Bitcoin mining pointless?

[allinvain]

I think the original poster's title for the thread has just been misleading people and diverting attention away from his point.  He wasn't saying Bitcoin mining was "pointless" in that it shouldn't be done or has no value (assuming of course that Bitcoin ought to be participated in and has value itself).  He was saying that it's not a logically necessary requirement that the mining activity not have positive spillover effects.

I think you are right. The thread title is a bit misleading and perhaps it should be changed. So in a sense the OP wants the proof of work mechanism to perform some function that not only is of value to the bitcoin network but also have some external positive social benefit. I think the idea is noble in and of itself but what on deep inspection it may be a bit impractical and difficult to implement technically.

I keep wanting to return to gold as my example.  Say you go back in time and, somewhat impolitely, pretend to be an Aztec god and have the opportunity to convince the Aztec people to use either gold or some alternative to gold.  Gold and the alternative have, for monetary purposes, similar properties:  they're equally rare, equally distributed throughout the earth, take roughly equal resources to mine, and so on.  If you were trying to help the Aztecs, wouldn't you want to look at whether the mining process for gold, versus its alternative, happened to lead to positive or negative effects unrelated to the use of the object of the mining as a currency?  For example, maybe in the process of mining gold, the Aztecs will discover valuable sources of water or other information about what lies below the earth, whereas mining for the other, they won't.  Maybe mining for the other will ultimately poison them, whereas mining for gold won't.  Why wouldn't you look at those considerations when choosing the properties of the future currency?

In designing Bitcoin, which is of course an ongoing process even now, the community has that choice.  It's not a question of whether mining is "pointless"; it's a question of what to count as "mining" to make it have value beyond, perhaps, its value to the Bitcoin network alone.

The question is who decides what should count as "useful" mining? How do we go about changing the nature of the mining work (hence the nature of the proof of work mechanism) on the fly when it is decided (by whatever mechanism) that the current mining work is no longer useful or is not bearing fruit. Will changing the mechanism cause incompatibility issues in the network. Will altering the mining work somehow "centralize" the decentralized nature of the bitcoin currency (reason being something has to tell each miner what new type of work is required of it - that something would most likely be a single server or cluster or some single entity)?

Also what if changing the mature of the mining work creates an added value? Whom stands to benefit the most from this added value service? Humanity as a whole or a specific group of individuals or corporation or vested interests? Let's take for pharmacological computational work? Who will benefit from any potential discoveries that come as a result of this mining work? Who own the rights (and therefore profits) to any beneficial discoveries that come about as a result of the mining process?

These are all questions that need to addressed. Sure it sounds noble and it would be *nice* if the mining process resulted in something of benefit to everyone. Lol I think at that point bitcoin would become backed by altruism in as sense - I'm joking of course.  

Also am I mistaken but shouldn't the ideal currency have absolutely no tangible benefits whatsoever? After all we don't use water as money do we? Gold is not the ideal currency but it very much closely approximates that ideal. Bitcoin in a sense is the perfected ideal currency. I think that bitcoins should have no "benefit" and no inherent tangible value other than that which its USERS give it.

Granted I'm no economist so I may not know what the hell I'm talking about

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[allinvain]

How do we go about changing the nature of the mining work (hence the nature of the proof of work mechanism) on the fly when it is decided (by whatever mechanism) that the current mining work is no longer useful or is not bearing fruit.

Oh, I think that's the easy part; you just change the main client, as has already happened a few times.  People routinely suggest that it won't be difficult to change the protocol if, say, SHA256 were compromised.  Essentially, it's some combination of open deliberation and then a decisive change to the main client by its developers, hoping that it will be adopted by users of the network.  There's theoretically competition, though little in practice (as is ordinarily true in many markets).

Perhaps we can give people a choice whether to run this alternative mining work. As long as the having two proof of work mechanisms does not cause any conflicts it would be interesting to see how many people would opt in to do this other proof of work.

For what it's worth, though, I think these are all the right questions to be asking.

Yep I agree. Discussion is always a good thing, and what happens I guess will happen.

So, what do you folks think would be the best idea for an alternative proof of work job to set our miners to?

[rezin777]

Oh, I think that's the easy part; you just change the main client, as has already happened a few times.  People routinely suggest that it won't be difficult to change the protocol if, say, SHA256 were compromised.  Essentially, it's some combination of open deliberation and then a decisive change to the main client by its developers, hoping that it will be adopted by users of the network.  There's theoretically competition, though little in practice (as is ordinarily true in many markets).

I suggest you offer a bounty in the Project Development forum.

[gareth69]

I'm ill-informed and completely new to this so please forgive my impertinence.

From my very limited understanding of what Bitcoin mining involves my first impression is that it seems a colossal waste of energy.

My understanding is that a computer mines bitcoins by solving mathematical puzzles whose difficulty increases as time goes on. These puzzles are pointless in that they do not pertain to anything in the real world. Completing these puzzles does not achieve anything unlike something like Folding@Home or SETI.

Electricity is used to power computers to complete these puzzles. All of the overheads (energy, hardware, time, effort etc) are less than the price fetched by the resultant bitcoins so for some people it makes sense to devote their computer or server farm's time to mining them. This much is crystal clear.

It seems to me though that this is very strange exercise. Nothing real is being produced by the huge amount of electricity used to mine these bitcoins. Something virtual, certainly, but it seems odd that something virtual should have to have so much real tangible energy spent on it to imbue it with value.

I understand that there has to be some sort of labour process (machine rather than human in this case) for the Bitcoin to have any intrinsic value, but this does seem to be quite an energy inefficient way to go about it.

I think I have probably misunderstood something quite fundamental. I'm not trying to criticise this community but rather just understand exactly how this Bitcoin mining works and see what I've failed to understand.

I think you are missing the point. Things have value because humans perceive them to have value.

The so called "real" money at your bank are also just ones and zeros on a computer. HOwever, it's much worse than bitcoin. The only way new USD or Sterling can by created is for the Government or individuals to borrow their own currency into existence from international banks.

Thus the private banking cartel is able to create money from nothing and profit from the interest thereof. Indeed the whole income tax system it can be agued is a necessary evil to fund the government bond market. This is where *your* (and your children's) future income and wealth are pledged as collateral for government loans.

In our system money IS debt, and the only way to pay off the debt is to issue more money which means even more debt. This is why in the UK despite having grown our GDP by 400% since 1980 we are being asked to work *even longer* before we retire. This is because any increase in GDP is met by a concomitant increase in debt. If you think this is insane...it's because it is.

Bitcoin is not just some scam to make money, it is also an attempt to take away the power of corrupt central banks and governments. Bitcoins are debt free money that *the banks can't control*...think of it as daylight spilling onto the vampire squid of banking.

check out money as debt on youtube for an interesting look at fractional reserve banking.

[benjamindees]

There is a positive externality to Bitcoin mining.

It drives up energy costs, hastening the end of fossil fuels and the adoption of renewable energy.

[Jaime Frontero]

pretty dang high-falutin' buncha three-dollar words there, boys...

"Bitcoin mining pointless?"

making some money, honest and fair.

works for me...

[Panther Modern]

In fact, right now the option to turn on mining is being removed from the default client - there's no point to mining unless you have a GPU setup. The gold rush has peaked - at this point, only established miners and really determined newcomers will likely set up shop and continue mining.

I'm very new to this entire concept, but for what specific reason has the gold rush "peaked" in your opinion? Aside from the fluctuations of the worth of bitcoins themselves, what variable determines the longevity of mining's profitability? Is the end of this "gold rush" simply a result of new miners driving up the difficulty?

[LightRider]

All currency is pointless. Unfortunately we live in a society dominated by a monetary system. Until that changes, vast amounts of resources will be wasted in service to such systems. Bitcoin is much better than the other currencies we have today, but that does not make it any less pointless.

[allinvain]

All currency is pointless. Unfortunately we live in a society dominated by a monetary system. Until that changes, vast amounts of resources will be wasted in service to such systems. Bitcoin is much better than the other currencies we have today, but that does not make it any less pointless.

All currency is pointless?! I disagree. A currency system serves to facilitate the trade of products, services, and property in an economic system based on scarce or limited resources. Currency would be pointless if we can have everything we want when we want it how we want it..ie if we had unlimited resources. Currency also serves as a unit of account and a method of tracking "who gets what" and "how much" depending on how useful their services are to the rest of society (ie how much society values their contribution - this being totally subjective but that's besides the point).

Just because the current monetary system is corrupt and faulty it does not necessarily follow that ALL currencies/monetary systems are pointless.

I see that you're an advocate of the Venus project, so I think I now understand why you made that assertion. No doubt from the point of view of the proponents of the Venus project currency is pointless because they believe that the application of technology can bring about a Utopian society where money will not become necessary because we can all have what we want. But my major gripe with this idea is that it's not realistic because the Earth does not have unlimited resources. If we were a space based society then it would be a different game. In space we truly can have ALMOST unlimited resources. But I am digressing here.

Also without currency the society you live in would not have developed. Currency is better than NO currency.

[LightRider]

All currency is pointless. Unfortunately we live in a society dominated by a monetary system. Until that changes, vast amounts of resources will be wasted in service to such systems. Bitcoin is much better than the other currencies we have today, but that does not make it any less pointless.

I disagree.

Well, you are technically correct. The "point" of currency is to deny people the necessities of life. I just don't agree with that goal. Also, when people use the term "utopian" to describe the goals of the Venus Project, they often don't understand what is really being advocated or are trying to attack the idea outright. We advocate no utopia of any sort. There are enough resources for all people to live right now, we just choose to serve the monetary system instead of eachother.

[marcus_of_augustus]

The "point" of currency is to deny people the necessities of life.

Well here's your problem right here ... if your believe this fallacy you're fecked right from the start.

Money facilitates the allocation of resources and capital in a free market which amazingly provide people with a greatly increased number of the necessities of life.

Money is in essence an information technology, it passes pricing information in a fast, efficient and distributed manner, such that the producers of the "necessities of life" can make correct decisions regarding supplies available and existing demand.

Having a pet anti-fetish against money, the technology, is like being opposed to Windows Server Edition. Write a better one if you don't like it, try not to turn into a political crusade, you'll be disappointed and wrong for a long time since it is an information technology.

[LightRider]

The "point" of currency is to deny people the necessities of life.

free market

No such thing.

[caveden]

The "point" of currency is to deny people the necessities of life.

free market

No such thing.

The only alternative is violence.

[marcus_of_augustus]

The "point" of currency is to deny people the necessities of life.

free market

No such thing.

Not quite, there is no such thing as a perfect free market ... as there is no such thing as an perfectly unregulated internet ... but in the same way as the internet, the free market will not be denied and sees regulation as a threat and provides work arounds ... we have gray and black markets to compensate ... and heavily regulated markets just move risk to other markets and sectors until they go bust ... and the free market gets established again .... spend some time to examine closely what happened to trading of goods and services and money in the soviet socialist eastern bloc countries ... it took quite some time but the free market was re-established, with avengence.