before their blocks are accepted by the network and before they are rewarded. As more people start to mine, the difficulty of finding valid blocks is automatically increased by the network to ensure that the average time to find a block remains equal to 10 minutes. As a result, mining is a very competitive business where no individual miner can control what is included in the block chain.
The proof of work is also designed to depend on the previous block to force a chronological order in the block chain. This makes it exponentially difficult to reverse previous transactions because this requires the recalculation of the proofs of work of all the subsequent blocks. When two blocks are found at the same time, miners work on the first block they receive and switch to the longest chain of blocks as soon as the next block is found. This allows mining to secure and maintain a global consensus based on processing power.
Bitcoin miners are neither able to cheat by increasing their own reward nor process fraudulent transactions that could corrupt the Bitcoin network because all Bitcoin nodes would reject any block that contains invalid data as per the rules of the Bitcoin protocol. Consequently, the network remains secure even if not all Bitcoin miners can be trusted.
Isn't Bitcoin mining a waste of energy?
Spending energy to secure and operate a payment system is hardly a waste. Like any other payment service, the use of Bitcoin entails processing costs. Services necessary for the operation of currently widespread monetary systems, such as banks, credit cards, and armored vehicles, also use a lot of energy. Although unlike Bitcoin, their total energy consumption is not transparent and cannot be as easily measured.
Bitcoin mining has been designed to become more optimized over time with specialized hardware consuming less energy, and the operating costs of mining should continue to be proportional to demand. When Bitcoin mining becomes too competitive and less profitable, some miners choose to stop their activities. Furthermore, all energy expended mining is eventually transformed into heat, and the most profitable miners will be those who have put this heat to good use. An optimally efficient mining network is one that isn't actually consuming any extra energy. While this is an ideal, the economics of mining are such that miners individually strive toward it.
How does mining help secure Bitcoin? FMZ
Mining creates the equivalent of a competitive lottery that makes it very difficult for anyone to consecutively add new blocks of transactions into the block chain. This protects the neutrality of the network by preventing any individual from gaining the power to block certain transactions. This also prevents any individual from replacing parts of the block chain to roll back their own spends, which could be used to defraud other users. Mining makes it exponentially more difficult to reverse a past transaction by requiring the rewriting of all blocks following this transaction.
What do I need to start mining?
In the early days of Bitcoin, anyone could find a new block using their computer's CPU. As more and more people started mining, the difficulty of finding new blocks increased greatly to the point where the only cost-effective method of mining today is using specialized hardware. You can visit BitcoinMining.com for more information.
Security FMZ
Is Bitcoin secure?
The Bitcoin technology - the protocol and the cryptography - has a strong security track record, and the Bitcoin network is probably the biggest distributed computing project in the world. Bitcoin's most common vulnerability is in user error. Bitcoin wallet files that store the necessary private keys can be accidentally deleted, lost or stolen. This is pretty similar to physical cash stored in a digital form. Fortunately, users can employ sound security practices to protect their money or use service providers that offer good levels of security and insurance against theft or loss.
Hasn't Bitcoin been hacked in the past?
The rules of the protocol and the cryptography used for Bitcoin are still working years after its inception, which is a good indication that the concept is well designed. However, security flaws have been found and fixed over time in various software implementations. Like any other form of software, the security of Bitcoin software depends on the speed with which problems are found and fixed. The more such issues are discovered, the more Bitcoin is gaining maturity.
There are often misconceptions about thefts and security breaches that happened on diverse exchanges and businesses. Although these events are unfortunate, none of them involve Bitcoin itself being hacked, nor imply inherent flaws in Bitcoin; just like a bank robbery doesn't mean that the dollar is compromised. However, it is accurate to say that a complete set of good practices and intuitive security solutions is needed to give users better protection of their money, and to reduce the general risk of theft and loss. Over the course of the last few years, such security features have quickly developed, such as wallet encryption, offline wallets, hardware wallets, and multi-signature transactions.
Could users collude against Bitcoin? FMZ
It is not possible to change the Bitcoin protocol that easily. Any Bitcoin client that doesn't comply with the same rules cannot enforce their own rules on other users. As per the current specification, double spending is not possible on the same block chain, and neither is spending bitcoins without a valid signature. Therefore, it is not possible to generate uncontrolled amounts of bitcoins out of thin air, spend other users' funds, corrupt the network, or anything similar.
However, powerful miners could arbitrarily choose to block or reverse recent transactions. A majority of users can also put pressure for some changes to be adopted. Because Bitcoin only works correctly with a complete consensus between all users, changing the protocol can be very difficult and requires an overwhelming majority of users to adopt the changes in such a way that remaining users have nearly no choice but to follow. As a general rule, it is hard to imagine why any Bitcoin user would choose to adopt any change that could compromise their own money.
Is Bitcoin vulnerable to quantum computing?
Yes, most systems relying on cryptography in general are, including traditional banking systems. However, quantum computers don't yet exist and probably won't for a while. In the event that quantum computing could be an imminent threat to Bitcoin, the protocol could be upgraded to use post-quantum algorithms. Given the importance that this update would have, it can be safely expected that it would be highly reviewed by developers and adopted by all Bitcoin users.
FMZ
submitted by FmzQuant to u/FmzQuant [link] [comments]

Ultimate argument against bitcoin mining being a waste of energy and causing climate change 👌

Ultimate argument against bitcoin mining being a waste of energy and causing climate change 👌 submitted by zhell_ to bitcoincashSV [link] [comments]

[Idea] Using hash power to simultaneously contribute to distributed computing projects

One typical objection to crypto-currencies in general is the belief that the energy required for mining is "wasted." The bitcoin.org FAQ addresses this by basically saying "It's worth it for the value created," and "There are energy costs associated with physical currencies too." While these points are both valid, perhaps we can do better?
I am wondering about the feasibility of creating (or modifying) a crypto-currency where the hashing problem overlaps with an existing (or new) useful distributed computing project.
I am not sure if any of these projects represent an effective one-way hashing function. For example, [email protected] sends the same blocks to multiple users for analysis and verification, which implies that the results cannot be efficiently checked in reverse.
Another problem could be the unpredictability of hashing time. It might be impossible to adjust difficulty to maintain a consistent solution rate.
A search for large prime numbers may hold promise, since it is comparatively easy to verify that a non-prime is the product of its factors, and the algorithm could be adjusted to require a certain number of new non-prime numbers be factored to complete a block. (Discovery of a new prime would obviously eat up a lot of time working an impossible factoring problem, but perhaps the coin reward could be structured to include a payout for miners that uncover a new prime, once independently verified?)
Anyway, this is all outside my areas of expertise, but I was wondering if anyone had ever considered this before, or if the nature of the blockchain problem simply precludes performing otherwise useful computational work in conjunction?
submitted by Leviathan97 to CryptoCurrency [link] [comments]

Ultimate argument against bitcoin mining being a waste of energy and causing climate change 👌

Ultimate argument against bitcoin mining being a waste of energy and causing climate change 👌 submitted by zhell_ to btc [link] [comments]

Bitcoin mentioned around Reddit: China Considers Ban On Cryptocurrency Mining Because It's A Stupid Waste Of Energy /r/technology

Bitcoin mentioned around Reddit: China Considers Ban On Cryptocurrency Mining Because It's A Stupid Waste Of Energy /technology submitted by SimilarAdvantage to BitcoinAll [link] [comments]

Bitcoin mentioned around Reddit: China Considers Ban On Cryptocurrency Mining Because It's A Stupid Waste Of Energy /r/technology

Bitcoin mentioned around Reddit: China Considers Ban On Cryptocurrency Mining Because It's A Stupid Waste Of Energy /technology submitted by SimilarAdvantage to BitcoinAll [link] [comments]

Bitcoin mentioned around Reddit: China Considers Ban On Cryptocurrency Mining Because It's A Stupid Waste Of Energy /r/technology

Bitcoin mentioned around Reddit: China Considers Ban On Cryptocurrency Mining Because It's A Stupid Waste Of Energy /technology submitted by cryptoanalyticabot to cryptoall [link] [comments]

Bitcoin mentioned around Reddit: China Considers Ban On Cryptocurrency Mining Because It's A Stupid Waste Of Energy /r/technology

Bitcoin mentioned around Reddit: China Considers Ban On Cryptocurrency Mining Because It's A Stupid Waste Of Energy /technology submitted by cryptoallbot to cryptoall [link] [comments]

Ultimate argument against bitcoin mining being a waste of energy and causing climate change

Ultimate argument against bitcoin mining being a waste of energy and causing climate change submitted by cryptoallbot to cryptoall [link] [comments]

Ultimate argument against bitcoin mining being a waste of energy and causing climate change

Ultimate argument against bitcoin mining being a waste of energy and causing climate change submitted by ABitcoinAllBot to BitcoinAll [link] [comments]

12-28 14:03 - 'Mining Power is not a Waste of Energy: Could be Used for Neuroscience' (usethebitcoin.com) by /u/andix3 removed from /r/Bitcoin within 74-84min

Mining Power is not a Waste of Energy: Could be Used for Neuroscience
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Author: andix3
submitted by removalbot to removalbot [link] [comments]

How is the concept of bitcoin mining not a needless waste of energy?

I'm curious if there's a reasonable explanation for this
submitted by sctalkingtime to Bitcoin [link] [comments]

Myth: "Bitcoin mining is a waste of energy and harmful for ecology"

Why isn't the content of the section entitled "Bitcoin mining is a waste of energy and harmful for ecology" not sufficient to debunk the recent spate of articles about Bitcoin being an "ecological disaster" and whatnot? Also, has anyone else noticed that Forbes and the big financial press seem to have soured on Bitcoin lately? They used to seem really neutral, to almost positive.
submitted by thechevalier to Bitcoin [link] [comments]

Would the MIT community be interested in a head to head competition between Bitcoin and one of the top environmental friendly alternatives next fall? Bitcoin mining wastes at least 60 times more electricity than all of the most energy efficient alternative coins.

The Wall Street Journal says that the Bitcoin hash rate is now 60 times more than it was last fall. The Bitcoin hash rate is directly proportionate to electric consumption. CoinDesk, the premier Bitcoin news site, explains that this is due to new specialize mining equipment made to cash in on the new Bitcoin mining bonanza
Link to Wall Street Journal article
http://blogs.wsj.com/moneybeat/2014/04/29/bitbeat-for-bitcoin-miners-a-hot-problem-this-summe
Link to CoinDesk article:
http://www.coindesk.com/coindesk-mining-roundup-hot-issues-lawsuits-eco-mining/
Huge corporate Bitcoin mining operations are popping up in Central Washington State where the least expensive electric rates exist in the US, which are powered by hydro.
Link to Washington State Bitcoin mining article powered by hydro
http://www.spokesman.com/stories/2014/ap26/northwests-cheap-power-drawing-bitcoin-miners/
One huge operation already exists in Iceland, which has the least expensive electricity in the world. It is produced by hydro and geothermal means. Link to Iceland Bitcoin mining article
http://dealbook.nytimes.com/2013/12/23/morning-agenda-the-bitcoin-mines-of-iceland/?_php=true&_type=blogs&_r=0
The alternative environmentally-friendly cryptocurrencies to Bitcoin are called Proof of Stake coins. Here is a Let’s Talk Bitcoin article on Proof of Stake coins:
http://letstalkbitcoin.com/experiments-in-cryptocurrency-sustainability/#.U2ZgoVea9J4
Two of the most promising Proof of Stake coins are Blackcoin and NXT. The links to their subreddits are below.
http://www.reddit.com/blackcoin
http://us.reddit.com/NXT/
The Blackcoin community is trying to develop a MIT Blackcoin Project. It has been suggested that each graduate students be provided $100 worth of Blackcoins. Besides being more environmentally friendly, Blackcoin is six times faster than Bitcoin.
The object of the competition would be to see if one coin became dominate over time. Bitcoin will have the initial infrastructure advantage. Will the Bitcoin, Litecoin, and, Dogecoin supporting companies be willing to offer a Blackcoin option? Coinkite will be adding Blackcoin to its Bitcoin/Litecoin lineup in June.
submitted by RJSchex to mit [link] [comments]

BitcoinAll comment: Likely not at all. Bitcoin mining is mostly hashrate, so ASICs are the main chips of choice, now. A CPU won't get you much Bitcoin and will just waste energy.. Join the conversation!

BitcoinAll comment: Likely not at all. Bitcoin mining is mostly hashrate, so ASICs are the main chips of choice, now. A CPU won't get you much Bitcoin and will just waste energy.. Join the conversation! submitted by BitcoinAllBot to BitcoinAll [link] [comments]

We need an ELI5 way for debunking the "Bitcoin mining is a waste of energy" myth. /r/Bitcoin

We need an ELI5 way for debunking the submitted by BitcoinAllBot to BitcoinAll [link] [comments]

Is the computational power used to mine Bitcoins a waste of energy? Or is it linked to solving real computationally intensive problems?

Just getting familiar with bitcoins and such, and I was wondering why bitcoin mining/reward infrastructure isn't directly linked to computing real problems: flow system problems, protein structures, any other computationally intesive calculation...
Edit* Found the Bitcoin FAQ that answers these questions. Thanks!
Edit 2* Found this post on a forum I think it explains why hash calculations were chosen fairly well:
"The requirements of the Bitcoin calculation function:
We do not know of any "useful" calculation (e.g. [email protected], [email protected]) that abides by these criteria, so random "useless" hashes were chosen."
Here's the link for those interested.
submitted by 1337Sheep to Bitcoin [link] [comments]

Putting $400M of Bitcoin on your company balance sheet

Also posted on my blog as usual. Read it there if you can, there are footnotes and inlined plots.
A couple of months ago, MicroStrategy (MSTR) had a spare $400M of cash which it decided to shift to Bitcoin (BTC).
Today we'll discuss in excrutiating detail why this is not a good idea.
When a company has a pile of spare money it doesn't know what to do with, it'll normally do buybacks or start paying dividends. That gives the money back to the shareholders, and from an economic perspective the money can get better invested in other more promising companies. If you have a huge pile of of cash, you probably should be doing other things than leave it in a bank account to gather dust.
However, this statement from MicroStrategy CEO Michael Saylor exists to make it clear he's buying into BTC for all the wrong reasons:
“This is not a speculation, nor is it a hedge. This was a deliberate corporate strategy to adopt a bitcoin standard.”
Let's unpack it and jump into the economics Bitcoin:

Is Bitcoin money?

No.
Or rather BTC doesn't act as money and there's no serious future path for BTC to become a form of money. Let's go back to basics. There are 3 main economic problems money solves:
1. Medium of Exchange. Before money we had to barter, which led to the double coincidence of wants problem. When everyone accepts the same money you can buy something from someone even if they don't like the stuff you own.
As a medium of exchange, BTC is not good. There are significant transaction fees and transaction waiting times built-in to BTC and these worsen the more popular BTC get.
You can test BTC's usefulness as a medium of exchange for yourself right now: try to order a pizza or to buy a random item with BTC. How many additional hurdles do you have to go through? How many fewer options do you have than if you used a regular currency? How much overhead (time, fees) is there?
2. Unit of Account. A unit of account is what you compare the value of objects against. We denominate BTC in terms of how many USD they're worth, so BTC is a unit of account presently. We can say it's because of lack of adoption, but really it's also because the market value of BTC is so volatile.
If I buy a $1000 table today or in 2017, it's roughly a $1000 table. We can't say that a 0.4BTC table was a 0.4BTC table in 2017. We'll expand on this in the next point:
3. Store of Value. When you create economic value, you don't want to be forced to use up the value you created right away.
For instance, if I fix your washing machine and you pay me in avocados, I'd be annoyed. I'd have to consume my payment before it becomes brown, squishy and disgusting. Avocado fruit is not good money because avocadoes loses value very fast.
On the other hand, well-run currencies like the USD, GBP, CAD, EUR, etc. all lose their value at a low and most importantly fairly predictible rate. Let's look at the chart of the USD against BTC
While the dollar loses value at a predictible rate, BTC is all over the place, which is bad.
One important use money is to write loan contracts. Loans are great. They let people spend now against their future potential earnings, so they can buy houses or start businesses without first saving up for a decade. Loans are good for the economy.
If you want to sign something that says "I owe you this much for that much time" then you need to be able to roughly predict the value of the debt in at the point in time where it's due.
Otherwise you'll have a hard time pricing the risk of the loan effectively. This means that you need to charge higher interests. The risk of making a loan in BTC needs to be priced into the interest of a BTC-denominated loan, which means much higher interest rates. High interests on loans are bad, because buying houses and starting businesses are good things.

BTC has a fixed supply, so these problems are built in

Some people think that going back to a standard where our money was denominated by a stock of gold (the Gold Standard) would solve economic problems. This is nonsense.
Having control over supply of your currency is a good thing, as long as it's well run.
See here
Remember that what is desirable is low variance in the value, not the value itself. When there are wild fluctuations in value, it's hard for money to do its job well.
Since the 1970s, the USD has been a fiat money with no intrinsic value. This means we control the supply of money.
Let's look at a classic poorly drawn econ101 graph
The market price for USD is where supply meets demand. The problem with a currency based on an item whose supply is fixed is that the price will necessarily fluctuate in response to changes in demand.
Imagine, if you will, that a pandemic strikes and that the demand for currency takes a sharp drop. The US imports less, people don't buy anything anymore, etc. If you can't print money, you get deflation, which is worsens everything. On the other hand, if you can make the money printers go brrrr you can stabilize the price
Having your currency be based on a fixed supply isn't just bad because in/deflation is hard to control.
It's also a national security risk...
The story of the guy who crashed gold prices in North Africa
In the 1200s, Mansa Munsa, the emperor of the Mali, was rich and a devout Muslim and wanted everyone to know it. So he embarked on a pilgrimage to make it rain all the way to Mecca.
He in fact made it rain so hard he increased the overall supply of gold and unintentionally crashed gold prices in Cairo by 20%, wreaking an economic havoc in North Africa that lasted a decade.
This story is fun, the larger point that having your inflation be at the mercy of foreign nations is an undesirable attribute in any currency. The US likes to call some countries currency manipulators, but this problem would be serious under a gold standard.

Currencies are based on trust

Since the USD is based on nothing except the US government's word, how can we trust USD not to be mismanaged?
The answer is that you can probably trust the fed until political stooges get put in place. Currently, the US's central bank managing the USD, the Federal Reserve (the Fed for friends & family), has administrative authority. The fed can say "no" to dumb requests from the president.
People who have no idea what the fed does like to chant "audit the fed", but the fed is already one of the best audited US federal entities. The transcripts of all their meetings are out in the open. As is their balance sheet, what they plan to do and why. If the US should audit anything it's the Department of Defense which operates without any accounting at all.
It's easy to see when a central bank will go rogue: it's when political yes-men are elected to the board.
For example, before printing themselves into hyperinflation, the Venezuelan president appointed a sociologist who publicly stated “Inflation does not exist in real life” and instead is a made up capitalist lie. Note what happened mere months after his gaining control over the Venezuelan currency
This is a key policy. One paper I really like, Sargent (1984) "The end of 4 big inflations" states:
The essential measures that ended hyperinflation in each of Germany,Austria, Hungary, and Poland were, first, the creation of an independentcentral bank that was legally committed to refuse the government'sdemand or additional unsecured credit and, second, a simultaneousalteration in the fiscal policy regime.
In english: *hyperinflation stops when the central bank can say "no" to the government."
The US Fed, like other well good central banks, is run by a bunch of nerds. When it prints money, even as aggressively as it has it does so for good reasons. You can see why they started printing on March 15th as the COVID lockdowns started:
The Federal Reserve is prepared to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals.
In english: We're going to keep printing and lowering rates until jobs are back and inflation is under control. If we print until the sun is blotted out, we'll print in the shade.

BTC is not gold

Gold is a good asset for doomsday-preppers. If society crashes, gold will still have value.
How do we know that?
Gold has held value throughout multiple historic catastrophes over thousands of years. It had value before and after the Bronze Age Collapse, the Fall of the Western Roman Empire and Gengis Khan being Gengis Khan.
Even if you erased humanity and started over, the new humans would still find gold to be economically valuable. When Europeans d̶i̶s̶c̶o̶v̶e̶r̶e̶d̶ c̶o̶n̶q̶u̶e̶r̶e̶d̶ g̶e̶n̶o̶c̶i̶d̶e̶d̶ went to America, they found gold to be an important item over there too. This is about equivalent to finding humans on Alpha-Centauri and learning that they think gold is a good store of value as well.
Some people are puzzled at this: we don't even use gold for much! But it has great properties:
First, gold is hard to fake and impossible to manufacture. This makes it good to ascertain payment.
Second, gold doesnt react to oxygen, so it doesn't rust or tarnish. So it keeps value over time unlike most other materials.
Last, gold is pretty. This might sound frivolous, and you may not like it, but jewelry has actual value to humans.
It's no coincidence if you look at a list of the wealthiest families, a large number of them trade in luxury goods.
To paraphrase Veblen humans have a profound desire to signal social status, for the same reason peacocks have unwieldy tails. Gold is a great way to achieve that.
On the other hand, BTC lacks all these attributes. Its value is largely based on common perception of value. There are a few fundamental drivers of demand:
Apart from these, it's hard to argue that BTC will retain value throughout some sort of economic catastrophe.

BTC is really risky

One last statement from Michael Saylor I take offense to is this:
“We feel pretty confident that Bitcoin is less risky than holding cash, less risky than holding gold,” MicroStrategy CEO said in an interview
"BTC is less risky than holding cash or gold long term" is nonsense. We saw before that BTC is more volatile on face value, and that as long as the Fed isn't run by spider monkeys stacked in a trench coat, the inflation is likely to be within reasonable bounds.
But on top of this, BTC has Abrupt downside risks that normal currencies don't. Let's imagine a few:

Blockchain solutions are fundamentally inefficient

Blockchain was a genius idea. I still marvel at the initial white paper which is a great mix of economics and computer science.
That said, blockchain solutions make large tradeoffs in design because they assume almost no trust between parties. This leads to intentionally wasteful designs on a massive scale.
The main problem is that all transactions have to be validated by expensive computational operations and double checked by multiple parties. This means waste:
Many design problems can be mitigated by various improvements over BTC, but it remains that a simple database always works better than a blockchain if you can trust the parties to the transaction.
submitted by VodkaHaze to badeconomics [link] [comments]

Is Proof of Stake the solution to the energy madness started with Bitcoin?

So far I really like the idea of cryptocurrency, but I really dislike the idea of Bitcoin. It's a giant waste of resources for no good reason. Even leaving the mining of it aside, "each Bitcoin transaction consumes 250kWh, enough to power homes for nine days." (bitcoins-insane-energy-consumption-explained). I just can't support something this inefficient.
I'm currently learning about Proof of Stake (what-is-proof-of-stake/), and I wonder if that's the way forward to having an efficient cryptocoin - both in mining and transactions. I know very little in the grand scheme of how cryptocurrency works, so I wonder what do you guys think?
Disclaimer: I realize many people on this subreddit have a vested interest, but please try your best to abstain from commenting based on it.
submitted by Lycanka to CryptoCurrency [link] [comments]

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Why Bitcoin is heading towards a huge mining problem

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