Quote from: GhostInTheBlockchain on December 18, 2013, 01:38:04 AM

Quote from: milesy on December 18, 2013, 01:16:46 AM

Basically, I am a newbie and my question maybe sounds silly.

But after learning the basic mechanism of Bitcoin, I can't stop thinking how wasteful the mining electricity power is and, is it an essential part of a cryptocurrency?

For now, all I can understand is that the minging system is designed for 2 purpose: distribute new created BTCs & maintain transactions.

Could there be another way of doing this without so much powerful computing force?

I can't figure it out but I am still hoping there will be someguy finding his muse in the future.

Or maybe mining is the only way and I am just babbling...lol.

If adding new blocks to the blockchain was cheap and easy then an attacker could add bogus, but valid looking blocks to the blockchain faster than the rest of the computers on the network and cause all kinds of problems. Adding blocks to the blockchain needs to be costly so that all the good computers combined together will always be more powerful than a single bad computer.

However, the cost to add a block doesn't necessarily need to be paid with CPU cycles. That's just how bitcoin chose to do it. This technique is called 'Proof of Work'. The 'work' is the CPU cycles used to do a complex cryptographic algorithm. Whatever is used to pay the price to add blocks to blockchain, the cost to verify that the new block is valid needs to be very low as this is also necessary to thwart bad guys (and make for better user experience). These two requirements (high cost to add block, low cost to verify block) limit the kinds algorithms that can be used to add and verify blocks. Another algorithm to add blocks to blockchain is called 'Proof of Stake'. In that algorithm, the cost to add block to blockchain is that you need to make a portion of your coins un-spendable for a period of time. Once that holding period is over you are free to spend those coins. People that advocate this technique claim it uses less electricity.

Maybe someday someone will come up with yet a third way to pay the cost of adding a block to the blockchain.

Proof of stake isnt perfect in anyway.

Beside we can add a new rule like sum of priorities to the proof of work and have essentially better system of both.

For early adoption stage, proof of work is better. For mature stages, i can see the new rule above being valuable.