BTC mining consumes a lot of electricity, which also causes a waste of energy. It is also a controversial and condemned aspect of Bitcoin. I wonder if you have ever thought about such a question! Is BTC mining really valuable?
To answer this question, let’s first understand what exactly is Bitcoin mining?
Simply put, Bitcoin mining is when Bitcoin miners participate in a computing power competition. Through hash operations, they see who can first calculate the "lucky number" that conforms to the predefined rules, thereby obtaining the packaged blockchain transfer transaction generation area. The right of the block. This block generation rule is the Proof of Work consensus algorithm (PoW, Proof of Work) that we often see.
If a Bitcoin miner obtains the right to generate a block, he will also receive the Bitcoin that generated the block as a block reward. As the total computing power of participating miner nodes increases, the difficulty of calculating the "lucky number" will also increase. Through dynamic difficulty adjustment, the speed of generating one Bitcoin block in about 10 minutes is maintained. The higher the difficulty, the more hashing operations required and the more power consumed.
Many people will think that such a power-consuming hash operation constantly calculates "lucky numbers" that comply with the rules. From the perspective of material output, it does not seem to produce anything of value. To put it more directly, no. It’s just a matter of constantly calculating a string of numbers that conforms to the rules in the online world. Does it have any actual value?
Having said that, let’s first take a look at what Bitcoin has achieved or what pain points it has solved. Simply put, Bitcoin creates and maintains an open, transparent, trustworthy, fair and decentralized financial system. It solves at least 2 problems:
By fixing the total amount of Bitcoin at 2,100, it solves the problem of the US dollar being able to be issued at will during the financial crisis, which leads to the depreciation of the US dollar and makes people lose trust in the US dollar. If we put it in one sentence, it is to solve people's trust problem and protect people's private property from infringement through open and transparent technical means.
A global cross-border transfer system has been built. As long as you can connect to the Bitcoin blockchain network, you can easily transfer money between accounts in any corner of the world. In terms of transfer efficiency and transfer fees, it is faster and cheaper than the actual financial cross-border transfer system.
Why does Bitcoin need to design such a power-consuming mining mechanism? Does such a mining mechanism have actual value?
Just imagine, if there is no mining mechanism, how to determine who is responsible for generating blocks? If anyone can generate blocks, what if someone does evil? Bitcoin establishes the threshold for participating in the operation of the Bitcoin system through computing power mining. At the same time, computing power mining also forms a moat for the Bitcoin system: for example, if you want to roll back a Bitcoin block (for example, if you want to implement a double-spending attack), you must have more than 51% of the total Bitcoin computing power to achieve such an operation. . However, the cost of owning more than 51% of the total Bitcoin computing power is very high and cannot be afforded by ordinary people or consortiums. Since its official birth on January 3, 2009, Bitcoin has suffered countless attacks, but it has remained unscathed. This is entirely due to the protection of the moat built by its mining mechanism. Facts have also proven that Bitcoin’s mining mechanism is safe and effective. Therefore, from this perspective, although Bitcoin mining consumes a lot of electricity, it cannot be said to be a wasted effort. Of immeasurable value. In real-life financial systems, maintenance and security costs are also very high, including investment in software and hardware, human investment in development and operation and maintenance, etc.
Does that mean that the power-consuming PoW mining mechanism of Bitcoin is the best?
I don't think so either. The original intention of the invention of Bitcoin is that everyone should be able to mine through ordinary computers and contribute to the security of the network, thereby achieving the purpose of decentralization. However, with the advent of professional mining ASIC chips and the gradual formation of large mining pools, the difficulty of Bitcoin mining for miners continues to increase, making it difficult for ordinary computers to perform mining tasks in the computing power competition. Bitcoin computing power is showing This creates a certain degree of concentration or even monopoly, which is contrary to the purpose of decentralization. On the other hand, in addition to the consensus algorithm of computing power mining such as workload proof, other non-computing power mining consensus algorithms have also emerged, such as Proof of Stake (PoS), Delegated Proof of Stake (DPOS) Stake) etc. But they all have their own shortcomings:
The PoS consensus algorithm obtains the right to produce blocks through the age of the currency (the product of the number of pledged coins and the pledge time). Whoever has the largest currency age will obtain the current block production rights, and then the currency age will be cleared. This will easily cause the poor to become poorer, the rich to become richer, the gap between the rich and the poor will gradually widen, and wealth will tend to be concentrated, which is not conducive to decentralization. Ethereum is currently preparing to move from PoW to PoS.
The DPoS consensus algorithm votes for block producers through elections. In order to obtain votes, block producers can easily choose to bribe votes to canvass votes. For example, if you vote for me (the more coins you hold, the more votes you can cast), the block reward I receive after becoming a block generator can be given to you according to the number of votes you cast for me. A certain share of feedback. In order to maximize their own interests, voters may vote for the block producer candidate who gives the most rewards against their will. Block producer candidates who are truly capable and capable may not be selected. This is the same as vote buying in real life, which leads to the weakening of decentralization. The public chains currently using the DPoS consensus algorithm are mainly EOS
From the above discussion, no consensus algorithm is perfect, and the choice can only be made after weighing the pros and cons. No matter what, the development of blockchain is constantly moving forward. In the future, a low-cost, efficient and highly decentralized consensus algorithm may emerge to replace the existing consensus algorithm. Because Bitcoin consumes a lot of electricity, Bitcoin mining has been banned in our country. Currently, the United States ranks first and Kazakhstan ranks second in terms of global Bitcoin computing power. Although Bitcoin cannot be called perfect, it can be called a great social experiment. It has written a glorious page in human history!
