Transaction

j"1LAnZuoQdcKCkpDBKQMCgziGMoPC4VQUckMi<div class="post"><div class="quoteheader"><a href="https://bitcointalk.org/index.php?topic=721.msg7771#msg7771">Quote from: gridecon on August 06, 2010, 01:52:00 AM</a></div><div class="quote">I believe that the amount of energy input required to the bitcoin economy represents a serious obstacle to its growth. I think in the long-term, transactions may be even more serious than minting in this regard, but I will for the moment discuss minting because it is more precisely bounded and defined. The idea that the value of bitcoins is in some way related to the value of the electricity required, on average, to mint a winning block is generally accepted, but the precise nature of this relationship is contentious. <br/></div><br/>I don't accept that.<br/>The idea that the value of a Bitcoin is in some way related to the value of the electricity required on average is a fallacy that has been widely spread by armchair economists to get-rich-quick merchants who don't understand the system.<br/><br/><div class="quoteheader">Quote</div><div class="quote">My contention is that both of these arguments miss the point and the real problem, which is the fundamental perversity of wasting large amounts of energy and computations in generating the winning blocks for the minting process. The minting process exists because of the necessity of actually "printing" the currency, and certain desirable properties of crypto-math for making the currency's behavior predictable. The fact that the current minting process requires a large energy input of computational work is highly unfortunate and has the perverse consequence that bitcoin may actually be "destroying wealth" in the sense of wasting energy producing a digital object worth less than the resources invested in it.<br/></div><br/>It's not about the minting at all.<br/><br/>The computation required is to maintain the integrity of the system by growing the block chain which serves as a 'timestamp' of transactions.<br/>It is probably possible to make the computation required for this process less than it currently is, but it would be at the expense of disk space or bandwidth or integrity or processing power required to validate transactions, or all of the above. The current system provides a good balance of all these things.<br/><br/>The minting is just a side effect, and an elegant way to reward those who have contributed processing power to the integrity of the system.<br/>There are many other threads that try to propose 'better' ways of rewarding these contributions, but the 'winner takes all' system is the one we have at the moment.<br/><br/><div class="quoteheader">Quote</div><div class="quote">As is often pointed out, a currency does not necessarily have, or need to have, any inherent value - a medium of exchange is a useful tool and can have value purely as a consequence of social convention. The cost of production of bitcoins in electricity consumed represents a waste, a "thermodynamic burden" that the currency has to carry. Consider a hypothetical alternative digital currency called "compucoin", which purchases cpu cycles from nodes on the network. The market value of this currency would converge very closely with the cost of electricity required to generate cpu cycles. Instead of costing cpu cycles to mint, the value of the cpu cycles the coins could be exchanged for would create a rational basis for the currency's value and integrate it with an existing market. I imagine that alternatives to Bitcoin (many of them probably sharing a lot of Bitcoin's source code) will inevitably emerge and Bitcoin's current minting process makes the currency "expensive" in terms of energy input. I believe this places it at a competitive disadvantage to other currencies and can only hinder its widespread adoption and long-term value.<br/></div><br/>Good luck with implementing compucoins..<br/><br/>Again, it is <b>not about the minting</b><br/><br/></div> text/html