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Is Crypto Finally Dead?
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this post was submitted on 19 Jun 2023
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Technology
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Bitcoin (as it uses proof of work) is incapable of handling all transaction of the world without creating insane amounts of wasted energy.
Updating the ledger (actually writing down transactions) is only a fraction of the total computing resources it consumes. Most of it is just spent doing random hashes over and over again (the proof of work part). This is computing power that does not actually do any of the money related tasks, it's just there to keep the ledger trusted.
This is an awesome idea in theory, but completely unscalable in reality.
Other Blockchain technologies like proof of stake don't have this issue of energy waste, but they have other hurdles.
But Bitcoin as it is implemented now can never be the money of the future in my opinion.
Trust is one of the most fundamental parts of any monetary system, so brute forcing hashes in this case is directly related to it.
Bitcoin can easily serve the world on 100 Mac Minis. Probably even fewer. The fact that currently people beat themselves into burning ridiculous amounts of electricity to run Bitcoin nodes is a function of the profitability of doing that. If that profitability decreases, so will the electricity burned. If I remember correctly, the protocol is designed to reduce that reward over time and unless the dollar value of Bitcoin dramatically increases, the energy waste should decrease long term.
A secondary point on energy consumption is how that of Bitcoin compares to the traditional financial transaction systems. I don't have the numbers at the moment but last time I checked it wasn't pretty for the latter.
With all that said, if PoS is proven to be as robust as PoW, it would probably be adopted by systems currently on PoW, like Bitcoin.
I think you're missing a critical part of how blockchains function: If Bitcoin was running on only 100 Mac Minis, there is nothing stopping someone buying 101 more Mac Minis, becoming dominant in the network and suddenly they can decide to just print their own bitcoins for themself.
The profitability of running Bitcoin miners is proportional to the market cap and the value of Bitcoin itself. For Bitcoin to remain stable, the total value must remain less than the cost of hardware to dominate the consensus algorithm.
Can you elaborate on how one could print bitcoins if they controlled 50% of the network?
Bitcoin miners validate transactions on the network, so if one entity controls a majority of all miners, they can validate their own fraudulent transactions
I don't know if you've heard about Lightning Network, but this is a layer on top of the bitcoin blockchain that is much more suitable for small payments. That's how I do most of my bitcoin payments now, and while it's still a maturing technology, it mostly works well. Transactions are fast and inexpensive.