What is all this computing power used for?

[wopwop]

It's purely wasted. it doesn't even waste it on trying to find prime numbers which at least has some scientific value.

The power isn't wasted on securing the network either, the reward is doing that. The reward is the incentive for people to waste power to mine, and it prevents the 50% attack which would kill bitcoin. The thing is as difficulty to mine rises, the mining is becoming more and more centralized, which will cause a more and more likely event of 50% attacks. Bitcoin supporters defend this by saying that that centralized power will have no interest in doing 50% attacks because it would destroy his money infrastructure (that would be bitcoin). Ironically, the Federal Reserve has no interest in destroying their dollar either, it's their money infrastructure and their power on the line.

[tondaS]

It's purely wasted. it doesn't even waste it on trying to find prime numbers which at least has some scientific value.

What is waste is subjective. Security is not waste imho

[wopwop]

It's purely wasted. it doesn't even waste it on trying to find prime numbers which at least has some scientific value.

What is waste is subjective. Security is not waste imho

I don't think you even know how the 'security' truly works. It's pretty simple: there is no security, atleast not on the peer-to-peer level which is the foundation of bitcoin. See my extended post above

[herzmeister]

This is a good question.  Primecoin finds prime numbers....

What does bitcoin do though?  You cannot tell me that all that power is just going up in smoke....

then why do you think we expend a lot of energy and fuel to dig gold out of the ground? is it necessary?

you can see mining like finding serial numbers for Bitcoins (although that is technically not entirely accurate, but may be a good short comparison or explanation for newcomers) in order to limit the money supply in order to make bitcoins valuable.

Primecoin is a nice experiment, but it's yet unproven if those chains of prime numbers provide any additional value.

I agree energy expenditure required by proof-of-work is not the nicest thing about Bitcoin, but the only alternatives known so far to reach consensus in a decentralized system are proof-of-stake and a web of trust. Both have other problems.

In theory, a centralized digital currency and transaction system would require only a database and could be much more energy efficient, but I'm not so sure in practice when I look at the big banks and all their COBOL crap they're still running on inefficient, legacy mainframes in giant data centers.

[madmadmax]

If you kill trees and print up fancy toilet paper with heads of dead presidents then it's not "going up in smoke" but God forbid you let your Bitcoin miner run, the environment yo!

[prezbo]

It's purely wasted. it doesn't even waste it on trying to find prime numbers which at least has some scientific value.

Those prime numbers primecoin is searching for have absolutely no scientific value. The problem is you need a very specific "cryptographic puzzle" to do what the bitcoin puzzle does, one that's difficult to solve but very easy to verify. Protein folding and such "useful" problems are almost never of such type.

[DannyHamilton]

If you kill trees and print up fancy toilet paper with heads of dead presidents then
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Trees?

I didn't think any currency was printed on paper made from trees.

I'm pretty sure that U.S. currency is 75% cotton and 25% linen

[greyhawk]

If you kill trees and print up fancy toilet paper with heads of dead presidents then
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Trees?

I didn't think any currency was printed on paper made from trees.

I'm pretty sure that U.S. currency is 75% cotton and 25% linen

I'm pretty sure there hasn't been currency made from wood pulp paper in any country since at least the 19th century. Even wartime emergency money (Notgeld) wasn't printed on wood pulp paper.

[Mitchell]

Thats crazyness.  You would think that Satoshi would have worked in some way for all this electricity and power to be useful for something else also.  Kind of sad actually.  Fold some proteins at least

The work is useful.   If you build a depository safe, install a security system, hire round the clock guards, and as a result of the security nobody robs the depository was the resources "wasted"?  Would it have been better to try and making it do something else at the same time?  Would it be better if that compromise resulted in the depository being robbed?

Creating a decentralized consensus is a difficult problem, an incredibly difficulty problem, there has been NO solution to this prior to Bitcoin.  The work isn't wasted the work protects the network.  Bitcoins are worth more than a billion dollars BECAUSE of this solution.

I think this is the best answer you can give him.

[Gabi]

NO

NO

This convinced me so much i didn't read further...
The last sentence was usefull tho. But the first two were absolutely a waste of time. Give me more than these "NO" man. Tho i got enough from other comments, I'm sure you can develop more than just "NO". And don't shout at me. It doesn't help me understand better. When explaining you have to lower yourself to the level of your dumbest listener. otherwise you're wasting your time. (Yeah i know i'm gready, give a no and i'm asking for more, give me a second one and i'm asking for a full blast explanation)

Security comes at a cost and we all sharing this cost. For once, mankind is pretty generous. Seems almost too good to be true

Ok then

1)Computing power is NOT used to create bitcoins. You can create all the coins even with a single Pentium 1

2)The algorithm is open source and known, it is just sha256 hashing 

[DannyHamilton]

Ok then

1)Computing power is NOT used to create bitcoins. You can create all the coins even with a single Pentium 1

If you don't mind, could you explain what you mean by this?  I'm not sure that you and I are representing the same concept when using the words "create all the coins".

[justusranvier]

The computing power is used to increase the amount of work an attacker would need to expend in order to disrupt the network.

"Useless" computations are better for this, because it means any computations an attacker performs which are not sufficient to achieve the effect they want truly are wasted, making failed attacks very expensive.

[Dabs]

It is used to heat up cold homes.

[e4xit]

All Bitcoin nodes audit all transactions. Bitcoin is predominantly zero trust... everyone checks everything, and this is important to creating the economic incentives that keep miners honest.

Mining exists to make transactions irreversible through people expending energy "cementing" the transaction history they believe to be the official history, and in doing so producing a consensus which can be cheaply validated by anyone.

Love it - nicely put.

[Gabi]

It is used to heat up cold homes.

Good suggestion, especially now that winter is coming 

[BTChap]

Ok then

1)Computing power is NOT used to create bitcoins. You can create all the coins even with a single Pentium 1

2)The algorithm is open source and known, it is just sha256 hashing 

Nice answer, gave a lot more intel than the previous one. Cheers mate :-)

[The Bitcoin Co-op]

I think there probably are practical problems besides just finding prime numbers that could be solved for the purpose of Bitcoin. There's no reason not to switch to that. It's probably just not a priority right now.

[DannyHamilton]

I think there probably are practical problems besides just finding prime numbers that could be solved for the purpose of Bitcoin.
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Do you have any examples, or are you just making stuff up because you like the way it sounds?

[hayek]

Use this metaphor:

Every computer participating in mining is a type of digital accountant. Every accountant is competing for the privilege of writing a page in a universal ledger everyone can read and check for errors. If an account guesses a correct number and records a page in the ledger they are awarded a sum of bitcoin.

This has been the best way of explaining mining to folks that I have encountered.

The guessing game being played is the correct header for the next block, I believe, but someone could probably correct that for me.

[DeathAndTaxes]

I think there probably are practical problems besides just finding prime numbers that could be solved for the purpose of Bitcoin. There's no reason not to switch to that. It's probably just not a priority right now.

How much have you thought about it because it not a trivial problem.

A proof of work must have the following characteristics:
a) have an adjustable "difficulty" which works under a very large range (bitcoin difficulty is ~150,000,000x higher today than at genesis and likely will go another 10x to 100x over next year).

b) be very fast to verify (<100ms).   Bitcoin has 52K blocks per year so someon bootstrapping 10 years after genesis woould need to validate 520K blocks in a timely manner.

c) the input of the proof must be linked to a prior proof to prevent precomputation (Bitcoin uses the prior block hash as input for current block hash to prevent solving "future" blocks).

d) the proof should be relatively compact (Bitcoin uses a 32 byte hash)

e) the solution should be probabilistic.  This means that given two competitors and one has 10x the computing power the smaller competitor should find ~9% of the solutions.  Many problems are not probablistic such that the faster competitor will always arrive at a solution first.  That would be bad from a security standpoint.

f) require no outside "trusted" source or central authority for issuing or assigning work.

h) have a mechanism to prevent  duplicated work across the network without any communication to a peer or outside data source.

Most simplistic "answers" fail this test.   For example using folding@home would work as a proof of work as long as you are willing to have the administrators of folding@home be the central bank with complete control and authority over the currency.