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Proof of Work is robust and secure but pays a heavy price for it. Given that working alternative consensus models exist, I see no reason to support PoW coins.
I agree. I see Bitcoin as an incredibly valuable step in the research of decentralized consensus and running it as a network with such high stakes is a great prover. However it is clear that it is time for us to move on onto the generations of cryptocurrencies that have built on top of what we have learned from Bitcoin with further improvements such as privacy in Monero and efficiency with the Proof of Stake coins. Of course I don’t think this is the end, for example the biggest Proof of Stake coins aren’t private yet. So I look forward to generations of coins yet to come.
Proof-of-stake incentivizes the hoarding of coins, which can lead to centralization. Given that PoS coins aren’t private, unlike Monero, I see no reason to support them.
Counterargument (that Proof of Work is not inherently better, IMHO worse, mostly because of environmental concerns):
Proof of Work incentivizes hoarding of useless electrical waste (long-term at least), the more you mine, the more you’ll want to invest into this useless hardware, to mine even more.
PoW only displaces the problem of wealth distribution. Most of the Proof of Stake currencies reward less (in % per block) than PoW currencies, thus they probably lead to less centralization. Additionally it’s just slower and doesn’t scale in comparison to PoS…
Also, it’s more secure.
“One of Monero’s philosophies is to maintain egalitarian mining, so that everyone can have the possibility to mine. To achieve this, Monero uses a particular algorithm ideated and developed by members of the Monero community: RandomX. This PoW algorithm is ASIC resistant, which means it’s impossible to build specialized hardware to mine Monero. Miners must use consumer-grade hardware and compete fairly”.
https://www.getmonero.org/get-started/mining/
Those are valid concerns. If I were to burn electricity for simple transactions, it would be Monero or some of its derivatives for sure. There at least you’re getting something in return, namely privacy.
However I think that environmental aspects overrule in the vast majority of cases.
You can make private Proof-of-stake coins (see: Particl), but Monero simply has too much going for it for people to make a switch
It would be interestibg to see how BTC mining compares to the large data centres of big tech. There’s not much reliable data on that.
It would be interesting, but not particularly meaningful. Big tech is producing a service. BTC is producing a bubble.
Big tech is also producing ads
That is a common business model, yes. But BTC is literally just producing entries on a block chain that are of questionable value.
Ads are of questionable value as well
No disagreement from me, but they at least are a revenue model that funds providing a service. Mining BTC is just rewarding people for wasting energy, either theirs or someone else’s.
Big tech companies route loads of data through their data centers that could either be processed on the end users’ devices, or that aren’t needed at all for the services that help the end users. A comparison between the climate impact of all the big tech data center processing that is done for the sole purpose of the big tech companies and other factors relevant to climate would be both interesting and meaningful.
Edit: Funny to see downvoting without making a point. Regarding the latter mentioned source of serviceless resource wasting of big tech, see https://www.inkandswitch.com/slow-software/ (under “user-hostile work”). Regarding the former one, think about why your average smartphone keyboard implementation needs to phone home to the tech company’s data center, while there are implementations that work right on the device. Removing all this stuff could most likely greatly reduce the resource usage of today’s end user devices, and does not provide any useful service to the end users.
The bubble is made by humans. I feel that complementary currency systems could have a huge positive impact on local and regional societies (as it was often the case in history), and the blockchain technology could help us to get there. The vast majority of crypto projects appear to aim at something else, unfortunately.
The problem with the dominant cryptocurrencies is that they aren’t backed by anything. For all of the issues with the US dollar, it is backed by a strong central bank that keeps the currency extremely dependable and a gigantic economy. Thus yes, I see crypto as being best as a complementary system rather than a standalone system.
I respectfully disagree with the notion of a “strong” central bank. The vast majority of the total money supply (~90%) is created by commercial banks by lending money to companies and individuals. Central banks can influence the total amount lent by reserve ratio requirements, but in our fractional reserve banking system where commercial banks hold only a small fraction of their deposits in reserves, each commercial bank loan creates about 10 times more money than its initial volume. This is just book money literally created out of thin air, it “exists” only as the sum of agreements between the commercial banks and their debitors rather than as notes and coins, and the central bank is by no means involved in this process.
So don’t get me wrong, I don’t say we should get rid of fiat money. I just argue that we need much more complementary currency systems that we have now. Whether or not these systems are blockchain-based is a different question altogether (that doesn’t really matter imo, although I consider blockchain a good technology for this). Communities should be free to create new means of exchange. Each of these new systems will have their own drawbacks, too. So let different systems compete with each other.
The US dollar is a Ponzi scheme. Blockchain allows transfers without the need of central banks (less costs, bureaucracy). Most cryptocurrencies are virtually deflationary, so they hold their value well, like gold. “Bad money drives out good”.
The key word you’re missing here is “The full faith and credit of the United States”. As in, there is a central bank sitting there with a bunch of levers where its #1 purpose is to keep the dollar stable. That bank is, in turn, backed by the taxation powers of the US government over the vast US economy. Every factory, every worker, every office. And they’ve kept the dollar remarkably stable for the past almost one hundred years. Meanwhile BTC’s value is governed solely on the hopes and dreams of people buying into it. If that ever falters, there will be nothing to stop BTC from sliding into oblivion.
If they want to keep it stable, why do they print lots of money, which creates a huge inflation? It’s fake money.
Yeah, $660 from 1900 have a relative inflated worth of $24,013.86 as of today. Remarkably stable!
Just like the Denarius. Eventually all fiat currencies fail.
Well, it has banks from all over the world, countries, individuals, etc. using it, so you’re wrong. Not that I like Bitcoin, I prefer Monero.
I’d be happy if Bitcoin fails, and Monero and other better cryptocurrencies do well.
They don’t, and there isn’t huge inflation. A nice, steady, low inflation encourages people not to hold onto currency for investment purposes. Currency is for moving goods and services within the economy, not as an investment in itself. That’s why deflation is such a drag on an economy. People start holding onto their money instead of either using it or investing it, thereby putting it to work.
First, the Denarius lasted for half a millennia. Not too shabby. Second, it was only because of mismanagement that it failed. Witness the oldest currency, Britain’s pound sterling, which has been in continuous use since 600 AD. We can’t tell what the future of the US dollar will bring, but its success will likely be tied to the US economy as a whole.
They’re tentatively dipping their toes in the water, and for the most part not holding onto it as a dependable store of value. There are no economies based on a cryptocurrency. You can’t go out and buy a car. People don’t typically get paid. It’s just too volatile.
Okay, then what are they backed by? Nothing, so it’s too volatile to use as a dependable store of value. Any currency without a strong backing will be susceptible to fluctuating at the whims of buyers.
That’s 122 years though!
I hate both.