The current main incentive against cheating is that miners will lose their invested PoW (compute time + electricity) if they cheat and get their block thrown out. However, with a useful PoW, this calculus changes. Now, the PoW is no longer "wasted" when the miner cheats and gets caught as the PoW is now useful for something besides mining. This means that attacks are much cheaper and much more likely to happen.

One interesting part about this is that you can consider PoW usefulness on a sliding scale. The more useful the PoW, the more vulnerable your coin is to attack. Thus, you can probably get away with a "useful" PoW if it isn't actually very useful. This is one of the reasons why most "useful" PoW schemes focus on something which is pretty much useless (such as finding weird primes and whatnot).

So you spend $x on (compute time + electricity) to mine a useful PoW worth $y outside the blockchain and an additional mining reward of $z. If you cheat, you don't get to collect the $z reward. Although your original $x are not completely wasted, you still only have $y instead of the $y + $z you could have had.

How is that not incentive enough?

To not care about the $z, $y must exceed $x by itself and that seems really unlikely for the types of things that OP suggested instead of proof-of-work.

Edit: silly question on my part. y and z should be trivially interchangeable. Your argument appears to rest on the idea that the monetizeable scientific worth of the work would dominate the worth of the crypto token itself, since there would be limited value in an already-mined result beyond standard blockchain speculation - is that the case?

scrathes head

That just makes $x grow to $previous_x + $y.

Eventually we may be able to buy cloud compute by inventing a new coin with a proof of work useful only to us, buying some Etherium to back it with (so that there's some initial value to mining it), and then letting speculators put it in there currency baskets to give it long-term value.

May not scale in 20 years. Useless research can become very valuable in a decade or two.

Won’t a market simply develop where people can buy / sell / exchange tokens?

It goes something like this: Imagine that you are mining Bitcoin and protein folding for a drug. Let's also imagine that if your mining rig finds the protein, it's worth $15m (as a company could commercialise a new drug with that information).

You can imagine a point where you can make more money from the results than from the mining (if they are useful, they will be worth some money after all). But the security of the Bitcoin network lies precisely in the game-theoretical aspect that it's more profitable to mine than it is to cheat. But if you can mine and make some money on the side (because it's useful), then cheating [double spending] might become more interesting. Or perhaps your "side-business" can bootstrap a 51% attack.

Finding a useful & relevant computational problem, whose monetary value is predictably low far into future and whose computation scales with a simple function ... well, it's a really difficult question. So the safest option is to go for "brainless" computation. That is trying random numbers.

I think it is not useless. It does the job: "Keeping the network secure by calculating random hashes". Useless, of course, is very subjective. I wish most video games did something useful like protein folding (I consider them and the machines powering them a waste of energy, matter, mining, time and intellectual power).

If we really care about the environment we wouldn't be playing this game of trying to say one kind of environment destroying energy consumption is okay but another isn't. We would instead argue to directly solve the root problem, which is dirty energy polluting our environment, by making sure energy pricing covers that cost. That way the market can tell us if Logan Paul videos are more valuable to people than say Bitcoin, and we would actually do something to fix the environment rather than simply making it cheaper for one energy consumer (Youtube) to pollute at the expense of outlawing another (Bitcoin).

For Facebook/Instagram/Youtube, the incentive is to lower the power use. Google pays directly for the power used by their servers which host Youtube, so lowering their power usage immediately benefits Google. They also have indirect incentives to lower the power consumption on the client for their video/audio codecs.

For Bitcoin, however, the incentive is to use as much power as possible. If a more efficient miner is manufactured, the incentive is to use more miners. The only ceiling to the amount of power used by Bitcoin miners is when the price paid for the power gets above the expected average block reward.

It’s like saying that actors are wasting food and energy by doing what they do. Facebook YouTube and others are here for our entertainment, meanwhile bitcoin right now is mostly used by people with a final goal of selling it and making money. Most of the miners I know don’t ever use it to purchase something or send money to someone. That’s the problem in my opinion

Much like you did when you said:

> to serve fake images and shitty news

?

I'm a bit skeptical of this argument though. If we go down this path we have to answer what percentage of bitcoin mining is from renewable sources too. As I understood it (correct me if I'm wrong) a very large amount of Bitcoin mining is located around hydro sources to get cheap hydro electricity. That would mean the same argument that Youtube is green would apply equally to Bitcoin. But then I suspect someone would say something like "well they're using power from a hydro dam in china but look at all of China's coal plants, now other chinese people have to buy from those coal plants" to which we'd probably have to then say "yeah, kind of like when Microsoft buys Columbia river power cuz it's cheap and green or Facebook buys solar and wind power because its green that means that someone else in America can't buy that green power and is "using" power from one of our coal plants too". It's all one grid at the end of the day.

No. PoW is just an old name from the 199x spam fighting. The point here is planet-scale consensus, not "proof of work". One way to achieve distributed consensus in untrusted non-static environment is to randomly choose master for a given block. Imagine that everybody just throws a dice, and whoever gets 6 becomes that master. How we make sure that there is only one master for a given block, and that when you say 6 you really got 6 as i have no way of checking whether you even threw the dice at all? Satoshi's great insight was in building such a verifiable and statistically [for several minutes] single-master dice by using the good old hash based PoW.

Now, if somebody could come up with more energy efficient way to achieve that consensus at such a scale...

A handful of the top cryptos are using some variant of proof-of-stake (like dPoS, dBFT, etc.), all of which are energy efficient. Ethereum is currently experimenting with PoS in Casper.

Ethereum's PoS implementation requires lock up of balances in stake accounts, so it removes any incentive to do transactions.

I believe that ETH PoS will calcify the economic strata, kill all transaction volume, and have the opposite of network effect.

The energy is spent on security independent of transaction volume.

Until someone realizes it's cheaper to have their tokens moved by a different blockchain than the original BTC

It's not that easy. You need to be able to generate tasks that have a predictable levels of difficulty.

It's stupid while it lasts bit fortunately it won't. Bitcoin has no practical utility, neither as currency nor as a store of value, and you can't pick the blockchain apart to extract anything of value. Bitcoin is like my dad's books of completed sudokus: Proof of hard work but not of any value to anyone.

ATM Bitcoin is approaching the $10K mark from above. The press will soon be writing stories about people who lost this-and-this-much. The stupid money which fueled the bubble will dry up.

No but you're right. This time it will be gone for good.

lol

That's been an active field of CS research for decades (it was an active field mentioned, though not explored in depth, in an introductory-level class I took in 1990), and (from Google Scholar) seems to have been hugely active starting about 4-5 years before Satoshi’s paper.

But I think the relevant point is that there has been progress since Satoshi, not that the progress is due to or solely in response to Satoshi.

Choosing a particular starting block or blockchain algorithm is arbitrary. Just as choosing a particular metal is arbitrary.

Its scarcity is 100% natural.