Hardly. Bitcoin ran just fine on CPUs. The only reason nobody uses CPUs to mine any more is because everybody else switched to GPUs, which resulted in a difficulty adjustment. In other words, competition for bitcoins upped the required compute power, not anything inherent to producing bitcoins themselves.
Do 500W GPUs play any part in this? No. The bitcoin client is a standalone app that can run on any machine. Mining (generating hashes) does not, to my knowledge, actually operate the network.
Hell, if bitcoin needs 1000 petaflops just to operate the network when it is still a fringe currency, how exactly is it supposed to scale to mainstream use?
The computing effort required by mining is almost completely decoupled from the actual number of transactions. It's designed to scale up with the available computing power, that's why it has grown.
> Mining (generating hashes) does not, to my knowledge, actually operate the network.
You're incorrect. The proof-of-work requirement is integral to the Bitcoin network, because it makes fraud unprofitable. The amount of computation required to create a block chain longer than the honest one should cost more than the potential benefits of doing so. That said, as far as I know, any proof-of-work algorithm could be used as long as a large portion of clients adopted it, so it should be possible to use work that is useful in itself.
So what you are saying is that Bitcoin will always require a horrific amount of computational power, just to prevent fraudulent generation of blocks? I'm starting to like the idea of mainstream Bitcoin less and less... 1000 petaflops just to maintain the network? Does that not raise the eyebrow?
I don't think it's "horrific," and I think the phrase "just to prevent fraudulent generation of blocks" vastly understates the awesomeness of having a virtually fraud-proof transaction log without relying on a centralized party.
Well, if Bitcoin goes mainstream it seems like we could expect it would require 51% of all computational power on the planet at all times, which would indeed be horrific as well as tragic, IMO.
Sure, the perfect currency is valuable. But is such a sheer brute-force approach to security the best we can do?
What makes you think it would require 51% of all computational power? That would only be true if there were no other valuable things to compute, which is very unlikely to be the case.
I don't think you really understand how the protocol works. The transaction rate is rather small and handled entirely by general purpose CPUs. The proof of work uses a fixed-size input made by hashing all the transactions in a block.
