Bitcoin The unsolvable problem of decentralization
How to start publishing? Well, let me immediately express the main idea, and then I will try to prove it. If you do not like it - rewind immediately to the end of the text and read the last sentence.
Decentralized cryptocurrency technologies are doomed to extinction due to the fact that with an increase in the number of users they lose to centralized energy efficiency technologies. Bitcoin and any of its variations have no future - all these systems, when they reach certain sizes, either become unprofitable for the participants of the system, or cease to ensure reliability, and most likely both.
')
Bitcoin is not necessary to "kill" government bans. There is a significant flaw in the decentralization system itself, due to which the “bright future” of those who believe in a new world fair system is postponed indefinitely.
This is quite an unexpected conclusion for me, because a few months ago I myself defended the advantages of Bitcoin and described the prospects that it opens up. Now I don’t understand why in all this time I didn’t come across a trivial analysis and comparison of different systems for their total energy consumption. However, the numbers see everything, but few interpret them correctly. But let's get everything in order.
A bitcoin network is a set of computers, each of which is associated with one or several others. A transaction generated on one computer is sent to the "neighbors", who check the correctness of ECDSA signatures in it and send it to their "neighbors". Thus, the transaction in a matter of seconds reaches all network nodes. Until I touch the topic of mining as the issue of new bitcoins. Suffice it to mention that for the existence of a network, there must be full nodes that have the entire transaction history. Full clients can connect to “light” clients that do not have the full history.
What happens when the number of network members increases? The number of transactions increases. Do you remember that each transaction extends across all full nodes of the network? And every full node must check for ECDSA signatures? This is a complex and relatively slow operation, the existing Bitcoin network still has a substantial amount of power, but it has long been known that Bitcoin is not suitable for micropayments. The existing communication channels also have certain bandwidth capabilities. But the saddest thing is that doubling the number of transactions and increasing the number of users double the total energy costs fourfold! As the number of users grows, the total cost of network maintenance grows faster than in the “centralized” case!
Wait a minute But after all, everyone knows that, unlike bank payments, Bitcoin transfers are made with a negligible commission or for free! What kind of network maintenance are we talking about? Do not be fooled. In this world, nothing is given to us for free - you have to pay for everything. The trick in any system is to pay later or in place of yourself to pay another person. How did it happen that nobody paid for the network? Well, why? Mavrodi most likely honestly paid for the office and electricity, while the course of "candy wrappers" grew. For the electricity spent by the miners were paid by those who bought the issued bitcoins.
I apologize, comparing Bitcoin with the MMM pyramid can cause confusion and inadequate reaction. Humanity in general has some kind of maniacal desire to build pyramids and centrally controlled systems. The introduction of currency into circulation as a single measure of the value of various items is the path to a more efficient exchange, and therefore more profitable for participants in the system.
Imagine subsistence farming and the collective farm market. Someone brought potatoes on it, someone horseshoes, someone clothes. The potato owner, of course, can write on his price tag “I will change a kilogram of potatoes for a pound of nails or a pair of shoes, but I don’t need cabbage”. But such “price tags” in and of themselves are unbreakable expenses, therefore, it becomes more profitable for market participants to agree on a “central point” - a universal exchange item.
Of all the options for choosing a currency in society, the option will win, the support of which, other things being equal, will be the least expensive for society. That is why paper money ousted gold, and non-cash payments are slowly but surely displacing cash turnover!
It's time to talk about mining. As you know, mining in Bitcoin is actually a combination of two processes: the emission of new Bitcoins and the confirmation of transactions in blocks. In principle, it would be possible to do without issuing remuneration for blocks - but for this, it would be necessary to install client software on the computers of all comers and distribute the initial issue (premin) to everyone. More interesting is the question - why miners are forced to spend so much electricity to confirm transactions in blocks? You can easily answer this question with a memorized phrase: to ensure network reliability. But isn't the bitcoin community paying too much for it? Thousand miners translate energy into heat only in order to prevent the attacker in principle from making a double-attacking attack, wiping several of the last blocks created by the community with his own chain of blocks?
An example that I cited earlier: let's say that the participants in the collective farm market must not allow the emergence of a gangster on this market who is robbing, stealing, and killing. There are two fundamental ways to do this:
1) pile up around the gate, each will follow their neighbors. The malefactor will not be able to pass
2) put the guard on the entrance with a gun
The first option is a decentralized bitcoin. The second is the existing world system. The option of choosing a guard is called democracy. Option when the guard passes his pistol to his son is called a monarchy. But let's not talk about politics.
The bitcoin community is like a group of people who propose digging a common field with shovels, instead of throwing off a tractor and leasing it. In the modern world, such communities are doomed.
So maybe it is worth paying attention to cryptocurrency alternatives to bitcoin? Is there a cryptocurrency with a scrypt-function, is it based on PoS? My answer is: no, these technologies have the same drawback: with the same reliability, they are more costly for the community than centralized systems, and with the same maintenance costs, they will be less reliable.
Should I give some conclusions at the end of the post? I think Habr readers themselves are able to make them. Those whose conclusions coincide with my opinion will not need my conclusions. If you are not convinced of the energy efficiency arguments, you don't need my conclusions either.
(Probably, this text should be in the Bitcoin / Payment Systems hub, but I could not figure out how to do it)
I wanted to finish with a quote. You should know the author:
If you don’t, you can’t. [#]
Decentralized cryptocurrency technologies are doomed to extinction due to the fact that with an increase in the number of users they lose to centralized energy efficiency technologies. Bitcoin and any of its variations have no future - all these systems, when they reach certain sizes, either become unprofitable for the participants of the system, or cease to ensure reliability, and most likely both.
')
Bitcoin is not necessary to "kill" government bans. There is a significant flaw in the decentralization system itself, due to which the “bright future” of those who believe in a new world fair system is postponed indefinitely.
This is quite an unexpected conclusion for me, because a few months ago I myself defended the advantages of Bitcoin and described the prospects that it opens up. Now I don’t understand why in all this time I didn’t come across a trivial analysis and comparison of different systems for their total energy consumption. However, the numbers see everything, but few interpret them correctly. But let's get everything in order.
A bitcoin network is a set of computers, each of which is associated with one or several others. A transaction generated on one computer is sent to the "neighbors", who check the correctness of ECDSA signatures in it and send it to their "neighbors". Thus, the transaction in a matter of seconds reaches all network nodes. Until I touch the topic of mining as the issue of new bitcoins. Suffice it to mention that for the existence of a network, there must be full nodes that have the entire transaction history. Full clients can connect to “light” clients that do not have the full history.
What happens when the number of network members increases? The number of transactions increases. Do you remember that each transaction extends across all full nodes of the network? And every full node must check for ECDSA signatures? This is a complex and relatively slow operation, the existing Bitcoin network still has a substantial amount of power, but it has long been known that Bitcoin is not suitable for micropayments. The existing communication channels also have certain bandwidth capabilities. But the saddest thing is that doubling the number of transactions and increasing the number of users double the total energy costs fourfold! As the number of users grows, the total cost of network maintenance grows faster than in the “centralized” case!
Wait a minute But after all, everyone knows that, unlike bank payments, Bitcoin transfers are made with a negligible commission or for free! What kind of network maintenance are we talking about? Do not be fooled. In this world, nothing is given to us for free - you have to pay for everything. The trick in any system is to pay later or in place of yourself to pay another person. How did it happen that nobody paid for the network? Well, why? Mavrodi most likely honestly paid for the office and electricity, while the course of "candy wrappers" grew. For the electricity spent by the miners were paid by those who bought the issued bitcoins.
I apologize, comparing Bitcoin with the MMM pyramid can cause confusion and inadequate reaction. Humanity in general has some kind of maniacal desire to build pyramids and centrally controlled systems. The introduction of currency into circulation as a single measure of the value of various items is the path to a more efficient exchange, and therefore more profitable for participants in the system.
Imagine subsistence farming and the collective farm market. Someone brought potatoes on it, someone horseshoes, someone clothes. The potato owner, of course, can write on his price tag “I will change a kilogram of potatoes for a pound of nails or a pair of shoes, but I don’t need cabbage”. But such “price tags” in and of themselves are unbreakable expenses, therefore, it becomes more profitable for market participants to agree on a “central point” - a universal exchange item.
Of all the options for choosing a currency in society, the option will win, the support of which, other things being equal, will be the least expensive for society. That is why paper money ousted gold, and non-cash payments are slowly but surely displacing cash turnover!
It's time to talk about mining. As you know, mining in Bitcoin is actually a combination of two processes: the emission of new Bitcoins and the confirmation of transactions in blocks. In principle, it would be possible to do without issuing remuneration for blocks - but for this, it would be necessary to install client software on the computers of all comers and distribute the initial issue (premin) to everyone. More interesting is the question - why miners are forced to spend so much electricity to confirm transactions in blocks? You can easily answer this question with a memorized phrase: to ensure network reliability. But isn't the bitcoin community paying too much for it? Thousand miners translate energy into heat only in order to prevent the attacker in principle from making a double-attacking attack, wiping several of the last blocks created by the community with his own chain of blocks?
An example that I cited earlier: let's say that the participants in the collective farm market must not allow the emergence of a gangster on this market who is robbing, stealing, and killing. There are two fundamental ways to do this:
1) pile up around the gate, each will follow their neighbors. The malefactor will not be able to pass
2) put the guard on the entrance with a gun
The first option is a decentralized bitcoin. The second is the existing world system. The option of choosing a guard is called democracy. Option when the guard passes his pistol to his son is called a monarchy. But let's not talk about politics.
The bitcoin community is like a group of people who propose digging a common field with shovels, instead of throwing off a tractor and leasing it. In the modern world, such communities are doomed.
So maybe it is worth paying attention to cryptocurrency alternatives to bitcoin? Is there a cryptocurrency with a scrypt-function, is it based on PoS? My answer is: no, these technologies have the same drawback: with the same reliability, they are more costly for the community than centralized systems, and with the same maintenance costs, they will be less reliable.
Should I give some conclusions at the end of the post? I think Habr readers themselves are able to make them. Those whose conclusions coincide with my opinion will not need my conclusions. If you are not convinced of the energy efficiency arguments, you don't need my conclusions either.
(Probably, this text should be in the Bitcoin / Payment Systems hub, but I could not figure out how to do it)
I wanted to finish with a quote. You should know the author:
If you don’t, you can’t. [#]
Source: https://habr.com/ru/post/238397/
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