[brighton36]

You're correct. The problem is that bitcoin exists due to holes in the regulatory structure. People mine because people need anonymous value transfers. If you allow people to purchase drugs/gamble/capital-flight/etc with credit cards, then this externality cost will go away :)

[Shorel]

> People mine because people need anonymous value transfers.

No, people mine because a global contest was the only way to create a self synchronized global database. Why a global database? To avoid the problem of double spending that all other electronic money initiatives had. But this is a distributed instead of a centralized database.

The process of mining is a way to make all miners maintain the blockchain in working order. Every miner has a copy of the full blockchain DB and all these copies are in sync. In fact, a mined block is a list of transactions between accounts, with their corresponding digital signatures.

The incentive of giving a token size of bitcoins to the first miner that finds the correct hash signature was to make mining something that people would like to do, instead of a burden for everyone.

If you can find another way to make a group of very diverse people, with possibly diverse interests in the game, to maintain a distributed networked database in sync, welcome to the community.

In fact, some groups are starting to test one alternative to mining, called Proof of Stake. If it is better for everyone, then another currency instead of Bitcoin will take the crown.

[VMG]

Even then, you'd still need a fair way of distributing the initial value. Mining provides censorship-resistance and transparent issuance.

[JoeAltmaier]

But the 'transparent issuance' is 'give value to those that piss away the most resources'. That's got to be the worst solution for the planet we could imagine.

Other solutions: issue more value to those already holding more value. Issue more value to those holding less value. Issue more value in the form of credit transactions within the community.

In fact, since imaginary value points are real numbers, just revalue what's there? Its not like we'll run out of fractions. Imagine if you will that only 1 bitcoin was ever issued. Folks trade around ever-decreasing fractional numbers (milli-coins? nano-coins?).

[VMG]

Believe it or not, people have thought about these things. Mining wasn't chosen because the developers love destroying the environment, but because it's the only way to bootstrap the system and keep it going.

It's a system to distribute scarce tokens as fairly as possible. At the beginning, you could just do it on your own computer device. Now the space is much more specialized, the barriers to entry is much higher, but anyone can still participate.

> issue more value to those already holding more value

Again, how should the initial units be distributed fairly? Besides, this system is not attractive to latecomers and will end even more centralized that the current system.

> Issue more value to those holding less value.

So I just create free new identities out to get the scarce tokens? Then the tokens are not that scarce, are they?

> Issue more value in the form of credit transactions within the community.

Not sure what you even mean here.

> Imagine if you will that only 1 bitcoin was ever issued.

A Bitcoin already is divisible into 100 million Satoshis. Mining is a solution to the question who gets the tokens.

[huherto]

> Again, how should the initial units be distributed fairly?

Same amount for everybody. One weekly/monthly payment for everybody. Like basic income. I am just guessing, I haven't thought about it deeply.

[VMG]

That requires a central registry match cryptographic identities with physical ones. That is overhead and a trusted third party.

An idea like this was also often brought up in spam prevention, which interestingly is also the origin of proof-of-work: https://en.wikipedia.org/wiki/Hashcash