Is Bitcoin viable, energy wise? - page 5.

Tonko

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Quote from: myrkul on March 31, 2013, 12:25:41 AM

http://blockchain.info/pools
Mining pools are just that - pools. actual miners come and go, and shift between the various pools.

http://eprint.iacr.org/2012/584

Quote from: myrkul on March 31, 2013, 12:25:41 AM

But it still only took you ten minutes to get your money to Gox. Compare that to a Money Order, or even Westen Union.

Isn't Ponzi scheme characterized by how easy is to get in and how hard is to get out? That used to be the way some people were 'proving' that Bitcoin is not ponzi.

Quote from: myrkul on March 31, 2013, 12:25:41 AM

If the transaction fees aren't sufficient to support a large group of miners, then the number of miners will scale back, or the fees will increase, until they are. the fees are not going to "skyrocket," because then nobody will pay them. (and .0001 btc is better than 0.0 btc)

Yo Boris, somebody just called in saying we have charge 3 times transaction fees of Visa. Damn it Vladimir, see all this hardware? We can melt Chernobil with it. But we still need to keep calculating that damn Satoshi function.

myrkul

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Lemme learn ya:

Quote from: Tonko on March 31, 2013, 12:01:13 AM

Quote from: asdf on March 30, 2013, 10:40:00 PM

When the block reward goes to zero, the cost of the network will be the sum of all fees paid. So if people pay 0.01cent fees on transactions, that's the cost of all energy that will be used.

When this happens and transaction fees start skyrocketing, Bitcoin will lose one more of the apparent appeals that it has (number 4):
1) security - yeah, kind of, if your IP is in Russia and you know people in KGB

By this, I assume you mean anonymity? It's pretty anonymous. If you're worried about IP tracing, use Tor.
The security of bitcoin is that it cannot be stolen without access to your private key. If you give someone access to your private key, it wasn't stolen, you were swindled.

Quote from: Tonko on March 31, 2013, 12:01:13 AM

2) decentralized - as much as Visa - few entities own and process all

http://blockchain.info/pools

Mining pools are just that - pools. actual miners come and go, and shift between the various pools.

Quote from: Tonko on March 31, 2013, 12:01:13 AM

3) fast processing - yeah, like it may take you a month to sell your stash on MtGox, due to random choice of withdrawal limits, once Satoshi starts dumping his 60% of all BTCs

But it still only took you ten minutes to get your money to Gox. Compare that to a Money Order, or even Westen Union.

Quote from: Tonko on March 31, 2013, 12:01:13 AM

4) low transaction fees, bwah, ha, ha, in your dreams but certainly not in your future. Who's gonna pay for all that custom HW once it is useful only for transaction fees?

If the transaction fees aren't sufficient to support a large group of miners, then the number of miners will scale back, or the fees will increase, until they are. the fees are not going to "skyrocket," because then nobody will pay them. (and .0001 btc is better than 0.0 btc)

Tonko

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Quote from: asdf on March 30, 2013, 10:40:00 PM

When the block reward goes to zero, the cost of the network will be the sum of all fees paid. So if people pay 0.01cent fees on transactions, that's the cost of all energy that will be used.

When this happens and transaction fees start skyrocketing, Bitcoin will lose one more of the apparent appeals that it has (number 4):
1) security - yeah, kind of, if your IP is in Russia and you know people in KGB
2) decentralized - as much as Visa - few entities own and process all
3) fast processing - yeah, like it may take you a month to sell your stash on MtGox, due to random choice of withdrawal limits, once Satoshi starts dumping his 60% of all BTCs
4) low transaction fees, bwah, ha, ha, in your dreams but certainly not in your future. Who's gonna pay for all that custom HW and energy bills once it is useful only for transaction fees?

blogospheroid

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There is a trade-off between usage of proof-of-work and general trust in the overall surrounding system.

Face it, if governments

had been trustworthy
based their monetary policies on any clearly defined standard (doesn't matter whether you're talking of a commodity peg, a constant unchanging money base increment, an NGDP level targeting standard, an export price or a nominal wage level standard)
and adhered to it through atleast 2 crises

bitcoin would have never picked up.

A positive endgame I can see is that the old order gets severely knocked and people familiar with bitcoin come to power. If the trust in the new order is high enough, then they used Peter Surda's proof of burn protocol to destroy their coins and create parallel coins in a new proof of stake coin, which does not need as much energy to process as a proof of work coin. That is the best case scenario for energy consumption. But this is a task that requires great trust and coordination. Very low probability.

myrkul

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Quote from: mestar on March 30, 2013, 11:15:04 PM

Quote from: myrkul on March 30, 2013, 11:02:05 PM

Quote from: mestar on March 30, 2013, 10:57:23 PM

When awards go to zero, and there is only one transaction per block, that transaction will have to pay the fee of 51%, otherwise it will be economical to do the double spending attack.

wut
I don't think you understand what you're talking about.

I'm sure that situation will never happen. One transaction in a block, in 2140 when there are no awards.

If all the world is on bitcoin, the mining power usage will be a seesaw, or better say, triangular.

When there are no transactions, nobody mines. In fact, nobody would mine until total fees in all transaction are above a threshold, which would be different for each miner. You would start mining when fees to be collected are higher than your expected cost to mine that block. Then after more transactions, more miners would join.

Ok, forget about that one transaction per block.

Sometimes such puzzles can give some insight. What would happen if there are no award, and only one transaction would be allowed in a block, and that transaction is always of the same size. In this totally unrealistic puzzle, how much would a transaction fee be, so that the transaction is safe?

First, some preliminary questions:
Do you know what a 51% attack is?
Do you know how it enables a double-spend?
If the answer to both of the previous questions are yes, Please explain.

mestar

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Quote from: myrkul on March 30, 2013, 11:02:05 PM

Quote from: mestar on March 30, 2013, 10:57:23 PM

When awards go to zero, and there is only one transaction per block, that transaction will have to pay the fee of 51%, otherwise it will be economical to do the double spending attack.

wut
I don't think you understand what you're talking about.

I'm sure that situation will never happen. One transaction in a block, in 2140 when there are no awards.

If all the world is on bitcoin, the mining power usage will be a seesaw, or better say, triangular.

When there are no transactions, nobody mines. In fact, nobody would mine until total fees in all transaction are above a threshold, which would be different for each miner. You would start mining when fees to be collected are higher than your expected cost to mine that block. Then after more transactions, more miners would join.

Ok, forget about that one transaction per block.

Sometimes such puzzles can give some insight. What would happen if there are no award, and only one transaction would be allowed in a block, and that transaction is always of the same size. In this totally unrealistic puzzle, how much would a transaction fee be, so that the transaction is safe?

myrkul

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Quote from: mestar on March 30, 2013, 10:57:23 PM

When awards go to zero, and there is only one transaction per block, that transaction will have to pay the fee of 51%, otherwise it will be economical to do the double spending attack.

wut

I don't think you understand what you're talking about.

mestar

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Quote from: asdf on March 30, 2013, 10:40:00 PM

When the block reward goes to zero, the cost of the network will be the sum of all fees paid. So if people pay 0.01cent fees on transactions, that's the cost of all energy that will be used.

When awards go to zero, and there is only one transaction per block, that transaction will have to pay the fee of 51%, otherwise it will be economical to do the double spending attack.

The same will be with huge transactions. Huge transactions will be insecure.

asdf

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When the block reward goes to zero, the cost of the network will be the sum of all fees paid. So if people pay 0.01cent fees on transactions, that's the cost of all energy that will be used.

cbeast

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Let's talk governance, lipstick, and pigs.

Eventually large mining business like Ali-Mining, VISA-Mining, etc., will process transactions and offer competitive fees for subscribers. They will use their own power plants and use the heat generated for other industrial uses. They will operate at near 100% energy efficiency.

Before you get all "hey that's like what we have now" on me, remember that they will be competing with all other corporations and governments for market share of the Bitcoin fee processing.

myrkul

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Quote from: mobodick on March 30, 2013, 10:02:28 PM

Yeah, ok, that seems like a way of getting around these kinds of problems.
But then bitcoin would need a more currency-like counterpart to make it big.
FrontCoin?

Bitcoin is probably the perfect online payment method. Not so good at making in-person transactions. For those, I prefer an older standard:
GoldCoin

And it's altcoin companion, SilverCoin

Le Happy Merchant

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Quote from: Nancarrow on March 30, 2013, 04:05:40 PM

Quote from: Le Happy Merchant on March 30, 2013, 09:10:20 AM

Quote from: ?? on ??

A Dyson sphere or two would kick the can down the road a bit I suppose.

Please see: Liquid fuel Thorium reactors.

You know, you could just google 'Dyson sphere'. Roll Eyes

I know what a Dyson Sphere is, but my solution is viable within this decade.

mestar

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Quote from: mobodick on March 30, 2013, 09:57:37 PM

OK, but then there is a limit to what you can get out of a new generation miner.

What do you mean?

Quote from: mobodick on March 30, 2013, 09:57:37 PM

So in the future all miners will use the same amount of energy.

Surely not. Some will be big, some will be small. Also, energy prices differ around the world. Mining will tend to move where the energy is cheaper. Also bitcoin heaters for "free" energy. Coming shortly for sure.

Quote from: mobodick on March 30, 2013, 09:57:37 PM

There will be no forward competition. So then mining starts breaking down (no more super ROI) and will need to be supported more by fees. So in the end i think the balance will be stable around the actual requirement of the network. There will not be a lot of incentive to do extra mining beyond what is needed and payed for by the users.

What do you mean by forward competition? Mining will not break down, when awards drop, weakest miners will die. In all I have written, you can assume I added transaction fees to the awards. Once awards go to zero, it is still unclear if the network can work, and what fees will miners require. Perhaps the equilibrium will happen with some silly hashrate that attacks will be easy.

mobodick

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Quote from: ?? on ??

Quote from: mobodick on March 30, 2013, 09:46:17 PM

Quote from: ?? on ??

Consider this. No matter the technology, the killer is continued exponential growth. There is no reason that there has to be continuous exponential growth except for the fact that a debt based monetary system can not continue to operate without it. Humanity can persist quite nicely with a large, albeit steady-state economy.

There is a temptation to conflate the exponential growth of Bitcoin with that of exponential growth in general, but that is fallacious IMO. What we are seeing with Bitcoin, or Bitcoin plus newer generation descendants, is the very early stages of a very large rotation.

It's not so much the growth rate but the general cost of doing a transaction with bitcoin.
The features of bitcoin cost energy to execute. So i'm wondering how that turns out on a large scale.
It would need to get cheaper to become realy big (or does it?).
But for there is a limit to how cheap it can get.
And it is also somehow affected by costs of the internet. You need to pay for an internet connection to be able to use it. It's not much but it adds up.

This may be an unpopular opinion on this forum, but I think it misses the mark a bit to think of Bitcoin as a flat global system for transactions. It is perhaps at best a layer in the infrastructure of a multi-tiered financial system, to think of making it universal to the point of buying sticks of chewing gum and paying the water bill is a bit daft IMO.

It is a bit like thinking of running curling irons and televisions on petrol. Whereas, you don't use SWIFT to pay for the lights.

Yeah, ok, that seems like a way of getting around these kinds of problems.
But then bitcoin would need a more currency-like counterpart to make it big.
FrontCoin?

mestar

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Quote from: mobodick on March 30, 2013, 09:36:14 PM

Ok, but what total hashrate is needed to sustain a network of, say, 1/10 of the world economy/

There is no such thing as "needed hashrate".

You can ask this: What will the hashrate be if Bitcoin had 1/10 of world economy.

And the answer to that is: It will be whatever you can calculate with energy costing X amount of dollars, and X will be (average (block award + transaction fees)) * BTC price * FACTOR.

FACTOR being estimated as 0.5 to 0.75. In other words, the large chunk of whatever miners get will always cover the energy costs.

mobodick

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Quote from: mestar on March 30, 2013, 09:40:50 PM

Quote from: mobodick on March 30, 2013, 09:19:45 PM

I don't see how energy (Joules, Watt) is a function of bitcoin price ($) and block reward ($?).
I'm looking for something like the mean minimum energy per hash, in the future.
Then all i need to figure out is how much hashing needs to be done to sustain a certain size network and i would get a number for the miners.

By, "energy spent", I meant "the cost of energy spent". Now I see that I indeed wrote it wrong, sorry about that.

Miners don't care about how much hashing needs to be done, they only care about their profit.

And if you have a new generation of miners, and your cost is 0.01 BTC per BTC mined, you and other miners have a strong incentive to expand operations.

We are currently in the process of moving to ASICs, and this is going kind of slow, and that is one of the two reasons of the current bubble (the other being halving the award to 25.)

OK, but then there is a limit to what you can get out of a new generation miner. So in the future all miners will use the same amount of energy. There will be no forward competition. So then mining starts breaking down (no more super ROI) and will need to be supported more by fees. So in the end i think the balance will be stable around the actual requirement of the network. There will not be a lot of incentive to do extra mining beyond what is needed and payed for by the users.

mestar

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Quote from: johnyj on March 30, 2013, 09:39:01 PM

Why should I pay the electricity with mined bitcoin? I can use fiat to pay the electricity and save the coins, if I believe bitcoin price will rise in long term due to scarcity

Imagine that last year my electricity cost is 2000 USD, and I mined 200 coins, I paid electricity using USD. Now I only need to sell 22 bitcoin to pay back that amount of dollar. If I paid using bitcoin as you suggested, I would have paid 100-150 bitcoins for my electricity cost Roll Eyes

True, you can do that. But that case is the same as if you actually took your USD, and bought bitcoins at the exchange, instead of mining them. (And somebody else mined them).

I'm talking about the things that create imbalances on the exchange. In your case, the exchange did not see the increased supply of bitcoins, but the cost of mining was still there, you paid it with your USD.

mobodick

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Quote from: ?? on ??

Consider this. No matter the technology, the killer is continued exponential growth. There is no reason that there has to be continuous exponential growth except for the fact that a debt based monetary system can not continue to operate without it. Humanity can persist quite nicely with a large, albeit steady-state economy.

There is a temptation to conflate the exponential growth of Bitcoin with that of exponential growth in general, but that is fallacious IMO. What we are seeing with Bitcoin, or Bitcoin plus newer generation descendants, is the very early stages of a very large rotation.

It's not so much the growth rate but the general cost of doing a transaction with bitcoin.
The features of bitcoin cost energy to execute. So i'm wondering how that turns out on a large scale.
It would need to get cheaper to become realy big (or does it?).
But there is a limit to how cheap it can get.
And it is also somehow affected by costs of the internet. You need to pay for an internet connection to be able to use it and your ISP has racks full of stuff churning away. It's not much but it adds up.

mestar

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Quote from: mobodick on March 30, 2013, 09:19:45 PM

I don't see how energy (Joules, Watt) is a function of bitcoin price ($) and block reward ($?).
I'm looking for something like the mean minimum energy per hash, in the future.
Then all i need to figure out is how much hashing needs to be done to sustain a certain size network and i would get a number for the miners.

By, "energy spent", I meant "the cost of energy spent". Now I see that I indeed wrote it wrong, sorry about that.

Miners don't care about how much hashing needs to be done, they only care about their profit.

And if you have a new generation of miners, and your cost is 0.01 BTC per BTC mined, you and other miners have a strong incentive to expand operations.

We are currently in the process of moving to ASICs, and this is going kind of slow, and that is one of the two reasons of the current bubble (the other being halving the award to 25.)

johnyj

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Quote from: mestar on March 30, 2013, 07:16:56 PM

This makes it that each block costs somewhere around (0.5 * block award * price) to (0.75 * block award * price). And since awards are paid in Bitcoins and electricity is paid in local currencies, this makes the situation that all mining costs hit the exchanges every day, and push the price down.

Why should I pay the electricity with mined bitcoin? I can use fiat to pay the electricity and save the coins, if I believe bitcoin price will rise in long term due to scarcity

Imagine that last year my electricity cost is 2000 USD, and I mined 200 coins, I paid electricity using USD. Now I only need to sell 22 bitcoin to pay back that amount of dollar. If I paid using bitcoin as you suggested, I would have paid 100-150 bitcoins for my electricity cost Roll Eyes

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