direct quote from him: "There are plenty of consensus protocols that don't waste energy"
i'm not entirely sure what do you consider inefficiencies in PoW, it is by design supposed to convert energy into a proof that similar amount of energy was spent producing the proof. the only inefficiency involved is how far we are from Landauer limit.
ultimately i don't think it matters which specific hashing algo is used - there will simply be more or fewer iterations per block, but for the same level of security as bitcoin provides, similar amount of electricity would be consumed.
saying that PoW has high economic cost is pretty much a truism. PoW produces very real economic value, so of course it will have a similar economic cost. if the value wasn't matching the cost - there would be more/less of PoW going on and that's exactly what the hashrate chart shows over the last 8 years of price discovery.
PoW uses energy to produce blocks in a process known as mining that consists of trial and error attempts at producing a “special” hash that meets a given difficulty target expressed in the number of leading zeroes. The difficulty target reflects the speculative work needed to produce valid blocks at regular intervals given the available hashrate. When more hashrate is added to the network the difficulty adjusts such that on average the block interval is kept around 10 minutes.
The product of PoW's work is largely wasted since all hashes produced for a given block height, other than the next valid blockhash, have no value and are discarded with the winning miner being paid the full block reward for its work. This means that not only are the hashes useless but they are also expensive to create and return 100% of the reward to the winning block producer at the cost of all other block producers. Bitcoin’s hashrate is what I refer to as an “economic firewall” in that it becomes increasingly more expensive to acquire the hardware needed to control a significant portion of the network's hashrate (eg: 51% attack), or even mine a single block, the more interest there is in the block reward tokens. Having said that, there is no causality relationship between the cost of producing blocks with PoW and the token’s price which is set in open markets were no single Exchange or a “bitcoin ceo" is a counter-party.
In other words, PoW keeps a blockchain safe because it’s wasteful and expensive. Only someone who can afford to run a mining rig would join and its costs are not covered unless their blocks are added to the canonical chain.
If the consensus protocol performed useful work, the incentive to "mine" on this chain would not only the block reward but also include ulterior motives so attackers could try to produce invalid blocks and their effort would still be justified by the value of the work done.
Hope this helps. Find me on telegram if you want to keep this discussion up, I'm always happy to discuss cryptoeconomics.
you're not telling me anything i dont know. you're just using wrong words to describe things.
PoW's work is hashes and they are discarded. PoW's product is valid block signatures and transitively - blockchain security. something is wasteful if the product is worthless. discarded hashes are worthless but valid signatures aren't worthless.
if somebody was running bitcoin miner and discarding all hashes - their work would have been a waste. people running bitcoin miners with purpose of finding valid blocks aren't wasting anything by definition:
wasteful
ˈweɪstfʊl,ˈweɪstf(ə)l
adjective
(of a person, action, or process) using or expending something of value carelessly, extravagantly, or to no purpose.
Producing fraudulent blocks (ie, containing double-spends) is the same as "discarding all the hashes" because the consensus mechanism (the fork choice rule) will ensure that the block is rejected, unless the attacker can also provide 51% of the current network hashrate to force this bad block into the canonical chain.
I defend PoW as the most secure consensus protocol for the major public blockchains precisely because the cost of an attack is so high right now. The wastefulness of PoW guarantees that there won't be reason to get involved in the mining business unless one intends to produce valid blocks and get paid for it.
edit: I would argue that producing fraudulent blocks is a "strictly dominated strategy" in game-theory terms, because its outcome is always worse than following the protocol rules and producing a valid block. From that perspective I believe it is the same as "discarding all the hashes".
> Producing fraudulent blocks (ie, containing double-spends) is the same as "discarding all the hashes"
no, it's not the same, it has the purpose of Producing fraudulent blocks. you're contradicting yourself within single sentence..
> The wastefulness of PoW guarantees
there is no wastefulness. there is energy consumption with purpose of securing the blockchain.
it would have been wasteful if difficulty was fixed and miner was spending 100 times more energy than necessary to create a block every 10 minutes, but since difficulty adjusts - there is zero waste in PoW. every joule spent was necessary and provided value.
i'm not entirely sure what do you consider inefficiencies in PoW, it is by design supposed to convert energy into a proof that similar amount of energy was spent producing the proof. the only inefficiency involved is how far we are from Landauer limit.
ultimately i don't think it matters which specific hashing algo is used - there will simply be more or fewer iterations per block, but for the same level of security as bitcoin provides, similar amount of electricity would be consumed.
saying that PoW has high economic cost is pretty much a truism. PoW produces very real economic value, so of course it will have a similar economic cost. if the value wasn't matching the cost - there would be more/less of PoW going on and that's exactly what the hashrate chart shows over the last 8 years of price discovery.