Squandering Resources: Backstory

“That can’t be right.” I looked to my friend as he nodded and exhaled a cloud of smoke, obscuring the dim lights of his garage. “You’re telling me, that if I buy this machine, plug it into the wall and turn it on, someone is going to pay me to waste the energy?”

“I wouldn’t put it like that, but you’re essentially correct.” We had just finished reading Satoshi Nakamoto’s paper on blockchain and were struggling a bit with the ramifications. The concept was simple enough – a network supported by a verification algorithm intentionally designed to be calculation-intensive would create an append-only framework unsusceptible to alteration by anyone with control of less than 51% of the network. This paradigm would essentially inject trust into the system thereby removing the need for impartial third parties who would wind up taking a cut for their services anyway. “It’s all about trust” my friend opined with a grin.

“But that trust is being supplanted by real, tangible resources.” I continued, the end state beginning to become visible. “Currency was once backed by tangible assets – gold, wampum, you name it – to ensure authenticity. Then came the fiat system, where the currency was instead backed by a central monetary authority. Like all governments, they’re run by people, who are corruptible and therefore the currency is corruptible. This fixes the corruptibility problem, but replaces it with a new one. We’re backing the currency with a definable amount of work – the hashing algorithm. It’s a currency backed by kinetic energy.”

“That’s right”, my friend added, “but these machines are super efficient”. He pointed me to the S9 product page as he gripped the laptop by it’s screen and swiveled it so I could see. “It’s an ASIC – the SHA-256 calculation is literally etched into the silicon. If we buy this now, we’re not going to have to worry about obsolescence for a while.”

“What you’re telling me,” I recapped, “is that we’re leveraging energy to provide a backing for this new generation of currency. The energy from the wall, which started its life as 200 million years of the first plant life on land, unassailed by Animalia, compressed over a billion years into high density carbon chains to be dug up, piped halfway around the world and burned in a refinery to produce the current that would flow through these chips. Precious, irreplaceable resources, being squandered to support a currency network because we as a civilization don’t trust each other.”

“Yeah, pretty much. Are you in for a couple of these bad boys?”

We bought machines, plugged them in, and are currently being paid to squander resources.