A friend of mine brought to y attention
a blog post that is challenging Bitcoin power consumption as misallocation of resources: the article suggests that hashing algorithms that provide "
useful" computing resources (a la primecoin) instead of just SHA256 would be preferrable.
The claim is ludicrous and ignores the design objectives of Bitcoin, namely security and decentralization.
Security:
If the hashing results have some commercial or desirable applications, then the opportunity cost of a 51% attack is lower.
Decentralization:
If the hashing results have some commercial or desirable applications, then the incentives for mining pools to stay away from the 51% market share mark are removed: the drop in the value of the coins due to excessive centralization could be compensated by the byproducts of the mining activity.
In general, the kind of criticism found in the article ignores the high environmental cost of the status quo : logistics of handling bank notes, carbon footprint of the trips to the bank, to notaries or other intermediaries, redundant data centers of the 300 Billion payment industry, etc..
The argument of the article is completely off target: instead, there is a valid environmental case against alt-coins because alternate crypto-currency networks consume incremental power without providing any incremental gain in the level of protection against double spend attacks and/or centralization.
In other words, we would be better off if the computing power consumption was concentrated on the bitcoin network instead of being spread on multiple, less secure altcoins.
I am interested in hearing your thoughts about this frequently asked question (Is Bitcoin green ?).
