But in its current form it seems to do way more harm than good. Aside from the troublesome regulatory issues, pure scams and lacking capabilities to counter financial crimes, the environmental impact is catastrophic. And I don't see Proof of Stake really changing that.
And don't get me started on NFTs and "DeFi". Nothing is decentralized when players like Alchemy effectively centralize access to the Ethereum blockchain and everyone and their mother uses them to build some scam apps.
The environmental impact of Proof of Stake is pretty small, the chain in question here is probably less wasteful electricity-wise than many of the companies people on HN work at.
You can rewrite the chain easier than with PoW, but it is plenty hard - requires a majority to precommit to a secret fork. Safe enough for many purposes at a fraction of the cost.
Only with PoS, there's no way to judge which fork is the "right" one. In PoW, miners vote with their finite hashpower. There's no practical limit to how many hard forks a PoS system can sustain because they don't rely on anything that's actually scarce.
Imagine the USD was suddenly split into two incompatible and free-floating currencies, with the US House of Representatives saying one currency is the official one and the US Senate claiming the other. It would be chaos.
As things stand POW chains have traded massive inefficiency for decentralization. I doubt this can stand long term if we wish to address climate change. Crypto already has a higher energy use than many countries.
> [...] especially when carbon costs are priced in.
You misunderstand the economics of proof-of-work. Perhaps we should call it 'proof-of-waste'. Basically, in something like bitcoin proof-of-work functions a bit like an auction: the total amount of resources wasted on mining tends to equal the total amount of mining rewards.
For simplicity, assume mining rewards are fixed.
If hashing becomes cheaper, (eg first because of GPU miners, later because of ASICs), the hash rate will go up, but the total amount of resources wasted on mining will stay the same.
If hashing becomes more expensive (eg because of a universal carbon tax), the hash rate will go down, but the total amount miners spend on mining stays the same.
Arguably, that's exactly how a carbon tax is supposed to work in the best case.
Of course, there will be plenty of incentives to avoid the carbon tax. Both by mining with clean power (good!) and by mining in places that don't implement the carbon tax (less good!).
half agree with that. PoW is the most efficient method of converting raw energy into a digitally secure token. It would be much better if the work done was actually useful beyond that.
Some attempts have been done in the past, but with low success (Riecoin IIRC uses cpus to find sequences of primes, GridCoin used BOINC for the PoW, proof-of-boinc in that case).
There is still work to be done on EVM chains. Contract calls need to be processed and verified by every (full) node
I'd say PoW is not the most efficient method. It's a terrible waste by design.
The kind of 'work' that works in PoW has some rather strict requirements, that's why it's almost impossible to shoehorn useful work into a PoW scheme.
Wikipedia tells me that eg GridCoin uses proof-of-stake to prevent double-spending attacks; its rewarding people for BOINC work is a totally separate gimmick.
That idea sounds good, but would only be a solution for a problem that doesn't exist.
Bitcoin's design solves two problems:
(1) only someone who owns a coin should be able to spend it
(2) they should only be able to spend it once
The first problem had been solved for ages: use digital signatures to authenticate messages of essentially the form "I, Alice, hereby send 3 bitcoins to Bob." Given some initial coin assignment to specific private/public key pairs, you can follow along these messages, keep a tally in a ledger, and know how much everyone has.
Solving the second problem is where bitcoin innovates. Without a trusted third party coordinating things, Alice could just show a message to Bob and Charles each 'sending' them the same 3 bitcoins. Bitcoin uses proof-of-work to pick (at most) one of these messages to be part of the consensus reality.
The scheme you are suggesting requires some trust in the partnership of government and power companies. But as soon as you have very minimal amounts of trust, you can just solve the double-spending problem directly.
And that direct solution involves much less trust than what is required for accepting any statements about the power grid.
If you want, I can sketch out a minimum trust system for the direct solution I mentioned.
PoST (Proof of Space and Time) is PoW 2.0 essentially. It addresses the energy consumption of PoW using the same Nakomoto Consensus mechanism that provides true decentralization and the security that comes with it. It does this by doing the work ONCE up-front and saving it to space (generating plot files) rather than doing the work for every block. Lookups are incredibly energy efficient (farming plots). The Time component ensures that a certain amount of time passes between blocks, and is responsible for moving the chain forward.
There is also the added benefit of utilizing datacenter drives destined to be scrapped // still perfectly usable for storing plot files.
In the long run, hard drives used for crypto lookups in PoST (farming) have very low load and can last for a decade. Whereas Bitcoin ASIC miners become obsolete much faster and can't be reused for general purpose computing afterwards.
> Consensus in both of them is based on unforgeable costliness, to make it economically unviable to create alternative histories.
> In both systems, total cost of mining approaches the block reward. For example, if block rewards are $10 million a day, then $10 million worth of energy is used in PoW. PoST burns through $10 million worth of hard drives.
In both systems, total cost of mining approaches the block reward. For example, if block rewards are $10 million a day, then $10 million worth of energy is used in PoW. PoST burns through $10 million worth of hard drives.
The cost of PoST is based on scarcity in hard drives, which incentivizes production of hard drives. The cost of PoW is based on scarcity in energy, which incentivizes production of cheap and clean energy.
I'm failing to follow how PoW is fundamentally different than PoST in terms of hardware (and the resources to produce it) necessary to validate blocks.
It seems that the point of PoST is that we get a similar potential of decentralization that we get with PoW with significantly less energy usage.
I somewhat understand the argument of PoW incentivizing production of cheap and clean energy and I hope this is realized ... specifically clean energy, specifically advanced nuclear as its utilization isn't geographically restricted.
The competition has shifted into finding cheaper energy sources, rather than developing more energy efficient ASICs. There's a clear trend in this direction.
Where do you get the 'clean' from?
Usually the cheapest sources are also far away from people, because any local demand will increase energy price. However, when renewables near people have overcapacity, Bitcoin miners can serve as a buyer of last resort. This way, investments in renewables become more profitable.
[0] https://www.weforum.org/agenda/2021/07/renewables-cheapest-e...
We can definitely agree that crypto's demand for electricity basically doesn't care about location. So it puts a floor of demand for electricity generation in remote places. (Also in more accessible places. But there it's relatively less important.)
Electricity is both fungible to an extent, but also not as globally traded as eg wheat or oil.
You are right that on the margin Bitcoin makes generation of renewable electricity more profitable. But it also makes all other electricity generation more profitable, on the margin.
Let's see how this develops.
In what fully decarbonized country do you live? Iceland?
https://ourworldindata.org/grapher/energy-consumption-by-sou...
Energy is somewhat fungible. Every Joule of electricity used on Bitcoin, can't be used for other purposes (apart from heating the data centre..)
Also, like I said in the other comment, most of grid energy is already too expensive for Bitcoin, so mining really makes sense just for any extra capacity which wouldn't have a buyer anyway.
That's only partially true. And your first paragraph explains exactly why.
Compare: most cows are raised for meat, and the leather is just a by-product. However, the extra income from the leather makes raising cows a bit more profitable, thus giving us more cows on the margin.
Similarly, bitcoin mining soaking up excess capacity makes electricity generation slightly more profitable.
Eg instead of running a coal baseload plant and a natural gas peaker, you could run two coal baseload plants and outside of peak periods, you mint bitcoins. (Numbers are just for illustration. You get the point.)
About your first paragraph: yes, supply is elastic in the long run. But opportunity costs still need to be paid. Yes, in the long run you might not be trading off one Joule for another Joule, but you are trading off uses for capital.
(Also keep in mind that even with elastic supply, we still have decreasing marginal returns. There's only so many good sites for hydro-electric generators; all the windiest spots will be full of wind turbines at some point, etc.)
This is like arguing that electric cars are better than diesel, and you retorting: but this tesla crashed into a wall, see electric cars suck!