Wednesday, April 17, 2013

#bitcoin - Would it be possible to create a mining algorithm that would promote general useful activity and not just consume 1 GWh a day?

Bitcoin mining
Each currency has its costs,and for example in currencies that need bank of issue and various other institutions to exist, it is completely understandable. Surprisingly, however, its significant costs has also the virtual currency Bitcoin. Server estimates that "mining" of currency Bitcoin, which is in fact the search for blocks of numbers that will succeed in certain clearly defined test, consumes daily 1 005,59 MWh.
Only the of electricity thus costs modern "gold diggers" $ 150,000 a day. Even so, it is a highly profitable business, because the dredged exchange is $ 470,000 - of course depending on the current exchange rate currency. If the currency will fare badly, this business can immediately turn into a loss.
The easiest way to get money is to start an additional process in your computer that utilizes its otherwise unused computing capacity. Today, however, by using this route of mining the cost of the energy exceeds the value of the dredged currency. Professional miners therefore use special computers, using either graphics processors that are actually parallel computers, or even ASICs (Application Specific Integrated Circuits) - specifically developed integrated circuits. Like many times in the history of real gold rushes, it’s those who are supplying the miners that are finding the real riches. Perhaps we can at least enjoy that, unlike during the real golden fevers, Bitcoin costs only the energy and money, not lives...
But that's a small relief, if we realize that this whole market that consumes large amounts of energy, engages a lot of people and even creates specialized segments in the computer market, is entirely artificial. One would say: what if all these resources and energy have been used for something meaningful? For example, to feed the poorest people in Africa; to create educational activities for the poor people in the developed countries; for the prevention of drug abuse; or on vaccination against infectious diseases?
Logical question that comes to mind, why creators of Bitcoin currency invented so complicated and energy-intensive algorithm of mining? The basis of each currency is its credibility. Rulers and governments have it easier, they may for example declare that they will accept taxes in their own currency, and this step alone makes their currency useful and valuable  But hardly anyone can accept an offer from a stranger, who does not have an existing trust (or power over a group of people, such as a ruler) and starts selling the currency, which he declares that he owns. The principle of "mining" solves the problem quite well. It gives everyone the opportunity to create the currency under certain specified conditions, and thus follows the historically proven examples of mining precious metals.
Bitcoin is after his recent problems with volatility probably already written off: right now, it is suitable nor for investments, because it can quickly evaporate, nor for transactions, because they can currently take so long that the currency value changes significantly during the transaction. But certainly there will be new virtual currencies to follow, and these currencies can learn from current problems of Bitcoin. And it is quite possible that they will also come up with new ideas in the field of "mining" the currency.
For example, is it really necessary to use for mining only those algorithms that have no real usefulness? If we think about the problem more closely, we see that there may be ways to combine mining with certain beneficial activities in our real world. If someone came up with such a project, his virtual currency would actually sponsor worthwhile activities, since these activities would suddenly could be performed for a currency convertible with dollars. In all probability also the currency itself would benefit from such an philosophy, as it would become endowed with much more trust than the currency based on merely abstract algorithms. This mining would be difficult to define and even more difficult to control, but the result could however be a real influx of money into areas that need it most. I am convinced that sooner or later someone will come up with such a project - and will succeed.