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Author Topic: Proposal: An Alternative Currency that doesn't "waste" energy  (Read 4228 times)
mckoss
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December 06, 2011, 05:26:19 PM
 #21

Here's a modified proposal that addresses "problem 1" - how to allocate reward for those contributing to securing the block chain.

In most ways, this protocol is identical with Bitcoin's, except that it relies on "Proof-of-Stake" as opposed to "Proof-of-Work" (thanks, cunicula for the terminology).  Note that the utility of mining, is to certify a block chain, so that the entire community can agree on a single version of the transaction history.  Bitcoin's protocol is designed to make it expensive for any single bad agent to out-compete the rest of the network, in order to re-write history and invalidate transactions.

About $200 worth of computation resources (electricity, capital costs) are (currently) collectively consumed in creating each block.  So, someone who wants to "re-write history", need spend more than that to replace a block with their own (which is why you should wait for many confirmations before accepting a large transaction as valid in the block chain - it costs about $1,200/hour to go back in time a re-write history).

Given the volume of transactions currently in the Bitcoin network, this is quite a high "tax" we are paying; and it will presumably only be getting worse if the value of Bitcoin rises.

So, why not use the currency itself be staked in order to ordain a block as valid?

  • Someone creates a proposed "next block".
  • Anyone who wants to, can sign that block, by committing some of their Coins to it.  For example, I'll stake 100 Coins over the next 144 blocks (24 hours) - for total of 14,400 "Coin-Blocks" of commitment.
  • When the block has collected enough signatures (the sum of the Coin-blocks committed), the block is considered valid, and a new block can be started.
  • The required block bounty can be adjusted just like the current "difficulty" is adjusted in the Bitcoin protocol.
  • In return for taking some of your Coins out of circulation, you earn a proportional amount of the block payout (e.g., 50 Coins).
  • Each client deducts from the balance of any address used to sign a block, until the expiration block of the commitment (thereby taking it temporarily out of circulation).
  • Clients break ties in potential block chains, by accepting the one with the largest total amount of bitcoin-blocks of commitment.

Mike Koss
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December 06, 2011, 06:13:05 PM
 #22

I see it this way:

Bitcoin
1) Person does labor (office, construction, IT, fries & burgers, whatever)
2) Labor -> Money (paycheck)
3) Money -> Electricity (electric bill from mining)
4) Electricity -> Hashed block and 50BTC reward.

As long as reward > electricity/money/labor, repeat steps 1 to 4

Your proposition
1) Person does labor (office, construction, IT, fries & burgers, whatever)
2) Labor -> Money (paycheck)
3) Money -> Lottery entries
4) Lottery entries -> Accepted block and 50BTC reward.

As long as reward > lottery entries/money/labor, repeat steps 1 to 4

Point is that electricity isn't coming out of thin air. Labor is being exchanged for it (hopefully good productive labor). And as long as the final reward is above the value of the initial labor/money, it doesn't matter what intermediary system gets used. In either case people would create as much "waste" as possible to get the maximum possible Bitcoin reward for their labor. The only possible variable may be efficiency of the process, though in that case the only difference will be how much of the in efficiencies make the money just disappear (inconvenient transaction fees, lost time, etc). Either way the same quantity of labor/money will be "wasted" to achieve the same level of security and reward.

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December 06, 2011, 08:04:00 PM
 #23

y
This will amplify one of the most undesirable effects of capitalism : you can't make money if you don't already have money.

What makes you think Bitcoin is any different?

  • Someone creates a proposed "next block".
  • Anyone who wants to, can sign that block, by committing some of their Coins to it.  For example, I'll stake 100 Coins over the next 144 blocks (24 hours) - for total of 14,400 "Coin-Blocks" of commitment.
  • When the block has collected enough signatures (the sum of the Coin-blocks committed), the block is considered valid, and a new block can be started.
  • The required block bounty can be adjusted just like the current "difficulty" is adjusted in the Bitcoin protocol.
  • In return for taking some of your Coins out of circulation, you earn a proportional amount of the block payout (e.g., 50 Coins).
  • Each client deducts from the balance of any address used to sign a block, until the expiration block of the commitment (thereby taking it temporarily out of circulation).
  • Clients break ties in potential block chains, by accepting the one with the largest total amount of bitcoin-blocks of commitment.

That sounds pretty damn nice. I'm gonna have to educate myself on proof-of-stake.
Okay, but where do the coins come from in the first place? If it's "proof-of-stake" who starts it? How would it possibly work P2P? The point of Bitcoins proof-of-work is that you can go and do the work yourself, show everyone else, they check it, looks good, approved, and everyone invents 50 coins for you.

How would you get a proof-of-stake system started? There are no coins, so you can't even buy a stake in the beginning because the coin doesn't yet exist, but there's no method to make coins so you can't make them. Even if someone did make a "original coin" the next person would have to pay that original person money to create his/her 'stake'. It immediately becomes a ponzi scheme with the original coin maker sitting at the top. 

Energy isn't being "wasted" when you make bitcoins. Its the investment for which the coin is the return. Gold has historically had value because you had to 'waste' energy to mine for it in one way or another. Nearly anything that is at least relatively rare has value if it requires energy to obtain.

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December 06, 2011, 10:48:26 PM
 #24

Okay, but where do the coins come from in the first place? If it's "proof-of-stake" who starts it? How would it possibly work P2P? The point of Bitcoins proof-of-work is that you can go and do the work yourself, show everyone else, they check it, looks good, approved, and everyone invents 50 coins for you.

How would you get a proof-of-stake system started? There are no coins, so you can't even buy a stake in the beginning because the coin doesn't yet exist, but there's no method to make coins so you can't make them. Even if someone did make a "original coin" the next person would have to pay that original person money to create his/her 'stake'. It immediately becomes a ponzi scheme with the original coin maker sitting at the top.  

Energy isn't being "wasted" when you make bitcoins. Its the investment for which the coin is the return. Gold has historically had value because you had to 'waste' energy to mine for it in one way or another. Nearly anything that is at least relatively rare has value if it requires energy to obtain.

I haven't addressed the bootstrapping problem.  You could start with a Genesis block, and then play nice until enough other people joined in and created enough of the currency to support the block commitments in a fairly uniform distributed way.  You could also generate "New Coin" in exchange for destroying a Bitcoin (i.e., enforce a 1:1 exchange rate - at least going one direction).

All the proofs of signing are there in the block for everyone to see and independently verify (signatures just use private keys for any Coin Address) - just like Bitcoin shows the proven small hash value and nonce.

Energy *is* being wasted if you consider that the same amount of *work* can be done for a lower *cost*.


Mike Koss
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December 06, 2011, 11:01:07 PM
 #25

I see it this way:

Bitcoin
1) Person does labor (office, construction, IT, fries & burgers, whatever)
2) Labor -> Money (paycheck)
3) Money -> Electricity (electric bill from mining)
4) Electricity -> Hashed block and 50BTC reward.

As long as reward > electricity/money/labor, repeat steps 1 to 4

Your proposition
1) Person does labor (office, construction, IT, fries & burgers, whatever)
2) Labor -> Money (paycheck)
3) Money -> Lottery entries
4) Lottery entries -> Accepted block and 50BTC reward.

As long as reward > lottery entries/money/labor, repeat steps 1 to 4

Point is that electricity isn't coming out of thin air. Labor is being exchanged for it (hopefully good productive labor). And as long as the final reward is above the value of the initial labor/money, it doesn't matter what intermediary system gets used. In either case people would create as much "waste" as possible to get the maximum possible Bitcoin reward for their labor. The only possible variable may be efficiency of the process, though in that case the only difference will be how much of the in efficiencies make the money just disappear (inconvenient transaction fees, lost time, etc). Either way the same quantity of labor/money will be "wasted" to achieve the same level of security and reward.

I would argue that there is a potential for Bitcoin mining to consume very large amounts of resources, on the orders of millions of dollars worth of electricity and computer capacity every day.  It's closer to $20,000 per day now.  People are fine "losing" that much, as they get at least that amount in Bitcoin in return.  But wouldn't it be better if we could have a system that had all the safety and security and decentralized control of Bitcoin, but WITHOUT the extra overhead?  I would think that would be a *good thing*.

BTW - after thinking about it, I would agree with other users here that a "lottery" per se may not be essential - I think it could be replaced with pro-rata return on investment.

Mike Koss
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December 06, 2011, 11:02:43 PM
 #26

Energy *is* being wasted if you consider that the same amount of *work* can be done for a lower *cost*.

Not sure I understand you correctly here, but (diminishing returns) as long as each extra bit of work can get me a bit of a return, won't people continue to exchange/waste work to keep buying lottery tickets until it's no longer profitable, the same way people continue to exchange/waste work for mining rigs rigs and electricity until mining is no longer profitable? What is the difference between $25,000 being spent on lottery tickets to secure a system, and $25,000 being spent on mining to secure a system? And if the former is less than $25,000, how do we know it's just as secure, if security largely depends on it being too costly to attack a system?
I'm trying to look at this as a series of simple math problems, and I feel I may be missing a variable that would differentiate the two systems. Maybe the whole system can be made way cheaper to run simply by lowering the rewards (already automatic) and lowering the transaction fees? People won't mine/waste electricity of the cost of mining drops below the payout amount.

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December 06, 2011, 11:22:30 PM
 #27

I see it this way:

Bitcoin
1) Person does labor (office, construction, IT, fries & burgers, whatever)
2) Labor -> Money (paycheck)
3) Money -> Electricity (electric bill from mining)
4) Electricity -> Hashed block and 50BTC reward.

As long as reward > electricity/money/labor, repeat steps 1 to 4

Your proposition
1) Person does labor (office, construction, IT, fries & burgers, whatever)
2) Labor -> Money (paycheck)
3) Money -> Lottery entries
4) Lottery entries -> Accepted block and 50BTC reward.

As long as reward > lottery entries/money/labor, repeat steps 1 to 4

Point is that electricity isn't coming out of thin air. Labor is being exchanged for it (hopefully good productive labor). And as long as the final reward is above the value of the initial labor/money, it doesn't matter what intermediary system gets used. In either case people would create as much "waste" as possible to get the maximum possible Bitcoin reward for their labor. The only possible variable may be efficiency of the process, though in that case the only difference will be how much of the in efficiencies make the money just disappear (inconvenient transaction fees, lost time, etc). Either way the same quantity of labor/money will be "wasted" to achieve the same level of security and reward.

I would argue that there is a potential for Bitcoin mining to consume very large amounts of resources, on the orders of millions of dollars worth of electricity and computer capacity every day.  It's closer to $20,000 per day now.  People are fine "losing" that much, as they get at least that amount in Bitcoin in return.  But wouldn't it be better if we could have a system that had all the safety and security and decentralized control of Bitcoin, but WITHOUT the extra overhead?  I would think that would be a *good thing*.

BTW - after thinking about it, I would agree with other users here that a "lottery" per se may not be essential - I think it could be replaced with pro-rata return on investment.

I get what your saying- but it's hard to see what people would be investing into if there wasn't some sort of cost to it.

Others have mentioned the idea of the hashing process doing something "useful" IE: perhaps curing cancer or some sort of SETI signal processing, but there is a very convincing (although I can't point to where it is at the moment) argument as to why the hashing process can't be anything 'useful' in an outside sense if the integrity of the system were to be maintained.


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December 06, 2011, 11:27:35 PM
 #28

Energy *is* being wasted if you consider that the same amount of *work* can be done for a lower *cost*.

Not sure I understand you correctly here, but (diminishing returns) as long as each extra bit of work can get me a bit of a return, won't people continue to exchange/waste work to keep buying lottery tickets until it's no longer profitable, the same way people continue to exchange/waste work for mining rigs rigs and electricity until mining is no longer profitable? What is the difference between $25,000 being spent on lottery tickets to secure a system, and $25,000 being spent on mining to secure a system? And if the former is less than $25,000, how do we know it's just as secure, if security largely depends on it being too costly to attack a system?
I'm trying to look at this as a series of simple math problems, and I feel I may be missing a variable that would differentiate the two systems. Maybe the whole system can be made way cheaper to run simply by lowering the rewards (already automatic) and lowering the transaction fees? People won't mine/waste electricity of the cost of mining drops below the payout amount.

That probably puts it most succinctly, and I haven't thought about it that way previously. The money goes into something one way or another. The spent electricity feels like waste- but even that can be useful.

A quick solution to your question would be for miners to use their waste "heat" for something 'useful'. Many heat their homes with it, and I've heard of some people drying fruit with it. Rather then redesign the coin, why not redesign the miner? Indeed if FPGA's take off there might be much less waste heat/electricity all in one go.

Sometimes the simplest solution is the least obvious. :-)

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December 06, 2011, 11:29:41 PM
 #29

BTW - after thinking about it, I would agree with other users here that a "lottery" per se may not be essential - I think it could be replaced with pro-rata return on investment.

Lottery, pro-rated universal ROI, and pure deflation would have the same effect. If everyone who owns Bitcoins gets 50% interest, then the supply has moved but demand hasn't. An individual Bitcoin would be worth 66% as much afterwards. 100 / (100 + 50)

Any system that does not introduce coins at the expense of other users is de facto purely deflationary.
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December 06, 2011, 11:35:54 PM
 #30

That probably puts it most succinctly, and I haven't thought about it that way previously. The money goes into something one way or another. The spent electricity feels like waste- but even that can be useful.

A quick solution to your question would be for miners to use their waste "heat" for something 'useful'. Many heat their homes with it, and I've heard of some people drying fruit with it. Rather then redesign the coin, why not redesign the miner? Indeed if FPGA's take off there might be much less waste heat/electricity all in one go.

Sometimes the simplest solution is the least obvious. :-)

I've heard that switching around bits in processors uses almost no energy whatsoever, and most of the wattage used is expelled as waste heat. If true, low wattage FPGAs only have an initial fixed cost as the barrier, and long term, people will likely just buy more FPGAs, pushing the difficulty level up, and getting the energy costs (variable cost) of all running FPGAs right back up to where it isn't profitable to mine anymore. So the only effect they will have is higher initial investment and more hardware doing the work, much like the switch from CPU to GPU mining.

Simplest solution to this whole thing is already built in: decreasing reward amounts, and (hopefully) market determined transaction fees.

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December 07, 2011, 12:21:45 AM
 #31


Others have mentioned the idea of the hashing process doing something "useful" IE: perhaps curing cancer or some sort of SETI signal processing, but there is a very convincing (although I can't point to where it is at the moment) argument as to why the hashing process can't be anything 'useful' in an outside sense if the integrity of the system were to be maintained.



I'd love to hear more on this. I'm still leaning towards believing the use of intrinsically valueless computational intensity as a obstacle/control is a design flaw, maybe even an awkward and artificial hack  Smiley  I'm also unconvinced that the desired characteristics of a medium of exchange like bitcoin should require it.

Do I have a better idea at a detail level? Not so far, but the way various spin offs of bitcoin all seem to embrace this "feature" as part of the territory makes me wonder if bitcoin itself is a restrictive paradigm calling for the application of some outside-the-box reconsideration.

"Bitcoins are for the most part as useless as they ever were."
 - Edward50
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December 07, 2011, 12:27:59 AM
 #32

When you do folding@home, you waste a MASSIVE amount of energy and computational power on useless calculations. Most of the results are wrong and can't be used. Once in a while, someone's computer calculates the problem correctly, and that result is the only one that is useful (possible drug or whatever). With bitcoin, there is massive waste, resulting in one calculation that is useful (transactions between a bunch of people get recorded in the ledger and money can change hands). You could argue about which single correct calculation is more important/beneficial, but other @home distributed computing setups are just as wasteful.

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December 07, 2011, 07:50:14 AM
 #33

When you do folding@home, you waste a MASSIVE amount of energy and computational power on useless calculations. Most of the results are wrong and can't be used. Once in a while, someone's computer calculates the problem correctly, and that result is the only one that is useful (possible drug or whatever). With bitcoin, there is massive waste, resulting in one calculation that is useful (transactions between a bunch of people get recorded in the ledger and money can change hands). You could argue about which single correct calculation is more important/beneficial, but other @home distributed computing setups are just as wasteful.

Thank you for reminding us this fact.
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December 07, 2011, 10:29:51 AM
 #34

When you do folding@home, you waste a MASSIVE amount of energy and computational power on useless calculations. Most of the results are wrong and can't be used. Once in a while, someone's computer calculates the problem correctly, and that result is the only one that is useful (possible drug or whatever). With bitcoin, there is massive waste, resulting in one calculation that is useful (transactions between a bunch of people get recorded in the ledger and money can change hands). You could argue about which single correct calculation is more important/beneficial, but other @home distributed computing setups are just as wasteful.

The definition of waste is key here. If most of the various trial calculations in a molecular chemistry project only help by excluding non-solutions, they aren't wasted, they are necessary, otherwise they wouldn't be performed at all.

On the other hand, there's bitcoin, where the computational obstacle is an entirely artificial construct of a man-made game theory exercise, and is actually superfluous to the implementation and use of a medium of economic exchange. Various mediums of exchange that do not require such an obstacle are existence proofs of this superfluousness.

"Bitcoins are for the most part as useless as they ever were."
 - Edward50
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December 07, 2011, 11:01:27 AM
 #35

I think it's a non issue. By the time Bitcoin has a substantial user base, there will be technological solutions to energy efficiency.

+1

This is already happening. Buttefly Labs is bringing out specialized hardware that can mine 1 Gh/s @ 20 W.

Expect energy consumption to decrease as difficulty increases.

5 years from now, most mining will probably take place in specialized complexes in Iceland comprising data centers and geothermal power plants.
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December 07, 2011, 11:11:10 AM
 #36

I think it's a non issue. By the time Bitcoin has a substantial user base, there will be technological solutions to energy efficiency.

+1

This is already happening. Buttefly Labs is bringing out specialized hardware that can mine 1 Gh/s @ 20 W.

Expect energy consumption to decrease as difficulty increases.

5 years from now, most mining will probably take place in specialized complexes in Iceland comprising data centers and geothermal power plants.

Yes, a huge industry around doing nothing that actually needs to be done in the most resource intensive way possible makes perfect sense  Wink

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December 07, 2011, 11:47:48 AM
 #37

I think it's a non issue. By the time Bitcoin has a substantial user base, there will be technological solutions to energy efficiency.

+1

This is already happening. Buttefly Labs is bringing out specialized hardware that can mine 1 Gh/s @ 20 W.

Expect energy consumption to decrease as difficulty increases.

5 years from now, most mining will probably take place in specialized complexes in Iceland comprising data centers and geothermal power plants.

Yes, a huge industry around doing nothing that actually needs to be done in the most resource intensive way possible makes perfect sense  Wink


a) It's not going to be a huge industry, in relation to the bitcoin economy as a whole, just like gold mining isn't a huge industry. 

b) If you want an example for "a huge industry doing nothing that needs to be done" then look at the marketing industry!  Both Coca-Cola and Pepsi "waste" huge amounts of energy and labor on marketing and all it achieves is to keep their market share approx. constant.    If both of them mutually decided to stop with all the aggressive marketing, they could probably keep their market share and all those resources could be used for something "useful".

Capitalism is suboptimal.  Deal with it.
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December 07, 2011, 02:05:44 PM
 #38

When you do folding@home, you waste a MASSIVE amount of energy and computational power on useless calculations. Most of the results are wrong and can't be used. Once in a while, someone's computer calculates the problem correctly, and that result is the only one that is useful (possible drug or whatever). With bitcoin, there is massive waste, resulting in one calculation that is useful (transactions between a bunch of people get recorded in the ledger and money can change hands). You could argue about which single correct calculation is more important/beneficial, but other @home distributed computing setups are just as wasteful.

The definition of waste is key here. If most of the various trial calculations in a molecular chemistry project only help by excluding non-solutions, they aren't wasted, they are necessary, otherwise they wouldn't be performed at all.

On the other hand, there's bitcoin, where the computational obstacle is an entirely artificial construct of a man-made game theory exercise, and is actually superfluous to the implementation and use of a medium of economic exchange. Various mediums of exchange that do not require such an obstacle are existence proofs of this superfluousness.

I'm not sure why you say it being an "artificial construct" changes anything. It's one of the solutions to a problem we have, and other known ones do not cost less. If there is a better solution, then we could switch to it, just like folding@home would. There aren't any mediums of exchange I know of which tackles the same problem, so I didn't get what you meant there. I think the "right" results in each case is valuable enough to justify waste (almost by definition), so I don't think the definition of waste differs.

One thing worth noting is, the computational power assigned to Bitcoin is to create a distributed notary system, and as such it can be, and is, used for anything that requires such a system. So it is essentially a structure that Bitcoin requires, but useful and valuable beyond it.

Having said all this, topic proposal is very interesting. Satoshi's proof-of-work based system solves a lot of issues at once though, I'm eager to see ideas about how they can be addressed with such a system.
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December 07, 2011, 02:12:23 PM
 #39

I think it's a non issue. By the time Bitcoin has a substantial user base, there will be technological solutions to energy efficiency.

+1

This is already happening. Buttefly Labs is bringing out specialized hardware that can mine 1 Gh/s @ 20 W.

Expect energy consumption to decrease as difficulty increases.

5 years from now, most mining will probably take place in specialized complexes in Iceland comprising data centers and geothermal power plants.

Yes, a huge industry around doing nothing that actually needs to be done in the most resource intensive way possible makes perfect sense  Wink


a) It's not going to be a huge industry, in relation to the bitcoin economy as a whole, just like gold mining isn't a huge industry. 

b) If you want an example for "a huge industry doing nothing that needs to be done" then look at the marketing industry!  Both Coca-Cola and Pepsi "waste" huge amounts of energy and labor on marketing and all it achieves is to keep their market share approx. constant.    If both of them mutually decided to stop with all the aggressive marketing, they could probably keep their market share and all those resources could be used for something "useful".

Capitalism is suboptimal.  Deal with it.

Yeah, that's actually not true. If they were to stop advertising tomorrow they would immediately lose market share to such obvious alternatives like, water. The industry has studied this topic to death. If they didn't HAVE to spend it on advertising they would gladly give themselves bonuses.

Marketing is critical to capitalism. It's critical to a lot of things actually.

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December 08, 2011, 06:49:11 AM
 #40

I think it's a non issue. By the time Bitcoin has a substantial user base, there will be technological solutions to energy efficiency.

+1

This is already happening. Buttefly Labs is bringing out specialized hardware that can mine 1 Gh/s @ 20 W.

Expect energy consumption to decrease as difficulty increases.

5 years from now, most mining will probably take place in specialized complexes in Iceland comprising data centers and geothermal power plants.

Yes, a huge industry around doing nothing that actually needs to be done in the most resource intensive way possible makes perfect sense  Wink


a) It's not going to be a huge industry, in relation to the bitcoin economy as a whole, just like gold mining isn't a huge industry. 

b) If you want an example for "a huge industry doing nothing that needs to be done" then look at the marketing industry!  Both Coca-Cola and Pepsi "waste" huge amounts of energy and labor on marketing and all it achieves is to keep their market share approx. constant.    If both of them mutually decided to stop with all the aggressive marketing, they could probably keep their market share and all those resources could be used for something "useful".

Capitalism is suboptimal.  Deal with it.

Yeah, that's actually not true. If they were to stop advertising tomorrow they would immediately lose market share to such obvious alternatives like, water. The industry has studied this topic to death. If they didn't HAVE to spend it on advertising they would gladly give themselves bonuses.

Marketing is critical to capitalism. It's critical to a lot of things actually.
not water, water doesn't have caffeine
what they're really competing against is tea and coffee

in fact, they're trying to supplant tea as the drink of choice in other countries by aggressive marketing

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