Cryptocurrency Mining

[freebeard]

I've never had the compute power to think I'd get anywhere*. Perhaps the better way is to earn them?

Non-fungible tokens and such....

Non-fungible token
A non-fungible token is a unique and non-interchangeable unit of data stored on a digital ledger. NFTs can be used to represent easily-reproducible items such as photos, videos, audio, and other types of digital files as unique items, and use blockchain technology to establish a verified and public proof of ownership.Wikipedia

I'd imagine massive copper and brass steampunk heat pipes to a bin full of dry ice.

[redpoint5]

Originally Posted by freebeard

I'd imagine massive copper and brass steampunk heat pipes to a bin full of dry ice.

Well the one thing I'm the worst at is predicting the future. I thought about NFT but a blockchain record of ownership doesn't seem valuable to me considering the digital content can be replicated anywhere with 100% fidelity.

The flaw I saw in the Star Trek utopia is that even if anything can be replicated perfectly, there would still be a market for originals such as paintings. Somehow a perfectly replicated work of art is less desirable than the original. A classic car is more valuable than a replica.

[serialk11r]

Originally Posted by redpoint5

Like most things, I assume there exists a relatively simple high-level explanation, but nobody is forthcoming with it.

The high level explanation is really simple. Blockchain is a database that a lot of people maintain copies of and have to agree on. The question is how do you make it costly for a potential attacker?

Proof of work's solution is have everyone waste some significant amount of money mining, so that it is very expensive to acquire a majority of mining computing power.

Proof of stake's solution is to take away all your staked tokens as punishment for being wrong.

The weaknesses depend on the details where you do need to know the technical bits.

[redpoint5]

Originally Posted by serialk11r

The high level explanation is really simple. Blockchain is a database that a lot of people maintain copies of and have to agree on. The question is how do you make it costly for a potential attacker?

Proof of work's solution is have everyone waste some significant amount of money mining, so that it is very expensive to acquire a majority of mining computing power.

Proof of stake's solution is to take away all your staked tokens as punishment for being wrong.

The weaknesses depend on the details where you do need to know the technical bits.

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.

Bitcoin will fail to sufficiently meet the economic definition of a currency, and therefore it's doomed to failure, just that bubble hasn't burst yet. I don't know enough about Ethereum 2.0 to know if it has staying power. If I had to bet long term on any crypto, it would be Ethereum, perhaps only due to my ignorance.

[serialk11r]

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.

[freebeard]

I thought about NFT but a blockchain record of ownership doesn't seem valuable to me considering the digital content can be replicated anywhere with 100% fidelity.

Will mow lawns and stack firewood for Bitcoin?

[serialk11r]

Originally Posted by redpoint5

I thought about NFT but a blockchain record of ownership doesn't seem valuable to me considering the digital content can be replicated anywhere with 100% fidelity.

Thinking about NFTs as pictures/content or replica vs. original is I think the wrong angle, you have to think about it as buying status. Kind of like buying baseball cards (people don't really play baseball card games right? the cards are just for collecting AFAIK). It doesn't matter that anyone can have the same cat picture or a replica of whatever rare card, it matters that everyone knows you are the "real owner" and the bragging rights are what's worth money.

A replica car is just as useful as the original car as a vehicle or as a costly piece of physical artwork, if the craftsmanship is equal then the replica should still be worth substantial money. An NFT on the other hand is digital and has close to zero inherent utility, so you are 100% purchasing it for status. A painting is somewhere in between, where you can have a reproduction of the original that's somewhat expensive to produce and is easily differentiated from just a print, but the original is still worth much more.

[redpoint5]

My thought about crypto has been that distributed ledger is a superior record of account, but there needed to be a way to efficiently execute the implementation including not just power requirements, but scalability and rapid confirmation of transactions. Perhaps Ethereum has a pathway to accomplish this? Pretty sure Bitcoin has no pathway for that.

As I say, I'm constantly wrong about the future. Perhaps the market will greatly value some NFT.

I'm not much of the collector mindset for bragging rights. Most of what I collect has intrinsic value or utility. That said, of the few things I have collected from childhood, Desert Storm trading cards are most interesting to me. I do have a Colin Powell card, but my collection is only about 90%.

[Isaac Zachary]

I was listening to the radio to a channel called CPR. I don't know how biased the report was, but it made crypto seem pretty bleak. Apparently it's very energy demanding, and accelerating very quickly. Whole power plants are being used to supply giant crypto mines of shelves and shelves of computers all running at full blast.

[freebeard]

Apparently it's very energy demanding, and accelerating very quickly. Whole power plants are being used to supply giant crypto mines of shelves and shelves of computers all running at full blast.

That's a second order effect. Mining doesn't require massive inputs, but people who want to get rich quick running mining rigs instead of earning them. The competition heats things up. The real metric is compared to what. Citation needed of course, but IIRC mining gold requires more energy than Bitcoin. And then you get to banks and credit card system that could be rendered redundant.

Once the Bitmine runs dry, the system will continue to run on transaction fees.