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Is Proof of Work (PoW) Wasteful?

Is Proof of Work (PoW) Wasteful?

What is Proof of Work, and why do people say it's "Wasteful"? Is it wasteful? In this short video, shot in east Pompano Beach, I discuss the aspects of Proof Of ...

Transcription

What's up, party people? Chris DeRose here, Community Director of the Counterparty Foundation and right now I'm here at the Fort Lauderdale Beach, the north side of the beach. It's right by Atlantic Boulevard. Everyone's enjoying the end of their Sunday and so am I, but I'm enjoying it with you. So let's talk about Bitcoin. The question I had posed to me today is, 'Is Proof of Work wasteful?' and let's talk about that, let's explore that issue. So Proof of Work is an alternative to Proof of Stake.

It is really the only Bitcoin consensus mechanism that we've really ever had that's worked for any period of time. I'm a big fan of it personally and I think a lot of us at the Counterparty Project are. So Proof of Work, we talked about it in other videos and how it compares to Proof of Stake, but one of things that keeps on coming up is, well, it uses a lot of energy. And that's true. Some energy estimates that I've heard have been as high as the entire power consumption, I think, of Vietnam in a year, or something like that. I heard some smaller estimates and truly no one exactly knows.

Probably is the output of at least one big power plant and then maybe more, we really don't know. It sounds like a lot of energy is being wasted. It's at least at first it's kind of like this, 'Well, do we really need to be spending energy on maintaining the consensus of the network?' But I certainly believe that compared to the existing infrastructure, it is very efficient. It's certainly very efficient compared to the size of the Federal Bank and all of the retail banks and all of the people going through it and all of the energy that is used. Not only in terms of the power consumption, but perhaps gas. Certainly, too, just think the amount of energy that people kind of use here in terms of keeping their livelihoods towards this purpose of maintaining that infrastructure, as opposed to maybe doing something else for the economy.

That's a huge amount of energy. But let's even take it towards the gold, because I think gold, digital gold is a very common theme here at Bitcoin. Gold itself uses a substantial amount of power. There's the power involved in mining, there's the power involved in transportation, there's the power involved in storage. All of these subsections of the power coefficient as it relates to gold, each of them is certainly more than what's being used by the entirety of Bitcoin. But then this also kind of works into a theme of, 'Well, why is gold valuable? And why is bitcoin valuable?' Throughout history we've had this theme of tokens that are representative of energy consumption.

We'd like to think about perhaps the seashells that early indigenous tribes were using to track their wealth. The reason that those were valuable was because energy was required to grab them. They were scarce, they were rare, and in order to get these seashells you had to put some amount of energy into the equation. Now, of course, they didn't have gasoline back then, but energy takes many forms and it is similarly that we see Bitcoin working in our economy today. Because Bitcoin is scarce, because it's rare, it has value. And I think that, not entirely getting into the entirety of the Proof of Stake debate, but when you compare it to those systems, when we say there's nothing at stake in those systems, that's what we mean.

There's no energy going into that system so it's not perhaps part and parcel with what we think of as a scarce token of value. So that's my opinion on the matter. Do you disagree? Do you agree? Write to me or tweet me. My email address is chris@chrisderose.com and my Twitter handle is DeRoseTech. Certainly, tell me what you think of this video and ask me questions.

I love to answer them. Subscribe to the channel if you like this answer, and I look forward to seeing you guys again.