When we think of bitcoin & blockchains ‘people power’ usually comes to mind but with bitcoin mining economics in question perhaps ‘people powered’ may be the answer.
Bitcoin Mining largely doesn’t make sense. The economics of which mean on the one hand it’s something that’s only commercially interesting at an industrial scale, in opposition to Bitcoin’s decentralised character. But on the other hand as economies of scale are won the algorithm, in direct response to these efficiencies, alters the risk vs reward mechanism in order to secure the network.
In other words it’s deliberately wasteful. Which is unsustainable both from a financial and ecological perspective. At this centralised level, with the cost of running a rig fixed in real world fiat currency, the risk vs reward algorithm working against me and the reward in volatile cryptos, its a very risky long-bet. As we have seen with recent documentaries on mining farms in China you can see where this is heading. In other markets where there was a natural pressure to reduce costs and increase output we got sweat shops. These artificial pressures unique to Bitcoin put that scenario on steroids bringing serious ethical considerations too.
Which begs the question what is the true price of current Bitcoin Minings success and why should we support it?
Eris Industries attempts to solve the problem by applying a ‘participatory architecture’ using peer-to-peer & distributed systems called Decerver. Which is similar to Spotify’s earlier set-up aping BitTorrent’s peer-to-peer file sharing protocol to have users themselves power the distribution of content.
This distributes processing for the users of a specific service across their own personal devices. This passes part of the processing cost to users themselves which seems fair but would be currently limited to niche systems.
Altcoins have introduced new ways of securing their network including Proof of Stake, where the mining is combined with ownership of the token and rewarded on a percent basis. This, however, has received a lot of criticism, because according to current thinking, it wouldn’t be nearly as secure.
Ignoring the mining itself, Bitcoin believers can, solely to support the network, install nodes but as we have seen this doesn’t scale to challenge the payment processing power of centralised companies like Paypal.
Just two days ago @aronvanammers and I sat having a curry (disclaimer: and a few beers) and strayed into;
‘How could you tap into the latent processing power of groups of consumers currently unconnected to bitcoin, like gamers, to power a decentralised global transactions processing network?’.
At first we considered could you make the games themselves perform the math required for bitcoin mining. But quickly binned the idea.
The next day I see Adam Draper ask on Zap Chain;
answer from bitcoiners… broadly yes as long as it didn’t slow things down too much & there was a good incentive.
Yes dependent on impact to battery. But I’m not sure about the wider public and certainly not without incentive. Although I do have a good idea what that incentive could be….
Next day; I hear uTorrent quietly installs mining nodes on their users devices without permission slowing the victims processing down. Actually it turns out it was EpicScale an ad partner of theirs but it leads me to the thought;
IS ‘FREEMIUM’ GOING TO INCREASINGLY MEAN ‘WITH NODE’
and that’s not so crazy when you think of the size of gaming operators like Zynga alone or the gaming market as a whole (see below).
The idea that ‘freemium’ becomes ‘with a processing node for something else’ could be where we’re heading. For any but a few companies, investing in full mining rigs for the sole purpose of Bitcoin mining just doesn’t make sense. But even running a Bitcoin miner on users desktops or mobiles might not be the most profitable way to “use” the spare capacity of end user devices as botnet exploiters have found out.
Staying on gaming however there might be more to it. Mobile gaming is fun but largely a waste of everyone’s time and money when you get down to it. Although the computing capacity of an end user mobile device isn’t nearly enough to compete in Bitcoin mining with even the smallest ASIC device in a mining farm, the mobile device is able to perform more lightweight cryptographic operations. Adding in the aspect that each mobile gamer is a human on a unique device at a unique location might offer additional possibilities to include in “mining” or processing/network-securing algorithms. In other words, combine Bitcoin with Lazooz and Candy Crush to create a new form of digital scarcity.
On a technical level, realizing something like this might not be viable at all, and at a minimum it requires a solid solution for guaranteeing that the user playing is a real human. Any form of computation that is compensated with value can be tricked, and for this example we just have to envision millions of bots “playing” games to see where the weakness is. However we do need radically different methods of securing blockchains.
Thinking from the perspective of the user the only real barriers are:
– Communicating / normalising ‘mining’ to the average consumer
– Specific to gaming, slowing down the speed of the the gaming experience
– More generally, slowing down the speed of the devices themselves
I WOULD BE INTERESTED TO HEAR YOUR TAKE…
All this has led me to come to the conclusion of the need to add a 9th BUILDING BLOCK FOR A SUCCESSFUL INDUSTRY‘ which is…
9: ECONOMICALLY VIABLE PROCESSING NETWORKS