No, not the miners themselves but the word itself may be a negative as bitcoin strives for popularity. The word throws us for a loop by taking us back to the days of gold mining and gold coins. So, naturally, bitcoin must be mined like gold but this clearly is a bad word choice. The word means physical work, like when they dug gold out of the ground and refined it with hammer and chisel. Bitcoin miners are not miners at all. They are community record keepers. Imagine if we would have come out of the gate with the bitcoin protocol, releasing periodic bitcoins that were won in an online contest between “Community Record Keepers.” This word is a problem with getting people to adopt bitcoin. When you mention bitcoin mining, and the everyday person hears about mining bitcoin, mining equipment, and energy use, it gives bitcoin a bad name. It makes the process seem barbaric and brings images of looting and stashing nuggets in your socks.
It is the word “miners” and “mining” that deserve the criticism as they really are “public bookkeepers”, “bookkeeping.” David Andolfatto is a Vice President at the St. Louis Fed and he just gave a presentation about Bitcoin. He recently said that when he first looked into bitcoin he thought, “This was kind of silly” and he questioned the role of these “miners” and “mining” bitcoin. It took him a while until he saw that these miners were mislabeled. They were performing a communal service, a record-keeping service which is critical to any money system. It is not seen by those on the outside of bitcoin right now; that mining is only a name given to the activity that rewards record keepers for their service. With that understanding, perhaps more people would see that bitcoin as a protocol could function well, and for a long while, since there will always be new bitcoins (at least in all of our lifetimes) so their will always be record keepers who want the reward.
Mining is a flawed analogy and has become the poster child for bitcoin. “Miners” are being rewarded for performing a task of clerical importance and transaction verification. One beauty of the system is that it does not need a centralized authority to confirm transactions because the computers on the network are given an incentive to take on that role.
When you think bitcoin miners, you may think of images like these. In my opinion, these images spell trouble for the lay person. They think back to the past 50 years and possibly even think: in reality, what value does gold have in the world? If the dollar were to crash tomorrow, would your neighbor take a gold coin for some cases of his stored water? How many gold coins would you need? When described instead as record keeping using high processing supercomputers, the process becomes clear and you start to think correctly with images such as this
Even better… there is no need for more coins. The creation of bitcoins until the year 2140 in slow and pre-determined intervals serves as a way of giving a reward to these record keepers for the transactions they verified. It is not at all a real commodity where you could have a shortage that would require you to dig up more. Bitcoins are infinitely divisible, and the price could rise infinitely, so there will never be a shortage. The limiting factor is of course the amount of money people are willing to devote to it.
So I vote we drop the mining tag. They are community Bitcoin bookkeepers, and they are bookkeeping.
Last modified: April 7, 2014 17:05 UTC