- Peercoin (http://en.wikipedia.org/wiki/Peercoin), which introduced an alternative concept called proof-of-stake, which essentially dismisses mining in the long run
- Primecoin (http://en.wikipedia.org/wiki/Primecoin), for which the "work" is engineed to be scientifically useful (I'm not sure how useful it actually is)
I really wish the Bitcoin community had seeked more ingenious/efficient alternatives early on... a lot of energy is going to waste now.
Not really. Peercoin's security comes from the developer of the system signing every block. It attempts to use a "Proof of Stake" system where ownership of coins controls mining, but the problem with PoS is, ironically, that there is nothing at stake.
In PoW when you attempt to mine you must expend energy and so you should only mine on a consensus which is likely to be the surviving one if you want your work to not be wasted. In PoS the same is not true, and an optimally rational PoS miner will attempt to concurrently mine all forks which he does not hate.
Originally the signed blocks in PPC were supposed to be a bootstrap mechanism until most of the mining was PoS based, but then some clever miner started mining many possible histories and finding ones where he magically got lucky and his coins were the selected stake for all the blocks.
Primecoin's work isn't scientifically useful— no one had bothered describing it as interesting before it got pulled out as a PoW, and it's far less clear that its not trapdoored (that someone knows how to mine it much faster) than the one way function based proof of work.
You can convert basically any stochastic search into a PoW, but not necessarily a good one (e.g. it might have trapdoors).
More deeply, if your mining work has independent value that that dilutes your incentive to mine on the one true best consensus, since you'll still gain that value even if you mine on a losing consensus.
And ultimately the energy is _not_ wasted: It provides security for the system which is shared by all it's users. In Bitcoin you don't mint coins (with enormous energy costs) or print notes, you don't need bank vaults, or armored cars. You don't need to incarcerate counterfitters, fly around agents, or suffer counterfeiting losses. All currencies have operating costs, if Bitcoin's costs are comparatively good is a complicated analysis which I don't think anyone's done.
* With cash we have to print and distribute cash, and move it around, and run hardware to validate it, and image scan it, and count it, and destroy it. Etc.
* Credit cards require servers, massive backups, authentication procedures, production of specialized hardware, and the same networked infrastructure as bitcoin, as well as server ops, bank managers, customer service. Etc.
* Bitcoin can use any machine, and the same internet as any other program. As chips get faster and more efficient the energy cost goes down.
This is incorrect. The value of the sum total of fees over a certain period, will be equal (or slightly greater) than the cost of the energy required to maintain Bitcoin.
The value of Bitcoin itself is not limited to the amount of energy required to operate it. Confirming a 1M BTC transaction requires the same amount of energy as confirming a 1 BTC transaction, so the cost of the amount of energy expanded is not a limit to the value of Bitcoin.
Is it? How much does Bank of America spend in energy to keep up its servers? Backups? disaster-recovery setups? That's a significant energy cost, too.
Of course any big corporation or administration is going to have a lot of underused ressources and redundancy but it doesn't mean they burn power "for the sake of it" as bitcoin does.
Also, bitcoin is not a bank, it's supposed to be a currency. If big banks were to switch to bitcoin I don't think they would spend less energy doing all you said. So no matter what you think of bitcoin it's fair to say it's not very "green" so far.
Primecoin is not calculating anything particularly useful from a scientific or medical point of view (Cunningham chains).
It seems that the cost of preventing counterfeiting, and other comparable attacks against the conventional financial system, is much lower than than the cost of the proof-of-work calculations done in bitcoin. In fact, by design the cost of these calculations must be significant, otherwise it would be cheap to hijack the bitcoin system.
I'm aware of some alternatives to proof-of-work, but until we see more of this in practice, I will continue to bet on fiat money as the future of money.
Doing a simple google search shows that counterfeiting costs the USA alone $200bn a year which is 1.2% of annual GDP. Current market cap of bitcoin is $10bn. This means that $100m would be comparative. Maybe someone can give me the numbers on mining hardware and electricity prices.
To be completely accurate, we need to include cost of minting physical dollars etc...maybe someone can do a better analysis on all this but I'm highly skeptical that bitcoin costs more to run than conventional financial systems.
Also the correct figure to compare with the market cap of bitcoin is M1 (approx 2.5 Trillion) not US GDP (approx 16 Trillion)
What do you base this assertion on? I have no idea what the US spends annually on preventing counterfeiting. Do you?
David responds, "The work is not useless, it secures the transactions. The public hash chain ensures that Bitcoins can only be spent once... There is currently no known way to make the work more useful. " See http://bitcoin.stackexchange.com/a/334
The long answer is: you cannot secure the network using another any other work. The work done has to be specifically tied to the previous block on the blockchain (made of up transaction data, which is of course unrelated to proteins or anything else "useful" in the view of the questioner). Otherwise, you cannot demonstrably prove the integrity of the blockchain.
The short answer is: they are doing useful work -- they're securing an increasingly large and distributed financial network.