Quote from: SpontaneousDream on September 01, 2014, 10:49:44 AM

This is from a Google Hangout with Daniel Larimer. He starts talking about the issues with Bitcoin mining and PoW at 1:01:20 and goes until 1:03:44. Only a few minutes long.

https://www.youtube.com/watch?v=tBcJ5rsAGaI

Seems to me like he's bringing up some pretty serious flaws here. He later goes on to say that PoW is dead and Bitcoin will have to change at some point. Any thoughts?

The blockchain maintains the list of all the transactions in bitcoin. It must be the same to everyone and yet not created by a single person or entity. Proof of Work is what enforces both of these features. The original vision was that anybody could be a miner and participate in securing the blockchain. However, as bitcoin becomes more popular and valuable, the mining rewards lead to the creation of mining facilities. Similarly to the gold rush, at the beginning there were pioneers with pickaxes but soon after they were replaced by conglomerates with heavy machinery. Now that mining pools have mostly taken over, he questions the decentralization of bitcoin mining and therefore bitcoin security is in the hands of a few. Furthermore, what is too costly for an individual may be acceptable for governmental entity. In conclusion, he prefers to have a group of trusted organizations in charge of the blockchain. Mining would be rendered useless and the cost of maintaining the blockchain greatly reduced.

I agree to most of what he said except for his conclusion and solution. I think finding a group of trusted entities is very hard and is the reason why previous digital currencies failed. POW mining is quite wasteful in computational resources but if it is what it takes to have an independent currency then I accept it.
There are other suggestions out there (POS, POS + POW). They may work better or not. I'm not convinced that anyone knows. In a sense this reminds me of physics. There are many theories out there but we can't verify any of them because we are nowhere close to that energy level. Today, there are a ton of different options but no one has put enough effort into breaking BTC. At this point, you'd need 100 PHash/s to attempt it. But who knows, maybe someone will build the super bitcoin collider.