Quote:
Originally Posted by redpoint5
I've since found those explanations, but I still need to dig into proof of stake a bit more. It's unclear to me how it reduces power consumption which was my major complaint with Bitcoin (and others). Wasting an enormous amount of energy for every transaction isn't cheap, and having to wait minutes to validate a transaction isn't fast, and that limited bandwidth to process transactions doesn't scale.
|
Think about how much computing power value it would take to record your credit card purchase of say 50 dollars. For reference, Visa charges the merchant something like $1 for that.
What does it cost Visa? Basically 0. They're writing a few bytes to some disks after sending it around their network a bit.
If they had to record that transaction a million times separately, it would cost on the order of maybe 1 cent. This is what proof of stake uses, because the consensus mechanism is based on economic punishment, not economic barrier to entry. There's not much calculation to do.
Bitcoin *by design* uses the entire dollar up, because that's the transaction price the market can bear. The algorithm is designed to burn up electricity at a certain rate per year (measured in terms of the value of bitcoin), it adjusts the computation requirement to hit that target, assuming perfectly liquid markets (they aren't, that's why miners can still make good money).
The libertarian anarchists who have a hard on for bitcoin argue that this price is cheaper than the existing financial system. In a way, that's true, at the end of the day banks and payment processors do charge around the same percentage for a transaction. To me, this is a stupid argument, because paying a high transaction fee is worse than paying a low transaction fee, and it seems pretty far fetched to suggest it is impossible to adequately secure a blockchain without those high costs.