Cambridge Bitcoin Electricity Consumption Index(cbeci.org)
cbeci.org
Cambridge Bitcoin Electricity Consumption Index
https://cbeci.org/cbeci/comparisons
1,835 comments
Nic Carter's point is intentionally obtuse and belies his conflicted interests.
The reality is that if you scaled up the bitcoin system linearly so it provided as much transaction capacity as Visa (let alone the entire world economy) [edit or rather worded differently if each Visa transaction consumed as much power as a Bitcoin transaction], it would require a number of times more power than the entire world produces, and produce as much e-waste as the entire world put together. Obviously this is not how bitcoin scales because even if you did that it would still process 7 tps.
That is, however, proof that it is drastically less efficient on a per transaction basis even factoring in any and all possible externalities including the army and mining and the fed (lol). This is a proof by contradiction.
Anything else is a talking point and also trivially falsifiable. The US Army protects the US not the dollar and its budget would not be reduced in a Bitcoin powered world. Neither would its oil consumption because tanks don't fill up on bitcoins.
The ubiquity of the dollar specifically is also irrelevant as we're not comparing crypto to US Dollars but rather to well-managed fiat systems. Any and all. Not just one albeit dominant one.
This is obvious stuff if you think about it for a half second without trying to justify the unjustifiable.
The reality is that if you scaled up the bitcoin system linearly so it provided as much transaction capacity as Visa (let alone the entire world economy) [edit or rather worded differently if each Visa transaction consumed as much power as a Bitcoin transaction], it would require a number of times more power than the entire world produces, and produce as much e-waste as the entire world put together. Obviously this is not how bitcoin scales because even if you did that it would still process 7 tps.
That is, however, proof that it is drastically less efficient on a per transaction basis even factoring in any and all possible externalities including the army and mining and the fed (lol). This is a proof by contradiction.
Anything else is a talking point and also trivially falsifiable. The US Army protects the US not the dollar and its budget would not be reduced in a Bitcoin powered world. Neither would its oil consumption because tanks don't fill up on bitcoins.
The ubiquity of the dollar specifically is also irrelevant as we're not comparing crypto to US Dollars but rather to well-managed fiat systems. Any and all. Not just one albeit dominant one.
This is obvious stuff if you think about it for a half second without trying to justify the unjustifiable.
How do completely incorrect comments like this get upvoted?
Well that might be because they’re correct my dude! Feel free to weigh in with your analysis. Nobody’s been able to spot a hole in the logic.
No, anyone who understands the Bitcoin protocol knows that energy doesn't scale with transactions. Read the paper. You could have your laptop sign a million transactions and it would be secure.
Energy scales with competition to sign transactions. Read the Bitcoin white paper my dude.
Energy scales with competition to sign transactions. Read the Bitcoin white paper my dude.
I did, and frankly, it shows a shocking lack of understanding of economics. Which is why we find ourselves in this situation.
It's no different than you saying "read the bible!"
It's no different than you saying "read the bible!"
It's completely different than the bible because it can be proven by yourself, no faith needed. There is the whitepaper and there is source code. But since you are so cynical as to not believe people, and didn't seem to understand the whitepaper, I'll explain it to you:
Transaction blocks are generated at a fixed rate, no matter how many miners are operating. This is done by adjusting the difficulty of finding a sha256 hash on the data of the transaction block. You simply need to find a hash by adding some random data to the block until you find a hash that ends in 0. The more 0s at the end of the hash, the harder to find.
Generating a sha256 hash is easily done by a laptop computer. But when huge farms of ASICs are finding the hash very quickly, the difficulty goes up to throttle the transaction rate, and many more hashes must be calculated in order to find one that meets the criteria. This is where the energy use comes from - the hash difficulty, not the number of transactions in a block - thus it scales with competition to sign blocks, rather than the number of transactions.
Transaction blocks are generated at a fixed rate, no matter how many miners are operating. This is done by adjusting the difficulty of finding a sha256 hash on the data of the transaction block. You simply need to find a hash by adding some random data to the block until you find a hash that ends in 0. The more 0s at the end of the hash, the harder to find.
Generating a sha256 hash is easily done by a laptop computer. But when huge farms of ASICs are finding the hash very quickly, the difficulty goes up to throttle the transaction rate, and many more hashes must be calculated in order to find one that meets the criteria. This is where the energy use comes from - the hash difficulty, not the number of transactions in a block - thus it scales with competition to sign blocks, rather than the number of transactions.
> The reality is that if you scaled up the bitcoin system linearly so it provided as much transaction capacity as Visa (let alone the entire world economy), it would require a number of times more power than the entire world produces, and produce as much e-waste as the entire world put together.
It's fair to judge Bitcoin's energy use by its tps, but the above is not true. Energy use and tps are, as you then acknowledge, not related. It is possible to increase the number of tps by many multiples. The trade-off is centralization due to hardware requirements.
It's fair to judge Bitcoin's energy use by its tps, but the above is not true. Energy use and tps are, as you then acknowledge, not related. It is possible to increase the number of tps by many multiples. The trade-off is centralization due to hardware requirements.
Unfortunately for Bitcoin, it needs more than “many multiples” in order to actually handle function as a currency. At 4tps they’re several orders of magnitude short of what the market actually needs.
That's why second-layer technologies like the Lightning Network are being built.
Bitcoin doesn't have to function as a currency to be wildly successful (since being a currency isn't the only relevant use case), but with second layer networks it will be able to.
Bitcoin doesn't have to function as a currency to be wildly successful (since being a currency isn't the only relevant use case), but with second layer networks it will be able to.
Once they increase it, which they won’t for philosophical reasons, I’ll update my assessment. Until then it’s strictly fair and accurate.
It’s representative of the world in which we live today not some hypothetical world that could exist in the future - that the team has promised and failed to deliver for a decade. I can make up numbers for visa that match too.
After all climate change doesn’t care about hypotheticals.
It’s representative of the world in which we live today not some hypothetical world that could exist in the future - that the team has promised and failed to deliver for a decade. I can make up numbers for visa that match too.
After all climate change doesn’t care about hypotheticals.
> ... climate change doesn’t care about hypotheticals.
But increasing the block size limit wouldn't reduce the energy consumption. It would just make Bitcoin support a higher maximum transaction count per second, which perhaps the market doesn't even need or care about.
But increasing the block size limit wouldn't reduce the energy consumption. It would just make Bitcoin support a higher maximum transaction count per second, which perhaps the market doesn't even need or care about.
I would love to see you defended active tire fire in your backyard with the same logic.
Can you explain what you mean?
The power consumption of Bitcoin is proportional to the price of Bitcoin, it is not related to the demand for making transactions or how many transactions are being made.
The power consumption of Bitcoin is proportional to the price of Bitcoin, it is not related to the demand for making transactions or how many transactions are being made.
You folks keep saying that like it’s a good thing but in my opinion that is a scathing indictment of the system. You’re talking about something that’s intentionally anti-efficient. It’s the only technology I’ve ever seen in my entire lifetime but becomes less efficient when more people try and use it. It’s horrifying.
[edit; to your reply: that sounds like a bad solution and I think you know that lol]
[edit; to your reply: that sounds like a bad solution and I think you know that lol]
That fact says nothing about the efficiency. What it says is that market forces will decide what level of energy they want to dedicate to the security of the network. Whatever the market is willing to pay, it will be 100% efficiently spent on outcompeting attackers on the network.
> that sounds like a bad solution and I think you know that lol
I don't think it's a good or bad solution. It is basically just the same as how market forces control the values of fiat currencies which in turn affects how much energy is required to secure them.
> that sounds like a bad solution and I think you know that lol
I don't think it's a good or bad solution. It is basically just the same as how market forces control the values of fiat currencies which in turn affects how much energy is required to secure them.
Through a proof of waste of limited resources system. Just spell it out and I’ll agree.
[edit: this isn't about the army. this is about currency. stay on track, stay on topic - both of those things can be bad and having two of them can be additively much worse; having a debate with you is like trying to grab a fistful of jello, absolutely impossible]
[edit: this isn't about the army. this is about currency. stay on track, stay on topic - both of those things can be bad and having two of them can be additively much worse; having a debate with you is like trying to grab a fistful of jello, absolutely impossible]
Exactly, just like how with fiat currencies, the military serves as a proof-of-waste system which does nothing productive except to compete with other militaries. They compete by intentionally burning their limited resources (young individuals' lives) so as to make an enemy attack cost-prohibitive, thus securing the network.
> The army is to defend the country and its people, and would not be reduced in a bitcoin powered world.
Yes, they also defend other things besides the country's financial interests. So you'd expect them to cost a little more than Bitcoin, which only defends holders' financial interests. I am simply pointing out how they use the same proof-of-work system to accomplish it.
If the widespread adoption of Bitcoin led to a devaluation of existing fiat currencies, then you would expect military spending to go down (in terms of bitcoins). But I don't think that Bitcoin's adoption will decrease the use of fiat currencies (by any significant amount).
> both of those things can be bad and having two of them can be additively much worse
It's not clear why they would be additively worse. Creating a new place to store wealth doesn't increase the overall amount of wealth.
I agree that it is not a good thing that proof-of-work systems are wasteful, but perhaps it's the only way of solving the problem.
Proof-of-stake systems look promising but there are still some open questions about how it should be implemented and what the implications are for network security, and it will be at least a few years before they become battle-tested enough to have the same level of trust as Bitcoin.
> The army is to defend the country and its people, and would not be reduced in a bitcoin powered world.
Yes, they also defend other things besides the country's financial interests. So you'd expect them to cost a little more than Bitcoin, which only defends holders' financial interests. I am simply pointing out how they use the same proof-of-work system to accomplish it.
If the widespread adoption of Bitcoin led to a devaluation of existing fiat currencies, then you would expect military spending to go down (in terms of bitcoins). But I don't think that Bitcoin's adoption will decrease the use of fiat currencies (by any significant amount).
> both of those things can be bad and having two of them can be additively much worse
It's not clear why they would be additively worse. Creating a new place to store wealth doesn't increase the overall amount of wealth.
I agree that it is not a good thing that proof-of-work systems are wasteful, but perhaps it's the only way of solving the problem.
Proof-of-stake systems look promising but there are still some open questions about how it should be implemented and what the implications are for network security, and it will be at least a few years before they become battle-tested enough to have the same level of trust as Bitcoin.
> I agree that it is not a good thing that proof-of-work systems are wasteful, but perhaps it's the only way of solving the problem.
Obviously not, the other solution is by fiat, which has been working for milennia, and it's not about to stop.
Obviously not, the other solution is by fiat, which has been working for milennia, and it's not about to stop.
"Until then it’s strictly fair and accurate."
Your argument is about as convincing as "well you couldn't make a payment billion dollars because a penny weighs 1 gram, and their combined weight would be too heavy to transport"
Your argument is about as convincing as "well you couldn't make a payment billion dollars because a penny weighs 1 gram, and their combined weight would be too heavy to transport"
How so? I said on a per transaction basis by falsification it’s not possible, factoring in all externalities for a Bitcoin transaction to be more efficient than visa. It is not. End of story. The scaling is a thought experiment not a plan.
Your counter example is nonsense.
Could it be in the future more efficient given unspecified future changes? Who knows but it sure as shit isn’t today. I was pushing back on Nic’s theory on pricing in externalities.
Your counter example is nonsense.
Could it be in the future more efficient given unspecified future changes? Who knows but it sure as shit isn’t today. I was pushing back on Nic’s theory on pricing in externalities.
"Future changes"? "Who knows"?
The more efficient changes ALREADY HAPPENED years ago in the form of Lightning network.
The Bitcoin blockchain is the bedrock of this new peoples currency and upon it has been built the Lightning network which is a Bitcoin integrated sidechain for cheap and small transactions.
Lightning facilitates Bitcoin transaction capacity to scale in a ludicrously efficient manner and has now been technically maturing for years now. Please keep up.
The more efficient changes ALREADY HAPPENED years ago in the form of Lightning network.
The Bitcoin blockchain is the bedrock of this new peoples currency and upon it has been built the Lightning network which is a Bitcoin integrated sidechain for cheap and small transactions.
Lightning facilitates Bitcoin transaction capacity to scale in a ludicrously efficient manner and has now been technically maturing for years now. Please keep up.
The number of lightning transactions and channels rounds to zero, so in a way, I did include them. Same number of channels, about half the capacity per channel, same quantity of locked up value (about 1000BTC total) and the same number of users since 2019. [1]
Of course it's not a solution to scaling, because it requires one on-chain transaction to open, one to close, and if an intermediate node happens to go down your funds are locked. It's garbage. Vastly overcomplicated garbage.
By the way to just open a single channel for everyone on earth today and close it will take about 70 years, so right around the year 3000 if you (very optimistically) factor in births and deaths. And about $265 billion dollars at current fee rates - $18.99 as quoted today. Elon better pony up! This of course assumes the blockchain isn't used for anything else in the interim.
How small can the transactions be if a channel open/close costs almost $40?
The only L2 solutions that scale are permissioned, centralized and/or trustful. Because that's how you scale. And you can back those with anything as none of the guarantees of the underlying asset are conferred to these L2 networks simply because they notionally operate on top of Bitcoin for net settlement and the (soon to be unlawful) non-custodial wallet.
[1] https://bitcoinvisuals.com/lightning
Of course it's not a solution to scaling, because it requires one on-chain transaction to open, one to close, and if an intermediate node happens to go down your funds are locked. It's garbage. Vastly overcomplicated garbage.
By the way to just open a single channel for everyone on earth today and close it will take about 70 years, so right around the year 3000 if you (very optimistically) factor in births and deaths. And about $265 billion dollars at current fee rates - $18.99 as quoted today. Elon better pony up! This of course assumes the blockchain isn't used for anything else in the interim.
How small can the transactions be if a channel open/close costs almost $40?
The only L2 solutions that scale are permissioned, centralized and/or trustful. Because that's how you scale. And you can back those with anything as none of the guarantees of the underlying asset are conferred to these L2 networks simply because they notionally operate on top of Bitcoin for net settlement and the (soon to be unlawful) non-custodial wallet.
[1] https://bitcoinvisuals.com/lightning
> By the way to just open a single channel for everyone on earth today and close it will take about 70 years, so right around the year 3000 if you (very optimistically) factor in births and deaths. And about $265 billion dollars at current fee rates - $18.99 as quoted today. Elon better pony up! This of course assumes the blockchain isn't used for anything else in the interim.
LOL. Nice. I like it even better than my other favorite example, that issuing a paycheck in Bitcoin to the 125 million full time employees in the US would take about a year to process.
LOL. Nice. I like it even better than my other favorite example, that issuing a paycheck in Bitcoin to the 125 million full time employees in the US would take about a year to process.
They will not increase it. I am merely pointing out the idea "to do twice the number of transactions it would consume twice as much energy" is not correct, because raising the block size would not necessarily increase energy consumption.
That’s not the point I’m making. The point I’m making is it takes more energy per transaction even after factoring in all specified and unspecified externalities because it’s not thermodynamically possible for visa to use as much energy per transaction. Visa would have to consume roughly 3X the entire worlds power output to match the sheer waste of Bitcoin.
How can you say "if you scaled up the bitcoin system" and "this is not how bitcoin scales" in the same argument?
Bitcoin could handle arbitrary scaling with little power-usage increase had it not been intentionally hamstrung by (for lack of a better term) "small-blockers". This is because the primary power usage of bitcoin (mining) does not scale linearly with transactions/block. The transactions to include are usually considered once by the miners who then make iterated attempts at solving by modifying the block nonce, not the included transactions.
Bitcoin could handle arbitrary scaling with little power-usage increase had it not been intentionally hamstrung by (for lack of a better term) "small-blockers". This is because the primary power usage of bitcoin (mining) does not scale linearly with transactions/block. The transactions to include are usually considered once by the miners who then make iterated attempts at solving by modifying the block nonce, not the included transactions.
When that changes I’ll update my math. Until then it doesn’t matter. Its less efficient on a per transaction basis by falsification. It is fundamentally thermodynamically impossible for it to be more efficient today on a per transaction basis. It’s been 14 years. Time to look in the mirror and stop making excuses for its devastating waste.
The case I am making is that it is not possible for Visa to use as much power as Bitcoin on a per transaction basis based on today's energy usage, factoring in all exernalities - because the world would be out of power.
I am simply countering Nic's trivially incorrect position.
The case I am making is that it is not possible for Visa to use as much power as Bitcoin on a per transaction basis based on today's energy usage, factoring in all exernalities - because the world would be out of power.
I am simply countering Nic's trivially incorrect position.
You countered the position, but you did not spend time understanding it.
As an example, ACH is an FTP based system that largely runs once a day (maybe 2-3x now), fed by various backing mechanics for the bank itself, including the Fed and whatever else you’d want to suck in.
Visa’s transaction rate is completely orthogonal to that system. Visa could 10x their transaction rate without touching that underlying system if they wanted to, as could something attached to Bitcoin. So your argument about scaling Bitcoin up counters a poor understanding of the initial position—so poor as to make it a different position entirely.
As an example, ACH is an FTP based system that largely runs once a day (maybe 2-3x now), fed by various backing mechanics for the bank itself, including the Fed and whatever else you’d want to suck in.
Visa’s transaction rate is completely orthogonal to that system. Visa could 10x their transaction rate without touching that underlying system if they wanted to, as could something attached to Bitcoin. So your argument about scaling Bitcoin up counters a poor understanding of the initial position—so poor as to make it a different position entirely.
It's not worth understanding because the goalpoast shifts every 5 minutes. Bitcoin is like a religion. Every point you tear down they come back and say ah but wait! The princess is in another castle!
Because there's nothing there.
The whole thesis of Bitcoin is that it's trustless, decentralized and permissionless. It's also obvious that it doesn't scale beyond a single Costco or a mid-sized flea market. The only way to scale it is "Layer 2" networks which fundamentally are trustful, centralized and/or permissioned. Because that's the only way to scale. You can back those L2 networks with anything. Gold. Shoes. Dollars. GME shares if you ask Bittrex in any non-US market. There aren't even any guarantees these un-audited, un-accountable, un-regulated exchanges aren't selling more bitcoins than exist the way you oversell seats on a plane. Should be fine unless there's a run.
If all you want is a one-way message for net settlement between banks, I recommend you investigate SWIFT and ACATS.
The system doesn't do what it says on the sticker. The only reason anyone cares is number go up. And number only goes up if you go through the kind of crazy mental gymnastics Nic did.
[edit: ACH is dead, long live RTP [1], and guess what, RTP doesn't use one Argentina of electricity either somehow]
[edit: My argument isn't about scaling, it's about Wh per transaction, which Nic is strictly, totally and completely wrong about; let's stay on topic]
[1] https://www.theclearinghouse.org/payment-systems/rtp
Because there's nothing there.
The whole thesis of Bitcoin is that it's trustless, decentralized and permissionless. It's also obvious that it doesn't scale beyond a single Costco or a mid-sized flea market. The only way to scale it is "Layer 2" networks which fundamentally are trustful, centralized and/or permissioned. Because that's the only way to scale. You can back those L2 networks with anything. Gold. Shoes. Dollars. GME shares if you ask Bittrex in any non-US market. There aren't even any guarantees these un-audited, un-accountable, un-regulated exchanges aren't selling more bitcoins than exist the way you oversell seats on a plane. Should be fine unless there's a run.
If all you want is a one-way message for net settlement between banks, I recommend you investigate SWIFT and ACATS.
The system doesn't do what it says on the sticker. The only reason anyone cares is number go up. And number only goes up if you go through the kind of crazy mental gymnastics Nic did.
[edit: ACH is dead, long live RTP [1], and guess what, RTP doesn't use one Argentina of electricity either somehow]
[edit: My argument isn't about scaling, it's about Wh per transaction, which Nic is strictly, totally and completely wrong about; let's stay on topic]
[1] https://www.theclearinghouse.org/payment-systems/rtp
"if you scaled up the bitcoin system linearly so it provided as much transaction capacity as Visa ... it would require a number of times more power than the entire world produces"
This is a complete fantasy - power consumption is driven by the desire to secure the network, it is not related to transaction volume.
There is an argument that power consumption would have to be significant because attacking the network has to be cost- prohibitive, and there are people working on POS and similar approaches.
Etherium is actually attempting to scale, their talks are very interesting .
This is a complete fantasy - power consumption is driven by the desire to secure the network, it is not related to transaction volume.
There is an argument that power consumption would have to be significant because attacking the network has to be cost- prohibitive, and there are people working on POS and similar approaches.
Etherium is actually attempting to scale, their talks are very interesting .
[deleted]
That's not how Bitcoin scales. The amount of transactions doesn't matter. Bitcoin can have a limited number of on-chain settlement transactions and unlimited number of off-chain payment transactions (Lightning, Paypal, Visa, etc.) and it doesn't consume a single bit of more energy. Energy consumption is proportional to its value and the current block reward.
That's not what I am arguing as it's not what Nic is arguing.
Nic doesn't say that Bitcoin consumes less power than you think on a per-transaction basis. He says that Visa consumes way, way more if you price in nebulous externalities.
I am rejecting his thesis by saying that if Visa used as much power per transaction as Bitcoin we'd need to generate 3X as much power as we currently do.
The quote is: "Any energy comparison must take the above into account – including the externalities from the extraction of oil, which implicitly backs the dollar."
I'm taking it into account. And I'm saying he's wrong.
Nic doesn't say that Bitcoin consumes less power than you think on a per-transaction basis. He says that Visa consumes way, way more if you price in nebulous externalities.
I am rejecting his thesis by saying that if Visa used as much power per transaction as Bitcoin we'd need to generate 3X as much power as we currently do.
The quote is: "Any energy comparison must take the above into account – including the externalities from the extraction of oil, which implicitly backs the dollar."
I'm taking it into account. And I'm saying he's wrong.
> Nic doesn't say that Bitcoin consumes less power than you think on a per-transaction basis.
Sure he does:
> Second, metrics like the “per-transaction energy cost” are misleading because transactions themselves do not cost energy; nor does bitcoin’s CO2 footprint scale with transactional count.
The point is that transactions per second isn't the unit of value by which Bitcoin is priced. Bitcoin is not competing with other monetary systems simply on the basis of transactions per second, but also network trustworthiness/security
Sure he does:
> Second, metrics like the “per-transaction energy cost” are misleading because transactions themselves do not cost energy; nor does bitcoin’s CO2 footprint scale with transactional count.
The point is that transactions per second isn't the unit of value by which Bitcoin is priced. Bitcoin is not competing with other monetary systems simply on the basis of transactions per second, but also network trustworthiness/security
You stopped reading half way through my sentence. He’s not disputing Bitcoin energy usage he’s disputing visa. That’s what I wrote.
I did read it but I cut out the irrelevant part.
He's not disputing the per-transaction cost of Bitcoin OR Visa, and is explicitly pointing out how looking at it on a per-transaction basis is misleading.
He is disputing the overall total network costs, not considered on a per-transaction basis but in terms of the total value provided by the network to all its users.
Transactions per second is just one of the factors that could add value to a monetary system, but it isn't the only one.
He's not disputing the per-transaction cost of Bitcoin OR Visa, and is explicitly pointing out how looking at it on a per-transaction basis is misleading.
He is disputing the overall total network costs, not considered on a per-transaction basis but in terms of the total value provided by the network to all its users.
Transactions per second is just one of the factors that could add value to a monetary system, but it isn't the only one.
I think you’re being intentionally disingenuous like Nic, but at least he was clear: “ Any energy comparison must take the above into account – including the externalities from the extraction of oil, which implicitly backs the dollar.”
I factored it in with my calculus and you and nic are wrong. If you believe otherwise please show your work like I did not gut feelings.
TPS is a means to an end re disproving the thesis not a talking point about utility.
I am not looking at value in terms of TPS. TPS an intermediate step in my calculation. I am looking at total system usage. Sorry bud, your system is the digital equivalent of rolling coal and no amount of mental gymnastics will change that.
But by all means show your work and let’s talk about it, don’t just say “nope try again” haha that’s what people who have no leg to stand on do.
I factored it in with my calculus and you and nic are wrong. If you believe otherwise please show your work like I did not gut feelings.
TPS is a means to an end re disproving the thesis not a talking point about utility.
I am not looking at value in terms of TPS. TPS an intermediate step in my calculation. I am looking at total system usage. Sorry bud, your system is the digital equivalent of rolling coal and no amount of mental gymnastics will change that.
But by all means show your work and let’s talk about it, don’t just say “nope try again” haha that’s what people who have no leg to stand on do.
Right, he is comparing the total usage of the network including externalities. But not on a per-transaction basis, since that would be meaningless, as the transactions per second can be scaled arbitrarily with almost no change in energy consumption.
The problem here is not about including the externalities (although that is an important thing to consider). The problem here is that it is a mistake to look at the value only in terms of transactions per second when transaction rate is just one factor by which you can judge a monetary system. It's not necessary for Bitcoin to compete with other monetary systems in terms of transaction rate for it to be useful.
The problem here is not about including the externalities (although that is an important thing to consider). The problem here is that it is a mistake to look at the value only in terms of transactions per second when transaction rate is just one factor by which you can judge a monetary system. It's not necessary for Bitcoin to compete with other monetary systems in terms of transaction rate for it to be useful.
Per-transaction basis is completely meaningless math. Both systems can be scaled as I said. The point is that it's more expensive to run the US dollar system than Bitcoin.
Per-transaction is only meaningful if you believe Bitcoin's only utility is by competing with Visa for everyday transactions like buying a cup of coffee.
But if you find that Bitcoin is a digital, permissionless, borderless, uncensorable store of value, a better gold than gold, then it doesn't need millions of transactions per second.
Bitcoin is just fine as the most secure settlement layer and long-term store of value for large, infrequent and expensive transactions.
Fiat money isn't going anywhere, Visa doesn't need to be replaced, and Bitcoin doesn't need to pay for your coffee to be useful. It can do what it does best, coexisting with fiat systems and other cryptocurrencies.
But if you find that Bitcoin is a digital, permissionless, borderless, uncensorable store of value, a better gold than gold, then it doesn't need millions of transactions per second.
Bitcoin is just fine as the most secure settlement layer and long-term store of value for large, infrequent and expensive transactions.
Fiat money isn't going anywhere, Visa doesn't need to be replaced, and Bitcoin doesn't need to pay for your coffee to be useful. It can do what it does best, coexisting with fiat systems and other cryptocurrencies.
> Bitcoin is just fine as the most secure settlement layer and long-term store of value for large, infrequent and expensive transactions.
It's not, because its inability to scale means folks are pushed onto L2 which has none of the guarantees you mention.
It's not, because its inability to scale means folks are pushed onto L2 which has none of the guarantees you mention.
If I buy real estate or fine art to defend against the money printer, my transactions are large, infrequent, slow and expensive.
As Bitcoin's use as a store of value increases and transaction throughput remains constant, transactions will be larger, less frequent and more expensive.
I won't get pushed out onto L2 just like I'm not pushed to liquidate real estate or art collections. I don't transact in long-term stores of value more than once every few years, and then I expect the transaction will be large, slow and expensive.
As Bitcoin's use as a store of value increases and transaction throughput remains constant, transactions will be larger, less frequent and more expensive.
I won't get pushed out onto L2 just like I'm not pushed to liquidate real estate or art collections. I don't transact in long-term stores of value more than once every few years, and then I expect the transaction will be large, slow and expensive.
Users can choose to adopt the trade-offs of second layer solutions if and when it is convenient for them, and with whatever portion of their wealth that they like.
Almost like classical finance has worked forever. Remind me what we’re Expending this energy for again? Or are we closing in on the end of the speedrun?
For situations in which the risk profile of traditional fiat currencies doesn't meet your needs.
It is a strawman to say that Bitcoin can only be useful if it replaces all traditional financial instruments.
It is a strawman to say that Bitcoin can only be useful if it replaces all traditional financial instruments.
I've never said that. I've said it does literally nothing better than classical systems. That point remains in contention. The idea that it's somehow everything and nothing at the same time, just a perpetual number go up machine, is a pro-crypto argument.
These guarantees aren't needed for most daily transactions. Using Visa with Bitcoin is fine, and does not undermine the security of the currency.
Your absolute right, those guarantees are not needed in most circumstances, which is why bitcoin is irrelevant.
Per-transactions costs matter a lot, you can’t just hand wave that away if you’re hoping to actually persuade anyone.
As far as scaling Bitcoin goes: prove it. It’s been a decade and it still does 4tps.
As far as scaling Bitcoin goes: prove it. It’s been a decade and it still does 4tps.
>As far as scaling Bitcoin goes: prove it. It’s been a decade and it still does 4tps.
Sure. The Lightning Network already exists, is working and in use, and can in principle do essentially unlimited TPS.
Bitcoin doesn't need to scale to millions of TPS to be successful (since payments and microtransactions aren't its only use case), but it so happens that it can do that through second layer technologies.
Sure. The Lightning Network already exists, is working and in use, and can in principle do essentially unlimited TPS.
Bitcoin doesn't need to scale to millions of TPS to be successful (since payments and microtransactions aren't its only use case), but it so happens that it can do that through second layer technologies.
Pointing to a Visa card to solve crypto scaling is probably not the argument I’d go for.
That's exactly how the Bitcoin's payment layer scales. Visa is just one solution, but that's probably the most popular one. The settlement layer doesn't have to scale, because it's possible to scale the payment layer. You get all the benefits of sound money with the usability of fiat money.
It scales by using the system that Bitcoin was supposed to replace?
Again, that’s not an argument for Bitcoin, just so we’re clear. This is an argument for visa instead.
Again, that’s not an argument for Bitcoin, just so we’re clear. This is an argument for visa instead.
Well ok do you have any basis for that or is that speculation?
How many transactions/day is Lightning handling? I recall this same discussion in late 2017. Have they managed to successfully get people using it yet?
You can't directly measure the number of transactions happening on lightning network unless every non leaf node publishes it's numbers, and even then you'd have to trust they're telling you the truth.
And it's even more complicated than that, because you'd have to take the data from every node, and reconstruct complete paths to identify a single transaction.
And yes, I personally use the Strike app + Fold app to collect satoshi rewards by buying gift cards for shopping. Strike also has a beta app that uses lightning as the rails for global p2p transfers, e.g. you can instantly send USD to EUR. https://twitter.com/JackMallers/status/1346867753253220356
And it's even more complicated than that, because you'd have to take the data from every node, and reconstruct complete paths to identify a single transaction.
And yes, I personally use the Strike app + Fold app to collect satoshi rewards by buying gift cards for shopping. Strike also has a beta app that uses lightning as the rails for global p2p transfers, e.g. you can instantly send USD to EUR. https://twitter.com/JackMallers/status/1346867753253220356
> Have they managed to successfully get people using it yet?
I was trying to figure out the same thing a month back[0], but most of the responses I got boiled down to "you're asking the wrong question". It's hard to wade through the crowd of "it's just digital gold", but the best response I got[1] is that it works decently for places that accept it, but there are hiccups, usually around liquidity.
[0] https://news.ycombinator.com/item?id=25675472
[1] https://news.ycombinator.com/item?id=25676779
I was trying to figure out the same thing a month back[0], but most of the responses I got boiled down to "you're asking the wrong question". It's hard to wade through the crowd of "it's just digital gold", but the best response I got[1] is that it works decently for places that accept it, but there are hiccups, usually around liquidity.
[0] https://news.ycombinator.com/item?id=25675472
[1] https://news.ycombinator.com/item?id=25676779
Roughly zero, and no. [1]
[1] https://bitcoinvisuals.com/lightning
[1] https://bitcoinvisuals.com/lightning
There is no number there on the number of transactions, simply because it’s impossible to measure. It’s only possible to see the lightning transactions flowing through your own node.
Each channel accommodates theoretically infinite amount of transaction.
Each channel accommodates theoretically infinite amount of transaction.
More knowable question: who actually uses the lightning network to accept payment for goods and services?
https://foldapp.com/
https://store.blockstream.com/
https://acceptlightning.com/list.html
Several major exchanges have announced that they are implementing LN support. Still very early days.
https://store.blockstream.com/
https://acceptlightning.com/list.html
Several major exchanges have announced that they are implementing LN support. Still very early days.
Looking at that list, most of those are clearly crypto enthusiasts. I don't think "HODL Monkey" is a good indicator of where the market is going; ditto with exchanges.
As always, call me when I can buy a latte with it.
As always, call me when I can buy a latte with it.
FWIW I have been buying lattes for bitcoin (a couple of which with lightning) in multiple countries since ~2012
This shouldn't be surprising. The early adopters of a finicky new technology are always going to be enthusiasts.
You can buy a Starbucks gift card on fold app using LN and currently get 3% back in sats.
But seriously, why would anyone spend a ton of effort right now integrating a coffee shop directly with LN in the first world? Traditional payment systems work fine. Bitcoin was never primarily concerned with replacing Visa. Think bigger.
You can buy a Starbucks gift card on fold app using LN and currently get 3% back in sats.
But seriously, why would anyone spend a ton of effort right now integrating a coffee shop directly with LN in the first world? Traditional payment systems work fine. Bitcoin was never primarily concerned with replacing Visa. Think bigger.
Is someone in the third world chomping at the bit to pay $40 to open and close a single LN channel when that’s 10% of the GDP per capita of some of those countries you plan to help? Probably not. The only places you can get away wanging people with such egregious fees simply don’t need crypto.
> Is someone in the third world chomping at the bit to pay $40 to open and close a single LN channel when that’s 10% of the GDP per capita of some of those countries you plan to help? Probably not.
In such cases, there is no reason such users can't "enter" bitcoin through a second layer such as the Lightning Network.
Why would they do that if it isn't real bitcoin?, you might ask. Well, for one, their local, tin-pot-dictator created currencies are often worthless, meaning that even second-layer bitcoin is a far more sound and reliable currency.
And who is to say $40 for an on-chain transaction is an "egregious fee"? It turns out having access to the world's most secure, decentralized, unstoppable, set-in-stone, uncensorable, trustless, non-inflationary monetary network is a valuable thing. Maybe so much so that $40 per on-chain transaction is a bargain in the bigger picture.
In such cases, there is no reason such users can't "enter" bitcoin through a second layer such as the Lightning Network.
Why would they do that if it isn't real bitcoin?, you might ask. Well, for one, their local, tin-pot-dictator created currencies are often worthless, meaning that even second-layer bitcoin is a far more sound and reliable currency.
And who is to say $40 for an on-chain transaction is an "egregious fee"? It turns out having access to the world's most secure, decentralized, unstoppable, set-in-stone, uncensorable, trustless, non-inflationary monetary network is a valuable thing. Maybe so much so that $40 per on-chain transaction is a bargain in the bigger picture.
You pay zero with the Phoenix wallet: https://phoenix.acinq.co/
What does “think bigger” even mean here, aside from memes about Bitcoin prices going up? If your competitor is cheaper, more popular, more reliable, and more widely supported, aren’t you just straight up losing?
Good point, thank you for the correction.
This may arise from a misunderstanding of how Bitcoin works, but TPS have nothing to do with energy consumption.
That alone should say something.
Yeah that say that like it’s a good thing but all I’m reading is a scathing indictment.
> The reality is that if you scaled up the bitcoin system linearly so it provided as much transaction capacity as Visa... it would require a number of times more power than the entire world produces
Scaling Bitcoin's tps does not increase its energy usage. The tps and energy usage vary independently of each other. Bitcoin does not require any more energy usage to handle more tps than Visa. In fact, if we include off-chain transactions which are settled on-chain it already can.
> The US Army protects the US not the dollar
What is the value of the dollar if the United States ceases to remain a sovereign polity? The dollar is part of the United States.
Scaling Bitcoin's tps does not increase its energy usage. The tps and energy usage vary independently of each other. Bitcoin does not require any more energy usage to handle more tps than Visa. In fact, if we include off-chain transactions which are settled on-chain it already can.
> The US Army protects the US not the dollar
What is the value of the dollar if the United States ceases to remain a sovereign polity? The dollar is part of the United States.
The first paragraph is a fair consideration. The second is a complete stretch. It's not as if America would suddenly stop providing military support to Saudi Arabia if we suddenly switched to bitcoin. An America that historically used Bitcoin would be even more incentivized to "secure" fossil fuel nations.
If the Saudis started selling oil in bitcoin they'd probably lose their military support and/or be overthrown.
It is difficult to justify why the US is providing militarily support to the Saudis without invoking oil and dollars. They are a pretty shady regime and not the sort of people the US wants to be supporting. And the Saudis don't seem to be trading with America as much as China [0, 1].
[0] https://tradingeconomics.com/saudi-arabia/exports-by-country
[1] https://tradingeconomics.com/saudi-arabia/imports-by-country
It is difficult to justify why the US is providing militarily support to the Saudis without invoking oil and dollars. They are a pretty shady regime and not the sort of people the US wants to be supporting. And the Saudis don't seem to be trading with America as much as China [0, 1].
[0] https://tradingeconomics.com/saudi-arabia/exports-by-country
[1] https://tradingeconomics.com/saudi-arabia/imports-by-country
While the term "petrodollars" makes sense prescriptively, saying that the KSA would be "overthrown" if they started settling transactions in something other than dollars is pure hyperbole. The macrobullshitters that keep throwing around this idea of ongoing US coercion are doing so with absolutely no proof. Sure, there's some soft power things going on, but they settle in USD because USD has been the de-facto currency for world trade (and thus currency reserves) for some time now. IF anything, we see a movement away from USD into a currency basket with a high weighting of USD over the coming decades.
Decisions and strategies worldwide do not make sense if you don't acknowledge that such things happen. That e.g. an oil country moving away from the dollar is something the US would do nasty things to avoid - and the reasons for that fall in the category of "conspiracy theory", but that is the case because no official tale makes sense. You know it is not about the weapons of mass destruction, because these were proven lies, and you know they did not tell these lies to "save the people from a despotic regime" after decades of "we don't care", because there are other examples of despotic regimes (including KSA) the US does not bother or has friendly relationships with.
So, what would you think is the reason the US invaded Iraq?
So, what would you think is the reason the US invaded Iraq?
Do people not seriously think about why the Iraq war happened? Everyone accepts that the WMD rational was disingenuous, so then why?
It just so happened to coincide with Saddam starting to sell oil for Euros, and France and Germany just so happened to oppose the war.. but it's probably nothing to do with oil and dollars.
Gaddafi wanted to sell oil for Gold. In that case Europe and the US were on board with removing him. Why then, when he'd been in power since the 70s?
It just so happened to coincide with Saddam starting to sell oil for Euros, and France and Germany just so happened to oppose the war.. but it's probably nothing to do with oil and dollars.
Gaddafi wanted to sell oil for Gold. In that case Europe and the US were on board with removing him. Why then, when he'd been in power since the 70s?
The Saudis are also well-liked by the US and much of the Western leaders because they buy billions in arms. Nevermind the crucifictions, decapitations, and dismemberments.
Reminds me of one of by favourite Frankie Boyle jokes: "Our government was angry about Khashoggi. We sent the Saudis a strongly worded arms invoice."
Reminds me of one of by favourite Frankie Boyle jokes: "Our government was angry about Khashoggi. We sent the Saudis a strongly worded arms invoice."
I think it is a very worthwhile observation, that existing, comparable systems also have massive 'externalities', only they aren't measured in kwH.
That is a general defense of the form of the statement, but not a defense of the statement itself.
The dollar is not the largest cause of perpetual US entanglement in the Middle East. Oil dependency, on the other hand, may be.
The dollar is not the largest cause of perpetual US entanglement in the Middle East. Oil dependency, on the other hand, may be.
Amazingly, due to fracking mostly in west Texas, the US is now a net oil producer. We should really change our Mid-East foreign policy to reflect that fact.
The Saudis have chopped a guy to pieces and his the body at the embassy in a foreign country.
Imagine the headlines if Russia did that in US. Yet they are sill 'allies'
Imagine the headlines if Russia did that in US. Yet they are sill 'allies'
It's not as if America would suddenly stop providing military support to Saudi Arabia if we suddenly switched to bitcoin.
No, but now that the US is a net petroleum exporter, puling the plug on the whole Middle East is a real possibility.
No, but now that the US is a net petroleum exporter, puling the plug on the whole Middle East is a real possibility.
Not all oil is the same. There's a reason that while Canada is massively a net exporter of oil (especially to the United States), boats from the Middle East show up on the regular. Common misconception. [1]
[1] https://www.aboutpipelines.com/en/blog/why-does-canada-impor...
[1] https://www.aboutpipelines.com/en/blog/why-does-canada-impor...
Take a look at OPEC companies that have priced oil in other currencies:
Iraq started pricing oil in euros in 1999:
https://www.theglobalist.com/iraq-the-dollar-and-the-euro-5/
Iran started pricing oil in yuan in 2012:
https://www.bbc.com/news/business-17988142
What's our geopolitical relationship with Iraq and Iran now?
Iraq started pricing oil in euros in 1999:
https://www.theglobalist.com/iraq-the-dollar-and-the-euro-5/
Iran started pricing oil in yuan in 2012:
https://www.bbc.com/news/business-17988142
What's our geopolitical relationship with Iraq and Iran now?
So they changed their pricing currency and then we became enemies? Or we were enemies, and they changed their pricing currency because of that... lol
The US CIA overthrew the democratically elected government of Mossadegh in Iran and then received backlash for it in the form of the Iranian Revolution [0][1].
[0] https://nsarchive.gwu.edu/briefing-book/iran/2017-06-15/iran...
[1] https://en.wikipedia.org/wiki/Iranian_Revolution
[0] https://nsarchive.gwu.edu/briefing-book/iran/2017-06-15/iran...
[1] https://en.wikipedia.org/wiki/Iranian_Revolution
The first Gulf War began in 1990, and the Iranian Revolution took place in 1979. The causality may well have taken place in the reverse of what you suggest.
Yep. You'd think if the reason the US restarted their war with Iraq was using Euros as a reserve currency, they might have made a bit more fuss about those pesky Europeans creating the Euro with the explicit goal of being a global reserve currency a few years earlier...
Being the largest reserve currency has more costs to the US than benefits overall and policy has been to try and reduce that exposure for the last decade or so.
https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-d...
Being a reserve currency means any financial crisis in the world tends to affect your currency and trade, not a good thing.
https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-d...
Being a reserve currency means any financial crisis in the world tends to affect your currency and trade, not a good thing.
Ask yourself which of those things would go away if BTC replaced Visa. Only then should it count towards the cost.
Somehow I doubt BTC would lower military spending.
Somehow I doubt BTC would lower military spending.
> including the externalities from the extraction of oil, which implicitly backs the dollar
This isn't true. Internationally the thing that backs the dollar is the U.S. economy. People know they can spend dollars to get anything they need. Domestically what drives the dollar is that it's the only way you can pay taxes.
I suppose you could say that oil is used to defend the U.S. economy but that's a stretch.
This isn't true. Internationally the thing that backs the dollar is the U.S. economy. People know they can spend dollars to get anything they need. Domestically what drives the dollar is that it's the only way you can pay taxes.
I suppose you could say that oil is used to defend the U.S. economy but that's a stretch.
>>including the externalities from the extraction of oil, which implicitly backs the dollar
>This isn't true.
Basic economics and the law of supply and demand says that it is true.
>when demand increases and supply remains the same, the higher demand leads to a higher equilibrium price and vice versa.
https://www.investopedia.com/ask/answers/033115/how-does-law...
>This isn't true.
Basic economics and the law of supply and demand says that it is true.
>when demand increases and supply remains the same, the higher demand leads to a higher equilibrium price and vice versa.
https://www.investopedia.com/ask/answers/033115/how-does-law...
On the other hand Visa actually works for its intended purpose.
And Bitcoin is a paper asset backed by absolutely nothing.
Ah see this is where you're wrong. The tokens are proof that huge quantities of energy were wasted. It's a proof of waste algorithm.
Bitcoin is a global settlement layer. it is not a representation of something else, it's the final product on its own.
You're not going to say that in a prison system cigarettes are not backed by anything for them to be used as a currency.
You're not going to say that in a prison system cigarettes are not backed by anything for them to be used as a currency.
I take my comment back. Bitcoin is backed by 'the market can stay delusional longer than you can stay solvent'
You can say that about any currency. An 80 year old billionaire still needs someone to care for him, just like an 80 year old pauper. He relies on the hope that his dollars will be accepted, to look after his medical and care needs as well as security and ownership needs.
My understanding is that because people have mortgages in dollar (or other useful money), you can be pretty confident that many people are going to be motivated enough to get some dollar (they have to pay their mortgage with it)
On the other hand, no one is going to be in a difficult situation if they cannot get bitcoin.
On the other hand, no one is going to be in a difficult situation if they cannot get bitcoin.
Well the whole idea of Bitcoin being a store of value isn't that its price is stable between 2017 and 2018, but its non-inflationary in long run (something which isn't true for the time being, it is inflationary.
However, the idea is that between 1971 (the closing of the gold window), and now, USD and all fiat currencies lost 99% of their value. The same is not true for Bitcoin on a similar time frame (i.e. 30+ years).
However, the idea is that between 1971 (the closing of the gold window), and now, USD and all fiat currencies lost 99% of their value. The same is not true for Bitcoin on a similar time frame (i.e. 30+ years).
The US government is functionally bound to the dollar, and its size is enough to guarantee the continued functioning of the dollar. On the other hand bitcoin is backed by speculators and criminals, hardly a stable foundation for a currency or commodity.
Would the need for oil and military go away were we to switch to using bitcoin for everything? Why are those coupled to the dollar's energy usage?
Seems to depend on how well your tinfoil hat fits.
You still need to use oil, but you don't have to use dollars. The support for dollars relies on a lot of things including the government and thus the military, which are big costs and oil consumes. If the dollar didn't rely on the military power of the US, why is the Bretton Woods meeting and the post war monetary policy so important to it's dominance (something practically no one disputes)? Why is it that the US seems to care so much about pricing oil in dollars? You don't need a tinfoil hat (as other comments suggest) to notice the US government has a strong interest in everyone using our currency and that where the gov has a strong interest, it also uses it's guns.
For some reason the Euro does not need all that "grossly oversized military" to be a proper, stable and usable currency. That alone kind of contradicts the entire grossly overstretched argument of this Nic Carter guy.
While I am also skeptical of the parent comment's quotes. The Euro is still backed by a centralized state(s) which does indeed have a monopoly on violence and require huge amounts of resources to maintain legitimacy. Crypto currencies demonstrably do not need these kind of resources. The rest of what people preach about crypto might be Bullshit, in a strict sense, but they are right about the anarchism thing.
All states by definition requires a monopoly on violence and resources to retain legitimacy. The currency is just a freeloader, and the consumption of resources to sustain a cryptocurrency is purely strictly additive.
The European Union has a huge standing army if they were counted as one force? Over 1 million active personnel. The US by comparison has 1.4m and China 2.0m
Ok here is a puzzle: is there any electricity provider who accepts BTC?
BTC runs on fiat money.
BTC runs on fiat money.
Actually, I'm aware of several Chinese miners which pay their (hydro) supplier in BTC.
But it's also unusual.
But it's also unusual.
Bitcoin is designed to be deflationary. Anyone who pays anything in BTC is economically irrational.
How else is BTC miner supposed to pay for expenses?
Accordingly, is anyone who saves fiat money also economically irrational?
Actually I would say yes, they are. Once you have a reasonable cash buffer and are out of the danger-zone for random financial ruin most people should invest all excess rather than be paid a pittance for their bank to do it for them.
Yes. Which is why no one invests for the long term by amassing cash alone (fiat money). They invest it in stocks, assets, real estate, and other non-cash holdings.
The common fallacy in Bitcoin circles is that Bitcoin is the only way to keep your money safe from inflation.
In reality, inflation means that your house, your car, your stock investments, and other holdings are also worth more in dollar-denominated amounts. The only thing that becomes less valuable is cash (and fixed return investment vehicles and such).
The common fallacy in Bitcoin circles is that Bitcoin is the only way to keep your money safe from inflation.
In reality, inflation means that your house, your car, your stock investments, and other holdings are also worth more in dollar-denominated amounts. The only thing that becomes less valuable is cash (and fixed return investment vehicles and such).
The goal is for everyone to accept it, but bitcoin is still on a journey to become store of value and medium of exchange.
it'd be a very long journey. the deflationary nature of btc means that people generally don't want to pay in btc, since it would be expected to become more valuable in the future.
That doesn't make any sense.
My amazon stock that I hold is going up in value, and is therefore "deflationary".
But it would be silly to say that I would never have a reason to sell those stocks.
I sell things, whether they are dollars or stock or crypto, because I want to buy something.
My amazon stock that I hold is going up in value, and is therefore "deflationary".
But it would be silly to say that I would never have a reason to sell those stocks.
I sell things, whether they are dollars or stock or crypto, because I want to buy something.
if you had 1 amazon share (worth $3286 right now), and $3286 in USD cash, and you wish to buy a $3286 computer, would you rather sell the share to obtain the cash, or transact using your existing USD?
I would have no preference.
It's the same thing.
The only difference maybe, is regarding friction. IE, maybe it is a bit more difficult to immediately sell the Amazon stock at a store.
But transaction friction is different than the deflation argument.
It's the same thing.
The only difference maybe, is regarding friction. IE, maybe it is a bit more difficult to immediately sell the Amazon stock at a store.
But transaction friction is different than the deflation argument.
That's not scope 1, 2 or 3 accounting, more like scope 23 at this point. And scope 0.1 for bitcoin.
> Visa relies on ACH, Fedwire, SWIFT, the global correspondent banking system, the Federal Reserve
do you have a good link that explains how this all works and how these different components interact?
do you have a good link that explains how this all works and how these different components interact?
For rather deep dive: https://www.coursera.org/learn/money-banking/home/welcome
Something shorter: https://gendal.me/2013/11/24/a-simple-explanation-of-how-mon...
Something shorter: https://gendal.me/2013/11/24/a-simple-explanation-of-how-mon...
Bitcoin fans when you complain that transactions are expensive, slow, and always irreversible:
"Bitcoin isn't a replacement for Visa or for your checking account. It's a store of value. It's not for day-to-day purchases."
Bitcoin fans when you complain that Bitcoin is massively wasteful:
"If you compare it to every cost that can be attributed to the existing financial system as a whole, including military spending, it's cheap."
"Bitcoin isn't a replacement for Visa or for your checking account. It's a store of value. It's not for day-to-day purchases."
Bitcoin fans when you complain that Bitcoin is massively wasteful:
"If you compare it to every cost that can be attributed to the existing financial system as a whole, including military spending, it's cheap."
Its getting to a point where it can be a component in the Gross Domestic Ignorance calculation.
Also bitcoin fans say all that swimming in millions of dollars the vast amount of people could never get in a lifetime by simply owning bitcion.
Please provide meaningful evidences for these claims?
I might be in a bubble, but it seems my intake of bitcoin information is balanced enough that most things are not this polarized.
I might be in a bubble, but it seems my intake of bitcoin information is balanced enough that most things are not this polarized.
This strikes me as a terrible argument. Yes, Visa is a small part of the whole system. It's also the only part that Bitcoin does anything to replace. Moving numbers from one column to another is trivial. If that were all the banking system needed to do we could run the whole world economy off my laptop with software I wrote in a month.
You can't do "non-final credit transactions" on Bitcoin.
You can't take out a mortgage.
You can't manage investments.
You can't pay for groceries without waiting a half an hour.
You can't buy a $1.25 pack of gum.
Bitcoin is complete and self-contained because it is inextensible and feature-poor. It cannot solve the problems the banking system solves. Its solution is the classic "you didn't need it anyway".
And then Bitcoin fans realize that yes, they did in fact need those things after all. We can watch them reinventing the entire modern banking system before our very eyes. The main differences are that they run everything on the world's worst database, they insist on calling their banks "exchanges", and that they think it's OK to have all their money stolen every so often.
(Bitcoin also lacks the ability to prevent money laundering or to enforce judgments. I'd consider that a bug. Other people might consider it a feature. In either case, it means Bitcoin is solving a much easier problem than normal banks.)
You can't do "non-final credit transactions" on Bitcoin.
You can't take out a mortgage.
You can't manage investments.
You can't pay for groceries without waiting a half an hour.
You can't buy a $1.25 pack of gum.
Bitcoin is complete and self-contained because it is inextensible and feature-poor. It cannot solve the problems the banking system solves. Its solution is the classic "you didn't need it anyway".
And then Bitcoin fans realize that yes, they did in fact need those things after all. We can watch them reinventing the entire modern banking system before our very eyes. The main differences are that they run everything on the world's worst database, they insist on calling their banks "exchanges", and that they think it's OK to have all their money stolen every so often.
(Bitcoin also lacks the ability to prevent money laundering or to enforce judgments. I'd consider that a bug. Other people might consider it a feature. In either case, it means Bitcoin is solving a much easier problem than normal banks.)
This nails it!
Unless your fiat money is not actually real and is just a made up number by the Fed. Bitcoin may not be useful in the local store, but if it can make fiscal, fair rules that the globe works within - I’ll take that.
The other mad comparison is that Bitcoin is globally distributed. If Argentina was globally distributed it would eat far more energy than Bitcoin.
What this really means is that Bitcoin is out of reach of a nation state attack.
For the local store, there’s always Nano currency.
The other mad comparison is that Bitcoin is globally distributed. If Argentina was globally distributed it would eat far more energy than Bitcoin.
What this really means is that Bitcoin is out of reach of a nation state attack.
For the local store, there’s always Nano currency.
Fiat only needs to hold its value for as long as it takes you to purchase assets and investments with. At 2% inflation it does. End of story.
Anywhere you drag your thesis out beyond that needs to take into account that you are fighting a straw-man. That's not what currency is for. Currency is a temporary, intentionally lossy (to encourage investment and velocity of money), store of value and medium of exchange. It is not an investment. It is not a long-term store of value.
> What this really means is that Bitcoin is out of reach of a nation state attack.
Right except 70% of the hash power is concentrated in a few mining pools in the PRC. A strongly worded memo from Xi that unless you permit their compromise of the network you'll find a new hobby mining minerals in Xinjiang, and party's over.
Anywhere you drag your thesis out beyond that needs to take into account that you are fighting a straw-man. That's not what currency is for. Currency is a temporary, intentionally lossy (to encourage investment and velocity of money), store of value and medium of exchange. It is not an investment. It is not a long-term store of value.
> What this really means is that Bitcoin is out of reach of a nation state attack.
Right except 70% of the hash power is concentrated in a few mining pools in the PRC. A strongly worded memo from Xi that unless you permit their compromise of the network you'll find a new hobby mining minerals in Xinjiang, and party's over.
> Right except 70% of the hash power is concentrated in a few mining pools in the PRC. A strongly worded memo from Xi that unless you permit their compromise of the network you'll find a new hobby mining minerals in Xinjiang, and party's over.
What attack are you imagining? Chinese miners cooperate to do a double-spend... on who? And how does it help them to destroy international trust in the coin and make their own assets worthless?
What attack are you imagining? Chinese miners cooperate to do a double-spend... on who? And how does it help them to destroy international trust in the coin and make their own assets worthless?
They can nuke the currency by executing a 51% attack on anyone. There’s no fundamental value to Bitcoin except faith/trust. Kill the trust kill the chain.
I have been hearing this argument for over a decade now.
In another decade, when this mythical attack on this scale l (as it applies to BTC. Some smaller coins have been attacked, but they are nowhere on the same scale) continues to fail to materialize, are you going to say the same thing?
I just want to know how many decades from now of your position being falsified, that you need to wait for you to change your mind.
Or will you never change you mind? Is you position truly unfalsifiable, no many how many decades go by?
In another decade, when this mythical attack on this scale l (as it applies to BTC. Some smaller coins have been attacked, but they are nowhere on the same scale) continues to fail to materialize, are you going to say the same thing?
I just want to know how many decades from now of your position being falsified, that you need to wait for you to change your mind.
Or will you never change you mind? Is you position truly unfalsifiable, no many how many decades go by?
> as it applies to BTC. Some smaller coins have been attacked, but they are nowhere on the same scale
So what I'm hearing is everyone knows it can and does happen at a smaller scale but you just can't bring yourself to believe it could ever happen on a bigger scale. This seems like the creationism vs evolution argument.
I find this particular criticism of the currency pretty weak too for what it's worth as It's got much bigger issues. Like the sheer magnitude of its waste.
However, I do find the argument disqualifying when petitioning to make Bitcoin the "one world currency" when 70% of the hashpower is in a totalitarian ethnostate that can just screw it up at will. Conceptually it amounts to giving up sovereignty of your currency to the PRC.
So what I'm hearing is everyone knows it can and does happen at a smaller scale but you just can't bring yourself to believe it could ever happen on a bigger scale. This seems like the creationism vs evolution argument.
I find this particular criticism of the currency pretty weak too for what it's worth as It's got much bigger issues. Like the sheer magnitude of its waste.
However, I do find the argument disqualifying when petitioning to make Bitcoin the "one world currency" when 70% of the hashpower is in a totalitarian ethnostate that can just screw it up at will. Conceptually it amounts to giving up sovereignty of your currency to the PRC.
> but you just can't bring yourself to believe it could ever happen on a bigger scale
What I asked was for what would make your position falsifiable, in terms of time that an attack does not happen. How many decades from now do we need to wait.
My position is falsifiable, on the other hand. If a major attack, on the scale of the whole BTC network gets broken for weeks and weeks on end, then my position is falsified, as I do not think such attacks, on that large of a scale, are going to happen, therefore if one does I would be wrong.
Yours, on the other hand, does not seem to be. It seems like there is no possible timeline, for attacks on that scale failing to materialize, for which you will admit that such attacks are not coming.
What I asked was for what would make your position falsifiable, in terms of time that an attack does not happen. How many decades from now do we need to wait.
My position is falsifiable, on the other hand. If a major attack, on the scale of the whole BTC network gets broken for weeks and weeks on end, then my position is falsified, as I do not think such attacks, on that large of a scale, are going to happen, therefore if one does I would be wrong.
Yours, on the other hand, does not seem to be. It seems like there is no possible timeline, for attacks on that scale failing to materialize, for which you will admit that such attacks are not coming.
I don’t disagree with your assessment though I would say the potential alone is disqualifying. I understand if you don’t. Your positions is quite consistent and compelling.
The "fair players" could simply coordinate to make a hard fork from before the attack.
They sure could, with the remaining 30% of the hash power. Thing is, continuously forking isn't a recipe for a store of value or currency or anything else.
You are right that wouldn't make for a good store of value. But Bitcoin actually does not get attacked "continuously" so that is not an applicable criticism. It is conceivable that such a thing could happen but we can expect it to happen approximately never given the incentives in place.
Economic incentives sure, but if it becomes America's currency and it's mined by the Chinese, economic incentives no longer have primacy.
Don't they? Then what does? I just don't see what the benefit of conducting such an attack would be.
Coinholders would practically not be impacted: they could just take their existing keys and bring them into the hard-forked software and continue like normal. Mining might be disrupted for a short time, but is that so harmful to the enemy to be worth spending millions in electricity?
Coinholders would practically not be impacted: they could just take their existing keys and bring them into the hard-forked software and continue like normal. Mining might be disrupted for a short time, but is that so harmful to the enemy to be worth spending millions in electricity?
At that rate and assuming 4tx per second a single Bitcoin transaction consumes 165kWh. A Tesla battery is bit over 50kWh. So let's round that to 3 full charges of Tesla battery.
That's 350km/220 miles of range per charge. In total 1050km or 660 miles of driving.
So basically if you want to transfer money and the recipient is closer than 660 miles from you it's more efficient to just get a bunch of bills, drive there with a Tesla rather than send a Bitcoin transaction. Or alternatively 330 miles roundtrip. For each single transaction.
It is hilariously inefficient system. It is literally better to drive a full car and give things physically than use Bitcoin.
A small addenum: Visa apparently uses 146kWh for 100000 transactions. Coming at 1.46wH per transaction. That can drive a Tesla for 9 meters (0.4 seconds of driving at 80km/h) or alternatively keep a nice led lamp lit for an hour. And that includes everything the company does, not just the actual transaction but the upkeep of their offices etc divided by the amount of transactions they perform per year.
EDIT:
Apparently on 2020 it was 741kWh per transaction in practice and/or I made a tiny error in my calculation. Either way it's even better!
https://www.statista.com/statistics/881541/bitcoin-energy-co...
That simply increases the ranges so that it becomes a 3600 mile trip. Or 1800 mile roundtrip.
That's 350km/220 miles of range per charge. In total 1050km or 660 miles of driving.
So basically if you want to transfer money and the recipient is closer than 660 miles from you it's more efficient to just get a bunch of bills, drive there with a Tesla rather than send a Bitcoin transaction. Or alternatively 330 miles roundtrip. For each single transaction.
It is hilariously inefficient system. It is literally better to drive a full car and give things physically than use Bitcoin.
A small addenum: Visa apparently uses 146kWh for 100000 transactions. Coming at 1.46wH per transaction. That can drive a Tesla for 9 meters (0.4 seconds of driving at 80km/h) or alternatively keep a nice led lamp lit for an hour. And that includes everything the company does, not just the actual transaction but the upkeep of their offices etc divided by the amount of transactions they perform per year.
EDIT:
Apparently on 2020 it was 741kWh per transaction in practice and/or I made a tiny error in my calculation. Either way it's even better!
https://www.statista.com/statistics/881541/bitcoin-energy-co...
That simply increases the ranges so that it becomes a 3600 mile trip. Or 1800 mile roundtrip.
Say you want to transfer a billion dollars 3000 miles. A billion dollars is 10 million Benjamins, which weighs 10 tons. You're not fitting that in a Tesla. More likely, you'll put it in an armored car and hire a few armed guards to go along with it. If you need to transport it overseas, you need a freighter (and a week) too. Now the energy cost of that Bitcoin transaction doesn't seem so bad.
The institutional interest in Bitcoin I've seen lately seems to assume a thesis of dollar depreciation and Bitcoin usurping its role as the global reserve currency. Ordinary people are not going to transact in Bitcoin under this thesis: they'll use dollars, pounds, deutchmarks, lira, yuan, etc. for their ordinary domestic transactions. Only banks, importers, and other major financial institutions need to convert the local currency into Bitcoin and settle up on the international markets, and these transactions will be in the tens-of-billions. Most of Bitcoin's drawbacks go away with this use-case - it doesn't matter that the network is limited to 4 TPS when only ~hundreds of transactions are conducted daily, and the energy use per transaction is similarly minimized. Bitcoin's advantages in trustlessness and lack of a central authority are hugely important in international relations, where nobody trusts anybody else and there's no higher authority to appeal to.
(Stellar's even better for this use-case, and has had a similar recent run-up, but currencies have strong network effects and it's unlikely that Stellar could get the name recognition or trust that Bitcoin has gotten.)
The institutional interest in Bitcoin I've seen lately seems to assume a thesis of dollar depreciation and Bitcoin usurping its role as the global reserve currency. Ordinary people are not going to transact in Bitcoin under this thesis: they'll use dollars, pounds, deutchmarks, lira, yuan, etc. for their ordinary domestic transactions. Only banks, importers, and other major financial institutions need to convert the local currency into Bitcoin and settle up on the international markets, and these transactions will be in the tens-of-billions. Most of Bitcoin's drawbacks go away with this use-case - it doesn't matter that the network is limited to 4 TPS when only ~hundreds of transactions are conducted daily, and the energy use per transaction is similarly minimized. Bitcoin's advantages in trustlessness and lack of a central authority are hugely important in international relations, where nobody trusts anybody else and there's no higher authority to appeal to.
(Stellar's even better for this use-case, and has had a similar recent run-up, but currencies have strong network effects and it's unlikely that Stellar could get the name recognition or trust that Bitcoin has gotten.)
I'm not very well informed on the modern banking system, but I remember hearing an anecdote about banks flying people with bags of checks on airplanes to handle exchanges (before the system was updated in the 70s iirc). In your example of transferring a billion dollars in cash 3000 miles, couldn't that transfer be done using the banking system for much cheaper than the armored car and guards? Is the metaphor valid only for transactions that don't want to trust some third party? Is there some reason why moving a billion dollars cash is something that anyone other than the CIA would want to do?
I'm also curious about your claim:
> Bitcoin's advantages in trustlessness and lack of a central authority are hugely important in international relations, where nobody trusts anybody else and there's no higher authority to appeal to.
Is this really true? I mean, what do large international exchanges use now? A majority of them certainly don't currently use bitcoin. Many large banks have a significant international presence, and most parties interested in exchanging can find a bank they both trust.
> Bitcoin's advantages in trustlessness and lack of a central authority are hugely important in international relations, where nobody trusts anybody else and there's no higher authority to appeal to.
Is this really true? I mean, what do large international exchanges use now? A majority of them certainly don't currently use bitcoin. Many large banks have a significant international presence, and most parties interested in exchanging can find a bank they both trust.
We've got plenty of mechanisms (SWIFT, ACH, wire transfers) that work pretty well for large electronic inter-bank transfers within the same monetary authority. The trouble is what happens when you want to trade between currencies.
Say that I want to buy a DJI drone, which is made in China. The workers who made the drone all get paid in yuan. I get paid in dollars. I want to spend my dollars on Amazon, receive a drone, and have those dollars automagically converted into yuan to pay DJI. Behind the scenes, Amazon takes my orders and my dollars, and has a contract with DJI to send them a certain number of yuan. Similarly, behind the scenes DJI is spending yuan to buy ads on Google.cn (hypothetically), which Google then wants to turn into dollars so it can pay my salary. Both Amazon and Google have relationships with banking institutions, so they say "I need to convert $X of dollars in CN¥0.15X of yuan".
The banks net out all the purchases made by Americans with the purchases made by Chinese, and then they need to trade on the currency exchange markets for any shortfall. On the national level, the shortfall is called the current account deficit, which has been persistently growing since 1991:
https://www.economicshelp.org/blog/483/economics/why-us-curr...
That article lists a lot of hypotheses for why the current account deficit has been growing for the last 30 years, but the primary one relevant to this thread is the dollar's status as the world reserve currency. This means a few things:
1) Historically, since WW2, the U.S. has been the most economically stable nation in the world, and so holding U.S. government debt is the most stable place you can park any excess savings that you get from a current account surplus.
2) Because of this stability, a lot of trade in other currency markets is denominated in dollars. Rather than trade directly between Iranian rial and Chinese yuan, Iran takes the dollars they receive for oil, pays China for infrastructure improvements with them, and then China converts the dollars into yuan to pay their employees. (In practice it's a bit more complicated because since 2015 China has been doing their best to reduce their dollar holdings, so now China might pay Caterpillar or Bechtel to build a road in Zimbabwe, with a contract that lets China take over the road if Zimbabwe defaults on the loan that funds it.)
3) Oil is priced in dollars, meaning that most countries on earth need to buy excess dollars in order to afford a fundamental energy source.
The dollar's status as a reserve currency means that the U.S. can get away with certain things that would cause other countries to default. For example, take the recent $6T COVID stimulus. Who's paying for that? It's literally holders of U.S. treasuries: all the countries that have sold more to the U.S. than they've bought and parked the excess in treasury bond purchases. They're not exactly happy about that, but the U.S. controls the world supply of both dollars and of U.S. government debt, so if you own either of those, you are at the mercy of the U.S. government's decision to print more.
This is where the trustless aspect of Bitcoin comes in. You know that the supply of Bitcoin is fixed. If you settled up your current account deficit in Bitcoin instead of dollars, you know that you'll have an asset that you can trade back at a later date, and that the supply of that asset will not have increased (devaluing your own holdings). This makes it very appealing to other governments who are sick of bankrolling Americans' propensity to consume more than they produce. It's potentially bad for Americans (though the effect of this is complex: it might actually bring manufacturing back to the U.S at the expense of the financial industry, because a major reason U.S. manufacturing is non-competitive is because the dollar is overvalued, which is because the dollar is the world's reserve currency), but it's good for foreign countries with a trade surplus, and for holders of Bitcoin.
Say that I want to buy a DJI drone, which is made in China. The workers who made the drone all get paid in yuan. I get paid in dollars. I want to spend my dollars on Amazon, receive a drone, and have those dollars automagically converted into yuan to pay DJI. Behind the scenes, Amazon takes my orders and my dollars, and has a contract with DJI to send them a certain number of yuan. Similarly, behind the scenes DJI is spending yuan to buy ads on Google.cn (hypothetically), which Google then wants to turn into dollars so it can pay my salary. Both Amazon and Google have relationships with banking institutions, so they say "I need to convert $X of dollars in CN¥0.15X of yuan".
The banks net out all the purchases made by Americans with the purchases made by Chinese, and then they need to trade on the currency exchange markets for any shortfall. On the national level, the shortfall is called the current account deficit, which has been persistently growing since 1991:
https://www.economicshelp.org/blog/483/economics/why-us-curr...
That article lists a lot of hypotheses for why the current account deficit has been growing for the last 30 years, but the primary one relevant to this thread is the dollar's status as the world reserve currency. This means a few things:
1) Historically, since WW2, the U.S. has been the most economically stable nation in the world, and so holding U.S. government debt is the most stable place you can park any excess savings that you get from a current account surplus.
2) Because of this stability, a lot of trade in other currency markets is denominated in dollars. Rather than trade directly between Iranian rial and Chinese yuan, Iran takes the dollars they receive for oil, pays China for infrastructure improvements with them, and then China converts the dollars into yuan to pay their employees. (In practice it's a bit more complicated because since 2015 China has been doing their best to reduce their dollar holdings, so now China might pay Caterpillar or Bechtel to build a road in Zimbabwe, with a contract that lets China take over the road if Zimbabwe defaults on the loan that funds it.)
3) Oil is priced in dollars, meaning that most countries on earth need to buy excess dollars in order to afford a fundamental energy source.
The dollar's status as a reserve currency means that the U.S. can get away with certain things that would cause other countries to default. For example, take the recent $6T COVID stimulus. Who's paying for that? It's literally holders of U.S. treasuries: all the countries that have sold more to the U.S. than they've bought and parked the excess in treasury bond purchases. They're not exactly happy about that, but the U.S. controls the world supply of both dollars and of U.S. government debt, so if you own either of those, you are at the mercy of the U.S. government's decision to print more.
This is where the trustless aspect of Bitcoin comes in. You know that the supply of Bitcoin is fixed. If you settled up your current account deficit in Bitcoin instead of dollars, you know that you'll have an asset that you can trade back at a later date, and that the supply of that asset will not have increased (devaluing your own holdings). This makes it very appealing to other governments who are sick of bankrolling Americans' propensity to consume more than they produce. It's potentially bad for Americans (though the effect of this is complex: it might actually bring manufacturing back to the U.S at the expense of the financial industry, because a major reason U.S. manufacturing is non-competitive is because the dollar is overvalued, which is because the dollar is the world's reserve currency), but it's good for foreign countries with a trade surplus, and for holders of Bitcoin.
This is very helpful, thanks. I guess the part I'm still confused on is the link to bitcoin:
>You know that the supply of Bitcoin is fixed. If you settled up your current account deficit in Bitcoin instead of dollars, you know that you'll have an asset that you can trade back at a later date, and that the supply of that asset will not have increased (devaluing your own holdings).
Doesn't the historic price volatility of bitcoin make it a very poor solution for these problems? Despite the supply being semi-fixed (for now), the value in USD or Yuan or whatever is the furthest thing from fixed. It's gained more than 8% in the last five days, and lost ~4% today alone. I guess if these were all very short term conversions USD --> BTC --> Yuan and vice versa, then maybe price volatility would burn users less often, but they'd still get burned eventually. In my mind, Bitcoin has inherent risk (in volatile pricing), and transactional cost (measured in either time or fees, as I understand it). As long as the (risk + fees) of BTC are greater than the fees charged by banks for money conversions, I don't expect widespread adoption.
>You know that the supply of Bitcoin is fixed. If you settled up your current account deficit in Bitcoin instead of dollars, you know that you'll have an asset that you can trade back at a later date, and that the supply of that asset will not have increased (devaluing your own holdings).
Doesn't the historic price volatility of bitcoin make it a very poor solution for these problems? Despite the supply being semi-fixed (for now), the value in USD or Yuan or whatever is the furthest thing from fixed. It's gained more than 8% in the last five days, and lost ~4% today alone. I guess if these were all very short term conversions USD --> BTC --> Yuan and vice versa, then maybe price volatility would burn users less often, but they'd still get burned eventually. In my mind, Bitcoin has inherent risk (in volatile pricing), and transactional cost (measured in either time or fees, as I understand it). As long as the (risk + fees) of BTC are greater than the fees charged by banks for money conversions, I don't expect widespread adoption.
Two things to consider: First of all, as a totally new asset class we are probably still in the price discovery phase of Bitcoin. In 20-50 years we will have a much better understanding of the nature of cryptocurrencies economically and I'd bet the volatility at that time will be much less.
Second, it's possible there could be a mean-reverting effect such that the long term volatility is less than you'd expect by looking at the short term volatility. Some claim that gold has this property and it's possible that Bitcoin might as well (not really enough data yet to tell).
Second, it's possible there could be a mean-reverting effect such that the long term volatility is less than you'd expect by looking at the short term volatility. Some claim that gold has this property and it's possible that Bitcoin might as well (not really enough data yet to tell).
You may like this somewhat recent story, I enjoyed the link a lot for some background on the petrodollar idea.
https://news.ycombinator.com/item?id=25407583
https://news.ycombinator.com/item?id=25407583
It's important to make a distinction between price volatility now, when Bitcoin is a speculative asset that might become useful in the future, vs. the price volatility if it actually does become useful. They have different dynamics.
Imagine that AMC launches a promotion where they announce that once COVID is over and theaters reopen, you will be able to exchange acorns for movie tickets. You'd expect a mad scramble for acorns, because a useless nut will suddenly become tradable for something of value to many people. When all the acorns have been snatched up, you'd expect a trade to commence in acorns themselves, with people paying for them on the expectation that they're convertible to tickets worth something in the future. Moreover, AMC didn't announce a price for this conversion, so there's a lot of uncertainty about what acorns are actually worth. If AMC then says "Oh, by the way, acorns will be the only way you can pay for movie tickets in the future, and we won't accept dollars", then you might see acorns bid up to totally brain-dead levels, because there's no ceiling for how high it might go, and you know that you won't be able to go to the movies with dollars anymore. Only when theaters actually reopen, and you find out how many people have acorns and how many people want to see movies, can you put an accurate price on them.
This is analogous to the scenario where the dollar loses its reserve currency status. You don't know what the eventual valuation of each country's local currency will be against Bitcoin. You do know that the dollar is going to be worth less. So you can get wild price swings as people FOMO into Bitcoin but have no accurate data to base their purchase price on.
Once a switchover does occur, then yes, the price of Bitcoin will still be volatile. But this volatility is the point! The idea is for each country's local currency to float up or down until it equalizes the demand for the country's imports & exports. So if American manufacturing is uncompetitive, few people will desire American goods, which means there will be little demand for dollars relative to Bitcoin, which means that the price of the dollar relative to Bitcoin will fall. Falling dollar prices mean that foreign countries can get more American goods for a given amount of Bitcoin, which raises the price-competitiveness of American exports, which raises the demand for dollars. Eventually you end up with equilibrium prices that reflect the overall competitiveness of the country's economy within the global economy. As a country produces more & higher value goods, the value of their currency relative to Bitcoin will rise, and they can afford to consume more. As a country's industry declines, the value of its currency will decline as well, which makes its product attractive as a low-cost alternative.
Imagine that AMC launches a promotion where they announce that once COVID is over and theaters reopen, you will be able to exchange acorns for movie tickets. You'd expect a mad scramble for acorns, because a useless nut will suddenly become tradable for something of value to many people. When all the acorns have been snatched up, you'd expect a trade to commence in acorns themselves, with people paying for them on the expectation that they're convertible to tickets worth something in the future. Moreover, AMC didn't announce a price for this conversion, so there's a lot of uncertainty about what acorns are actually worth. If AMC then says "Oh, by the way, acorns will be the only way you can pay for movie tickets in the future, and we won't accept dollars", then you might see acorns bid up to totally brain-dead levels, because there's no ceiling for how high it might go, and you know that you won't be able to go to the movies with dollars anymore. Only when theaters actually reopen, and you find out how many people have acorns and how many people want to see movies, can you put an accurate price on them.
This is analogous to the scenario where the dollar loses its reserve currency status. You don't know what the eventual valuation of each country's local currency will be against Bitcoin. You do know that the dollar is going to be worth less. So you can get wild price swings as people FOMO into Bitcoin but have no accurate data to base their purchase price on.
Once a switchover does occur, then yes, the price of Bitcoin will still be volatile. But this volatility is the point! The idea is for each country's local currency to float up or down until it equalizes the demand for the country's imports & exports. So if American manufacturing is uncompetitive, few people will desire American goods, which means there will be little demand for dollars relative to Bitcoin, which means that the price of the dollar relative to Bitcoin will fall. Falling dollar prices mean that foreign countries can get more American goods for a given amount of Bitcoin, which raises the price-competitiveness of American exports, which raises the demand for dollars. Eventually you end up with equilibrium prices that reflect the overall competitiveness of the country's economy within the global economy. As a country produces more & higher value goods, the value of their currency relative to Bitcoin will rise, and they can afford to consume more. As a country's industry declines, the value of its currency will decline as well, which makes its product attractive as a low-cost alternative.
All of this is based on the premise that
1) Countries want external control of their international transactions
2) They accept Bitcoin as said thing.
They are sort of , to some degree, forced to 1, by the US Govt. there is likely near zero chance they WANT this as a property though.
2) This is also not very likely. With some 70% of BTC being mined inside of PRC and a 51% attack possible, there is a lot of trust required of the Chinese govt. Unless this changes, I don't see countries wanting this to happen, either.
So while what you say is theoretically possible, I don't think it's very likely. I think what will happen, and what already is happening to some degree, is countries are just deciding to convert in direct currency transactions and not use USD as the base contract amounts, because the US reserve currency status is slowly declining. I.e. they are using the dominant currency in their region ( Yuan/Yen, Euro, USD, etc)
It's unknown how the US will respond at this point, with Trump in office they were basically ignoring the problem(that I'm aware of). How Biden's team will handle this is still unknown(or if they also will kick the can down the road).
We do see some corporations using BTC as a store of "cash", TSLA the latest big company to do so. It's still unknown if this is just a short-term thing to make some extra dollars on otherwise boring cash, or if this will be a long-term situation.
1) Countries want external control of their international transactions
2) They accept Bitcoin as said thing.
They are sort of , to some degree, forced to 1, by the US Govt. there is likely near zero chance they WANT this as a property though.
2) This is also not very likely. With some 70% of BTC being mined inside of PRC and a 51% attack possible, there is a lot of trust required of the Chinese govt. Unless this changes, I don't see countries wanting this to happen, either.
So while what you say is theoretically possible, I don't think it's very likely. I think what will happen, and what already is happening to some degree, is countries are just deciding to convert in direct currency transactions and not use USD as the base contract amounts, because the US reserve currency status is slowly declining. I.e. they are using the dominant currency in their region ( Yuan/Yen, Euro, USD, etc)
It's unknown how the US will respond at this point, with Trump in office they were basically ignoring the problem(that I'm aware of). How Biden's team will handle this is still unknown(or if they also will kick the can down the road).
We do see some corporations using BTC as a store of "cash", TSLA the latest big company to do so. It's still unknown if this is just a short-term thing to make some extra dollars on otherwise boring cash, or if this will be a long-term situation.
Hi,
I liked your answer here on https://news.ycombinator.com/item?id=26093675. Would you like to write for our website on topics finance and crypto as a volunteer?
I liked your answer here on https://news.ycombinator.com/item?id=26093675. Would you like to write for our website on topics finance and crypto as a volunteer?
Volatility doesn't matter because 1 BTC = 1 BTC
What percentage of transactions are 1 billion dollars? I'm pretty sure VISA has never had anything over $10M.
This is excessively hypothetical.
The more obvious benefit is that a Tesla can't drive 3000 miles in 15 minutes. But a VISA transaction is faster and uses 1/100,000th the electricity. And neither are "anonymous".
This is excessively hypothetical.
The more obvious benefit is that a Tesla can't drive 3000 miles in 15 minutes. But a VISA transaction is faster and uses 1/100,000th the electricity. And neither are "anonymous".
If you think BTC is anonymous you have a mistaken understanding of how permanently public blockchain transactions are.
A given transaction might be "anonymous" today(for some definition of anonymous), but chances are it won't be anonymous at some point in the future. This may or may not matter given your definition of anonymous, but to think your transaction will STAY anonymous forever is just asking for trouble.
A given transaction might be "anonymous" today(for some definition of anonymous), but chances are it won't be anonymous at some point in the future. This may or may not matter given your definition of anonymous, but to think your transaction will STAY anonymous forever is just asking for trouble.
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The problem w Bitcoin as a global reserve currency is that it cannot be manipulated by the nation-state. Manipulation in this case is not a bad thing it is actually a safety feature for society against pure supply/demand dynamics. The prevailing wisdom is that having a fiat currency which value and velocity can be manipulated by, granted the Fed Reserve is a quasi govt agency, in times of emergency helps preserve the social order and smooth fluctuations. So Bitcoin has no value as a reserve currency unless it could be manipulated by the state, which it can’t, so it won’t.
The state can still manipulate their national currency (which Bitcoin likely won’t replace). Positive things with Bitcoin are that:
1. When the US dollar eventually loses its status as the global currency for settlement and reserves, no individual country needs to have the same perverse control that they US had as a consequence today.
2. Citizens have an exit ramp from the local currency. This means the state doesn’t have the same totalitarian control of the national economy, limiting the impact on citizens of demonetization and hyperinflation.
1. When the US dollar eventually loses its status as the global currency for settlement and reserves, no individual country needs to have the same perverse control that they US had as a consequence today.
2. Citizens have an exit ramp from the local currency. This means the state doesn’t have the same totalitarian control of the national economy, limiting the impact on citizens of demonetization and hyperinflation.
> The institutional interest in Bitcoin I've seen lately seems to assume a thesis of dollar depreciation and Bitcoin usurping its role as the global reserve currency.
Aren't we losing the assumed federation in this system? A country whose banking system is under strain (Nigeria) or has collapsed (Zimbabwe) will have a bad-faith government acting to constrain the free-flow of money (because they want a transaction-fee cut).
Wouldn't that still lead to me wanting to go buy my groceries with BTC? Do we create a localised version/model where people can transact with each other without touching the blockchain (because of the low throughput), or how do we address this use-case; as it seems to be the most attractive one?
Has the energy requirement peaked, or is it still going to increase? Linearly or not?
Aren't we losing the assumed federation in this system? A country whose banking system is under strain (Nigeria) or has collapsed (Zimbabwe) will have a bad-faith government acting to constrain the free-flow of money (because they want a transaction-fee cut).
Wouldn't that still lead to me wanting to go buy my groceries with BTC? Do we create a localised version/model where people can transact with each other without touching the blockchain (because of the low throughput), or how do we address this use-case; as it seems to be the most attractive one?
Has the energy requirement peaked, or is it still going to increase? Linearly or not?
>Do we create a localised version/model where people can transact with each other without touching the blockchain
This is what the lightning network is for: scalable, instant, low-cost, and off-chain TXs. All transactions between the opening and closing of a payment channel are consolidated into two TXs. One to open it another to close it. This means energy cost per TX goes down pretty significantly with adoption.
This is what the lightning network is for: scalable, instant, low-cost, and off-chain TXs. All transactions between the opening and closing of a payment channel are consolidated into two TXs. One to open it another to close it. This means energy cost per TX goes down pretty significantly with adoption.
It'd have a similar role as gold. In cases state failure, you absolutely do have people trying to buy groceries with gold coins. But it's inconvenient, and people tend to run out of gold coins. So the incentives - when times are good - run toward normal credit systems like Visa & Mastercard, and hard currencies gain adoption only when times are bad.
Similarly, we've had folks transacting personally with Bitcoin in Venezuela and Zimbabwe. It tends to work out fairly well for them - at least their money holds value. But transaction costs in Bitcoin during the 2017 bubble were about $20/transaction, which makes it a pretty high-friction experience for groceries. There's a lot of market pressure to create other solutions (Lightning Network? Stellar? Local fintech companies?) for payments when Bitcoin costs $20 for everything.
Similarly, we've had folks transacting personally with Bitcoin in Venezuela and Zimbabwe. It tends to work out fairly well for them - at least their money holds value. But transaction costs in Bitcoin during the 2017 bubble were about $20/transaction, which makes it a pretty high-friction experience for groceries. There's a lot of market pressure to create other solutions (Lightning Network? Stellar? Local fintech companies?) for payments when Bitcoin costs $20 for everything.
So what? Almost all transactions are going to be significantly smaller than a billion people usd. You are just focusing on an edge case. Bitcoin is a horrible system for conducting the vast majority of transactions.
I can see smaller bitcoin transactions running on an alternative networks like Stellar, where assets (like bitcoin, USD, etc) can be issued by a trusted 3rd party.
> Say you want to transfer a billion dollars 3000 miles.
I don't. You don't. Nobody does. In the one-off case that you do, we can special-case it, instead of blowing energy on every single transaction as though everyone did.
You’re arguing we should be zipping around town in a car with a W12 engine in case somebody wants to drag race an airplane.
I don't. You don't. Nobody does. In the one-off case that you do, we can special-case it, instead of blowing energy on every single transaction as though everyone did.
You’re arguing we should be zipping around town in a car with a W12 engine in case somebody wants to drag race an airplane.
This is like arguing that station wagons full of tape drives could one day replace the Internet.
Deutsche Marks do not exist anymore.
They do exist and are still redeemable for Euros at fixed rate. Little weird but germany is a big country that wants people to trust it, so 20 years after Euro was adopted it's still worth 1.95 deutchmarks.
Many of the same people who buy the Bitcoin-as-global-reserve-currency scenario also believe the Euro is going to collapse. It has known problems as a monetary union without a fiscal union, which lead to periodic bailout crises.
Here "deutsche mark" (and lira, which is another dead currency) are stand-ins for whatever national currency emerges after a Euro collapse. It may not be called that, but the point is that there will be some German national currency that settles up into Bitcoin in the international markets.
Here "deutsche mark" (and lira, which is another dead currency) are stand-ins for whatever national currency emerges after a Euro collapse. It may not be called that, but the point is that there will be some German national currency that settles up into Bitcoin in the international markets.
Correct. Ultimately, we will end up using Bitcoin as an asset and less for transactions. It is a better version of Gold.
The energy that goes into a Bitcoin transaction doesn't just pay for the one transaction. It also pays for the security of all the value stored in the rest of the system, and that's actually where most of the revenue for mining comes from - inflation, not fees.
But also, Bitcoin transactions aren't typically buying coffee from your local store. It's very often international, and Bitcoin transactions offer a finality and immediateness that can't be found in other financial systems.
But also, in many cases Bitcoin is your only choice to transact at all. Our business keeps getting rejected by payment processors such as Stripe and PayPal, and at this point Bitcoin is our only option to get revenue from Europe. As a result, Bitcoin is making things possible for us and our users that simply aren't possible at all without Bitcoin.
If you think the fees are absurd, make a system that gives all the same benefits to us without costing so much. So far, we don't have an alternative, and we are very grateful that Bitcoin exists as an option.
But also, Bitcoin transactions aren't typically buying coffee from your local store. It's very often international, and Bitcoin transactions offer a finality and immediateness that can't be found in other financial systems.
But also, in many cases Bitcoin is your only choice to transact at all. Our business keeps getting rejected by payment processors such as Stripe and PayPal, and at this point Bitcoin is our only option to get revenue from Europe. As a result, Bitcoin is making things possible for us and our users that simply aren't possible at all without Bitcoin.
If you think the fees are absurd, make a system that gives all the same benefits to us without costing so much. So far, we don't have an alternative, and we are very grateful that Bitcoin exists as an option.
You mean deflation, incidentally.
No, I do think he means inflation. He's talking about the block reward, the Bitcoin "minted" through mining, being larger than the fees. Currently it's 6.25 BTC minted per block and the fees only add up to between 1 and 2 BTC.
We don't really see this as inflation because of the value of Bitcoin going up, but it is a tiny tiny tax on all the people HODLING their coins, as it dilutes the value (again, by a miniscule amount).
In theory if BTC is still being used in 2150 or whenever the block reward goes to zero, all the cost of mining will be borne by those actually exchanging BTC, and the people just holding it will be free-riding, with the security of the network paid for entirely by people transacting on it. Not sure how well this will work.
We don't really see this as inflation because of the value of Bitcoin going up, but it is a tiny tiny tax on all the people HODLING their coins, as it dilutes the value (again, by a miniscule amount).
In theory if BTC is still being used in 2150 or whenever the block reward goes to zero, all the cost of mining will be borne by those actually exchanging BTC, and the people just holding it will be free-riding, with the security of the network paid for entirely by people transacting on it. Not sure how well this will work.
Bitcoin supply is scheduled to increase for the next 100 years or so. So yes, inflation.
«a single Bitcoin transaction consumes 165kWh»
This needs to be repeated in every HN thread about Bitcoin: no, transactions don't consume energy. The proof-of-work is completely independent of the number of transactions. A block could have 1 or 1000 transactions, but the energy consumption would be the same.
People have this wrong idea that more transactions imply more energy consumption. That's just not true.
This needs to be repeated in every HN thread about Bitcoin: no, transactions don't consume energy. The proof-of-work is completely independent of the number of transactions. A block could have 1 or 1000 transactions, but the energy consumption would be the same.
People have this wrong idea that more transactions imply more energy consumption. That's just not true.
> A block could have 1 or 1000 transactions, but the energy consumption would be the same.
The calculations are based on the maximum throughput of the Bitcoin protocol, which is a fixed value due to the 10-minute block time and the limited block size.
The average number of transactions per block is always around 2K: https://www.blockchain.com/charts/n-transactions-per-block
> The proof-of-work is completely independent of the number of transactions.
Right, which makes this whole thing even more ridiculous. If number of transactions went to zero we'd still have to burn 120+ TWh per year just to keep the system going.
The 165kWh per transaction calculation is the best case scenario assuming every block is filled to the maximum with transactions.
The calculations are based on the maximum throughput of the Bitcoin protocol, which is a fixed value due to the 10-minute block time and the limited block size.
The average number of transactions per block is always around 2K: https://www.blockchain.com/charts/n-transactions-per-block
> The proof-of-work is completely independent of the number of transactions.
Right, which makes this whole thing even more ridiculous. If number of transactions went to zero we'd still have to burn 120+ TWh per year just to keep the system going.
The 165kWh per transaction calculation is the best case scenario assuming every block is filled to the maximum with transactions.
Incorrect.
The proof of work difficulty scales automatically. If the miners/hash-power reduces then blocks become easier to mine.
The Bitcoin blockchain could subsist on a minuscule fraction of todays energy usage if the majority of miners decided to throw away their investments and stop mining.
The Bitcoin blockchain could subsist on a minuscule fraction of todays energy usage if the majority of miners decided to throw away their investments and stop mining.
Is this a joke? Yes, bitcoin could function without using any energy at all if there where no transactions and no miners. That doesn’t change that currently independent of transaction numbers a huge amount of energy is being wasted, and the minimal waste per transaction in a theoretical maximum transactions/energy scenario would still have you spending more than our entire energy production just heating up silicon if we relied entirely on Bitcoin for financial transactions.
Energy isn't being wasted, that's the point. What proof of work and the blockchain allows is a monetary network that (a) does not rely on trusted third parties for verification, whose (b) unit of currency does not rely on states or central banks, which cannot be trusted to avoid inflation.
Whatever else you may think of those features, it's a bit weird to call it pure waste when clearly millions of people find this incredibly valuable.
Whatever else you may think of those features, it's a bit weird to call it pure waste when clearly millions of people find this incredibly valuable.
But it would not be possible for it to maintain its price and usefulness at that minuscule fraction of todays energy usage.
> The proof-of-work is completely independent of the number of transactions. A block could have 1 or 1000 transactions, but the energy consumption would be the same.
There's a block limit, though, right? It doesn't scale up infinitely -- you might have 1000 transactions in a block, but not a million. Therefore, it is accurate to attribute the energy per block to securing the transactions within.
There's a block limit, though, right? It doesn't scale up infinitely -- you might have 1000 transactions in a block, but not a million. Therefore, it is accurate to attribute the energy per block to securing the transactions within.
Also worth noting though that "extra" energy per-tx increases the security of that tx. You aren't just paying for the system to function, you're paying for the system to be resistant to bad actors.
Only so far as the majority of the miners are not coordinated.
With the current concentration of mining capacity in China, that's not exactly a sure thing any more.
With the current concentration of mining capacity in China, that's not exactly a sure thing any more.
The point is that the energy they are spending on mining disincentivizes them from doing anything except using it to earn Bitcoins legitimately. If they waste that energy attacking the network instead, it would be less profitable.
Yes, but the limit is chosen to keep a balance between scale and decentralization (keeping the cost of running nodes low).
It can be safely increased over time as bandwidth, storage and processing costs go down.
For now there's still a lot of viable efficiency enhancements to be implemented/adopted so increasing the limit isn't strictly necessary.
It can be safely increased over time as bandwidth, storage and processing costs go down.
For now there's still a lot of viable efficiency enhancements to be implemented/adopted so increasing the limit isn't strictly necessary.
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I think the real value in Bitcoin is its immutability. I don't think there's any piece of information in the world as immutable as the first bitcoin block mined by satoshi.
This property is what powers amazing projects like OpenTimeStamps (https://opentimestamps.org/), this will become an essential tool for notaries all around the world, seriously!, and this has nothing to do with number of transactions, this scales to O(1) (you only need one transaction to prove as many things as there needs to be proved). Previous to bitcoin existence I don't think there was ever a distributed way of proving a piece of information existed previous to X, and even if there was, it was probably centralized or much much MUCH weaker than bitcoin. There's just no replacement, not even a million years as effective as bitcoin is for this, if I'm wrong please tell me! I want to know!
Most people here in favor of bitcoin argue about inflation, I understand the reasoning, and I'm from Venezuela, I pretty sure understand that value, but that's just missing the point, immutability >>> inflation protection.
And if we go into the smart-contracts terrain, that's a whole other world of very diverse possibilities of values to be uncovered
This property is what powers amazing projects like OpenTimeStamps (https://opentimestamps.org/), this will become an essential tool for notaries all around the world, seriously!, and this has nothing to do with number of transactions, this scales to O(1) (you only need one transaction to prove as many things as there needs to be proved). Previous to bitcoin existence I don't think there was ever a distributed way of proving a piece of information existed previous to X, and even if there was, it was probably centralized or much much MUCH weaker than bitcoin. There's just no replacement, not even a million years as effective as bitcoin is for this, if I'm wrong please tell me! I want to know!
Most people here in favor of bitcoin argue about inflation, I understand the reasoning, and I'm from Venezuela, I pretty sure understand that value, but that's just missing the point, immutability >>> inflation protection.
And if we go into the smart-contracts terrain, that's a whole other world of very diverse possibilities of values to be uncovered
If it was centralised, that's fine. Not everyone shares this decentralisaton fetish.
Why is it a fetish?, if something is centralized it means you need to trust that central party. Decentralization removes that dependency
In the bitcoin's case, to verify the immutability of *any block*, you only need some basic knowledge of cryptography, and all the blockchain after that block. You then need to sum all the proofs of work of every subsequent block and divide by the network's current hash power, that will give you the amount of effort (energy, cost, etc) needed today to create that amount of proof of work, and that's how you get a feeling of the mind-boggling immutability of bitcoin's block
In summary, you can, independently, verify how much work a piece of information in a bitcoin block has. You don't need to trust anyone
In the bitcoin's case, to verify the immutability of *any block*, you only need some basic knowledge of cryptography, and all the blockchain after that block. You then need to sum all the proofs of work of every subsequent block and divide by the network's current hash power, that will give you the amount of effort (energy, cost, etc) needed today to create that amount of proof of work, and that's how you get a feeling of the mind-boggling immutability of bitcoin's block
In summary, you can, independently, verify how much work a piece of information in a bitcoin block has. You don't need to trust anyone
Decentralisation simply moves trust around the system, rather than eliminating it. It is a fetish because most people really don't care.
Immutability is by consensus, not some fundamental law of the universe. Consensus can change (see the reason Eth Classic exists).
Bitcoin's guarantees are not mind-boggling, and the amount of work it would take to fake is not mind-boggling either, it's very quantifiable, and it is some fraction of the available computing power that exists today, for a time period of no more than the age of bitcoin. Compare that to the stronger guarantees of things like AES encryption, if you want your mind boggled.
I don't give a crap how much work a piece of information has attached to it, all that is to me, is a record of wasted cycles.
Further, in most real-world situations having no central authority that can make changes coupled with immutable transactions is actively terrible.
Immutability is by consensus, not some fundamental law of the universe. Consensus can change (see the reason Eth Classic exists).
Bitcoin's guarantees are not mind-boggling, and the amount of work it would take to fake is not mind-boggling either, it's very quantifiable, and it is some fraction of the available computing power that exists today, for a time period of no more than the age of bitcoin. Compare that to the stronger guarantees of things like AES encryption, if you want your mind boggled.
I don't give a crap how much work a piece of information has attached to it, all that is to me, is a record of wasted cycles.
Further, in most real-world situations having no central authority that can make changes coupled with immutable transactions is actively terrible.
You are leaving out significant amounts of energy consumed in the legacy financial system.
Those bills cost energy to produce. The bank had to be built. There was a teller there, did they spend any energy driving to the bank that day? Did you use a duffel bag? Where’d that come from? Etc.
I’m not sure that any of this is meaningful in any way.
Those bills cost energy to produce. The bank had to be built. There was a teller there, did they spend any energy driving to the bank that day? Did you use a duffel bag? Where’d that come from? Etc.
I’m not sure that any of this is meaningful in any way.
The Visa kWh figure includes all that. The office workers and whatnot. The source is Visa corporate responsibility data. https://usa.visa.com/dam/VCOM/download/corporate-responsibil... that's for 2019.
They include air travel and whatnot. Basically the whole energy consumption of the company. Also including building stuff etc.
Visa doesn't share that in order to poke at Bitcoin. They share that because enviromentalism is hip nowadays. So they want to tell how they're improving their CO2 emissions as a company.
They include air travel and whatnot. Basically the whole energy consumption of the company. Also including building stuff etc.
Visa doesn't share that in order to poke at Bitcoin. They share that because enviromentalism is hip nowadays. So they want to tell how they're improving their CO2 emissions as a company.
The mining equipment needed to be produced. The mining rig needed to be installed, many factories needed to be produced. There are workers in these mines, did they spend energy driving a car? Did they use a gym bag? Where did that come from?
BTC is not magic dude, it has externalities too.
BTC is not magic dude, it has externalities too.
Then you might as well price in the cost of the computers and GPUs assembly into Bitcoin's cost. I don't see the utility in going down this chain of production.
How many people go speak to a bank teller to transfer funds? My bank can give me a mortgage for my home. The banking system is doing way way way more than counting how much people own and shifting that around.
If the concern is the cost of brick and mortar banks then we can solve that with technology much more effectively than btc.
If the concern is the cost of brick and mortar banks then we can solve that with technology much more effectively than btc.
The problem with "interventionistas" with little/no understanding of bitcoin is, they look at one feature/component of btc's game theory in isolation and state "I can do this particular thing cheaper/faster/easier" while ignoring the 100 other aligned incentive structures that are lost with their 2nd/3rd-order-effect altering solutions.
Bitcoin is too elegantly designed to approach in this fashion.
Bitcoin is too elegantly designed to approach in this fashion.
Which is also true on the opposite side or did your mining rig magically materialize out of nowhere? The difference is that a lot of the infrastructure for the traditional system is already built out which reduces the marginal energy costs to a degree that isn't the case for cryptocurrencies.
> Those bills cost energy to produce. The bank had to be built. There was a teller there, did they spend any energy driving to the bank that day? Did you use a duffel bag?
It's 2021. Carrying around duffel bags of paper bills received from a human bank teller is not how anyone manages their cash or transactions.
Bitcoin is not the only way to digitally transact. It's not even a good way. In practice, it's just about the worst way to handle transactions unless you have no other options.
It's 2021. Carrying around duffel bags of paper bills received from a human bank teller is not how anyone manages their cash or transactions.
Bitcoin is not the only way to digitally transact. It's not even a good way. In practice, it's just about the worst way to handle transactions unless you have no other options.
This "legacy financial system" comparison isn't fair. I use standard banking and haven't been to a bank in years. I think a more reasonable comparison is with online only banks. Our current system doesn't actually need physical cash. You just need banks keeping score for individual accounts and a central bank keeping score of the banks' accounts.
Those bills cost energy to produce. The bank had to be built. There was a teller there, did they spend any energy driving to the bank that day? Did you use a duffel bag? Where’d that come from? Etc.
Just like the mining rigs that produce bitcoin. It seems like you're conflating fixed costs (of plant and machinery) with marginal costs (of exchanging some amount of BTC vs fiat).
Just like the mining rigs that produce bitcoin. It seems like you're conflating fixed costs (of plant and machinery) with marginal costs (of exchanging some amount of BTC vs fiat).
If you compare the money (resources) spent bitcoin mining and the money (resources) spent operating the world’s central banks, then the costs are similar.
The world's central banks do not use more electricity than Argentina, and they handle a lot more money.
No, but their budgets are on the order of the annual btc mining rewards.
The main function of the banks is lending and other services, not payments. In a retail bank just a tiny fraction of employees and budget are used for handling payments, it's a necessary piece of infrastructure for every bank but it's not a particularly large part of it.
How well does that "money" hold its value?
Money is intended to transact with, not for speculation on it increasing purchasing power, which is great, because it can be spent on or invested in things which create value instead. And at a rate of more than 10 transactions per second worldwide!
You are confusing "currency" with "money", there is a difference and it is not insignificant.
Someone should tell all the people who've studied numismatics for their entire life! Even the etymology of the word "money" derives from the location of the mint in Rome.
Before the fiat system, national currencies could have been considered closer to "money" because they were actually backed by commodities.
Now we have pure currency and all fiat currencies go to ~0 in less than 100 years.
USD, GBP, CAD = currency
Bitcoin, Gold, Silver = money
Now we have pure currency and all fiat currencies go to ~0 in less than 100 years.
USD, GBP, CAD = currency
Bitcoin, Gold, Silver = money
You'll forgive me for sticking with the definition of money used by all academic experts in the field and the vast majority of colloquial use...
Incidentally, Bitcoin is also not a commodity in the general sense of the word (as opposed to the CFTC thinks it should regulate it like other exotic financial instruments sense of the word)
Incidentally, Bitcoin is also not a commodity in the general sense of the word (as opposed to the CFTC thinks it should regulate it like other exotic financial instruments sense of the word)
Sure, just one change... ”Currency is intended to transact with, not for speculation...”
Bitcoin is forcing an expansion of the definition of money. A self-regulated financial network backed by tremendous amounts of hardware and electricity is "advanced money".
We are at a transition point so I don't expect good labeling/categorization from the shortsighted/incumbents/fiat-boomers (directed at the gatekeepers, not you personally).
Side note: What people complaining about electricity consumption don't get is, BTC transfers the uncounterfeitable properties of energy to a money.
Bitcoin is forcing an expansion of the definition of money. A self-regulated financial network backed by tremendous amounts of hardware and electricity is "advanced money".
We are at a transition point so I don't expect good labeling/categorization from the shortsighted/incumbents/fiat-boomers (directed at the gatekeepers, not you personally).
Side note: What people complaining about electricity consumption don't get is, BTC transfers the uncounterfeitable properties of energy to a money.
Sorry, the English language is distributed consensus based, and so you don't get to torture it into redefining money as "digital tulip bulbs" or condescendingly dismiss people using the term correctly until you have the numbers to mount a 51% attack. :)
Side note: what people don't get is that pretending tokens have more exchange value because more energy was expended than the printing of other tokens is just sunk cost fallacy.
Side note: what people don't get is that pretending tokens have more exchange value because more energy was expended than the printing of other tokens is just sunk cost fallacy.
It's misrepresentative to represent it just in quantities of number of on-chain transactions.
First, let's look at the actual transacted value: last 24h ~90 billion USD.
Then, consider the narrative of Bitcoin as a store of value - the value of Bitcoin depends on the security of the network, so this needs to be taken into consideration as well.
One estimate of the current market cap of Bitcoin is ~800 billion USD.
Then you also have all the things relying on and extending Bitcoin, without each unit of added value resulting in individual on-chain transactions. Take Lightning Network, for example. Uncountable (literally) number of transactions all enabled by the base layer of the Bitcoin blockchain, protected by its proof of work. It's only the entry- and exit-points that result in on-chain transactions.
Then there is also something untangible; the things bitcoin enables. Can you put a number in watts on how much is reasonable for the unknown number of individuals who have been able to remit money to their families that they otherwise would not have been able to? Those locked out of the global financial ecosystem just because they were born or are living in the "wrong" country?
If you personally find that those dimensions makes it more reasonable or not is up to you, but let's at least try to get a reasonable narrative.
First, let's look at the actual transacted value: last 24h ~90 billion USD.
Then, consider the narrative of Bitcoin as a store of value - the value of Bitcoin depends on the security of the network, so this needs to be taken into consideration as well.
One estimate of the current market cap of Bitcoin is ~800 billion USD.
Then you also have all the things relying on and extending Bitcoin, without each unit of added value resulting in individual on-chain transactions. Take Lightning Network, for example. Uncountable (literally) number of transactions all enabled by the base layer of the Bitcoin blockchain, protected by its proof of work. It's only the entry- and exit-points that result in on-chain transactions.
Then there is also something untangible; the things bitcoin enables. Can you put a number in watts on how much is reasonable for the unknown number of individuals who have been able to remit money to their families that they otherwise would not have been able to? Those locked out of the global financial ecosystem just because they were born or are living in the "wrong" country?
If you personally find that those dimensions makes it more reasonable or not is up to you, but let's at least try to get a reasonable narrative.
That comparison is flawed. Visa is not money. The purpose of mining is to protect the value of the currency.
Protecting the value of the US dollar requires a huge economy with politics and military power.
Protecting the value of the US dollar requires a huge economy with politics and military power.
Visa is literally money created by issuing credit just like all the other money in the economy. No one spends specie.
It's credit that is backed by the US dollar. Similarly Visa could use Bitcoin as their base currency, and they probably will.
Wouldn't you eventually need military power to protect your bitcoin mining rig?
No if it's decentralized enough.
Bitcoin transactions take negligible amounts of electricity to produce and validate. The fact that you can spin up a Bitcoin node on a Raspberry Pi is trivial proof of this.
Block production, on the other hand, takes as much energy as the market will bear.
Block production, on the other hand, takes as much energy as the market will bear.
Bitcoin transactions are worthless unless put into blocks, and blocks have a cap for transactions.
The parent was talking about the cost per transaction being high. In reality, that number is basically 0.
The entire cost of Bitcoin mining is in block production, no matter how many or few transactions there are. If you're going to get mad about the energy use, at least direct it towards the right target.
The entire cost of Bitcoin mining is in block production, no matter how many or few transactions there are. If you're going to get mad about the energy use, at least direct it towards the right target.
As others have written, a block can handle at most (I think 100, but the exact number doesn’t matter) transactions, so to get an lower bound on consumption per transaction we could divide the block’s energy requirements by this number.
If there were _zero_ transactions, Bitcoin would take the same amount of energy. The proof-of-work calculation is _completely decoupled_ from how many transactions there are.
You're missing the point. The point isn't that there are zero transactions, it's that there is an upper limit to the transactions allowed on blocks (a very famous limit) which allows for these types cost calculations.
OP was arguing that transactions in Bitcoin take a lot of energy. I'm pointing out that this simply isn't true -- all the energy use in Bitcoin is in solving the PoW puzzle, which is unrelated to transactions. It's not like this is a secret -- read Bitcoin's source code if you don't believe me.
Nobody is saying that PoW doesn't exist, so no, I'm not going to read Bitcoin's source code. That is such an odd thing to say.
You can calculate cost per transaction because each block has a maximum number of transactions, irregardless of the current PoW difficulty. I don't know why you're so fixated on this. You can take 10 minutes of electricity costs and project it onto the number of transactions in the last block.
You can calculate cost per transaction because each block has a maximum number of transactions, irregardless of the current PoW difficulty. I don't know why you're so fixated on this. You can take 10 minutes of electricity costs and project it onto the number of transactions in the last block.
It's now an odd thing to recommend reading the source code to a skeptic on a tech site that focuses on software development? You've come to the wrong place if you believe that reading the comments section will be more informative than studying the software artifact being discussed.
You and the OP commit a category error in thinking that transactions contribute to Bitcoin's energy expenditure. Transactions are no more a source of Bitcoin's energy usage than solar panels are a source of the Sun's energy usage. The sun produces energy on a schedule that is independent of the number of solar panels around to collect it. Similarly, Bitcoin consumes energy on a schedule that is independent of the number of transactions around to be mined.
You and the OP commit a category error in thinking that transactions contribute to Bitcoin's energy expenditure. Transactions are no more a source of Bitcoin's energy usage than solar panels are a source of the Sun's energy usage. The sun produces energy on a schedule that is independent of the number of solar panels around to collect it. Similarly, Bitcoin consumes energy on a schedule that is independent of the number of transactions around to be mined.
It’s like arguing that the heating in a car is energetically free because when the motor is on, it will generate heat.
Just because PoW have to happen regardless of transactions doesn’t make transactions decoupled from it - and thus they have a ‘price’.
Just because PoW have to happen regardless of transactions doesn’t make transactions decoupled from it - and thus they have a ‘price’.
Miners are selling you space in the block they're building, which you pay for with a transaction fee. But that block is getting built either way as long as it is profitable.
Putting this in terms of distributed systems, we would say that the act of mining a block is the act of executing a view change (or a leader election). We would say that transactions are the messages sent to all nodes during the epoch. Obviously a system that only executes view-changes is not an interesting system, and nor is a system that just transmits messages but cannot order them or decide which are accepted by other nodes. But my original point is, these are separate operations, and only one of them is energy-intensive.
Trying to say that both view-changes and message transmission are energy intensive because just one of them is not only belies a fundamental lack of understanding of how the system operates, but also hinders an effective regulatory response to stopping the real problem: pollution from fossil fuels.
Putting this in terms of distributed systems, we would say that the act of mining a block is the act of executing a view change (or a leader election). We would say that transactions are the messages sent to all nodes during the epoch. Obviously a system that only executes view-changes is not an interesting system, and nor is a system that just transmits messages but cannot order them or decide which are accepted by other nodes. But my original point is, these are separate operations, and only one of them is energy-intensive.
Trying to say that both view-changes and message transmission are energy intensive because just one of them is not only belies a fundamental lack of understanding of how the system operates, but also hinders an effective regulatory response to stopping the real problem: pollution from fossil fuels.
What about all those Lightning Network transactions on top of Bitcoin?
https://bitcoinvisuals.com/lightning
No information on actual transactions performed. But in practice the lightning network is tiny and stagnant.
If it would actually be used it would perhaps be more relevant, but it really doesn't seem to be. Except as an excuse for the bad efficiency.
No information on actual transactions performed. But in practice the lightning network is tiny and stagnant.
If it would actually be used it would perhaps be more relevant, but it really doesn't seem to be. Except as an excuse for the bad efficiency.
That's because of the nature of the Lightning Network. You can only see transactions going through your own LN node, if you run one. Only the opened LN channels are visible for everyone.
Sure. But the amount of channels gives an indication on the potential users. And it's way way less than on the main network, basically a footnote at this point.
Yeah it _might_ grow in the future. But until it does it doesn't work as an argument.
Also in order to get into Visa levels of efficiency one would have to have (assuming the 741kWh in the main network) 500k TX per second in the lightning network with 0 energy cost. Visa handles around 1700 per second.
So basically if we'd have all the worlds economy in Lightning network we might get close to those numbers (assuming 8 billion people each doing one transaction per 4 hours, that's super high but ah well, whatever). And that's assuming the mining energy consumption doesn't change at all which it definitely would not do in case of the whole world relying on Bitcoin.
Yeah it _might_ grow in the future. But until it does it doesn't work as an argument.
Also in order to get into Visa levels of efficiency one would have to have (assuming the 741kWh in the main network) 500k TX per second in the lightning network with 0 energy cost. Visa handles around 1700 per second.
So basically if we'd have all the worlds economy in Lightning network we might get close to those numbers (assuming 8 billion people each doing one transaction per 4 hours, that's super high but ah well, whatever). And that's assuming the mining energy consumption doesn't change at all which it definitely would not do in case of the whole world relying on Bitcoin.
The amount of channels doesn't give any indication on the potential users. For example a bitcoin exchange can have one LN channel open with the rest of the network and allow many transactions per second for all its users.
And I believe LN will grow much bigger than VISA, because not only people will make transactions, also programs who will send many micro-transactions to eachother, something which is far from possible with the VISA network.
Ok, but according to that site, the total capacity of all those opened channels is only a little over 1,000 BTC. The whole BTC network spends about that much on mining (block rewards + fees) every day.
So is 1,000 BTC a lot of money, in which case, it's a lot to spend on mining?
Or is it a small amount of money, in which case, it looks like LN is hardly used?
So is 1,000 BTC a lot of money, in which case, it's a lot to spend on mining?
Or is it a small amount of money, in which case, it looks like LN is hardly used?
You can have an LN channel worth 10 dollars of bitcoin left open for years, over which unlimited transactions route worth 10 dollars or less each.
Exactly - and I can say from experience that this does generally happen. I manage a node that receives significant amounts over lightning, and channels are typically reused with batch "loop out transactions" that free up liquidity by converting a bunch of lightning transactions into onchain funds without closing a channel.
The whole point of lightning network is to be p2p, so you're not supposed to know how big it is or how often it's used.
Lightning removes any of the benefits of Bitcoin by being a traditional trusted payment system.
Lightning doesn't remove anything from Bitcoin, it only adds the option to make instant transactions as a second layer on top of it. If you want the benefits of Bitcoin, you can use the slower and 100% trustless Bitcoin network.
The "instant" lightning transactions on top of Bitcoin are not instant. They're I.O.U.s that need to clear on the bitcoin network first.
Lightning requires that you trust the person you're transacting with, otherwise you need to wait for it to clear bitcoin, meaning you may as well just use bitcoin or a more accepted, efficient trusted system.
By trying to straddle both, Lightning is the worst of the both worlds.
Lightning requires that you trust the person you're transacting with, otherwise you need to wait for it to clear bitcoin, meaning you may as well just use bitcoin or a more accepted, efficient trusted system.
By trying to straddle both, Lightning is the worst of the both worlds.
If you think lightning is a "trusted payment system", you clearly don't understand how it works.
Lightning is the same as writing checks.
They are worthless transactions until they clear, so you have to make them with trusted parties. Otherwise you may as well just use bitcoin.
They are worthless transactions until they clear, so you have to make them with trusted parties. Otherwise you may as well just use bitcoin.
At that rate and assuming 4tx per second a single Bitcoin transaction consumes 165kWh. A Tesla battery is bit over 50kWh. So let's round that to 3 full charges of Tesla battery.
This seems like a roundabout way to analyze efficiency. A simpler way is just to look at how much it costs in dollars, rather than trying to convert everything into energy units.
It varies but over the past couple months a Bitcoin transaction has cost from $7-$20.
source: https://ycharts.com/indicators/bitcoin_average_transaction_f...
That is more than it costs to power a Tesla driving 400 miles, yes, but the cost of that activity is dwarfed by the cost of the driver. You are missing all the energy it takes to create a human with the skills to drive a car, pay for their opportunity cost, and keep them alive for the time it takes to drive for 400 miles ;-)
It's also more expensive than an electronic funds transfer, but it's comparable in price to wire fees, so it just depends on the details of your financial transfer whether it was efficient.
Overall though that $20 fee is generally going to be dwarfed by the utility that a large financial transfer brings. It would be nice if it was cheaper but this doesn't seem like it's insanely wasteful or anything. It's really just demonstrating that it will be hard for Bitcoin to perform in small-value transactions like making a purchase at a retail store, in a way that people once thought it would.
This seems like a roundabout way to analyze efficiency. A simpler way is just to look at how much it costs in dollars, rather than trying to convert everything into energy units.
It varies but over the past couple months a Bitcoin transaction has cost from $7-$20.
source: https://ycharts.com/indicators/bitcoin_average_transaction_f...
That is more than it costs to power a Tesla driving 400 miles, yes, but the cost of that activity is dwarfed by the cost of the driver. You are missing all the energy it takes to create a human with the skills to drive a car, pay for their opportunity cost, and keep them alive for the time it takes to drive for 400 miles ;-)
It's also more expensive than an electronic funds transfer, but it's comparable in price to wire fees, so it just depends on the details of your financial transfer whether it was efficient.
Overall though that $20 fee is generally going to be dwarfed by the utility that a large financial transfer brings. It would be nice if it was cheaper but this doesn't seem like it's insanely wasteful or anything. It's really just demonstrating that it will be hard for Bitcoin to perform in small-value transactions like making a purchase at a retail store, in a way that people once thought it would.
The downside of driving your tesla with a case full of bills is that there's no immutable world-wide distributed record of your transaction making it irreversible.
Well, it is irreversible to the extent giving any physical papers to another person is irreversible.
However, the upside of driving your Tesla with a case full of bills is that there's no immutable world-wide distributed record of your transaction making it irreversible.
However, the upside of driving your Tesla with a case full of bills is that there's no immutable world-wide distributed record of your transaction making it irreversible.
It's reversible in the sense that the second you leave, I can just claim you never dropped off the cash. AKA I can reverse it.
Bitcoin isn't digital cash, it has different tradeoffs. That implies there are upsides/downsides to all of these factors.
Bitcoin isn't digital cash, it has different tradeoffs. That implies there are upsides/downsides to all of these factors.
Sure, you could claim that, but if you're doing it at a scale that ultimately matters, then you're only harming yourself. The only kind of people who would be interested in having business with a person mired in such controversies are people you don't want to have business anyway.
Maybe the guy you hired to drive the Tesla just stole all or some of the cash? How would you know?
We can spend all day coming up with slight variations of this scenario where one or the other person is to blame.
In the end, this situation is one of the few things humans have grown really adept at handling. We're (compared to many other things) very good at negotiating complex social situations and teasing out who are getting shafted in a situation, and we have techniques for dealing with it. (Spreading rumours and/or going to the local leader are prominent among them.)
We have set up economic systems based on trust since forever, and they generally work very well. The only times they stop working are when too large authorities get involved. But there are many responses to that that aren't cryptocurrency.
In the end, this situation is one of the few things humans have grown really adept at handling. We're (compared to many other things) very good at negotiating complex social situations and teasing out who are getting shafted in a situation, and we have techniques for dealing with it. (Spreading rumours and/or going to the local leader are prominent among them.)
We have set up economic systems based on trust since forever, and they generally work very well. The only times they stop working are when too large authorities get involved. But there are many responses to that that aren't cryptocurrency.
> Bitcoin isn't digital cash
This made me laugh. It's true, but the name literally means "digital cash".
This made me laugh. It's true, but the name literally means "digital cash".
I was expecting the last word of your post to be "public".
Many would see that as an upside. Irreversible transactions are not very desirable to a lot of folks, particularly where it comes to the consumer side of things.
In that case, write them a cheque?
If you don't want irreversible transactions, you don't want bitcoin.
My point is that claiming bitcoin is or isn't inefficient relative to other systems is nonsense. There's simply no comparable system that has the same guarantees as bitcoin, presently or throughout history.
As far as we know, the power cost of bitcoin may very well be the minimum required energy to run an irreversible proof-of-work distributed ledger. Maybe spending 1% of the world's energy to have this public infrastructure is actually a good deal? I really don't know.
If you don't want irreversible transactions, you don't want bitcoin.
My point is that claiming bitcoin is or isn't inefficient relative to other systems is nonsense. There's simply no comparable system that has the same guarantees as bitcoin, presently or throughout history.
As far as we know, the power cost of bitcoin may very well be the minimum required energy to run an irreversible proof-of-work distributed ledger. Maybe spending 1% of the world's energy to have this public infrastructure is actually a good deal? I really don't know.
> If you don't want irreversible transactions, you don't want bitcoin.
You brought it up as an upside.
> Maybe spending 1% of the world's energy to have this public infrastructure is actually a good deal?
That seems highly unlikely, especially at a time when we don't have negative externalities priced into that energy cost, and we know we're damaging the climate, and given that the only thing it really brings to the table is decentralisation. Which itself is firstly a bit of a sham (mining tends to centralise) and not even that important to the speculators.
You brought it up as an upside.
> Maybe spending 1% of the world's energy to have this public infrastructure is actually a good deal?
That seems highly unlikely, especially at a time when we don't have negative externalities priced into that energy cost, and we know we're damaging the climate, and given that the only thing it really brings to the table is decentralisation. Which itself is firstly a bit of a sham (mining tends to centralise) and not even that important to the speculators.
If we can conclude it's nonsense to say that other systems are more efficient than BTC because other systems aren't proof of work distributed ledgers, maybe it's also nonsense to say that Teslas are more energy efficient than something with a 6 litre V12 engine, because they don't have a throaty growl or run on petrol.
Back in the world of actual use cases, we can probably put a ceiling on the value of circumventing AML laws without using a non-POW altcoin at well below BTC's current energy cost.
Back in the world of actual use cases, we can probably put a ceiling on the value of circumventing AML laws without using a non-POW altcoin at well below BTC's current energy cost.
As such thus regulations will occur once normal folks can't get a refund for whatever broken trinket they purchase with Dogecoin or EROS or ETH or ETHC or BSV or Ripple or Stellar or, or do I need to continue?...
I'm off to play in the penny stock section of Yahoo... /s
I'm off to play in the penny stock section of Yahoo... /s
Of course there is: physics. I hand you a pile of coins/bills, you have it and I don’t. “Bearer” is sufficient information.
That's not really what irreversible transactions means in this context.
What ledger has recorded this transaction? How might a dispute be resolved? What's stopping the receiver from just claiming you never dropped off the cash when you drive back home?
What ledger has recorded this transaction? How might a dispute be resolved? What's stopping the receiver from just claiming you never dropped off the cash when you drive back home?
Ah, but if you send money to a bitcoin address the recipient could simply claim the address you sent the bitcoin to wasn't theirs.
And if they can sign a non-repudiable statement that a given address is theirs, they can just as easily sign a non-repudiable receipt when you hand over the cash.
And if they can sign a non-repudiable statement that a given address is theirs, they can just as easily sign a non-repudiable receipt when you hand over the cash.
A transaction involves exchanging something (usually a currency) for something else. What you say is that with bitcoin you have proof and irreversibility of payment but the transaction can still go wrong because payment is only one end of the deal. And when the transaction goes wrong you probably wouldn't want a form of payment that is irreversible.
I am not making a claim of whether or not you want irreversible transactions or that they are somehow inherently better than reversible ones.
I am simply pointing out that USD != bitcoin, so the Tesla-driving-cash example is a fundamentally different thing than a bitcoin transaction.
It's like saying "Jeez, it took THAT MUCH energy to get to the Moon? I can drive around the earth a thousand times with that much energy!"
Yes. You can do that. It might be smarter and better for you to do that. But you won't be on the Moon at the end, and there's no way for you to get there unless you take a spaceship.
In this example cars = money, and spaceships = bitcoin.
I am simply pointing out that USD != bitcoin, so the Tesla-driving-cash example is a fundamentally different thing than a bitcoin transaction.
It's like saying "Jeez, it took THAT MUCH energy to get to the Moon? I can drive around the earth a thousand times with that much energy!"
Yes. You can do that. It might be smarter and better for you to do that. But you won't be on the Moon at the end, and there's no way for you to get there unless you take a spaceship.
In this example cars = money, and spaceships = bitcoin.
Often a simple bill of sale is sufficient
"Often" isn't a guarantee.
Turning "often" into "always" is the reason bitcoin exists, and the reason it uses so much energy.
Turning "often" into "always" is the reason bitcoin exists, and the reason it uses so much energy.
Imagine that you accepted the Bitcoin transfer to sell somebody’s car for them to a known interested buyer, acting as a quick middleman, but then refused or failed to arrange the sale. There is still room to argue about what exactly the “trade” was and whether it was theft. The Bitcoin doesnt simplify resolving it. There were companies filling offices with people to do this exact “scam” years ago in Canada and I never heard of anyone getting punished because there were no contracts or bills of sale to refer to. Having a record of payment (via credit card) didn’t help anyone
The kinds of people who are moving a billion dollars cash and don't want any record it through the traditional financial system have another solution if someone fucks with the deal -- they kill them.
Everyone else will do whatever kind of wire transfer you do for moving a billion dollars.
Everyone else will do whatever kind of wire transfer you do for moving a billion dollars.
Also, if you accidentally drive 3601 miles, you lose on the transaction :)
Plus the non-instantaneous driving part.
Apparently you haven’t tried to send Bitcoin when it is backed up. In such times, driving the cash across the country would be much faster than waiting for the Bitcoin transaction to clear.
edit: fixed a typo
edit: fixed a typo
I have tried this, and the way you resolve it is by raising your transaction fee. This is done with Replace-By-Fee or Child-Pays-For-Parent transactions.
Unless of course you want to send two transactions at the same time.
Good point. You also don't have to pay attention to the Bitcoin transaction the entire time like you do the road. I'm more just commenting on how Bitcoin transactions are anything but "instant".
Without a doubt it is inefficient. Now US government can arm twist wist Visa and Mastercard to stop serving companies they dont like (Po*nhub). They can not do that to Bitcoin. This is the value the inefficiency adds.
This is amazing and absolutely crazy! Thanks for the analysis. It's still not going to convince the cultists that are hodling it unfortunately.
The 4 transactions per second is an artificial cap that is not associated with the power consumption of Bitcoin. The answer was, and is, to increase the maximum block size parameter, preferably making it dynamic.
> That simply increases the ranges so that it becomes a 3600 mile trip. Or 1800 mile roundtrip.
It would still be 3600 miles round trip. A round trip is just a two-way trip; the driving distance is still the same.
It would still be 3600 miles round trip. A round trip is just a two-way trip; the driving distance is still the same.
The team that works on it isn't interested in making any upgrades. It's pure religion at this point.
They would argue that a chunk of the energy is renewable -- so that makes it better.
They would argue that a chunk of the energy is renewable -- so that makes it better.
That is not true, when you have billions of dollars at stake you need to be a lot more careful with the changes you're going to implement, otherwise, it would jeopardize the whole network.
There are many upgrades that have and are happening, some examples: segwit, schnorr/taproot, lightning network, etc.
There are many upgrades that have and are happening, some examples: segwit, schnorr/taproot, lightning network, etc.
And the outcome has been exactly what in terms of TPS?
1) TPS isn't the only thing that matters, 2) TPS on L2 such as lightning is both extremely fast and very cheap. Ethereum is also going to have an L2 because it makes a lot of sense.
> 1) TPS isn't the only thing that matters,
It's pretty important for adoption to happen. Right now most Ethereum apps with complex contracts (i.e. Augur, Synthetix) can cost $50+ per transaction.
> 2) TPS on L2 such as lightning is both extremely fast and very cheap.
That's only true if there isn't high demand. If there is opening a channel costs $15 or more.
> Ethereum is also going to have an L2 because it makes a lot of sense.
Something which has been discussed since 2017. The architecture still isn't there. Most apps have to interact on the main chain. Not confident it is going to happen anytime soon even with startups like Matic.
It's pretty important for adoption to happen. Right now most Ethereum apps with complex contracts (i.e. Augur, Synthetix) can cost $50+ per transaction.
> 2) TPS on L2 such as lightning is both extremely fast and very cheap.
That's only true if there isn't high demand. If there is opening a channel costs $15 or more.
> Ethereum is also going to have an L2 because it makes a lot of sense.
Something which has been discussed since 2017. The architecture still isn't there. Most apps have to interact on the main chain. Not confident it is going to happen anytime soon even with startups like Matic.
>That's only true if there isn't high demand. If there is opening a channel costs $15 or more.
Sure, but lightning is (effectively) infinitely reusable. You can keep doing as many TXs as you need, and the fee is only to open and close the channel.
I have spent far more than the cost of opening a lightning channel on buying wallets for physical cash, and they aren't nearly as reusable.
Sure, but lightning is (effectively) infinitely reusable. You can keep doing as many TXs as you need, and the fee is only to open and close the channel.
I have spent far more than the cost of opening a lightning channel on buying wallets for physical cash, and they aren't nearly as reusable.
Bitcoin uses electricity for security, not transactions. The transaction rate for bitcoin is basically independent of the hashrate
This is like saying my car's engine uses oil as lubricant, not as fuel. It's true, but I still have to change the oil every 5,000 miles. So I can still calculate the cost of oil changes into each mile.
Since transacting Bitcoin securely is the utility of the network, just as moving around is the utility of a car, it seems quite fair to judge the energy consumption of the network in terms of energy expended per transaction secured.
Since transacting Bitcoin securely is the utility of the network, just as moving around is the utility of a car, it seems quite fair to judge the energy consumption of the network in terms of energy expended per transaction secured.
It's quite different: the energy represents the market cost of securing the network. The value of the network supports that cost otherwise nobody would be performing mining.
If this were taxpayer supported I could understand the objection, but the people buying the energy to run the system are doing so as a commercial activity to make a profit. How is this commercial use of energy inherently worse than other commercial activities?
If this were taxpayer supported I could understand the objection, but the people buying the energy to run the system are doing so as a commercial activity to make a profit. How is this commercial use of energy inherently worse than other commercial activities?
> It is hilariously inefficient system
I think you mean "morally reprehensible"
I think you mean "morally reprehensible"
You didn't include the production cost (energy input) to make the paper bills. I can only assume it's negligible but perhaps that should be stated.
The maintenance cost of the Tesla, however, is not neglibible. 660 miles will have measurable/accountable tire wear.
Most importantly, you didn't account for the utility value of the power. Teslas are charged with power that would otherwise be saved, and would not produce CO2, etc. Whereas my understanding is that BTC are mostly mined with excess power that would just go to waste if not used, eg "surplus" hydro generation. Of course that's not completely the case, but any analysis must be "full lifecycle" to hold any water.
The maintenance cost of the Tesla, however, is not neglibible. 660 miles will have measurable/accountable tire wear.
Most importantly, you didn't account for the utility value of the power. Teslas are charged with power that would otherwise be saved, and would not produce CO2, etc. Whereas my understanding is that BTC are mostly mined with excess power that would just go to waste if not used, eg "surplus" hydro generation. Of course that's not completely the case, but any analysis must be "full lifecycle" to hold any water.
With a fancy tesla it might even be faster.
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I think your analysis shows how valuable (literally) Bitcoin actually is.
And the cost of an off-chain transaction? Actually, you're right, that's not worth mentioning because that doesn't fit with your argument.
Well that would be double, as you have to set up and tear down the lightning channel with a transaction for each operation...
Your comment is so obviously disingenuous. It makes absolutely no sense to open a Lightning Network channel to send one transaction and then immediately close it.
It was a joke.
OTOH lightning is IMHO a joke as well, for many reasons. Funds need to be tied up, nodes generally need to be online, routing is a (mathematically) hard issue, and the channel open and close transactions (or 'add funds') would certainly become an issue on the main chain if lightning became popular.
OTOH lightning is IMHO a joke as well, for many reasons. Funds need to be tied up, nodes generally need to be online, routing is a (mathematically) hard issue, and the channel open and close transactions (or 'add funds') would certainly become an issue on the main chain if lightning became popular.
Why? If I want to send money to Bob in Venezuela I need a connection to him. And I'm not interested in sending further transactions to him. And he is in Venezuela and cannot rely on institutions (this is the real scenario that advocates keep bringing up). How am I going to pull this off without an on-chain transaction?
You both use your lightning app connected to a LN payment processor which already has the necessary channels open with other nodes and/or payment processors.
Can't do it in Venezuela. The whole point of that scenario when raised as a reason why btc is awesome is that you don't need an attached institution and your transactions cannot be censored.
An LN payment processor is not institution, it's just a LN node which has channels open to many other nodes and to which you as a user can connect to, so you don't need to open separate channels with everyone you are doing transactions with. And if your LN node becomes unreachable due to censoring: they are often available over Tor too.
Such a node becomes a payment processor, and must have a lot of BTC tied up in its channels in order to facilitate these payments.
It's basically a bank at that point. Or a worse Visa.
It's basically a bank at that point. Or a worse Visa.
It doesn’t need a lot of BTC tied up in channels. It’s enough to have one channel open with another well connected node. Transactions can jump over several nodes to reach their destinations. And everybody can become a bank/payment processor for their friends and family with an LN node, no need for big centralized institutions.
We were talking about the well connected nodes, they need funds tied up in many channels. That's what makes them well connected. And effectively institutions. If it takes off don't be surprised if such entities start charging fees.
It's up to each node how many channels they open and how much bitcoin is used for those channels, but lots of channels doesn't make it an institution. An LN node has to play with the same rules as every other node, it cannot enforce rules like institutions. And if you don't like some LN node's transaction fees, you choose a different node for your transaction to go through. As a result the high-transaction-fee node will soon lower its fees. Btw, every LN node is already charging fees.
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...and the cost of those operations?
what are you referring to?
off chain operations don't need to spend a lot of energy to validate transactions.
AFAIK globally the banking system estimated energy consumption amounts to ~100 terrawatt of power annually
that amount includes ATMs, servers and branch offices
EDIT: I forgot how touchy people on BC threads could be.
The data on energy consumption of banking system was cited from a post of a BC advocate
Statista has published data for transaction costs of 2020
https://www.statista.com/statistics/881541/bitcoin-energy-co...
What's interesting to me, on a human level, is the way people in the BC World keep moving the goalpost, one day they are greener because the total absolute power consumption is lower (regardless of users - I remember when in 2019 BC consumed more energy than Switzerland), then when it's not better in absolute anymore, BC is greener because is powered by renewables, like renewables were only available to BC miners, now that BC power consumption is going up (and fast) and banking is going down (slowly) it's ok, because it's the price to pay for freedom and everybody should be happy, even though they don't care about bitcoins etc. etc.
Funny, indeed.
off chain operations don't need to spend a lot of energy to validate transactions.
AFAIK globally the banking system estimated energy consumption amounts to ~100 terrawatt of power annually
that amount includes ATMs, servers and branch offices
EDIT: I forgot how touchy people on BC threads could be.
The data on energy consumption of banking system was cited from a post of a BC advocate
Statista has published data for transaction costs of 2020
https://www.statista.com/statistics/881541/bitcoin-energy-co...
What's interesting to me, on a human level, is the way people in the BC World keep moving the goalpost, one day they are greener because the total absolute power consumption is lower (regardless of users - I remember when in 2019 BC consumed more energy than Switzerland), then when it's not better in absolute anymore, BC is greener because is powered by renewables, like renewables were only available to BC miners, now that BC power consumption is going up (and fast) and banking is going down (slowly) it's ok, because it's the price to pay for freedom and everybody should be happy, even though they don't care about bitcoins etc. etc.
Funny, indeed.
Are you saying that if I send you $100 worth of bitcoins, the network would spend 700 kWh? I find that hard to believe.
Not really. The network spends those kWh whether you send your transaction or not.
It's also worth to note that nobody really knows how many kW miners really burn. All the figures are more or less educated guesses from the efficiency of equipment sold publicly. If someone has a more efficient method they probably won't share it.
But nobody accused Bitcoin of being efficient, ever. That's what almost everyone notices when reading about it first time.
It's also worth to note that nobody really knows how many kW miners really burn. All the figures are more or less educated guesses from the efficiency of equipment sold publicly. If someone has a more efficient method they probably won't share it.
But nobody accused Bitcoin of being efficient, ever. That's what almost everyone notices when reading about it first time.
That is exactly correct.
Bitcoin's inefficiency is tremendous, its throughput minimal, and by design it cannot scale.
How did bitcoin network transacted $90 billions just yesterday? By spending more energy than the entire world has ever produced?
The cost is per transaction, not per amount transferred. A small transaction takes just as much space in the ledger as a large transaction.
A fun thought experiment is to see just how limited the throughput of Bitcoin is. Suppose the Bitcoin enthusiasts were to get their wish and Bitcoin becomes the dominant "currency". If every person on the planet were to make a bitcoin transaction once if their lifetime, that alone would be too many transactions/second for the network to handle.
A fun thought experiment is to see just how limited the throughput of Bitcoin is. Suppose the Bitcoin enthusiasts were to get their wish and Bitcoin becomes the dominant "currency". If every person on the planet were to make a bitcoin transaction once if their lifetime, that alone would be too many transactions/second for the network to handle.
Sounds like a single bitcoin transaction is like transferring a few billion dollars at a time.
Pretty much. It is only useful in cases where you are making very large transactions. At that point, you have few enough actors that setting up a trusted network is far, far cheaper and more flexible. The trustless nature of Bitcoin is what makes it unscalable.
Its not correct. The network spends this energy either ways, and it not only allows transactions to happen but it is integral to securing funds that are not moving. Dividing the energy consumption by number of transactions is therefore nonsense.
Bitcoin transaction value has nothing to do with it's energy consumption. So moving a cent or a million both cost the same.
The power usage is the same if you transfer $100 worth of BTC or $100 billion.
What happens if a few millions people send 5 bucks worth of bitcoin? A global power outage?
Depends on the transaction fees associated with those transfers. If those millions of people also post higher-than-average transaction fees, then the Bitcoin network prioritizes those payments, and cannot process any other transfers.
They would have to wait a lot. Also a fee is almost $20 now. So they would make a bad and slow deal.
That seems like a natural rate limiter that would prevent wasting any meaningful amount of energy on bitcoin.
That transaction fee will be used to run more miners and thus increase the energy usage.
Higher fees means fewer transactions. Nobody's going to buy a $3 coffee with $300 fees just because it's bitcoin.
Nobody will pay a coffee with BTC, just like you don't pay for your stuff with a gold coins.
Some say Litecoin will be used for that but I doubt it. Coins like Cardano or IOTA will be used for transactions. I'm not sure about Cardano but with IOTA you can transfer a fraction of a cent (or no value at all) without fees (that doesn't mean everything will be always fee-less).
Some say Litecoin will be used for that but I doubt it. Coins like Cardano or IOTA will be used for transactions. I'm not sure about Cardano but with IOTA you can transfer a fraction of a cent (or no value at all) without fees (that doesn't mean everything will be always fee-less).
Analyses like this just take the energy cost of each block of transactions and divide it by the amount of transactions in the block. If the number of transactions in a block doubles, the average energy cost per transaction is halved.
Another way of stating it is "the marginal energy usage of a bitcoin transaction is essentially 0".
Another way of stating it is "the marginal energy usage of a bitcoin transaction is essentially 0".
Except that there is a maximum number of transactions per block. Across the entire network, by design, there can never be more than 5 transactions per second. This is stupidly small. If people received their biweekly paychecks in bitcoin, only 6 million people could be paid without going over that transaction limit, assuming that absolutely nothing else is done using bitcoin.
The marginal energy usage being zero is another way of saying that Bitcoin wastes the tremendous amount of energy that it does even if nobody is using it at the time.
The marginal energy usage being zero is another way of saying that Bitcoin wastes the tremendous amount of energy that it does even if nobody is using it at the time.
Yes, but the number of transactions in 'bitcoin' as it's currently defined is severely limited (blocks are already full at a $15 per transaction cost). Conceptually, making something which increases the transaction count involves forking bitcoin, and a fork which aimed to do exactly that was denounced heavily by the community and rejected by the markets. The marginal cost may be small but the cost per transaction is high, by design, and by design which has extremely heavy resistance to even small and simple changes.
But the number of transactions in a block is fixed.
We went through this with BTC/BCH. The BTC folks did not want to increase block size.
We went through this with BTC/BCH. The BTC folks did not want to increase block size.
...and yet it is so.
Total energy required to mine one block / # transactions per block.
Total energy required to mine one block / # transactions per block.
I have often seen people saying things like "Bitcoin is orders of magnitude less efficient than Visa". While true, it's kind of like saying "the Atlantic Ocean is orders of magnitude bigger than my swimming pool".
Bitcoin is six orders of magnitude less efficient than Visa. Six.
And it's getting worse every day.
Bitcoin is six orders of magnitude less efficient than Visa. Six.
And it's getting worse every day.
Nobody ever said that Bitcoin was a efficient system. It has other qualities that worth it.
Every time anyone brings up a problem with Bitcoin someone says this. It seems like bitcoin is not designed for anything but existing.
Indeed it does, but generally in industry and technology one goes from inefficient prototype that serves as proof of concept to a more efficient one. Do other cryptocurrencies not improve on Bitcoin in some way? If so, why does it continue to have value despite its agreed-upon flaws? If not, why do they have any value?
True - and even with this tremendous waste, it pays for itself.
We have never looked beyond monetary return to justify the existence of anything and i fear we are doomed to stay that way.
Thankfully, renewables are becoming more profitable. If we built enough, we could power the USA. Imagine that.
All the bitcoin, teslas and visa transactions you would ever want, with no squabbling.
Thankfully, renewables are becoming more profitable. If we built enough, we could power the USA. Imagine that.
All the bitcoin, teslas and visa transactions you would ever want, with no squabbling.
Energy is the ultimate currency. A bitcoin transfer is cheap considering the amount of energy it takes, and its also cheaper then a bank transfer. Visa is overcharging if it takes such little energy.
Now include the environmental impact of all visa employees. You can’t divorce the effects of the people who run the system (which are relatively very insignificant for Bitcoin) from the effects of the system itself.
The people making the transactions pay for that energy. At 10 cents a kWh that's $16.5 , right in line with the current transaction price. Some people are getting enough value from the transaction to purchase that volume of energy. Who are we to tell them how to use the energy they purchase?
> Who are we to tell them how to use the energy they purchase?
Personally, I also criticize people who use private jets, drive large cars, air-condition/heat a building excessively, and so on.
Since I end up breathing the pollution they cause (and all the other effects), I feel I have a right to complain about it.
Personally, I also criticize people who use private jets, drive large cars, air-condition/heat a building excessively, and so on.
Since I end up breathing the pollution they cause (and all the other effects), I feel I have a right to complain about it.
Super pessimistic. I don't know why this comment is at the top. The analogy and calculations are fun, but nothing more than that. You are basically suggesting that we all should buy Teslas, right? 330 miles roundtrip is about 5-6 hours of non-stop driving. Not the best UX.
I do international transfers quite often. Every time I try to send a more or less large amount, it becomes a pain in the ass both for sender and recipient. You have to prove that you are not a unicorn.
People use Bitcoin because it's freedom from the existing banking system, plain and simple. When you are sending money via a bank, it's like someone is watching you at a bathroom. It simply doesn't happen with Bitcoin.
Bitcoin will be the force that will make all the miners completely switch to a green energy (and that's already happening).
I do international transfers quite often. Every time I try to send a more or less large amount, it becomes a pain in the ass both for sender and recipient. You have to prove that you are not a unicorn.
People use Bitcoin because it's freedom from the existing banking system, plain and simple. When you are sending money via a bank, it's like someone is watching you at a bathroom. It simply doesn't happen with Bitcoin.
Bitcoin will be the force that will make all the miners completely switch to a green energy (and that's already happening).
>You are basically suggesting that we all should buy Teslas, right?
Here's how arguments work. You read a claim and disprove it by offering a counterexample. The weaker the counterexample, the weaker the disproven claim.
In the case of Bitcoin a weak counter example is to show that even a grossly inefficient method of money transfer has superior efficiency. A stronger counterexample based on Visa's less than 2Wh per transaction numbers absolutely destroys the claim that Bitcoin's efficiency is reasonable.
It's laughable that anyone would even defend Bitcoin instead of recognizing the inefficiency. It's laughable in the exact same way the Tesla suggestion is laughable, except Bitcoin is even worse.
Here's how arguments work. You read a claim and disprove it by offering a counterexample. The weaker the counterexample, the weaker the disproven claim.
In the case of Bitcoin a weak counter example is to show that even a grossly inefficient method of money transfer has superior efficiency. A stronger counterexample based on Visa's less than 2Wh per transaction numbers absolutely destroys the claim that Bitcoin's efficiency is reasonable.
It's laughable that anyone would even defend Bitcoin instead of recognizing the inefficiency. It's laughable in the exact same way the Tesla suggestion is laughable, except Bitcoin is even worse.
I'm well aware of how facts work. My Tesla response was more of a sarcasm and was primarily meant to highlight that the OPs arguments are somewhat useless. They make sense, but, practically, they are useless.
In your estimation, how much Bitcoin is purchased in hopes of gaining freedom from the existing banking system, and how much Bitcoin is purchased in hopes of making money when it goes up?
> In your estimation, how much Bitcoin is purchased in hopes of gaining freedom
Not a lot, but it's definitely a thing. Speaking about majority, these days, most people and companies are accumulating Bitcoin only because in 5-10 years it'll worth much, much more. And that makes a lot of sense if you think about it. The shift to a digital form of currency will eventually happen anyway. I do not believe Bitcoin will ever become a global currency, but I strongly believe that it's going to stay with us for quite a long while. The blockchain technology is in its infancy and is experiencing a lot of research on all fronts.
Not a lot, but it's definitely a thing. Speaking about majority, these days, most people and companies are accumulating Bitcoin only because in 5-10 years it'll worth much, much more. And that makes a lot of sense if you think about it. The shift to a digital form of currency will eventually happen anyway. I do not believe Bitcoin will ever become a global currency, but I strongly believe that it's going to stay with us for quite a long while. The blockchain technology is in its infancy and is experiencing a lot of research on all fronts.
This isn't exactly an rebuttal to your argument, but 74% of energy that Bitcoin used to power it's network was renewable energy [1], that's more than you can say for most countries. While the network itself is inefficient, I think the philosophy of "why bitcoin", is always amiss in these arguments. Everything can be made more efficient.
Edit: 39% of energy used is renewable, not really sure how that doesn't matter.
[1] https://www.finextra.com/newsarticle/36672/renewable-energy-....
Edit: 39% of energy used is renewable, not really sure how that doesn't matter.
[1] https://www.finextra.com/newsarticle/36672/renewable-energy-....
That article actually states the opposite: 74% of miners use some renewable energy. Only 39% of energy used comes from renewable sources, and most of it is hydroelectric, which is limited so miners demand for it is likely crowding out other users from it. The remainder mostly consists of coal and natural gas (there's a popular idea that miners use or can use the excess energy usage which occasionally comes from wind or solar, but the cost of the hardware they use prevents it: they will run the hardware 100% of the time to pay for it, so they represent a strong base load on the system, not a convenient energy sink for excess renewable generation).
Read two paragraphs below what in your own link.
>However, the CCAF’s report specifies that the 76% refers to the share of hashers who use renewable energy at any point. It estimates that only 39% of hashing’s total energy consumption comes from renewables.
> Behind hydroelectricity, coal (38%) and natural gas (36%) are the energy sources hashers favour most.
>However, the CCAF’s report specifies that the 76% refers to the share of hashers who use renewable energy at any point. It estimates that only 39% of hashing’s total energy consumption comes from renewables.
> Behind hydroelectricity, coal (38%) and natural gas (36%) are the energy sources hashers favour most.
Yes, but only because electricity from those sources is cheaper. Green up the grid (pls nuclear) and no problems.
Bitcoin people keep trying to score points and if they can't they move the goal post. You tried to get the green energy point but when you can't get it its like "yeah... duh nobody else can either". The what are you good for and why do people constantly bring up this false stat.
Not moving any goal posts here, I just meant to say that some part of the energy usage is renewable, and we as mankind have been moving towards more energy consumption each year anyway. In the coming years, we'll start using more renewable energy.
As far as the question what are you good for is concerned, we've been printing money at an alarming rate ever since 2008 crisis, if the new stimulus is passed, the us will have printed 40% of all dollars in existence in the past year alone, I don't know how you think that won't cause inflation/it's acceptable that the cost of printing is borne by other countries because the us dollar is the international reserve currency. Bitcoin has been adopting a store of value narrative and is synonymous with digital gold at this point, so in effect a hedge against inflation.
Two, I'm not sure if you relate with it or not, but maybe we just believe in decentralization of financial institutions just a little bit more than you do, everyone who got burned because of banks in the past decade has developed a deep distrust of the modern financial system.
As far as the question what are you good for is concerned, we've been printing money at an alarming rate ever since 2008 crisis, if the new stimulus is passed, the us will have printed 40% of all dollars in existence in the past year alone, I don't know how you think that won't cause inflation/it's acceptable that the cost of printing is borne by other countries because the us dollar is the international reserve currency. Bitcoin has been adopting a store of value narrative and is synonymous with digital gold at this point, so in effect a hedge against inflation.
Two, I'm not sure if you relate with it or not, but maybe we just believe in decentralization of financial institutions just a little bit more than you do, everyone who got burned because of banks in the past decade has developed a deep distrust of the modern financial system.
This has to be the most disingenuous comment on this whole website. You not only moved the goal post about green energy, you moved the goal post into an entire different stadium by mentioning inflation. Dude, you are defending bitcoin. That thing is less stable than a monkey on ice skates. You think that will combat inflation?
You are being extremely rude by calling my comment disingenuous, it's your parochial thinking which seeks perfection from an asset from the onset and cannot comprehend that asset classes can mature, if you cannot hold a conversation properly do not reply at all. All emerging technologies undergo Gartner cycles. Perhaps, you haven't heard what happens when a financial system continuously prints money, does the Venezuelan Bolivar ring a bell? I did not say it will combat inflation, I said it's a hedge against inflation, perhaps you could take a look at the charts of dollar index and Bitcoin and contemplate on the exact counter reflection that they are.
Doesn't matter, really. Bitcoin is secured by waste. Maybe the money is burned in coal-fired power plants, maybe it's burned buying "mining" equipment, maybe it's burned building wind turbines. All of those things are polluting and all of them use manpower and natural resources.
If Bitcoin transitions to 100% renewable energy, then it will just use more of it to achieve the same amount of money-burning. The economics stay the same.
If Bitcoin transitions to 100% renewable energy, then it will just use more of it to achieve the same amount of money-burning. The economics stay the same.
From what I understand bitcoin currently has a $20+ transaction fee with a transaction time takes 60 minutes+
With these issues in addition to the high power consumption, how will Bitcoin become a usable currency?
With these issues in addition to the high power consumption, how will Bitcoin become a usable currency?
It won't and even BTC enthusiasts have given up on that. They narrative is now that BTC is a "store of value".
Exactly. Here's VC and prominent cryptocurrency enthusiast Fred Wilson saying exactly that: https://avc.com/2017/08/store-of-value-vs-payment-system/
While I agree with him that Bitcoin is a terrible currency, I think the "store of value" thing is nonsense as well. Stores of value need to have relatively stable value. Bitcoin is hugely volatile. That's great for speculation, but nobody with any sense would use it as the equivalent of a savings account.
While I agree with him that Bitcoin is a terrible currency, I think the "store of value" thing is nonsense as well. Stores of value need to have relatively stable value. Bitcoin is hugely volatile. That's great for speculation, but nobody with any sense would use it as the equivalent of a savings account.
When in doubt, zoom out.
On larger timescales, this isn't really that much of an issue.
Volatility is also trending downwards. The bigger it gets, the more stable it becomes.
On larger timescales, this isn't really that much of an issue.
Volatility is also trending downwards. The bigger it gets, the more stable it becomes.
You're appealing to future data that are not available yet. Bitcoin has never been stable in its existence. You are positing without evidence that it will become stable in the future.
> The bigger it gets, the more stable it becomes.
To be clear, there is no mechanism, logic or reason (at least revealed to me) why this would be true. Vice versa, increased amount of trading typically increases volatility.
To be clear, there is no mechanism, logic or reason (at least revealed to me) why this would be true. Vice versa, increased amount of trading typically increases volatility.
It's true everywhere already. Compare the SPY to a large cap stock to a small cap stock, and you'll see tail events decrease monotonically along market cap. Compare BTC to a shitcoin. Compare the USD to a smaller currency. It's known to be a true thing and rather universal. Compare BTC now to many years ago.
The mechanism is that you get flows hitting both sides simultaneously (56 buyers vs 44 sellers) that tend to cancel out, instead of a single player (3 buyers vs 1 seller or vice versa) dominating the flow.
BTC volatility will go down as adoption goes up.
The mechanism is that you get flows hitting both sides simultaneously (56 buyers vs 44 sellers) that tend to cancel out, instead of a single player (3 buyers vs 1 seller or vice versa) dominating the flow.
BTC volatility will go down as adoption goes up.
I think you're confusing cause and effect. People value stability, so more money goes into those things. E.g., SPY is an synthetic asset engineered to be lower vol.
I don't think it's at all clear that Bitcoin adoption will go up. It's never been useful as a currency for most people, and Tesla aside, merchant adoption has been in retreat for years. KYC/AML laws are reducing its utility for financial crime. Its only real advantage is in speculation and market manipulation. But both of those depend on volatility.
I don't think it's at all clear that Bitcoin adoption will go up. It's never been useful as a currency for most people, and Tesla aside, merchant adoption has been in retreat for years. KYC/AML laws are reducing its utility for financial crime. Its only real advantage is in speculation and market manipulation. But both of those depend on volatility.
I'm not confusing cause and effect.
Large cap stocks weren't engineered for stability, but they're lower tail-risk than mid cap stocks, which are lower tail-risk than small cap stocks, and so on.
The same phenomenon has been broadly true across all markets over all of human history, and the underlying mechanism (heterogeneous flows) is well understood and rather intuitive.
Whether or not BTC adoption increases is not relevant to what I was saying. My only claim is that volatility will decrease if adoption increases, counter to the misplaced scepticism of the post I was replying to
If BTC adoption decreases instead, then volatility should increase, ceteris paribus.
Large cap stocks weren't engineered for stability, but they're lower tail-risk than mid cap stocks, which are lower tail-risk than small cap stocks, and so on.
The same phenomenon has been broadly true across all markets over all of human history, and the underlying mechanism (heterogeneous flows) is well understood and rather intuitive.
Whether or not BTC adoption increases is not relevant to what I was saying. My only claim is that volatility will decrease if adoption increases, counter to the misplaced scepticism of the post I was replying to
If BTC adoption decreases instead, then volatility should increase, ceteris paribus.
If more powerful actors are owners they will not need to sell upon volatility hence providing more stability.
Yes, Microstrategy or Tesla have no interest in daytrading.
I am not sure I follow the logic. Bitcoin becomes "bigger" when there are more big actors not using it but just hoarding it? And thus less volatile - until one of these big actors decide to dump their holdings to the thin market used to trade only scraps left from these big actors... Sorry, not convincing.
The idea is that bitcoin is something you prefer over fiat currency in your bank account. The same idea that gold bugs have.
If that's the case, then bitcoin owners will only dump their holdings if a) they fear that the bitcoin network is about to collapse for some reason or b) they need to put the value stored in those bitcoins to use.
If that's the case, then bitcoin owners will only dump their holdings if a) they fear that the bitcoin network is about to collapse for some reason or b) they need to put the value stored in those bitcoins to use.
increased amount of trading typically increases volatility.
Define amount. If you mean number of trades, then the effect is decreased standard deviation if the average trade is smaller as a percentage of total market capitalisation. That seems completely logical.
See: pretty much every study in to HFT.
Define amount. If you mean number of trades, then the effect is decreased standard deviation if the average trade is smaller as a percentage of total market capitalisation. That seems completely logical.
See: pretty much every study in to HFT.
Trading volume. It was taught to me so long time ago and I have thought it so obviously true that I haven't questioned it ever. If you want sources, here is one example (TBH, I only read abstract) I quickly googled. To me, number of trades does not sound a reasonable measure for analyzing markets in macro level, even if for HFT it may be interesting, I know nothing about that.
https://core.ac.uk/download/pdf/4837179.pdf
https://core.ac.uk/download/pdf/4837179.pdf
Businesses don't operate on a "zoomed out" timeline. Volatility in the short term causes cashflow driven liquidity bankruptcy.
It's volatile because it is exposed to a fuckton of markets, but 1btc will always be 1btc.
That's not how measuring the "store of value" quality works at all.
For example, inflation of a given currency is measured using a basket of goods and services, not other currencies.
For example, inflation of a given currency is measured using a basket of goods and services, not other currencies.
This could be said of any economic good.
"1 Tulip bulb will always be 1 tulip bulb. It's just that people but them with a bunch of different currencies and all the other currencies have been really volatile relative to tulips (though not relative to one another)."
"1 Tulip bulb will always be 1 tulip bulb. It's just that people but them with a bunch of different currencies and all the other currencies have been really volatile relative to tulips (though not relative to one another)."
>Bitcoin is hugely volatile. That's great for speculation, but nobody with any sense would use it as the equivalent of a savings account.
Consider the classic store of value asset: gold. It's up 17% compared to a year ago, and down 11% compared to its peak last august. Sure, it's less volatile as bitcoin, but it's hugely more volatile compared to t-bills or a FDIC insured bank account. Does that mean gold also isn't a good store of value?
Consider the classic store of value asset: gold. It's up 17% compared to a year ago, and down 11% compared to its peak last august. Sure, it's less volatile as bitcoin, but it's hugely more volatile compared to t-bills or a FDIC insured bank account. Does that mean gold also isn't a good store of value?
Yes, that's exactly what it means. Very few people actually use gold as a value store - they put their savings in various USD-based (or Euro, etc) savings vessels - money market, CDs, etc.
Gold is generally considered a last resort for the case where the US completely falls apart. But if that happens, I'm not sure gold is going to be much use - the global economy will be screwed enough that everybody suffers, gold or no gold.
Gold is generally considered a last resort for the case where the US completely falls apart. But if that happens, I'm not sure gold is going to be much use - the global economy will be screwed enough that everybody suffers, gold or no gold.
If civilization collapses then I'm pretty sure bitcoins would be worthless as the whole mining chain collapses. I guess it is a good store of value in the more cyberpunk dystopia where large corporations continue to grow in influence and power and it is used to funnel funds for the shadow economy. I mean it is valuable because people with money are convinced it is valuable and that whole feedback loop.
> If civilization collapses then I'm pretty sure bitcoins would be worthless
If all civilisations collapse, yes. But if your civilisation collapses, a neutral store of value is easier to own than e.g. a portfolio of foreign bonds in a handful of offshore accounts.
If all civilisations collapse, yes. But if your civilisation collapses, a neutral store of value is easier to own than e.g. a portfolio of foreign bonds in a handful of offshore accounts.
Sure, but any crypto coin could do that, and I doubt we would be using a currency as "mainstream" as bitcoin at this point to do it at that point because we could not afford the transaction costs. Probably be some privately issued Zaibatsu coin or something, with bitcoin use being reserved for the upper classes that had made it out. (OK I guess I've been reading too much Gibson lately)
There is $8 trillion held in gold. Whether you believe that qualifies as a store of value or not, if Bitcoin reaches the same level, each Bitcoin will be valued at $500,000
> Very few people actually use gold as a value store - they put their savings in various USD-based (or Euro, etc) savings vessels - money market, CDs, etc.
Do you mean that very few people use gold as their only/primary store of value? I am sure many people have small amounts of their net worth in gold. Similarly I think Bitcoin is a promising technology but that doesn't mean I think users should allocate a significant percentage of their portfolio to it.
Do you mean that very few people use gold as their only/primary store of value? I am sure many people have small amounts of their net worth in gold. Similarly I think Bitcoin is a promising technology but that doesn't mean I think users should allocate a significant percentage of their portfolio to it.
One thing I don’t understand is how will gold retain its value during a societal collapse when most of the industrial demand - and the trading/insuring/transporting infrastructure around it - disappears? It doesn’t really make sense as a post-apocalyptic currency since most people won’t have any and it’s utility to help you survive is limited.
It is pretty, and easy to form in stone age processes. Thus it is actual useful unlike dollars.
Even if gold isn't a means of currency, you can still trade for it because someone will be interested in buying it. After the collapse bonds and paper money will be worthless, but you can still trade gold for things.
Currency is whatever we use to avoid having to create 10-way exchanges. (Baker offers the cobbler 600 loafs off bread for a pair of shoes, but cobbler doesn't want that many because they will obviously go stale, so we need to bring in dozens of other people who need bread and can trade something else to the cobbler). Gold is a good choice for this, but is isn't the only possible choice.
Even if gold isn't a means of currency, you can still trade for it because someone will be interested in buying it. After the collapse bonds and paper money will be worthless, but you can still trade gold for things.
Currency is whatever we use to avoid having to create 10-way exchanges. (Baker offers the cobbler 600 loafs off bread for a pair of shoes, but cobbler doesn't want that many because they will obviously go stale, so we need to bring in dozens of other people who need bread and can trade something else to the cobbler). Gold is a good choice for this, but is isn't the only possible choice.
I’m still trying to understand why someone in the aftermath societal collapse would be interested in gold. It’s something that would be useful after society rebuilds. If I am trading it why am I trading it? What are people doing with it? If it’s just a currency, why assume it would be adopted when it would be a relatively scarce resource.
One great thing you can do with gold without the rest of society is paint. A little gold leaf goes a long way. I think religious icons will be very popular in event of societal collapse. Or you can add a little gold leaf to the pages of your books to add some holiness to the message.
Of course, signalling your importance and status is also necessary in primitive society, and wearing a little gold does the trick.
EDIT oh found another cool one, "Gold, with its malleability and incorruptibility, has also been used in dental work for over 3000 years. The Etruscans in the 7th century BCE used gold wire to fix in place substitute animal teeth."
https://www.ancient.eu/gold/
Of course, signalling your importance and status is also necessary in primitive society, and wearing a little gold does the trick.
EDIT oh found another cool one, "Gold, with its malleability and incorruptibility, has also been used in dental work for over 3000 years. The Etruscans in the 7th century BCE used gold wire to fix in place substitute animal teeth."
https://www.ancient.eu/gold/
why did society collapse? It is hard to come up with something realistic. There are a lot of shocks that will make things bad for a few weeks, but society will recover - or at least the survivors will.
I can think of two, but perhaps you can think of more.
First is the local society collapse because of war. Could happen to everyone, and while your armies might win in the long run, you might be forced to flee. At that point gold is useful because it is small enough to hide on your person, thus meaning you have a chance to get it out to a safer area. You might not be able to prove you own foreign bonds (or maybe you can, but it takes years of paperwork). Gold still has value to the rest of the world in this, so if you can get out with it that is a good thing.
A nuclear nation decides to end it all and shoot randomly targeted ICBMs everywhere. In this case the few percent of the world that survives by luck will need to start over. It is just your village, you can't travel far because of the wastelands surrounding you. Gold is useful because it can be formed into tools. Iron is better, but harder to form, and you may not have fuel to spare to heat it (proper heat treatment of steel is one of the things that makes iron useful). Gold also is pretty and so there will still be the jewelry aspects.
Neither of the above require the gold be currency, though it is a good choice for currency in general in the latter case when starting over. (not the only good choice) Scarcity is part of what has always made gold useful. You could get it in enough quantities that most travelers could carry their wealth around in that form (when not in the form of trade goods - traveler implies trader in those historical days)
Both of the above are long shots. I don't personally invest in gold because I find the risks of the above low enough that I don't bother to insurance against them.
I can think of two, but perhaps you can think of more.
First is the local society collapse because of war. Could happen to everyone, and while your armies might win in the long run, you might be forced to flee. At that point gold is useful because it is small enough to hide on your person, thus meaning you have a chance to get it out to a safer area. You might not be able to prove you own foreign bonds (or maybe you can, but it takes years of paperwork). Gold still has value to the rest of the world in this, so if you can get out with it that is a good thing.
A nuclear nation decides to end it all and shoot randomly targeted ICBMs everywhere. In this case the few percent of the world that survives by luck will need to start over. It is just your village, you can't travel far because of the wastelands surrounding you. Gold is useful because it can be formed into tools. Iron is better, but harder to form, and you may not have fuel to spare to heat it (proper heat treatment of steel is one of the things that makes iron useful). Gold also is pretty and so there will still be the jewelry aspects.
Neither of the above require the gold be currency, though it is a good choice for currency in general in the latter case when starting over. (not the only good choice) Scarcity is part of what has always made gold useful. You could get it in enough quantities that most travelers could carry their wealth around in that form (when not in the form of trade goods - traveler implies trader in those historical days)
Both of the above are long shots. I don't personally invest in gold because I find the risks of the above low enough that I don't bother to insurance against them.
Gold is potentially useful AFTER things get back together again. If there is a major disaster - US falls apart, as does the rest off the world. 95% of the world population dies, but by luck you are one of the survivors (this luck seems to be a factor most survivalists don't think about). For a few years there is chaos as people try to figure out how to get food without the supply chains in place. (worse in the cities, but even rural areas are dependent on the supply chain for fuel, fertilizer, seed, repair parts, and lots of other things)
After a few years things start to settle down. Trade with your neighbors becomes possible for some division of labor. However trade works better if there is a currency. Paper money is either degraded (the most common bills last a couple years), and the replacements are all obviously bad copies. What is needed is something that is easy to verify, that is hard to copy, has some intrinsic value, isn't so common that you need vast quantities, and something you are willing to trade. There are many choices for this, but gold is one of the better ones. Even if something other than gold is chosen, it is rare enough, and valuable enough (for good looks, and it is somewhat easy to for into useful shapes) so you can expect to find a market for your gold. Many of the things you can choose instead are either useless (computers without the entire power grid can't do anything), or so common that nobody will care (why would I want your iron when there are junk cars everywhere with plenty)
Note that in order for this to work you need to actually have the gold in hand. If you invest in gold without a safe to store it in, then it does you no good. Even if you can get to Fort Knox, whoever is there first won't recognize your claim to the gold inside.
You also need to consider inflation, thousands is a nest egg. millions is more than the local economy needs. People don't need to accept your gold, unless you are the local warlord, and then you don't need gold.
After a few years things start to settle down. Trade with your neighbors becomes possible for some division of labor. However trade works better if there is a currency. Paper money is either degraded (the most common bills last a couple years), and the replacements are all obviously bad copies. What is needed is something that is easy to verify, that is hard to copy, has some intrinsic value, isn't so common that you need vast quantities, and something you are willing to trade. There are many choices for this, but gold is one of the better ones. Even if something other than gold is chosen, it is rare enough, and valuable enough (for good looks, and it is somewhat easy to for into useful shapes) so you can expect to find a market for your gold. Many of the things you can choose instead are either useless (computers without the entire power grid can't do anything), or so common that nobody will care (why would I want your iron when there are junk cars everywhere with plenty)
Note that in order for this to work you need to actually have the gold in hand. If you invest in gold without a safe to store it in, then it does you no good. Even if you can get to Fort Knox, whoever is there first won't recognize your claim to the gold inside.
You also need to consider inflation, thousands is a nest egg. millions is more than the local economy needs. People don't need to accept your gold, unless you are the local warlord, and then you don't need gold.
You have to take into account that we are at the birth of a new asset class which means volatility is part of it. Look at the birth of the stock market, for example, the birth of industry or real estate, the list goes on.
Gold has been used as a store of wealth since at least ancient times. So it’s not quite a fair comparison.
And the whole economy doesn’t need to collapse for an asset to be valuable. The reason Bitcoin is up is because people looking to maintain wealth are looking to broaden portfolios. S&P is overvalued for some, the US dollar is weak for some. Fed rates are still low, bond yields are low. If you take into account inflation those CDs and Money Markets you mention lose money. An extremely good CD will currently earn you 1% interest, meanwhile inflation will remove 2%.
So it doesn’t need to be nonvolatile for it to be seen as part of a portfolio of wealth management, and it definitely doesn’t need to only be a last resort against complete economic failure since almost nothing qualifies.
If you don’t already have a fully balanced and diversified portfolio, you may not need or be ready for Bitcoin yet... but that doesn’t mean there’s not trillions of dollars that are ready for it.
Gold has been used as a store of wealth since at least ancient times. So it’s not quite a fair comparison.
And the whole economy doesn’t need to collapse for an asset to be valuable. The reason Bitcoin is up is because people looking to maintain wealth are looking to broaden portfolios. S&P is overvalued for some, the US dollar is weak for some. Fed rates are still low, bond yields are low. If you take into account inflation those CDs and Money Markets you mention lose money. An extremely good CD will currently earn you 1% interest, meanwhile inflation will remove 2%.
So it doesn’t need to be nonvolatile for it to be seen as part of a portfolio of wealth management, and it definitely doesn’t need to only be a last resort against complete economic failure since almost nothing qualifies.
If you don’t already have a fully balanced and diversified portfolio, you may not need or be ready for Bitcoin yet... but that doesn’t mean there’s not trillions of dollars that are ready for it.
> You have to take into account that we are at the birth of a new asset class [like] the stock market
Or it could be like tulip bulbs, beanie babies, or International Postal Reply Coupons (what Charles Ponzi sold everybody on investing in). Or it might not be a new asset class at all. It's not like there's a finite supply of integers.
Or it could be like tulip bulbs, beanie babies, or International Postal Reply Coupons (what Charles Ponzi sold everybody on investing in). Or it might not be a new asset class at all. It's not like there's a finite supply of integers.
The are fundamental differences to all of those things versus Bitcoin, and lots of really good sources of information about why they are different.
It doesn’t matter if there are a finite supply of integers. I’m guessing you are alluding to being able to “print more Bitcoin” by moving decimal places or changing code or some such. That’s probably not going to happen, since you’d have to convince 51% of Bitcoin holders to dilute their own stake, since that’s how the consensus algorithm works. And if you don’t, we’ll then you have a fork, and as we’ve seen with Bitcoin cash etc, those typically don’t hold value, because fundamentally the value of a store of wealth is that everyone agrees that it’s a store of wealth.
No one ever agreed or assumed beanie babies or tulips were stores of wealth. Those were speculative bubbles based on the assumption that tomorrow you could sell it for more.
Bitcoin doesn’t need to be worth more tomorrow to make it valuable. It simply needs to hold wealth in a convenient, transferable, counterfeit proof manner that’s also not easily manipulated. And it does all of those things very very well. Ethereum likewise stores value, and also permits useful decentralized finance systems that also provide for storage and transfer of wealth.
If you told dollar holders 100 years ago, that the money in their pocket would only be good based on the good faith of the US Federal Reserve they’d look at you cock eyed, because back then the dollar was gold backed. To the average joe, that gave them confidence in its value.
And don’t get me wrong I’m not a gold bug that thinks we should go back to the gold standard. Just the opposite. Instead what the US did was brilliant. They simply said “trust” “believe” that the dollar is valuable and will remain valuable.
And it’s been incredibly successful, again because it comes down to faith in the ability to hold wealth and have others respond in kind when transferring that asset.
So do you believe the US dollar will hold value over the next 20 years? If you base it on the word of the government then that’s not as different as the the word of millions of Bitcoin miners. (Democratic consensus) If you base it instead on the value of the underlying economy using the dollar as a wealth exchange medium, well then again, Bitcoin currently does 87 billion USD worth of transactions per day.
So it should be pretty clear that it’s incredibly different than tulips or beanie babies. If it’s not clear, I’d research a little more about the concepts of wealth historically, along with macro economics and monetary policies the world over.
https://en.m.wikipedia.org/wiki/Wealth
https://en.m.wikipedia.org/wiki/Store_of_value
If you think Bitcoin is an odd thing to believe in to store value and wealth, check out this island that uses giant stones...
https://www.npr.org/sections/money/2011/02/15/131934618/the-...
It doesn’t matter if there are a finite supply of integers. I’m guessing you are alluding to being able to “print more Bitcoin” by moving decimal places or changing code or some such. That’s probably not going to happen, since you’d have to convince 51% of Bitcoin holders to dilute their own stake, since that’s how the consensus algorithm works. And if you don’t, we’ll then you have a fork, and as we’ve seen with Bitcoin cash etc, those typically don’t hold value, because fundamentally the value of a store of wealth is that everyone agrees that it’s a store of wealth.
No one ever agreed or assumed beanie babies or tulips were stores of wealth. Those were speculative bubbles based on the assumption that tomorrow you could sell it for more.
Bitcoin doesn’t need to be worth more tomorrow to make it valuable. It simply needs to hold wealth in a convenient, transferable, counterfeit proof manner that’s also not easily manipulated. And it does all of those things very very well. Ethereum likewise stores value, and also permits useful decentralized finance systems that also provide for storage and transfer of wealth.
If you told dollar holders 100 years ago, that the money in their pocket would only be good based on the good faith of the US Federal Reserve they’d look at you cock eyed, because back then the dollar was gold backed. To the average joe, that gave them confidence in its value.
And don’t get me wrong I’m not a gold bug that thinks we should go back to the gold standard. Just the opposite. Instead what the US did was brilliant. They simply said “trust” “believe” that the dollar is valuable and will remain valuable.
And it’s been incredibly successful, again because it comes down to faith in the ability to hold wealth and have others respond in kind when transferring that asset.
So do you believe the US dollar will hold value over the next 20 years? If you base it on the word of the government then that’s not as different as the the word of millions of Bitcoin miners. (Democratic consensus) If you base it instead on the value of the underlying economy using the dollar as a wealth exchange medium, well then again, Bitcoin currently does 87 billion USD worth of transactions per day.
So it should be pretty clear that it’s incredibly different than tulips or beanie babies. If it’s not clear, I’d research a little more about the concepts of wealth historically, along with macro economics and monetary policies the world over.
https://en.m.wikipedia.org/wiki/Wealth
https://en.m.wikipedia.org/wiki/Store_of_value
If you think Bitcoin is an odd thing to believe in to store value and wealth, check out this island that uses giant stones...
https://www.npr.org/sections/money/2011/02/15/131934618/the-...
Your notion that people who disagree with you are just ignorant is tedious as well as wrong.
Bitcoin is also a speculative bubble. It has no use value. It is not in any way living up to its original goal as electronic cash. (Contrast transaction volume and adoption with MPesa, for example.) Its main practical uses are speculation and some financial crime.
Well, I left one out. It's also great for market manipulation. The recent runup has been driven by "the largest fraud since Madoff": https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/
Eventually, like all frauds, you run out of dumb new money and accounting chicanery. That day will come: https://davidgerard.co.uk/blockchain/2020/12/13/tether-is-to...
Bitcoin is also a speculative bubble. It has no use value. It is not in any way living up to its original goal as electronic cash. (Contrast transaction volume and adoption with MPesa, for example.) Its main practical uses are speculation and some financial crime.
Well, I left one out. It's also great for market manipulation. The recent runup has been driven by "the largest fraud since Madoff": https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/
Eventually, like all frauds, you run out of dumb new money and accounting chicanery. That day will come: https://davidgerard.co.uk/blockchain/2020/12/13/tether-is-to...
I have no notion that people who disagree with me are ignorant.
I only have a notion that ignorance is ignorant.
I can back up all my arguments with facts, information, research study and understanding.
Your articles on Tether is just red herring fallacy since your original argument has no merit.
As for Bitcoins uses, there are many. For instance I recently acquired large amounts of bullion at a steep discount via bitcoin. Why? Because it’s cheaper and less trouble transaction wise for the bullion seller. All above board. All taxes reported. Nothing criminal.
Defi loans allow collateralization of crypto assets. People in business are currently using them to secure extremely large multimillion dollar notes in minutes to do business transactions. I’ve been in the rooms when these occurred. Again all above board, all tax legal.
Simply using banks for certain situations are a pain.
Clearly you’ve never experienced such situations, hence why it seems a scam to you.
I guess you’re smarter than me and Elon Musk. I would absolutely believe it if you had facts and arguments that didn’t have logical fallacies.
There’s political arguments on both sides of the crypto currency debate. Your arguments seem politically motivated. I have no political agenda.
The discovery of fission changed the world. There was no keeping it under wraps or going backwards after the physics were discovered.
The ability to transfer and store wealth online via blockchain and consensus algorithms will exists from now on. There’s no going back. It’s simply a fact of information science and physics.
Remember this discussion. Think on it when in 30 year’s cryptocurrency is considered a norm, and when multiple governments finally transition to digital currencies.
Or you know... you can quote more non relevant, poorly educated sources to support a point you wish for. It’s like the old timers laughing that the internet was just a play thing in the 90s... Now if the internet went down it would be a national emergency.
Oh... and here’s an actual intelligent article from a fairly respected source rather than some random blogger. Here’s the important point
Edit: I also hope you understand that this debate is an intellectual exercise, not a personal issue. So I am somewhat annoyed that you would call my comments tedious :). No one should accept ignorance. And disagreement is wonderful, but it should be an educated discourse. Silent downvoting or flagging of things that are unpleasant isn’t the way forward. I tend to only downvote comments that are provably factually incorrect, make comments that are based on ignorance or misunderstanding, non constructive, or outright hostile.
If you truly are interested in open understanding, it’s not a bad thing to say “I am ignorant on this subject.” In the past when I have said that, I have learned a lot.
Cryptocurrency and Bitcoin causes emotions or brings up political divides for a lot of people... I can only begin to guess at the reasons why. But burying your head in the sand or listening to the “bubble” crowd chorus is doing yourself a disservice.
I only have a notion that ignorance is ignorant.
I can back up all my arguments with facts, information, research study and understanding.
Your articles on Tether is just red herring fallacy since your original argument has no merit.
As for Bitcoins uses, there are many. For instance I recently acquired large amounts of bullion at a steep discount via bitcoin. Why? Because it’s cheaper and less trouble transaction wise for the bullion seller. All above board. All taxes reported. Nothing criminal.
Defi loans allow collateralization of crypto assets. People in business are currently using them to secure extremely large multimillion dollar notes in minutes to do business transactions. I’ve been in the rooms when these occurred. Again all above board, all tax legal.
Simply using banks for certain situations are a pain.
Clearly you’ve never experienced such situations, hence why it seems a scam to you.
I guess you’re smarter than me and Elon Musk. I would absolutely believe it if you had facts and arguments that didn’t have logical fallacies.
There’s political arguments on both sides of the crypto currency debate. Your arguments seem politically motivated. I have no political agenda.
The discovery of fission changed the world. There was no keeping it under wraps or going backwards after the physics were discovered.
The ability to transfer and store wealth online via blockchain and consensus algorithms will exists from now on. There’s no going back. It’s simply a fact of information science and physics.
Remember this discussion. Think on it when in 30 year’s cryptocurrency is considered a norm, and when multiple governments finally transition to digital currencies.
Or you know... you can quote more non relevant, poorly educated sources to support a point you wish for. It’s like the old timers laughing that the internet was just a play thing in the 90s... Now if the internet went down it would be a national emergency.
Oh... and here’s an actual intelligent article from a fairly respected source rather than some random blogger. Here’s the important point
“Many people think that bitcoin is a bubble, and that's predicted on the concept that bitcoin has no value. But there's reason to believe that that just isn't true. By definition, bitcoin is scarce. And the cryptocurrency may have utility as a superior way to store and exchange wealth.”
Edit: I also hope you understand that this debate is an intellectual exercise, not a personal issue. So I am somewhat annoyed that you would call my comments tedious :). No one should accept ignorance. And disagreement is wonderful, but it should be an educated discourse. Silent downvoting or flagging of things that are unpleasant isn’t the way forward. I tend to only downvote comments that are provably factually incorrect, make comments that are based on ignorance or misunderstanding, non constructive, or outright hostile.
If you truly are interested in open understanding, it’s not a bad thing to say “I am ignorant on this subject.” In the past when I have said that, I have learned a lot.
Cryptocurrency and Bitcoin causes emotions or brings up political divides for a lot of people... I can only begin to guess at the reasons why. But burying your head in the sand or listening to the “bubble” crowd chorus is doing yourself a disservice.
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Buddy, I'm not here for "debate". Debate is a construct where people stake out arbitrary positions and defend them in hopes of "winning". It's a zero-sum, dominance-driven approach to discussion, and is poisonous to actual understanding.
That you think a pseudo-debate is a good idea explains why you're flooding the zone with nonsense, condescension, and a refusal to even look at what you're saying and how you're saying it. Which is indeed tedious. Maybe you don't have any better ways to spend your time, but I sure do.
That you think a pseudo-debate is a good idea explains why you're flooding the zone with nonsense, condescension, and a refusal to even look at what you're saying and how you're saying it. Which is indeed tedious. Maybe you don't have any better ways to spend your time, but I sure do.
> dominance-driven approach to discussion
Damn... guess that Socrates was a dominance driven asshole then huh?
It’s only “dominance driven” if you take it personally. If instead you realize that strong conversations are a way to elucidate clear logical thought and arguments on both sides, then you see it as a tool for understanding.
> condescension, and a refusal to even look at what you're saying and how you're saying it
That’s not me. I’ve been adding to the discussion with fact, and discourse. You’re the one who has quickly taken to dismissive ad hominem attacks.
> Maybe you don't have any better ways to spend your time, but I sure do
Says the man who’s cultivated a karma of 38876. You clearly spend wayyyyyyy more time on here than I do. Again, you turned this personal quickly... why?
Look if your so badly triggered by a discussion on HN about bitcoins, to the point where your thinking this is condescending and dominance driven on my half then do yourself a favor and read this book or at least the article.
The Coddling of the American Mind: How Good Intention... https://www.amazon.com/dp/0735224897/ref=cm_sw_r_sms_awdb_im...
https://www.theatlantic.com/magazine/archive/2015/09/the-cod...
And maybe that’s condescending? Or maybe I’m trying to actually help (which I am).
You don’t know me... I don’t know you. But I recognize areas when I know less than someone else and I open myself up to it. Did your teachers in school “condescend to you”?
Reread all the discussions and you’ll simply see that I attempted to shine information and fact where there was ignorance.
Not every human being has equal knowledge and understanding of all fact. I know for a fact I have a greater understanding of this than you do.
And when you post ignorant things, or post conspiracy theories then I respond in kind. And yes, I do have better things to do. But honestly it pains me there is so much ignorance, and conspiracy stuff online rather, retweeted and reposted without thought, than actual facts.
If enough people sat down with those Trump supporters who marched on the capital and actually condescended to them for a bit to get them to face reality and fact, you could get through to some of them. Not all. But some. And that’s the start of change.
So which kind of person are you. Do you take criticism and seek more knowledge, or will you come away from this never questioning yourself and only seeing condescension in differing opinions?
Good luck, and if you believe it or not, I do wish you the best.
Damn... guess that Socrates was a dominance driven asshole then huh?
It’s only “dominance driven” if you take it personally. If instead you realize that strong conversations are a way to elucidate clear logical thought and arguments on both sides, then you see it as a tool for understanding.
> condescension, and a refusal to even look at what you're saying and how you're saying it
That’s not me. I’ve been adding to the discussion with fact, and discourse. You’re the one who has quickly taken to dismissive ad hominem attacks.
> Maybe you don't have any better ways to spend your time, but I sure do
Says the man who’s cultivated a karma of 38876. You clearly spend wayyyyyyy more time on here than I do. Again, you turned this personal quickly... why?
Look if your so badly triggered by a discussion on HN about bitcoins, to the point where your thinking this is condescending and dominance driven on my half then do yourself a favor and read this book or at least the article.
The Coddling of the American Mind: How Good Intention... https://www.amazon.com/dp/0735224897/ref=cm_sw_r_sms_awdb_im...
https://www.theatlantic.com/magazine/archive/2015/09/the-cod...
And maybe that’s condescending? Or maybe I’m trying to actually help (which I am).
You don’t know me... I don’t know you. But I recognize areas when I know less than someone else and I open myself up to it. Did your teachers in school “condescend to you”?
Reread all the discussions and you’ll simply see that I attempted to shine information and fact where there was ignorance.
Not every human being has equal knowledge and understanding of all fact. I know for a fact I have a greater understanding of this than you do.
And when you post ignorant things, or post conspiracy theories then I respond in kind. And yes, I do have better things to do. But honestly it pains me there is so much ignorance, and conspiracy stuff online rather, retweeted and reposted without thought, than actual facts.
If enough people sat down with those Trump supporters who marched on the capital and actually condescended to them for a bit to get them to face reality and fact, you could get through to some of them. Not all. But some. And that’s the start of change.
So which kind of person are you. Do you take criticism and seek more knowledge, or will you come away from this never questioning yourself and only seeing condescension in differing opinions?
Good luck, and if you believe it or not, I do wish you the best.
Again, valid useful discourse just gets downvoted nowadays. Not HN of past.
Usually constructive comments would get some actual criticism or disagreement rather than just downvotes.
I get it... BTC sour grapes just downvote. Same thing happened when I called out the GME fiasco when that was $300 a share.
But pro tip so you’re not sour grapes in the future. Put aside you’re egos, and instead of downvoting things here that scare you or you simply disagree with. Try using HN as a learning tool.
If you disagree with something.. comment first... then downvote. Discourse, discussion, debate. Those are the paths to learning and understanding.
Usually constructive comments would get some actual criticism or disagreement rather than just downvotes.
I get it... BTC sour grapes just downvote. Same thing happened when I called out the GME fiasco when that was $300 a share.
But pro tip so you’re not sour grapes in the future. Put aside you’re egos, and instead of downvoting things here that scare you or you simply disagree with. Try using HN as a learning tool.
If you disagree with something.. comment first... then downvote. Discourse, discussion, debate. Those are the paths to learning and understanding.
I dare you to comment constructively instead of downvoting.
Unfortunately, your replies suggest replying is not worth the effort, because you have a fixed set of beliefs and are here to argue them. Downvoting and moving on is the better approach.
I don’t have beliefs. I have facts. And if you have alternative facts then please post them.
What’s the benefit of downvoting rather than posting evidence to counter my posts.
Since you don’t it means you don’t have relevant facts and instead seem to quell posts you disagree with.
What’s the benefit of downvoting rather than posting evidence to counter my posts.
Since you don’t it means you don’t have relevant facts and instead seem to quell posts you disagree with.
Believing that you don't have beliefs, just a direct line to the mind of God, is a great reason to downvote and move on. It's much more time-efficient.
It is a fact that the sky is blue due to Rayleigh scattering of light.
That is a fact. I don’t “believe” the sky is blue due to light scattering ... I know it. And it doesn’t require “a line to the mind of God”. It’s called science, knowledge... education.
It is a fact that cryptocurrencies have value as a store of wealth and are not ponzi schemes.
Just because you don’t understand it doesn’t make it a belief on my end. Just like if you don’t understand why the sky is blue from how light interacts with nitrogen molecules, doesn’t make it a belief on my end.
We could debate the current price of Bitcoin. We could debate whether it’s in a bubble (which happens all the time in legitimate asset classes like real estate or the stock market). We could debate if the fact that only certain sectors of the population have access is detrimental. We could even discuss if Tether is pumping up Bitcoin through manipulation. (My opinion, since I and everyone currently have very limited data on it, is that it is, but ultimately to a very small degree). And tether in the way you brought it up, is a red herring here because one lone bad player doesn’t negate everything.
But dismissing cryptocurrencies as Ponzi schemes, tulips or beanie babies is simply ignorant and without fact. If there were facts that could support that conclusion, that would be worthy to discuss, but “extraordinary claims require extraordinary evidence”
Here are facts: COVID is a pandemic. Bitcoin is a store of value.
Here are opinions based on fact: The COVID pandemic has caused enormous suffering. Bitcoin is a good store of value.
Here are beliefs: COVID is humanity’s punishment. Bitcoin is going to ruin the world.
Here are prejudices: COVID is a caused by 5G or Chinese conspiracy. Bitcoin is a Ponzi scheme.
More reading on fact, belief, opinions etc:
https://writing.colostate.edu/guides/teaching/co300man/pop12...
https://chem.tufts.edu/answersinscience/relativityofwrong.ht...
That is a fact. I don’t “believe” the sky is blue due to light scattering ... I know it. And it doesn’t require “a line to the mind of God”. It’s called science, knowledge... education.
It is a fact that cryptocurrencies have value as a store of wealth and are not ponzi schemes.
Just because you don’t understand it doesn’t make it a belief on my end. Just like if you don’t understand why the sky is blue from how light interacts with nitrogen molecules, doesn’t make it a belief on my end.
We could debate the current price of Bitcoin. We could debate whether it’s in a bubble (which happens all the time in legitimate asset classes like real estate or the stock market). We could debate if the fact that only certain sectors of the population have access is detrimental. We could even discuss if Tether is pumping up Bitcoin through manipulation. (My opinion, since I and everyone currently have very limited data on it, is that it is, but ultimately to a very small degree). And tether in the way you brought it up, is a red herring here because one lone bad player doesn’t negate everything.
But dismissing cryptocurrencies as Ponzi schemes, tulips or beanie babies is simply ignorant and without fact. If there were facts that could support that conclusion, that would be worthy to discuss, but “extraordinary claims require extraordinary evidence”
Here are facts: COVID is a pandemic. Bitcoin is a store of value.
Here are opinions based on fact: The COVID pandemic has caused enormous suffering. Bitcoin is a good store of value.
Here are beliefs: COVID is humanity’s punishment. Bitcoin is going to ruin the world.
Here are prejudices: COVID is a caused by 5G or Chinese conspiracy. Bitcoin is a Ponzi scheme.
More reading on fact, belief, opinions etc:
https://writing.colostate.edu/guides/teaching/co300man/pop12...
https://chem.tufts.edu/answersinscience/relativityofwrong.ht...
Gold isn't the best store of value if stability of value is the only concern.
In places like India, gold jewelry has a prominent cultural value (a part of most wedding rituals, for example). So its desired and even required no matter its price - though demand is, I imagine, pretty elastic. The volatility of gold prices competes with 8% inflation,
Even if gold is volatile, it competes favorably in an investment environment where 1) cash inflates at 8% a year 2) private banks can often be risky, with many going bankrupt over the years 3) the average person has no access to US T-bills 4) gold can be melted any time to make jewelry anew, so one can always be fashionable (keeping the use-value of the material fresh) 5) gold can be pawned in emergencies, in practically every town 6) where access to digital banking may be spotty, transporting jewelry is an easy way to transport wealth
A store of value has many attributes that make it a good store of value - ubiquity, tradability, use-value, transportability, its value relative to the other options in the investment environment.
In places like India, gold jewelry has a prominent cultural value (a part of most wedding rituals, for example). So its desired and even required no matter its price - though demand is, I imagine, pretty elastic. The volatility of gold prices competes with 8% inflation,
Even if gold is volatile, it competes favorably in an investment environment where 1) cash inflates at 8% a year 2) private banks can often be risky, with many going bankrupt over the years 3) the average person has no access to US T-bills 4) gold can be melted any time to make jewelry anew, so one can always be fashionable (keeping the use-value of the material fresh) 5) gold can be pawned in emergencies, in practically every town 6) where access to digital banking may be spotty, transporting jewelry is an easy way to transport wealth
A store of value has many attributes that make it a good store of value - ubiquity, tradability, use-value, transportability, its value relative to the other options in the investment environment.
In other words if you're a goldbug, you now have an even worse option.
> Does that mean gold also isn't a good store of value?
You answered your own question. There's a good reason to prefer FDIC insurance. If your fashion choices require you to avoid fiat currency, that's on you.
> Does that mean gold also isn't a good store of value?
You answered your own question. There's a good reason to prefer FDIC insurance. If your fashion choices require you to avoid fiat currency, that's on you.
If you consider the amount of investment dollars parked in gold and metals relative to the amount of total investment dollars/flows in other financialized assets, isn't the answer kind of self evident? Sure, there are worse stores of value but there are better, more stable (and modern) ones that are more prevalent in actual practice. Much of the total interest in gold is emotional or speculative too.
But the point is, it's not an exclusive choice. BTC will coexist with other commodities. It won't be the be-all-end-all of financial transactions, but it will probably endure.
Gold has a reputation for being a 'safe haven' asset, which is not quite the same as a 'store of value'. Gold returns are supposedly negatively correlated with those of stocks and other financial assets and so holding gold provides a sort of protection against market downturns.
Which is why fixed income products are now the go-to "store of value" for any corporation or high-net-worth individuals.
Few financially savvy entities keep gold as a store of value.
Few financially savvy entities keep gold as a store of value.
Not a fan of this sort of argument logic.
Y is like X to a lesser degree, and no it's not as good as Z, but does that mean Y is bad? We're only talking about X and no it's not a good store of value given the other options.
Y is like X to a lesser degree, and no it's not as good as Z, but does that mean Y is bad? We're only talking about X and no it's not a good store of value given the other options.
Not really, no? When the monetary system itself is as unstable as it is, I struggle to think of what could be a good store of value.
Maybe we should all just acknowledge that money is made up and any security it provides depends on tons of interconnected systems made up of people largely unaccountable to the layman.
Edit: I think the mistake people make is trying to create stability on unstable ground.
Maybe we should all just acknowledge that money is made up and any security it provides depends on tons of interconnected systems made up of people largely unaccountable to the layman.
Edit: I think the mistake people make is trying to create stability on unstable ground.
> ... I struggle to think of what could be a good store of value.
Land.
Land.
Land is hard to liquidate when needed, unless it's in a popular place.
the 2008 mortgage crisis has entered the chat
But yeah, fair point. It's pretty much the only 99% safe asset.
But yeah, fair point. It's pretty much the only 99% safe asset.
Tell that to landowners in 1917 Russia :)
I said 99%. :P
If facebook is having a hard time censoring anti-vaxxers, imagine when the term "land reform" starts making the rounds.
What incentive will there be for the community to continue verifying transactions after all the bitcoins are mined?
Is it just that the system of storage will have Ongoing operational cost like a vault has ongoing costs to protect gold?
Has anyone modeled what these costs might look like?
Is it just that the system of storage will have Ongoing operational cost like a vault has ongoing costs to protect gold?
Has anyone modeled what these costs might look like?
> What incentive will there be for the community to continue verifying transactions after all the bitcoins are mined?
How are these questions still being asked, and more amazingly, still being upvoted? First off, there will not be a time when "all the bitcoins are mined". Mining rewards are on a geometric curve that approaches 21 million but never touches it. Second, transaction fees also go to miners, so even when mining emissions are negligible, transaction fees will keep the miners incentivized to keep mining.
This is all pretty much in the intro of the whitepaper, and the first thing you should learn if you spend 5 minutes looking into this technology.
How are these questions still being asked, and more amazingly, still being upvoted? First off, there will not be a time when "all the bitcoins are mined". Mining rewards are on a geometric curve that approaches 21 million but never touches it. Second, transaction fees also go to miners, so even when mining emissions are negligible, transaction fees will keep the miners incentivized to keep mining.
This is all pretty much in the intro of the whitepaper, and the first thing you should learn if you spend 5 minutes looking into this technology.
> How are these questions still being asked, and more amazingly, still being upvoted? First off, there will not be a time when "all the bitcoins are mined". Mining rewards are on a geometric curve that approaches 21 million but never touches it.
These questions are still being asked because people like you still spout the wrong answers. There will be a time when "all the bitcoins are mined" - its in the source[0].
[0]: https://github.com/bitcoin/bitcoin/blob/master/src/validatio...
These questions are still being asked because people like you still spout the wrong answers. There will be a time when "all the bitcoins are mined" - its in the source[0].
[0]: https://github.com/bitcoin/bitcoin/blob/master/src/validatio...
Honest question: if there is little transactions because it's a "store of value", and if the mining reward continuously go down, why would anyone be incenticized to be a miner?
there's still a fee for just verifying transactions.
I suspect transaction costs will rise when that's the only gain
Currently, miners get the block reward plus transaction fees. Miners get to pick which transactions to include in the blocks they are processing, so of course they only include the ones with highest fees. Once there is no more block rewards, they would would have to survive off transaction fees alone.
If the economics of verifying transactions is no longer sustainable, the code will be updated to allow more mining. That's something no one wants to admit, but the SegWit soft fork confirmed the influence concentrated miners have on development. The idea that somehow Bitcoin just works outside of any social influence is a complete fallacy.
Exactly. Miners will decide to continue mining. Probably in just the right amount such that inflation/deflation is controlled enough to create sustained profits for them. Thus basically acting like a central bank.
True, and honestly this can happen before they even get near the mining cap, since computational costs will likely be unsustainable before that.
What competes with these stores of value? As a high-risk-high-return investment, it makes a lot of sense. I'd count it in the same category as artwork as an investment.
The counter-counter-argument is that it's volatile because it's still in its infancy. Gold used to be that volatile too, when wars were commonplace and new sources were found quite often. It can still swing significantly.
I've come around to the idea. I don't hold any bitcoin anymore, and the best chance to get rich is gone, but I can see a future where something digital (hence fundamentally ethereal) acts as dense and largely unregulated store of value, for the people who need it. In the same way the drug trade currently uses artworks and commodities when it needs to move value across national boundaries, they can use hashes or something like that. Transaction costs to convert those from/to cash are actually higher and slower than bitcoin will likely ever be (i.e. a week or two, and several hundrend USDs, will still be acceptable).
We'll never pay taxes or coffees with bitcoin, or hold savings accounts, but it will still act as a commodity.
I've come around to the idea. I don't hold any bitcoin anymore, and the best chance to get rich is gone, but I can see a future where something digital (hence fundamentally ethereal) acts as dense and largely unregulated store of value, for the people who need it. In the same way the drug trade currently uses artworks and commodities when it needs to move value across national boundaries, they can use hashes or something like that. Transaction costs to convert those from/to cash are actually higher and slower than bitcoin will likely ever be (i.e. a week or two, and several hundrend USDs, will still be acceptable).
We'll never pay taxes or coffees with bitcoin, or hold savings accounts, but it will still act as a commodity.
Gold Market is backed by Governments, bitcoin is not, I doubt it ever will be, and by now it is probably already cornered market.
https://en.wikipedia.org/wiki/Black_Friday_(1869)
https://en.wikipedia.org/wiki/Black_Friday_(1869)
Afaik no developed-country government “backs” gold in any meaningful way. There are some reserves here and there, some historical, but they are not directly linked to liquidity. It’s just a market for a commodity that happens to be fairly practical to store value in. Whether governments will start using digital commodities in the same way, is really a political question. I agree that it might be a cornered market, but the fact that forks do seem to happen might well turn out to be the way out of that problem.
GOV/Central banks still use gold as reserves holding.
https://en.wikipedia.org/wiki/Gold_reserve
https://en.wikipedia.org/wiki/Gold_reserve
That’s not “backing”: nobody buys specifically to keep gold prices up or to legitimise the trade, they just use it as a commodity to make their creditworthiness believable and storing their value in a practical way. They are leveraging a pre-existing market, not backing it.
(As a side note, this role for gold is clearly legacy: look at how little gold China stores, compared to their overall reserves.)
(As a side note, this role for gold is clearly legacy: look at how little gold China stores, compared to their overall reserves.)
> their creditworthiness believable
this not backing ?
> look at how little gold China stores
by metric tones china is on 6th place in world, what do you mean ?
this not backing ?
> look at how little gold China stores
by metric tones china is on 6th place in world, what do you mean ?
>>[Governments use gold to make] their creditworthiness believable
> this not backing ?
It's the opposite. Originally you said "Gold Market is backed by Governments". This is governments being (partially) backed by gold.
>> look at how little gold China stores
> by metric tones china is on 6th place in world, what do you mean ?
Their economy is the largest in the world. How much smaller are their gold holdings, compared to those in first place?
> this not backing ?
It's the opposite. Originally you said "Gold Market is backed by Governments". This is governments being (partially) backed by gold.
>> look at how little gold China stores
> by metric tones china is on 6th place in world, what do you mean ?
Their economy is the largest in the world. How much smaller are their gold holdings, compared to those in first place?
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> the best chance to get rich is gone
The second best time to plant a tree is today.
The second best time to plant a tree is today.
Yes, but not always true with investments.
Such a strategy is dangerous when you're looking at a Ponzi scheme, or a pump and dump, or anything else that is designed to leave the late entrants as the bag holders.
I'm not saying that's what Bitcoin is, just that it's dangerous to be a late entrant to an investment and you should be more wary
Such a strategy is dangerous when you're looking at a Ponzi scheme, or a pump and dump, or anything else that is designed to leave the late entrants as the bag holders.
I'm not saying that's what Bitcoin is, just that it's dangerous to be a late entrant to an investment and you should be more wary
Bitcoin makes sense as a store of value because it is likely to survive dramatic global economic failure. The short term volatility is higher, but it's counter-correlated with almost everything else and is a great hedge against societal collapse.
Perhaps not the most fun thing to hedge against, but just like buying life insurance it's a good idea.
Perhaps not the most fun thing to hedge against, but just like buying life insurance it's a good idea.
Your theory is that a digital currency relying on a delicate, sophisticated international network and an even more delicate technology supply chain, plus massive amounts of wasteful energy consumption will do well in "dramatic global economic failure"? I think "likely" is doing an awful lot of work there.
Bitcoin only produces about 100 kilobytes of new data every minute, and only the consensus builders (the miners) need to have any sort of real time access to that data stream. Participants can have latencies of days or even months and still be able to correctly build consensus.
In extreme meltdown scenarios, you can broadcast Bitcoin over FM radio, the data rates are literally low enough. Spending bitcoin requires sending _hundreds_ of bytes, which again is small enough that you can drop down to very robust and simple technologies if you need to.
Bitcoin has no "wasteful energy requirement". It adjusts the amount of hashing you need to do based on the amount of competition that's doing hashing. If 80% of the hashrate suddenly disappears, Bitcoin runs slowly for a couple of weeks and then significantly drops the hashrate requirements for the network to progress.
For efficiency, many Bitcoin mining farms are established within a couple hundred meters of the power plants producing the electricity, which means that Bitcoin also generally has minimal dependence on the global electricity grid, even though it consumes an enormous amount of electricity.
Bitcoin's robustness to societal meltdowns is one of the things that makes it really interesting.
In extreme meltdown scenarios, you can broadcast Bitcoin over FM radio, the data rates are literally low enough. Spending bitcoin requires sending _hundreds_ of bytes, which again is small enough that you can drop down to very robust and simple technologies if you need to.
Bitcoin has no "wasteful energy requirement". It adjusts the amount of hashing you need to do based on the amount of competition that's doing hashing. If 80% of the hashrate suddenly disappears, Bitcoin runs slowly for a couple of weeks and then significantly drops the hashrate requirements for the network to progress.
For efficiency, many Bitcoin mining farms are established within a couple hundred meters of the power plants producing the electricity, which means that Bitcoin also generally has minimal dependence on the global electricity grid, even though it consumes an enormous amount of electricity.
Bitcoin's robustness to societal meltdowns is one of the things that makes it really interesting.
The notion that people will wait days or months to settle survival transactions after a catastrophe is absurd. As is the notion that after major global collapse there will be a robust global network so that planetary consensus can be achieved. Ditto that enough people will care about global transactions when global trade falls apart.
Bitcoin can't even build a significant user base now. Approximately nobody buys anything with it. Compared with debit cards or cash or mobile money systems like MPesa, it's a rounding error. If it's not better than any of the existing payment systems, it's not going to get better in some sort of prepper-fantasy collapse.
Bitcoin can't even build a significant user base now. Approximately nobody buys anything with it. Compared with debit cards or cash or mobile money systems like MPesa, it's a rounding error. If it's not better than any of the existing payment systems, it's not going to get better in some sort of prepper-fantasy collapse.
it's volatile because it's still in price discovery mode.
also, volatility only matters if you sell it. if you're holding as a store of value, then you've done extremely well over the long term.
also, volatility only matters if you sell it. if you're holding as a store of value, then you've done extremely well over the long term.
For many BTC enthusiasts the store of value narrative has been in place for a very long time.
“I see Bitcoin as ultimately becoming a reserve currency for banks, playing much the same role as gold did in the early days of banking. Banks could issue digital cash with greater anonymity and lighter weight, more efficient transactions.” - Hal Finney (2010)
“I see Bitcoin as ultimately becoming a reserve currency for banks, playing much the same role as gold did in the early days of banking. Banks could issue digital cash with greater anonymity and lighter weight, more efficient transactions.” - Hal Finney (2010)
> Banks could issue digital cash with greater anonymity
Why would (a) my bank want to do this, and (b) why would I want my bank to do this?
Why would (a) my bank want to do this, and (b) why would I want my bank to do this?
The point here is that bitcoin is incredibly transparent, which on one level one may welcome, but on another certainly not.
(a) providing cash level privacy to customers, which (b) they should probably value more than they do.
(a) providing cash level privacy to customers, which (b) they should probably value more than they do.
What "cash level privacy"? Banks have to report all significant cash transactions and ensure that customers can't deal large quantities of cash anonymously; and in the exact same manner they would also have to report all significant e-cash transactions and ensure that every customer with whom they deal large quantities of e-cash can't be anonymous.
just post all your financial statements on the web for everyone to see.
you've got nothing to hide, right?
you've got nothing to hide, right?
Now I'm confused. Bitcoin is not lighter weight than existing digital cash. It's not really lighter weight than anything. Well, possibly the large hadron collider consumes more, I don't know.
There is no such thing as digital cash outside of cryptocurrencies.
The money in your bank account is a liability of the bank, it's not cash.
The money in your bank account is a liability of the bank, it's not cash.
You can go through life without ever using physical cash. You get paid digitally, you buy groceries digitally. You even borrow money for a house digitally.
The thing you transact with is digital, liquid and fungible. In what sense is it not cash?
The thing you transact with is digital, liquid and fungible. In what sense is it not cash?
All those transactions are reversible at any point with a flip of a bit (or two).
If you receive physical cash, it's in your control.
Now if only that cash could not be inflated as much as it can.
If you receive physical cash, it's in your control.
Now if only that cash could not be inflated as much as it can.
I don’t think any common definition of cash includes the idea that payments are “irreversible”. I don’t even see why this is so important. If someone pays me physical cash by mistake they have legal recourse to get it back. It’s not finder’s keepers.
But it doesn't have any value. Except that some people think it has. In times of truly global trouble, nobody will accept bitcoins as payment for bread.
> In times of truly global trouble, nobody will accept bitcoins as payment for bread.
That is true for gold as well. (Ofc not 'nobody', just 'almost nobody'.)
That is true for gold as well. (Ofc not 'nobody', just 'almost nobody'.)
This is why there is no gold standard anymore. Like, this right here is the exact reason: because collectively it's apparent gold is not worth much to anyone in a pinch. So why bother trading with it as a proxy for your nation-state's goods and services output?
Interestingly, I went and looked up what the price of gold would actually be if it was solely used for industrial processes, and it's hard to actually figure out: it's speculated on a lot, but world gold demand in 2019 was 4355.7t. Of that, 48.5% was for the jewelery industry, and 7.48% for technology - the rest accounted for by investment. So industrially world demand for gold for productive or decorative uses is about 2439.2 tons (as of 2019), whereas mining production in that year was about 3,300 tons.
So about 45% of world gold demand is essentially from financial speculators. To figure out pricing you'd have to really get into the current mining economics for technological use...
https://www.statista.com/statistics/299609/gold-demand-by-in... https://www.statista.com/statistics/264628/world-mine-produc... https://www.gold.org/about-gold/gold-supply
Interestingly, I went and looked up what the price of gold would actually be if it was solely used for industrial processes, and it's hard to actually figure out: it's speculated on a lot, but world gold demand in 2019 was 4355.7t. Of that, 48.5% was for the jewelery industry, and 7.48% for technology - the rest accounted for by investment. So industrially world demand for gold for productive or decorative uses is about 2439.2 tons (as of 2019), whereas mining production in that year was about 3,300 tons.
So about 45% of world gold demand is essentially from financial speculators. To figure out pricing you'd have to really get into the current mining economics for technological use...
https://www.statista.com/statistics/299609/gold-demand-by-in... https://www.statista.com/statistics/264628/world-mine-produc... https://www.gold.org/about-gold/gold-supply
>That is true for gold as well.
Not even close. Gold is a tangible psychical asset, a finite resource on Earth that can not only make valuables you can wear or leave as heirloom but is also a really good heat-reflector and electricity conductor needed in anything from semiconductors and precision electronics to supercars and satellites. Without it, the global electronics industry would suffer terribly.
Not even close. Gold is a tangible psychical asset, a finite resource on Earth that can not only make valuables you can wear or leave as heirloom but is also a really good heat-reflector and electricity conductor needed in anything from semiconductors and precision electronics to supercars and satellites. Without it, the global electronics industry would suffer terribly.
Is this really true historically? Obviously these are biased goldbugs, but there are at least some anecdotes that suggest https://www.bullionstar.com/blogs/ronan-manly/the-power-of-g...
It seems more likely that people conflict zones would be happy to accept gold (with the assumption it will be valuable in the future/in more stable areas) than bitcoins that require electricity, stable internet and tons of disk space.
It seems more likely that people conflict zones would be happy to accept gold (with the assumption it will be valuable in the future/in more stable areas) than bitcoins that require electricity, stable internet and tons of disk space.
Conflict zones are generally aware that there are non-conflict zones. The existence of the first world, and detailed knowledge of it's demands, means people know to collect assets that will be valued there.
The problem with Bitcoin is it's not a physical thing at the end of the day: nobody mints jewellery out of bitcoin.
The problem with Bitcoin is it's not a physical thing at the end of the day: nobody mints jewellery out of bitcoin.
Gold makes a nice filling for your teeth, if you like that look.
It also has industrial applications, not to mention that it's being used for jewellery.
A golden chain with a gold-plated USB key containing a Bitcoin wallet might have a considerable bling factor though. :)
A golden chain with a gold-plated USB key containing a Bitcoin wallet might have a considerable bling factor though. :)
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Gold is a real thing that has value though. Bitcoin literally stops existing if you stop believing in it.
> Bitcoin literally stops existing if you stop believing in it.
That is the case for countless things. Is a corporation a real thing or a belief? Where is the physical entity Facebook or the physical entity Apple? Is it the people working for them? Their logo? Their contracts? It's all that and a collective belief in an abstract entity. That's true for fiat or states too, even if that belief can be enforced through e.g. army, that doesn't change the fact that's is a collective belief in something that has no material reality.
That is the case for countless things. Is a corporation a real thing or a belief? Where is the physical entity Facebook or the physical entity Apple? Is it the people working for them? Their logo? Their contracts? It's all that and a collective belief in an abstract entity. That's true for fiat or states too, even if that belief can be enforced through e.g. army, that doesn't change the fact that's is a collective belief in something that has no material reality.
So does fiat.
But fiat has taxes, and state-backed violence and jails.
If your state demands your taxes be paid in FIAT, no matter what you wan't, you'll be paying in FIAT (or fined, or in jail, or depending on the circunstances maybe dead).
If your state demands your taxes be paid in FIAT, no matter what you wan't, you'll be paying in FIAT (or fined, or in jail, or depending on the circunstances maybe dead).
Say someone wealthy wants to escape the taxman and spends all their fiat buying things that "have value as long as people believe it has value", like land, stocks, jewelry, art works, antique cars.
When the taxman comes knocking on their door, do you think this person will escape by saying "sorry, I don't have fiat available to pay for the taxes, come back next year!"? No, the taxman will respond by either seizing their assets or forcing the person to liquidate into fiat.
What makes Bitcoin (or crypto) different in that regard?
When the taxman comes knocking on their door, do you think this person will escape by saying "sorry, I don't have fiat available to pay for the taxes, come back next year!"? No, the taxman will respond by either seizing their assets or forcing the person to liquidate into fiat.
What makes Bitcoin (or crypto) different in that regard?
What's with the capitals? The "fiat" in "fiat money" is neither an acronym nor an Italian automobile manufacturer. (The Italian automobile manufacturer, OTOH, is an acronym, just like "OTOH". One stands for "on the other hand"; the other for "Fabricca Italiana de Automobili, Torino".)
Bitcoin is fiat. It's not backed by a commodity.
that's a stretch of what fiat means. Fiat backing is not just the belief in the backer's ability to back it. Fiat specifically requires government/authority.
bitcoin acts more like a commodity than fiat. Bitcoin is backed by the laws of mathematics, rather than laws of nature (which is the case for gold).
bitcoin acts more like a commodity than fiat. Bitcoin is backed by the laws of mathematics, rather than laws of nature (which is the case for gold).
Fiat does not require a government or authority. Fiat money simply means it's not commodity money. Commodity money means the money is backed by a commodity, i.e. the issuer promises to redeem the notes for a certain quantity of a commodity.
Your claim that bitcoin is not fiat because it's backed by the laws of mathematics makes as much sense as claiming that the dollar is not fiat because it's backed by the printing press. This is not what 'backed' means in the context of money.
Your claim that bitcoin is not fiat because it's backed by the laws of mathematics makes as much sense as claiming that the dollar is not fiat because it's backed by the printing press. This is not what 'backed' means in the context of money.
That is true of a lot of things. Would diamonds or gold be as valuable if people didn't think it was a store of value?
Right. It's all mass psychology. Gold, the stock market, bitcoin, whatever.
It only has value as long as people believe it has value.
The caveat of course is that all of the things I listed have SOME more inherent value, but that is NOT the major contributor to their actual trading prices. Gold is not THAT useful. Neither is owning a billionth of a company.
It only has value as long as people believe it has value.
The caveat of course is that all of the things I listed have SOME more inherent value, but that is NOT the major contributor to their actual trading prices. Gold is not THAT useful. Neither is owning a billionth of a company.
Obviously this is much less true for gold than for bitcoin, and the value of the stock market is very real. If you own a piece of Apple or the local hot dog stand, you own a piece of something that is continuously producing value for people.
Gold has some industrial uses. Therefore it has some "intrinsic" value. However, I suspect that the VAST majority of today's price of gold comes from the fact that it's used in jewelry (not actually "valuable" unless you also allow my bragging about my bitcoin wallet to count as value) and from "gold bugs" (basically the same as bitcoin "hodlers").
That was my point. Any "real" value in most of these things is dwarfed by social delusion value.
Same with AAPL stock. Sure, I can pay ~$130 per share to technically own a fraction of Apple. And what good does that do for me? What's the dividends on AAPL? Will my vote EVER actually influence the company? I could spend $130 on canned beans and rice and likely get far more utility than I'd get from the ACTUAL share of AAPL. On the other hand, I'll probably be able to sell my AAPL share to the next sucker for more than $130. THAT'S the real reason 99.99% of us are invested in the stock market.
And, like it or not, bitcoin DOES have uses. It's still a little bit cheaper to send money via bitcoin than via Western Union, AFAIK. It's easy to pay for something online without giving your personal info to PayPal or the person who you are paying. Are those minor conveniences worth $40k? Hell no. But that's also my point. It's all crap.
That was my point. Any "real" value in most of these things is dwarfed by social delusion value.
Same with AAPL stock. Sure, I can pay ~$130 per share to technically own a fraction of Apple. And what good does that do for me? What's the dividends on AAPL? Will my vote EVER actually influence the company? I could spend $130 on canned beans and rice and likely get far more utility than I'd get from the ACTUAL share of AAPL. On the other hand, I'll probably be able to sell my AAPL share to the next sucker for more than $130. THAT'S the real reason 99.99% of us are invested in the stock market.
And, like it or not, bitcoin DOES have uses. It's still a little bit cheaper to send money via bitcoin than via Western Union, AFAIK. It's easy to pay for something online without giving your personal info to PayPal or the person who you are paying. Are those minor conveniences worth $40k? Hell no. But that's also my point. It's all crap.
You buy a share in a company because that gives you ownership over a corresponding share of their earnings, in perpetuity, whether they pay dividends or not.
In Apple’s case, you’d now have to pay 136 dollars in order to be entitled to 3.7 dollars of their annual earnings, corresponding to a current annual return rate of 2.7%. That’s better than any bank accounts, and it will most likely rise faster than inflation.
This is how the stock market works and how people value mature companies.
In Apple’s case, you’d now have to pay 136 dollars in order to be entitled to 3.7 dollars of their annual earnings, corresponding to a current annual return rate of 2.7%. That’s better than any bank accounts, and it will most likely rise faster than inflation.
This is how the stock market works and how people value mature companies.
> you own a piece of something that is continuously producing value for people.
People will only pay for the next Apple product as long as they believe it provides value to them. It's all the same. Perception is king.
People will only pay for the next Apple product as long as they believe it provides value to them. It's all the same. Perception is king.
Over a billion people use Apple products, it's an extremely solid business. You can't compare that to a speculative bubble. Tulips were also very expensive once.
True, but when you own a part of Apple you also have to have faith that your shares won't be diluted to nothing via new stock offerings (which numerous companies have done in the past). So while there is intrinsic value in the shares, some of that is still based on faith (if Apple doubled their outstanding shares overnight, the value of yours would go down).
No that is not how it works. In order to double the number of shares they’d need to issue and sell more shares, meaning that they would increase their cash balance, and hence overall value, by 2.5 trillion.
So issuing more shares would not change the value of existing shares, at least in the short term.
Never mind the fact that the shareholders would have to make this decision, and that Apple has long been doing the exact opposite.
So issuing more shares would not change the value of existing shares, at least in the short term.
Never mind the fact that the shareholders would have to make this decision, and that Apple has long been doing the exact opposite.
> you also have to have faith that your shares won't be diluted to nothing via new stock offerings
if the existing majority shareholders chose to do this, then it will happen, but otherwise, this can't happen. And i don't see a situation where the existing shareholders would willingly choose to do this dilution for no reason.
if the existing majority shareholders chose to do this, then it will happen, but otherwise, this can't happen. And i don't see a situation where the existing shareholders would willingly choose to do this dilution for no reason.
> Over a billion people use Apple products
That is not true. There are only 1.5 billion active Apple devices. I myself own 4 of those. Everyone else I know that has an Apple device also has multiple. I'm pretty sure the average Apple customer owns more than 1.5 devices. Thus there can't be over a billion of these people.
That is not true. There are only 1.5 billion active Apple devices. I myself own 4 of those. Everyone else I know that has an Apple device also has multiple. I'm pretty sure the average Apple customer owns more than 1.5 devices. Thus there can't be over a billion of these people.
You can use diamonds to cut things. As for store of value, nobody sees it as a store of value. If you think it has value, go and buy a large diamond from a jewellery store, and then try to sell it somewhere for the same price.
Diamonds are mostly consumption. Used diamonds always sell for WAY less than new, unless there’s some other factor.
The same could be said it FIAT currencies. It’s all an illusion/religion.
One is an illusion based around a legal system of enforceable debt, and the other is an illusion based on current speculator psychology.
One of those illusions is more powerful and sustainable than the other
One of those illusions is more powerful and sustainable than the other
Fiat currencies (of democratic nations) are democratically controlled. That makes them fundamentally different from cryptocurrencies controlled by early adopters, a few engineers, and mining rigs.
serious question, how is the democratic process different between the two? One i.e. democratic nations are a group of people on the same piece of land that. The other is a group of people on the internet.
A few years ago the BTC/BCH split happened. This was a major philosophical decision that creates winners and losers and changes the trajectory of the winning coin forever. It was a fiscal policy decision.
It was made exclusively by software engineers and miners. Miners get to vote based on their wealth. I don't consider that to be "a democratic process". There is no guarantee of enfranchisement. Some people get far far far more votes than others. It is more like a council of aristocrats.
It was made exclusively by software engineers and miners. Miners get to vote based on their wealth. I don't consider that to be "a democratic process". There is no guarantee of enfranchisement. Some people get far far far more votes than others. It is more like a council of aristocrats.
it is, but bitcoin is a particularly stupid one
No, FIAT currencies derive a value by the government putting one to it. The government spends it and accepts payment with it.
Government spending in the US is 35% of the whole GDP.
Try to argue with your tax office, that it is an illusion/religion.
Government spending in the US is 35% of the whole GDP.
Try to argue with your tax office, that it is an illusion/religion.
the only reason the dollar has any value at all is that it is issued within the context of a society full of people who have agreed to treat it as though it has value. Without that faith, every major currency on Earth would be as useful as small pieces of paper generally are
no, this is literally macro economics 101 dude. Governments don't give money value. People's belief it has value is what gives money value.
Absolutely. It's just funny that many cryptocurrency advocates reject "fiat" currencies for being fake and arbitrary, but bitcoin is even more fake and arbitrary. At least USD has the non-illusionary property of keeping me out of jail when paid to the IRS. ;)
Why is BTC worth more than BCH?
Why is BTC worth more than BCH?
Indeed, it doesn't even need to be global trouble, e.g. if you were a bitcoin enthusiast living in Puerto Rico during 2017, you learned first-hand exactly how useless bitcoin becomes when a major disaster strikes. Cash and gold didn't suffer the same fate.
Presumably it wasn't used for everyday payments before, and obviously the global price was unaffected, so when you say it become useless, in what way do you mean?
I mean that the island was without power for months so anybody that was expecting to rely on bitcoin in any capacity during the disaster was totally screwed.
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It's going to take some pretty big balls to dump your money into bitcoin instead of gold or cash the next time the stock market crashes. Then we'll see how good a store of value it is.
Big balls, surely, but are we waiting to see that happen, or haven't we seen that happen? The stock market has settled around ATHs, not pushing too far down or up. Meanwhile, 40% of all US currency ever minted has been printed in the last 365 days [1], and Bitcoin is worth nearly $50k.
Maybe it's just me, but it's clear to me that markets crashed, the shockwave just hasn't been felt by everyone yet.
[1]: https://fred.stlouisfed.org/series/M1
Maybe it's just me, but it's clear to me that markets crashed, the shockwave just hasn't been felt by everyone yet.
[1]: https://fred.stlouisfed.org/series/M1
No, I mean a depression. What we've seen is investors scrambling to find returns in riskier assets due to low interest rates, but the bubble hasn't burst yet.
Once it does, we're likely to see a depression at some point [1].
Since Bitcoin is famously volatile I'd bet that once there's a scare, people who've pumped the price up to the current highs will abandon it in droves. After all, there's a huge difference in risk between buying in <$5k vs ~$30-50k
[1] https://economicprinciples.org/
Once it does, we're likely to see a depression at some point [1].
Since Bitcoin is famously volatile I'd bet that once there's a scare, people who've pumped the price up to the current highs will abandon it in droves. After all, there's a huge difference in risk between buying in <$5k vs ~$30-50k
[1] https://economicprinciples.org/
We know exactly what happens in a rush to liquidity. BTC/other non income producing "assets" are the first to go.
I'd rather invest into something that is highly volatile but almost certainly appreciates over time rather than something that depreciates at a predictable yet increasing rate.
We could discuss the fact that BTC might be overpriced or underpriced, nobody really knows. But that it's going to go up in value (in terms of purchasing power) in the long term is, black swan events aside, almost a certainty because of its engineered stock to flow.
Scarcity is real whether it's physical or digital (as we've seen with art, collectibles or more recently NFTs). Gold is a good store of value because of historically predictable scarcity but it's not predictable with certainty. Bitcoin is. We'll know exactly how many bitcoins are in circulation 10 minutes, 10 days, 10 or even 100 years from now. If anything many will be lost, which will contribute to its scarcity.
Will Bitcoin be replaced by something else in the future? Almost certainly. But let's not forget that unbacked cash has been around for just half a century. Even if Bitcoin is replaced by something 50, 100 years from now that's plenty of time for a couple of generations to use it as a store of value (and payment system).
We could discuss the fact that BTC might be overpriced or underpriced, nobody really knows. But that it's going to go up in value (in terms of purchasing power) in the long term is, black swan events aside, almost a certainty because of its engineered stock to flow.
Scarcity is real whether it's physical or digital (as we've seen with art, collectibles or more recently NFTs). Gold is a good store of value because of historically predictable scarcity but it's not predictable with certainty. Bitcoin is. We'll know exactly how many bitcoins are in circulation 10 minutes, 10 days, 10 or even 100 years from now. If anything many will be lost, which will contribute to its scarcity.
Will Bitcoin be replaced by something else in the future? Almost certainly. But let's not forget that unbacked cash has been around for just half a century. Even if Bitcoin is replaced by something 50, 100 years from now that's plenty of time for a couple of generations to use it as a store of value (and payment system).
There are many, many things other than Bitcoin which are also guaranteed to be finite in supply (more so in the case of physical goods, since they cannot be forked). BCash, most shitcoins and inactive ICO tokens, for example, are limited in supply in exactly the same way. Share certificates of bust companies are fixed in supply, and yet rarely worth more than the paper they're printed on. The creative output of every dead person is fixed in supply, and yet some dead people's work appreciates massively in value whilst others' is near worthless.
Price is the interaction of supply and demand, and there is no particular reason to believe that people will be more willing to pay over $45k to update ledgers to indicate possession of a particular alphanumeric string in a couple of decades' time than they are now.
Price is the interaction of supply and demand, and there is no particular reason to believe that people will be more willing to pay over $45k to update ledgers to indicate possession of a particular alphanumeric string in a couple of decades' time than they are now.
Yep and that's Bitcoin's network effect. There is demand for Bitcoin. 2017 was the year of retail interest, 2021 is the year of institutional interest. It's easy to see that the price is now uncorrelated with the retail interest, using Google Trends as an example. [0]
> there is no particular reason to believe that people will be more willing to pay over $45k to update ledgers to indicate possession of a particular alphanumeric string in a couple of decades' time than they are now
Absolutely. Nobody can know with certainty what will happen but if you compare Bitcoin with something like gold you immediately realize that Bitcoin is better in any possible way. There is literally no reason to think that Bitcoin won't replace gold in terms of market capitalization (except for the 7.5% actually used in manufacturing) [1].
[0] https://trends.google.com/trends/explore?date=today%205-y&ge...
[1] https://www.statista.com/statistics/299609/gold-demand-by-in...
> there is no particular reason to believe that people will be more willing to pay over $45k to update ledgers to indicate possession of a particular alphanumeric string in a couple of decades' time than they are now
Absolutely. Nobody can know with certainty what will happen but if you compare Bitcoin with something like gold you immediately realize that Bitcoin is better in any possible way. There is literally no reason to think that Bitcoin won't replace gold in terms of market capitalization (except for the 7.5% actually used in manufacturing) [1].
[0] https://trends.google.com/trends/explore?date=today%205-y&ge...
[1] https://www.statista.com/statistics/299609/gold-demand-by-in...
> Nobody can know with certainty what will happen but if you compare Bitcoin with something like gold you immediately realize that Bitcoin is better in any possible way.
Again, this is cargo-cult nonsense. Gold does not take the electricity resources of a large country to render it secure and make transactions possible. People cannot vote for a greater gold supply or fork gold, or create an alternative gold which lacks the need to use the electricity resources of a small country to secure it but is in every other respect functionally identical. Gold is pretty to look at and can be made into jewellery, not intrinsically worthless. Gold's price might be pushed higher than that intrinsic value by interest in its use as a store of value, but it's driven by millenia of desire to possess gold as a status symbol and currency substitute across a vast array of cultures, not a 12 year bull run propped up by counterfeit dollars and increasingly unrealistic claims that it will replace currency. There is literally no reason to believe that Bitcoin will ever 'replace gold in terms of market capitalization'
Again, this is cargo-cult nonsense. Gold does not take the electricity resources of a large country to render it secure and make transactions possible. People cannot vote for a greater gold supply or fork gold, or create an alternative gold which lacks the need to use the electricity resources of a small country to secure it but is in every other respect functionally identical. Gold is pretty to look at and can be made into jewellery, not intrinsically worthless. Gold's price might be pushed higher than that intrinsic value by interest in its use as a store of value, but it's driven by millenia of desire to possess gold as a status symbol and currency substitute across a vast array of cultures, not a 12 year bull run propped up by counterfeit dollars and increasingly unrealistic claims that it will replace currency. There is literally no reason to believe that Bitcoin will ever 'replace gold in terms of market capitalization'
> Gold does not take the electricity resources of a large country to render it secure and make transactions possible.
Except it does [0].
> Gold is pretty to look at and can be made into jewellery, not intrinsically worthless.
The first argument is laughable, the second is simply incorrect. Oil is intrinsically worthless. It's worth something only if you can turn it into fuel, plastic or some other product for which there is demand. Same goes for gold.
And although it's true that you can turn a piece of gold into a piece of jewelry that piece of jewelry will decrease in value over time unless it gains intangible value because of its history. Try buying a gold necklace and selling it the next day at the same value.
Nothing has "intrinsic" value. All value is relative.
[0] https://medium.com/@hillpot/bitcoin-vs-gold-which-hurts-the-....
Except it does [0].
> Gold is pretty to look at and can be made into jewellery, not intrinsically worthless.
The first argument is laughable, the second is simply incorrect. Oil is intrinsically worthless. It's worth something only if you can turn it into fuel, plastic or some other product for which there is demand. Same goes for gold.
And although it's true that you can turn a piece of gold into a piece of jewelry that piece of jewelry will decrease in value over time unless it gains intangible value because of its history. Try buying a gold necklace and selling it the next day at the same value.
Nothing has "intrinsic" value. All value is relative.
[0] https://medium.com/@hillpot/bitcoin-vs-gold-which-hurts-the-....
> Except it does [0].
That energy is used in production, not securing the existing stock of gold. With the very significant consequence for gold's "store of value" role that if environmental activists succeed in curtailing gold mining, gold owners would see their gold go up in value, not transactions becoming incredibly difficult and prone to fraud and a price crash. (But FWIW I'm not saying that gold mining to use as a "store of value" isn't also wasteful)
> It's worth something only if you can turn it into fuel, plastic or some other product for which there is demand. Same goes for gold.
I'm sorry to hear you find the aesthetic preferences of virtually every culture in history and the role they have played in promoting gold as a symbol of wealth laughable. You'd be surprised how much harder it is to enthuse them about the aesthetic properties of Bitcoins though.
And no, oil or gold is not "intrinsically worthless" because it is possible to use oil or gold for purposes other than exchange, and thus people value them for those use cases independently of beliefs about their future price.
> And although it's true that you can turn a piece of gold into a piece of jewelry that piece of jewelry will decrease in value over time unless it gains intangible value because of its history. Try buying a gold necklace and selling it the next day at the same value.
And yet gold necklaces of a given design are invariably more scarce in supply than Bitcoin! Almost like the demand side of the equation actually matters! Luckily, people do not buy gold necklaces solely because they believe gold necklaces will go up in price, and are not motivated to sell them as soon as they fear the price will fall in future. The same does not apply to Bitcoins, because unlike Bitcoins, people hold necklaces for the intrinsic pleasure of having a shiny necklace.
That energy is used in production, not securing the existing stock of gold. With the very significant consequence for gold's "store of value" role that if environmental activists succeed in curtailing gold mining, gold owners would see their gold go up in value, not transactions becoming incredibly difficult and prone to fraud and a price crash. (But FWIW I'm not saying that gold mining to use as a "store of value" isn't also wasteful)
> It's worth something only if you can turn it into fuel, plastic or some other product for which there is demand. Same goes for gold.
I'm sorry to hear you find the aesthetic preferences of virtually every culture in history and the role they have played in promoting gold as a symbol of wealth laughable. You'd be surprised how much harder it is to enthuse them about the aesthetic properties of Bitcoins though.
And no, oil or gold is not "intrinsically worthless" because it is possible to use oil or gold for purposes other than exchange, and thus people value them for those use cases independently of beliefs about their future price.
> And although it's true that you can turn a piece of gold into a piece of jewelry that piece of jewelry will decrease in value over time unless it gains intangible value because of its history. Try buying a gold necklace and selling it the next day at the same value.
And yet gold necklaces of a given design are invariably more scarce in supply than Bitcoin! Almost like the demand side of the equation actually matters! Luckily, people do not buy gold necklaces solely because they believe gold necklaces will go up in price, and are not motivated to sell them as soon as they fear the price will fall in future. The same does not apply to Bitcoins, because unlike Bitcoins, people hold necklaces for the intrinsic pleasure of having a shiny necklace.
[flagged]
> Safes and transportation equipment have to be built too.
Because gold will be worthless and useless if it is not possible to continue using as much energy as Argentina on a daily basis to build and maintain safes and Securicor vans?
> Meaning we could be using a lot of renewable resources that would otherwise be wasted to create and exchange value.
Because the world is famously short of use cases and storage media for electrical power? As I already pointed out, none of the energy used to mine new gold is essential (or even remotely helpful) to securing and transacting with the existing gold supply, gold mining being energy use is something of a moot point when considering possible advantages of holding gold instead.
> I don't and you took what I said out of context Of course aesthetic properties are important. But quartz is arguably "prettier" than gold in most cultures. Gold is scarcer. That's why only considering the aesthetics is laughable.
At no point have I even hinted at considering only the aesthetics, and no good faith reading of my arguments would conclude I did. I did, after all, include the clause "price is the interaction of supply and demand" in my opening post.
I noted that aesthetics were a factor creating demand for gold independently from its perceived resale value. You summarily dismissed this as "laughable". There was nothing substantive for me to "take out of context", but I'm glad you now agree that the intrinsic aesthetic properties of gold are important.
> Gold necklaces of a certain brand. Not any custom designed necklace. It's an important distinction
Yes. I am aware that brands exist. Sometimes brands even produce limited editions so "we'll know exactly how many [necklaces] are in circulation 10 minutes, 10 days, 10 or even 100 years from now", but even this doesn't guarantee their gold necklaces retain their value. The fact that scarcity of particular designs often does not make them more useful as a store of value than the less scarce raw material supports my argument not yours. Second hand necklace preferences are fickle, and financial instrument preferences even more so.
> You seem to be unaware of how many people hold Bitcoin just because they like doing so (think GME and WSB)
How's GME performed as a store of value since WSB pumped? It's just as scarce as it was 10 days ago, but apparently not guaranteed to go up after all...
And come to think of it, the "terms of it being an instrument against totalitarianism and governments in general" are not independent from BTCs potential for future exchange use. Certainly neither as independent from future use nor as widespread as people taking pleasure from things' intrinsic shininess.
Because gold will be worthless and useless if it is not possible to continue using as much energy as Argentina on a daily basis to build and maintain safes and Securicor vans?
> Meaning we could be using a lot of renewable resources that would otherwise be wasted to create and exchange value.
Because the world is famously short of use cases and storage media for electrical power? As I already pointed out, none of the energy used to mine new gold is essential (or even remotely helpful) to securing and transacting with the existing gold supply, gold mining being energy use is something of a moot point when considering possible advantages of holding gold instead.
> I don't and you took what I said out of context Of course aesthetic properties are important. But quartz is arguably "prettier" than gold in most cultures. Gold is scarcer. That's why only considering the aesthetics is laughable.
At no point have I even hinted at considering only the aesthetics, and no good faith reading of my arguments would conclude I did. I did, after all, include the clause "price is the interaction of supply and demand" in my opening post.
I noted that aesthetics were a factor creating demand for gold independently from its perceived resale value. You summarily dismissed this as "laughable". There was nothing substantive for me to "take out of context", but I'm glad you now agree that the intrinsic aesthetic properties of gold are important.
> Gold necklaces of a certain brand. Not any custom designed necklace. It's an important distinction
Yes. I am aware that brands exist. Sometimes brands even produce limited editions so "we'll know exactly how many [necklaces] are in circulation 10 minutes, 10 days, 10 or even 100 years from now", but even this doesn't guarantee their gold necklaces retain their value. The fact that scarcity of particular designs often does not make them more useful as a store of value than the less scarce raw material supports my argument not yours. Second hand necklace preferences are fickle, and financial instrument preferences even more so.
> You seem to be unaware of how many people hold Bitcoin just because they like doing so (think GME and WSB)
How's GME performed as a store of value since WSB pumped? It's just as scarce as it was 10 days ago, but apparently not guaranteed to go up after all...
And come to think of it, the "terms of it being an instrument against totalitarianism and governments in general" are not independent from BTCs potential for future exchange use. Certainly neither as independent from future use nor as widespread as people taking pleasure from things' intrinsic shininess.
> How's GME performed as a store of value since WSB pumped? It's just as scarce as it was 10 days ago, but apparently not guaranteed to go up after all...
I was simply responding to what you said earlier:
> The same does not apply to Bitcoins, because unlike Bitcoins, people hold necklaces for the intrinsic pleasure of having a shiny necklace.
It does, instead, apply.
I was simply responding to what you said earlier:
> The same does not apply to Bitcoins, because unlike Bitcoins, people hold necklaces for the intrinsic pleasure of having a shiny necklace.
It does, instead, apply.
> Oil is ... worth something only if you can turn it into fuel, plastic or some other product for which there is demand. Same goes for gold.
You clearly don't understand what "intrinsic value" means if you believe this. The very fact it can be fabricated into something of value gives it some intrinsic value.
You clearly don't understand what "intrinsic value" means if you believe this. The very fact it can be fabricated into something of value gives it some intrinsic value.
Please omit personal swipes from your comments, and please don't post in the flamewar style.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
> The very fact it can be fabricated into something of value gives it some intrinsic value.
That's a plain contradiction. Oil is valuable because there is demand for products manufactured with it. In a world where there's no demand for gasoline, plastic or any other derivative of oil the "intrinsic value" of oil is zero, which proves there is no such thing as intrinsic value that isn't relative to a market.
Just to be clear we're discussing commodities and not company stocks, for which there is a very specific definition of "intrinsic value", according to fundamental analysis at least.
I'm pretty sure you're the one who's confused, but ok.
That's a plain contradiction. Oil is valuable because there is demand for products manufactured with it. In a world where there's no demand for gasoline, plastic or any other derivative of oil the "intrinsic value" of oil is zero, which proves there is no such thing as intrinsic value that isn't relative to a market.
Just to be clear we're discussing commodities and not company stocks, for which there is a very specific definition of "intrinsic value", according to fundamental analysis at least.
I'm pretty sure you're the one who's confused, but ok.
Please omit personal swipes from your comments, and please don't post in the flamewar style.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
Apologies @maclured. Thank you @dang!
The question is, will people run to it as a safe haven in the event of a huge stock market crash, or away from it? Nobody knows for sure. It's a game of chicken - not having the heritage of gold, I don't think it'd take much for people to get scared and realise that all they have are a load of strings of characters (scarce or not) and want to dump it. After all, it's crashed before.
Until then, it's potentially a great investment in today's climate (especially if you don't care about the climate).
Until then, it's potentially a great investment in today's climate (especially if you don't care about the climate).
> all they have are a load of strings of characters
Most things valuable nowadays are strings of characters. It's not the byte sequence that's valuable, it's what it represents. Bitcoin is, conceptually speaking, an asset that is orders of magnitude better than most existing financial instruments and commodities. The fact that it's implemented using bits instead of atoms is completely irrelevant.
I really don't understand this urge of breaking down anything digital into its fundamental units to try and diminish its value. It's the equivalent of evaluating anything in the physical world as "just a bunch of atoms".
Most things valuable nowadays are strings of characters. It's not the byte sequence that's valuable, it's what it represents. Bitcoin is, conceptually speaking, an asset that is orders of magnitude better than most existing financial instruments and commodities. The fact that it's implemented using bits instead of atoms is completely irrelevant.
I really don't understand this urge of breaking down anything digital into its fundamental units to try and diminish its value. It's the equivalent of evaluating anything in the physical world as "just a bunch of atoms".
> I really don't understand this urge of breaking down anything digital into its fundamental units to try and diminish its value. It's the equivalent of evaluating anything in the physical world as "just a bunch of atoms".
Because in the good times, people think these things are great investments. But as soon as things go south they look at what they have from a different perspective. Something with some intrinsic value (e.g. a "bunch of atoms" that can be eaten or lived in) is likely to be much easier to rationalise holding on to in that scenario, rather than something that's only worth something due to consensus by a bunch of strangers.
And that's the risk - it doesn't matter if as an individual you see great potential. If everyone else disagrees, gets scared and sells, then BTC could be battered.
Because in the good times, people think these things are great investments. But as soon as things go south they look at what they have from a different perspective. Something with some intrinsic value (e.g. a "bunch of atoms" that can be eaten or lived in) is likely to be much easier to rationalise holding on to in that scenario, rather than something that's only worth something due to consensus by a bunch of strangers.
And that's the risk - it doesn't matter if as an individual you see great potential. If everyone else disagrees, gets scared and sells, then BTC could be battered.
Most subjectively "useless" objects are used as a store of value. Only 7/8% of gold is used in the manufacturing industry, the rest is sitting there with no active purpose other than existing. Same goes for collectibles (you can't eat or live in a baseball card or a valuable artwork).
Also the "live in" is a big misconception. Real estate doesn't increase in value. What does is the land on top of which it sits. A house depreciates over time exactly like a car (prefabs on rented land are a great example of that).
The only question that matters is: is Bitcoin better than commodity X? Where X can be gold, silver, oil or whatever else. And if the answer is yes there's no reason to believe it wouldn't take over X in terms of market capitalization (and, therefore, value).
Also the "live in" is a big misconception. Real estate doesn't increase in value. What does is the land on top of which it sits. A house depreciates over time exactly like a car (prefabs on rented land are a great example of that).
The only question that matters is: is Bitcoin better than commodity X? Where X can be gold, silver, oil or whatever else. And if the answer is yes there's no reason to believe it wouldn't take over X in terms of market capitalization (and, therefore, value).
> The only question that matters is: is Bitcoin better than commodity X
No. The only question that matters is will people collectively continue to agree that it's worth something, lacking any intrinsic value?
If interest rates go up and people need to call in their assets to repay their debts, what do you think will happen? Would people rather lose their houses or their bitcoins?
I think people will dump stocks and risky "assets" like BTC and take flight into cash with some percentage in traditional safe havens with a proven track record (like gold) until things settle down. This is exactly what happened a year ago. There's no reason in my mind to believe anything would change regarding BTC's status now - I think it'll be dumped like it was last year. It may recover faster (I'd certainly buy it for a heavy discount), but I just don't buy the "store of value", "digital gold" argument.
It's an early-stage speculative asset IMO - let's not pretend it's a stable, low-risk store of value.
> A house depreciates over time
Tell that to people unable to buy because house prices have shot up. Property can also generate a good rental income - yield obviously dependent on the price paid. BTC doesn't provide any such perpetuity.
No. The only question that matters is will people collectively continue to agree that it's worth something, lacking any intrinsic value?
If interest rates go up and people need to call in their assets to repay their debts, what do you think will happen? Would people rather lose their houses or their bitcoins?
I think people will dump stocks and risky "assets" like BTC and take flight into cash with some percentage in traditional safe havens with a proven track record (like gold) until things settle down. This is exactly what happened a year ago. There's no reason in my mind to believe anything would change regarding BTC's status now - I think it'll be dumped like it was last year. It may recover faster (I'd certainly buy it for a heavy discount), but I just don't buy the "store of value", "digital gold" argument.
It's an early-stage speculative asset IMO - let's not pretend it's a stable, low-risk store of value.
> A house depreciates over time
Tell that to people unable to buy because house prices have shot up. Property can also generate a good rental income - yield obviously dependent on the price paid. BTC doesn't provide any such perpetuity.
You fail to understand 3 things:
1. There is no such thing as "intrinsic value" and I explained clearly why in a different reply to your comment.
2. What goes up is the value of land, not houses. If houses themselves were valuable movable homes would also increase in value. They don't. The reason why land goes up in value is that (residential) land is scarce.
3. Gold isn't a safe haven because of its track record (in fact gold is relatively volatile [0] and if you had bought gold in 1980 you'd have lost money today, adjusted to inflation), it's considered a safe haven because it's the only commodity that has a historically predictable stock to flow and can (and normally does) act as a hedge against inflation. Bitcoin does that and more.
> It's an early-stage speculative asset IMO
So was gold in its early stages as a store of value. So is any valuable company's stock in the first few months after IPO. Speculation is uncorrelated with the lack of fundamental valuable features.
At this point I'm not sure your intent is to try to understand more about Bitcoin (or economy, for that matter) but rather to force a narrative that isn't at all obvious, unlike what you're trying to imply. And I'm not saying you're wrong, rather that you're unable to corroborate your statements with data and facts.
"And for that reason, I'm out".
[0] https://www.macrotrends.net/1333/historical-gold-prices-100-...
1. There is no such thing as "intrinsic value" and I explained clearly why in a different reply to your comment.
2. What goes up is the value of land, not houses. If houses themselves were valuable movable homes would also increase in value. They don't. The reason why land goes up in value is that (residential) land is scarce.
3. Gold isn't a safe haven because of its track record (in fact gold is relatively volatile [0] and if you had bought gold in 1980 you'd have lost money today, adjusted to inflation), it's considered a safe haven because it's the only commodity that has a historically predictable stock to flow and can (and normally does) act as a hedge against inflation. Bitcoin does that and more.
> It's an early-stage speculative asset IMO
So was gold in its early stages as a store of value. So is any valuable company's stock in the first few months after IPO. Speculation is uncorrelated with the lack of fundamental valuable features.
At this point I'm not sure your intent is to try to understand more about Bitcoin (or economy, for that matter) but rather to force a narrative that isn't at all obvious, unlike what you're trying to imply. And I'm not saying you're wrong, rather that you're unable to corroborate your statements with data and facts.
"And for that reason, I'm out".
[0] https://www.macrotrends.net/1333/historical-gold-prices-100-...
Please don't post in the flamewar style to HN. You've crossed noticeably into that here and it's not cool—we're trying to avoid that kind of thing on this site.
If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and sticking to the rules when posting here, we'd be grateful.
If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and sticking to the rules when posting here, we'd be grateful.
Again, I apologize. It was a knee jerk reaction to being told I don't understand something without proof. I believe that also violates numerous guidelines:
> Be kind. Don't be snarky.
> Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something.
And I disagree with:
> You've crossed noticeably into that here [emphasis mine]
I've only done that in 2 comments towards the same user who also behaved similarly towards me. All my other comments have been polite, constructive and filled with references.
> Be kind. Don't be snarky.
> Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something.
And I disagree with:
> You've crossed noticeably into that here [emphasis mine]
I've only done that in 2 comments towards the same user who also behaved similarly towards me. All my other comments have been polite, constructive and filled with references.
>Even if Bitcoin is replaced by something 50, 100 years
How about 5 years?
How about 5 years?
Extremely unlikely. Bitcoin has been around 12 years and it's just now starting to go mainstream. Most people still have no idea what it even is. You can count the number of publicly traded companies that have Bitcoin in their treasury on 2 hands and that's only destined to increase.
I can't give you an actual estimate of how long it will take for Bitcoin to lose its market share but I can confidently say it will take decades. At very least until it replaces a good chunk of gold's market cap.
I can't give you an actual estimate of how long it will take for Bitcoin to lose its market share but I can confidently say it will take decades. At very least until it replaces a good chunk of gold's market cap.
Seems like an Is/Ought Fallacy. Also, governments won't willingly surrender their control of the money supply. I think that with one stroke of a pen they could let the price /10 as fast as it went x10.
Moreover, since technology is accelerating ever faster, five years from now is a lot longer than five years starting from 1980.
Moreover, since technology is accelerating ever faster, five years from now is a lot longer than five years starting from 1980.
It won't
It won't for small transactions. Buying a car or a house with BTC could still be viable in the future.
It won't for small transactions. Buying a car or a house with BTC could still be viable in the future.
I still don't see how. When we bought our house in the UK I sent the entire transfer from my phone, paid 0 fee, and it arrived 30 seconds later. Why would I use bitcoin for it?
Meanwhile, if I want to donate over $25,000 to charity in the US, I have to go into the bank (in person even during the pandemic) spend half an hour while they fill out forms, pay a $12 fee (still negligible, granted), and they'll process it within 12 hours.
Bitcoin might not be as good as the UK, but you have to understand that the consumer US financial system remains stuck in the 1980s.
Bitcoin might not be as good as the UK, but you have to understand that the consumer US financial system remains stuck in the 1980s.
> if I want to donate over $25,000 to charity in the US, I have to go into the bank (in person even during the pandemic) spend half an hour while they fill out forms, pay a $12 fee (still negligible, granted), and they'll process it within 12 hours.
You can do it from home for a negligible fee ($0-$3) if you're ok with ACH instead.
(Same-day ACH has a max of $100k, though it used to be $25k. Next-day ACH is something like $100M, though your bank likely has a lower limit.)
You can do it from home for a negligible fee ($0-$3) if you're ok with ACH instead.
(Same-day ACH has a max of $100k, though it used to be $25k. Next-day ACH is something like $100M, though your bank likely has a lower limit.)
I’m currently buying a house internationally. International wire transfers take multiple days and I have to produce all sorts of documents for the receiving country’s government showing the source of the money. It’s an annoying and lengthy process. I’d much rather send BTC to a wallet than this.
If you are buying and selling real estate in a functioning jurisdiction, hiding your identity by making the payment opaque is not going to do much for you.
There are title deeds and tax rolls. In many jurisdictions you have obligations like building codes that need to be inspected and an owner needs to be held to account. If you need privacy, you have to set up shell companies to act as the legal owner, not hide the payment from your bank or government.
Speaking of showing the source of the money, if you bought my house from me with bitcoin, I would have to speak to a lawyer about not running afoul of money-laundering regulations. And no, I won’t take the internet’s word for it that somehow, those laws only pertain to fiat currency.
Something tells me that the cost of fighting my government in court would far exceed the value of my home regardless of whether I was technically in the right not to fill out all those same forms.
There are title deeds and tax rolls. In many jurisdictions you have obligations like building codes that need to be inspected and an owner needs to be held to account. If you need privacy, you have to set up shell companies to act as the legal owner, not hide the payment from your bank or government.
Speaking of showing the source of the money, if you bought my house from me with bitcoin, I would have to speak to a lawyer about not running afoul of money-laundering regulations. And no, I won’t take the internet’s word for it that somehow, those laws only pertain to fiat currency.
Something tells me that the cost of fighting my government in court would far exceed the value of my home regardless of whether I was technically in the right not to fill out all those same forms.
Are you saying that if you were buying a house with Bitcoin that the government wouldn't want to see where the money is sourced from?
It would be easier, this TX came from my work's hotwallet & this one was part of my inheritance, you can see these TXs where that address sent to the tax authority assuring all tax has been paid as opposed to being passed around a call centre to talk to "Bob" so the bank can provide those details.
So......exactly the same way it works with a bank nowadays? When I did it it was just a printed statement from my bank(that I printed myself), showing money arriving from X account, Y amount paid for tax, document from solicitor confirming inheritence, 3 copies of my payslip, done. How exactly is that easier with bitcoin?
Bitcoin is useful for evading the law, but of course there had a host of other issues and risks.
Like finding out that the house is actually not yours after landing in a foreign country and having spend you life saving on a BTC transaction.
Big issues, big risks, but maybe you have big balls too... I personally don't feel so self assured about myself.
Big issues, big risks, but maybe you have big balls too... I personally don't feel so self assured about myself.
[deleted]
No they don't? I frequently send large(about £50k/month) amounts of money between one EU country and UK, we always pay extra(50 euro) to have the transfer done as an express transfer and the money arrives within 60 minutes in the UK bank. Or if you don't mind doing a SEPA transfer then it's 15 minutes. And no, I was never asked to prove any source of anything, it's an invoice payment, it goes straight through.
Maybe by "international" you mean something else, but at least in the EU(and EEA and UK) transfers can be incredibly quick.
Maybe by "international" you mean something else, but at least in the EU(and EEA and UK) transfers can be incredibly quick.
14x more people live outside of SEPA than live within it.
And it's the biggest(by operating revenue) market in the world, what's your point?
Apologies, I thought I was being clear. A payment system that lets people transfer unlimited amounts of value to 14x more people than SEPA (presuming internet access), without censorship, irreversibly, and effectively for free, has, it seems to me, substantial value.
Even if it's less useful than, say, access to SEPA, it'd have to be 14x less valuable to break even (again, presuming internet access available to everyone, which isn't a thing yet).
Even if it's less useful than, say, access to SEPA, it'd have to be 14x less valuable to break even (again, presuming internet access available to everyone, which isn't a thing yet).
The main reason for a lot of that documentation is know your customer/anti-money-laundering laws. Even if you were sending BTC, you would still have to provide that documentation to not break the law.
>International wire transfers take multiple days
Not in the EU they don't. A SEPA transfer takes max 1 business day and is usually free. More info: https://www.gbm.hsbc.com/solutions/global-liquidity-and-cash...
Not in the EU they don't. A SEPA transfer takes max 1 business day and is usually free. More info: https://www.gbm.hsbc.com/solutions/global-liquidity-and-cash...
Ummm, I've seen a lot of movies and international wire transfers are not like that at all. Basically one click and they're instantaneous.
Well, almost -- they do always feature cool progress bars as the money is transferred.
Well, almost -- they do always feature cool progress bars as the money is transferred.
banks in the UK are operating a charity? someone pays for all those skyscrapers.
Well I mean, clearly they make their money elsewhere. I don't pay anything for having an account, debit card for it, or for making any transfers - that's with barclays. So their entire money making process is elsewhere.
Maybe you don't want your bank to know.
You can't just buy a house with a suitcase full of cash these days, it's not possible. The gov will be asking where that money came from, to prevent money laundering and to ensure it's not proceeds of crime. Whether not you agree with that, this is the situation.
The idea that somehow they'll let you buy something with Bitcoin without requiring the same level of disclosure is a complete fantasy.
The idea that somehow they'll let you buy something with Bitcoin without requiring the same level of disclosure is a complete fantasy.
While I think technically there isn't anything stopping you from buying a house with hard cash in the UK, I very much doubt that either side's solicitor would agree to it without extensive documentation as to where how and when you got that cash.
Yes, for clarity I meant to say "you can't just buy a house with a suitcase full of cash and no explanation of where it came from".
I'm sure it's possible, although almost certainly very much not really liked by your solicitor!
I'm sure it's possible, although almost certainly very much not really liked by your solicitor!
> You can't just buy a house with a suitcase full of cash these days, it's not possible
I must point out I know a couple people who did that in Hungary in the last ten years, just because it seemed absolutely insane to me (cheques don't exist here, either..).
I am reasonably sure this isn't that common though, and the government still tracks the transaction :)
I must point out I know a couple people who did that in Hungary in the last ten years, just because it seemed absolutely insane to me (cheques don't exist here, either..).
I am reasonably sure this isn't that common though, and the government still tracks the transaction :)
I mean the only reason you own a house is because the government tracks the transaction.
In what way? As in financiers will pay with BTC? I don't know many people who pay for their cars or houses in one payment. Or is the suggestion that scheduled recurring monthly payments are viable?
Poor people don't. Many rich people do.
Paying for cars with one payment is fairly common, I just used my debit card for my current one.
I want Banks and Regulators involved when I buy a house. I understand that these 3rd parties can make things take longer or add extra fees, but that gives me legal protections I don't get with bitcoin.
I haven't received my official enthusiast talking points memo, but the obvious solution was proposed years ago: off chain transaction that use smart contracts for settlement on the public ledger. I vaguely remember "store of value" being used for what would more accurately be described as "trust anchor" or "root authority".
As you've said, it's been years since that was proposed but it's still not helping because none of the off chain networks have gotten any traction.
Admittedly, my experience with BTC is limited so please enlighten me if I have this wrong. That’s not a sarcastic request. I’m being genuine.
Admittedly, my experience with BTC is limited so please enlighten me if I have this wrong. That’s not a sarcastic request. I’m being genuine.
I don't follow the day to day, and it has been years since I contributed any code, but a quick peek at the lightning network stats makes me think that everything is fine. Good organic growth, with over 1000 BTC presently in flight. A lot of people seemed to be under the impression that the off chain networks would take center stage, and the blockchain would quietly power it from behind the scenes - but I'm pretty sure the direct opposite will occur. As far as why there hasn't been an explosion in network activity: I guess there isn't enough pressure. Every so often there is a spike that gets people up in arms, then it quiets down and they forget. Larger wallets will eventually start moving transactions off chain, but they've obviously got as much enthusiasm about it as they did in updating their backends to take advantage of space saving changes in the protocol. But once its done, its done.
https://bitcoinvisuals.com/ln-capacity
https://bitcoinvisuals.com/ln-capacity
Off Chain transactions look so much like a credit card that as soon as you begin to build the off chain transaction system you see that Amex/Visa/MC could just allow customers to settle payment in BTC and get the same value.
I'm trying to imagine how you think that'd work without them also running an exchange and eating slippage, or maintaining a massive hot wallet.
You could make it a debit card and require people to deposit BTC. But in general the USD is a better settlement currency. That is why BTC isn't being used in transactions.
BTC is a pump and dump play.
BTC is a pump and dump play.
lol, so nothing even close to an off chain network - but somehow the "same value". Well, except for the real time cryptographically secure stuff - but nobody wanted those values anyway.
10+ years is a pretty long con, that satoshi is one patient fraudster.
10+ years is a pretty long con, that satoshi is one patient fraudster.
satoshi obviously isn't part of the con. He would have sold a long time ago if that was the case.
It is the people who have latched on as "bitcoin evangelists" and are recruiting more people into the network to get the price to go up. Classic Ponzi scheme.
It is the people who have latched on as "bitcoin evangelists" and are recruiting more people into the network to get the price to go up. Classic Ponzi scheme.
So not a "Classic Ponzi scheme", but the opposite - where Charles Ponzi is the victim of "people who have latched on". That is twice now that you've claimed something based on a bizarre redefinition. Even if there were some kind of campaign of revolving pyramid schemes over all these YEARS, bitcoin is net positive... while pyramid schemes operate at a deficit all the way up to the point where they go to zero.
I think you are right, this doesn't perfectly fit with existing definitions of other scams. This is more like the beanie baby situation combined with some libertarian political beliefs.
But the beanie baby craze only lasted 3 years. The CBOE didn't start trading beanie baby options. NIST didn't begin several beanie baby focused work groups and studies. The IRS didn't provide tax guidance on beanie babies... You guys really need to update that script, but I do congratulate you on dropping the tulip mania talking point - given the fact that there is no evidence it ever happened in the first place.
The irony is we place a lot of value on energy. The current economic system reflects this with oil being a proxy for energy.
I'd rather use Whisky as my store of value. With that you can still have a party when the power goes off.
My bitcoin bought my airplanes, wine cellar, and whiskey collection. It's comparatively very difficult to hold as it's price increases.
It will. Via second and third layers. It'll scale just fine. An example second layer that you can use right now is the lightning network https://lightning.network/
Lightning is a joke, with insoluble routing problems, a need for always-on nodes, the requirement to lock funds in channels, and the requirement for on-chain transactions to start and close channels. The BTC network can't process enough transactions to make even that viable.
>with insoluble routing problems
can you elaborate on this?
>a need for always-on nodes
AFAIK if you're not a payment hub (ie. you want to route other people's payments) you don't need to be always online.
can you elaborate on this?
>a need for always-on nodes
AFAIK if you're not a payment hub (ie. you want to route other people's payments) you don't need to be always online.
> can you elaborate on this?
Haviong trouble finding it now, but google "lightning network routing problems" and you'll get a lot of results. IIRC the fundamental issue boils down to a hard mathematical problem about node traversal that is not yet solved. I am having trouble recalling the name right now, apologies.
> AFAIK if you're not a payment hub (ie. you want to route other people's payments) you don't need to be always online.
There have been ways that a counterparty can close a channel in their favour if you aren't online. Perhaps this has been fixed by now.
Haviong trouble finding it now, but google "lightning network routing problems" and you'll get a lot of results. IIRC the fundamental issue boils down to a hard mathematical problem about node traversal that is not yet solved. I am having trouble recalling the name right now, apologies.
> AFAIK if you're not a payment hub (ie. you want to route other people's payments) you don't need to be always online.
There have been ways that a counterparty can close a channel in their favour if you aren't online. Perhaps this has been fixed by now.
>There have been ways that a counterparty can close a channel in their favour if you aren't online. Perhaps this has been fixed by now.
AFAIK the fix is to have a service (or multiple) stay online for you, and I believe it could be done without requiring access to your private keys. If your counterparty broadcasts a stale transaction that's in their favor, your service will broadcast a newer transaction that reverts it.
AFAIK the fix is to have a service (or multiple) stay online for you, and I believe it could be done without requiring access to your private keys. If your counterparty broadcasts a stale transaction that's in their favor, your service will broadcast a newer transaction that reverts it.
I was hoping that link would explain how to actually make a transaction with the lightning network. Can you do that with the Bitcoin-Qt client?
"Bitcoin Cash" is a fork of Bitcoin with larger blocks to solve the transaction fee problem, which it has been largely successful at.
In fact the original design for Bitcoin assumed larger blocks in the future, so it is perhaps a more accurate description to say that Bitcoin Cash is the "original" Bitcoin, and Bitcoin Core is a fork with an altered (small blocks) design.
In fact the original design for Bitcoin assumed larger blocks in the future, so it is perhaps a more accurate description to say that Bitcoin Cash is the "original" Bitcoin, and Bitcoin Core is a fork with an altered (small blocks) design.
> how will Bitcoin become a usable currency
It won't, it's just a speculative asset.
It won't, it's just a speculative asset.
mj4m1n(4)
I can send Bitcoin for free, instantly, trustlessly.
Bitcoin has nearly $20 transaction fees (https://ycharts.com/indicators/bitcoin_average_transaction_f...) and it takes at least 10 minutes for a transfer to be confirmed (https://www.blockchain.com/charts/median-confirmation-time).
I find this data fascinating - partly because I don't understand it. I regularly send bitcoin and, as far as I can tell, have never spent more than a tiny (unquantifiable in fiat, as in much less than a cent) amount on transaction fees. Can anyone more savvy chime in on the discontinuity here?
Not an expert, but I did make my own erc20 once.
Are you sending it over the network, or to someone else within a website? (eg: binance, coinbase; doesn't need to be an exchange)
Do you track your transactions later? Do they get confirmed? How many confirmations does a website need to count it? How long does that take?
I would expect a low-fee transaction to eventually either expire or go through. I don't know what timeframe that might take: higher fee typically means higher priority as I've understood it. I can't imagine it'd keep your $ in limbo forever, but who knows. If you haven't used it in a long time, I understand that the network is much more congested these days.
Are you sending it over the network, or to someone else within a website? (eg: binance, coinbase; doesn't need to be an exchange)
Do you track your transactions later? Do they get confirmed? How many confirmations does a website need to count it? How long does that take?
I would expect a low-fee transaction to eventually either expire or go through. I don't know what timeframe that might take: higher fee typically means higher priority as I've understood it. I can't imagine it'd keep your $ in limbo forever, but who knows. If you haven't used it in a long time, I understand that the network is much more congested these days.
You are one for three.
you can be a proponent of bitcoin without stating such blatant lies...
It's not entirely trustless. You trust the security of the system.
that ship has sailed long ago. it is now seen as a replacement for gold and a hedge against inflation
It was always a hedge on inflation. The genesis block message: https://www.investopedia.com/terms/g/genesis-block.asp
Nakamoto instilled within the Block's raw data: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."
Nakamoto instilled within the Block's raw data: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."
So basically the entire premise is undermining confidence in the existing system of capitalism and Democracy.
"Your money isn't safe in banks", and a healthy dose of making it easier to launder money.
"Your money isn't safe in banks", and a healthy dose of making it easier to launder money.
Pretty sure the existing system of capitalism and Democracy is undermining confidence in itself.
Bitcoin just provides a hedge.
Bitcoin just provides a hedge.
Off chain through Liquid or Lighting networks.
The funny thing is that there is 117x more Bitcoin on Layer 2 ETH in WBTC[1] than in the lighting network[2].
[2] - https://1ml.com/statistics
$5,793,513,475.00 // WBTC (Bitcoin on Ethereum)
$49,173,964.59 // Lightning
[2] - https://1ml.com/statistics
IMO it isn't. However, I do see a huge for sending large transactions. In that sense, I don't find it too crazy that Tesla is accepting Bitcoin, because buying a Tesla is a large transaction.
IMO a niche use though.
IMO a niche use though.
I can't see Tesla BTC as anything more than a marketing gimmick for their computer geek clientele and fan base. Even if it's a logistical disaster, they probably make it back in stock purchases from true believers.
Tesla tested the waters with Elon's tweets and it shook the Bitcoin and sent it to all time highs, then Tesla bought large amount of Bitcoin and now the market exploded even further. It is a marketing gimmick, true, but it is making Bitcoin more volatile and unstable, while Tesla hoards more money from Bitcoin!
I think accepting Bitcoin as payment was tried before - it never worked since people buying it are either not selling (and using to store cash that keeps on growing), or buying it for speculative purposes via secondary instruments (gbtc, ethe).
Not really sure what’s point is for Tesla but my guess its speculative for them, with an attempt to get some additional value on cash they are starting to swim in now...
Not really sure what’s point is for Tesla but my guess its speculative for them, with an attempt to get some additional value on cash they are starting to swim in now...
[deleted]
> Not really sure what’s point is for Tesla
Speculation and free marketing I expect
Speculation and free marketing I expect
If Bitcoin is the future and an antidote to the alleged extreme inflation of the US dollar, it makes more sense to buy the Tesla in fiat
Tesla isn't accepting Bitcoin.
In theory, "lightning networks", which are basically a network of open transactions across wealthy, participating nodes (e.g. banks and exchanges.) A lot of smaller transactions can piggyback on the larger transactions basically for free.
I don't think these are widely used in practice yet, but I might be wrong.
I don't think these are widely used in practice yet, but I might be wrong.
Isn’t that the point of Corda?
It's about $7 at the moment to be included in the next block. A new block is added approximately every 10 minutes. Since bitcoin does not guarantee finality some services require you to wait for a certain amount of extra blocks after yours to reduce the chance of a change reorginaztion happening that doesn't include your transaction.
Bitcoin will not function as a currency due to it's high volatility. For a more usable currency look at DAI, USDT, and USDC which are stable coins pegged to the dollar. DAI is collateralized with on chain assets where USDT and USDC are collateralized with real life assets which are mainly regular USD.
Bitcoin will not function as a currency due to it's high volatility. For a more usable currency look at DAI, USDT, and USDC which are stable coins pegged to the dollar. DAI is collateralized with on chain assets where USDT and USDC are collateralized with real life assets which are mainly regular USD.
USDT claims to be collateralized with real life assets. But their story keeps changing, they refuse to allow an audit, and they're under serious investigation by the NY Attorney General. It can reasonably be thought of as a fraud that hasn't popped yet: https://www.kalzumeus.com/2019/10/28/tether-and-bitfinex/
The public does not have proof that USDT is collateralized with real life assets. I'm not sure about USDC.
luka-birsa(1)
Buying US stocks takes 2 days to settle.
Sending simple wires in the US takes hours.
Last time I tried to send significant funds from France to the UK, it took me a whole week of back and forth with the bank to complete all the AML/KYC paperwork.
Let's not even talk about how long it would take to move gold from one part of the world to another cf. https://www.bloomberg.com/news/articles/2020-04-30/iran-is-h...
You can buy or send bitcoin in seconds if you're not trying to do it on-chain, the same way you can do it with stocks and other assets. But definitive settlement of a bitcoin transaction is faster than pretty much any other asset.
Sending simple wires in the US takes hours.
Last time I tried to send significant funds from France to the UK, it took me a whole week of back and forth with the bank to complete all the AML/KYC paperwork.
Let's not even talk about how long it would take to move gold from one part of the world to another cf. https://www.bloomberg.com/news/articles/2020-04-30/iran-is-h...
You can buy or send bitcoin in seconds if you're not trying to do it on-chain, the same way you can do it with stocks and other assets. But definitive settlement of a bitcoin transaction is faster than pretty much any other asset.
> Sending simple wires in the US takes hours
What? No. It happens instantly at a protocol level. Practically, about thirty minutes. Most people don’t send and receive wires and so don’t choose bank accounts that prioritise them.
Practically speaking, Venmo and Apple Pay and Zelle are frictionless and instantaneous and more widely adopted than Bitcoin. For heavy users of international transfers, there are usually better solutions.
There are absolutely edge cases, and so a legitimate use case for a cryptocurrency there, but that’s not enough use to sustain Bitcoin’s value. To say nothing of the transactional motivation having been long since abandoned when inconvenient for the current store of value one.
What? No. It happens instantly at a protocol level. Practically, about thirty minutes. Most people don’t send and receive wires and so don’t choose bank accounts that prioritise them.
Practically speaking, Venmo and Apple Pay and Zelle are frictionless and instantaneous and more widely adopted than Bitcoin. For heavy users of international transfers, there are usually better solutions.
There are absolutely edge cases, and so a legitimate use case for a cryptocurrency there, but that’s not enough use to sustain Bitcoin’s value. To say nothing of the transactional motivation having been long since abandoned when inconvenient for the current store of value one.
Yes sure, it takes 30 mins to send wires in a best case scenario it is executed immediately when you send it but that's not what happens in practice for most people. I do that regularly and it takes me a couple of hours.
Venmo and co aren't "real" transfers of asset, it's an update to a "permissioned" database. You can make immediate transfers on coinbase too but they could be reversed, or your account could get locked just as with venmo. It is just as easy to have banks hold everyone's bitcoin and instantaneously update a database so that feature is not an advantage of fiat over bitcoin.
Venmo and co aren't "real" transfers of asset, it's an update to a "permissioned" database. You can make immediate transfers on coinbase too but they could be reversed, or your account could get locked just as with venmo. It is just as easy to have banks hold everyone's bitcoin and instantaneously update a database so that feature is not an advantage of fiat over bitcoin.
> it takes 30 mins to send wires in a best case scenario it is executed immediately when you send it but that's not what happens in practice for most people. I do that regularly and it takes me a couple of hours.
Your bank is not set up for wires. Try Fidelity or First Republic or Silicon Valley Bank. Between 10 and 30 minutes from my hitting transfer to appearing in the recipient’s account. Exceptions are large wires which may require a phone call for verification, though I can usually turn that off if I wanted to.
Your bank is not set up for wires. Try Fidelity or First Republic or Silicon Valley Bank. Between 10 and 30 minutes from my hitting transfer to appearing in the recipient’s account. Exceptions are large wires which may require a phone call for verification, though I can usually turn that off if I wanted to.
Ok, interesting... I think your general point is valid, which is that, transacting in USD with a bank is, under certain circumstances, simpler and faster than transacting in bitcoin on-chain.
But you always have to rely on a third party, transactions can be reversed, your funds can be locked etc... It's completely different from say, transferring actual bank notes, or actual gold bars or any kind of transaction where a third party is not needed, you can't be censored and it can't be reversed.
And again, everything you do with USD, you could do eventually do with bitcoin. If banks decide to hold bitcoin, they'll let you send bitcoin wires with all the issues associated with fiat wire. Bitcoin wires don't exist but they could. Permissionless, uncensorable, irreversible, under 1-hour USD transactions don't exist and they never will.
But you always have to rely on a third party, transactions can be reversed, your funds can be locked etc... It's completely different from say, transferring actual bank notes, or actual gold bars or any kind of transaction where a third party is not needed, you can't be censored and it can't be reversed.
And again, everything you do with USD, you could do eventually do with bitcoin. If banks decide to hold bitcoin, they'll let you send bitcoin wires with all the issues associated with fiat wire. Bitcoin wires don't exist but they could. Permissionless, uncensorable, irreversible, under 1-hour USD transactions don't exist and they never will.
> Last time I tried to send significant funds from France to the UK, it took me a whole week of back and forth with the bank to complete all the AML/KYC paperwork.
You would need to do the same paperwork with bitcoin.
I have UK and French bank accounts, transfers between them take seconds. Transfers from the French account to any other Eurozone account take seconds.
You would need to do the same paperwork with bitcoin.
I have UK and French bank accounts, transfers between them take seconds. Transfers from the French account to any other Eurozone account take seconds.
> Sending simple wires in the US takes hours.
Joke is on you, though. Even Brazil now has instant wires (zero fees).
Joke is on you, though. Even Brazil now has instant wires (zero fees).
> Last time I tried to send significant funds from France to the UK, it took me a whole week of back and forth with the bank to complete all the AML/KYC paperwork.
How much time would it take to convert, transfer to a bank account AND withdraw that same amount of money from Bitcoin to plain FIAT?
How much time would it take to convert, transfer to a bank account AND withdraw that same amount of money from Bitcoin to plain FIAT?
I feel like Iran and Venezuela are bad examples as they are typically denied access to much of the global financial system. It’s normally pretty easy to move gold around and this process is handled by banks. Of course you might not get the same gold bars if you move gold between countries (for one thing they tend to come in different sizes in different places) and it likely won’t even be physically the same gold, but the banks tend to handle the arbitrage of taking physical gold to refineries across to move it from one market to another (though there were some worries this might break down between the US futures markets and London physical markets due to coronavirus restrictions)
A bitcoin transaction never settles. If a longer chain is created without that transaction it will become the current state and that transaction will be effectively rolled back.
A bank transaction never settles. Though unlikely, it is possible that quantum events may sporadically reverse the transaction.
Both are probabilistic and highly unlikely.
Both are probabilistic and highly unlikely.
>Both are probabilistic and highly unlikely.
A simple case of this happening with bitcoin is if the network fragmented. For example if a country had a firewall which temporarily blocked bitcoin. The country would continue slowly adding blocks which would likely revert when they reconnected back with the rest of the network.
A simple case of this happening with bitcoin is if the network fragmented. For example if a country had a firewall which temporarily blocked bitcoin. The country would continue slowly adding blocks which would likely revert when they reconnected back with the rest of the network.
People would only mine on the shorter blockchain if they think it's valid and good luck adding a country firewall in an undetected fashion. It will be directly visible in one of the two forked blockchain that a lot of the hashpower has vanished.
If a country is behind a firewall, most likely, almost no new blocks will be mined because the hashrate difficulty will stay constant while the computational power behind the firewall will become too low. Blocks will be mined much more slowly for a period of time inversely proportional to the hashpower behind the firewall. Most likely, that chain will enter into a "mining death spiral".
If a country is behind a firewall, most likely, almost no new blocks will be mined because the hashrate difficulty will stay constant while the computational power behind the firewall will become too low. Blocks will be mined much more slowly for a period of time inversely proportional to the hashpower behind the firewall. Most likely, that chain will enter into a "mining death spiral".
It could become a backbone for large transactions, while side chains (Dash, Eth, etc.) provide faster, smaller transactions.
The last years were the strongest indicator that bitcoin will not become any kind of usable currency. Seeing that it is as volatile as ever I'm honestly not sure what bitcoin can even still become except yet another abstract plaything to "invest" (bet) money on, the very thing it has been for a while now.
Also while it is decentralized, the reality of how it is used is very much not. The typical use case is buying and selling it via an exchange, not much else. Depending on where you live you have to reveal more information about yourself to "just buy bitcoin" than you have to when opening a bank account.
Also while it is decentralized, the reality of how it is used is very much not. The typical use case is buying and selling it via an exchange, not much else. Depending on where you live you have to reveal more information about yourself to "just buy bitcoin" than you have to when opening a bank account.
Right or wrong, the theory is that eventually it will stabilize and then the early adopters got a reward for commiting early.
This isn't so different from any network.
This isn't so different from any network.
For large transactions.
Small transactions can be done on sidechains and other chains.
Small transactions can be done on sidechains and other chains.
I use it as a currency for years.
Especially for large transactions internationally, where my bank asks me+the other party to fees like $30 and it takes 3 days if everything goes well.
In comparison with that, BTC for those years, gave me on average 40 minutes and $1 fee.
This is thirty times better than what my bank provides.
Especially for large transactions internationally, where my bank asks me+the other party to fees like $30 and it takes 3 days if everything goes well.
In comparison with that, BTC for those years, gave me on average 40 minutes and $1 fee.
This is thirty times better than what my bank provides.
Do you feel bad that you used bitcoin to save $30 instead of speculating on it to make $30K?
This may not be the most constructive way to make the point, but this is a feature of any speculative asset. If the market as a whole has a very high confidence it will continue to rise in value, few people will want to trade it for goods and services unless they have no choice or can make even more money from the goods and services than they can from holding the asset.
Otherwise, it’s like getting options in a startup and spending them on pizza.
Otherwise, it’s like getting options in a startup and spending them on pizza.
No. I don't use BTC as a speculative asset. I use it for two things:
1. when it is expensive or difficult to send money to places like Vietnam, post-soviet countries, Iran. 2. some saving in case the shit hits the fan and I will have to survive for a couple of months without TransferWise, Revolut.
1. when it is expensive or difficult to send money to places like Vietnam, post-soviet countries, Iran. 2. some saving in case the shit hits the fan and I will have to survive for a couple of months without TransferWise, Revolut.
A transaction takes ~10 minutes, to ensure that the block which the transaction is included in isn't orphaned some services institute a 6 block waiting period to ensure the transaction is stable. Should the block be orphaned, the transaction will re-enter the mempool on all hosts who'd confirmed the block and should be included in a subsequent block.
The transaction cost depends on the size of the transaction and the congestion in the mempool, the cost can be set by any sender depending on the urgency of the transaction.
The transaction cost depends on the size of the transaction and the congestion in the mempool, the cost can be set by any sender depending on the urgency of the transaction.
> how will Bitcoin become a usable currency?
Wake up, this question was reasonable in 2010, maybe 2015. :) Today no serious person is still thinking it would be usable :)
Wake up, this question was reasonable in 2010, maybe 2015. :) Today no serious person is still thinking it would be usable :)
Maybe people close to Bitcoin know it won't be a usable currency, but unless you closely follow bitcoin, it sure seems like it is built to be a usable currency. Even the name implies this relationship, and the idea of a 'wallet' does too. Tesla just recently bought $1.5 billion worth for exchange, no?
It won't, but it's also not transferred as much because of cost, time, and transactions/second limit; I have no solid figures, but I wouldn't be surprised if 99% of actual bitcoin transactions are virtual, in databases on the exchanges. You can't do high frequency trading on the blockchain.
I have no position in Bitcoin, but isn’t it possible for “BTC scrip” to be the money used day to day. With actual blockchain transactions just being used to aggregate at the institutional level?
This is pretty much the way money worked in the 19th century, just with gold instead of BTC. Nobody physically carried or transferred gold to buy a beer. They just used bank notes that were backed by a trusted intermediary holding the physical asset. It might make sense for a bank, or even a very wealthy person, to pay the cost of physically transferring the hard asset. But most just used IOUs that were backed by the underlying hard asset.
This is pretty much the way money worked in the 19th century, just with gold instead of BTC. Nobody physically carried or transferred gold to buy a beer. They just used bank notes that were backed by a trusted intermediary holding the physical asset. It might make sense for a bank, or even a very wealthy person, to pay the cost of physically transferring the hard asset. But most just used IOUs that were backed by the underlying hard asset.
It could, but why? The two things that BTC grants are trustlessness and the inability to enact fiscal policy. If BTC just becomes the backing for institutions, trustlessness is gone. So then it is a question of whether a backing unit that supports fiscal policy is better than one that doesn't. I think I know what institutions would prefer.
You're talking about a BTC bearer bond. Isn't that just what cash used to be? You've gone full circle.
Some of us ask ourselves the same thing. NANO, for instance, has no fees and is basically instantaneous (<1s). But unlike Bitcoin, Elon Musk isn't hyping it, and you can't make money by using computer farms, so most people don't know about it.
It's already a usable currency. You overpay the fee to get your transaction confirmed in the next average 10 minutes. You use lightening (though support is still limited) to have cheap and fast confirmations and you settle later.
Also, it's still faster and cheaper than an international SWIFT.
Also, it's still faster and cheaper than an international SWIFT.
Question that came to mind after reading the headline: could this become a future reason for governments to criminalise the trading / use of Bitcoin because of negative environmental effects?
On the surface it seems the value of Bitcoin is directly tied to its energy consumption and thus environmental harm.
I get that Bitcoin itself is decentralised and cannot be banned outright. But could it be neutered in such a way that renders it more and more worth / useless?
On the surface it seems the value of Bitcoin is directly tied to its energy consumption and thus environmental harm.
I get that Bitcoin itself is decentralised and cannot be banned outright. But could it be neutered in such a way that renders it more and more worth / useless?
I was thinking exactly the same. I would be in favor tbh.
If the government is allowed to dictate how my car must be built in order to make it more environmentally friendly, I don't see why it shouldn't be able to dictate how my blockchain must be built in order to make it environmentally sustainable.
This wouldn't mean banning blockchain altogether. It would entail banning only those forms of distributed consensus that are not energy efficient.
Proof of work (POW) is by definition inefficient from an energy perspective. You have to prove to have spent a lot of resources to be trusted. There's no excuse for this from an environment point of view, even if, admittedly, from a technological perspective is quite a marvel.
I wouldn't be surprised to know that those defending bitcoin on this front are biased because they hold some quantity of crypto based on POW.
If the government is allowed to dictate how my car must be built in order to make it more environmentally friendly, I don't see why it shouldn't be able to dictate how my blockchain must be built in order to make it environmentally sustainable.
This wouldn't mean banning blockchain altogether. It would entail banning only those forms of distributed consensus that are not energy efficient.
Proof of work (POW) is by definition inefficient from an energy perspective. You have to prove to have spent a lot of resources to be trusted. There's no excuse for this from an environment point of view, even if, admittedly, from a technological perspective is quite a marvel.
I wouldn't be surprised to know that those defending bitcoin on this front are biased because they hold some quantity of crypto based on POW.
Government regulation should focus on how electricity is produced, not how electricity is used. If Bitcoin created pollution or dumped toxic chemicals, I would agree with you. But Bitcoin doesn't do either of those things, the power plants do those things.
So save your regulations for the power plants and let the market figure out how to spend the electricity. If you wouldn't be in favor of the government regulating how much money can be spent on beef, or how much money can be spent on TVs, you shouldn't be in favor of the government regulating how much can be spent on Bitcoin's electricity bills.
So save your regulations for the power plants and let the market figure out how to spend the electricity. If you wouldn't be in favor of the government regulating how much money can be spent on beef, or how much money can be spent on TVs, you shouldn't be in favor of the government regulating how much can be spent on Bitcoin's electricity bills.
Even renewable energy has externalities. They're not as bad as burning fossil fuels but we still want to avoid wasting energy on inefficient things.
Which is fair, but the impact is much less.
The bigger issue with GP's comment is that, even if every major country on earth requires PoW systems to use renewable electricity (which won't happen any time soon in the first place) and can't run on the regular mixed grid, then after switching to countries without such laws (until there are none left), the renewable energy will be bought up at the source and the coal and gas plants will continue to supply everyone else. Nothing changes.
We need to change everything else to renewable before this starts to be effective. It would make a much bigger impact if some countries, where users want to use cryptocurrency, make it illegal to use proof-of-work-based goods or currencies (whatever it's classified as). Suddenly a coin with PoS or something else becomes much more popular and we might, perhaps, shift over to a digital coin that is not a climate disaster.
The bigger issue with GP's comment is that, even if every major country on earth requires PoW systems to use renewable electricity (which won't happen any time soon in the first place) and can't run on the regular mixed grid, then after switching to countries without such laws (until there are none left), the renewable energy will be bought up at the source and the coal and gas plants will continue to supply everyone else. Nothing changes.
We need to change everything else to renewable before this starts to be effective. It would make a much bigger impact if some countries, where users want to use cryptocurrency, make it illegal to use proof-of-work-based goods or currencies (whatever it's classified as). Suddenly a coin with PoS or something else becomes much more popular and we might, perhaps, shift over to a digital coin that is not a climate disaster.
Yes. Holding gold in the US was illegal due to executive order 6102.
There's no need for mental gymnastics of blaming energy. Just one powerful guy says "no" and poof, its illegal. Now laws or logic required.
There was an exception for collector coins and jewelry
There's no need for mental gymnastics of blaming energy. Just one powerful guy says "no" and poof, its illegal. Now laws or logic required.
There was an exception for collector coins and jewelry
It's not mental gymnastics to have a legitimate concern about energy usage.
Especially when the economic value provided by that consumption is virtually zero (net negative with externalities).
I liked the idea of bitcoin when it came out, but as per usual things have just gotten out of hand from there.
I liked the idea of bitcoin when it came out, but as per usual things have just gotten out of hand from there.
Are there similar concerns about the pollution produced by gold mining? eg. "we should ban gold because it's so toxic to mine!"
Yes ofc. Nobody thinks mining is a clean industry.
There might be some concerns (eg. "wow gold mining is dirty, we should do something about it"), but I personally haven't seen anything close to "we should ban gold".
because gold is useful, bitcoin only has speculative value
This is addressed in a sibling comment. https://news.ycombinator.com/item?id=26089473
And gold is useful.
Almost half of the world gold demand is for speculative/investment purposes[1]. If you consider jewelry to be speculative as well (at least partially, since if you only cared about appearance you could just plate it), the vast majority isn't "useful".
[1] https://www.statista.com/statistics/299609/gold-demand-by-in...
[1] https://www.statista.com/statistics/299609/gold-demand-by-in...
> Almost half of the world gold demand is for speculative/investment purposes
fair (and I think gold as a "beautiful" metal is dumb), but the other half of the usage (on your claim) is for an array of productive things. I don't see wires, heat reflectors, etc being made out of bitcoin.
fair (and I think gold as a "beautiful" metal is dumb), but the other half of the usage (on your claim) is for an array of productive things. I don't see wires, heat reflectors, etc being made out of bitcoin.
>but the other half of the usage (on your claim) is for an array of productive things
It's far less than that. Only 7.48% is definitely useful (under "technology").
It's far less than that. Only 7.48% is definitely useful (under "technology").
There are. They're not super present in the public consciousness because they're drowned out by the concerns about the prevalence of child labor in many countries' gold mines.
The Bitcoin guy is going to be the second place after Thomas Midgley Jr [1][2] in terms of most damage done to Earth by an individual I reckon.
Is there no way to slim down the resource requirements to cut electrical use? (without breaking everything Bitcoin of course)
-
[1] He played a major role in developing leaded gasoline (Tetraethyllead) and some of the first chlorofluorocarbons (CFCs)
[2] Environmental historian J. R. McNeill opined that Midgley "had more impact on the atmosphere than any other single organism in Earth's history"
https://en.wikipedia.org/wiki/Thomas_Midgley_Jr.#Legacy
Is there no way to slim down the resource requirements to cut electrical use? (without breaking everything Bitcoin of course)
-
[1] He played a major role in developing leaded gasoline (Tetraethyllead) and some of the first chlorofluorocarbons (CFCs)
[2] Environmental historian J. R. McNeill opined that Midgley "had more impact on the atmosphere than any other single organism in Earth's history"
https://en.wikipedia.org/wiki/Thomas_Midgley_Jr.#Legacy
> Is there no way to slim down the resource requirements to cut electrical use?
To put it bluntly (not meant to sound blunt, I just can't think of a better example without reiterating a technical explanation of how bitcoin works), that's like asking if people living in the Sahara can't simply drink less water to solve the unavailability of fresh water. And even that's a bad comparison because the human body actually can actually make due with less water. Perhaps it's like an electric heater (not heat pump, just a plain old heater), if you know how these things work: if you make it use fewer Watts, you get less heat, because there is no "waste heat" because heat is what you want in the first place. So fewer Watts is always less heat no matter how you spin it.
Similarly, putting more power into Bitcoin makes you earn more money (as a miner). If we make the hashing algorithm more efficient, then the hash rate will just raise proportionally to meet the new supply (supply being the block reward + transaction fees, both in bitcoin (or whatever proof-of-work currency you're mining) that you receive when finding a block as a miner).
No, the alternative is moving away from proof of work. I've been hearing stuff about proof of stake for years now, and afaik there are some currencies already using it. Not sure why Bitcoin doesn't switch to it, I'm not keeping up. Lost interest back when it became clear what a disaster it is and that it won't be able to fulfill its original purpose anyway. I'm very surprised the price is still soaring, shouldn't the best currency win? I guess people just don't give a fuck about their non-direct impact and see it as a way to get rich quick.
To put it bluntly (not meant to sound blunt, I just can't think of a better example without reiterating a technical explanation of how bitcoin works), that's like asking if people living in the Sahara can't simply drink less water to solve the unavailability of fresh water. And even that's a bad comparison because the human body actually can actually make due with less water. Perhaps it's like an electric heater (not heat pump, just a plain old heater), if you know how these things work: if you make it use fewer Watts, you get less heat, because there is no "waste heat" because heat is what you want in the first place. So fewer Watts is always less heat no matter how you spin it.
Similarly, putting more power into Bitcoin makes you earn more money (as a miner). If we make the hashing algorithm more efficient, then the hash rate will just raise proportionally to meet the new supply (supply being the block reward + transaction fees, both in bitcoin (or whatever proof-of-work currency you're mining) that you receive when finding a block as a miner).
No, the alternative is moving away from proof of work. I've been hearing stuff about proof of stake for years now, and afaik there are some currencies already using it. Not sure why Bitcoin doesn't switch to it, I'm not keeping up. Lost interest back when it became clear what a disaster it is and that it won't be able to fulfill its original purpose anyway. I'm very surprised the price is still soaring, shouldn't the best currency win? I guess people just don't give a fuck about their non-direct impact and see it as a way to get rich quick.
For future reference go with the technical explanation. We're on hacker news and I'm not a simpleton, I'm just not into Bitcoin haha. Analogies are always awful.
Cheers for the reply
Cheers for the reply
If governments banned the on/off ramps to normal currency, then yes it would be effectively neutered. There is an audience that wouldn't care, but it's a small audience.
Yes, but the narrative is that Bitcoin is innovation and any government against it is basically against innovation.
If I wanted to neutralize it, I would do something like Bait&Switch. Support banks running own cryptos until point where general public will see no difference between BTC and private cryptocurrencies and leave BTC users with their wallets and even when it will remain legal and everything, the "crypto revolution" would be taken by usual suspects (the establishment).
However, I wouldn't like to see it. I prefer world currency to be run by nerds over bankers and politicians.
If I wanted to neutralize it, I would do something like Bait&Switch. Support banks running own cryptos until point where general public will see no difference between BTC and private cryptocurrencies and leave BTC users with their wallets and even when it will remain legal and everything, the "crypto revolution" would be taken by usual suspects (the establishment).
However, I wouldn't like to see it. I prefer world currency to be run by nerds over bankers and politicians.
As the other commenter says - nobody would care about those, because the only reason people are interested is the speculation. Stable cryptocurrencies are really only of interest to a small group of decentralisation fetishists, and stable, centralised cryptocurrencies are of interest to basically nobody.
Canada actually tried that, at least once - maybe twice. When it became clear that the government was talking about a pre-mined, non-transparent, centralized fedcoin - everybody laughed and then ignored it.
I think both the article and this comment miss the point.
If we generated power cleanly in the first place, there would be far less environmental damage everywhere.
The fact that Bitcoin now uses half the power of Youtube (from a terribly unreliable estimate) should not be such a distraction from the real problem IMHO.
Terribly unreliable estimate:
https://www.google.com/search?q=what+is+the+total+power+cons...
The fact that Bitcoin now uses half the power of Youtube (from a terribly unreliable estimate) should not be such a distraction from the real problem IMHO.
Terribly unreliable estimate:
https://www.google.com/search?q=what+is+the+total+power+cons...
We can only hope so. There are new proof-of-stake cryptocurrencies that don't have this massive environmental downside. The only people who should oppose replacing BTC with some other technologically and ecologically superior coin are bitcoin bagholders trying to protect their "investment" in this Ponzi scheme.
Will anyone criminalise the US army because they use lots of energy? https://en.wikipedia.org/wiki/Energy_usage_of_the_United_Sta...
The answer: they might try, but good luck with that.
The answer: they might try, but good luck with that.
We always have to take into account the usefulness of what we spend energy on.
It's not as simple as calling out the top energy users and saying we should start there.
It's not as simple as calling out the top energy users and saying we should start there.
Can US live without army? Can it live without bitcoin?
>Will anyone criminalise the US army because they use lots of energy?
Ah yes, the old trope that people use the US dollar because they are forced to.
Meanwhile, back in reality, people around the world are desperate to get their hands on USD for commerce, because it's easily transacted, accepted and valued anywhere. You know, kinda like Bitcoin purports to be, but way more common.
Ah yes, the old trope that people use the US dollar because they are forced to.
Meanwhile, back in reality, people around the world are desperate to get their hands on USD for commerce, because it's easily transacted, accepted and valued anywhere. You know, kinda like Bitcoin purports to be, but way more common.
Arguably, modern currencies are backed by the ability of nation states to demand tax payments in them, creating a steady and stable (due to being directly proportional to economic activity) demand for them.
A currency having value abroad is arguably a side effect, not the main goal.
A currency having value abroad is arguably a side effect, not the main goal.
Of course, it is everyone's taste. One values USD more and other BTC more. Objectively, so far, BTC was a better investment. And given some 80% of BTC was already mined and there will be no more BTC ever while 20% of USD was printed this year (edit: sorry, in 2020), I undestand why some people stash Bitcoin. I have maybe 0.5% of my net worth in it, but I am very happy for those 0.5%.
>Objectively, so far, BTC was a better investment.
Dollars are not meant to be an "investment". The fact that the supply can be increased on demand is a feature, not a bug.
Dollars are not meant to be an "investment". The fact that the supply can be increased on demand is a feature, not a bug.
The economical and political power of the US is the reason for that. And the military might is what backs up the political power.
The same pattern repeats itself in history: those with the biggest army popularize their culture, language and coin. The Roman Empire is a good example.
See https://en.wikipedia.org/wiki/Hegemony
The same pattern repeats itself in history: those with the biggest army popularize their culture, language and coin. The Roman Empire is a good example.
See https://en.wikipedia.org/wiki/Hegemony
So how do we explain international use of the Euro and Swiss franc?
> could this become a future reason for governments to criminalise the trading / use of Bitcoin because of negative environmental effects?
The whole point of Bitcoin is resistance to adversity. Bitcoin value is directly correlated to its resistance against governments/agencies/bankers/regulation or anything else that wants to shut it down. If you can wrap your head around that, you'll understand why making bitcoin more eco-friendly from a centralized government or organization will suddenly make it less valuable.
The whole point of Bitcoin is resistance to adversity. Bitcoin value is directly correlated to its resistance against governments/agencies/bankers/regulation or anything else that wants to shut it down. If you can wrap your head around that, you'll understand why making bitcoin more eco-friendly from a centralized government or organization will suddenly make it less valuable.
Maybe tax it in relation to its environmental harm? It would put me off if I had to record them on the tax return.
break the hash algo...?
After all the Bitcoin is mined, it will be the greenest crypto currency, yes?. What if we just accelerated the mining, or made them all available at once. Problem solved? Truth be told, I really don't know what I'm talking about. It just sounded good in my head.
Nope. Bitcoin transactions require wasting energy. It is built into the very fabric of bitcoin. Currently, the energy wasters ("miners") are compensated by the minting of new bitcoins, and some transaction fees. As the number of bitcoins asymptomatically approaches it's maximum, the energy wasters are still compensated, but more and more through transaction fees.
Impossible due to how cryptocurrency works. In any cryptocurrency there is something called an "emissions target" which will only up to X amount of coins to be "released" on the discovery of a new block. This is also compounded by the fact that even if you did try to accelerate the mining by adding more powerful nodes into the network, the network would automatically adjust the difficulty in order to keep blocks spitting out at the predetermined time of 10 minutes per block.
Nice edit :
>Truth be told, I really don't know what I'm talking about. It just sounded good in my head.
I sincerely wish more people had your ability for introspection!
I sincerely wish more people had your ability for introspection!
Better solution would be to choose a proof of stake cryptocurrency instead
Even when all bitcoins are mined mining has to continue.
If the goal is to educate the public on the scale of power involved, a comparison with a commonly used service would help a lot IMHO.
Something like 'Bitcoin consumes 14 times the energy of Google and half (according rough estimates) that of Youtube' would make things easier to grasp before hitting the reader with country comparisons.
FWIW here is my list of 'if a service were a country':
Google Guatemala
Bitcoin Argentina
Youtube South Africa (unreliable data)
[Edit] whoops - no references
https://www.google.com/search?q=what+is+the+total+power+cons...
https://www.google.com/search?q=what+is+the+total+power+cons...
https://en.wikipedia.org/wiki/List_of_countries_by_electrici...
FWIW here is my list of 'if a service were a country':
Google Guatemala
Bitcoin Argentina
Youtube South Africa (unreliable data)
[Edit] whoops - no references
https://www.google.com/search?q=what+is+the+total+power+cons...
https://www.google.com/search?q=what+is+the+total+power+cons...
https://en.wikipedia.org/wiki/List_of_countries_by_electrici...
I think the average person would find it easier to imagine the consumption of a country than that of a an internet service.
Both are basically unintelligible, but at least the country one is something that one can _imagine_ from their experience, if wrongly (my house consumption:country consumption = 1:population).
I bet few people on hackernews itself have any clue what the energy consumption of google might be, and have no way of relating to it.
Both are basically unintelligible, but at least the country one is something that one can _imagine_ from their experience, if wrongly (my house consumption:country consumption = 1:population).
I bet few people on hackernews itself have any clue what the energy consumption of google might be, and have no way of relating to it.
That is correct, but not a fair comparison, imho. Google, as a centralized entity, is one of a few companies devoted to go 100% green. Bitcoin consuming that much energy is akin to saying that production of wine all over the world is 14x what's being produced in France. Where's the logic?
Thank you for such a high quality comment.
There's lots of misdirected anger these last few days towards Bitcoin.
First, the only thing that's energy-intensive about Bitcoin is block production. Making transactions, relaying them, validating them and storing them have negligible energy cost.
Second, nothing about the Bitcoin protocol requires block production to use fossil fuels. Just like with every other energy-intensive industry, the problem isn't the industry. The problem is the fossil fuel use.
Therefore, if you want to get mad about the high energy use of block production leading to environmental pollution, you should direct that anger at the appropriate target: miners who use fossil fuels to mine.
How do we fix this? The same way we fixed it in every other energy-intensive industry: through taxes and regulation. Let's get some laws passed to require miners in your area to use only renewable energy, and to require exchanges to impose a carbon tax on coins whose miners rely on fossil fuels to mine. Properly applied, these laws would make fossil-fuel mining unprofitable, which is exactly what we want.
Bitcoin and PoW aren't going anywhere at this point. So let's make sure it's continued existence doesn't make the world worse. Sound good?
First, the only thing that's energy-intensive about Bitcoin is block production. Making transactions, relaying them, validating them and storing them have negligible energy cost.
Second, nothing about the Bitcoin protocol requires block production to use fossil fuels. Just like with every other energy-intensive industry, the problem isn't the industry. The problem is the fossil fuel use.
Therefore, if you want to get mad about the high energy use of block production leading to environmental pollution, you should direct that anger at the appropriate target: miners who use fossil fuels to mine.
How do we fix this? The same way we fixed it in every other energy-intensive industry: through taxes and regulation. Let's get some laws passed to require miners in your area to use only renewable energy, and to require exchanges to impose a carbon tax on coins whose miners rely on fossil fuels to mine. Properly applied, these laws would make fossil-fuel mining unprofitable, which is exactly what we want.
Bitcoin and PoW aren't going anywhere at this point. So let's make sure it's continued existence doesn't make the world worse. Sound good?
> Let's get some laws passed to require miners in your area to use only renewable energy
Even if every major country on earth requires PoW systems to use renewable electricity (which won't happen any time soon in the first place) and can't run on the regular mixed grid, then after switching to countries without such laws (until there are none left), the renewable energy will be bought up at the source and the coal and gas plants will continue to supply everyone else. Nothing changes.
We need to change everything else to renewable before this really starts to be effective. It would make a much bigger impact if some countries, where users want to use cryptocurrency, make it illegal to use proof-of-work-based goods or currencies (whatever it's classified as). Suddenly a coin with PoS or something else becomes much more popular and we might, perhaps, shift over to a digital coin that is not a climate disaster.
Even if every major country on earth requires PoW systems to use renewable electricity (which won't happen any time soon in the first place) and can't run on the regular mixed grid, then after switching to countries without such laws (until there are none left), the renewable energy will be bought up at the source and the coal and gas plants will continue to supply everyone else. Nothing changes.
We need to change everything else to renewable before this really starts to be effective. It would make a much bigger impact if some countries, where users want to use cryptocurrency, make it illegal to use proof-of-work-based goods or currencies (whatever it's classified as). Suddenly a coin with PoS or something else becomes much more popular and we might, perhaps, shift over to a digital coin that is not a climate disaster.
> Even if every major country on earth requires PoW systems to use renewable electricity (which won't happen any time soon in the first place) and can't run on the regular mixed grid, then after switching to countries without such laws (until there are none left), the renewable energy will be bought up at the source and the coal and gas plants will continue to supply everyone else. Nothing changes.
Never say never. Humanity has successfully banned itself from using CFCs in refrigerants, for example. I also agree that regulating pollution from PoW specifically isn't as high of a priority as, say, regulating pollution from coal-fired power plants or concrete production. But it's something that could, in theory, be regulated if we find the will to do so. And if we don't believe that we can regulate CO2 production, then we must also believe that humanity is doomed anyway, and thus PoW pollution ought to be beneath our concern.
> We need to change everything else to renewable before this really starts to be effective. It would make a much bigger impact if some countries, where users want to use cryptocurrency, make it illegal to use proof-of-work-based goods or currencies (whatever it's classified as). Suddenly a coin with PoS or something else becomes much more popular and we might, perhaps, shift over to a digital coin that is not a climate disaster.
Why stop there? Why not impose a global carbon tax on all goods and services known to produce pollution? Then it doesn't matter what the goods are or how the goods are procured; what matters is that CO2 concentration stays steady or goes down.
My original point was to channel focus on what matters -- energy-intensive industries are in need of pollution regulation. But as you point out here, this need isn't specific to PoW.
Never say never. Humanity has successfully banned itself from using CFCs in refrigerants, for example. I also agree that regulating pollution from PoW specifically isn't as high of a priority as, say, regulating pollution from coal-fired power plants or concrete production. But it's something that could, in theory, be regulated if we find the will to do so. And if we don't believe that we can regulate CO2 production, then we must also believe that humanity is doomed anyway, and thus PoW pollution ought to be beneath our concern.
> We need to change everything else to renewable before this really starts to be effective. It would make a much bigger impact if some countries, where users want to use cryptocurrency, make it illegal to use proof-of-work-based goods or currencies (whatever it's classified as). Suddenly a coin with PoS or something else becomes much more popular and we might, perhaps, shift over to a digital coin that is not a climate disaster.
Why stop there? Why not impose a global carbon tax on all goods and services known to produce pollution? Then it doesn't matter what the goods are or how the goods are procured; what matters is that CO2 concentration stays steady or goes down.
My original point was to channel focus on what matters -- energy-intensive industries are in need of pollution regulation. But as you point out here, this need isn't specific to PoW.
> But it's something that could, in theory, be regulated if we find the will to do so.
Oh definitely we can, I just don't expect it to be realistic. Similar to being a tax haven, it's profitable for some countries to not make something illegal such that the people will go there to do it and pay only a small tax (or, in this case, be allowed to do it at all). Other countries can put pressure etc., but it would take time we don't have. Hence my alternative idea of making it illegal to use and forcing people to use alternatives, rather than to require it to use a precious resource (renewable energy).
Then again, making proof of work illegal to use seems like it would be too easy for a non-trivial part of the population to start screaming that the tinfoil hats were right.
> Why not impose a global carbon tax on all goods and services known to produce pollution?
Full agree. I genuinely don't know why we're not already doing that. Well, I mean, corruption, fear of change.. lots of things, but nothing fundamental. Not as if not literally everyone realizes that we will need to start with this. And I understand that some industries are so dependent on it that your economy collapses if you, from one day to the next, impose a tax equal to the real environmental damage done. People wouldn't get around, steel would cost more than gold, we can't build wind turbines anymore because they're made out of unobtainium (aka steel), etc. But we all know we need to get there anyway, and with the capitalistic system we have, well, the super fucking easiest way is to just start with a low carbon tax that increases to "real environmental damage" in <target_year_for_climate_neutral>. Probably an exponential curve to give companies some time to build out and use alternatives, but we do need to get there, everyone knows it (yes, also the politicians, and the delusional ones aren't in enough power to use that as an excuse), but we're not doing it.
> My original point was to channel focus on what matters
I suppose I agree with that. I am just frustrated with people invested in Bitcoin, people that are otherwise rational, waylaying logical arguments because they subconsciously don't want it to be true. It's clear as day, why can't we just stop this madness...
In general you're right of course, universal carbon tax would seem like it solves most things in one go instead of trying to fight a lot of individual battles for bitcoin, coal plants, and other individual things that produce CO2 or take renewable energy away unnecessarily.
Oh definitely we can, I just don't expect it to be realistic. Similar to being a tax haven, it's profitable for some countries to not make something illegal such that the people will go there to do it and pay only a small tax (or, in this case, be allowed to do it at all). Other countries can put pressure etc., but it would take time we don't have. Hence my alternative idea of making it illegal to use and forcing people to use alternatives, rather than to require it to use a precious resource (renewable energy).
Then again, making proof of work illegal to use seems like it would be too easy for a non-trivial part of the population to start screaming that the tinfoil hats were right.
> Why not impose a global carbon tax on all goods and services known to produce pollution?
Full agree. I genuinely don't know why we're not already doing that. Well, I mean, corruption, fear of change.. lots of things, but nothing fundamental. Not as if not literally everyone realizes that we will need to start with this. And I understand that some industries are so dependent on it that your economy collapses if you, from one day to the next, impose a tax equal to the real environmental damage done. People wouldn't get around, steel would cost more than gold, we can't build wind turbines anymore because they're made out of unobtainium (aka steel), etc. But we all know we need to get there anyway, and with the capitalistic system we have, well, the super fucking easiest way is to just start with a low carbon tax that increases to "real environmental damage" in <target_year_for_climate_neutral>. Probably an exponential curve to give companies some time to build out and use alternatives, but we do need to get there, everyone knows it (yes, also the politicians, and the delusional ones aren't in enough power to use that as an excuse), but we're not doing it.
> My original point was to channel focus on what matters
I suppose I agree with that. I am just frustrated with people invested in Bitcoin, people that are otherwise rational, waylaying logical arguments because they subconsciously don't want it to be true. It's clear as day, why can't we just stop this madness...
In general you're right of course, universal carbon tax would seem like it solves most things in one go instead of trying to fight a lot of individual battles for bitcoin, coal plants, and other individual things that produce CO2 or take renewable energy away unnecessarily.
It is impossible to regulate and tax miners; they live in various countries and in some it is impossible to apply such regulations, if some countries will do it then minim will move to other places.
When you have an industry, you get a product that you can use. Mining energy consumption is just about how hard to make the mining, not a real limitation like in industry. It is like "let's make car building 3 times more energy consuming".
No, there is no misdirected anger, there are good reasons.
When you have an industry, you get a product that you can use. Mining energy consumption is just about how hard to make the mining, not a real limitation like in industry. It is like "let's make car building 3 times more energy consuming".
No, there is no misdirected anger, there are good reasons.
> It is impossible to regulate and tax miners; they live in various countries and in some it is impossible to apply such regulations, if some countries will do it then minim will move to other places.
Other countries can sanction them until they figure out how to apply such regulations. This isn't unique to PoW; it happens for other such dangerous pollutants as well (like CFC emissions).
> When you have an industry, you get a product that you can use. Mining energy consumption is just about how hard to make the mining, not a real limitation like in industry. It is like "let's make car building 3 times more energy consuming".
Energy usage and product/market fit are both irrelevant to this discussion. What is important is the pollution PoW creates. If we can get a global handle on that (along with basically every other energy-intense industry), then it hardly matters that the energy is used for PoW. The point is to not pollute.
> No, there is no misdirected anger, there are good reasons.
You may not think Bitcoin has a right to exist, but it's not up to you, and it's not going anywhere anytime soon. Love it or hate it, we're going to be living with it for likely a long, long time, so we might as well figure out a way to get a handle on the pollution it could cause.
Other countries can sanction them until they figure out how to apply such regulations. This isn't unique to PoW; it happens for other such dangerous pollutants as well (like CFC emissions).
> When you have an industry, you get a product that you can use. Mining energy consumption is just about how hard to make the mining, not a real limitation like in industry. It is like "let's make car building 3 times more energy consuming".
Energy usage and product/market fit are both irrelevant to this discussion. What is important is the pollution PoW creates. If we can get a global handle on that (along with basically every other energy-intense industry), then it hardly matters that the energy is used for PoW. The point is to not pollute.
> No, there is no misdirected anger, there are good reasons.
You may not think Bitcoin has a right to exist, but it's not up to you, and it's not going anywhere anytime soon. Love it or hate it, we're going to be living with it for likely a long, long time, so we might as well figure out a way to get a handle on the pollution it could cause.
Fossil fuels are already taxed and regulated.
Slightly off topic, but does anyone have any good resources on how alternative consensus protocols work, like proof of stake and proof of importance? I either see really simplistic explanations or ones that assume a lot of domain knowledge. I also recently saw a crypto coin that claims to be energy efficient, and I don’t quite understand how that’s possible without the possibility of a 50.1% attack.
Proof of stake is relatively simple. You agree to stake a minimum amount of tokens (decided on by the network) and you get to run a node and validate transactions. If you attest to a malicious block and other validators call you out on it, you get slashed (i.e. you lose some portion of your stake, if not all of it): https://ethereum.org/en/developers/docs/consensus-mechanisms...
One of the problems with it is that it's difficult to bootstrap a network on a proof-of-stake system with a fair distribution. You end up with the pre-sale participants (i.e. VCs or founders) having the majority of the tokens.
I think what Ethereum is doing is a decent approach. They started as Proof of Work, so they were able to bootstrap the network for 6 years and now ETH is widely distributed and no single holder owns more than 1% of ETH, for example. So now they can migrate to Proof of Stake and they won't suffer from the centralized allocation problem.
One of the problems with it is that it's difficult to bootstrap a network on a proof-of-stake system with a fair distribution. You end up with the pre-sale participants (i.e. VCs or founders) having the majority of the tokens.
I think what Ethereum is doing is a decent approach. They started as Proof of Work, so they were able to bootstrap the network for 6 years and now ETH is widely distributed and no single holder owns more than 1% of ETH, for example. So now they can migrate to Proof of Stake and they won't suffer from the centralized allocation problem.
Nothing about Proof of Stake is relatively simple lol. Not the incentives, not the threat model, not the trust model, not the impact on the economics, not the implementation, not the scalable byzantine fault tolerate research.
There are plenty of people who understand it well, I'm not saying it's outside of reach of a normal human being. But understanding proof of stake is not a 30 minute journey. (nor is understanding proof of work for that matter)
There are plenty of people who understand it well, I'm not saying it's outside of reach of a normal human being. But understanding proof of stake is not a 30 minute journey. (nor is understanding proof of work for that matter)
I think it is relatively simple compared to proof-of-work don't you? And it's not really hard to get at a conceptual level even if the implementation level is far more complex.
I post a deposit that says I'll be honest. If I'm caught being dishonest, I risk losing my whole stake.
I post a deposit that says I'll be honest. If I'm caught being dishonest, I risk losing my whole stake.
You've left out a whole bunch of key ideas in proof of stake, for example the idea that the amount of voting power you have is proportional to the percentage of the money supply that you own. Which in turn means that your consensus system is ultimately controlled by the wealthy.
How do you know that someone has been dishonest? A consensus system can only enforce rules within that consensus system, if the consensus system has been compromised the dictator can censor any evidence of dishonesty, even if most people are aware that dishonesty has occurred.
You can draw the line anywhere you want for "conceptually simple". We could easily say that proof of work is equivalent to building a tower, and that the tallest tower is used to determine what consensus is. That's also very simple, but also leaves out a bunch of ideas.
How do you know that someone has been dishonest? A consensus system can only enforce rules within that consensus system, if the consensus system has been compromised the dictator can censor any evidence of dishonesty, even if most people are aware that dishonesty has occurred.
You can draw the line anywhere you want for "conceptually simple". We could easily say that proof of work is equivalent to building a tower, and that the tallest tower is used to determine what consensus is. That's also very simple, but also leaves out a bunch of ideas.
> Which in turn means that your consensus system is ultimately controlled by the wealthy.
Yes, well how is this different than Bitcoin's massive multibillion dollar mining farm operations? Hard to avoid the rich getting richer. At least with Ethereum, it has launched hundreds of derivative tokens that have been able to experience exponential growth and have made a lot of retail investors very wealthy.
> How do you know that someone has been dishonest? A consensus system can only enforce rules within that consensus system, if the consensus system has been compromised the dictator
You're getting into implementation details. Almost nothing is ever easy to implement even if it is easy to conceive. Ok, a dam or a bridge is easy to understand, but building one is a highly technical challenge that involves a myriad of engineering tradeoffs, so if you want to read more into the particular tradeoffs the Ethereum Developers have settled on, go read the documentation. Everything is a rabbit hole, go as deep as you want.
Yes, well how is this different than Bitcoin's massive multibillion dollar mining farm operations? Hard to avoid the rich getting richer. At least with Ethereum, it has launched hundreds of derivative tokens that have been able to experience exponential growth and have made a lot of retail investors very wealthy.
> How do you know that someone has been dishonest? A consensus system can only enforce rules within that consensus system, if the consensus system has been compromised the dictator
You're getting into implementation details. Almost nothing is ever easy to implement even if it is easy to conceive. Ok, a dam or a bridge is easy to understand, but building one is a highly technical challenge that involves a myriad of engineering tradeoffs, so if you want to read more into the particular tradeoffs the Ethereum Developers have settled on, go read the documentation. Everything is a rabbit hole, go as deep as you want.
>no single holder owns more than 1% of ETH, for example
Curious about this statement. Is this something that can be looked up online? I know wallets/transactions are entirely public so I guess its just a question of whether someone has made a tool to do this with ETH or other cryptos. How do other coins fair in the same regard? What's BTC distribution? LTC? Or any of their forks?
Curious about this statement. Is this something that can be looked up online? I know wallets/transactions are entirely public so I guess its just a question of whether someone has made a tool to do this with ETH or other cryptos. How do other coins fair in the same regard? What's BTC distribution? LTC? Or any of their forks?
Etherscan is the standard tool for looking up Ethereum wallet balances without having to run your own node: https://etherscan.io/ .
Top Accounts by ETH Balance: https://etherscan.io/accounts
#1 has 5%, but it's the wETH ("wrapped ETH") smart contract, that allows people to deposit ETH as the native token and receive wETH in return. wETH is more easily used for things like decentralized exchanges (https://weth.io/). So that's really a utility contract used by many applications and users.
#2 is the ETH2 Deposit contract, with 2.6% of supply. These are stakers receiving mining rewards for participating in ETH2 beacon chain validation.
#3 is Binance, with 2.5% of supply. They are the largest centralized exchange, so that 2.5% represents Binance's customer accounts.
#4, #5, #6, are also exchanges.
#7 is Compound Ether (@1.08% of supply). Compound is a decentralized finance savings & loan protocol, so again, that 1.08% represents tens of thousands of Compound users.
Top Accounts by ETH Balance: https://etherscan.io/accounts
#1 has 5%, but it's the wETH ("wrapped ETH") smart contract, that allows people to deposit ETH as the native token and receive wETH in return. wETH is more easily used for things like decentralized exchanges (https://weth.io/). So that's really a utility contract used by many applications and users.
#2 is the ETH2 Deposit contract, with 2.6% of supply. These are stakers receiving mining rewards for participating in ETH2 beacon chain validation.
#3 is Binance, with 2.5% of supply. They are the largest centralized exchange, so that 2.5% represents Binance's customer accounts.
#4, #5, #6, are also exchanges.
#7 is Compound Ether (@1.08% of supply). Compound is a decentralized finance savings & loan protocol, so again, that 1.08% represents tens of thousands of Compound users.
I believe it's fairly well established that Joe Lubin holds somewhere around 10% of the Eth supply. Anyone with large holdings is incentivized to spread those holdings across many accounts to avoid scrutiny.
Pretty much every coin has substantial gini coefficient issues.
Pretty much every coin has substantial gini coefficient issues.
> no single holder owns more than 1% of ETH
You mean no single wallet?
You mean no single wallet?
No, I mean people. Unless you count centralized exchanges that represent thousands to millions of users' pooled ETH, as people. Even then, the largest of these has about 2.5% of ETH supply.
How do you know if someone spreads their tokens across multiple wallets?
For one, there's some risk in spreading your tokens across many wallets as an individual. That's more keys to keep up with that could be lost. Is it theoretically possible someone out there has spread their ETH holdings across 100 wallets and secretly hold 4% of the ETH supply? Sure, but it's unlikely given the distribution of exchange and smart contract wallet balances. If Binance, the world's largest centralized exchange for crypto has only 2.5% of supply, what are the odds there's an individual out there with more than that? They'd have had to be one of the earliest participants in ETH, but even Vitalik, the main founder only ever held about 1% at most (and from what I understand, currently holds less than 0.5%). Even the big ICO contracts that raised hundreds of millions in 2017 before the price really took off, never held that big of a supply. So either someone secretly mined 4% of ETH all these years while strategically accruing them in multiple wallets and never sold (so how did they fund their mining operations?)...or there's just not a whale out there like that.
> That's more keys to keep up with that could be lost.
More keys to keep up? I don't think you understand how wallets work...
You can trivially generate 100 ethereum addresses from just one private key...
More keys to keep up? I don't think you understand how wallets work...
You can trivially generate 100 ethereum addresses from just one private key...
How is the correct chain decided?
That page does not explain how the correct chain is chosen...
I searched and found a blog that claims a chain is chosen by trusting other nodes:
“In PoS systems, weak subjectivity arises because the longest chain rule is not sufficient to determine the main chain due to the (nearly) costless process of creating an up-to-date chain. Creating up-to-date competing chains would take little effort in PoS as opposed to in PoW. Therefore, new nodes or nodes that have been a long time offline have to trust the information they receive from other nodes about which chain is the valid one, causing weak subjectivity.
In the case of weak subjectivity, to ensure that the information about the valid chain is accurate, a node that is new or comes online after a significant period would have to get a recent block hash from a reputable source, such as a blockchain explorer, and insert that as a “checkpoint” into their blockchain client. This is the method of dealing with weak subjectivity, which relies on the trust with a reputable source. Although not completely in line with a trustless system, it shouldn’t really be an issue unless the reputable source is compromised.” - https://medium.com/better-programming/the-problems-that-ethe...
I searched and found a blog that claims a chain is chosen by trusting other nodes:
“In PoS systems, weak subjectivity arises because the longest chain rule is not sufficient to determine the main chain due to the (nearly) costless process of creating an up-to-date chain. Creating up-to-date competing chains would take little effort in PoS as opposed to in PoW. Therefore, new nodes or nodes that have been a long time offline have to trust the information they receive from other nodes about which chain is the valid one, causing weak subjectivity.
In the case of weak subjectivity, to ensure that the information about the valid chain is accurate, a node that is new or comes online after a significant period would have to get a recent block hash from a reputable source, such as a blockchain explorer, and insert that as a “checkpoint” into their blockchain client. This is the method of dealing with weak subjectivity, which relies on the trust with a reputable source. Although not completely in line with a trustless system, it shouldn’t really be an issue unless the reputable source is compromised.” - https://medium.com/better-programming/the-problems-that-ethe...
From the page I linked:
In distributed networks, a transaction has "finality" when it's part of a block that can't change.
"To do this in proof-of-stake, Casper, a finality protocol, gets validators to agree on the state of a block at certain checkpoints. So long as 2/3 of the validators agree, the block is finalised. Validators will lose their entire stake if they try and revert this later on via a 51% attack."
In ETH2 2/3 of 128 randomly selected validators have to agree. You also get slashed if your validator goes offline, so they factored for that case:
https://ethereumprice.org/guides/article/eth-2-staking-risks...
And at least for the beacon chain you have to sync the whole chain to your node before you can begin validating.
In distributed networks, a transaction has "finality" when it's part of a block that can't change.
"To do this in proof-of-stake, Casper, a finality protocol, gets validators to agree on the state of a block at certain checkpoints. So long as 2/3 of the validators agree, the block is finalised. Validators will lose their entire stake if they try and revert this later on via a 51% attack."
In ETH2 2/3 of 128 randomly selected validators have to agree. You also get slashed if your validator goes offline, so they factored for that case:
https://ethereumprice.org/guides/article/eth-2-staking-risks...
And at least for the beacon chain you have to sync the whole chain to your node before you can begin validating.
Determining a valid block isn’t the same thing as determining the correct chain. A node validates blocks by staking, but how does the node know it’s validating a block on the correct chain? As far as I can tell, PoS projects don’t have a trustless solution to this problem.
Imagine a net split, where the network becomes briefly partitioned. Nodes in each partition would keep adding blocks. When the network converges, there would be two conflicting chains. Using proof-of-work the chain with the most work (longest chain) is the valid chain.
Another scenario: Using proof-of-stake I can create my own alternative chain easily (if I don’t want stake money I could create new genesis block), and broadcast blocks to nodes that join the network. When those new nodes receive blocks from conflicting chains, which one is correct? From what I understand of Ethereum, new nodes have to choose trusted nodes when they join the network.
I wonder, if one is going to consider trust a non-problem, then why stake at all? A network like Nano works the same way, by trusting a quorum of voting nodes, but there’s no staking or inflation, which has the benefit of allowing anyone to participate without the rich getting richer.
Imagine a net split, where the network becomes briefly partitioned. Nodes in each partition would keep adding blocks. When the network converges, there would be two conflicting chains. Using proof-of-work the chain with the most work (longest chain) is the valid chain.
Another scenario: Using proof-of-stake I can create my own alternative chain easily (if I don’t want stake money I could create new genesis block), and broadcast blocks to nodes that join the network. When those new nodes receive blocks from conflicting chains, which one is correct? From what I understand of Ethereum, new nodes have to choose trusted nodes when they join the network.
I wonder, if one is going to consider trust a non-problem, then why stake at all? A network like Nano works the same way, by trusting a quorum of voting nodes, but there’s no staking or inflation, which has the benefit of allowing anyone to participate without the rich getting richer.
You're perhaps thinking of https://nano.org ? A brief description of it's Open Representative Voting (ORV) consensus mechanism:
"A consensus mechanism unique to Nano which involves accounts delegating their balance as voting weight to Representatives. The Representatives vote themselves on the validity of transactions published to the network using the voting weight delegated to them. These votes are shared with their directly connected peers and they also rebroadcast votes seen from Principal Representatives. Votes are tallied and once quorum is reached on a published block, it is considered confirmed by the network."
Suggested read: https://docs.nano.org/protocol-design/orv-consensus/
"A consensus mechanism unique to Nano which involves accounts delegating their balance as voting weight to Representatives. The Representatives vote themselves on the validity of transactions published to the network using the voting weight delegated to them. These votes are shared with their directly connected peers and they also rebroadcast votes seen from Principal Representatives. Votes are tallied and once quorum is reached on a published block, it is considered confirmed by the network."
Suggested read: https://docs.nano.org/protocol-design/orv-consensus/
ORV is as revolutionary as PoW. Nano still uses PoW but in a far far far more efficient way.
If only Nano had first-mover advantage! I'm rooting for it though, it's everything BTC should have been.
I'm a huge Nano fanboy since the RaiBlocks days. It definitely deserves more attention, since it's a pretty solid technology and was distributed pretty fairly.
But even in this crypto bull market, everybody seems to ignore it, except for the fanboys on Reddit.
But even in this crypto bull market, everybody seems to ignore it, except for the fanboys on Reddit.
Satoshi would be really proud of nano.
Eth prolly has the best constructed PoS system, just starting to roll out.
https://ethereum.org/en/developers/docs/consensus-mechanisms...
https://ethereum.org/en/developers/docs/consensus-mechanisms...
What about Cardano? Isn't it already rolled out with >70% of ADA staked?
When arguing with a Bitcoin-fanatic, try this line:
"Yeah I agree that cryptocurrencies are interesting, perhaps some day one will replace the USD. It will probably not be Bitcoin, but rather some other cryptocurrency“.
Watch how they recoil!
For they have been found out, they do not actually care for financial freedom, etc., all these noble crypto goals which can also be achieved with a cryptocurrency that is not Bitcoin.
All they care about is their speculative investment in Bitcoin in particular, so it won't help them much if another crypto becomes the world standard.
It‘s probably <1% that are true believers and >99% that have missed out on a few bull runs and are now hoping to get rich quickly.
Really, try this line some time and you will come to the same conclusion.
"Yeah I agree that cryptocurrencies are interesting, perhaps some day one will replace the USD. It will probably not be Bitcoin, but rather some other cryptocurrency“.
Watch how they recoil!
For they have been found out, they do not actually care for financial freedom, etc., all these noble crypto goals which can also be achieved with a cryptocurrency that is not Bitcoin.
All they care about is their speculative investment in Bitcoin in particular, so it won't help them much if another crypto becomes the world standard.
It‘s probably <1% that are true believers and >99% that have missed out on a few bull runs and are now hoping to get rich quickly.
Really, try this line some time and you will come to the same conclusion.
> It‘s probably <1% that are true believers
Yay, I was the 1%!
Until I left in like 2015 when it became clear what a disaster it is and that it won't be able to fulfill its original purpose anyway. I'm very surprised the price is still soaring, shouldn't the best currency win? You seem to be right about the 99% idea, though the remaining 1% is not a true believer (you can't seriously be interested in the tech and miss this little fact) but rather people blinded by the additional promise of getting rich.
Yay, I was the 1%!
Until I left in like 2015 when it became clear what a disaster it is and that it won't be able to fulfill its original purpose anyway. I'm very surprised the price is still soaring, shouldn't the best currency win? You seem to be right about the 99% idea, though the remaining 1% is not a true believer (you can't seriously be interested in the tech and miss this little fact) but rather people blinded by the additional promise of getting rich.
What was it that made it clear it cannot fulfill its original purpose?
I am sure most cryptocurrency fanatics understand that volatility is not a good thing for a currency and do not expect bitcoin to be the world standard for payments. Just because you won't end up paying your bills with bitcoin doesn't mean that bitcoin will be worthless.
Again, let‘s assume you are right, and Bitcoin is in fact 100% useful for doing X!
Are you happy? Sure you are, since being useful for X made the price soar!
...
Now let‘s pretend it wasn‘t Bitcoin, but some other cryptocoin that actually became the world's standard for X. Are you still excited? If not, you don't actually care about cryptocurrencies in general but want to make a quick buck with Bitcoin in particular.
This is the point I am trying to make.
Are you happy? Sure you are, since being useful for X made the price soar!
...
Now let‘s pretend it wasn‘t Bitcoin, but some other cryptocoin that actually became the world's standard for X. Are you still excited? If not, you don't actually care about cryptocurrencies in general but want to make a quick buck with Bitcoin in particular.
This is the point I am trying to make.
And this is not surprising. Cryptocurrency is designed to be anti-efficient. "Proof of work" is just a synonym for "having wasted tons of energy."
This is my main beef with these systems. Gaining fundamental value from the act of wasting energy and being the one to accelerate the (local) heat death by the most is not a sensible basis for a 21st century technology.
This is my main beef with these systems. Gaining fundamental value from the act of wasting energy and being the one to accelerate the (local) heat death by the most is not a sensible basis for a 21st century technology.
My issue with it is even more fundamental than this: it is structurally impossible for Proof of Work to become more efficient. If you find a more energy-efficient way to mine, the correct decision is not to reduce your energy usage, but rather to use the same amount of energy to compute more hashes.
The energy-per-transaction ratio is only relevant if the utility of Bitcoin is to compete with Visa to process transactions.
However, if the ultimate utility of Bitcoin is to store trillions of dollars of value, transmit it into the future, across borders, quickly, pseudonymously, and without capital controls from coercive and corrupt governments, then energy-per-transaction is an inappropriate metric.
Bitcoin is the only asset with these properties, and it doesn't need many transactions to do what it does best.
If you find you're angry about Bitcoin's energy usage but you're not even more angry about the energy wasted by industries and technologies that have much less social utility, then maybe it's not the wasted energy that you're angry about after all.
However, if the ultimate utility of Bitcoin is to store trillions of dollars of value, transmit it into the future, across borders, quickly, pseudonymously, and without capital controls from coercive and corrupt governments, then energy-per-transaction is an inappropriate metric.
Bitcoin is the only asset with these properties, and it doesn't need many transactions to do what it does best.
If you find you're angry about Bitcoin's energy usage but you're not even more angry about the energy wasted by industries and technologies that have much less social utility, then maybe it's not the wasted energy that you're angry about after all.
> without capital controls from coercive and corrupt governments
And conversely too! letting corrupt governments and corporations transfer money with ease!
And conversely too! letting corrupt governments and corporations transfer money with ease!
That's always the problem with freedom, it works for good guys and bad guys alike.
Let's not forget druglords, illegal arms dealers, hitmen...
Paging argument from 2010...
You would use Monero or physical cash for those activities.
Bitcoin is much easier to trace once you have a lead.
You would use Monero or physical cash for those activities.
Bitcoin is much easier to trace once you have a lead.
It's just a tradeoff between opsec and ease of use. Monero is harder to turn back into cash, precisely because it carries a worse reputation.
Note that my argument was pro btc - I can see underground demand sustaining its price in the long run.
Note that my argument was pro btc - I can see underground demand sustaining its price in the long run.
Because you definitely can't do that with fiat...
This is such an old, tired take.
This is such an old, tired take.
No, you really can't do that easily and sometimes at all with "fiat". Which is why "money laundering" is a thing. Or drug cartels having the problem to stash or move hundreds of thousands of small dollar bills over North and South American borders.
A somewhat trustworthy state having control over or transparency into money transfers generally is a very good thing. If your government isn't trustworthy enough, you have bigger problems than the currency.
A somewhat trustworthy state having control over or transparency into money transfers generally is a very good thing. If your government isn't trustworthy enough, you have bigger problems than the currency.
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When it comes to truth, old != bad. The oldest profession is still around, for example, because demand will always be there.
There are industries with less social utility than Bitcoin?
> However, if the ultimate utility of Bitcoin is to store trillions of dollars of value, [...] then energy-per-transaction is an inappropriate metric.
The amount of energy used in equilibrium in Bitcoin mining is proportional to the price of Bitcoin (between halvings and holding the fraction of total mining costs spent on energy constant). If the price of Bitcoin rose enough that it had a 2TN market cap tomorrow, miners would have incentives to burn 3-4x more energy.
I agree that transaction-based accounting is flawed, but it doesn’t make the problem go away.
The amount of energy used in equilibrium in Bitcoin mining is proportional to the price of Bitcoin (between halvings and holding the fraction of total mining costs spent on energy constant). If the price of Bitcoin rose enough that it had a 2TN market cap tomorrow, miners would have incentives to burn 3-4x more energy.
I agree that transaction-based accounting is flawed, but it doesn’t make the problem go away.
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By computing more hashes, you raise the difficulty for everyone else mining so you do ultimately push out the less efficient miners.
That's efficient if you define efficiency as hashes computed per watt. That's the metric by which less-efficient miners are driven out.
However, this does nothing for the overall energy efficiency of Bitcoin, which could be defined as transactions processed per gigawatt. If energy gets cheaper, that number only gets smaller.
However, this does nothing for the overall energy efficiency of Bitcoin, which could be defined as transactions processed per gigawatt. If energy gets cheaper, that number only gets smaller.
The problem is that there is, by definition, economic incentive to spend an amount of electric energy equal to the economic value of transaction confirmation to all protocol participants.
If someone has money and power already, they can take a better chance to get more bitcoin. How about the other guys and the other guys ... 10/20 years later?
There’s also proof of stake which requires a lot less energy. I think a lot of nuance is missed when discussing Bitcoin and its consensus mechanism as the only way of running a blockchain
So far no one has shown in practice how to run a decentralized proof of stake network.
How do you bootstrap a node in the face of conflicting history? How do you handle network partitions?
There are also open question surrounding security, prevent actors from colluding and so on. Most other blockchains do not even bother. At least the Ethereum people have the ambition to have something practical. Let's study the design when it you can make an eth transfer with it.
These discussions are like when in a discussion about uranuium waste management someone inevitably cries about how we should just scrap it and go with fusion energy instead.
Great idea, but let's have something working first.
How do you bootstrap a node in the face of conflicting history? How do you handle network partitions?
There are also open question surrounding security, prevent actors from colluding and so on. Most other blockchains do not even bother. At least the Ethereum people have the ambition to have something practical. Let's study the design when it you can make an eth transfer with it.
These discussions are like when in a discussion about uranuium waste management someone inevitably cries about how we should just scrap it and go with fusion energy instead.
Great idea, but let's have something working first.
It is quite noteworthy that Ethereum trusts proof of stake so much that they want to move to it though. Ethereum has some really good devs.
Last time I checked for altcoins that are trying to solve Bitcoin‘s various scalability problems I ended up with a proof of stake coin too, Nano (using the rather new idea block lattice, small but so far quite low-toned development team that seemed to focus on problem solving rather than scammy marketing).
I’m surprised that Ethereum is convinced that they can „just move“ from proof of work to proof of stake. Should be possible for Bitcoin too then, shouldn’t it? (Maybe I’m missing something about this transition.) Nano required a whole new development.
Last time I checked for altcoins that are trying to solve Bitcoin‘s various scalability problems I ended up with a proof of stake coin too, Nano (using the rather new idea block lattice, small but so far quite low-toned development team that seemed to focus on problem solving rather than scammy marketing).
I’m surprised that Ethereum is convinced that they can „just move“ from proof of work to proof of stake. Should be possible for Bitcoin too then, shouldn’t it? (Maybe I’m missing something about this transition.) Nano required a whole new development.
Ethereum's social contract has evolved to become much more "fluid" and open to change than Bitcoin's. Mainline Ethereum today is is very different in many ways to what it was two years ago. There is even a proposal with a lot of support to have transaction fees mostly burned rather than mostly given to miners. Aside from minority forks, something like that would never happen in Bitcoin in a million years.
So, while Bitcoin techinically could switch to proof of stake, it probably won't.
So, while Bitcoin techinically could switch to proof of stake, it probably won't.
Tezos is up and running and working just fine.
Plus Cosmos, Polkadot, Solana, Cardano, Avalanche, NXT, and probably others I'm forgetting. There are plenty of PoS systems in production these days!
As someone who hasn't been watching closely for a while, any thoughts on which of those seem most interesting?
To me Mina and Zcash are interesting since they (plan to) use cryptographic arguments to show that chain states are valid, which leads to some nice features, such as better light clients. I'm probably biased since our own startup was influenced by them. Besides that, I'd say NEAR since it seems like the most promising sharded chain that's in or close to production.
(They weren't on the list since Mina hasn't launched quite yet, Zcash isn't PoS though it might switch, and NEAR isn't PoS in its current form, but will be soon.)
(They weren't on the list since Mina hasn't launched quite yet, Zcash isn't PoS though it might switch, and NEAR isn't PoS in its current form, but will be soon.)
All of those are run by a singular entity. This makes it trivial for them to implement PoS.
That's not the use case something like Bitcoin is built for.
That's not the use case something like Bitcoin is built for.
That's flatly untrue.
How can that be controversial? They all had an ICO to begin with. Some of them have even registered a company or organization to back it up.
The controversy is in the language "started" vs. "run."
Tezos, as an example, is governed by voting and on-chain governance. It isn't "run by a single entity."
Ripple or Tether are, though, sure.
Tezos, as an example, is governed by voting and on-chain governance. It isn't "run by a single entity."
Ripple or Tether are, though, sure.
Governance is more than a voting protocol. Tezos is not governed by equal actors.
There is a "Tezos Foundation". They control 30% of all staked XTZ. They checkpoint the blockchain regularly to provide correct history.
There is a "Tezos Foundation". They control 30% of all staked XTZ. They checkpoint the blockchain regularly to provide correct history.
It seems to me that admin rights to the bitcoin core github repo count for a lot more than a 30% vote.
You can make near-zero-cost ETH and ERC-20 transfers right now using L2 solutions like state channels and rollups. There are also a few POCs of applications like Uniswap running on L2.
> I think a lot of nuance is missed when discussing Bitcoin and its consensus mechanism as the only way of running a blockchain
Bitcoin holders are financially incentivized to steer everyone else toward Bitcoin.
As long as early adopters are financially invested in alternative currencies failing, we’re going to continue seeing a focus on Bitcoin.
Bitcoin holders are financially incentivized to steer everyone else toward Bitcoin.
As long as early adopters are financially invested in alternative currencies failing, we’re going to continue seeing a focus on Bitcoin.
Proof-of-stake distributed ledger technology is extremely efficient. Hedera Hashgraph uses a gossip protocol and has extremely high transaction-per-second support with finality. Already being used by major corporations.
https://hedera.com/
https://hedera.com/
Proof of space, too. See e.g. https://www.chia.net
Ugh, that seems like it just exchanges one form of waste for another. If it takes off the price of storage is likely to rocket in the same way GPUs have.
Let's not shoot ourselves in the foot, again, for another digital gold rush?
Let's not shoot ourselves in the foot, again, for another digital gold rush?
IIRC some Proof of Storage algorithms allow you to store actually useful data, and there shouldn't be any incentive to get fast storage, so it should have less of an effect on the average person.
True, and I understand this is how projects like Sia work. But IIRC Bram Cohen's proposal was effectively PoW but with storage.
When is that rolling out for Ethereum
It's a really complicated transition, but it's already started. The estimate is that there's probably about $1.5B worth of transactions left to mine, but most transactions will be switching over to PoS in the coming year. No one knows for sure when the full transition will occur, it's more of a gradual phase-out.
I like Ethereum not just because of the more responsible PoS but also because mining is currently asic resistant. A lot of the waste going into bitcoin right now is building specialized miners that will go into a landfill after a generation or two. Eth can still be mined with hardware you already own.
It's coming with Ethereum 2.0. The transition process to Eth2 is on the way, it is estimated that they will finish by 2022.
> "Proof of work" is just a synonym for "having wasted tons of energy." This is my main beef with these systems. Gaining fundamental value from the act of wasting energy [...] is not a sensible basis for a 21st century technology.
This is my main beef with the system we live in already.
See ; Bullshit Jobs
https://en.wikipedia.org/wiki/Bullshit_jobs
"Bullshit Jobs: A Theory is a 2018 book by anthropologist David Graeber that argues for the existence and societal harm of meaningless jobs. He contends that over half of societal work is pointless, which becomes psychologically destructive when paired with a work ethic that associates work with self-worth."
I am not contesting the Bitcoin situation is ... interesting.
(edit = comment layout )
This is my main beef with the system we live in already.
See ; Bullshit Jobs
https://en.wikipedia.org/wiki/Bullshit_jobs
"Bullshit Jobs: A Theory is a 2018 book by anthropologist David Graeber that argues for the existence and societal harm of meaningless jobs. He contends that over half of societal work is pointless, which becomes psychologically destructive when paired with a work ethic that associates work with self-worth."
I am not contesting the Bitcoin situation is ... interesting.
(edit = comment layout )
Hypothetically this could be amortized better by increasing the transactions per block. Just because Bitcoin was first doesn't mean it's the best wrt efficiency. PoW can be competitive with legacy infrastructure with good clearing design.
I think Donatella Meadows made it quite clear a while back that fiddling with constants and coefficients doesn't really have an Effect with capital E.
At the very least the proof of work ought to compute something useful.
It can't be made useful because the output of a useful calculation can't be known in advance - otherwise it wouldn't be useful.
I think Gridcoin offers a happy medium. It's proof of stake, but it also offers rewards for participating in BOINC-based research projects.
https://gridcoin.us/
Not exactly "proof of work" in the same sense its being used, but I wish that the project would get more attention.
https://gridcoin.us/
Not exactly "proof of work" in the same sense its being used, but I wish that the project would get more attention.
I've been trying to get people to pay attention to this project for years. I think a lot of the "useful computation" chains are much more likely to survive the next cryptocurrency crash because of their inherent utility. For example, the various storage coins, stuff like Nym or Oxen, Namecoin, etc.
You can gain use computing to gain specificity from complexity though, and recognize that new specificity - i.e. brute force protein folding calculations.
That would be great, but unfortunately the structure of problems that are well suited to proof of work (hard to compute but easy to verify in a decentralized way) doesn't seem to have too many practical applications.
Aren't there lots of NP problems that have this property?
It's really hard to see how BTC does not get outlawed by most governments. Since financial transactions are zero sum and provide no economic value, it's the equivalent of a giant methane leak.
We detached this subthread from https://news.ycombinator.com/item?id=26090317.
The correct comparison is with the transaction and storage costs, in electricity, of storing gold in fort knox and moving it once a century in a boat across the ocean. Tesla's 1.5 billion USD in bitcoin probably won't move in your lifetime.
Mining for gold is even more inefficient. You've got dig earth several kilometers down, build massive infrastructure, use harmful chemicals to purify it, lose lives etc etc
That's falsely equating fixed and variable costs. A mined bitcoin is useless if the network isn't burning electricity, whereas mined gold is continually useful after mining.
At least gold is useful for something though
Gold also doesn't require constant electricity expenditure to keep it's value and "utility"z
A kilo of gold once mined is perpetual. A bitcoin needs the whole network to keep running (and be large enough so that miners can't collude) to keep it's value.
A kilo of gold once mined is perpetual. A bitcoin needs the whole network to keep running (and be large enough so that miners can't collude) to keep it's value.
proof of work is cleverly misnamed, because what's actually going on is proof of wasted work, or simply proof of waste. you are proving you threw a precise measure of something valuable away (money/resources/energy... whether your own or someone else's).
the behavioral econ assumption is that you will seek to recover that loss someday, thus requiring you to hold and protect the receipt token representing it until that time.
the behavioral econ assumption is that you will seek to recover that loss someday, thus requiring you to hold and protect the receipt token representing it until that time.
Ethereum has already started transitioning to proof-of-stake which will significantly lower transaction costs in Ethereum.
Indeed, the comment shows how valuable Bitcoin actually really is - it's pretty impressive.
Interesting take. Does the amount of money spent on Herbalife show how valuable it actually really is? What about essential oils or healing crystals?
In a tautological way, sure, everything's worth what somebody's willing to pay for it. But the above examples must call into question whether there is a distinction between what something is worth in dollars, and what its merit is.
In a tautological way, sure, everything's worth what somebody's willing to pay for it. But the above examples must call into question whether there is a distinction between what something is worth in dollars, and what its merit is.
Good points. To give it a totally different spin, imagine Bitcoin's value is pretty constant actually and what changes is the dollar (its being devalued at a rapid pace at the moment).
There is only a limited supply of Bitcoin, but there will be more and more dollars printed over the next decades (making the dollar even less valuable compare to the constant Bitcoin). So Bitcoin will be interesting to watch - quite exciting for future and to see what's gonna happen.
There is only a limited supply of Bitcoin, but there will be more and more dollars printed over the next decades (making the dollar even less valuable compare to the constant Bitcoin). So Bitcoin will be interesting to watch - quite exciting for future and to see what's gonna happen.
Most newer cryptos are built on proof of stake. So your criticism is mainly aimed at Btc.
Naturally. While POS cryptos share many other bad sides with Bitcoin at least they don't ruin the planet so they're far far better.
POW only ruins the planet if you're using non-renewables / non-nuclear. It's not intrinsic.
quibble on "you're". It's a shared planet, so it gets ruined if enough mining is done on non-renewables. Most people complaining aren't mining at all.
Was this a useful comment? "You're" is just a stand-in for "people are". The second person is a fairly common way to structure such a sentence.
Sure, you can argue that nuclear (or whatever) is a better way to produce energy than most/all others currently known, but that's a very low bar to clear.
There are more and less sucky ways to produce energy, but let's be clear: all of them suck to some degree. There is no type of energy production where the mere act of producing that energy is a net positive.
Then the argument turns to whether or not the gains from proof of wasted energy-type systems outweigh the drawbacks of producing the required energy -- even if that energy is produced in the least sucky way. I'm firmly in the no camp.
There are more and less sucky ways to produce energy, but let's be clear: all of them suck to some degree. There is no type of energy production where the mere act of producing that energy is a net positive.
Then the argument turns to whether or not the gains from proof of wasted energy-type systems outweigh the drawbacks of producing the required energy -- even if that energy is produced in the least sucky way. I'm firmly in the no camp.
Which is where most energy is derived from, so it's ruining the planet.
You may be interested in Ada coin. It uses a "proof of stake" algorithm instead which does not rely on processing power. Virtually infinitely more eco-friendly.
Cryptocurrency are inefficient by the design only at creation. But once mined, in principle with the right setup transactions can be arbitrary cheap. It is similarly as with gold. It is expensive to dig it once, but once a coin is minted, it can be used for millions of transaction making transaction cost rather low.
This is completely incorrect. Transactions are processed as part of mining. You cannot simply stop mining and continue doing transactions for free; the whole point of the mining process in a PoW cryptocurrency is that mined coins are given out as a reward for helping to secure transactions.
What happens when all the bitcoins are mined? There still has to be some settlement process or else the blockchain ends.
Mining continues but the reward comes solely from transaction fees.
The algorithm makes it such that the last coin will be mined sometime around 2140. My assumption is that people just plan on moving to another fork before that point.
Miners are incentivised with transaction fees alone after all the bitcoins are mined.
> What happens when all the bitcoins are mined?
Then miners will get only the transaction fees. But it's still the same process. (Anyway, that won't happen, the number of available BTC to mining will asymptoptically approach 0, but will never get there.)
Then miners will get only the transaction fees. But it's still the same process. (Anyway, that won't happen, the number of available BTC to mining will asymptoptically approach 0, but will never get there.)
No, new bitcoins run out around 2140. From then on there will be no new bitcoin
Actually your analogy is flawed. Because the way bitcoin works you have to pay some energy cost per block and you have a limited time to use that block because the next block will be coming in in 10 mins. It would be more like we had to make new coins every 10 mins.
Or am I missing something here?
Or am I missing something here?
Bitcoin probably is not fixable, but other designs are much better at supporting cheap transactions. There is nothing inherently expensive in maintaining the block chain.
this thread is about bitcoins. So I thought its implied we are talking about bitcoin. Maintaining a POW block chain is inherently wasteful, but yes POS blockchains can maybe save this.
Even with bitcoins just consider what happens once all bitcoins are mined. Does the whole thing collapse? Or do bitcoins continue to be used similar to POS?
Then the transaction fees associated with every transaction fund the miners.
The block mining algorithm doesn't change, right? So I don't see how it will move to POS. That will require some sort of buy in from the users. Every time something new is introduced in Bitcoin the legacy remains and the new ideas fork the chain into their own thing. Usually these alternatives either die or ignored.
In the grand scheme, the "tons" (or rather, gigajoules) of energy wasted by the Proof-of-Work are nothing. The Sun radiation that hits Earth every second dwarfs this consumption.
Also, one of the definitions of life is "a local decrease in entropy, at the cost of a global, larger, increase in entropy". By this criteria, every living being is a bad thing for the universe, because it accelerates the global heat death ever so slightly.
I guess my point is, some uses of energy are acceptable, even desirable. And every use of energy accelerates the heat death of the universe, but we humans are insignificant on this scale; there is really nothing that we can do to even accelerate our Sun's death. We're not even Kardashev-1 :)
Also, one of the definitions of life is "a local decrease in entropy, at the cost of a global, larger, increase in entropy". By this criteria, every living being is a bad thing for the universe, because it accelerates the global heat death ever so slightly.
I guess my point is, some uses of energy are acceptable, even desirable. And every use of energy accelerates the heat death of the universe, but we humans are insignificant on this scale; there is really nothing that we can do to even accelerate our Sun's death. We're not even Kardashev-1 :)
I was going to point that the universe is not relevant here, only humans, the energy we produce and how we produce it matters. But then I realized that either your comment must be tongue in cheek or you are trying to hard to rationalize this than there is no point on try to convince you.
Okay, I admit my comment was a bit rushed, and I apologize for that. It's not tongue-in-cheek, and I don't feel that I'm rationalizing things (but then, I guess I wouldn't feel it even if I were).
I was trying to view things in a bigger picture. Ofcourse we are using too much fossil fuels at this time. Ofcourse our functioning is pretty unsustainable.
What I am trying to say, is that sometimes high energy usage is acceptable. Should we stop launching things in orbit? Should we stop the LHC?
I think that for _some_ people, having a thing such as bitcoin is worth the energy expenditure. It is perfectly okay that for you, it _isn't_ acceptable. I am not trying to convince you of anything. Just affirming that there exists a subset of humans that find value in it, and therefore are willing to allocate resources -- be that electrical energy, fiat money, or mindshare.
I was trying to view things in a bigger picture. Ofcourse we are using too much fossil fuels at this time. Ofcourse our functioning is pretty unsustainable.
What I am trying to say, is that sometimes high energy usage is acceptable. Should we stop launching things in orbit? Should we stop the LHC?
I think that for _some_ people, having a thing such as bitcoin is worth the energy expenditure. It is perfectly okay that for you, it _isn't_ acceptable. I am not trying to convince you of anything. Just affirming that there exists a subset of humans that find value in it, and therefore are willing to allocate resources -- be that electrical energy, fiat money, or mindshare.
> Also, one of the definitions of life is "a local decrease in entropy, at the cost of a global, larger, increase in entropy". By this criteria, every living being is a bad thing for the universe, because it accelerates the global heat death ever so slightly.
The discussion about energy use of Bitcoin is within the context of the effectively closed system of Earth.
Until such a time that solar generated electricity is too plentiful to meter and ubiquitous, Bitcoin mining will cause huge demand for fossil fuel based energy, with the associated consequences for climate change.
The discussion about energy use of Bitcoin is within the context of the effectively closed system of Earth.
Until such a time that solar generated electricity is too plentiful to meter and ubiquitous, Bitcoin mining will cause huge demand for fossil fuel based energy, with the associated consequences for climate change.
> effectively closed system of Earth.
All the plants, algae, and everything with chlorophyll would beg to differ. I really think we cannot consider Earth a closed system, because we're not a rogue planet in the insterstellar void.
Our solar _system_ would be a better approximation of a "closed system".
All the plants, algae, and everything with chlorophyll would beg to differ. I really think we cannot consider Earth a closed system, because we're not a rogue planet in the insterstellar void.
Our solar _system_ would be a better approximation of a "closed system".
Solar radiation is the only significant exogenous input to the otherwise closed system of earth, and I directly addressed it in the context of solar electricity production needing to grow by a huge amount to offset the carbon footprint of BTC mining.
> Our solar _system_ would be a better approximation of a "closed system".
That's both pedantic and irrelevant. The rest of the solar system (other than the Sun) have practically zero bearing in any way on the energy consumption of BTC mining, or the damage to the climate it causes when powered by fossil fuels.
> Our solar _system_ would be a better approximation of a "closed system".
That's both pedantic and irrelevant. The rest of the solar system (other than the Sun) have practically zero bearing in any way on the energy consumption of BTC mining, or the damage to the climate it causes when powered by fossil fuels.
>In the grand scheme, the "tons" (or rather, gigajoules) of energy wasted by the Proof-of-Work are nothing.
>but we humans are insignificant on this scale; there is really nothing that we can do to even accelerate our Sun's death. We're not even Kardashev-1 :)
I am shocked that you are brave enough to write these things in the same comment. The problem with Bitcoin and proof of work is that it's literally capable of consuming our sun and all energy in the universe.
>but we humans are insignificant on this scale; there is really nothing that we can do to even accelerate our Sun's death. We're not even Kardashev-1 :)
I am shocked that you are brave enough to write these things in the same comment. The problem with Bitcoin and proof of work is that it's literally capable of consuming our sun and all energy in the universe.
Is that you, Gary Johnson?
No idea who's Gary Johnson. I'm just a guy from Eastern Europe, watching too much Isaac Arthur.
Just a playful joke. He's a US politician who ran for president in 2016 as a third-party (i.e. no chance of victory) candidate.
At one point he was asked about his long term view on global warming, and he said "In billions of years, the sun is going to actually grow and encompass the Earth, right? So global warming is in our future."
At one point he was asked about his long term view on global warming, and he said "In billions of years, the sun is going to actually grow and encompass the Earth, right? So global warming is in our future."
Ah, I see. Thanks for explaining :)
Gary's response was obviously tongue-in-cheek, even somewhat flippant. My comment wasn't trying to be ironic, though I now see that it could be interpreted so.
Gary's response was obviously tongue-in-cheek, even somewhat flippant. My comment wasn't trying to be ironic, though I now see that it could be interpreted so.
If this trend continue we may well seal our fate by crunching useless numbers at a global scale for the sake of greed and because we seem incapable of trusting each other.
If this was written in a novel we'd deem it a bit too much on the nose really.
If this was written in a novel we'd deem it a bit too much on the nose really.
The greed is the chairs of central banks and the policymakers who are debasing other monies (some people benefit more than others from this).
If they weren't debasing other people's hard earned value, there would be no need for bitcoin.
But since they are, and are doing it at an increasing pace, the demand for bitcoin is inevitable.
If they weren't debasing other people's hard earned value, there would be no need for bitcoin.
But since they are, and are doing it at an increasing pace, the demand for bitcoin is inevitable.
You'll have to explain to me how replacing inflationary currencies with a deflationary one makes any sense in that context. Inflationary currencies punish those hoarding money, deflationary currencies reward them.
The idea that bitcoin is good for the less fortunate and bad for rich people is pure propaganda and not based on reality. It's going to make a bunch of early adopters very rich, and that's about it.
The idea that bitcoin is good for the less fortunate and bad for rich people is pure propaganda and not based on reality. It's going to make a bunch of early adopters very rich, and that's about it.
Bitcoin will benefit anyone who wants to save (create capital). It will not be kind on those who merely want to consume. It's low time preference vs high time preference.
Not all rich people have low time preferences. Particularly those who are involved in the fiat system and who benefit from the expansion of debt. They think in quarters.
And not all poor people have high time preferences, but under fiat, saving money is highly discouraged because it loses purchasing power. People are encouraged to spend or invest in stonks - where the markets are rigged to benefit the big players.
Everyone benefits in a society where capital is accumulated, rather than debt.
As for "rich versus poor," this is a distraction because their is nothing you can do about it besides resorting to theft, which makes the problem worse.
The problem has always been "thieves versus hard workers." The current system is one where central banks and those close to them are stealing the time that other people have put into labour by deliberately devaluing their money.
Not all rich people have low time preferences. Particularly those who are involved in the fiat system and who benefit from the expansion of debt. They think in quarters.
And not all poor people have high time preferences, but under fiat, saving money is highly discouraged because it loses purchasing power. People are encouraged to spend or invest in stonks - where the markets are rigged to benefit the big players.
Everyone benefits in a society where capital is accumulated, rather than debt.
As for "rich versus poor," this is a distraction because their is nothing you can do about it besides resorting to theft, which makes the problem worse.
The problem has always been "thieves versus hard workers." The current system is one where central banks and those close to them are stealing the time that other people have put into labour by deliberately devaluing their money.
We've already destroyed the planet through greed (let's be real, we're not going to fix climate change). If you were a writer you would be writing history, not speculative fiction.
I like the fun-facts on this page: "The amount of electricity consumed every year by always-on but inactive home devices in the USA alone could power the Bitcoin network for 1.8 years"
Where is the discussion about the smart home devices using that much energy? This is horrible, thats twice as the Bitcoin network and this is just the USA.
I would really like if someone estimate the energy usage (with all trucks and cars and people and companies and buildings and so on) of other things than just whole countries, maybe the "normal" financial system, or plastic bottles or something everyone is using (like idle smart devices).
I think most people missing the main point: Energy is to cheap. Most miners are in China, an they seem to pay nearly nothing for the energy (else they would'nt do it). This would mean they waste Energy on EVERYTHING, not only Bitcoin mining. In Germany I would never even think about mining Bitcoin, since I have to pay 0,35€ per kWh. But if I would buy thousends of miners and waste 5MW of energy, I would have to pay roughtly 0,15€ (maybe even just 0,05€). So wasting energy is profitable, is'nt this strange?
I think most people missing the main point: Energy is to cheap. Most miners are in China, an they seem to pay nearly nothing for the energy (else they would'nt do it). This would mean they waste Energy on EVERYTHING, not only Bitcoin mining. In Germany I would never even think about mining Bitcoin, since I have to pay 0,35€ per kWh. But if I would buy thousends of miners and waste 5MW of energy, I would have to pay roughtly 0,15€ (maybe even just 0,05€). So wasting energy is profitable, is'nt this strange?
I’ve been getting ads from my power company about “energy vampires” reminding me to turn off or unplug unwanted devices for decades. There is an outrage about that wasted power; you’ve just missed it.
Oh, and we’re getting more efficient about household energy usage every single day. Those always on lights used to be 60W incandescent bulbs, now they’re 6-7W LEDs. The same cannot be said about the Bitcoin network, which is growing in energy consumption.
Oh, and we’re getting more efficient about household energy usage every single day. Those always on lights used to be 60W incandescent bulbs, now they’re 6-7W LEDs. The same cannot be said about the Bitcoin network, which is growing in energy consumption.
I didn't have time to dig in to the sources but I wonder if that fun fact is still true. Back in the day your VCR and TV used to consume a large amount of power in standby. These days a device on standby consumes pennies of power a year. Of course there are a lot more electronics in the average home these days...
This is a rehash of a previous post of mine regarding electricity consumption:
Back in the days where all our electricity came from fossil fuels, I completely agree that marginal electricity usage was bad for the environment. However I think that thought has persisted with us even though it is no longer true 100% of the time. With renewables sometimes the marginal cost of electricity to our environment is near 0 or even negative (eg, during periods of higher winds and lower demand.)
I predict that in the future as bitcoin mining becomes more and more of an efficiency game that you will see bitcoin mining be kind of a load balancer the grid, effectively turning off during peak demand (or low supply) times and contributing to the base load during regular times.
For example, it may even help the economics of building new wind plants. Eg, currently it may not be profitable to build a new wind plant because base load is too low that the excess power generated would need to be sold off at 0 or even negative prices. However if bitcoin mining could be turned on during these times and off during periods of high demand, there will need to be fewer peaker plants in operation and it would positively affect the economics of opening a new wind plant.
Bitcoin mining only cares about the cost of electricity at a given time, it is not like most other electricity demands that are very time based. With the large variance of electricity generation by renewables, I think bitcoin can in the future help smooth demand according to the real supply/demand curve.
It's kind of like a different implementation of the Tesla utility grid batteries. Instead of deploying power, you force the grid to build more renewable capacity (that the miners are paying for) that you use except in peak periods, where you turn off and effectively provide the grid with more power.
Edit: here is an article of a bitcoin mining company doing just that:
https://www.bloomberg.com/news/articles/2020-09-01/bitcoin-m... https://www.forbes.com/sites/christopherhelman/2020/05/21/ho...
Back in the days where all our electricity came from fossil fuels, I completely agree that marginal electricity usage was bad for the environment. However I think that thought has persisted with us even though it is no longer true 100% of the time. With renewables sometimes the marginal cost of electricity to our environment is near 0 or even negative (eg, during periods of higher winds and lower demand.)
I predict that in the future as bitcoin mining becomes more and more of an efficiency game that you will see bitcoin mining be kind of a load balancer the grid, effectively turning off during peak demand (or low supply) times and contributing to the base load during regular times.
For example, it may even help the economics of building new wind plants. Eg, currently it may not be profitable to build a new wind plant because base load is too low that the excess power generated would need to be sold off at 0 or even negative prices. However if bitcoin mining could be turned on during these times and off during periods of high demand, there will need to be fewer peaker plants in operation and it would positively affect the economics of opening a new wind plant.
Bitcoin mining only cares about the cost of electricity at a given time, it is not like most other electricity demands that are very time based. With the large variance of electricity generation by renewables, I think bitcoin can in the future help smooth demand according to the real supply/demand curve.
It's kind of like a different implementation of the Tesla utility grid batteries. Instead of deploying power, you force the grid to build more renewable capacity (that the miners are paying for) that you use except in peak periods, where you turn off and effectively provide the grid with more power.
Edit: here is an article of a bitcoin mining company doing just that:
https://www.bloomberg.com/news/articles/2020-09-01/bitcoin-m... https://www.forbes.com/sites/christopherhelman/2020/05/21/ho...
I think that this is a great big stretch to try and justify BitCoin mining. I don't know if you personally own BitCoin, but I would say that this is a prime example of motivated reasoning.
> or even negative
I can see no way that consuming more energy can result in an improvement to the environment (unless that energy usage was directly related to improving the environment). There is absolutely no time where you can say "the more lights I leave on, the better the climate will be," no matter what your energy source is.
In general the rest of your argument can be summed up as "if there is more demand for electricity, more utilities will build renewable plants." The problem with this argument is that there is already far more electricity being used than renewables can supply, so there is already all the incentive needed to build more plants.
As for the present-day, a BitCoin mining rig consumes whatever proportion of fossils are inputs to that grid. If a grid is 50% renewable and 50% fossil, you can't pretend that you're consuming only the renewable portion. Indeed, the opposite may be true: renewables generally just produce their max output, the fossils can ramp up and down to meet higher demand. So it's best to think of the fossils as the ones that are rising to supply any "unnecessary" usage.
> where you turn off and effectively provide the grid with more power
This is again pretty striking motivated reasoning. Yes, if we turn off all non-essential lights during peak hours we are kind of "supplying the grid" with more energy, but if we build a huge energy-suck, and then occasionally turn it off, we don't get to pretend we are actually energy suppliers. If I set fire to $1000 of my company's money every day, I don't get to pretend I earned them $1000 on the days when I don't.
> or even negative
I can see no way that consuming more energy can result in an improvement to the environment (unless that energy usage was directly related to improving the environment). There is absolutely no time where you can say "the more lights I leave on, the better the climate will be," no matter what your energy source is.
In general the rest of your argument can be summed up as "if there is more demand for electricity, more utilities will build renewable plants." The problem with this argument is that there is already far more electricity being used than renewables can supply, so there is already all the incentive needed to build more plants.
As for the present-day, a BitCoin mining rig consumes whatever proportion of fossils are inputs to that grid. If a grid is 50% renewable and 50% fossil, you can't pretend that you're consuming only the renewable portion. Indeed, the opposite may be true: renewables generally just produce their max output, the fossils can ramp up and down to meet higher demand. So it's best to think of the fossils as the ones that are rising to supply any "unnecessary" usage.
> where you turn off and effectively provide the grid with more power
This is again pretty striking motivated reasoning. Yes, if we turn off all non-essential lights during peak hours we are kind of "supplying the grid" with more energy, but if we build a huge energy-suck, and then occasionally turn it off, we don't get to pretend we are actually energy suppliers. If I set fire to $1000 of my company's money every day, I don't get to pretend I earned them $1000 on the days when I don't.
I think that this critique severely mischaracterizes the argument: we're not just talking about the merits of blindly consuming electricity ("leaving the lights on forever"), we're talking about what happens when you attach a financial incentive to consuming electricity structured in such a way that your net profit increases if you spend less on that energy.
For Bitcoin miners, the input is energy, and the output is money. This means that there is now possibly an incentive to make available cheaper sources of energy, and right now that happens to be wind and solar (at least per kWh).
It's worth litigating whether such an incentive actually exists, or if it does exist whether it will actually stimulate green energy development, or whether cheap energy is always going to be clean energy. These are interesting debates. But it's impossible to talk about Bitcoin as long as we mischaracterize the arguments.
For Bitcoin miners, the input is energy, and the output is money. This means that there is now possibly an incentive to make available cheaper sources of energy, and right now that happens to be wind and solar (at least per kWh).
It's worth litigating whether such an incentive actually exists, or if it does exist whether it will actually stimulate green energy development, or whether cheap energy is always going to be clean energy. These are interesting debates. But it's impossible to talk about Bitcoin as long as we mischaracterize the arguments.
You have the supply-demand curve backwards. If there is more consumption of electricity, that raises the price, it doesn't make it cheaper. Of course the bitcoin miners would like to buy it cheaper. The power companies would like to make it more expensive. Economics dictates that their meeting point will be higher with more demand.
You're describing it as if BitCoin miners have the ability to construct their own gigawatt power plant.
But even if they did, the argument is still "If I use more electricity, and I/they create more green power plants to match my demand, the environment is better off."
If I burn 100 TWh/yr of electricity, and they build a power plant for me that supplies 100 TWh/yr of green power, how, exactly, have I reduced the demand for fossil fuels? I'm burning all the new green energy that's being created!
You're describing it as if BitCoin miners have the ability to construct their own gigawatt power plant.
But even if they did, the argument is still "If I use more electricity, and I/they create more green power plants to match my demand, the environment is better off."
If I burn 100 TWh/yr of electricity, and they build a power plant for me that supplies 100 TWh/yr of green power, how, exactly, have I reduced the demand for fossil fuels? I'm burning all the new green energy that's being created!
> If there is more consumption of electricity, that raises the price, it doesn't make it cheaper. Of course the bitcoin miners would like to buy it cheaper. The power companies would like to make it more expensive. Economics dictates that their meeting point will be higher with more demand.
First of all, economics dictates that supply will catch up to meet the demand as long as the barrier to entry is low. You'd be right if there was a cartel in green energy — but there's not. As long as supply is elastic, high prices are always transient.
> You're describing it as if BitCoin miners have the ability to construct their own gigawatt power plant.
No, I'm describing it as if BitCoin miners have the ability to set up ASICs powered by solar panels in the middle of a desert in Nevada. Somewhat high upfront cost, but effectively zero marginal cost of power. What's being stimulated here is the demand for accessible solar panels that can be quickly/cheaply installed.
> If I burn 100 TWh/yr of electricity, and they build a power plant for me that supplies 100 TWh/yr of green power, how, exactly, have I reduced the demand for fossil fuels? I'm burning all the new green energy that's being created!
But again, that presupposes that there's some fixed supply. Supply also changes, and it responds to demand. This is the core thesis behind Keynesian stimulus, and why inflation doesn't necessarily follow from stimulating demand.
Now, baked into all of my points here is the assumption that the barrier to entry for new supply is low. It might not be! That's, I think, the more interesting question. The market conditions could also change making it easier and easier to spin up a solar farm, or spin up a wind-farm.
First of all, economics dictates that supply will catch up to meet the demand as long as the barrier to entry is low. You'd be right if there was a cartel in green energy — but there's not. As long as supply is elastic, high prices are always transient.
> You're describing it as if BitCoin miners have the ability to construct their own gigawatt power plant.
No, I'm describing it as if BitCoin miners have the ability to set up ASICs powered by solar panels in the middle of a desert in Nevada. Somewhat high upfront cost, but effectively zero marginal cost of power. What's being stimulated here is the demand for accessible solar panels that can be quickly/cheaply installed.
> If I burn 100 TWh/yr of electricity, and they build a power plant for me that supplies 100 TWh/yr of green power, how, exactly, have I reduced the demand for fossil fuels? I'm burning all the new green energy that's being created!
But again, that presupposes that there's some fixed supply. Supply also changes, and it responds to demand. This is the core thesis behind Keynesian stimulus, and why inflation doesn't necessarily follow from stimulating demand.
Now, baked into all of my points here is the assumption that the barrier to entry for new supply is low. It might not be! That's, I think, the more interesting question. The market conditions could also change making it easier and easier to spin up a solar farm, or spin up a wind-farm.
> But again, that presupposes that there's some fixed supply.
No, it doesn't! Exactly the opposite!
Again: if a BitCoin miner generates 1 TWh/yr of their own electricity, how does that reduce the burning of fossil fuels?
Likewise, if power companies create more green power to supply the needs of BitCoin miners, how does that reduce the burning of fossil fuels? You're simply consuming whatever new green energy you're creating.
So the whole "it will make power companies produce more green energy, and therefore it's good for the planet" argument falls flat.
No, it doesn't! Exactly the opposite!
Again: if a BitCoin miner generates 1 TWh/yr of their own electricity, how does that reduce the burning of fossil fuels?
Likewise, if power companies create more green power to supply the needs of BitCoin miners, how does that reduce the burning of fossil fuels? You're simply consuming whatever new green energy you're creating.
So the whole "it will make power companies produce more green energy, and therefore it's good for the planet" argument falls flat.
> No, it doesn't! Exactly the opposite!
How?
> Again: if a BitCoin miner generates 1 TWh/yr of their own electricity, how does that reduce the burning of fossil fuels?
First of all, if a BitCoin miner can generate 1 TWh/year of their own electricity without burning fossil fuels, then the entire argument around Bitcoin electricity use is moot. Second of all, the only way a BitCoin miner can generate 1TWh/year of their own electricity is if they have access to the tools/infrastructure necessary to set up their own power generation — and the demand for that tooling/infrastructure stimulates the development and promulgation of it.
> Likewise, if power companies create more green power to supply the needs of BitCoin miners, how does that reduce the burning of fossil fuels? You're simply consuming whatever new green energy you're creating.
Again, because if you dust off your "economics" argument, when demand increases, cost increases. Then when cost increases, as long as supply is elastic, it increases to meet the demand. The demand for green energy, today, is increasing at a natural/slow pace, but if you have a financialized industry that demands high volumes of it, you supercharge the development of infrastructure on the supply side — enough that eventually the majority of electricity supply is green.
> So the whole "it will make power companies produce more green energy, and therefore it's good for the planet" argument falls flat.
You really haven't explained how. Your entire argument presupposes fixed supply. Maybe that's true, but you'll then have to make the case for why the supply of green energy (or tooling/infrastructure) is fixed.
As it stands, right now, there's a lot of money to be made selling solar panels. If industries mobilize to cheaply produce easy-to-deploy solar panels at scale, that is good for everyone.
How?
> Again: if a BitCoin miner generates 1 TWh/yr of their own electricity, how does that reduce the burning of fossil fuels?
First of all, if a BitCoin miner can generate 1 TWh/year of their own electricity without burning fossil fuels, then the entire argument around Bitcoin electricity use is moot. Second of all, the only way a BitCoin miner can generate 1TWh/year of their own electricity is if they have access to the tools/infrastructure necessary to set up their own power generation — and the demand for that tooling/infrastructure stimulates the development and promulgation of it.
> Likewise, if power companies create more green power to supply the needs of BitCoin miners, how does that reduce the burning of fossil fuels? You're simply consuming whatever new green energy you're creating.
Again, because if you dust off your "economics" argument, when demand increases, cost increases. Then when cost increases, as long as supply is elastic, it increases to meet the demand. The demand for green energy, today, is increasing at a natural/slow pace, but if you have a financialized industry that demands high volumes of it, you supercharge the development of infrastructure on the supply side — enough that eventually the majority of electricity supply is green.
> So the whole "it will make power companies produce more green energy, and therefore it's good for the planet" argument falls flat.
You really haven't explained how. Your entire argument presupposes fixed supply. Maybe that's true, but you'll then have to make the case for why the supply of green energy (or tooling/infrastructure) is fixed.
As it stands, right now, there's a lot of money to be made selling solar panels. If industries mobilize to cheaply produce easy-to-deploy solar panels at scale, that is good for everyone.
> Again: if a BitCoin miner generates 1 TWh/yr of their own electricity, how does that reduce the burning of fossil fuels?
Simple, during times where peaker plants need to run (because electricity demand is higher than supply), these miners can shut off, giving the grid more green power. Now these peaker plants (which generally burn coal/natural gas) don't need to exist or run anymore.
Simple, during times where peaker plants need to run (because electricity demand is higher than supply), these miners can shut off, giving the grid more green power. Now these peaker plants (which generally burn coal/natural gas) don't need to exist or run anymore.
> I can see no way that consuming more energy can result in an improvement to the environment (unless that energy usage was directly related to improving the environment).
Literally the entire point of the comment you are responding to was to outline how bitcoin mining can help support the economic viability of renewable energy projects like wind farms.
Literally the entire point of the comment you are responding to was to outline how bitcoin mining can help support the economic viability of renewable energy projects like wind farms.
And since we already use far more electricity than renewables generate, I dismissed this concern in my comment.
I mean, if that were valid, wouldn't it be more environmental if we all just left the lights on 24 hours a day? Or turned on thousands of A/C units outdoors?
It's like saying my burning $1000/day of my company's money incentives the company to earn more money, so it's actually a good thing.
I mean, if that were valid, wouldn't it be more environmental if we all just left the lights on 24 hours a day? Or turned on thousands of A/C units outdoors?
It's like saying my burning $1000/day of my company's money incentives the company to earn more money, so it's actually a good thing.
I don't think you're understanding the point being made. It's not simply that bitcoin consumes energy, but about the economics of renewable energy infrastructure. Building a renewable project large enough to power an entire city during peak hours often does not make economic sense because of the large fluctuations in consumption. But, if you have a bitcoin mine that you can flip on to consume the excess energy during off hours, suddenly the economic viability is completely different.
> bitcoin mining be kind of a load balancer
Given that the difficulty adjusts only every 2 weeks, that means that the time to find a block will vary enormously during the day as the demand/supply imbalance varies. That'll make BTC even more annoying than it is already (it's currently peak electricity demand where most of the miners are sitting, so I'll have to wait 3 hours for my 6 confirms?).
At any rate, you're basically saying that with renewable energy it's ok to waste energy, and I think we are not quite there yet.
Given that the difficulty adjusts only every 2 weeks, that means that the time to find a block will vary enormously during the day as the demand/supply imbalance varies. That'll make BTC even more annoying than it is already (it's currently peak electricity demand where most of the miners are sitting, so I'll have to wait 3 hours for my 6 confirms?).
At any rate, you're basically saying that with renewable energy it's ok to waste energy, and I think we are not quite there yet.
>Given that the difficulty adjusts only every 2 weeks, that means that the time to find a block will vary enormously during the day as the demand/supply imbalance varies.
Isn't this a non-issue because mining is global? Peak time in europe doesn't mean it's peak time in north america or east asia.
Isn't this a non-issue because mining is global? Peak time in europe doesn't mean it's peak time in north america or east asia.
Interesting question. If miners are approximately evenly distributed across timezones, it could be indeed the case, say, that those where demand is currently at its peak (following the sunlight) switch off their mining as electricity is expensive, and then switch back on as the sun leaves and electricity demand (and prices) fall.
I had assumed that mining is concentrated more. Empirical question.
I had assumed that mining is concentrated more. Empirical question.
As long as we need coal or gas plants, bitcoin mining is a net negative for the environment. It also doesn't add anything of value and facilitates crime. If you want to push bitcoin to low demand hours via pricing, you're increasing the price for the rest of us. It's a lose-lose-lose situation for people.
I don't think this will work out for several reasons:
1) Peak power usage is when people are awake - this is when you want transactions to happen.
2) This wouldn't reduce the need of peak plants, since you aren't generating power when mining for bitcoin. How would increasing overall energy consumption require less energy generation? If renewables could ramp up/down quickly and not be dependent on external factors - that would remove the need for current peak plants - which is usually nat gas.
1) Peak power usage is when people are awake - this is when you want transactions to happen.
2) This wouldn't reduce the need of peak plants, since you aren't generating power when mining for bitcoin. How would increasing overall energy consumption require less energy generation? If renewables could ramp up/down quickly and not be dependent on external factors - that would remove the need for current peak plants - which is usually nat gas.
>1) Peak power usage is when people are awake - this is when you want transactions to happen.
Mining is global, so this isn't an issue. It might be peak period in europe right now (2PM UTC) but not in asia or western US.
>This wouldn't reduce the need of peak plants, since you aren't generating power when mining for bitcoin. How would increasing overall energy consumption require less energy generation?
This is a big unknown, because the economics depends entirely on the cost of electricity vs the cost of equipment. If electricity cost dominates, then it'd make sense to shut down mining operations during periods of peak usage (because electricity prices are higher), but if equipment costs dominate then it'd make sense to mine 24/7.
Mining is global, so this isn't an issue. It might be peak period in europe right now (2PM UTC) but not in asia or western US.
>This wouldn't reduce the need of peak plants, since you aren't generating power when mining for bitcoin. How would increasing overall energy consumption require less energy generation?
This is a big unknown, because the economics depends entirely on the cost of electricity vs the cost of equipment. If electricity cost dominates, then it'd make sense to shut down mining operations during periods of peak usage (because electricity prices are higher), but if equipment costs dominate then it'd make sense to mine 24/7.
> Bitcoin mining only cares about the cost of electricity at a given time
I think this is the fallacy in your argument:
In the absence of a block reward, Bitcoin mining seems like a purely demand-driven activity. The demand is people wanting their transactions be confirmed on-chain, which seems entirely uncorrelated with electricity prices.
On the other side, you have miners wanting to operate at marginal profit.
Total mining expenses would therefore be driven to always exactly match the total monetary value of being able to transact. In other words, the demand for transaction confirmation drives the demand for mining, which in turn drives the demand for electricity.
In a world in which the only electricity sources available are renewable, I'd agree that Bitcoin mining has no net impact on the environment. In any other world, some of that demand for electricity will be satisfied using fossil fuels, directly or indirectly.
I think this is the fallacy in your argument:
In the absence of a block reward, Bitcoin mining seems like a purely demand-driven activity. The demand is people wanting their transactions be confirmed on-chain, which seems entirely uncorrelated with electricity prices.
On the other side, you have miners wanting to operate at marginal profit.
Total mining expenses would therefore be driven to always exactly match the total monetary value of being able to transact. In other words, the demand for transaction confirmation drives the demand for mining, which in turn drives the demand for electricity.
In a world in which the only electricity sources available are renewable, I'd agree that Bitcoin mining has no net impact on the environment. In any other world, some of that demand for electricity will be satisfied using fossil fuels, directly or indirectly.
Only turning on miners when electricity is cheap lowers your ROI.
I think that depends entirely on the delta between "cheap" and "normal" electricity.
Using fossil fuels for electricity is very nice. Imagine all the forests that stayed intact in remote places of the world that just started burning oil.
Bitcoin is so fundamentally deficient that I am absolutely shocked by its continuing popularity. I’ve tried and tried to think of a legitimate purpose for it, but I’m confident that it doesn’t have one.
It is just too slow and inefficient to be used as a currency, and I can’t understand why anybody would use something so volatile as a value storage mechanism similar to gold.
Transactions provide extremely dubious privacy as well, and governments still control it to a large extent via the exchanges, since at the end of the day, you still need to convert it to cash for anything useful.
Its only true use is for wild speculation and greed. It just makes me sick to think of the energy wasted by this when we are on the brink of climate catastrophe.
It is just too slow and inefficient to be used as a currency, and I can’t understand why anybody would use something so volatile as a value storage mechanism similar to gold.
Transactions provide extremely dubious privacy as well, and governments still control it to a large extent via the exchanges, since at the end of the day, you still need to convert it to cash for anything useful.
Its only true use is for wild speculation and greed. It just makes me sick to think of the energy wasted by this when we are on the brink of climate catastrophe.
While I largely agree, the existence of volatile instruments (in the abstract) is a Good Thing in that it offers the possibility of rapid gains for people who are willing to accept risk but only have a small pile of capital, sort of like a poker game with no minimum stake (unless you want to treat the transaction fees as such).
Where else can you take those sort of risks? Stock fads like $GME are notable for their rarity because large capital holders benefit more from stability than volatility. You could gamble in a casino but people don't like betting against the house, which fills the role of a market maker. Volatile instruments like bitcoin are more like a casino where the dealer is paid a fee per hand but is not a participant in the game.
Where else can you take those sort of risks? Stock fads like $GME are notable for their rarity because large capital holders benefit more from stability than volatility. You could gamble in a casino but people don't like betting against the house, which fills the role of a market maker. Volatile instruments like bitcoin are more like a casino where the dealer is paid a fee per hand but is not a participant in the game.
> are notable for their rarity
If you consider that there are gazillion crypto currencies, bitcoin is a rarity among them. How is it different from stocks?
If you consider that there are gazillion crypto currencies, bitcoin is a rarity among them. How is it different from stocks?
I don't really understand your question. Lots of cryptocurrencies are very volatile, and cryptocurrencies are different from stocks insofar as they lack street addresses, SEC filings etc. (which is part of why they're so volatile).
Lots of people are paying for the energy the network uses right now and they thought it was worth it. You might have missed something in your thinking. Maybe go talk to some people that have used the network and ask why they though it was worth it to pay for all this energy.
I know why, and I said as much in my original post. Bitcoin is purely for speculation at this point. It’s a money making scheme. These people don’t care about energy usage or transaction fees as long as they are getting incredible returns on their investment.
Why do these discussions so often assume electricity is a finite resource? Are people not able to turn their lights on because of Bitcoin miners?
When Bitcoin miners consume electricity shouldn't that increased demand affect the market price and dis-incentivize mining? What other use of electricity has such a high price elasticity? People don't turn off their ACs in the middle of summer because electricity costs are high -- they value comfort, a lot. But miners, IIUC, shut down their ASICs when they're unprofitable. Bitcoin mining is extremely price sensitive.
If Bitcoin mining is driving up local electricity prices it seems worthy of local regulation. It also seems like an incentive for increased energy production -- and given today's prices would most likely be clean energy production.
The report states Bitcoin's consumption is 39% clean energy. That is considerably higher than the overall portion of global energy consumption from renewables. Does this not mean Bitcoin is a large source of demand for renewable energy? https://ourworldindata.org/grapher/share-electricity-renewab...
Increased demand increases prices in the short-run and incentivizes production -- decreasing prices, and further increasing usage in the long-run. Right? What am I missing?
When Bitcoin miners consume electricity shouldn't that increased demand affect the market price and dis-incentivize mining? What other use of electricity has such a high price elasticity? People don't turn off their ACs in the middle of summer because electricity costs are high -- they value comfort, a lot. But miners, IIUC, shut down their ASICs when they're unprofitable. Bitcoin mining is extremely price sensitive.
If Bitcoin mining is driving up local electricity prices it seems worthy of local regulation. It also seems like an incentive for increased energy production -- and given today's prices would most likely be clean energy production.
The report states Bitcoin's consumption is 39% clean energy. That is considerably higher than the overall portion of global energy consumption from renewables. Does this not mean Bitcoin is a large source of demand for renewable energy? https://ourworldindata.org/grapher/share-electricity-renewab...
Increased demand increases prices in the short-run and incentivizes production -- decreasing prices, and further increasing usage in the long-run. Right? What am I missing?
A simple "back of the envelope" power use calculation of the possible power use of the bitcoin network, using the total hash rate from
https://www.coinwarz.com/mining/bitcoin/hashrate-chart
( 151.55 EH/s )
and assuming all Antminer S19 (110 TH/s for 3250 watts)
gives me a total power use of 0.00445 TWH which is very different to the 121 TWH on the cbeci site.. even given the efficiency range of mining gear (like if spread of included hw included stuff 10 x less efficient), cooling systems etc, what am I missing? I dont do these power calculations often so have a left a parameter out?
gives me a total power use of 0.00445 TWH which is very different to the 121 TWH on the cbeci site.. even given the efficiency range of mining gear (like if spread of included hw included stuff 10 x less efficient), cooling systems etc, what am I missing? I dont do these power calculations often so have a left a parameter out?
It's TWh per year, so you have to multiply your figure of 0.00445 TW (without H!) by 24*365.25 hours giving you 39TWh/year; I guess if you add cooling and different gear you can get to 120TWh/year.
I agree it's kind of strange to measure stuff in TWh/year instead of just TW...
I agree it's kind of strange to measure stuff in TWh/year instead of just TW...
thanks! I missed that, yes now it makes sense, and is in the right ballpark.
Bitcoin is Crypto 1.0.
There are better ways to do this. But people remain infatuated with Bitcoin.
There are better ways to do this. But people remain infatuated with Bitcoin.
It is crypto 1.0. And it can be overtaken.
The problem is (and I have been involved - most often unsuccessfully) that building anything in this ecosystem requires a lot of understanding of digital signatures, distributed system, economics, game theory, security & quality, trustless ecosystems, incentives, possibilities of players with big budgets (PoS - 51% bought by some government)/great developers (bots frontrunning hacking of ERC20 contracts)/criminals (you have strong encryption, but still can be blackmailed/beaten).
Bitcoin is one of a few currencies that deliver what it promises. It doesn't promise a lot, but what it promises, it does. Others promise a lot but underdeliver and later abandon it. At this moment, I think Bitcoin delivers 100% of what I expect from it. Monero is potentially better, but underdelivers. Ethereum is potentially better, but underdelivers. Others are either just copycats or completely fail.
The problem is (and I have been involved - most often unsuccessfully) that building anything in this ecosystem requires a lot of understanding of digital signatures, distributed system, economics, game theory, security & quality, trustless ecosystems, incentives, possibilities of players with big budgets (PoS - 51% bought by some government)/great developers (bots frontrunning hacking of ERC20 contracts)/criminals (you have strong encryption, but still can be blackmailed/beaten).
Bitcoin is one of a few currencies that deliver what it promises. It doesn't promise a lot, but what it promises, it does. Others promise a lot but underdeliver and later abandon it. At this moment, I think Bitcoin delivers 100% of what I expect from it. Monero is potentially better, but underdelivers. Ethereum is potentially better, but underdelivers. Others are either just copycats or completely fail.
Bitcoin only delivers 100% of its promises because the promises have changed.
At first it was supposed to be peer-to-peer digital electronic cash. It was meant to both be money and a payment system to replace PayPal and the like.
Now it's been reduced to just a store-of-value, and not even that, it's a speculation that the volatility will stabilize and that it will be a store-of-value in the future.
At first it was supposed to be peer-to-peer digital electronic cash. It was meant to both be money and a payment system to replace PayPal and the like.
Now it's been reduced to just a store-of-value, and not even that, it's a speculation that the volatility will stabilize and that it will be a store-of-value in the future.
The only fully functional crypto I know that could make Bitcoin obsolete is Nano. It does one thing, and does it well. Fast, feeless, green.
If something ever overtakes Bitcoin in the same way that Facebook overtook MySpace it’ll disprove the entire Bitcoin thesis. Currencies have to be stable. I expect a winner take all scenario here and Bitcoin to be that winner.
What "Bitcoin thesis"? Nakamoto had no such assertions in the original whitepaper that other cryptos would never outcompete Bitcoin.
The only way to out compete bitcoin now is on features. Which if successful in an altcoin can easily be integrated into bitcoin.
"if" successful? Ethereum has had smart contracts now on-chain for 5-6 years and they are producing new abstractions and value add to the crypto ecosystem like decentralized exchanges, derivatives, crypto collectibles, savings and loans, conditional execution logic of smart contract based on external data from oracles (for things like prediction markets, insurance, price feeds, etc), etc etc. Turing complete smart contracts on-chain are a game changing innovation and Bitcoin won't go near it. They have ossified the protocol around the digital gold paradigm while Ethereum is creating a whole new platform with distinct network effects and value add. There's no reason why Ethereum's market cap can't exceed Bitcoin's. You know, there's asset classes that exceed gold's market cap, after all.
Ethereum is the most interesting altcoin I agree but it was always designed to be something sufficiently different to bitcoin, unlike most altcoins.
However ethereums adoption is considerably below that of bitcoin, possibly because the use cases are so varied there is not one strong reason for involvement. There may be many minor reasons that small specific groups have an interest in it but that isn't sufficient for widespread adoption.
The most important thing Ethereum is working on is PoS over PoW, and that technology, I expect, will transfer to bitcoin I'd Ethereum implements it successfully first
However ethereums adoption is considerably below that of bitcoin, possibly because the use cases are so varied there is not one strong reason for involvement. There may be many minor reasons that small specific groups have an interest in it but that isn't sufficient for widespread adoption.
The most important thing Ethereum is working on is PoS over PoW, and that technology, I expect, will transfer to bitcoin I'd Ethereum implements it successfully first
Bitcoin is never quitting PoW. The Bitcoin core maintainers and consensus are adamant about PoW.
The ETH2 work is important but the app layer on Ethereum is where the action is at today. Decentralized Finance is growing at 30x rate per year: https://defipulse.com/ . I fully expect this development to eventually eat most of the financial markets. They are going after derivatives, lending, options, etc. It's an extremely fast moving and innovative field and Bitcoin is frankly getting left in the dust. They will not implement Turing completeness. A lot of Bitcoin will end up wrapped and deployed on Ethereum. There's already $7.7B worth on there today: https://defipulse.com/btc
https://defipulse.com/
The ETH2 work is important but the app layer on Ethereum is where the action is at today. Decentralized Finance is growing at 30x rate per year: https://defipulse.com/ . I fully expect this development to eventually eat most of the financial markets. They are going after derivatives, lending, options, etc. It's an extremely fast moving and innovative field and Bitcoin is frankly getting left in the dust. They will not implement Turing completeness. A lot of Bitcoin will end up wrapped and deployed on Ethereum. There's already $7.7B worth on there today: https://defipulse.com/btc
https://defipulse.com/
Bitcoin couldn't even raise the blocksize. It's unimaginable that Bitcoin would ever include Monero's feature set which is magnitudes more disruptive.
'easily' seems quite an assumption. It would depend on the change. Some changes would require giant rewrites.
Hi HackerNews, I don't typically post but seeing as this involves what I do daily, thought my input might be warranted.
1)Bitcoin mining by nature is a competitive game, people have flocked to cheapest power sources (unused hydro, solar, etc.) where the power costs are super low as that is the only recurring production cost.
2)There are no batteries that are power plant sized..... other than Bitcoin. Bitcoin allows opportunities for unused power to generate instant profit for the producers.
3)Because Bitcoin prices are currently soaring, it has opened up the profitability to mining in many areas with reasonably cheap power as essentially the global hashrate density can not catch up to adoption fast enough. In the long term, more and more efficient equipment will be manufactured and as the hashrate grows exponentially past the pace of mainstream adoption, the power usage again will need to be next to nothing to be competitive as the cost to produce 1 Bitcoin becomes harder and harder with increased competition and lower block rewards. *Please understand that via Moore's law continuance this is inevitable that hashrate will explode past the correlation to BTC prices due to more efficient chip technology increasing exponentially, and block rewards decreasing*
4)In the future, Bitcoin will only be mined in places where electricity is nearly free as the rewards ($/TH) will be shrunk to next to nothing. That is the end goal. We are at an asymmetric point at the moment where the mining is behind adoption. But just as the internet took time to be adopted, so will Bitcoin. But adoption curves must always end, and at the terminal equilibrium the incentives to only use waste energy for mining will be restored.
5)We are witnessing the birth of something A-M-A-Z-I-N-G that will completely change how banking and finance work on this planet forever. Of course there will be some growing pains along the way, but the future envisioned by Bitcoin is one of digital freedom, empowerment, and privacy. At the end of the day, you can't fight this tidal wave, all you can try to do is steer the technology towards your desired outcome.
So it is written, so it shall be.
All Hail Satoshi
1)Bitcoin mining by nature is a competitive game, people have flocked to cheapest power sources (unused hydro, solar, etc.) where the power costs are super low as that is the only recurring production cost.
2)There are no batteries that are power plant sized..... other than Bitcoin. Bitcoin allows opportunities for unused power to generate instant profit for the producers.
3)Because Bitcoin prices are currently soaring, it has opened up the profitability to mining in many areas with reasonably cheap power as essentially the global hashrate density can not catch up to adoption fast enough. In the long term, more and more efficient equipment will be manufactured and as the hashrate grows exponentially past the pace of mainstream adoption, the power usage again will need to be next to nothing to be competitive as the cost to produce 1 Bitcoin becomes harder and harder with increased competition and lower block rewards. *Please understand that via Moore's law continuance this is inevitable that hashrate will explode past the correlation to BTC prices due to more efficient chip technology increasing exponentially, and block rewards decreasing*
4)In the future, Bitcoin will only be mined in places where electricity is nearly free as the rewards ($/TH) will be shrunk to next to nothing. That is the end goal. We are at an asymmetric point at the moment where the mining is behind adoption. But just as the internet took time to be adopted, so will Bitcoin. But adoption curves must always end, and at the terminal equilibrium the incentives to only use waste energy for mining will be restored.
5)We are witnessing the birth of something A-M-A-Z-I-N-G that will completely change how banking and finance work on this planet forever. Of course there will be some growing pains along the way, but the future envisioned by Bitcoin is one of digital freedom, empowerment, and privacy. At the end of the day, you can't fight this tidal wave, all you can try to do is steer the technology towards your desired outcome.
So it is written, so it shall be.
All Hail Satoshi
So, where do we draw the line? At which percentage of all human electric output do we say, maybe there's something wrong with this picture? 1% total? 5% total? 20% total output? We're at 0.59% now. Of all electricity we generate as a species.
I sold out of my position because of the energy consumption but more importantly that bitcoin feels now like it's 100% dependent on greater fools. Like a pyramid scheme, those who buy now must convince others to buy later to increase their wealth. It seems that momentum is the real driver of bitcoin price now not value. The end result is massive inequality especially as institutional investors buy in and the marketing gears begin to wind up. At least with an inflationary currency like USD, there's an incentive to work and put your money to work. Bitcoin feels like it mostly rewards the hoarders.
Quite a few people have noted that this is a lot, but there are caveats (how much does the _whole_ banking system use, how much is cryptofinance worth to society, etc etc).
There's a more important point though: you can have cryptocurrencies without this horrendous waste of energy.
There are functional cryptocurrencies that are _not_ backed by proof-of-work, and don't have the same catastrophic environment impact. Notable candidates include Stellar (backed by Stripe [1], using a consensus protocol with a distributed web of trusted servers) and Cardono (which includes Ethereum-like functionality, using proof-of-stake). They're newer, and they will evolve further, but they're already functional and dramatically more efficient (by many orders of magnitude).
They're not even that niche: Cardono is #4 by market cap & Stellar is #12 [2].
There are interesting arguments for crypto being valuable, but there are very few arguments for Bitcoin or proof-of-work specifically is valuable (and for why the current price isn't a huge bubble). Burning this quantity of power is tragic and totally unnecessary.
[1] https://stripe.com/blog/stellar
[2] https://coinmarketcap.com/
There's a more important point though: you can have cryptocurrencies without this horrendous waste of energy.
There are functional cryptocurrencies that are _not_ backed by proof-of-work, and don't have the same catastrophic environment impact. Notable candidates include Stellar (backed by Stripe [1], using a consensus protocol with a distributed web of trusted servers) and Cardono (which includes Ethereum-like functionality, using proof-of-stake). They're newer, and they will evolve further, but they're already functional and dramatically more efficient (by many orders of magnitude).
They're not even that niche: Cardono is #4 by market cap & Stellar is #12 [2].
There are interesting arguments for crypto being valuable, but there are very few arguments for Bitcoin or proof-of-work specifically is valuable (and for why the current price isn't a huge bubble). Burning this quantity of power is tragic and totally unnecessary.
[1] https://stripe.com/blog/stellar
[2] https://coinmarketcap.com/
As a store of value, bitcoin does not compare to fiat but to other forms of hard money such as gold. During Bretton-woods, the US dollar and other currencies were redeemable for gold and no one was saying that the US dollar was polluting the world because gold mining is polluting.
Comparing the environmental impact of gold and bitcoin is an open question. Gold mining pollutes the world in ways bitcoin never will. It creates ocean waste [1], long-lasting mercury pollution [2] and more.
As renewable become cheaper than fossil fuels, bitcoin will create additional demand for cheap renewable and accelerate the green transition. Because a mine could be moved essentially anywhere, it can be placed exactly where cheap renewable source of energy can be collected, thus maximizing the return on investment for renewable power plants, for example with geothermal in Iceland [3].
[1] https://www.earthworks.org/blog/drawing-the-battle-lines-ove...
[2] https://theconversation.com/gold-rush-mercury-legacy-small-s...
[3] https://www.wired.com/story/iceland-bitcoin-mining-gallery/
Comparing the environmental impact of gold and bitcoin is an open question. Gold mining pollutes the world in ways bitcoin never will. It creates ocean waste [1], long-lasting mercury pollution [2] and more.
As renewable become cheaper than fossil fuels, bitcoin will create additional demand for cheap renewable and accelerate the green transition. Because a mine could be moved essentially anywhere, it can be placed exactly where cheap renewable source of energy can be collected, thus maximizing the return on investment for renewable power plants, for example with geothermal in Iceland [3].
[1] https://www.earthworks.org/blog/drawing-the-battle-lines-ove...
[2] https://theconversation.com/gold-rush-mercury-legacy-small-s...
[3] https://www.wired.com/story/iceland-bitcoin-mining-gallery/
I would agree with your first point, but increasing power consumption to accelerate green transition makes no sense to me.
Green energy is a better solution to energy shortage, it's not something you'd want if there was no need for extra energy. The green energy industry captures financial investments, generates waste and contributes to global warming.
To go ad absurdum, wouldn't increasing CO2 emissions also accelerate the green transition?
Of course if Bitcoin can provide a substantial benefit world-wide then it's energy footprint can be deemed acceptable. I don't have enough experience with it to make such claim but I'm worried about increased fees and transaction times.
Green energy is a better solution to energy shortage, it's not something you'd want if there was no need for extra energy. The green energy industry captures financial investments, generates waste and contributes to global warming.
To go ad absurdum, wouldn't increasing CO2 emissions also accelerate the green transition?
Of course if Bitcoin can provide a substantial benefit world-wide then it's energy footprint can be deemed acceptable. I don't have enough experience with it to make such claim but I'm worried about increased fees and transaction times.
> bitcoin will create additional demand for cheap renewable and accelerate the green transition
Bitcoin does not create demand for renewable energy. Bitcoin only creates demand for energy. If bitcoin had significant demand for "cheap renewable energy", then we should have seen bitcoin mining operations concentrating in locations where renewable energy is abundant and land is pretty much useless for anything else. This has not happened in reality.
Furthermore, even if we assume that bitcoin does put demand on renewable energy, since bitcoin mining does not replace other consumers, it is an additional overall energy demand. As long as bitcoin energy consumption grows faster than new renewable installations it effectively runs on carbon.
Bitcoin does not create demand for renewable energy. Bitcoin only creates demand for energy. If bitcoin had significant demand for "cheap renewable energy", then we should have seen bitcoin mining operations concentrating in locations where renewable energy is abundant and land is pretty much useless for anything else. This has not happened in reality.
Furthermore, even if we assume that bitcoin does put demand on renewable energy, since bitcoin mining does not replace other consumers, it is an additional overall energy demand. As long as bitcoin energy consumption grows faster than new renewable installations it effectively runs on carbon.
Uh, there wasn't really anyone talking about environment issues in the 1940's, which is when the system was created, and global warming wasn't established as a firm concern until the 1980's by which time Bretton Woods was dead.
Remember, the earth is burning.
Crypto is a huge environmental issue.
Crypto is a huge environmental issue.
It's completely meaningless because GWh aren't interchangeable. A hydro o thermal energy source too far from inhabited places could be used for bitcoin mining and its CO2 footprint would be near zero.
I'm not saying you are wrong but this requires a far more exhaustive analysis.
I'm not saying you are wrong but this requires a far more exhaustive analysis.
There are transmission losses, but they're not that great.
Please point out which power plants were built especially for proof of work mining. The others were apparently built with something else in mind and their power is now being wasted on western people's get-rich-quick schemes.
Please point out which power plants were built especially for proof of work mining. The others were apparently built with something else in mind and their power is now being wasted on western people's get-rich-quick schemes.
So we'd build energy production away from where people live just to mine a digital currency?
The government's of the world seem concerningly content underplaying this.
I'm glad I don't have kids.
I'm glad I don't have kids.
If all crypto was mined with renewable energy, would it be a huge environmental issue?
Yes. Even if every major country on earth requires PoW systems to use renewable electricity (which won't happen any time soon in the first place) and can't run on the regular mixed grid, then after switching to countries without such laws (until there are none left), the renewable energy will be bought up at the source and the coal and gas plants will continue to supply everyone else. Nothing changes.
We need to change everything else to renewable before this really starts to be effective.
It would make a much bigger impact if some countries, where users want to use cryptocurrency, make it illegal to use proof-of-work-based goods or currencies (whatever it's classified as). Suddenly a coin with PoS or something else becomes much more popular and we might, perhaps, shift over to a digital coin that is not a climate disaster.
We need to change everything else to renewable before this really starts to be effective.
It would make a much bigger impact if some countries, where users want to use cryptocurrency, make it illegal to use proof-of-work-based goods or currencies (whatever it's classified as). Suddenly a coin with PoS or something else becomes much more popular and we might, perhaps, shift over to a digital coin that is not a climate disaster.
Yes. Renewable doesn't mean without a carbon or other cost. All energy usage and production takes resources from the planet.
Ok, I have to admit that I am one of those people who knew about BTC very, very early but never bought any. Now, of course I should have mined at least 100 back in the days, but anyways.
The reason I have never mined nor bought into it is that I still, to this day struggle to come up with a real reason to do so.
Am I getting too old? Do I not see the "huge potential" what it may become? Don't I want to get freaking rich? I simply can't answer what BTCs and other crypto coins are actually good for. Can someone help me out here?
The reason I have never mined nor bought into it is that I still, to this day struggle to come up with a real reason to do so.
Am I getting too old? Do I not see the "huge potential" what it may become? Don't I want to get freaking rich? I simply can't answer what BTCs and other crypto coins are actually good for. Can someone help me out here?
I'm in your boat, when it was first explained to me in a hacker space at college when it was first growing and priced at a few cents per 100++ Bitcoin. All I could see was a waste of energy and resources (time, energy, hardware).
It will always be a drain on society, and it scares me that it hasn't failed because we see it draining our GPU industry to the point that market prices have gone insane and availability is practically non-existent / all left up to chance.
It does take a rocket science to see the trends, as long as it's tied to needing hardware to compute arbitrary calculations to work... It's going to waste computer resources and energy. Both which are finite resources... Yes finite, solar cells aren't free to make, they don't last forever after you make them. Same with any other green technology. Maybe if fusion was our only power source it would be less of a concern, but we still haven't cracked Q=1, so... Yes it is a waste of finite resources.
It will always be a drain on society, and it scares me that it hasn't failed because we see it draining our GPU industry to the point that market prices have gone insane and availability is practically non-existent / all left up to chance.
It does take a rocket science to see the trends, as long as it's tied to needing hardware to compute arbitrary calculations to work... It's going to waste computer resources and energy. Both which are finite resources... Yes finite, solar cells aren't free to make, they don't last forever after you make them. Same with any other green technology. Maybe if fusion was our only power source it would be less of a concern, but we still haven't cracked Q=1, so... Yes it is a waste of finite resources.
It’s not draining the GPU industry. No one buys GPUs for mining Bitcoin anymore, they use ASICs.
In the specific context of Bitcoin it may be true that the preference is for ASIC, but (1) some Bitcoin is still mined using GPU's and (2) there are several thousand active digital currencies, many of them favoring GPU's.
Grandparent's wider assertion is absolutely true, the GPU market is skewed by miners. Purchasing a 3000 series GPU is not easy right now.
Grandparent's wider assertion is absolutely true, the GPU market is skewed by miners. Purchasing a 3000 series GPU is not easy right now.
Do you have a source for (1)?
I'm pretty sure GPU mining btc is inefficient even with free electricity (depreciation of the PC/GPU will outweigh benefits)
edit: was curious so checked the math
Using a 3060TI GPU (one of the most cost-efficient for performance gpu's available) would generate about $0.0002/day, or take ~5000 years to pay itself off even with free electricity
I'm pretty sure GPU mining btc is inefficient even with free electricity (depreciation of the PC/GPU will outweigh benefits)
edit: was curious so checked the math
Using a 3060TI GPU (one of the most cost-efficient for performance gpu's available) would generate about $0.0002/day, or take ~5000 years to pay itself off even with free electricity
Doesn't bitcoin compute time go up with computational advances also? If so, any answer greater than a few years can be transposed to infinite time to cover costs.
[deleted]
I'm not sure about that...Search "best GPU mining 2021" on Google and you'll get several hits.
None of those seem to be about Bitcoin? For example https://www.nicehash.com/blog/post/best-mining-gpu-in-2021 lists a "DaggerHashimoto" hashrate which would be for Etherium.
Most people mining use something like NiceHash, which rents out your hashpower to people who use it to mine the currently most efficient asset (usually ethereum/monero/doge+ltc)
Mining bitcoin with a GPU would take around 5000 years in the best case scenario to pay off _with free electricity_
Mining bitcoin with a GPU would take around 5000 years in the best case scenario to pay off _with free electricity_
Even as just ASICs there's something of a drain, Bitcoin ASICs consume fab production which means less remaining production capacity for GPUs.
This is an equilibrium that should eventually fix itself, but while Bitcoin and crypto mining is growing they are making a material dent in the global semiconductor economy.
This is an equilibrium that should eventually fix itself, but while Bitcoin and crypto mining is growing they are making a material dent in the global semiconductor economy.
Cryptoasset mining creates demand for custom chip fab (how different are mining rigs from SSL/TLS accelerator expansion cards), which is definitely not zero sum: more revenue = more opportunities.
https://en.wikipedia.org/wiki/Price_elasticity_of_supply
With insufficient demand, a market does not develop into a sustainable market. "Rule of three (economics)" says that markets are stable with 3 major competitors and many smaller competitors; nonlinearity and game theory.
https://en.wikipedia.org/wiki/Rule_of_three_(economics)
We've always had custom chip fab, but the prices used to be much higher. Proof of Work (and Proof of Research) incentivize microchip and software energy efficiency; whereas we had observed and been most concerned with doublings in transistor density.
FWIU, it's now more sustainable and profitable to mine rare earth elements from recycled electronics than actually digging real value out of the earth?
Compared to creating real value by digging for gold, how do we value financial services?
https://en.wikipedia.org/wiki/Price_elasticity_of_supply
With insufficient demand, a market does not develop into a sustainable market. "Rule of three (economics)" says that markets are stable with 3 major competitors and many smaller competitors; nonlinearity and game theory.
https://en.wikipedia.org/wiki/Rule_of_three_(economics)
We've always had custom chip fab, but the prices used to be much higher. Proof of Work (and Proof of Research) incentivize microchip and software energy efficiency; whereas we had observed and been most concerned with doublings in transistor density.
FWIU, it's now more sustainable and profitable to mine rare earth elements from recycled electronics than actually digging real value out of the earth?
Compared to creating real value by digging for gold, how do we value financial services?
They're mining it with malware on CPUs, don't underestimate human stupidity when faced with large numbers of people...
They may be mining Montero but they definitely are not mining bitcoin
In the end GPUs are better off using energy to play counterstrike than to generate sound money right?!
You're looking at it from a totally wrong perspective. The U.S. government can print as much dollars as they want, whereas BTC cannot. The government does not care about green energy unless they can profit from it. To say that you did not buy BTC because of "wasting energy" is a very odd way to cope.
You guys are so hung up on energy consumption, a meme, that you're forgetting the real intrinsic value of Bitcoin.
You guys are so hung up on energy consumption, a meme, that you're forgetting the real intrinsic value of Bitcoin.
> the real intrinsic value of Bitcoin
Intrinsic: belonging to the essential nature or constitution of a thing [0].
Bitcoin, being a series of bits proving you or one of your financial forebears burnt some spare energy without any material return, has no intrinsic value. Its value is entirely extrinsic and intersubjective, in that it only has value if a quorum believes it has value.
[0] https://www.merriam-webster.com/dictionary/intrinsic
Intrinsic: belonging to the essential nature or constitution of a thing [0].
Bitcoin, being a series of bits proving you or one of your financial forebears burnt some spare energy without any material return, has no intrinsic value. Its value is entirely extrinsic and intersubjective, in that it only has value if a quorum believes it has value.
[0] https://www.merriam-webster.com/dictionary/intrinsic
> The U.S. government can print as much dollars as they want, whereas BTC cannot.
In a macroeconomic sense, this is a strength of the dollar and a weakness of Bitcoin.
In a macroeconomic sense, this is a strength of the dollar and a weakness of Bitcoin.
It is a strength of the dollar as a fiat currency, but that doesn't mean it would be a good thing for every asset class to behave that way.
Haha wait wait, so energy consumption is "a meme," but having a fixed supply of money is apparently a totally good idea and not at all a meme. We don't care about deflation, we don't care about monetary policy, we want a gold standard where instead of gold we just burn absurd quantities of carbon. lol
I understand the value of blockchain tech, but what's the intrinsic value of Bitcoin?
Value which cannot be stolen or debased.
Also, "blockchain" is just a data structure that has practically no use besides bitcoin.
Also, "blockchain" is just a data structure that has practically no use besides bitcoin.
> Value which cannot be stolen or debased.
Bitcoin's "intrinsic value" is really value unto itself for the most part, at this point in time. Maybe in the future it'll be used more as a currency, and we've seen that with Tesla, Bovada, etc., but I don't think most governments will allow such a threat to their currency without additional controls.
> Also, "blockchain" is just a data structure that has practically no use besides bitcoin.
I've always felt the other way around actually; I think blockchain will be used more widely and longer-term than Bitcoin. Blockchain as a technology has already been invested in and deployed by firms like IBM and JPMorgan.
Bitcoin's "intrinsic value" is really value unto itself for the most part, at this point in time. Maybe in the future it'll be used more as a currency, and we've seen that with Tesla, Bovada, etc., but I don't think most governments will allow such a threat to their currency without additional controls.
> Also, "blockchain" is just a data structure that has practically no use besides bitcoin.
I've always felt the other way around actually; I think blockchain will be used more widely and longer-term than Bitcoin. Blockchain as a technology has already been invested in and deployed by firms like IBM and JPMorgan.
Centralised blockchains are an oxymoron. Just use JPMorgans SQL database, it’s cheaper.
Sometimes you want to trust and verify.
Seems like there have been numerous stories about bitcoin being stolen?
Private keys can be stolen if you leave them lying around.
Nobody can steal your bitcoin if your private keys are well protected. And of course, the best protection is a brain wallet.
If a State attempts to implement an EO6102 equivalent for Bitcoin, they will be unable to enforce it.
Nobody can steal your bitcoin if your private keys are well protected. And of course, the best protection is a brain wallet.
If a State attempts to implement an EO6102 equivalent for Bitcoin, they will be unable to enforce it.
Brain wallets are hilariously bad, if you make it up yourself; a randomly generated key is far superior and can still be memorized. Search up "brainflayer" for just one example of a brain wallet cracker.
> Nobody can steal your bitcoin if your private keys are well protected. And of course, the best protection is a brain wallet.
The end result of this is that a huge portion of humans cannot safely store their wealth in btc. I sure as hell don't trust myself to keep that much cash in a brain wallet.
"If your private keys are well protected" might as well mean "if you can do four backflips in a row" to most people.
The end result of this is that a huge portion of humans cannot safely store their wealth in btc. I sure as hell don't trust myself to keep that much cash in a brain wallet.
"If your private keys are well protected" might as well mean "if you can do four backflips in a row" to most people.
The best strategy is to use a BIP-39 seed phrase with an additional passphrase. The seed phrase should be written down/etched into a piece of metal and stored safely (with redundancy), and the passphrase should be memorized by yourself and possibly a family member (as insurance if something happens to you).
You can leave a small amount of coins in the wallet using the same seed phrase but with no passphrase as a decoy. This way, if somebody "stumbles upon" your seed phrase, they'll attempt to recover this small amount of money, and you can monitor using only the xpub to discover it has been compromised. You then have some time to move the other coins before anybody could potentially brute-force your passphrase (Since they need to compute PBKDF2 for each attempt).
You can reuse the same seed phrase for multiple wallets, using a different passphrase for each. There is no way for somebody to determine if you have surrendered all passphrases for a give seed, since there could be infinitely many. This offers plausible deniability in the case your thief is the government.
You can leave a small amount of coins in the wallet using the same seed phrase but with no passphrase as a decoy. This way, if somebody "stumbles upon" your seed phrase, they'll attempt to recover this small amount of money, and you can monitor using only the xpub to discover it has been compromised. You then have some time to move the other coins before anybody could potentially brute-force your passphrase (Since they need to compute PBKDF2 for each attempt).
You can reuse the same seed phrase for multiple wallets, using a different passphrase for each. There is no way for somebody to determine if you have surrendered all passphrases for a give seed, since there could be infinitely many. This offers plausible deniability in the case your thief is the government.
Listen to yourself. Decoys? What percentage of people do you think won't go running away screaming when you tell them that this is how they should store their wealth? If I lose my bank password I can walk into a branch and talk to a human. No need for metal etchings and incantations.
Yeah, not everyone needs custody of their own money.
But those of us who do, can.
Under fiat, we can't.
But those of us who do, can.
Under fiat, we can't.
And that'd be fine if btc was a niche product for a few people who want this control but it also comes with extreme social costs in terms of emissions. The power use argument that advocates make is that it'll be fine once btc is used by literally everybody.
Cannot be debased? When the US government rules it illegal, or enough people collectively lose interest, btc will no longer have value.
> When the US government rules it illegal, or enough people collectively lose interest, btc will no longer have value.
Recall that for the first 2 years of its life, bitcoin had no market price. Bitcoin acquired a price because it has value to some people. That is, its having value preceded it having a price. What that should tell you is that even if a lot of people lost interest, bitcoin would still be valuable. The key insight arrives if you figure out what is valuable about Bitcoin that caused btc to acquire a price.
" It might make sense just to get some in case it catches on. If enough people think the same way, that becomes a self fulfilling prophecy. " https://satoshi.nakamotoinstitute.org/emails/cryptography/17...
Recall that for the first 2 years of its life, bitcoin had no market price. Bitcoin acquired a price because it has value to some people. That is, its having value preceded it having a price. What that should tell you is that even if a lot of people lost interest, bitcoin would still be valuable. The key insight arrives if you figure out what is valuable about Bitcoin that caused btc to acquire a price.
" It might make sense just to get some in case it catches on. If enough people think the same way, that becomes a self fulfilling prophecy. " https://satoshi.nakamotoinstitute.org/emails/cryptography/17...
Hey there. I'm one of those people who read Schneier's Applied Cryptography in highschool in the 90s, and immediately recognized the groundbreaking potential of using asymmetric cryptography for currency.
I work in information security, and have seen first hand how our existing financial infrastructure is held together with string and scotch tape. For 10 years or so, every time I heard about some big credit card theft, or wire fraud, or SWIFT hack, I would go see if anyone had figured out how to do cryptocurrencies yet. Then 2009 rolled around and I got an email forwarded to me from someone named Satoshi who had apparently figured out a really solid mitigation for the double spend problem, and had actually released some working PoC code in the form of Bitcoin.
Yes, there are a ton of problems with Bitcoin. I've been extremely critical even since that first email, but those problems are nothing compared to the existing systemic problems plaguing traditional finance.
Getting rich was never a draw for me. I'm not quite retired (though this year has been pretty good) but I have spent 10s of thousands of Bitcoins over the years building up various aspects of the economy in order to maximize the utility of the network. I could easily be living on my own private island if I had held onto the coins I CPU mined in the early days, but I have no regrets at all about how I spent those coins. I'm more passionate about this than most, I know, but I 100% believe that legacy finance is a massive hindrance to the sustainability of our species, and crypto-economics will be a key aspect in building healthy incentives for a technologically driven society.
I work in information security, and have seen first hand how our existing financial infrastructure is held together with string and scotch tape. For 10 years or so, every time I heard about some big credit card theft, or wire fraud, or SWIFT hack, I would go see if anyone had figured out how to do cryptocurrencies yet. Then 2009 rolled around and I got an email forwarded to me from someone named Satoshi who had apparently figured out a really solid mitigation for the double spend problem, and had actually released some working PoC code in the form of Bitcoin.
Yes, there are a ton of problems with Bitcoin. I've been extremely critical even since that first email, but those problems are nothing compared to the existing systemic problems plaguing traditional finance.
Getting rich was never a draw for me. I'm not quite retired (though this year has been pretty good) but I have spent 10s of thousands of Bitcoins over the years building up various aspects of the economy in order to maximize the utility of the network. I could easily be living on my own private island if I had held onto the coins I CPU mined in the early days, but I have no regrets at all about how I spent those coins. I'm more passionate about this than most, I know, but I 100% believe that legacy finance is a massive hindrance to the sustainability of our species, and crypto-economics will be a key aspect in building healthy incentives for a technologically driven society.
So, what about refunds when corporations rip us off?
And what about losing 100% of my funds when my key is lost or stolen? All keys are lost/stolen - it doesn't take a rocket degree to have observed that from human behavior.
Who enforces splitting of equity when some rich dick beats his wife into submission? The courts don't control any bitcoin keys.
The problems of bitcoin are proportionately larger than then problems with fiat. The only people saying otherwise are those that are profiting from the opposite perspective.
If we are not a bitcoin miner, then how will we get the funds to begin with? Right now I can trade fiat for it, but in the future my children would not be able to trade fiat for it (assuming it's as good as you say it is). So, they will become indentured servants to the bitcoin miners.
And what about losing 100% of my funds when my key is lost or stolen? All keys are lost/stolen - it doesn't take a rocket degree to have observed that from human behavior.
Who enforces splitting of equity when some rich dick beats his wife into submission? The courts don't control any bitcoin keys.
The problems of bitcoin are proportionately larger than then problems with fiat. The only people saying otherwise are those that are profiting from the opposite perspective.
If we are not a bitcoin miner, then how will we get the funds to begin with? Right now I can trade fiat for it, but in the future my children would not be able to trade fiat for it (assuming it's as good as you say it is). So, they will become indentured servants to the bitcoin miners.
Some of the following applies more to chains with smart contracts, rather than Bitcoin itself, but:
> refunds when corporations rip us off?
Easily implemented in various ways. One old scheme is a simple 2-of-3 multisig, where the keys are buyer, seller, and arbitrator. If buyer and seller agree, the arb doesn't have to be involved, otherwise the arb decides where the funds go.
> what about losing 100% of my funds when my key is lost or stolen?
Hence Vitalik's advocacy of social recovery wallets: https://vitalik.ca/general/2021/01/11/recovery.html
> Who enforces splitting of equity when some rich dick beats his wife into submission? The courts don't control any bitcoin keys.
No, but courts have effective ways to make you pay up even when they don't directly control your funds, including putting you in jail for contempt.
> my children would not be able to trade fiat for it
If Bitcoin or whatever isn't available to anyone besides miners, then I don't see why it would have any value at all. Cryptocurrency that succeeds is out in the economy, not locked up in a small group of professionals. There are plenty of cryptocurrencies owned only by a small group of enthusiasts, and they are nearly worthless.
> refunds when corporations rip us off?
Easily implemented in various ways. One old scheme is a simple 2-of-3 multisig, where the keys are buyer, seller, and arbitrator. If buyer and seller agree, the arb doesn't have to be involved, otherwise the arb decides where the funds go.
> what about losing 100% of my funds when my key is lost or stolen?
Hence Vitalik's advocacy of social recovery wallets: https://vitalik.ca/general/2021/01/11/recovery.html
> Who enforces splitting of equity when some rich dick beats his wife into submission? The courts don't control any bitcoin keys.
No, but courts have effective ways to make you pay up even when they don't directly control your funds, including putting you in jail for contempt.
> my children would not be able to trade fiat for it
If Bitcoin or whatever isn't available to anyone besides miners, then I don't see why it would have any value at all. Cryptocurrency that succeeds is out in the economy, not locked up in a small group of professionals. There are plenty of cryptocurrencies owned only by a small group of enthusiasts, and they are nearly worthless.
This third party arbitrator’s decision... if it is not liked by one party. Wouldn’t that party demand an arbitrator on the decision1? But then couldn’t decision2 be demanded to be arbitrated by the other party. And then. And then... it doesn’t seem to stop? In other words it seems you would need some kind of judicial process to keep in check the arbitrators. Which then sounds just like regular money, where you can usually arbitrate many times?
I’m also in the grandparent’s boat and I just want to get another view on this.
I’m also in the grandparent’s boat and I just want to get another view on this.
That's not how it works in regular life. If two parties agree on an arbitrator, then that arbitrator's decision is binding.
One old scheme is a simple 2-of-3 multisig, where the keys are buyer, seller, and arbitrator
Who is the arbiter? Who pays for the arbiter? Do I have to negotiate for an arbiter for every purchase I make? There's a candy store down the street that takes Bitcoin. Am I really supposed to figure out an arbitration scheme just to buy a tub of popcorn?
Who is the arbiter? Who pays for the arbiter? Do I have to negotiate for an arbiter for every purchase I make? There's a candy store down the street that takes Bitcoin. Am I really supposed to figure out an arbitration scheme just to buy a tub of popcorn?
> Who is the arbiter? Who pays for the arbiter? Do I have to negotiate for an arbiter for every purchase I make?
How do you do it with traditional financial instruments? You probably sign a long-term contract with some agency just as you would if you were signing up for a credit card. Or you could simply not worry about arranging any kind of arbitration for such a low-value purchase, or simply just use fiat currency for those things (there's no reason it can't continue to coexist with cryptocurrencies).
How do you do it with traditional financial instruments? You probably sign a long-term contract with some agency just as you would if you were signing up for a credit card. Or you could simply not worry about arranging any kind of arbitration for such a low-value purchase, or simply just use fiat currency for those things (there's no reason it can't continue to coexist with cryptocurrencies).
It would be solved in the same way those problems are solved today, through court. Not following court orders ultimately leads to enforcement through force. You'd end up arrested and jailed at some point.
>> If we are not a bitcoin miner, then how will we get the funds to begin with? Right now I can trade fiat for it, but in the future my children would not be able to trade fiat for it (assuming it's as good as you say it is). So, they will become indentured servants to the bitcoin miners.
I don't quite understand the point you are trying to make here? Cash just don't magically appear today either. Why wouldn't they be able to trade fiat for crypto in the future?
>> If we are not a bitcoin miner, then how will we get the funds to begin with? Right now I can trade fiat for it, but in the future my children would not be able to trade fiat for it (assuming it's as good as you say it is). So, they will become indentured servants to the bitcoin miners.
I don't quite understand the point you are trying to make here? Cash just don't magically appear today either. Why wouldn't they be able to trade fiat for crypto in the future?
> You'd end up arrested and jailed at some point.
- assuming they didn't flee
- assuming they didn't spend the bitcoin
- assuming they didn't transfer the bitcoin, and then claim it was stolen/lost.
With fiat controlled by banks, most liquid assets are frozen during these sorts of disputes for the above reason. A threat of jail in the future also doesn't really help the other person during that timeframe.
Cash does magically appear, actually. It's printed by mints and released via monetary control.
With fiat controlled by banks, most liquid assets are frozen during these sorts of disputes for the above reason. A threat of jail in the future also doesn't really help the other person during that timeframe.
Cash does magically appear, actually. It's printed by mints and released via monetary control.
Civil forfeiture has become a controversial issue lately. It's not clear that the ability of financial institutions to do that is actually a net positive for society.
Consider how it'd be easier to catch criminals without the fourth and fifth amendment, but it is thought to be more important that we provide protections against government overreach.
Consider how it'd be easier to catch criminals without the fourth and fifth amendment, but it is thought to be more important that we provide protections against government overreach.
> Cash just don't magically appear today either.
Cash doesn't, but money does. The principal function of central banks is controlling the rate of money creation to ensure that the money supply supports economic activity.
Cash doesn't, but money does. The principal function of central banks is controlling the rate of money creation to ensure that the money supply supports economic activity.
All of those are the same problems money has. Refunds capability is something built on top of cash. It will be built on top of cryptocurrencies. Money can be stolen and locked and hidden and whatnot.
But if it is built on top of cryptocurrencies then you don't have the trustlessness that makes it different from cash and banking. Why would banks and businesses choose to transact primarily in btc?
Because the markets wants to trade on it. Going with the assumption that crypto will "succeed" in the future, any business or bank not trading on it would be loosing out to businesses that are capable to do both.
That is circular. BTC will succeed as an investment because it will supplant other systems for banking. BTC will supplant other systems for banking because it succeeds as an investment.
I think that's the same issue that every new technology related to network effects has had. Like Napster, Myspace, facebook, etc
Yes, and we have built safety measures to protect individuals in these cases, none of which work in a trustless key-based storage world.
Just continue to use fiat currency for those situations where you'd prefer the risk profile that they provide. The success of cryptocurrencies doesn't preclude the continued existence of fiat currencies.
I think you are very confused.
Asymmetric cryptography is a completely separate, much older technology that has nothing directly to do with cryptocurrencies.
Furthermore, Bitcoin does nothing to solve the kind of fraud problems you are talking about, and in fact makes the consequences of them much worse, since you no longer have a central authorities that can reverse fraudulant transactions and the like. The "double spend" problem refers to a problem in distributed systems, not applied security.
Asymmetric cryptography is a completely separate, much older technology that has nothing directly to do with cryptocurrencies.
Furthermore, Bitcoin does nothing to solve the kind of fraud problems you are talking about, and in fact makes the consequences of them much worse, since you no longer have a central authorities that can reverse fraudulant transactions and the like. The "double spend" problem refers to a problem in distributed systems, not applied security.
> Asymmetric cryptography is a completely separate, much older technology that has nothing directly to do with cryptocurrencies.
It does, Bitcoin wouldn't work without it, the whole thing relies on cryptographic signatures.
> The "double spend" problem refers to a problem in distributed systems, not applied security.
Is it not both? It's a security issue present in distributed systems.
It does, Bitcoin wouldn't work without it, the whole thing relies on cryptographic signatures.
> The "double spend" problem refers to a problem in distributed systems, not applied security.
Is it not both? It's a security issue present in distributed systems.
Bitcoin wouldn't work without it - sure, it's a building block, but the core innovation behind Bitcoin is not asymmetric crypto. The parent comment was implying that using asymmetric crypto in finance would solve problems with security and fraud, when in truth, asymmetric crypto has already been in use since well before Bitcoin came along, and is an important technology but has not magically solved all our security problems. There are multiple separate things being conflated here in incorrect ways.
>There are multiple separate things being conflated here in incorrect ways.
Only by you. Read more carefully.
Only by you. Read more carefully.
Maybe you can help me out, then? How does the network increase the transaction rate to current global rates (at least 10^4 higher)? What happens when the mining phase completes, or if there is a drop in value? What is a sustainable transaction fee for miners to take absent mining incentives? What happens over long periods of time from hardware failures where wallets are lost? It's probably my problem not researching well enough, but if you know or can point me to anything I would be grateful.
> How does the network increase the transaction rate to current global rates (at least 10^4 higher)?
Efficiency improvements on the base chain, 2nd layer technologies like Lightning Network and ultimately increasing the base block size limit.
> What happens when the mining phase completes, or if there is a drop in value?
Mining doesn't "complete". There have been many massive drops in value in Bitcoin's history, not sure what you're asking about, it just keeps working?
> What is a sustainable transaction fee for miners to take absent mining incentives?
Anything above 0 is sustainable, you can mine for free if you're using the energy to heat your house.
The question is how much energy the network needs to spend to remain secure, that I don't know, depends on how much any potential attackers are willing to spend to attack it.
> What happens over long periods of time from hardware failures where wallets are lost?
Bitcoin deflates? If some coins are lost but demand remains the same the value of the remaining coins goes up.
Efficiency improvements on the base chain, 2nd layer technologies like Lightning Network and ultimately increasing the base block size limit.
> What happens when the mining phase completes, or if there is a drop in value?
Mining doesn't "complete". There have been many massive drops in value in Bitcoin's history, not sure what you're asking about, it just keeps working?
> What is a sustainable transaction fee for miners to take absent mining incentives?
Anything above 0 is sustainable, you can mine for free if you're using the energy to heat your house.
The question is how much energy the network needs to spend to remain secure, that I don't know, depends on how much any potential attackers are willing to spend to attack it.
> What happens over long periods of time from hardware failures where wallets are lost?
Bitcoin deflates? If some coins are lost but demand remains the same the value of the remaining coins goes up.
I 100% believe that legacy finance is a massive hindrance to the sustainability of our species,
Could you please expand on that? Why?
Could you please expand on that? Why?
In terms of getting rich, that was luck. Some people with perhaps more money than sense played the lottery and won. Bitcoin could have, and might still fail with governments giving it more scrutiny as it grows, or this may be its peak, so anyone buying now is screwed. No way to know.
It's also easy to look back at Amazon and say you should have invested back when they were an online bookstore that talked a big game. With the information available at the time it arguably would have been a stupid decision.
For everyone who won big on Amazon and everyone who's winning big on Bitcoin, there are thousands if not millions of investors who bet on something with legitimate confidence and lost it all or under-performed.
As for what it is, as far as I'm concerned it's just another commodity. The value of said commodity can be debated, the same way people can talk about how silver is not only a precious metal but has substantial industrial demand driving it, unlike gold. They're still all commodities.
Now plenty of people have played the commodity lottery and gotten crazy rich in crazy circumstances that are hard if not impossible to repeat. If you want to try and be one of them by speculating on bitcoin, don't use any money you can't lose.
For my perspective, my financial goals for my family haven't been met yet and probably won't be for a couple of decades given that we've yet to buy a house and the wife and I are hoping to give our future kids a full ride through college. I can invest the money I make in cheap, diversified funds based on Fama/French factors and have nobel-winning math and statistics saying I have a positive expected return over time given 100 years of stock market history, or I can gamble it in the various single-stock/commodity/sector lotteries with large amounts of uncompensated risk and hope I win big, but more likely lose and never meet my goals.
My current solution to "more money" is I'm seriously looking into trying to get some sort of lifestyle business going on top of my day job. Worst case scenario it sharpens my technical skills and makes me even more employable. I like sets of outcomes that don't include (or at least minimize the likelihood of) "zero".
It's also easy to look back at Amazon and say you should have invested back when they were an online bookstore that talked a big game. With the information available at the time it arguably would have been a stupid decision.
For everyone who won big on Amazon and everyone who's winning big on Bitcoin, there are thousands if not millions of investors who bet on something with legitimate confidence and lost it all or under-performed.
As for what it is, as far as I'm concerned it's just another commodity. The value of said commodity can be debated, the same way people can talk about how silver is not only a precious metal but has substantial industrial demand driving it, unlike gold. They're still all commodities.
Now plenty of people have played the commodity lottery and gotten crazy rich in crazy circumstances that are hard if not impossible to repeat. If you want to try and be one of them by speculating on bitcoin, don't use any money you can't lose.
For my perspective, my financial goals for my family haven't been met yet and probably won't be for a couple of decades given that we've yet to buy a house and the wife and I are hoping to give our future kids a full ride through college. I can invest the money I make in cheap, diversified funds based on Fama/French factors and have nobel-winning math and statistics saying I have a positive expected return over time given 100 years of stock market history, or I can gamble it in the various single-stock/commodity/sector lotteries with large amounts of uncompensated risk and hope I win big, but more likely lose and never meet my goals.
My current solution to "more money" is I'm seriously looking into trying to get some sort of lifestyle business going on top of my day job. Worst case scenario it sharpens my technical skills and makes me even more employable. I like sets of outcomes that don't include (or at least minimize the likelihood of) "zero".
If everyone were to get excited about Monopoly money as a store of value, it would be wrong to tell you that you fail to see the huge potential. The crowd decided that bitcoin is worth something, and thus it is worth something. That doesn't make you wrong for not being part of the crowd.
Today Elon Musk chooses BTC and it goes up. Tomorrow the US government could crack down on BTC and it could go down. Maybe a technical weakness arises. Maybe the dollar breaks and it goes to a million. That doesn't mean it has potential, nor that it's useful. It just means there's uptake.
Today Elon Musk chooses BTC and it goes up. Tomorrow the US government could crack down on BTC and it could go down. Maybe a technical weakness arises. Maybe the dollar breaks and it goes to a million. That doesn't mean it has potential, nor that it's useful. It just means there's uptake.
> doesn't mean it has potential, nor that it's useful. It just means there's uptake.
This is a bit nihilistic. Bitcoin’s value has reallocated a huge amount of technical talent and resources in the global economy. It also has a growing carbon footprint. These give the public, and by extension its members, legitimate exposure to its downsides. Given that exposure, it’s valid to consider managing it.
This is a bit nihilistic. Bitcoin’s value has reallocated a huge amount of technical talent and resources in the global economy. It also has a growing carbon footprint. These give the public, and by extension its members, legitimate exposure to its downsides. Given that exposure, it’s valid to consider managing it.
So you determine the inherent value of something based on its price action?
To flesh this out: I'm not arguing that BTC has no value, nor that it has no externalities, so I really don't understand what motivates your reply. I don't feel that there's anything nihilistic about pointing out the logical flaw in saying, "oh the concept of Bitcoin has 12% more inherent value now than yesterday because the price went up by that much." I recognize that the article is about electricity, but I'm not sure how you get from my comment to electricity. If Bitcoin crashes tomorrow, does that mean that the inherent value (or conversely, the societal burden) of the concept went down?
To flesh this out: I'm not arguing that BTC has no value, nor that it has no externalities, so I really don't understand what motivates your reply. I don't feel that there's anything nihilistic about pointing out the logical flaw in saying, "oh the concept of Bitcoin has 12% more inherent value now than yesterday because the price went up by that much." I recognize that the article is about electricity, but I'm not sure how you get from my comment to electricity. If Bitcoin crashes tomorrow, does that mean that the inherent value (or conversely, the societal burden) of the concept went down?
> So you determine the inherent value of something based on its price action?
Not at all. But in this case, the broader cost of Bitcoin scales with its price.
Not at all. But in this case, the broader cost of Bitcoin scales with its price.
Sure, and the cost to Hasbro of making monopoly money could scale with its price if there were a market for it. But the inherent value of a monopoly dollar would not be dependent upon that cost.
When you say "the broader cost of bitcoin" you're talking about electricity right? Aside from the important fact that "cost" isn't "value", there are a couple problems with that. First of all, many people are finding arbs in energy (eg, you live or work in a dorm, lab, or other building where don't pay an electric bill) and using free electricity to mine. That provides liquidity/fungibility by contributing to transactions, without incurring any cost to the miner. Second, people and entities with large early reserves of bitcoin have an incentive to mine even when the energy cost is greater than the mining return, because a better functioning bitcoin is more likely to attract further inflows that impact the price upward.
When you say "the broader cost of bitcoin" you're talking about electricity right? Aside from the important fact that "cost" isn't "value", there are a couple problems with that. First of all, many people are finding arbs in energy (eg, you live or work in a dorm, lab, or other building where don't pay an electric bill) and using free electricity to mine. That provides liquidity/fungibility by contributing to transactions, without incurring any cost to the miner. Second, people and entities with large early reserves of bitcoin have an incentive to mine even when the energy cost is greater than the mining return, because a better functioning bitcoin is more likely to attract further inflows that impact the price upward.
I appreciate an honest question. The negative sentiment around crypto is a bit extreme imo. Bitcoin does have intrinsic value. A trustless P2P payment network has value. Is POW flawed, yes. This is a big reason why I prefer and hold Ethereum. Eth is moving to POS which is vastly more efficient. It also has additional programability in the form of smart contracts that bitcoin does not have. Look into the DeFi space for further use cases.
When even the people who says that Bitcoin has intrinsic value prefer something else it's hard to buy the argument.
What's the intrinsic value of Bitcoin then? $10000? $100? $1?
What's the intrinsic value of Bitcoin then? $10000? $100? $1?
whats the intrinsic value of anything. currency is just an idea that a group of people all agree to abide by. I wont accept French Francs for payment - 30 years ago they were worth something - now people have agreed it should be replaced by the Euro. there is nothing physically different between the Frank and the Euro beyond the combined trust of the group. BTC is just another example except it doesnt have a physical existence
> When even the people who says that Bitcoin has intrinsic value prefer something else it's hard to buy the argument.
This argument doesn't make any sense. I prefer BTC over gold. This does not negate the intrinsic value of gold in any way.
This argument doesn't make any sense. I prefer BTC over gold. This does not negate the intrinsic value of gold in any way.
You're right, that wasn't a very good argument.
But the point is that saying that "it has intrinsic value" doesn't really mean anything if one cannot even given an order of magnitude of what it is.
I won't say that the price of gold is directly related to its intrinsic value (there is no way to do "financial valuation" on it) but the situation with bitcoin is even worse. At least there are some industrial uses of gold that can be used to assign an objective value to an ounce of the metal.
But the point is that saying that "it has intrinsic value" doesn't really mean anything if one cannot even given an order of magnitude of what it is.
I won't say that the price of gold is directly related to its intrinsic value (there is no way to do "financial valuation" on it) but the situation with bitcoin is even worse. At least there are some industrial uses of gold that can be used to assign an objective value to an ounce of the metal.
You're right. Calculating the intrinsic value of something is hard if not impossible. However, I would argue that global network that enables P2P transfer of a scarce asset is quite valuable. Is it more valuable than gold? Maybe. Only time will tell.
How many hundreds of global networks that enable P2P transfer of scarce assets do we have by now, though?
Determining fully decentralized consensus between arbitrary participants (or at least one of the best approximations of that). In Bitcoin that consensus is limited to transactions, in Ethereum with smart contracts it can be used for much more (though that might require additional layers of incentivation to work properly, depending on the use case).
Nobody actually wants fully decentralised irreversible consensus between arbitrary participants on a public ledger because it is slow, costly and doesn’t solve real-word problems of identity verification, trust, reversible transactions, private transactions etc etc. People have tried and failed for years to find a compelling use for it.
It’s a very interesting experiment in social engineering but I find it difficult to find a concrete example of bitcoin being useful. Making some people very rich at the cost of others is not sufficient justification. If anything fewer people are actually using bitcoin now for real transactions not involving speculation on prices than in 2015 say.
It’s a very interesting experiment in social engineering but I find it difficult to find a concrete example of bitcoin being useful. Making some people very rich at the cost of others is not sufficient justification. If anything fewer people are actually using bitcoin now for real transactions not involving speculation on prices than in 2015 say.
>Nobody actually wants fully decentralised irreversible consensus between arbitrary participants on a public ledger because it is slow, costly and doesn’t solve real-word problems of identity verification, trust, reversible transactions, private transactions etc etc.
Are you sure? In fact it seems like quite a few people want that, as evidenced by the entire crypto space.
Are you sure? In fact it seems like quite a few people want that, as evidenced by the entire crypto space.
On the contrary, the current crypto space resembles a classic speculative bubble right now, it's a perfect example of mania, and spurious justifications like this of a new paradigm which explains the crazy valuations are also classic signs of that.
Hardly anyone is using these currencies to actually perform transactions or store value because they are awful in so many ways for that (volatility, treated and taxed like an asset, unpredictable fees, slow settlement, no fraud protection etc). All the transactions, all the new accounts flooding into exchanges are there for one reason - to strike it rich in the new gold rush.
Coins intended to be a valueless joke are worth SIX BILLION DOLLARS and nobody is actually using them as a currency or a consensus mechanism or anything useful - this is pure speculation on finding a greater fool later on when you want to sell, if you're even thinking about later on, because perhaps this will never end and it's different this time.
People are buying and selling cryptocurrencies as they did beanie babies or tulips...
https://theweek.com/articles/461977/great-beanie-baby-bubble
Hardly anyone is using these currencies to actually perform transactions or store value because they are awful in so many ways for that (volatility, treated and taxed like an asset, unpredictable fees, slow settlement, no fraud protection etc). All the transactions, all the new accounts flooding into exchanges are there for one reason - to strike it rich in the new gold rush.
Coins intended to be a valueless joke are worth SIX BILLION DOLLARS and nobody is actually using them as a currency or a consensus mechanism or anything useful - this is pure speculation on finding a greater fool later on when you want to sell, if you're even thinking about later on, because perhaps this will never end and it's different this time.
People are buying and selling cryptocurrencies as they did beanie babies or tulips...
https://theweek.com/articles/461977/great-beanie-baby-bubble
yes, most people are invested in crypto because they wanna get rich with that 355% increase FULL STOP. No one with a brain uses it as currency. For the same reason that inflation is ALWAYS better than deflation. you lose money using bitcoin to buy something.
> yes, most people are invested in crypto because they wanna get rich with that 355% increase FULL STOP.
Wanting to get rich is an excellent incentive for anyone. Most other incentives (e.g. altruism) quickly become perverse as they devolve into status-seeking or coercion through force or in subsidisation and centralised planning.
In fact, without that desire to get rich (acquire resources), it's hard to imagine businesses being incentivised to provide value to the largest number of people in the most efficient way possible. The profit motive is the best incentive humans have encountered because, in a society that respects individual freedom and property rights, the profit motive forces us to innovate to provide others with value in order to receive value from them.
Wanting to get rich is an excellent incentive for anyone. Most other incentives (e.g. altruism) quickly become perverse as they devolve into status-seeking or coercion through force or in subsidisation and centralised planning.
In fact, without that desire to get rich (acquire resources), it's hard to imagine businesses being incentivised to provide value to the largest number of people in the most efficient way possible. The profit motive is the best incentive humans have encountered because, in a society that respects individual freedom and property rights, the profit motive forces us to innovate to provide others with value in order to receive value from them.
But if acquiring currency and holding it causes you to get rich, that's a serious defect. That means it won't get spent which means the economy grinds to a halt and depression ensues. This is not a feature we want for a currency.
> if acquiring currency and holding it causes you to get rich, that's a serious defect. That means it won't get spent which means the economy grinds to a halt and depression ensues.
I like you was severely brainwashed to believe that inflation and debasement of a currency is great! My father's friend worked at the IMF and would dismiss my notions of deflation as childish. I studied Finance and Mathematics and never once was your view of money seriously questioned.
But it's a lie. In fact, if you think from first principles, you realise that saving, not spending, is the key to economic growth and individual prosperity.[0]
Think about what you were saying: you're effectively claiming that money should be worthless, in which case, why bother trying to earn it? You want to work for and to be paid something valuable not something worthless which you want to throw away as soon as you get it. You want your money to be good enough to save. Saving allows us to defer present consumption for future benefits.
The idea that people will never spend their bitcoin is absurd. Humans have needs that they can't get away from. They also have desires to indulge. They will buy stuff and at the same time they will be incentivised to be prudent if they adopt a Bitcoin Standard. We should want our communities to be prudent.
[0]: https://mises.org/wire/saving-not-spending-engine-economic-g...
I like you was severely brainwashed to believe that inflation and debasement of a currency is great! My father's friend worked at the IMF and would dismiss my notions of deflation as childish. I studied Finance and Mathematics and never once was your view of money seriously questioned.
But it's a lie. In fact, if you think from first principles, you realise that saving, not spending, is the key to economic growth and individual prosperity.[0]
Think about what you were saying: you're effectively claiming that money should be worthless, in which case, why bother trying to earn it? You want to work for and to be paid something valuable not something worthless which you want to throw away as soon as you get it. You want your money to be good enough to save. Saving allows us to defer present consumption for future benefits.
The idea that people will never spend their bitcoin is absurd. Humans have needs that they can't get away from. They also have desires to indulge. They will buy stuff and at the same time they will be incentivised to be prudent if they adopt a Bitcoin Standard. We should want our communities to be prudent.
[0]: https://mises.org/wire/saving-not-spending-engine-economic-g...
I didn't say currency should be worthless. Obviously a worthless currency is... worthless. Saving for the future is great. There are lots of ways to save money sans BTC, holding currency just usually isn't one of them.
I don't think bringing in "brainwashing" is helpful to discussion.
I don't think bringing in "brainwashing" is helpful to discussion.
> There are lots of ways to save money sans BTC, holding currency just usually isn't one of them.
I'm sure you've travelled around the world. In underdeveloped countries, most people don't have bank accounts and they hold what little currency they can as cash savings. In developed countries, many individuals hold currency in bank accounts with a 0% real rate of interest. In aggregate this is a lot of depreciating money being held. Bitcoin has been appreciating at an average annual rate of 200% over the past decade and anyone can choose at any time, to begin saving their wealth in it.
> I don't think bringing in "brainwashing" is helpful to discussion.
I did not mean to insult you or claim it's your fault. Mea culpa. If you've had a typical western education, especially if you've been to business school or taken a business and economics course somewhere, or even read a modern economics textbook, then you've been brainwashed. We all were. The reason I use that word is to emphasise that we're indoctrinated to never question a system that keeps us in a rat race, wondering why we can't get ahead. I mean, my god, just look at the IMF twitter account https://twitter.com/imfnews/status/1297152792403103745 and the Bank of Jamaica twitter account https://twitter.com/centralbankja/status/1299127633364557826
Bitcoin, at minimum, provides us with a way to measure the value of our fiat currencies and the performance of other assets we might want.
I'm sure you've travelled around the world. In underdeveloped countries, most people don't have bank accounts and they hold what little currency they can as cash savings. In developed countries, many individuals hold currency in bank accounts with a 0% real rate of interest. In aggregate this is a lot of depreciating money being held. Bitcoin has been appreciating at an average annual rate of 200% over the past decade and anyone can choose at any time, to begin saving their wealth in it.
> I don't think bringing in "brainwashing" is helpful to discussion.
I did not mean to insult you or claim it's your fault. Mea culpa. If you've had a typical western education, especially if you've been to business school or taken a business and economics course somewhere, or even read a modern economics textbook, then you've been brainwashed. We all were. The reason I use that word is to emphasise that we're indoctrinated to never question a system that keeps us in a rat race, wondering why we can't get ahead. I mean, my god, just look at the IMF twitter account https://twitter.com/imfnews/status/1297152792403103745 and the Bank of Jamaica twitter account https://twitter.com/centralbankja/status/1299127633364557826
Bitcoin, at minimum, provides us with a way to measure the value of our fiat currencies and the performance of other assets we might want.
Haven't you heard? It's not a currency any more so it doesn't need to be actually used. It's now an asset like no other, with zero use value but infinite exchange value.
"fully decentralized consensus"
Can someone define this term? Do we ignore P2P bootstrapping issues? Do we ignore the roll of IANA, RIRs, and other authorities that manage IP address and ASN assignments?
Or perhaps more to the point, why would it not work to have a consortium of banks set up and operate a distributed public ledger (thus avoiding the energy-intensive "mining" process)?
Can someone define this term? Do we ignore P2P bootstrapping issues? Do we ignore the roll of IANA, RIRs, and other authorities that manage IP address and ASN assignments?
Or perhaps more to the point, why would it not work to have a consortium of banks set up and operate a distributed public ledger (thus avoiding the energy-intensive "mining" process)?
You don't even need a consortium to avoid the energy-intensive mining. Ethereum's beacon chain has been running a low-energy consensus process for months with no problems so far, and $5 billion in ETH participating, on about 100K nodes. They haven't migrated the legacy chain to it yet but that's coming in a year or so.
> Do we ignore the roll of IANA, RIRs, and other authorities that manage IP address and ASN assignments?
Yes, because Bitcoin doesn't have those issues. It follows the chain with the largest amount of PoW, it doesn't matter where it comes from.
Yes, because Bitcoin doesn't have those issues. It follows the chain with the largest amount of PoW, it doesn't matter where it comes from.
> Determining fully decentralized consensus
But this only solves a problem specific to bitcoin that no one else has, because no one else keeps a centralised database with every transaction, so I'm not sure it counts as an advantage.
But this only solves a problem specific to bitcoin that no one else has, because no one else keeps a centralised database with every transaction, so I'm not sure it counts as an advantage.
Follow the big money.
Michael Saylor from Microstrategies: $1B.
Elon Musk from Tesla: $1.5B.
GrayScale: not sure how many dollars, but they own >550,000 bitcoins.
Big money is of the opinion that bitcoin is an excellent store of value.
Only a matter of time before it becomes a medium of exchange.
And later on, a unit of account.
By that time, you won't be asking yourself what 1 bitcoin is worth anymore.
Things will be priced in bitcoin. And those who have it, have it good.
Michael Saylor from Microstrategies: $1B.
Elon Musk from Tesla: $1.5B.
GrayScale: not sure how many dollars, but they own >550,000 bitcoins.
Big money is of the opinion that bitcoin is an excellent store of value.
Only a matter of time before it becomes a medium of exchange.
And later on, a unit of account.
By that time, you won't be asking yourself what 1 bitcoin is worth anymore.
Things will be priced in bitcoin. And those who have it, have it good.
> Big money is of the opinion that bitcoin is an excellent store of value. Only a matter of time before it becomes a medium of exchange.
By that same logic, I should be able to pay for my groceries with Apple stocks by now.
By that same logic, I should be able to pay for my groceries with Apple stocks by now.
No, it's not the same. Bitcoin is like gold, which you also can't use to pay for groceries. A better example is if you were to physically mail bars of gold vs digitally sending Bitcoin.
Nope. That's what a medium of exchange is for.
Bitcoin isn't at that phase yet.
For any new money, it goes like this:
1. Store of value. 2. Medium of exchange. 3. Unit of account.
In that order. Cumulatively.
Bitcoin isn't at that phase yet.
For any new money, it goes like this:
1. Store of value. 2. Medium of exchange. 3. Unit of account.
In that order. Cumulatively.
Bitcoin's usage as a medium of exchange appears to be decreasing, not increasing.
If you look for graphs showing the growth of merchants accepting bitcoin over time, you'll notice they're all out of date. That's because at some point after 2016 it stopped growing and people lost interest in this metric. This happened when the block size limit was reached: the result was higher transaction fees and unpredictable confirmation times. In 2018 it got so bad there was basically a civil war in the community about it and bitcoin cash forked. Today the average transaction fee is $19.
So I don't think we're on the path you envision. If bitcoin continues to be successful, I expect it will be used as an international settlement system by large corporations and financial institutions only.
If you look for graphs showing the growth of merchants accepting bitcoin over time, you'll notice they're all out of date. That's because at some point after 2016 it stopped growing and people lost interest in this metric. This happened when the block size limit was reached: the result was higher transaction fees and unpredictable confirmation times. In 2018 it got so bad there was basically a civil war in the community about it and bitcoin cash forked. Today the average transaction fee is $19.
So I don't think we're on the path you envision. If bitcoin continues to be successful, I expect it will be used as an international settlement system by large corporations and financial institutions only.
I invest hundreds of hours per year studying bitcoin's development, the crypto markets, etc. But you think your opinion somehow weighs more than mine, eh?
Ignore Lightning Network's development at your own peril.
Increased and decreased interest are part of the normal market cycle, the chart of which I'm betting you don't know by heart.
You have to be extremely & wilfully ignorant to claim 'medium of exchange' is off the table, just now that PayPal & Mastercard are embracing cryptocurrencies.
But whatever, man. You don't wanna belong to the future's 1%, that's fine with me.
Ignore Lightning Network's development at your own peril.
Increased and decreased interest are part of the normal market cycle, the chart of which I'm betting you don't know by heart.
You have to be extremely & wilfully ignorant to claim 'medium of exchange' is off the table, just now that PayPal & Mastercard are embracing cryptocurrencies.
But whatever, man. You don't wanna belong to the future's 1%, that's fine with me.
> I invest hundreds of hours per year studying bitcoin's development, the crypto markets, etc. But you think your opinion somehow weighs more than mine, eh?
You're reading things into my comment that I didn't say. Note that I didn't claim that my opinion is more important than yours, nor did I claim that bitcoin will not be successful. It very well might be. I just pointed out some inconsistencies in the path to success that you envision. (Or rather, the path that Dan Held envisions, because your comment was an almost verbatim copy of what he recently said in a "What Bitcoin Did" podcast episode.)
> Ignore Lightning Network's development at your own peril.
Lightning will help with scaling, but it's not a silver bullet. To give one example: a lightning channel's state management involves composing precommitted transactions, which are not broadcast but can be used to unilaterally close a channel (see section 3.3.2 of the lightning paper[1]). That means the transaction fee also needs to be chosen in advance. That can be problematic when the transaction fees spike, because there is only a limited window for such a transaction to go through. If it takes too long to confirm, it will not be able to override an attempt by the other party to maliciously close the channel with outdated state.
> You have to be extremely & wilfully ignorant to claim 'medium of exchange' is off the table, just now that PayPal & Mastercard are embracing cryptocurrencies.
Paypal does not currently support using bitcoin as a medium of exchange. See Paypal's FAQ "Can I use Cryptocurrencies to pay or send money with PayPal?"[2].
Even if they do enable "sending bitcoin" within paypal in the future, I'm not sure we can say that that's bitcoin being used as a medium of exchange. The medium would be paypal, while bitcoin would act as a unit of account (numbers in paypal's database).
[1] https://lightning.network/lightning-network-paper.pdf
[2] https://www.paypal.com/us/smarthelp/article/cryptocurrency-o...
You're reading things into my comment that I didn't say. Note that I didn't claim that my opinion is more important than yours, nor did I claim that bitcoin will not be successful. It very well might be. I just pointed out some inconsistencies in the path to success that you envision. (Or rather, the path that Dan Held envisions, because your comment was an almost verbatim copy of what he recently said in a "What Bitcoin Did" podcast episode.)
> Ignore Lightning Network's development at your own peril.
Lightning will help with scaling, but it's not a silver bullet. To give one example: a lightning channel's state management involves composing precommitted transactions, which are not broadcast but can be used to unilaterally close a channel (see section 3.3.2 of the lightning paper[1]). That means the transaction fee also needs to be chosen in advance. That can be problematic when the transaction fees spike, because there is only a limited window for such a transaction to go through. If it takes too long to confirm, it will not be able to override an attempt by the other party to maliciously close the channel with outdated state.
> You have to be extremely & wilfully ignorant to claim 'medium of exchange' is off the table, just now that PayPal & Mastercard are embracing cryptocurrencies.
Paypal does not currently support using bitcoin as a medium of exchange. See Paypal's FAQ "Can I use Cryptocurrencies to pay or send money with PayPal?"[2].
Even if they do enable "sending bitcoin" within paypal in the future, I'm not sure we can say that that's bitcoin being used as a medium of exchange. The medium would be paypal, while bitcoin would act as a unit of account (numbers in paypal's database).
[1] https://lightning.network/lightning-network-paper.pdf
[2] https://www.paypal.com/us/smarthelp/article/cryptocurrency-o...
1. I do not listen to the Dan Held podcast.
2. Like with every solution suggested in the bitcoin ecosystem, LN attracts a lot of FUD. The weakness you observe in LN seems to me like arguing in 1995 we'll never be able to stream movies via the Internet. "X Doesn't exist now, so it never will.". Present this argument to one of LN's creators, and they'd likely wipe it off the table.
The fact of the matter remains that any scaling solution has 2 minimum requirements:
A. It needs to be done off-chain. B. All transactions need to be verifiable from the genesis block.
LN satisfies these 2 conditions. If you'd design LN from the ground up, you'd probably end up with LN again. Just like you'd end up with bitcoin again, if you'd design that from the ground up. So these solutions will have to do.
3. Just because PayPal doesn't support this now, it doesn't mean they won't support it in the future. Matter of fact, it's fairly likely they will. Once again... "X Doesn't exist now, so it never will" is an inadequate argument.
2. Like with every solution suggested in the bitcoin ecosystem, LN attracts a lot of FUD. The weakness you observe in LN seems to me like arguing in 1995 we'll never be able to stream movies via the Internet. "X Doesn't exist now, so it never will.". Present this argument to one of LN's creators, and they'd likely wipe it off the table.
The fact of the matter remains that any scaling solution has 2 minimum requirements:
A. It needs to be done off-chain. B. All transactions need to be verifiable from the genesis block.
LN satisfies these 2 conditions. If you'd design LN from the ground up, you'd probably end up with LN again. Just like you'd end up with bitcoin again, if you'd design that from the ground up. So these solutions will have to do.
3. Just because PayPal doesn't support this now, it doesn't mean they won't support it in the future. Matter of fact, it's fairly likely they will. Once again... "X Doesn't exist now, so it never will" is an inadequate argument.
> For any new money, it goes like this:
1. Store of value. 2. Medium of exchange. 3. Unit of account.
I’m struggling to think of a currency that started as a store of value and then became a medium of exchange. Most currencies [1] started out worthless for good theoretical reasons. If they started valuable, they’d be subject to Gresham’s law and not transacted.
[1] The U.S. dollar, pounds Sterling, the Euro, the Swiss franc, money in the free banking era, Song Dynasty jiaozi, et cetera
I’m struggling to think of a currency that started as a store of value and then became a medium of exchange. Most currencies [1] started out worthless for good theoretical reasons. If they started valuable, they’d be subject to Gresham’s law and not transacted.
[1] The U.S. dollar, pounds Sterling, the Euro, the Swiss franc, money in the free banking era, Song Dynasty jiaozi, et cetera
Read "The Bitcoin Standard" if you want that problem solved.
It's a fun book and it accurately describes some of the flaws with fiat money, at least as it is used now.
But the part where it tries to explain why Bitcoin is the answer is laughable.
Almost as laughable as the part where he blames every societal ill from the degeneration of art and onwards on fiat currencies.
But the part where it tries to explain why Bitcoin is the answer is laughable.
Almost as laughable as the part where he blames every societal ill from the degeneration of art and onwards on fiat currencies.
No attempt at rational argument is made by you.
Argument irrelevant.
Argument irrelevant.
You've been breaking the site guidelines egregiously in this thread, and in other threads. We ban accounts that do that. Would you please review https://news.ycombinator.com/newsguidelines.html and stick to the rules when posting here?
I'm not going to ban you right now because you've posted some good comments too, but if you keep posting comments like these ones we're going to have to. Please correct.
I'm not going to ban you right now because you've posted some good comments too, but if you keep posting comments like these ones we're going to have to. Please correct.
Bitcoin will never become a standard currency, it's slow, it has zero privacy (if I send you money once you can see ALL my transactions), it is EXTREMELY energy inefficient. Even if you believe crypto will one day become the standard (which I dont), it won't be bitcoin because there are better alternatives; proof of work is dumb, bitcoin has a finite supply of bitcoins, etc.
Other comments in this thread are claiming bitcoin makes it much easier to launder money. So which is it? Zero privacy or increased privacy and anonymity?
Decreased privacy for everyday users. Increased privacy for those with the time, resources, and incentives to find ways to orchestrate transfers that can't be tied back to them. In other words, the worst of both worlds.
Let's be real: Everyday users just resort to credit cards, which have zero privacy. Only those with the time, resources, & incentives to transact away from credit cards get increased privacy.
My CC statement is not on a public distributed ledger.
You are fooling yourself if you believe using a credit card affords you any kind of privacy.
https://www.aclu.org/blog/privacy-technology/consumer-privac...
https://www.aclu.org/blog/privacy-technology/consumer-privac...
My CC statement is not on a public distributed ledger.
Who cares? You have the option to completely anonymize your transactions with BTC, this option does not exist with credit cards, in fact you have no idea who is doing what with your data. If privacy is your concern, BTC is the superior option.
> If privacy is your concern, BTC is the superior option
Bitcoin is a public ledger. It is AT BEST pseudonymous. At best.
Bitcoin is a public ledger. It is AT BEST pseudonymous. At best.
You'll notice users of the silk road who were risking life in prison used BTC, not credit cards, as their form of payment. If it truly was trivial to link a wallet to your IRL identity every user of the site would have been charged with multiple felonies, and yet that never happened.
How come so few Silk Road market place vendors were arrested if it decreased privacy? Many people on the SR were just everyday users. I don't think the argument that it's a step down in privacy is valid at all.
It's completely possible to remain anonymous with btc, but a big enough pain in the ass that only people who are committing crimes will do it. Everyone else will at some point link their identity to their wallet and all of their transaction and transaction amounts are then public record.
Yes, but the option is there. How does one protect their identity with a credit card transaction? The argument that BTC is not private doesn't seem to hold up.
I guess we could go through a challenge. You set up a Stripe page or some such thing and someone else can set up a BTC wallet. I will spend a dollar with my CC on your Stripe site and I will spend a dollar equivalent to that BTC wallet.
Then I will make two other secret transactions with the CC and the BTC wallet. You can each then try to identify the targets and the sums spent in the secret transactions.
Whoever identifies gets some sum of money from the other. I'm happy to escrow for you.
Then I will make two other secret transactions with the CC and the BTC wallet. You can each then try to identify the targets and the sums spent in the secret transactions.
Whoever identifies gets some sum of money from the other. I'm happy to escrow for you.
If you want to launder money, you need to shuffle your cash through a dozen shady shells at a fee. If you want to just send people money, that's not anonymous at all.
The finite supply is a feature, not a bug. I agree there are many aspects of bitcoin that suck, but not this one. We are right now witnessing many governments printing more and more money, which makes it less and less valuable. Bitcoin avoids that.
Central banking does have some benefits. Printing money can make a currency more valuable if it reduces volatility, because that draws more participants into the currency.
> The finite supply is a feature, not a bug.
Finite supply means that a guy who mined a bunch of bitcoin in his dorm room in 2011 because the university gave him free electricity can move the price when he decides to sell.
> The finite supply is a feature, not a bug.
Finite supply means that a guy who mined a bunch of bitcoin in his dorm room in 2011 because the university gave him free electricity can move the price when he decides to sell.
It's a shitty feaure advocated for by people who are proud of being ignorant. Fiat currency and monetary policy is largely responsible for the economic success of the last century.
There will be greater economic success in the current century, due to better money: bitcoin.
Feature that can be changed. Specially if armies come to play... After all whole feature set is consensus of miners, not the users...
State actors have good handle on violence. And then you better be on the same chain as they are, or it's jail time...
State actors have good handle on violence. And then you better be on the same chain as they are, or it's jail time...
Features that can't be changed. Certainly not when armies come to play.
You can change the bitcoin source code to have more coins and deal out half to yourself first. That's the easy part.
But then comes the part where you have to convince the whole world that your chain is the one, true bitcoin.
Good luck with that.
You can change the bitcoin source code to have more coins and deal out half to yourself first. That's the easy part.
But then comes the part where you have to convince the whole world that your chain is the one, true bitcoin.
Good luck with that.
Limited supply does not make things valuable per se.
It does if there's demand for it.
And there's been growing demand for bitcoin for 12 years and counting.
It's deflationary by design. But by all means, stick to your government money.
Printer goes brrrrrrrrr.
And there's been growing demand for bitcoin for 12 years and counting.
It's deflationary by design. But by all means, stick to your government money.
Printer goes brrrrrrrrr.
You realize deflation is bad, right? There's a reason why the central bank deliberately keeps inflation at a steady 2%. Slow, steady inflation is the ideal.
Store your value in fiat then, if you enjoy watching icecubes melt so much.
Nah, I keep it in a mutual fund. That's the point of inflation — spend or invest, but don't just sit on it.
I invested my inflationary fiat in deflationary bitcoin.
I sit on it while it appreciates.
Number go up.
I sit on it while it appreciates.
Number go up.
The value of bitcoin increases because people speculate, not because the number of them is fixed. I bet there are hundreds of crypto currencies that have fixed or decreasing stock that keep losing value, or are already worthless.
As per Satoshi himself, the value of bitcoin increases because people speculate, start using it more, speculate more, start using it more, etc.
The reason why it is capable of increasing, is because the number is fixed. Inflation would outstrip its value, if it weren't.
Bitcoin is useful. It has organic support. When it comes to storing value, other coins do not matter (nearly as much). Just ask PayPal, Mastercard, Microstrategies, Tesla, JP Morgan, GrayScale, etc.
https://bitcointreasuries.org/
https://hope.com/
The reason why it is capable of increasing, is because the number is fixed. Inflation would outstrip its value, if it weren't.
Bitcoin is useful. It has organic support. When it comes to storing value, other coins do not matter (nearly as much). Just ask PayPal, Mastercard, Microstrategies, Tesla, JP Morgan, GrayScale, etc.
https://bitcointreasuries.org/
https://hope.com/
There is absolutely nothing about bitcoin that sucks. It is exactly what it needs to be: the world's hardest store of value.
Every design decision comes with trade offs. All the right trade offs have been made. If you'd reinvent it from scratch, you'd end up with the exact same thing.
The only thing about bitcoin that sucks, is that nocoiners don't have any. And they won't have any until it's $1M.
Nobody wants to be the first. But everybody wants to be second.
Every design decision comes with trade offs. All the right trade offs have been made. If you'd reinvent it from scratch, you'd end up with the exact same thing.
The only thing about bitcoin that sucks, is that nocoiners don't have any. And they won't have any until it's $1M.
Nobody wants to be the first. But everybody wants to be second.
These are all the same uninformed arguments that every newcomer thinks of. It's all incorrect, and if you'd want to learn correct info, then you'd be able to do so.
It's important that you do it yourself. Because when I tell you it, it isn't going to land.
Your ideologies don't matter. The world won't let you force them onto it. The reality of the situation, is that all the big money believes bitcoin has a large role to play in the future of the world economy.
And this is true.
Screenshot this. Message me in 2030. Let's reevaluate.
It's important that you do it yourself. Because when I tell you it, it isn't going to land.
Your ideologies don't matter. The world won't let you force them onto it. The reality of the situation, is that all the big money believes bitcoin has a large role to play in the future of the world economy.
And this is true.
Screenshot this. Message me in 2030. Let's reevaluate.
> Only a matter of time before it becomes a medium of exchange.
It is impossible for BTC to become a medium of exchange without significant technical upgrades that the core developers have so far been hostile to.
Although it was a goal of the original bitcoin project (and continues to be for BCH and others), it is not a goal of the BTC community and it is incredibly unlikely that it will ever happen.
It is impossible for BTC to become a medium of exchange without significant technical upgrades that the core developers have so far been hostile to.
Although it was a goal of the original bitcoin project (and continues to be for BCH and others), it is not a goal of the BTC community and it is incredibly unlikely that it will ever happen.
Utter baloney. Lightning Network will deliver.
As for BTC vs BCH... the market has spoken: BTC is the one, true bitcoin.
As for BTC vs BCH... the market has spoken: BTC is the one, true bitcoin.
I wouldn't be shocked if one bitcoin is worth $1 million in ten years, but I would honestly be shocked if it were being used as a medium of exchange. I see it as less probable than people mailing gold bars back and forth to each other.
I unironically think Dogecoin has a much higher chance than Bitcoin of being a legitimate and popular medium of exchange in the future, in part because the supply isn't capped.
I think cryptocurrency may drive a lot of commerce in the coming decades as an actual payment mechanism rather than a speculative security, but, if so, I don't think it'll be Bitcoin that wins that race. I suspect the value will still be fluctuating frequently and violently in ten years.
I unironically think Dogecoin has a much higher chance than Bitcoin of being a legitimate and popular medium of exchange in the future, in part because the supply isn't capped.
I think cryptocurrency may drive a lot of commerce in the coming decades as an actual payment mechanism rather than a speculative security, but, if so, I don't think it'll be Bitcoin that wins that race. I suspect the value will still be fluctuating frequently and violently in ten years.
Don't see how you can compare a virtual asset to a physical one and then somehow think the virtual asset is harder to manage then the physical one?
Big money can write it off as a business expense on their taxes if it goes down. The average individual doesn't have that upside.
Why wouldn’t an individual be able to claim a capital loss?
Individuals can, but those are subject to a cap of $3000 against income.
I'm no tax expert but I think the point the OP was making is businesses have more options for writing off lossess - they can drum up other things to apply a loss towards. Thus, a business can effectively write off more of the loss than an individual can.
I'm no tax expert but I think the point the OP was making is businesses have more options for writing off lossess - they can drum up other things to apply a loss towards. Thus, a business can effectively write off more of the loss than an individual can.
[deleted]
Unlike other investment decisions you mean?
My point is it's easier to gamble when you have corporate tax advantages.
These are rich people/companies putting non-existential amounts of money into something new in the off chance it pays off. Best case scenario they get even richer, worse case scenario they pay a lot less in taxes. Either way their lifestyle/needs will be met and the business will continue.
For the average individual: Best case scenario they get rich. Worst case scenario their investment goes to zero or close to it and they get a max 3k tax deduction on their taxable income. Their lifestyle/future savings could be greatly impacted by the loss, certainly far more than the businesses/rich people in question would suffer.
These are rich people/companies putting non-existential amounts of money into something new in the off chance it pays off. Best case scenario they get even richer, worse case scenario they pay a lot less in taxes. Either way their lifestyle/needs will be met and the business will continue.
For the average individual: Best case scenario they get rich. Worst case scenario their investment goes to zero or close to it and they get a max 3k tax deduction on their taxable income. Their lifestyle/future savings could be greatly impacted by the loss, certainly far more than the businesses/rich people in question would suffer.
What I meant was, how is any of this an argument for investing specifically in Bitcoins?
In any case, if a corporate makes an investment and loses the money, you are correct that this will lower the tax base and hence the total taxes paid, but that will of course only cover a small part of the loss.
I don't know the tax implications for individuals in the US investing in stocks, but in Sweden there's not much difference if you're a company or an individual, you'll still be able to deduct losses.
Finally, if a company invest a large part of their capital in Bitcoin and it goes to zero, that is just as catastrophic for the company as it would be for an individual, it just depends on how much of the "savings" were invested.
In any case, if a corporate makes an investment and loses the money, you are correct that this will lower the tax base and hence the total taxes paid, but that will of course only cover a small part of the loss.
I don't know the tax implications for individuals in the US investing in stocks, but in Sweden there's not much difference if you're a company or an individual, you'll still be able to deduct losses.
Finally, if a company invest a large part of their capital in Bitcoin and it goes to zero, that is just as catastrophic for the company as it would be for an individual, it just depends on how much of the "savings" were invested.
Well it's good to be an investor in Sweden I guess, if theoretically you could write off your entire capital loss and pay no income tax, like a US business could. As far as the US goes it's capped at a $3000 loss barring some special circumstances.
I was just opposing the "Rich people and businesses are getting into it! That means the value is bound to go up and makes it a good investment for me!" attitude I was seeing in the comments. The super rich and large corporations have disposable incomes and options that make buying bitcoin considerably less risky than it would be for the average retail investor.
Hell the risks are in Tesla's own SEC filing: https://www.sec.gov/Archives/edgar/data/1318605/000156459021...
"We hold and may acquire digital assets that may be subject to volatile market prices, impairment and unique risks of loss.
In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future. Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.
The prices of digital assets have been in the past and may continue to be highly volatile, including as a result of various associated risks and uncertainties. For example, the prevalence of such assets is a relatively recent trend, and their long-term adoption by investors, consumers and businesses is unpredictable. Moreover, their lack of a physical form, their reliance on technology for their creation, existence and transactional validation and their decentralization may subject their integrity to the threat of malicious attacks and technological obsolescence. Finally, the extent to which securities laws or other regulations apply or may apply in the future to such assets is unclear and may change in the future. If we hold digital assets and their values decrease relative to our purchase prices, our financial condition may be harmed.
Moreover, digital assets are currently considered indefinite-lived intangible assets under applicable accounting rules, meaning that any decrease in their fair values below our carrying values for such assets at any time subsequent to their acquisition will require us to recognize impairment charges, whereas we may make no upward revisions for any market price increases until a sale, which may adversely affect our operating results in any period in which such impairment occurs. Moreover, there is no guarantee that future changes in GAAP will not require us to change the way we account for digital assets held by us.
Finally, as intangible assets without centralized issuers or governing bodies, digital assets have been, and may in the future be, subject to security breaches, cyberattacks or other malicious activities, as well as human errors or computer malfunctions that may result in the loss or destruction of private keys needed to access such assets. While we intend to take all reasonable measures to secure any digital assets, if such threats are realized or the measures or controls we create or implement to secure our digital assets fail, it could result in a partial or total misappropriation or loss of our digital assets, and our financial condition and operating results may be harmed."
I was just opposing the "Rich people and businesses are getting into it! That means the value is bound to go up and makes it a good investment for me!" attitude I was seeing in the comments. The super rich and large corporations have disposable incomes and options that make buying bitcoin considerably less risky than it would be for the average retail investor.
Hell the risks are in Tesla's own SEC filing: https://www.sec.gov/Archives/edgar/data/1318605/000156459021...
"We hold and may acquire digital assets that may be subject to volatile market prices, impairment and unique risks of loss.
In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future. Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.
The prices of digital assets have been in the past and may continue to be highly volatile, including as a result of various associated risks and uncertainties. For example, the prevalence of such assets is a relatively recent trend, and their long-term adoption by investors, consumers and businesses is unpredictable. Moreover, their lack of a physical form, their reliance on technology for their creation, existence and transactional validation and their decentralization may subject their integrity to the threat of malicious attacks and technological obsolescence. Finally, the extent to which securities laws or other regulations apply or may apply in the future to such assets is unclear and may change in the future. If we hold digital assets and their values decrease relative to our purchase prices, our financial condition may be harmed.
Moreover, digital assets are currently considered indefinite-lived intangible assets under applicable accounting rules, meaning that any decrease in their fair values below our carrying values for such assets at any time subsequent to their acquisition will require us to recognize impairment charges, whereas we may make no upward revisions for any market price increases until a sale, which may adversely affect our operating results in any period in which such impairment occurs. Moreover, there is no guarantee that future changes in GAAP will not require us to change the way we account for digital assets held by us.
Finally, as intangible assets without centralized issuers or governing bodies, digital assets have been, and may in the future be, subject to security breaches, cyberattacks or other malicious activities, as well as human errors or computer malfunctions that may result in the loss or destruction of private keys needed to access such assets. While we intend to take all reasonable measures to secure any digital assets, if such threats are realized or the measures or controls we create or implement to secure our digital assets fail, it could result in a partial or total misappropriation or loss of our digital assets, and our financial condition and operating results may be harmed."
I’d say the main difference here is not the tax treatment, it’s the relative amounts - most private individuals could also afford to invest 10% of their cash savings in something very risky.
Add to that the fact that the people making the investment decisions at companies are not personally completely dependent on the outcome. Worst case scenario they can get another job.
Add to that the fact that the people making the investment decisions at companies are not personally completely dependent on the outcome. Worst case scenario they can get another job.
Things will be priced in bitcoin. You mean like how things are priced in gold now? Oh wait, we got off the gold standard specifically because of its high short-run volatility. Hmm....
Gold never even moved to medium of exchange. It couldn't.
Bitcoin can. And then it can move on to unit of account.
Bitcoin can. And then it can move on to unit of account.
> Follow the big money
I worry that companies like PayPal are interested in btc precisely because they know it won't ever threaten them.
I worry that companies like PayPal are interested in btc precisely because they know it won't ever threaten them.
Follow the big money? The total "market value" of bitcoin is a rounding error in the global economy. Many individual companies have a larger market cap.
Bitcoin has a market cap of something like 1 trillion dollars right now I would hardly call that a rounding error
The total market cap of crypto is now larger than Google.
Thanks for playing.
Thanks for playing.
I see a huge potential in cryptocurrencies, just not in Bitcoin per se. I can totally see the European Central Bank controlling some kind of CryptoEuro that is tied to the real euro and allows individuals to make transactions without banks.
Banks would become an optional frontend on this transaction system, with security features built-in, etc.
Banks would become an optional frontend on this transaction system, with security features built-in, etc.
I don't think most normal people see "without banks" as a feature. Indeed, banks have already been peering with each other on transaction-clearing since forever, and I don't think it would take much for the EU to mandate a particular set of common APIs and maybe some entry criteria that allow increasingly smaller players access to the already-existing framework.
All of this seems a lot easier and cheaper than bitcoin's distributed ledger.
All of this seems a lot easier and cheaper than bitcoin's distributed ledger.
> I don't think most normal people see "without banks" as a feature.
The other day I walked into a shop where I couldn't pay by card because the banks didn't provide the service to them. Users don't see "without banks" as a feature, but businesses will. It will reduce their fees and their dependency to the whole industry.
The other day I walked into a shop where I couldn't pay by card because the banks didn't provide the service to them. Users don't see "without banks" as a feature, but businesses will. It will reduce their fees and their dependency to the whole industry.
Fair, but how many small businesses who are unable or unwilling to set up a payment terminal will be able to maintain the infrastructure needed to participate in a distributed consensus network?
There will still be an intermediary to whom the small business will pay fees for a turnkey solution. And absolutely those fees would be lower in a world where anyone can participate and compete on them. But that's definitely not the world we live in just yet, and even if/when it arrives, I don't think anyone at the retail level (either the consumer or the storefront) will have an appreciably different experience from what they have today.
EDIT: Just adding also, clearing times is the other huge barrier. Obviously no retail environment can tolerate a transaction delay of more than a few seconds, so the other function of the intermediary would be to manage that reality, by some combination of pre-clearing transactions for customers who look safe (classical CC fraud detection where de-anonymizing would be a key component), or maybe a pre-paying scheme (which ends up sounding a lot like a bank debit card).
There will still be an intermediary to whom the small business will pay fees for a turnkey solution. And absolutely those fees would be lower in a world where anyone can participate and compete on them. But that's definitely not the world we live in just yet, and even if/when it arrives, I don't think anyone at the retail level (either the consumer or the storefront) will have an appreciably different experience from what they have today.
EDIT: Just adding also, clearing times is the other huge barrier. Obviously no retail environment can tolerate a transaction delay of more than a few seconds, so the other function of the intermediary would be to manage that reality, by some combination of pre-clearing transactions for customers who look safe (classical CC fraud detection where de-anonymizing would be a key component), or maybe a pre-paying scheme (which ends up sounding a lot like a bank debit card).
If you see something like the CryptoEuro taking off, doesn't it naturally follow that there would be a cryptocurrency that would take off that was global, and not issued by any individual country?
Well, I think they aren't any good for anything. They seem to be a solution to a problem nobody has. [0]
[0]: https://louwrentius.com/cryptocurrencies-are-detrimental-to-...
[0]: https://louwrentius.com/cryptocurrencies-are-detrimental-to-...
> I simply can't answer what BTCs and other crypto coins are actually good for.
Getting rich quickly. It might be the largest Ponzi scheme ever. I hope it's not..
Getting rich quickly. It might be the largest Ponzi scheme ever. I hope it's not..
Once you understand Bitcoin, there's no way why you'd go back to the legacy system. It's not Bitcoiners getting freaking rich; it's them adopting a superior store of value that is being selected as the winner in a free market.
Most people are perfectly happy entrusting their (fiat) money with the banks, and asking permission for accessing their funds. Bitcoiners, on the other hand, have tasted the freedom of self-custody and a permissionless payment system.
Whether it has value or not depends on how important it is to have a monetary good that is not issued by a nation state, and cannot be controlled/stopped/inflated/modified.
Most people are perfectly happy entrusting their (fiat) money with the banks, and asking permission for accessing their funds. Bitcoiners, on the other hand, have tasted the freedom of self-custody and a permissionless payment system.
Whether it has value or not depends on how important it is to have a monetary good that is not issued by a nation state, and cannot be controlled/stopped/inflated/modified.
> there's no way why you'd go back to the legacy system
I can think of lots of reasons.
* Deflationary currencies are dangerous. Inflation is a feature, not a bug.
* If I screw up a bank transfer or have my credit card details stolen, I can have those transactions reversed. No such luck with Bitcoin. The idea of losing my life’s savings to a zero day or sophisticated hacker doesn’t sounds great to me.
* I can’t remember the last time my bank got DoSed.
* Bitcoin’s value fluctuates wildly, making it a poor medium of exchange.
* I like that my country can adjust monetary policy in response to world events like pandemics. That’s a feature, not a bug.
I can think of lots of reasons.
* Deflationary currencies are dangerous. Inflation is a feature, not a bug.
* If I screw up a bank transfer or have my credit card details stolen, I can have those transactions reversed. No such luck with Bitcoin. The idea of losing my life’s savings to a zero day or sophisticated hacker doesn’t sounds great to me.
* I can’t remember the last time my bank got DoSed.
* Bitcoin’s value fluctuates wildly, making it a poor medium of exchange.
* I like that my country can adjust monetary policy in response to world events like pandemics. That’s a feature, not a bug.
Fortunately, no one is forcing anyone to adopt Bitcoin, if the features are undesirable.
> Deflationary currencies are dangerous. Inflation is a feature, not a bug.
You may be right, but we can't stop a community from choosing something deflationary as their preferred currency.
> I can have those transactions reversed. No such luck with Bitcoin
I'd argue this is a feature in Bitcoin for many people.
> I can’t remember the last time my bank got DoSed.
You're fortunate. Last time I went to a bank (right after COVID hit), I was denied cash withdrawals due to liquidity issues. That's what happens when your money is in custody of someone else. Once you look outside first world countries, you'll see the demerits of centralised systems handling critical resources like money.
> Bitcoin’s value fluctuates wildly, making it a poor medium of exchange.
I'll agree with this point. Perhaps it's because of the nature of the market itself. Bitcoin trades globally, 24x7 and 365 days a year, without circuit breakers when there's extreme volatility. It's not appropriate for buying candies from a store, but maybe a good option for a Tesla?
> I like that my country can adjust monetary policy in response to world events like pandemics.
On the contrary, people holding Bitcoin during the pandemic were relatively well off in 2020. The stimulus package had negative impacts too, like asset inflation. But more concretely, Bitcoin is the first true alternative to central banking, and many people are happy to adopt it because it solves important problems for them.
> Deflationary currencies are dangerous. Inflation is a feature, not a bug.
You may be right, but we can't stop a community from choosing something deflationary as their preferred currency.
> I can have those transactions reversed. No such luck with Bitcoin
I'd argue this is a feature in Bitcoin for many people.
> I can’t remember the last time my bank got DoSed.
You're fortunate. Last time I went to a bank (right after COVID hit), I was denied cash withdrawals due to liquidity issues. That's what happens when your money is in custody of someone else. Once you look outside first world countries, you'll see the demerits of centralised systems handling critical resources like money.
> Bitcoin’s value fluctuates wildly, making it a poor medium of exchange.
I'll agree with this point. Perhaps it's because of the nature of the market itself. Bitcoin trades globally, 24x7 and 365 days a year, without circuit breakers when there's extreme volatility. It's not appropriate for buying candies from a store, but maybe a good option for a Tesla?
> I like that my country can adjust monetary policy in response to world events like pandemics.
On the contrary, people holding Bitcoin during the pandemic were relatively well off in 2020. The stimulus package had negative impacts too, like asset inflation. But more concretely, Bitcoin is the first true alternative to central banking, and many people are happy to adopt it because it solves important problems for them.
These kinds of posts are so frustrating. "Blub currencies". They insist that everybody skeptical of BTC's utility must simply be ignorant. This is a deeply uncharitable way of discussing almost any topic.
Understanding Bitcoin really can also convince you that it might not be a superior store of value. Think of the consequences of someone breaking SHA256 which, given, at the moment looks absolutely unfeasible, or of some entity or coordinated entities to actually control the main branch, or the cost of energy to mine (and the fees) exceeding the value of bitcoin at a point in time, or more mundane things like loosing the private key of an address.
edit:typos
edit:typos
> I simply can't answer what BTCs and other crypto coins are actually good for.
Everybody here is missing out why Bitcoin was made in the first place: the 2008 crash.
The benefits of a globally liquid asset (not USD) will only be appreciated if you're living from a country that has a weak Central Bank.
- Nigerians use it to import goods from China. This guy can't source USD to purchase imports for his mobile phone business, so he uses BTC [0]
- Venezuela remote workers getting paid in BTC, because their central bank clamped down on USD inflow. They also didn't want to be paid in the worthless local currency. [1]
- Remittance shops in Hongkong are using BTC to settle remittances by batch. Buy and sell to the last mile instantly, no exposure to volatility. This gives them way better FX fees and faster settlement (30mins vs. 1-3 business days). They pass the savings down to their customers as marketing spend, or they pocket the change to increase profit [2]
- Argentina Central Bank is hoarding USD due to dwindling reserves. So they imposed a $200USD/month cap on individuals transacting with USD. People are flocking to BTC for remote settlement. [3]
- Iran hit with sanctions cant use USD. So they're working on laws to use BTC for settling imports with China. They even issued BTC mining licenses for private companies. [4]
I come from a country, where if you remit more than $10K outbound you'd have to: pay big fees ($200+), suffer bad FX rates, wait for 2-3 days, do a physical appearance at the branch for and pay documents/notarial stamps, sign forms, present and print out government ID's, just to say: "This is my money, I just want to send money to my dad overseas for medical purposes".
December 2020, my mom had received USD in her dollar account. She wanted to withdraw and convert it to help build float for the family business, the local bank didn't have enough USD. They told her it was a 6-week wait, lots of people lined up. Lol.
People from first-world countries have it good.
[0] https://www.reuters.com/article/us-crypto-currencies-africa-...
[1] https://www.bbc.com/news/business-47553048
[2] https://www.reuters.com/article/us-crypto-currencies-remitta...
[3] https://www.coindesk.com/crypto-is-booming-in-economically-c...
[4] https://asiatimes.com/2020/10/iran-to-use-bitcoin-to-fund-im...
Everybody here is missing out why Bitcoin was made in the first place: the 2008 crash.
The benefits of a globally liquid asset (not USD) will only be appreciated if you're living from a country that has a weak Central Bank.
- Nigerians use it to import goods from China. This guy can't source USD to purchase imports for his mobile phone business, so he uses BTC [0]
- Venezuela remote workers getting paid in BTC, because their central bank clamped down on USD inflow. They also didn't want to be paid in the worthless local currency. [1]
- Remittance shops in Hongkong are using BTC to settle remittances by batch. Buy and sell to the last mile instantly, no exposure to volatility. This gives them way better FX fees and faster settlement (30mins vs. 1-3 business days). They pass the savings down to their customers as marketing spend, or they pocket the change to increase profit [2]
- Argentina Central Bank is hoarding USD due to dwindling reserves. So they imposed a $200USD/month cap on individuals transacting with USD. People are flocking to BTC for remote settlement. [3]
- Iran hit with sanctions cant use USD. So they're working on laws to use BTC for settling imports with China. They even issued BTC mining licenses for private companies. [4]
I come from a country, where if you remit more than $10K outbound you'd have to: pay big fees ($200+), suffer bad FX rates, wait for 2-3 days, do a physical appearance at the branch for and pay documents/notarial stamps, sign forms, present and print out government ID's, just to say: "This is my money, I just want to send money to my dad overseas for medical purposes".
December 2020, my mom had received USD in her dollar account. She wanted to withdraw and convert it to help build float for the family business, the local bank didn't have enough USD. They told her it was a 6-week wait, lots of people lined up. Lol.
People from first-world countries have it good.
[0] https://www.reuters.com/article/us-crypto-currencies-africa-...
[1] https://www.bbc.com/news/business-47553048
[2] https://www.reuters.com/article/us-crypto-currencies-remitta...
[3] https://www.coindesk.com/crypto-is-booming-in-economically-c...
[4] https://asiatimes.com/2020/10/iran-to-use-bitcoin-to-fund-im...
I'll make it to the point since I was in on bitcoin back in the cpu crunch days too:
1. As a medium of exchange. This was what the global community, and more particularly the techie community behind it wanted to use it as. We wanted a quick way to exchange payment across the globe without dealing with shitty companies like Paypal etc.
but at some point, it became instead
2. A store of value. I'm not sure the order of effect on this, but then rich people who had the ability to influence the network effect started dumping real money into it, further inflating the price. I theorized at one point the central banks might have even participated on the dl, just because it's an easy bet to hedge on if you can poof money from thin air like they can.
I think #2 has completely overtaken it's use as #1, and due to that and other factors, I expect a major collapse at some inevitable but undetermined point in the future.
My personal evaluation and why I skipped bitcoin was because I saw that it did not have privacy protections built in, which is what the early coin community wanted (or so I thought). I kick myself for not keeping a few blocks sometimes (at one point I think I spent ~20 btc on a food order!), but oh well.
1. As a medium of exchange. This was what the global community, and more particularly the techie community behind it wanted to use it as. We wanted a quick way to exchange payment across the globe without dealing with shitty companies like Paypal etc.
but at some point, it became instead
2. A store of value. I'm not sure the order of effect on this, but then rich people who had the ability to influence the network effect started dumping real money into it, further inflating the price. I theorized at one point the central banks might have even participated on the dl, just because it's an easy bet to hedge on if you can poof money from thin air like they can.
I think #2 has completely overtaken it's use as #1, and due to that and other factors, I expect a major collapse at some inevitable but undetermined point in the future.
My personal evaluation and why I skipped bitcoin was because I saw that it did not have privacy protections built in, which is what the early coin community wanted (or so I thought). I kick myself for not keeping a few blocks sometimes (at one point I think I spent ~20 btc on a food order!), but oh well.
You can send me money across the globe without a middleman or anyone being able to block that transfer.
That's it.
If you don't want that, you don't want that. Some of us do.
That's it.
If you don't want that, you don't want that. Some of us do.
That’s ignoring the middlemen who run the mining network, who you pay for every transaction, and the middlemen on both ends who convert to and from the real current which you use to buy and sell the things you actually use.
Similarly, any government which wants to can block the network entirely or require everyone exchanging into real currency to avoid transactions involving people who’ve violated local laws. Since Bitcoin by design helpfully gives them a full list of your past activities anyone considering ignoring those demands has to consider the risk of consequences for their participation at any point in the future.
Similarly, any government which wants to can block the network entirely or require everyone exchanging into real currency to avoid transactions involving people who’ve violated local laws. Since Bitcoin by design helpfully gives them a full list of your past activities anyone considering ignoring those demands has to consider the risk of consequences for their participation at any point in the future.
Ah yeah, you're right, all of those legally sounding words invalidate actual use.
Yes, I buy things with bitcoin, and no, you can't find it on the blockchain.
(Or do I? :))
Yes, I buy things with bitcoin, and no, you can't find it on the blockchain.
(Or do I? :))
I’m not doubting that you use it, only pointing out that it’s not free to do so.
Similarly, maybe you haven’t hit a transaction yet which a government made an effort to block but … are you certain that nobody will ever try to do so or be interested in your past history? If you’re trying to obscure your identity, consider how that would look under existing money laundering if any party led to your real identity being associated with those transactions. If you aren’t confident that no government with jurisdiction will ever care, that’s a factor to weigh on every transaction since you’re leaving an immutable public record.
Similarly, maybe you haven’t hit a transaction yet which a government made an effort to block but … are you certain that nobody will ever try to do so or be interested in your past history? If you’re trying to obscure your identity, consider how that would look under existing money laundering if any party led to your real identity being associated with those transactions. If you aren’t confident that no government with jurisdiction will ever care, that’s a factor to weigh on every transaction since you’re leaving an immutable public record.
> Similarly, maybe you haven’t hit a transaction yet which a government made an effort to block but …
They wouldn't be able to unless they had over 51% of the mining power, and it would be easily noticed.
They wouldn't be able to unless they had over 51% of the mining power, and it would be easily noticed.
That’s assuming that a direct attack on a network is the only option. What I described was much easier: if the government requires payment of taxes or reporting real identities, you’re going to have trouble exchanging into real currency unless you’re paying enough for someone to risk money laundering charges. Similarly, if a commercial exchange is required to refuse transactions traced to an address on a list, it’ll effectively limit their ability to use the network. Most companies aren’t going to risk their business on those transactions even if they’re technically capable of processing them.
Since the blockchain is public all of that can be retroactive, too, so any transaction has the risk that the other party will leak your identity, which similarly disincentivizes other people from taking them.
Since the blockchain is public all of that can be retroactive, too, so any transaction has the risk that the other party will leak your identity, which similarly disincentivizes other people from taking them.
None of that is about actually blocking the transaction, it's just about possible consequences of making the transaction.
By that logic anyone in the world can "block" whatever they want by threatening consequences.
By that logic anyone in the world can "block" whatever they want by threatening consequences.
Unless, you know, it’s illegal. Then someone with a gun might take you & it away.
Well, sure.
At the moment someone with a gun might stop me from going to have a cup of tea with my mother.
I learned long ago to ignore such things in order to maintain my sanity.
At the moment someone with a gun might stop me from going to have a cup of tea with my mother.
I learned long ago to ignore such things in order to maintain my sanity.
Is it illegal to go get tea with your mother somewhere? Today, Bitcoin is illegal to trade in some places.
Yes, this is illegal in the UK.
We're all criminals now. Such are the '20s.
With the trajectory our political system is on, a few more months of this and the outcome where the guy with the gun pulls the trigger may well be preferable.
The main escape valve at the moment is that the regulations aren't being enforced.
We're all criminals now. Such are the '20s.
With the trajectory our political system is on, a few more months of this and the outcome where the guy with the gun pulls the trigger may well be preferable.
The main escape valve at the moment is that the regulations aren't being enforced.
Actually with Covid it might really be illegal to go get tea with your mother in some places, assuming you don't live with her.
My answer to this is that back in the early '10s I massively underestimated how successful it would be as a pyramid scheme that I could get in on early, but that I massively overestimated how useful it would be as a currency, despite having an extremely low estimation of that. So I guess you and I should have had better foresight to see how good it would be for unhinged speculation, but frankly I never really have any regrets about this: I'm fundamentally not a gambler or a speculator. (However I might not like it if my wife were to gain a full understanding of how much wealthier and easier our lives could be right now if that hadn't been the case.)
If tens of thousands of folks like yourself had mined and kept the coins, it wouldn’t be nearly as valuable as it is today.
It’s a deflationary asset, meaning the less it gets used the more valuable it is.
It’s a deflationary asset, meaning the less it gets used the more valuable it is.
I don’t follow your logic here. How would more mining early on have impacted the Bitcoin price?
How do you make that out? There would still be the same amount of bitcoin in circulation.
No, I agree with you completely. I have missed the whole thing, from $100 up. So a bit later than you, but I have the same questions and some more about viability.
I've been in since very early on as well. There isn't anything, other than black market transactions, that BTC is good for. The idea that it has some kind of inherent value is completely insane. People are willing to pay for it now because Tether is artificially keeping the price high. Sooner or later someone (US government, Russian mobsters) are going to nab those Tether dudes and the game is going to be up.
I'm in the same boat. The more I think about it the more it seems any cryptocurrency is essentially Monopoly money obfuscated by complexity.
Sure, let me help you: Apple, Amazon, Tesla and some third-world real-estate have made x100+ gains in the last 20-30 years. It's not the fact that you are getting old, but that speculating about future yield is a business.
There is no reason to speculate about Bitcoin, the same as there is no reason to speculate about real-estate land going up in Antarctica .
There is no reason to speculate about Bitcoin, the same as there is no reason to speculate about real-estate land going up in Antarctica .
This is the classic trap of "failure of imagination". Failure of imagination can be fatal in that it obscures your vision of the future due to your own biases, perspective and lack of knowledge. It is critical for people to seek out knowledge they do not possess and perspectives they do not have.
I think they're very useful, if your a guy like Musk, who needs to move billions of USD, anonymously. You can't carry gold around, nor diamonds anymore with full body scanners. BTC is the only way to move massive wealth, ergo why NK is using it to buy WMD material's & know-how.
USD is backed by guns ( nukes ), what is BTC back's by? Large numbers, 10E77 (2E256), greater than the number of sub-atomic particles in the universe. You more likely to find a nickle lost in our galaxy, than to find a specific BTC private-key.
The problem with the question here, is nobody thinks like a rich guy, let's fall back to JP-Morgans famous "Only gold is money, all else is credit". I hate to admit it but BTC in most recent decade has largely vacuumed up all the paranoid money that would normally be in gold.
I don't even want to touch on the fact that SHA256 & ECDSA SECP256k1 are both NSA algos that are backbone of BTC. In my day the NSA didn't release an algo that they didnt' have a backdoor key.
IMHO BTC is a great way to move massive wealth, but only the rich can play this game. From a GUV point of view BTC has kept the paranoid money out of gold, let's remember the original Satoshi white-paper came out of IMF-NSA, in 1997.
I myself have played BTC since 2011, and have hacked it since then, as its always been more fun to hack Secp256k1 ( big prime numbers and such ) than thinking about 'money' of which I have no use.
The problem that I see is like Alfred H Proofrock in the famous TS-ELIOT 'women come&go speaking of Michelangelo', IMHO BTC requires a total classic knowledge of math, physics, computation, and economic history to 'get-it', and thus given that most are not masters of these four, they're not unlike the wisemen holding different parts of the elephant.
In summary BTC is a toy of rich men, and it will go away when the NSA-IMF decides open the backdoors of sha-256&secp256k1. Even then newer coins will come out using sha-512, and secp512k-n, and the game will continue, as the crypto-currency model has been proven, and road-tested.
My advice for little people is to diversify, say have a little of everything, some gold, some farm-land, some stock, some cash, and most important of all to hold a passport is 'good country' when the SHTF in the USA. Today, I think it much better to play ETH and/or ZEN, which have had better gains, and still are profitable to mine, which allows you to accumulate with privacy, as the coinbase (or any 'exchange') purhcase of crypto is just an IRS database. I would say like gold, 5% crypto, and as along as its a good crypto, it doesn't really matter. By good I mean backed by good-teams, which is why I like ETH and/or ZEN;
BTC is a barometer that's why my #1 hobby is cracking BTC ( factoring ECDSA primes using GPU farms ) its field-medal level math, that you will never get public recognition for solving.
USD is backed by guns ( nukes ), what is BTC back's by? Large numbers, 10E77 (2E256), greater than the number of sub-atomic particles in the universe. You more likely to find a nickle lost in our galaxy, than to find a specific BTC private-key.
The problem with the question here, is nobody thinks like a rich guy, let's fall back to JP-Morgans famous "Only gold is money, all else is credit". I hate to admit it but BTC in most recent decade has largely vacuumed up all the paranoid money that would normally be in gold.
I don't even want to touch on the fact that SHA256 & ECDSA SECP256k1 are both NSA algos that are backbone of BTC. In my day the NSA didn't release an algo that they didnt' have a backdoor key.
IMHO BTC is a great way to move massive wealth, but only the rich can play this game. From a GUV point of view BTC has kept the paranoid money out of gold, let's remember the original Satoshi white-paper came out of IMF-NSA, in 1997.
I myself have played BTC since 2011, and have hacked it since then, as its always been more fun to hack Secp256k1 ( big prime numbers and such ) than thinking about 'money' of which I have no use.
The problem that I see is like Alfred H Proofrock in the famous TS-ELIOT 'women come&go speaking of Michelangelo', IMHO BTC requires a total classic knowledge of math, physics, computation, and economic history to 'get-it', and thus given that most are not masters of these four, they're not unlike the wisemen holding different parts of the elephant.
In summary BTC is a toy of rich men, and it will go away when the NSA-IMF decides open the backdoors of sha-256&secp256k1. Even then newer coins will come out using sha-512, and secp512k-n, and the game will continue, as the crypto-currency model has been proven, and road-tested.
My advice for little people is to diversify, say have a little of everything, some gold, some farm-land, some stock, some cash, and most important of all to hold a passport is 'good country' when the SHTF in the USA. Today, I think it much better to play ETH and/or ZEN, which have had better gains, and still are profitable to mine, which allows you to accumulate with privacy, as the coinbase (or any 'exchange') purhcase of crypto is just an IRS database. I would say like gold, 5% crypto, and as along as its a good crypto, it doesn't really matter. By good I mean backed by good-teams, which is why I like ETH and/or ZEN;
BTC is a barometer that's why my #1 hobby is cracking BTC ( factoring ECDSA primes using GPU farms ) its field-medal level math, that you will never get public recognition for solving.
Inflation-proof store of value.
Only a given bitcoin fork is inflation proof. Bitcoin itself is infinitely forkable, and if someone greatly improves the experience of creating and trading forks, we're at risk of inflation in a way fiat currencies are not.
By trading inflation for volatility?
Anything of value that is not the currency used in your country meets that definition, and most of those things do not consume vast amounts of electricity.
Can you really not find a single use for bitcoin?
Here is the most obvious one - true sovereignty over your capital. When you have bitcoin, you have have physical ownership of a digitally transferable asset. Not legal ownership where a custodian ultimately decides whether you can access it.
In theory nothing prevents individuals from carrying entire national budgets as seed words in their heads.
You can argue ethics, legality but surely you have to acknowledge the power it gives individuals.
Here is the most obvious one - true sovereignty over your capital. When you have bitcoin, you have have physical ownership of a digitally transferable asset. Not legal ownership where a custodian ultimately decides whether you can access it.
In theory nothing prevents individuals from carrying entire national budgets as seed words in their heads.
You can argue ethics, legality but surely you have to acknowledge the power it gives individuals.
> Here is the most obvious one - true sovereignty over your capital. When you have bitcoin, you have have physical ownership of a digitally transferable asset. Not legal ownership where a custodian ultimately decides whether you can access it.
This isn't really true though. At the end of the day, you're always subject to the powers that be who will come knocking on your door with guns if you stop paying your taxes. If they criminalize BTC, stick you in jail, it won't really matter that you have "physical ownership of a digitally transferable asset". Ultimately there's always a custodian who decides whether you can access it.
It might currently have some small benefits over traditional currency (in terms of not needing to operate via the banking system) but that doesn't mean it's somehow outside the boundaries of traditional society.
This isn't really true though. At the end of the day, you're always subject to the powers that be who will come knocking on your door with guns if you stop paying your taxes. If they criminalize BTC, stick you in jail, it won't really matter that you have "physical ownership of a digitally transferable asset". Ultimately there's always a custodian who decides whether you can access it.
It might currently have some small benefits over traditional currency (in terms of not needing to operate via the banking system) but that doesn't mean it's somehow outside the boundaries of traditional society.
Well, the owner of 51% of processing decides. It also has no use if both parties aren't connected to the internet. Also, you are in the truest sense not the owner of the bitcoins. You are using the "ownership service" of the network. If the network goes down, you lose access to the network (goverment internet filtering) or the network gets taken over, you lose everything. It's strictly worse than gold. The only downside of gold compared to this is that gold has to be physically stored somewhere
If the owner of Bitcoin's 51% hashrate decides to take anyone's coins, then Bitcoin and cryptocurrency in general is over. They all go to 0. If that happens, then all of the critics will be proven right.
Hasn't happened so far though because Bitcoin disincentivizes this sort of behavior.
Hasn't happened so far though because Bitcoin disincentivizes this sort of behavior.
>Ok, I have to admit that I am one of those people who knew about BTC very, very early but never bought any.
I was too. I told a friend who owns a data center about it, and mentioned maybe he could stress test servers by mining bitcoin (this was before 2011, mining was very reasonable on consumer hardware). He never did to my knowledge.
December of 2019 I ran into him and he thanked me for telling him about bitcoin all those years ago. He sold one for around $16,000, and still had 11 more. He literally didn't care if they dropped to $0, he considered it a win.
I should reach out and see if he has sold another one this week. He could buy a new SUV outright.
I was too. I told a friend who owns a data center about it, and mentioned maybe he could stress test servers by mining bitcoin (this was before 2011, mining was very reasonable on consumer hardware). He never did to my knowledge.
December of 2019 I ran into him and he thanked me for telling him about bitcoin all those years ago. He sold one for around $16,000, and still had 11 more. He literally didn't care if they dropped to $0, he considered it a win.
I should reach out and see if he has sold another one this week. He could buy a new SUV outright.
Bitcoin is a potentially revolutionary technology in a very early stage. The important new part, the consensus algorithm, is ground breaking.
Now, the very first implementation (Bitcoin) kinda sucks, like most technologies in their first versions. But there are newer generations, each more interesting, and each unlocking more possibilities. We are for example getting:
* No-autority enforcement of contracts (Ethereum).
* A distributed computation (operating) system (EOS).
* Decentralised finance, for example lending platforms (AAVE).
* Cash-like payment system suitable for real-world payments (Monero).
We're only eleven years in so it's a bit too early to say if it's all rubbish or if it will change the world.
Now, the very first implementation (Bitcoin) kinda sucks, like most technologies in their first versions. But there are newer generations, each more interesting, and each unlocking more possibilities. We are for example getting:
* No-autority enforcement of contracts (Ethereum).
* A distributed computation (operating) system (EOS).
* Decentralised finance, for example lending platforms (AAVE).
* Cash-like payment system suitable for real-world payments (Monero).
We're only eleven years in so it's a bit too early to say if it's all rubbish or if it will change the world.
Bitcoin is over a decade old by now. It’s certainly not become a revolutionary technology and is not in its infancy.
Fully agree, I bet somebody will reply that Bitcoin is like the early internet soon...
https://davidgerard.co.uk/blockchain/2018/04/05/debunking-bu...
https://davidgerard.co.uk/blockchain/2018/04/05/debunking-bu...
Do you have any idea about what 'finance' is? Shuffling money around is not finance.
> potentially revolutionary
this seems to mean "not actually revolutionary" in practice
this seems to mean "not actually revolutionary" in practice
The problem that you and others like you have is you don't have any BTC and now are struggling to understand why anyone else would have any. I think it's mostly from the fact you didn't get any when you should have and now there is no reason as it's expensive and again you don't have any. Simple really.
Please don't cross into personal attack in HN comments, or take HN threads further into flamewar. We're trying to avoid that here.
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
I think this is a heavy-handed reply. His personal lack of an answer to the question, "what's the value," is presumably why he didn't buy in at the beginning.
Also, even if he had two or three Bitcoin it would be a nice windfall, but not an earth-shattering event that would cause eternal jealousy.
Also, even if he had two or three Bitcoin it would be a nice windfall, but not an earth-shattering event that would cause eternal jealousy.
People are asking a pretty basic question on a supposedly technological forum. It would be like me asking what's the point of Linux, the OS problem was solved by (D)OS(X), or something similar. I'll admit the reply is heavy handed but there is a reason Bitcoin exists and people are using it so when do these questions stop?
Let's say you have a side hustle of selling shoplifted Tide Pods via Craigslist, and you want to use digital payments. In that case it's easy to understand the value of bitcoin. But for the millions of people who have no problem whatsoever making digital transactions via PayPal, Zelle, Venmo, CashApp, ACH, wire, or one of numerous other formats, why go to the trouble of making a whole new currency with corner-case issues (price volatility, potential cryptographic weakness, energy cost, early adopter advantage, and so forth) when the dollar is fairly stable? It's not a basic question, IMO it's a deep one.
The dollar works plenty good for digital transactions, and with the right bank I can withdraw money anywhere in the world at a reasonable exchange rate without paying additional fees. Credit cards work worldwide. If you pay your taxes and don't partake in illegal commerce, it seems like a fairly good system. I can get around the inflation risk to some degree by buying commodities, securities, or property, and convert to cash when I need it.
I don't think the questions ever stop. We're questioning the dollar and yet we've used it for centuries. We're questioning gold and yet we've used it for millennia. We don't know what the world's cryptocurrency of choice will be in the long term, we don't know who we're helping by bidding up bitcoin (Musk? Cartels? Nerds from MIT and CalTech?), and we don't know the impact that future energy and computing technologies will have on cryptocurrencies.
It also appears to me that anyone who buys and holds bitcoin would make money in a global system that uses bitcoin, because (A) money cannot be created beyond a set limit but can be destroyed/lost, (B) the marginal cost of use goes up as more participants get involved, and (C) inflows to an asset with limited supply always bid up the price because of basic economics. What makes a currency good is that its price stays stable relative to the commodities for which it is used to transact. When the time value of money far exceeds the time value of human activity, you get deflation and that's a poor characteristic for a currency because it punishes those economic participants who are active.
The dollar works plenty good for digital transactions, and with the right bank I can withdraw money anywhere in the world at a reasonable exchange rate without paying additional fees. Credit cards work worldwide. If you pay your taxes and don't partake in illegal commerce, it seems like a fairly good system. I can get around the inflation risk to some degree by buying commodities, securities, or property, and convert to cash when I need it.
I don't think the questions ever stop. We're questioning the dollar and yet we've used it for centuries. We're questioning gold and yet we've used it for millennia. We don't know what the world's cryptocurrency of choice will be in the long term, we don't know who we're helping by bidding up bitcoin (Musk? Cartels? Nerds from MIT and CalTech?), and we don't know the impact that future energy and computing technologies will have on cryptocurrencies.
It also appears to me that anyone who buys and holds bitcoin would make money in a global system that uses bitcoin, because (A) money cannot be created beyond a set limit but can be destroyed/lost, (B) the marginal cost of use goes up as more participants get involved, and (C) inflows to an asset with limited supply always bid up the price because of basic economics. What makes a currency good is that its price stays stable relative to the commodities for which it is used to transact. When the time value of money far exceeds the time value of human activity, you get deflation and that's a poor characteristic for a currency because it punishes those economic participants who are active.
First, you have a bunch of ideas that you're trying compose into an argument, you were not successful.
Second, Bitcoin solves the problem of digital exchange between non-trusting parties, this is a very hard problem that didn't have a solution before Bitcoin came around, that's why it exists and it's useful.
Above, you do weave U$ Dollar throughout, let's use it to explain Bitcoin. Currently the trust-less exchange is solved by holding assets which others trust. This means that if you have $100 you can show it other people and they can see that you have it and test that it is really $100. The reason $100 is $100 is because USA makes sure that is true. Now, non-US people are not the happiest that the US dollar is effectively the world currency. This has roots in WW*, Bretton Woods, etc., beside the point for our needs. The biggest problem is that US controls the dollar supply, just in the last year the supply has increased by ~25%, making everyone else'$ cheaper. If instead the world currency was Bitcoin or some other cryptocurrency, one entity would not control the supply, the supply would be controlled by algorithms, which are easier to understand than some old white men. To me the last point, about algorithms, is enough to make bitcoin useful. No matter how much we fight it the world is going digital, and why would money be an exception?
Second, Bitcoin solves the problem of digital exchange between non-trusting parties, this is a very hard problem that didn't have a solution before Bitcoin came around, that's why it exists and it's useful.
Above, you do weave U$ Dollar throughout, let's use it to explain Bitcoin. Currently the trust-less exchange is solved by holding assets which others trust. This means that if you have $100 you can show it other people and they can see that you have it and test that it is really $100. The reason $100 is $100 is because USA makes sure that is true. Now, non-US people are not the happiest that the US dollar is effectively the world currency. This has roots in WW*, Bretton Woods, etc., beside the point for our needs. The biggest problem is that US controls the dollar supply, just in the last year the supply has increased by ~25%, making everyone else'$ cheaper. If instead the world currency was Bitcoin or some other cryptocurrency, one entity would not control the supply, the supply would be controlled by algorithms, which are easier to understand than some old white men. To me the last point, about algorithms, is enough to make bitcoin useful. No matter how much we fight it the world is going digital, and why would money be an exception?
That doesn't really answer the question "what is the point of it" unless the only point is to create wealth for the people who do have it.
"what is the point of it"
From bitcoin wiki: Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
The trustless exchange part was worked on for a long time and Bitcoin came around and solved it. This is why questions like that are completely ignorant of anything technology and really makes me question the instigator's motives.
Edit: adding a link to an answer provided to the same question on this site https://news.ycombinator.com/item?id=25256738
The trustless exchange part was worked on for a long time and Bitcoin came around and solved it. This is why questions like that are completely ignorant of anything technology and really makes me question the instigator's motives.
Edit: adding a link to an answer provided to the same question on this site https://news.ycombinator.com/item?id=25256738
I think you're seriously misrepresenting the questioner. People who question the point of it understand that the aim is to be currency. Calling people questioning the point idiots who don't understand technology doesn't answer the question either, it just makes you look like a dick. You're on a forum where the majority of posters have at least a higher-than average understanding of current technologies, so I'm skeptical that you have a much deeper understanding than most of them. And even if that is the case, what you're saying is just rude. There are negative stereotypes surrounding bitcoin enthusiasts that you are playing into very successfully here.
I didn't call anyone any names, as opposed to what you are doing, and I will not.
In any case Bitcoin is here to stay and you will own it, either directly or indirectly, but it's not going away. So questioning it's idea of existence doesn't further the conversation, I'm sorry, but it really makes the questioner seem ignorant. It's the same question being asked since 2011, when does it stop?
Nobody's questioning it exists. This is a wilful misrepresentation of why people have issues with it -- the reason why I got pissed with the things you've written is that they match the stereotype bitcoin enthusiast speil almost to a tee. I can understand why it exists, and what the value proposition is, and what it promises, and still question what the point of it is because there are huge glaring issues with it.
> when does it stop
It doesn't, because of the very obvious problems with it as a currency vs. existing currencies. If those magically go away, then people will stop questioning it. As it is, there is very little sign of that ocurring.
There is no disconnect there, no hidden motives. People use currency. Do the benefits of bitcoin outweigh what seem like huge downsides? Quoting the technical underpinnings of it as if it's some slam dunk -- how do you seriously think this persuades people?
Edit: also this
> The problem that you and others like you have is you don't have any BTC and now are struggling to understand why anyone else would have any. I think it's mostly from the fact you didn't get any when you should have and now there is no reason as it's expensive and again you don't have any. Simple really.
This reads as the reason people people have problems with it is envy, that they didn't buy some before it skyrocketed in value, and they now can't buy any.
> when does it stop
It doesn't, because of the very obvious problems with it as a currency vs. existing currencies. If those magically go away, then people will stop questioning it. As it is, there is very little sign of that ocurring.
There is no disconnect there, no hidden motives. People use currency. Do the benefits of bitcoin outweigh what seem like huge downsides? Quoting the technical underpinnings of it as if it's some slam dunk -- how do you seriously think this persuades people?
Edit: also this
> The problem that you and others like you have is you don't have any BTC and now are struggling to understand why anyone else would have any. I think it's mostly from the fact you didn't get any when you should have and now there is no reason as it's expensive and again you don't have any. Simple really.
This reads as the reason people people have problems with it is envy, that they didn't buy some before it skyrocketed in value, and they now can't buy any.
I'll respond only to the last part. My post was made in fun and I didn't mean to offend anyone, maybe accost them a bit. The initial poster I was replying too did say that they had access to bitcoin and could/should have kept some as do most of us hence the post. The subsequent replying was made to explain, poorly it seems, why it's useful.
you can just buy satochis, dont think about the price of bitcoin, think about how much money you want to invest.
Do you understand what the purpose of money is? It allows you to abstract your work into a (near) universally acceptable intermediary.
For instance: I am great at writing web APIs in golang, but unfortunately for me the people coming to my house today to deliver a dumpster (we're doing some spring cleaning) do not accept "golang apis" as a method of payment.
So I find somebody wants "golang APIs", agree to exchange with them for some money, and then use that money to pay the dumpster guys.
Money is a hugely innovative concept which has obviously driven a huge amount of innovation (now you can do work like "write golang APIs" instead of only doing things like "grow potatoes").
Does that help you understand what the point of bitcoin is?
For instance: I am great at writing web APIs in golang, but unfortunately for me the people coming to my house today to deliver a dumpster (we're doing some spring cleaning) do not accept "golang apis" as a method of payment.
So I find somebody wants "golang APIs", agree to exchange with them for some money, and then use that money to pay the dumpster guys.
Money is a hugely innovative concept which has obviously driven a huge amount of innovation (now you can do work like "write golang APIs" instead of only doing things like "grow potatoes").
Does that help you understand what the point of bitcoin is?
This doesn't really answer why bitcoin though. Because we already have money that we've been using for a good long time.
The problem is that money now is issued by governments. Governments are on average only governing one country, although sometimes more as with the Euro. In other words, it is not universal, so if you want to exchange some money for goods and services then you need to find the right money for the country the service is in.
Globalisation means we often want goods and services from other countries. But then we always need to find the right money for that country or use some de facto universal money like USD. But then you're always exchanging money or letting the US government (who control USD) exert some control over you, even though you could be outside the US buying a good/service from a non-US entity.
Bitcoin gives you a universal money. Once you have it, you can exchange it for goods or services without caring about where the recipient is. And you don't have to worry that you've now created a universal money that is controlled by one non-universal entity like the USA.
At least that is the idea
The problem is that money now is issued by governments. Governments are on average only governing one country, although sometimes more as with the Euro. In other words, it is not universal, so if you want to exchange some money for goods and services then you need to find the right money for the country the service is in.
Globalisation means we often want goods and services from other countries. But then we always need to find the right money for that country or use some de facto universal money like USD. But then you're always exchanging money or letting the US government (who control USD) exert some control over you, even though you could be outside the US buying a good/service from a non-US entity.
Bitcoin gives you a universal money. Once you have it, you can exchange it for goods or services without caring about where the recipient is. And you don't have to worry that you've now created a universal money that is controlled by one non-universal entity like the USA.
At least that is the idea
No, because Bitcoin is not money, and if the only way you can talk about it is by referring to a different concept it's clear that you don't understand Bitcoin either.
what does this have to do with cryptocurrency?
You already do that now. its called a job.
You already do that now. its called a job.
None of my customers pay me in potatoes, dumpsters, or iced coffee/chocolate chip scones. They pay my in money, which I then give to the person at the coffee shop and she gives me the coffee.
And then the coffee shop people give that money to their landlord, the power company, the coffee bean people, and also their employees.
---
It seems like such bad faith arguments to claim that bitcoin doesn't have a use. It has an obvious use. HNers might not agree that it solves the problem it claims to solve, but if that's what you think then argue that. Don't pretend like you "don't understand" what the purpose is.
And then the coffee shop people give that money to their landlord, the power company, the coffee bean people, and also their employees.
---
It seems like such bad faith arguments to claim that bitcoin doesn't have a use. It has an obvious use. HNers might not agree that it solves the problem it claims to solve, but if that's what you think then argue that. Don't pretend like you "don't understand" what the purpose is.
yes thank you, im aware of how money is different than bartering. What does this have to do with cryptocurrency?
>crypto currency
Bitcoin is a crypto CURRENCY. It IS money.
Bitcoin is a crypto CURRENCY. It IS money.
Bitcoin calls itself money, but that doesn't make it money any more than calling my cat currency would make it money.
As far as governments have ruled in tax law, Bitcoin and other cryptocurrencies are not treated as foreign currency.
As far as governments have ruled in tax law, Bitcoin and other cryptocurrencies are not treated as foreign currency.
People use it as money, so it is money. If people used acorns as money, then acorns would be money.
You don't need to complicate this further.
You don't need to complicate this further.
That sounds very impressive, until you realize that Argentina uses slightly more energy than a single hydroelectric power station like the Itaipu Dam (103 TWh/year).
So comparing Bitcoin to Argentina really is more a testament how little electricity Argentina uses. In people's mind, a "single dam" sounds much, much less impressive than a "whole country".
So comparing Bitcoin to Argentina really is more a testament how little electricity Argentina uses. In people's mind, a "single dam" sounds much, much less impressive than a "whole country".
And as Bitcoins get more scarce and get adopted by more and more banks and companies as reserves, the value of mining rewards is only going to continue rising, until Bitcoin will consume more electricity than the rest of the world combined. (Around the time it is worth $1.2 Million a coin.)
Change my mind.
Bitcoin rewards miners in Bitcoin, which is the ultimate deflationary “store of value”, and has the world mindshare as such. Even if a network arose that was better in every technological way, if it was a “sidechain” to Bitcoin, then BTC would just be locked up as people migrated to that network, so “unstaked” Bitcoins on the original network would become even more scarce, thus mining rewards would go up even more. Bitcoin would be a store of value / collectible just like gold, except its supply would always be shrinking and mining rewards rising.
PS: Consider I am right. How would governments even begin to stop it, if this use of electricity would net the provider more profit than powering a home?
Change my mind.
Bitcoin rewards miners in Bitcoin, which is the ultimate deflationary “store of value”, and has the world mindshare as such. Even if a network arose that was better in every technological way, if it was a “sidechain” to Bitcoin, then BTC would just be locked up as people migrated to that network, so “unstaked” Bitcoins on the original network would become even more scarce, thus mining rewards would go up even more. Bitcoin would be a store of value / collectible just like gold, except its supply would always be shrinking and mining rewards rising.
PS: Consider I am right. How would governments even begin to stop it, if this use of electricity would net the provider more profit than powering a home?
"the value of mining rewards is only going to continue rising" is not consistent with the design of Bitcoin. There is a finite number of BTC left to mine (15% of the eventual total?) and the amount of BTC received from mining is designed to halve every four years, so in the long run BTC processing will have to be funded more by transaction costs and less so by mining.
"How would governments even begin to stop it" - I don't thing that governments will choose to try it, but if they did want to do so, a simple ban on all sale and barter in BTC would work. It wouldn't stop all trade, but making exits difficult would reduce investment interest sufficiently to get a huge decrease in price, especially since current price seems mostly defined by "store of value" i.e. investment arguments, not based on usefulness for transactions. If many investors can't exit, then it ceases to be a good store of value for them, reducing the demand.
For example, Tesla $1.5B purchase was a big pressure upwards; but if it's known that no such purchases are ever coming again, and that Tesla's holding is now worthless (unlike some small-scale drug trader, a US company like Tesla can't really use a black market or person-to-person transactions to exhange it for anything), that would kill the short-term price; this would mean that the mining costs much more than their electricity costs (there is an inherent lag in block difficulty adjustments that's potentially huge in case of a rapid slowdown in mining rate) which may cause many miners to cease mining.
"How would governments even begin to stop it" - I don't thing that governments will choose to try it, but if they did want to do so, a simple ban on all sale and barter in BTC would work. It wouldn't stop all trade, but making exits difficult would reduce investment interest sufficiently to get a huge decrease in price, especially since current price seems mostly defined by "store of value" i.e. investment arguments, not based on usefulness for transactions. If many investors can't exit, then it ceases to be a good store of value for them, reducing the demand.
For example, Tesla $1.5B purchase was a big pressure upwards; but if it's known that no such purchases are ever coming again, and that Tesla's holding is now worthless (unlike some small-scale drug trader, a US company like Tesla can't really use a black market or person-to-person transactions to exhange it for anything), that would kill the short-term price; this would mean that the mining costs much more than their electricity costs (there is an inherent lag in block difficulty adjustments that's potentially huge in case of a rapid slowdown in mining rate) which may cause many miners to cease mining.
> Change my mind.
Well, personally, I'm still convinced Bitcoin is going to crash at some point. It doesn't work well as an actual currency because transfer times/fees are too high.
I don't know if that will happen in one year or 20 years though.
Well, personally, I'm still convinced Bitcoin is going to crash at some point. It doesn't work well as an actual currency because transfer times/fees are too high.
I don't know if that will happen in one year or 20 years though.
But that’s not it use anymore. Yes it was called a Peer to Peer cash system but it failed at that. Somewhere around 2013 the narrative shifted to it being a store of value. And that has stuck.
It is the ultimate store of value.
You think people will let governments destroy their store of value so that the world can use electricity for other uses? Let’s explore that shall we.
One third of the world farmland is desertified, today.
Insects are dwindling and other species are experiencing an extinction on unprecedented scales today.
Fossil fuels are being extracted at rates that are not stopping anytime soon. We never switched to electric cars yet.
We couldn’t even switch to biodegradeable plastic and instead polluted all the bodies of water on earth.
You really think humanity will be able to stop this runaway economic effect designed to get bigger and bigger until it consumes the world’s use of electricity? Why is this any different?
PS: with exponential growth, by the time you note the electric use is one quarter of the world, it’s too late.
It is the ultimate store of value.
You think people will let governments destroy their store of value so that the world can use electricity for other uses? Let’s explore that shall we.
One third of the world farmland is desertified, today.
Insects are dwindling and other species are experiencing an extinction on unprecedented scales today.
Fossil fuels are being extracted at rates that are not stopping anytime soon. We never switched to electric cars yet.
We couldn’t even switch to biodegradeable plastic and instead polluted all the bodies of water on earth.
You really think humanity will be able to stop this runaway economic effect designed to get bigger and bigger until it consumes the world’s use of electricity? Why is this any different?
PS: with exponential growth, by the time you note the electric use is one quarter of the world, it’s too late.
> But that’s not it use anymore. Yes it was called a Peer to Peer cash system but it failed at that. Somewhere around 2013 the narrative shifted to it being a store of value. And that has stuck.
Yep, a "store of value" created out of thin air, just like tulip petals! I don't expect it to last myself.
Yep, a "store of value" created out of thin air, just like tulip petals! I don't expect it to last myself.
And why not?
What backs gold? It is more durable than tulip petals
The more people buy Bitcoin as reserves the more it IS reserves. It is a network effect, man.
That’s how languages and cultures work too.
What backs gold? It is more durable than tulip petals
The more people buy Bitcoin as reserves the more it IS reserves. It is a network effect, man.
That’s how languages and cultures work too.
Bitcoin is barely two decades old, whereas gold has been used for centuries as a way to means of storing wealth. Gold was literally used as currency for much of that time, and today the price of gold is far more stable than Bitcoin.
None of that means Bitcoin couldn't be the next gold, I just think the odds are overwhelmingly stacked against it.
None of that means Bitcoin couldn't be the next gold, I just think the odds are overwhelmingly stacked against it.
> Bitcoin, which is the ultimate deflationary “store of value”
Inflating the supply of bitcoins is a value in a config file + buy-in from miners, who are the ones with all the capital to benefit from inflating the supply. Unsure why you think the miners are just going to go home when it’s all mined and sell off their expensive equipment at firesale prices when they can collaborate to increase the amount of Bitcoin?
Inflating the supply of bitcoins is a value in a config file + buy-in from miners, who are the ones with all the capital to benefit from inflating the supply. Unsure why you think the miners are just going to go home when it’s all mined and sell off their expensive equipment at firesale prices when they can collaborate to increase the amount of Bitcoin?
Miners benefit from deflating the supply. If there were only 50,000 bitcoins and the rest was locked up in sidechains, then every mining reward would be worth far more. They would like more sidechains to Bitcoin.
(Somewhere Joel Spolsky is yelling: “Commoditize your complements!”)
(Somewhere Joel Spolsky is yelling: “Commoditize your complements!”)
> Inflating the supply of bitcoins is a value in a config file + buy-in from miners
Please learn about how consensus rules work.
"The consensus rules are the specific set of rules that all Bitcoin full nodes will unfailingly enforce when considering the validity of a block and its transactions. For example, the Bitcoin consensus rules require that blocks only create a certain number of bitcoins. If a block creates more bitcoins than is allowed, all full nodes will reject this block, even if every other node and miner in the world accepts it." [0]
Because users must consent to run full-node software with a particular version of consensus rules, miners cannot simply change the rules. This was shown in 2017 with Segwit2x and UASF(User Activated Soft Fork).[1]
In other words,
"If securing Bitcoin requires consensus on what Bitcoin is, and Bitcoin is a database of values assigned to keys, and Bitcoin has a protocol for reassignment of keys, then securing Bitcoin can only be done by … your node!" [2]
> [Miners] are the ones with all the capital to benefit from inflating the supply.
You're not thinking clearly about supply and demand. Because bitcoin has a fixed supply (21M), its price movement is a pure result of demand. If someone were to start inflating the supply, the price would drop, devaluing the coins for everyone including those doing the inflation because created coins are instantly visible to everyone. (Incidentally, this also creates a disincentive for Satoshi to ever move his "lost" 1M BTC. Moving them would instantly make them appear available to the market/network and be a massively inflationary event. Prices would immediately drop in response to this perceived increase in supply.)
> Unsure why you think the miners are just going to go home when it’s all mined and sell off their expensive equipment at firesale prices when they can collaborate to increase the amount of Bitcoin?
Miners work for the block reward (which halves every four years) but also for transaction fees (an auction in which you bid for blockspace for your transactions). The question for the distant future is: will transaction fees be sufficient to ensure the security of the network?
[0]: https://en.bitcoin.it/wiki/Consensus
[1]: https://bitcoinmagazine.com/articles/bitcoin-independence-da...
[2]: https://medium.com/bitcoinerrorlog/who-secures-bitcoin-95b19...
Please learn about how consensus rules work.
"The consensus rules are the specific set of rules that all Bitcoin full nodes will unfailingly enforce when considering the validity of a block and its transactions. For example, the Bitcoin consensus rules require that blocks only create a certain number of bitcoins. If a block creates more bitcoins than is allowed, all full nodes will reject this block, even if every other node and miner in the world accepts it." [0]
Because users must consent to run full-node software with a particular version of consensus rules, miners cannot simply change the rules. This was shown in 2017 with Segwit2x and UASF(User Activated Soft Fork).[1]
In other words,
"If securing Bitcoin requires consensus on what Bitcoin is, and Bitcoin is a database of values assigned to keys, and Bitcoin has a protocol for reassignment of keys, then securing Bitcoin can only be done by … your node!" [2]
> [Miners] are the ones with all the capital to benefit from inflating the supply.
You're not thinking clearly about supply and demand. Because bitcoin has a fixed supply (21M), its price movement is a pure result of demand. If someone were to start inflating the supply, the price would drop, devaluing the coins for everyone including those doing the inflation because created coins are instantly visible to everyone. (Incidentally, this also creates a disincentive for Satoshi to ever move his "lost" 1M BTC. Moving them would instantly make them appear available to the market/network and be a massively inflationary event. Prices would immediately drop in response to this perceived increase in supply.)
> Unsure why you think the miners are just going to go home when it’s all mined and sell off their expensive equipment at firesale prices when they can collaborate to increase the amount of Bitcoin?
Miners work for the block reward (which halves every four years) but also for transaction fees (an auction in which you bid for blockspace for your transactions). The question for the distant future is: will transaction fees be sufficient to ensure the security of the network?
[0]: https://en.bitcoin.it/wiki/Consensus
[1]: https://bitcoinmagazine.com/articles/bitcoin-independence-da...
[2]: https://medium.com/bitcoinerrorlog/who-secures-bitcoin-95b19...
SpaceX could probably help usher in a new age where we have mining nodes in space, big solar arrays (100 or so) powering a small 100-GPU cluster or ASIC cluster....
It would be far cheaper and easier to do this on Earth. There's plenty of sunny desert, heat dissipation is much easier, broken things can be repaired, etc.
ya but heat would dissipate into space and not contribute to global warming?
Dissipating heat into space is very challenging (vacuum makes a great insulator). On Earth the solar energy is arriving here already, so converting it to electricity and using it to perform calculations won't directly contribute to global warming.
In capitalism, most players in the economy do not make decisions based on this
Combined world governments going after miners is the best thing could happen to Bitcoin. Difficulty would drop allowing people to mine from general purpose computers again, which is a huge incentive. Then things will scale up again.
The toothpaste is out of the tube. Nothing can be done.
The toothpaste is out of the tube. Nothing can be done.
How does it scale when a block can only contain about 3,000 transactions?
It doesn't. Bitcoins themselves will eventually be migrated of the bitcoin network so that they can be used with the rest of the defi ecosystem.
It won’t matter because the remaining “unstaked” bitcoins will be worth even more so all mining rewards will be worth even more - get it?
It doesn’t. Proof of work is the wrong architecture. We started https://intercoin.org to solve the problem. Others started other projects. But it doesn’t do anything to demand for Bitcoin because nearly all of it is for Bitcoin as a store of value and deflationary investment that will go up, up, up.
Yes it was called a cash system in the original whitepaper - but somewhere around 2013 the narrative shifted from Peer to Peer Cash to Store of Value. And it has stuck. This is a copout but it works! Bitcoin has all the features to be a great store of value and nothing more...
Bitcoin is now a store of value and you dont need it to scale if once in a while someone wants to move $50K from their savings account to their checking account to actually use. They can also have Nexo, BitPay etc as debit cards backed by BTC reserves.
So why do you need Bitcoin to be a good currency too?
Yes it was called a cash system in the original whitepaper - but somewhere around 2013 the narrative shifted from Peer to Peer Cash to Store of Value. And it has stuck. This is a copout but it works! Bitcoin has all the features to be a great store of value and nothing more...
Bitcoin is now a store of value and you dont need it to scale if once in a while someone wants to move $50K from their savings account to their checking account to actually use. They can also have Nexo, BitPay etc as debit cards backed by BTC reserves.
So why do you need Bitcoin to be a good currency too?
All the people defending BTC because they a vested interest is hilarious. Ahhhh yes lets develop clean energy solutions to mine it before solving all the actual other clean power needs in the world.
Can't wait for the (American/Chinese/Russian) secret 4000 qubit computer to make a mockery of that ledger and all the culty idiots who bought into it.
There's a 0.9+ correlation between Tesla and BTC. If we're not near the end of the bubble, we're definitely not more than a few cycles away.
There's a 0.9+ correlation between Tesla and BTC. If we're not near the end of the bubble, we're definitely not more than a few cycles away.
I like your ideas and username
PC gaming uses more energy than Switzerland, estimated 75 billion kilowatt hours.
https://grist.org/article/video-games-consume-more-electrici...
https://grist.org/article/video-games-consume-more-electrici...
So on one hand Elon Musk is buying bitcoins which consumes so much energy and on the other hand the same Elon Musk is promoting "green energy" with Teslas...
This comment will probably get buried but I wish someone would make something like coinmarketcap that showed how much energy was being used to secure each cryptocurrency.
If there were solid metrics, it'd help people who want to be more conscientious about where they put their money to actually do that.
Something like "coincarboncap".
A lot of cryptocurrencies don't use even a fraction of the energy bitcoin uses but there's no index to show that, so even if there were incentives for people to invest in energy efficient cryptocurrencies, how would they know which ones to go for?
The closest thing I can think of is whattomine. Maybe they'd be best equipped to build something like this, although I'm not sure if they'd have an interest in it.
If there were solid metrics, it'd help people who want to be more conscientious about where they put their money to actually do that.
Something like "coincarboncap".
A lot of cryptocurrencies don't use even a fraction of the energy bitcoin uses but there's no index to show that, so even if there were incentives for people to invest in energy efficient cryptocurrencies, how would they know which ones to go for?
The closest thing I can think of is whattomine. Maybe they'd be best equipped to build something like this, although I'm not sure if they'd have an interest in it.
Does anyone know how much energy the global gold mining industry uses?
Why does that matter? Nobody uses the gold standard anymore.
Both gold and Bitcoin are stores of value with high production costs, Bitcoin gets a lot of heat for its electricity consumption but I haven’t seen anyone ask the same for gold.
That's ridiculous. Gold is used for jewelry (arguably the same thing as money, okay), electronics, medicine, as a food additive, glass coloring, photography, satellite coating, radio telescopy, aircraft cockpit windows... try opening Wikipedia some time.
I can't quickly find what percentage of gold is purely mined for the purposes of being locked up in a vault somewhere as value store. If it is a sizable majority and it uses as much power as entire countries, then we should make this practice illegal as well.
But that is two big "if"s that you aren't answering (you're just asking questions, hinting at "see this other thing is also bad!", without adding anything to the conversation). And even if you would then it still doesn't mean that we should just carry on with the easier-to-stop-because-it-has-no-practical-uses method.
FYI I used to own Bitcoin. I also made money with it, and I bought products with it. Back in 2013. I know the technology deeply, as a tech nerd with too much time (back then) this was great and I learned many things about the tech as well as economics. But it has since become clear that the only purpose it can realistically fulfill is being an investment scheme, which you could also do without proof of work. Anyone who still uses this is either (and I mean this genuinely) blinded by the money they're hoping to make, waving away arguments using logical fallacies, or misinformed.
I can't quickly find what percentage of gold is purely mined for the purposes of being locked up in a vault somewhere as value store. If it is a sizable majority and it uses as much power as entire countries, then we should make this practice illegal as well.
But that is two big "if"s that you aren't answering (you're just asking questions, hinting at "see this other thing is also bad!", without adding anything to the conversation). And even if you would then it still doesn't mean that we should just carry on with the easier-to-stop-because-it-has-no-practical-uses method.
FYI I used to own Bitcoin. I also made money with it, and I bought products with it. Back in 2013. I know the technology deeply, as a tech nerd with too much time (back then) this was great and I learned many things about the tech as well as economics. But it has since become clear that the only purpose it can realistically fulfill is being an investment scheme, which you could also do without proof of work. Anyone who still uses this is either (and I mean this genuinely) blinded by the money they're hoping to make, waving away arguments using logical fallacies, or misinformed.
Bitcoin every consumption halves every two years since the mining profit halfs. Thus mining bitcoins becomes less profitable and thus more energy efficient over time.
In the other, if the price increases faster than the mining yield drops, efficiency is decreased.
In the other, if the price increases faster than the mining yield drops, efficiency is decreased.
This is incorrect. The mining reward halves every 4 years, but if the price of bitcoin goes up then so does the value of the reward. Also it is a bit of an arms race so more power is required to power more machines,to mine the same number of bitcoin.
Unless BTC changes to a "proof of stake" model like the majority of other new cryptocurrencies that are out there, it will see a large chunk of its marketshare replaced.
There's already a big shift from BTC to more technically sophisticated solutions like Ethereum (ETH).
tThe newest protocols like Cardano (ADA) and Polkadot (DOT) are even more efficient in terms of number of transactions that can be securely handled per second.
Bitcoin also suffers from long wait times because you need to wait for the current block to be finalized. The sheer amount of electricity required just to confirm a transaction is not a viable long term solution for e-commerce.
There's already a big shift from BTC to more technically sophisticated solutions like Ethereum (ETH).
tThe newest protocols like Cardano (ADA) and Polkadot (DOT) are even more efficient in terms of number of transactions that can be securely handled per second.
Bitcoin also suffers from long wait times because you need to wait for the current block to be finalized. The sheer amount of electricity required just to confirm a transaction is not a viable long term solution for e-commerce.
Energy consumption doesn't cause emissions.
Energy production causes emissions.
Reducing consumption (by shaming it, in this case) means less investment in production, because there's less demand. This could slow the green energy transition.
Energy production causes emissions.
Reducing consumption (by shaming it, in this case) means less investment in production, because there's less demand. This could slow the green energy transition.
That makes no sense. We don't have enough renewable electricity yet to replace existing electricity consumers, and 90% of energy consumption is non-electricity and will still need to be switched over to be electric (insofar as we can), let alone if we invent a new waste of electricity in the form of a get-rich-quick-scheme. We don't need more problems.
Don't use proof of work systems, or admit that you're in it for your personal gain and the planet can turn to semi-literal hell for all you care.
Don't use proof of work systems, or admit that you're in it for your personal gain and the planet can turn to semi-literal hell for all you care.
Uh, less consumption also causes less production, maybe you missed that bit?
And historically consumption has not lead to the green energy transition on its own, so it's a bit weird to assume it does it now.
And historically consumption has not lead to the green energy transition on its own, so it's a bit weird to assume it does it now.
I directly call that out: less consumption causes less production, so will reduce investment in production.
If we're talking about emissions of bitcoin we're already talking about second and third order effects, so let's follow it all the way through.
If we're talking about emissions of bitcoin we're already talking about second and third order effects, so let's follow it all the way through.
It's worth noting that current bitcoin capitalization ($600B) is also more than Argentina GDP ($445B), so it can be said that bitcoin users constitute a rather significant (bit)nation on this planet.
Does anyone have any figures on what regular banking systems use for accepted/official currencies? I feel like this has blown up so much that it makes sense to compare and contrast.
Argentina has 45 million inhabitants. Bitcoin has like 300k transactions per day. Every person in Argentina could do three transactions per year (300e3/45e6×365) and it would already exceed the transaction count of Bitcoin. Yet Argentina's banking system uses less energy than Argentina, and so their banking system must be more efficient than Bitcoin.
That's assuming that a transaction comparison even makes sense, which it doesn't really because:
Bitcoin is not a currency. People use it as a way of getting rich, which they could also do with any other currency by just having a limited number of numbered paper bills, some guarantee that no more will ever be printed (e.g. agree that nobody will use a bill number higher than 10 million), and publishing on a forum who owns a specific bill number. It doesn't need proof-of-work to function as an investment scheme.
That's assuming that a transaction comparison even makes sense, which it doesn't really because:
Bitcoin is not a currency. People use it as a way of getting rich, which they could also do with any other currency by just having a limited number of numbered paper bills, some guarantee that no more will ever be printed (e.g. agree that nobody will use a bill number higher than 10 million), and publishing on a forum who owns a specific bill number. It doesn't need proof-of-work to function as an investment scheme.
Bitcoin provides very few of the services that regular banking systems do, and to a far, far smaller audience. Unless that's taken into account, such a comparison is meaningless.
I doubt counting this per transaction volume will yield close results, mining is computation intensive by design.
Absolutes are a curiosity, but comparing those is not constructive imho
I have the idea that banking for a country the size of Argentina uses much, much less energy than bitcoin mining, yet serves more people than bitcoin.
I think the real value in Bitcoin is its immutability. I don't think there's any piece of information in the world as immutable as the first bitcoin block mined by satoshi.
This property is what powers amazing projects like OpenTimeStamps (https://opentimestamps.org/), this will become an essential tool for notaries all around the world, seriously!, and this has nothing to do with number of transactions, this scales to O(1) (you only need one transaction to prove as many things as there needs to be proved). Previous to bitcoin existence I don't think there was ever a distributed way of proving a piece of information existed previous to X, and even if there was, it was probably centralized or much much MUCH weaker than bitcoin. There's just no replacement, not even a million years as effective as bitcoin is for this, if I'm wrong please tell me! I want to know!
Most people here in favor of bitcoin argue about inflation, I understand the reasoning, and I'm from Venezuela, I pretty sure understand that value, but that's just missing the point, immutability >>> inflation protection.
And if we go to the smart-contracts terrain, that's a whole other world of very diverse and unexplored possibilities of values
This property is what powers amazing projects like OpenTimeStamps (https://opentimestamps.org/), this will become an essential tool for notaries all around the world, seriously!, and this has nothing to do with number of transactions, this scales to O(1) (you only need one transaction to prove as many things as there needs to be proved). Previous to bitcoin existence I don't think there was ever a distributed way of proving a piece of information existed previous to X, and even if there was, it was probably centralized or much much MUCH weaker than bitcoin. There's just no replacement, not even a million years as effective as bitcoin is for this, if I'm wrong please tell me! I want to know!
Most people here in favor of bitcoin argue about inflation, I understand the reasoning, and I'm from Venezuela, I pretty sure understand that value, but that's just missing the point, immutability >>> inflation protection.
And if we go to the smart-contracts terrain, that's a whole other world of very diverse and unexplored possibilities of values
A maximum of 178 things on the planet can consume >= to the electricity of Bitcoin.
99.44%/0.56% = ~178 (according to their estimate of 0.56% global use). So for the many comments invoking rhetorical comparisons: Bitcoin mining value per watt can be compared to no more than 178 things on Earth. Are we really saying there are only possibly 178 better uses for global energy than doing double SHA2 for no material value?
Bitcoin is wasteful.
99.44%/0.56% = ~178 (according to their estimate of 0.56% global use). So for the many comments invoking rhetorical comparisons: Bitcoin mining value per watt can be compared to no more than 178 things on Earth. Are we really saying there are only possibly 178 better uses for global energy than doing double SHA2 for no material value?
Bitcoin is wasteful.
You are comparing centralized entities to a decentralized one. I don't believe it's a fair comparison.
Being decentralized does not exempt it from value comparison, each node in the network serves the same purpose and is bound by the same rules.
Well, then we should compare Bitcoin to how much energy is being consumed by every apartment/house in the world, which is more closer to how Bitcoin network operates.
Yes! you can, this is exactly what I am saying. Think about it: 0.56% of electricity _globally_ is consumed by Bitcoin... there are a _max_ of 178 ways to divide up the remaining energy. If you want to designate global housing to be one of the things to compare to, you can do that, now there are <177 things left to compare too (probably quite a bit less).
No matter how you go about categorizing things, it's a very short list for the entire planet. Most of them will bring real material value to everyone's lives (electricity in the home), vs Bitcoin which caters to a tiny minority for the purpose of speculating on intrinsic value - most of the world would not notice or care if it disappeared, I'm willing to bet everything above it on the list would be quite noticeable around the world no matter how you go about categorizing things without overlap.
Most people in this giant thread are either throwing out rhetorical comparisons like icecream, proposing that bitcoin be treated like one of the many unnecessary pleasures in the world, yet in absolute terms it dwarfs every single one of them in energy use while serving orders of magnitude less people making it's relative value for pleasure or otherwise extremely expensive; Or, they (and other articles) are comparing it to the likes of Visa - in very convincing and well thought out ways, yet missing one critical detail: bitcoin does not actually serve the entire planets transactions, no where even near, that's not even it's purpose any more.
I'm essentially saying put it in comparative context without needing to actually compare individual arbitrary things: it's global use of electricity, what is it being used for and by how many, it's not hard to see it being at the extreme end of disproportionate and useless.
No matter how you go about categorizing things, it's a very short list for the entire planet. Most of them will bring real material value to everyone's lives (electricity in the home), vs Bitcoin which caters to a tiny minority for the purpose of speculating on intrinsic value - most of the world would not notice or care if it disappeared, I'm willing to bet everything above it on the list would be quite noticeable around the world no matter how you go about categorizing things without overlap.
Most people in this giant thread are either throwing out rhetorical comparisons like icecream, proposing that bitcoin be treated like one of the many unnecessary pleasures in the world, yet in absolute terms it dwarfs every single one of them in energy use while serving orders of magnitude less people making it's relative value for pleasure or otherwise extremely expensive; Or, they (and other articles) are comparing it to the likes of Visa - in very convincing and well thought out ways, yet missing one critical detail: bitcoin does not actually serve the entire planets transactions, no where even near, that's not even it's purpose any more.
I'm essentially saying put it in comparative context without needing to actually compare individual arbitrary things: it's global use of electricity, what is it being used for and by how many, it's not hard to see it being at the extreme end of disproportionate and useless.
Ok, fair point. But how large is the list? I'd love to see it.
Also, keep in mind, blockchain is in its infancy. I expect things to change dramatically. We'll see a lot of regulations in the future and I believe Bitcoin will be the driving force to shift industries to use green energy.
Also, keep in mind, blockchain is in its infancy. I expect things to change dramatically. We'll see a lot of regulations in the future and I believe Bitcoin will be the driving force to shift industries to use green energy.
Submitted title was "Bitcoin now uses more electricity than Argentina". Please don't editorialize like that—it's against the site guidelines:
"Please use the original title, unless it is misleading or linkbait; don't editorialize."
Cherry-picking a detail, especially a sensational detail, and making that the title, is the main way that people break this guideline, so please don't do that.
If you want to say what you think is important about an article, please do so in the comments. Then your view will be on a level playing field with everyone else's: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
"Please use the original title, unless it is misleading or linkbait; don't editorialize."
Cherry-picking a detail, especially a sensational detail, and making that the title, is the main way that people break this guideline, so please don't do that.
If you want to say what you think is important about an article, please do so in the comments. Then your view will be on a level playing field with everyone else's: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...
The part that impressed me:
"The amount of electricity consumed every year by always-on but inactive home devices in the USA alone could power Bitcoin for 1.8 years"
In other words idle devices in US could power all of Saudi and Netherlands. And all it would take to reduce that is some proper thoughfull design.
"The amount of electricity consumed every year by always-on but inactive home devices in the USA alone could power Bitcoin for 1.8 years"
In other words idle devices in US could power all of Saudi and Netherlands. And all it would take to reduce that is some proper thoughfull design.
I do not understand the motivation behind the alarm of BTC mining energy utilization. In terms of pollution there are much easier targets with obvious net negatives for civilization. I'll give you one example, Teflon is a fantastic product but it does not need to coat every piece of cookware. PFOA's are likely in the blood of every American.
What motivations must one have to not see freeing billions of humans from the control of central banks as something good for humanity? Could the energy consumption of bitcoin mining be merely an engineering problem or are we being asked to eschew bitcoin mining (an cryptocurrencies) for the oh-so energy efficient global financial system?
Something smells...
What motivations must one have to not see freeing billions of humans from the control of central banks as something good for humanity? Could the energy consumption of bitcoin mining be merely an engineering problem or are we being asked to eschew bitcoin mining (an cryptocurrencies) for the oh-so energy efficient global financial system?
Something smells...
The problem with Bitcoin is that POW is an unbounded competition of who can provide more computational power, ie. energy, to represent a consensus. Comparing the energy usage to Argentina, Island or any other country is therefore just a snapshot of the issue: Miners are incentivized to either increase the efficiency of mining, or invest more energy -- and because the latter option is easier, we see power usage rising and rising, without it having any influence on the performance or functionality. The only imaginable bound is all the energy that Humans can dispose of, but I think that if that is even being considered, the means have been mistaken for the goals.
Yesterday I read "What Bloomberg Gets Wrong About Bitcoin’s Climate Footprint" [0] where the writer tries to make a case that you shouldn't compare Bitcoin to VISA, but more to something like the dollar.
While I don't agree with his whole story, for example including the US army in the costs, I thought it was an interesting way of looking at it.
Edit: he also points out that after all Bitcoin has been mined, the electricity use will probably change.
[0] https://finance.yahoo.com/news/bloomberg-gets-wrong-bitcoin-...
Edit: he also points out that after all Bitcoin has been mined, the electricity use will probably change.
[0] https://finance.yahoo.com/news/bloomberg-gets-wrong-bitcoin-...
People/companies who invested significantly in BTC will go to extreme measures to defend their investments. Anything negative said about BTC will be faced with various whataboutisms, how it uses renewables, it's a value store and other marketing talk. It's also pathetic that Tesla and Musk are pledging $100M for a CO2 capture solution, whereas in reality Bitcoin is adding 35MT (mega tons) of CO2 per year.
Perhaps not all of it is entirely "wasted" though. I've largely been able to avoid heating this winter as a result of crypto mining.
A computer pumping ~300W into the air 24/7 is remarkably effective for a small apartment
A computer pumping ~300W into the air 24/7 is remarkably effective for a small apartment
> Perhaps not all of it is entirely "wasted" though. I've largely been able to avoid heating this winter as a result of crypto mining.
I am telling myself the same thing when I play videogames. :-)
I am telling myself the same thing when I play videogames. :-)
That serves a purpose, though. Relaxing after work is perfectly legitimate. Having an investment scheme where you issue numbered bank notes and agree to never use a bank note with a number higher than 21 million, then track on some forum who now owns which bank note, would work the same way as Bitcoin. So long as people keep buying, the price keeps increasing, as it does with Bitcoin. Except that Bitcoin also agrees to burn some Terrawatts for no added benefit.
With a heat pump you'd get about 3x the heat for the same amount of power
But a heat pump gives you about 0x the amount of bitcoin.
But will that heat pump mine bitcoins for me?
No but you could use the money you save on electricity to buy bitcoin if you really want to own it (a better question is why anyone would want to hold bitcoin?).
Electricity is one of the most inefficient ways to heat a dwelling. I think natural gas is still considered to be several times more efficient but I haven’t looked at it in a few years. Of course if you are also getting benefits from the crypto you mined that will offset the cost.
This depends on what you’re measuring the efficiency with respect to though, right? Cost-wise, yeah, natural gas outperforms electricity everywhere I’m aware of. On a grid powered entirely by renewable energy though, there’s a meaningful sense in which the electrical method is “more efficient”
>Electricity is one of the most inefficient ways to heat a
dwelling.
This is not true. Resistive heating is inefficient indeed but not all forms of conversion of electricity are inefficient. Geothermal pumps are very efficient for instance and use electricity only, they can be assisted directly by solar (PV) too.
This is not true. Resistive heating is inefficient indeed but not all forms of conversion of electricity are inefficient. Geothermal pumps are very efficient for instance and use electricity only, they can be assisted directly by solar (PV) too.
Resistive Heating is literally the most efficient form of heating where 100% (ie, all of) of the electric watts you put in are turned into thermal energy.
Doesn't mean that the generator on the other end is efficient but that is a separate concern that can benefit from economies of scale (a big gas turbine would be more efficient than a swarm of small gas ovens producing the same energy).
Doesn't mean that the generator on the other end is efficient but that is a separate concern that can benefit from economies of scale (a big gas turbine would be more efficient than a swarm of small gas ovens producing the same energy).
From thermodynamic standpoint every process is 100% efficient. It is a useless metric. Normally we measure desired energy over certain consumed energy. Heat pumps achieve >100% efficiency.
Furthermore, that 100% efficiency of a resistive heater is only true under very specific high school level circumstances. Under no practical circumstances (e.g. source resistance, reactive load) resistive heater is 100% efficient (though it can get close).
Furthermore, that 100% efficiency of a resistive heater is only true under very specific high school level circumstances. Under no practical circumstances (e.g. source resistance, reactive load) resistive heater is 100% efficient (though it can get close).
From a thermodynamic standpoint, yes, but nobody with an honest face will claim that makes measuring wasted energy as efficiency a bad measurement.
In cases of heating, resistive is 100% efficient as you loose none of the energy put in to waste heat, only effective heat, while a gas oven or heater will loose heat to it's exhaust gases, thereby being less efficient.
I wouldn't say this is "high school level" circumstances. The waste heat in the wires of your house feeding into the heater will also heat up, no?
The only energy lost is outside the system we're trying to measure, hence, not relevant.
In cases of heating, resistive is 100% efficient as you loose none of the energy put in to waste heat, only effective heat, while a gas oven or heater will loose heat to it's exhaust gases, thereby being less efficient.
I wouldn't say this is "high school level" circumstances. The waste heat in the wires of your house feeding into the heater will also heat up, no?
The only energy lost is outside the system we're trying to measure, hence, not relevant.
> as you loose none of the energy put in to waste heat
The mains is normally AC. You WILL lose energy either in AC-DC converter or in reactive load of the heater.
The mains is normally AC. You WILL lose energy either in AC-DC converter or in reactive load of the heater.
Reactive load is dissipated as heat, it does actually do what is intended here.
I think you are conflating active and reactive loads. Reactive load is basically EM, not heat.
Yes, reactive current is still current and any series active load (wiring) will experience that current and heat up. The reactive load itself is "imaginary".
Yes, reactive current is still current and any series active load (wiring) will experience that current and heat up. The reactive load itself is "imaginary".
I'm aware it's EM but I'm pointing out it's dissipated as heat through wire current. I'm aware it's imaginary, doesn't mean it doesn't produce electrical load in the wire.
Besides, for any reasonable heater arrangement, this loss will be negligible compared to any other heating mechanism.
Besides, for any reasonable heater arrangement, this loss will be negligible compared to any other heating mechanism.
Heat pumps are more than 100% efficient though, as they move heat energy, not create it
In theory. Remember that the motor of the heat pump isn’t 100% efficient. It’s still an electric motor. That’s is of course offset by it not generating heat but rather transferring it. So say you’re electric motor is 33% efficient. That means you need a 3x multiplier to break even with a resistive load. And the multiplier depends on the temperature difference between inside and outside. If it’s 70F inside and 50F outside you are golden. If it is -10F outside, you are better off using a resistive load.
I would not call that a 100% efficiency. The efficiency of a heatpump is expressed in Watt per Watt, ie, how many watts of thermal energy are moved per watt of electric energy.
The reason is that simply a heat pump does not convert electrical to thermal energy, so it has no comparable efficiency in that process.
The reason is that simply a heat pump does not convert electrical to thermal energy, so it has no comparable efficiency in that process.
But you need to transmit those watts. Pumping natural gas takes overall less power on the entire ecosystem. That's what people are talking about.
Electrically powered heat pumps also produce >100% efficiency.
Electrically powered heat pumps also produce >100% efficiency.
Heat pumps move heat around, that has to come from somewhere. Their performance is not measured in efficiency but the performance coefficient, which simply measures in Watt per Watt how much energy is moved.
Due to heat pump inefficiencies, they only make sense if you can get like a 3-4x multiplier out of them. Beyond that you break even energy-wise. Basically if it’s -10F outside, your heat pump isn’t going to be cheaper than a resistive heater. On the other hand when it’s 50F outside you do better than 4X.
The point is that I can heat my home by 10 degrees with a heat pump using less energy than electric resistive heating, except in specific conditions where it is too cold outside for the heat pump to function well. When I run my auxiliary heat (electric resistive heating), my bill skyrockets.
Where I lived until like a year ago, it was cheaper to heat via electric heating than the heatpump by about 3-4%, the maintenance costs of the heatpump compressor did the rest after a decade. That is in a temperate region with winter not going below -10 or so.
The matter of discussion is this: "most inefficient ways to heat a dwelling."
Not the fact that conversion of electricity doesn't have make energy disappear.
Not the fact that conversion of electricity doesn't have make energy disappear.
A gas oven is 100% efficient, while a gas turbine is at most 60%.
A gas oven is not 100% efficient. If yours says it is, it's a lie sold to you by gas oven manufacturers. It's 100% efficient compared to some previous oven sold.
Simple proof by example; if the exhaust air of your gas oven is warmer than ambient energy, it cannot be 100% efficient. (A few other laws of thermodynamics also play in here)
A gas turbine has the advantage that it can use higher temperature gradients within, as well as high speeds and other mechanisms to take advantage of larger burnoffs of gas.
A gas turbine is 60% efficient at base load and largely will be able to maintain 60% efficiency while being maintained at this load. A gas oven has a rough efficiency of around 70-90 % in AFUE. AFUE does not measure actual thermal efficiency, you can usually subtract between 10-35% depending on your boiler system, which ends you between... 40-60% just like a gas turbine in a worst case. The better cases of 60-80% are unlikely to be a steady state efficiency and more likely to be achieved if you have a boiler with great heat capacity that can hold onto the heat for longer. The efficiency here is ruined by ignition each time the furnace has to start running.
Turns out you can't cheat thermodynamics, but you can certainly market like you did.
Simple proof by example; if the exhaust air of your gas oven is warmer than ambient energy, it cannot be 100% efficient. (A few other laws of thermodynamics also play in here)
A gas turbine has the advantage that it can use higher temperature gradients within, as well as high speeds and other mechanisms to take advantage of larger burnoffs of gas.
A gas turbine is 60% efficient at base load and largely will be able to maintain 60% efficiency while being maintained at this load. A gas oven has a rough efficiency of around 70-90 % in AFUE. AFUE does not measure actual thermal efficiency, you can usually subtract between 10-35% depending on your boiler system, which ends you between... 40-60% just like a gas turbine in a worst case. The better cases of 60-80% are unlikely to be a steady state efficiency and more likely to be achieved if you have a boiler with great heat capacity that can hold onto the heat for longer. The efficiency here is ruined by ignition each time the furnace has to start running.
Turns out you can't cheat thermodynamics, but you can certainly market like you did.
Electricity is 100% efficient in a resistance heater, in that all the electricity used is turned to heat. However, it is considerably more expensive per unit heat than natural gas, even though you may only get 70-90% efficiency with your boiler or furnace. A heat pump can be even more efficient, though. An electric heat pump can be more than 100% efficient, in that each watt of electricity can be used to move more than 1 watt of heat into your home using the heat pump.
If electricity is made combusting fossil fuels at a power plant at say 40-50% effciency thats the problem.
If your using fossil fuels for heat its more efficient to burn them directly at point needed and capture the heat, rather than use the heat to convert to mechanical then electrical then back into heat.
Air source heat pumps are basically solar assisted, they move heat from outside air into heated space using electricity which also contributes resistive heat in compressor friction. The outside air is heated by the sun.
If your using fossil fuels for heat its more efficient to burn them directly at point needed and capture the heat, rather than use the heat to convert to mechanical then electrical then back into heat.
Air source heat pumps are basically solar assisted, they move heat from outside air into heated space using electricity which also contributes resistive heat in compressor friction. The outside air is heated by the sun.
Can you successfully mine bitcoin with one computer these days?
Well I'm mining conflux [0] not bitcoin.
And yeah that does seem to be "profitable". A 2070 Super card seems to net me a couple of bucks a day...enough to offset the cost. Probably not profitable in the true sense, but hey free heating is a win for personal finances.
[0] https://confluxnetwork.org/
And yeah that does seem to be "profitable". A 2070 Super card seems to net me a couple of bucks a day...enough to offset the cost. Probably not profitable in the true sense, but hey free heating is a win for personal finances.
[0] https://confluxnetwork.org/
It's done with ASICs these days but the general idea of using the waste heat still holds.
I’ve actually seen a few startups which install small servers in homes for heating. The idea is to let the cloud heat your home. I think there’s still a cost to the home owner but their heating bill is reduced.
The economy does not account for the environment, that is what is wrong with the current economic system. Bitcoin did not fix that, but it fixes that there is no central bank other than miners.
The only real reason to be upset about this is carbon emissions. If we could properly price those into the price of energy and products the Bitcoin energy consumption would be a non-topic
Bitcoin (as an investment) is a pyramid scheme. It produces no wealth but has become a powerful means of transferring wealth to the upper layers of the pyramid by growing through the base of the pyramid and recruiting the "greater fools" still out there. It was meant as a currency but has become a investment goal and thus a pyramid scheme. Lets get rid of it, not least for the sake of environment.
Bitcoin also enables ransomware.
>
Bitcoin also enables ransomware.
"Ransomware" has been a thing well before Bitcoin. Instead of Bitcoin, they would convince people to buy moneypaks or various gift cards.
"Ransomware" has been a thing well before Bitcoin. Instead of Bitcoin, they would convince people to buy moneypaks or various gift cards.
Does that work on a large scale (automation), and/or with the large amounts of money like we have seen in recent cases in the news?
Cash also enables ransome.
Bitcoin helps to solve a massive problem (centralization) so I wouldn't say it's not worth it. That said, there are many PoS and DPoS cryptocurrencies to choose from which use almost no electricity and would actually help to decentralize the economy much better than Bitcoin could on its own.
...We can't achieve decentralization by pooling all of the world's money on a single asset. That makes no sense.
...We can't achieve decentralization by pooling all of the world's money on a single asset. That makes no sense.
this is beyond stupidity. first we waste all that material and brainpower in stupid wars where we destroy what we build, and kill those who remember how. and then comes captchas and passwords which steal so many hours from all the humans alive. and now things like this, it really pisses me off tbh. this should be used to find cures to peoples suffering. like the value should be real.
you must have had some REALLY bad captcha experiences to put it on the same scale as war
There's no energy index for the US military industrial complex, the entire US police force--but the primacy of fiat is based on the ability of an authority (for most of the world an authoritarian regime) to protect property through violent cohersion or violent force.
Bitcoin changes that. How much energy is a non-violent property protection commons system worth to humanity?
Bitcoin changes that. How much energy is a non-violent property protection commons system worth to humanity?
The pressures for electricity demand has helped drive research and innovation in renewable energies. In some way, the quest for bitcoin has helped renewables get off the ground.
I personally don't mind this extra demand on our electric production, as I believe it will help get us to a renewable energy sources even sooner.
I personally don't mind this extra demand on our electric production, as I believe it will help get us to a renewable energy sources even sooner.
Are the calculations for traditional finance energy consumption accurate? Do they account for all of the physical devices required? Credit card readers, POS systems, banks, offices, credit cards, mailers, etc... It all requires an immense amount of oil and other resources to keep that machine rolling.
Well, we need to build houses with bitcoin miners for heat generation.
(Idea stolen from guy on reddit who actually did this)
(Idea stolen from guy on reddit who actually did this)
Although I am not a fan of cryptocurrency popularity (mainly because of the potential to destabilize the macro economy), and I don't know much about this company: https://qarnot.com/en/home/, but I find they have a great name suggestive of thermodynamically optimal computing, Carnot being the father of thermodynamic efficiency. Carnot came up with thermodynamics to optimize steam engines, maybe making him the most steampunk of scientists. Thermodynamically optimizing bits is an echo of that for the cyberpunk age.
And who is gonna foot the bill for the mining?
You already pay to heat your house, what if you could be paid to hear your house?
Your house is not necessarily heated with electricity.
Running an ASIC 24/7 would use up like $285 worth of electricity per month if you pay 12 cents for each kilowatt-hour.
Running an ASIC 24/7 would use up like $285 worth of electricity per month if you pay 12 cents for each kilowatt-hour.
> Your house is not necessarily heated with electricity.
But it will be anyway, that's a matter of a few decades now. If you're currently replacing your heating system, I should hope you're switching to electricity.
Though I'd say let's get a heat pump and save like 2/3rds of the energy compared to making the heat from scratch. Depending on the climate you might need some additional heating a few weeks per year, and then yeah sure let's do mining, but that's not a stable basis for a cryptocurrency's security.
But it will be anyway, that's a matter of a few decades now. If you're currently replacing your heating system, I should hope you're switching to electricity.
Though I'd say let's get a heat pump and save like 2/3rds of the energy compared to making the heat from scratch. Depending on the climate you might need some additional heating a few weeks per year, and then yeah sure let's do mining, but that's not a stable basis for a cryptocurrency's security.
So about the normal amount for heating a house here in Canada.
[deleted]
Why don't we care about how dynamic typing contributes to global energy consumption? Runtime overhead for preserving type info in memory (on large quantity of machines) is probably comparable to crypto mining (which is performed on very few machines in comparison).
Because that can't be trivially understood to be wholly unnecessary. Who is to say that it doesn't make programming a lot faster and saves a lot of development time? Conversely, Bitcoin really is unnecessary given all the alternative investment, payment, and timestamping schemes that don't use proof of work.
It's a matter of picking the easiest battles first. Bitcoin -> clearly evil -> why not move to another investment? Why not tax it for its environmental damage, like we tax other things that cause damage that the government later has to clean up?
It's a matter of picking the easiest battles first. Bitcoin -> clearly evil -> why not move to another investment? Why not tax it for its environmental damage, like we tax other things that cause damage that the government later has to clean up?
I had a concept that used crop futures as a virtual currency, deforming a "cloth" with "root growth" to generate randomness.
The money would go to finance food production and the currency would accrue an actual dividend once it reaches the market.
This is just ridiculous! I’m hoping for ETH with proof-of-stake to save the face of crypto soon.
Surely the comparison should be against conventional systems used to store and transfer value? Consider a bank, with its datacentre, branches, and people employed to eyeball and verify transactions, maintain the supporting systems and infra, to begin with...
Forgive my ignorance but aren't there a finite number of bitcoins? A casual search says the world has mined 18.5 million out of a total of 21 million, after which, doesn't the mining process stop, along with the current environmental impact?
Indeed. The "Coinbase" mining reward (currently 6.25 BTC per block mined) halves every 4 years. The theory is that the proportion of fees (currently only 10%-20% of the total reward miners make) will increase and make up for the reduction in coinbase.
Currently, a successful block makes 6.25 BTC * 45000 BTCUSD = 280k USD in Coinbase, or around 100 USD per transaction, plus a 10-20 USD fee per transaction.
As Coinbase drops (or BTCUSD drops), users will have to pay around 100+ USD per transaction in fees, or the rewards to miners will drop and some will go offline, resulting in a reduction in difficulty and less energy wasted.
Currently, a successful block makes 6.25 BTC * 45000 BTCUSD = 280k USD in Coinbase, or around 100 USD per transaction, plus a 10-20 USD fee per transaction.
As Coinbase drops (or BTCUSD drops), users will have to pay around 100+ USD per transaction in fees, or the rewards to miners will drop and some will go offline, resulting in a reduction in difficulty and less energy wasted.
No it doesn't, since the primary purpose of mining is processing transactions, not creating new bitcoins. The created bitcoins are merely an incentive to mine.
Mining is what powers transactions as well as generating new coins. Once all 22 million coins are mined it is assumed that transaction fees will replace the coins miners earn . So mining will always remain in some form or another, and also the size of the network is what makes it safe.
Bitcoin has a halving mechanism, every 4 years the rate of new BTC mined drops by half, so that BTC will take over a century to actually reach 21 million (2140).
Ethereum 2.0 solves this via Proof of Stake. They are rolling it out in 2021 and I think the environmentally concerned will then consider the number two coin because of how energy hungry Bitcoin is. PoS also greatly increases transaction speed.
Isn't this only a meaningful statistic when compared to the energy generated by current currency production and maintenance? Considering what the U.S. does to support the dollar, it's probably not even remotely a comparison.
Everyone sleeping on Cardano, but it's creeping. It PoS consensus protocol in action. Tokens and smart contracts coming to mainnet soon.
Keep sleeping and balking at PoW. Stellar and Cardano will reshape the future of fintech transactions.
Keep sleeping and balking at PoW. Stellar and Cardano will reshape the future of fintech transactions.
Bitcoin holders don't actually care about proof of work or proof of stake, or even any of the technical details.
They only care that their investment goes up in value. That only happens if new entrants to the crypto ecosystem choose Bitcoin over alternatives.
Cryptocurrencies are like MLMs for nerds. The earlier you get in at the ground floor, the more valuable your position. You can help the price go up by convincing your friends to invest, who will convince their friends to invest, and so on.
They only care that their investment goes up in value. That only happens if new entrants to the crypto ecosystem choose Bitcoin over alternatives.
Cryptocurrencies are like MLMs for nerds. The earlier you get in at the ground floor, the more valuable your position. You can help the price go up by convincing your friends to invest, who will convince their friends to invest, and so on.
Am I wrong that resources spent mining Bitcoin aren't that much different from money spent on else? Is the impact of buying $1000 worth of concrete, airline flights, tomatoes, iPhones, etc. etc. significantly different?
Yes that's wrong. Bitcoin can be trivially understood to be unnecessary, given the alternative proof-of-stake system, the alternative cash system, the alternative online banking system, the e-cash systems that exist...
It's less trivial to say that air travel can be trivially migrated to alternatives. In fact, I think you could make a good argument that some air travel is a net positive for the climate. The trick is knowing which part and whether you can get away with taking people's favorite toys away as a government (lots of people enjoy not traveling 3 weeks for a holiday on the other side of the globe).
The only practical use that I can see for Bitcoin is that you don't need a bank yet can make donations. I can donate to sci-hub without signing up for a shady online wallet that operates in Kazakhstan and isn't impacted by sanctions against sci-hub in other countries. But if that's really all there is aside from the investment scheme (you can invest in, say, helium: move the amount of money that people invested in Bitcoin to the helium market and you get the same effect without the power consumption) then we should just find alternative solutions for donating to "good for everyone but unfortunately illegal" services like wikileaks and sci-hub.
It's less trivial to say that air travel can be trivially migrated to alternatives. In fact, I think you could make a good argument that some air travel is a net positive for the climate. The trick is knowing which part and whether you can get away with taking people's favorite toys away as a government (lots of people enjoy not traveling 3 weeks for a holiday on the other side of the globe).
The only practical use that I can see for Bitcoin is that you don't need a bank yet can make donations. I can donate to sci-hub without signing up for a shady online wallet that operates in Kazakhstan and isn't impacted by sanctions against sci-hub in other countries. But if that's really all there is aside from the investment scheme (you can invest in, say, helium: move the amount of money that people invested in Bitcoin to the helium market and you get the same effect without the power consumption) then we should just find alternative solutions for donating to "good for everyone but unfortunately illegal" services like wikileaks and sci-hub.
I wish people would acknowledge that we are still in the early stages of blockchain technology. When ethereum proof of stake arrives then you will arguably have the security of Bitcoin in a much more efficient blockchain.
They don't have the same security, for example, the immutability property is seriously weakened, you cannot verify it anymore, we could argue it becomes federated among the stakers
But sure, most other things still seems to work (I'm not expert BTW)
But sure, most other things still seems to work (I'm not expert BTW)
Genuine question: how much does this matter if much of it is renewables and cheap hydro? I feel like the negative externalities of using a lot of electricity are very very tied to where that electricity came from
According to their mining map[1], 35% of the global hashrate happens in Xinjiang. From Wikipedia, it looks like most major power stations in Xinjiang are coal driven[2].
10% is in Sichuan, which appears to be largely hydro-driven[3].
1: https://cbeci.org/mining_map
2: https://en.wikipedia.org/wiki/List_of_major_power_stations_i...
3: https://en.wikipedia.org/wiki/List_of_major_power_stations_i...
10% is in Sichuan, which appears to be largely hydro-driven[3].
1: https://cbeci.org/mining_map
2: https://en.wikipedia.org/wiki/List_of_major_power_stations_i...
3: https://en.wikipedia.org/wiki/List_of_major_power_stations_i...
It seems [0] that roughly 40% of crypto mining uses renewables. Yesterday I wrote a lengthy post about the topic [1], if you're keen to know more.
[0]: https://www.smart-energy.com/renewable-energy/renewables-pow...
[1]: https://simon.medium.com/bitcoin-and-pollution-the-definitiv...
[0]: https://www.smart-energy.com/renewable-energy/renewables-pow...
[1]: https://simon.medium.com/bitcoin-and-pollution-the-definitiv...
Is there reason to believe even a majority comes from renewable sources? And then, how much of that clean energy could be powering other things which are instead using fossil fuels?
At least in Europe, the lowest prices (even negative sometimes) for electricity are when renewable energies are producing a lot (e.g. when there's a storm in the north sea). If bitcoin mines are plugged on the real time market of electricity they would have an incentive to turn on when there's a lot of renewable energy produced. Assuming mines optimize their mining schedules on that, there's a scenario in which it could even help soak up the low prices and push investments into renewables.
Maybe, but only running miners when electricity is cheap doesn't work for a proof of work currency. 51% attacks would consist of an individual turning on their ASIC on a windless day. You need a large base load for it to be secure.
I’d half remembered mining clusters near large hydro projects in China. As to the opportunity cost, getting the electricity from one place to another where it can be used if you have a local glut isn’t easy, aiui
A lot of mining is done close to hydro dams, this power was in some cases waste power that would be unused. So it is swings and roundabouts, I don't think any new coal power stations are being built to mine bitcoin but bitcoin miners have taken advantage of excess electricity production to site their mines where power is cheapest.
If you freed all those resources, you could equivalently reduce fossil fuel consumption (up to 0%, of course). So I say it matters very much.
If you made it a crime to fly to tropical islands to enjoy the beach in the winter, you would enjoy a reduction in fossil fuels too, and people would be more productive than loafing about on the beach.
End of the day, people choose to spend resources on things that provide utility to them.
End of the day, people choose to spend resources on things that provide utility to them.
Even if it were all green energy, why not use it to produce aluminum or to get rid of coal instead of wasting it on math puzzles?
This is a bit too hypothetical: the most generous estimate I can find is that Bitcoin is still using 61% non-renewable energy, in as much as farms are favourably set up in places with cheap energy (somewhat but not entirely correlated with renewable energy).
Even if all of Bitcoin uses renewables, that's demand for renewable energy that drives prices up, which will lead other energy consumers to either pay more or pick less expensive non-renewable energy sources instead.
I don’t think power markets are that fluid in most of the world
If energy demand suddenly halved, I do think we would choose to turn coal plants off before solar panels. Of course Bitcoin isn't half of any country's energy, but proportionally it works the same way. There is no reason not to turn it off except some daredevils' get-rich-quick scheme falls apart.
One argument I've heard it's that it increasing the power demand beyond what renewables can handle. Reducing total power consumption would be more ideal.
That would depend on how much heat the computations/mining itself generates - has to be some - and the total effort to make graphics cards or other hardware for a lot of clients that would not really exist if crypto wouldn't be a thing
[deleted]
Bitcoin's value is derived by the fact that an enormous amount of calculations (and therefore energy) are required to fake a transaction. But smart investors know that just because something is hard does not make something a worthwhile endeavor. We should always go after low-hanging fruit first, and cryptocurrency is not that. I gave up on Bitcoin almost 8 years ago and I haven't regretted it. It is not going to fix the world's financial problems and its going to further wreck the planet. As a father, I don't want any further part of it.
[deleted]
There is no problem, energy is "free", but still, the source of the electricity should always be a concern not just for bitcoin but for everything. Nuclear, solar, wind? good. Hydro, natural gas? less good but ok for now. Carbon, oil? we need to replace those plants asap.
Bitcoin or anything really should be allowed to use however much energy it is economically feasible. The real question is, why is there no better use for that electricity than to compute numbers? How our economies became so stagnant the best return for capital investment is bitcoin?
Bitcoin or anything really should be allowed to use however much energy it is economically feasible. The real question is, why is there no better use for that electricity than to compute numbers? How our economies became so stagnant the best return for capital investment is bitcoin?
What’s your opinion on Corda? It has a different view on trust, than other cryptos (and it is not even crypto if we are being pedantic)
Honestly, the only scheme I have seen that seems like a reasonable trade off of trustlessness and energy efficiency is DPoS.
It’s an energy virus and needs to be stopped.
[deleted]
I would love to see this done on a per country basis. Like x percent of y countries energy goes towards Bitcoin.
Anyone who buys and takes part in mining this currency is taking part in the proliferation of climate change and the destruction of the planet. Until you can say all mining is done sustainably and all server production doesn’t not use rare earth materials or cause significant e waste, mining and Bitcoin itself should be regulated. Period.
At some point these transaction costs would effectively make further gains impossible.
Has any government entity attempted to ban Bitcoin yet, and is this even possible?
Yes it's Bitcoin is inefficient, but in exchange we get social scalability.
https://unenumerated.blogspot.com/2017/02/money-blockchains-...
https://unenumerated.blogspot.com/2017/02/money-blockchains-...
This is disgusting. Why is this stupid useless asset allowed to proliferate without regulation?
Why are we not concerned about harvesting this blockchain at the cost of the planet? This is silly. Bitcoin needs to be regulated like other industries. It’s polluting just the same. Regulation now please.
Why are we not concerned about harvesting this blockchain at the cost of the planet? This is silly. Bitcoin needs to be regulated like other industries. It’s polluting just the same. Regulation now please.
According to this report, Bitcoin mining is fueled by renewables: https://coinshares.com/research/bitcoin-mining-network-decem...
How much of that would be wasted otherwise though? You want cheap electricity to mine Bitcoin, so any energy that would otherwise be wasted is ideal. Before Bitcoin, some energy was literally just thrown away. With Bitcoin, it can be put to use for a profit instead.
Electricity thrown away is a very very trivial amount compared to the amount Bitcoin uses. And there are still surpluses that are thrown away. Bitcoin doesn't magically tap into the grid and run only when there is a surplus; virtually all miners run it regardless of the current energy price on wholesale markets.
Time to add another thing to Drake equation: Fb - the fraction of civilizations who didn’t fall prey for proof of work consensus. Others are invisible, cause they are very advanced, but all they do is mining crypto for food. To eat a sandwich you have to prove that it’s yours and a consensus is that it costs few MWh. Small islands of non-crypto trust appear millenia by millenia, but they are slowly marked as communism and disbanded by military consensus. It would be much faster, if military smart contract balance legacy didn’t require a petawatt-hour to sign one resolution with all conditionals, involving century-long testing of its code. Thankfully these groups do not form too often, because when you’re born, there is already a set of smart contracts that your ggggg-parent signed for your kin to obey. Maybe your ggg-children will have a chance with other families, if they manage to meet in the same aeon.
Complaining about Bitcoin now uses more electricity than Lichtenstein
Can we please regulate Bitcoin the way we regulate over heavy consumption and pollution industries? This doesn’t even take into account the production and mining of rare earth materials to power the super computers mining Bitcoin.
Well, how much could you make selling Argentina?
Would there even be a buyer?
Would there even be a buyer?
How much electricity does the world monetary system use?
Climate change progress is being offset by the rise of harvesting digital currencies and the mining and production of parts that go into computers that power the harvesting and production of the currency.
Is Bitcoin now using more resources than gold mining?
In other words, Tesla just went carbon positive.
Does gold coin use more gold than Argentina?
It's not about today, but tomorrow. Inefficiency is way easier to fix than break paradigms. How much it spends per transaction now isn't that relevant.
I don't know if you're serious, but you can't make proof of work more efficient, nor can cryptocurrencies realistically get even close to the transaction capacity of current "paradigm" (banks). This won't ever change the paradigm. I fear you may be misinformed about where Bitcoin is headed.
I get you, though, I was also in it for the technology (as well as the profit, but I got in back when the "bitcoin faucet" gave away mined bitcoins freely, and I spent like 2 whole bitcoin on socks, there was no investment scheme in the beginning), but it has since become clear that this system can't be more than it currently is: an investment scheme that only works so long as more people put money in.
It will take another paradigm shift, as big as Bitcoin was compared to the "paradigm" before 2009, before perhaps someone proposes something that has all the beneficial properties and actually practically works (regardless of energy efficiency).
I get you, though, I was also in it for the technology (as well as the profit, but I got in back when the "bitcoin faucet" gave away mined bitcoins freely, and I spent like 2 whole bitcoin on socks, there was no investment scheme in the beginning), but it has since become clear that this system can't be more than it currently is: an investment scheme that only works so long as more people put money in.
It will take another paradigm shift, as big as Bitcoin was compared to the "paradigm" before 2009, before perhaps someone proposes something that has all the beneficial properties and actually practically works (regardless of energy efficiency).
Release the free energy patents or btc dies
Is consuming electricity a bad thing?
Since we're destroying the planet by doing it, I guess I'd say so?
How much energy does watching porn consume? Playing video games? Watching a movie? Browsing Facebook? Using a ski chair? Visiting an amusement park? Going in vacation? Cooking your favorite type of food? Making ice cream? Driving to your friends? Listening to music? Concerts? Having a party? Banking? Casinos?
As a species we use energy to meet our goals. Those goals may be situated anywhere in our hierarchy of needs. Some are essential, some could be considered trivial. But they are all important for their consumers.
Bitcoin is now considered by some important for our future finance system. While not everybody agrees, this may be more important than countless other ways we use energy, for much more trivial reasons.
Being judgmental about how others use energy they pay for reeks of hypocrisy, virtue signaling and holier-than-thou attitude.
As a species we use energy to meet our goals. Those goals may be situated anywhere in our hierarchy of needs. Some are essential, some could be considered trivial. But they are all important for their consumers.
Bitcoin is now considered by some important for our future finance system. While not everybody agrees, this may be more important than countless other ways we use energy, for much more trivial reasons.
Being judgmental about how others use energy they pay for reeks of hypocrisy, virtue signaling and holier-than-thou attitude.
If maintaining the infrastructure for something a miniscule percentage of the world's population benefit from requires more energy than entire countries, surely it's worth interrogating whether the benefits outweigh the costs?
I'm not against bitcoin anymore than I am against unnecessary taxation but since bitcoin uses electricity at an insanely unnecessary quantity it should be taxed to the hilt to make up for increased environmental and infrastructure costs that are borne onto the 99.999% that do not participate in the scam.
Tax the externality of actually burning carbon. That's what we actually want to discourage, right?
How much does it cost to maintain the dollar? It's reserve status is propped up through trillions of dollars spent on the military industrial complex. How much energy does that waste? Massive taxation on Bitcoin, simply because it's energy usage is easily calculated, is questionable.
Most of it is renewable energy.
edit: 39% of it, as in a lot of it and that number should go up as the world is phasing out dirty energy for cleaner energy sources.
edit: 39% of it, as in a lot of it and that number should go up as the world is phasing out dirty energy for cleaner energy sources.
Its really not[1].
> However, the CCAF’s report specifies that the 76% refers to the share of hashers who use renewable energy at any point. It estimates that only 39% of hashing’s total energy consumption comes from renewables.
> Behind hydroelectricity, coal (38%) and natural gas (36%) are the energy sources hashers favour most.
[1]https://www.finextra.com/newsarticle/36672/renewable-energy-....
> However, the CCAF’s report specifies that the 76% refers to the share of hashers who use renewable energy at any point. It estimates that only 39% of hashing’s total energy consumption comes from renewables.
> Behind hydroelectricity, coal (38%) and natural gas (36%) are the energy sources hashers favour most.
[1]https://www.finextra.com/newsarticle/36672/renewable-energy-....
Only? I guess that if 40% of the worldwide energy production came from clean sources, all news outlets would count that as a massive success.
Yes. As they should. Its a much bigger achievement. I don't think these things are related.
Which could be used for... heating? Lighting? Cooking? Cars? Something useful?
While you might disagree with that, Bitcoin is useful.
@s1artibartfast, then it comes down to, who decides what's considered useful? In many ways, the market does, right? If it was useless trash, it wouldn't have any value, but that's clearly not the case.
I think that is the fundamental disagreement. Many people do not view bitcoin as doing anything useful. If it is useful, how does it compare to other solutions for the same problems.
This is for Raw transaction App person. What is bitcoin useful for? Laundering money out of China I give you. Do cartels accept bitcoin yet?
Genuinely curious, what it is useful for?
Genuinely curious, what it is useful for?
@ecommerceguy, for protecting my wealth against dilution by endless money printing, stimulus and bailouts of broken companies/banks.
I strongly believe that the current financial system is completely broken, so I'd like to opt out of it as much as possible.
I strongly believe that the current financial system is completely broken, so I'd like to opt out of it as much as possible.
You're free to do so, buy a plot of land and grab a plow.
Don't ruin the planet for everybody else so that you can sit on your un-diluting hoard of tulips like a dutch dragon.
Don't ruin the planet for everybody else so that you can sit on your un-diluting hoard of tulips like a dutch dragon.
I think most of that is hydro-power or geothermal energy, as in some situation, these produce excess energy locally at times.
This is not the same as "renewable" energy, it's locally bound opportunistic energy. Hydro- and geothermal power is limited and almost exhausted already. These power sources are not chosen because they are ecologically neutral, but because mining is portable and can opportunistically use temporary cheap sources, like hydro-electrical dams build before the intended consumers arrived. Nothing in Bitcoin inherently favors sustainable energy sources, over cheap supply. In the coming years, we will have to bite the bullet and chose very expensive endeavors over what the market suggests. Bitcoin doesn't fit this future. It's suggested "value" is nothing compared to humanity's survival.
This is not the same as "renewable" energy, it's locally bound opportunistic energy. Hydro- and geothermal power is limited and almost exhausted already. These power sources are not chosen because they are ecologically neutral, but because mining is portable and can opportunistically use temporary cheap sources, like hydro-electrical dams build before the intended consumers arrived. Nothing in Bitcoin inherently favors sustainable energy sources, over cheap supply. In the coming years, we will have to bite the bullet and chose very expensive endeavors over what the market suggests. Bitcoin doesn't fit this future. It's suggested "value" is nothing compared to humanity's survival.
The issue is that energy is largely fungible, at least when limited in space and time. Occasionally renewables are over-produced and can't be transmitted elsewhere, but often every kWh of green energy wasted on bitcoin mining is a kWh of non-renewable energy that has to be created to meet other demands.
[deleted]
> interrogating whether the benefits outweigh the costs
What does this mean, in practice? Who investigates and what is the outcome?
Do the things OP listed above warrant a similar investigation?
What does this mean, in practice? Who investigates and what is the outcome?
Do the things OP listed above warrant a similar investigation?
I don't think it matters who you ask to investigate it, everyone except bitcoin users themselves will realise that it's an absurd waste of electricity, for very little added value.
Again, reading the original comment, you can apply your very same line of reasoning to " Playing video games?" or the rest of the examples. Should all the people who don't play videogames also get together and ban gaming because they themselves don't benefit from it and it consumes "too much"?
Why do you stop taking into account scale? Gaming as a whole does provides entertainment to a large number of people and thus consumes large amount of energy. While bitcoin is providing benefits (real or imagined) to a very small fraction of people and consuming more electricity than a _whole country_. If red dead redemption was played by 10 people but consumed electricity equivalent to 100 people's daily life then we would be talking about regulation there too.
BTW, afaik bitcoin has 5million users and Argentina's population is 44 million. Also, this energy consumption by 44million people includes all the activities you can think of to add to this argument.
BTW, afaik bitcoin has 5million users and Argentina's population is 44 million. Also, this energy consumption by 44million people includes all the activities you can think of to add to this argument.
Scale does not inherently excuse. Energy for gaming could be routed to feeding/warming the poor; should 100 die of starvation/hypothermia so that 1,000,000 can play Fortnite? do you really want to continue such reasoning?
Yes I do. This is why my country had a space program before we solved all our social issues. You need to look at how much good an activity actually does vs how much resources it will consume. Entertainment is a good thing so is space exploration. But ISRO did not consume more resources than all other social improvement plans combined. Bitcoin is consuming more energy than the daily lives of a whole country. _Combined_
Gaming is also consuming more energy than the daily lives of a whole country __Combined__. Entertainment is a good thing, but watching a movie consumes a lot less resources than playing games so why are games acceptable? What about VR? VR uses a lot of GPU computations for something a small fraction of people use. Surely people playing VR could use some other form of entertainment that is less resource consuming.
Or then we let people use their own resources the way they see fit.
Or then we let people use their own resources the way they see fit.
I would like to redirect you to @africanboy's analysis[1] of how much energy gaming uses. He did it well.
[1] https://news.ycombinator.com/item?id=26091220
[1] https://news.ycombinator.com/item?id=26091220
Gaming uses vastly less energy per person.
in your example 100 bitcoin users would let a million of people die of starvation/hypothermia so that they can play blockchain.
scale in general does not excuse, but consumption per capita should.
A Ps4 consume around 100 watt/hour
If you keep it on 24 hours a day, 7 days a week, is 876 KW/year.
Which is not very much.
At 120Tw/year with 5 million users BC consumption per capita is an astonishing 24,000kw/year (or 24Mw)
Every bitcoin user consumes 27 times the energy consumed by a (quite powerful) gaming console turned on non stop (which is never the case)
That's why there have been campaigns around the World to replace incandescent bulbs with the energy efficient ones.
Compared to the traditional ones the new light bulbs can save up to the 80% of the energy, compared to a bitcoiner, a non bitcoiner can save ~97% of the energy by simply playing videogames.
scale in general does not excuse, but consumption per capita should.
A Ps4 consume around 100 watt/hour
If you keep it on 24 hours a day, 7 days a week, is 876 KW/year.
Which is not very much.
At 120Tw/year with 5 million users BC consumption per capita is an astonishing 24,000kw/year (or 24Mw)
Every bitcoin user consumes 27 times the energy consumed by a (quite powerful) gaming console turned on non stop (which is never the case)
That's why there have been campaigns around the World to replace incandescent bulbs with the energy efficient ones.
Compared to the traditional ones the new light bulbs can save up to the 80% of the energy, compared to a bitcoiner, a non bitcoiner can save ~97% of the energy by simply playing videogames.
> A Ps4 consume around 100 watt/hour
You need to take in the manufacturing costs, costs to develop software, costs to run servers too, otherwise you're only measuring marginal energy consumption for a new user.
Marginal energy consumption for a new Bitcoin user is probably small too.
You need to take in the manufacturing costs, costs to develop software, costs to run servers too, otherwise you're only measuring marginal energy consumption for a new user.
Marginal energy consumption for a new Bitcoin user is probably small too.
The website linked is actually measuring the amount of energy that BC is using right now to operate.
It's not the total amount of energy used to create the BC network, the software, the HW and everything else.
https://cbeci.org/
> The Cambridge Bitcoin Electricity Consumption Index (CBECI) provides a real-time estimate of the total electricity load and consumption of the Bitcoin network. The model is based on a bottom-up approach initially developed by Marc Bevand in 2017 that takes different types of available mining hardware as the starting point.
> The first number refers to the total electrical power consumed by the Bitcoin network and is expressed in gigawatts (GW). This figure is updated every 30 seconds and corresponds to the rate at which Bitcoin uses electricity. The second number refers to the total yearly electricity consumption of the Bitcoin network and is expressed in terawatt-hours (TWh). We annualise Bitcoin’s electricity consumption assuming continuous power usage at the aforementioned rate over the period of one year. We apply a 7-day moving average to the resulting data point in order to make the output value less dependent of short-term hashrate movements, and thus more suitable for comparisons with alternative uses of electricity.
It's not the total amount of energy used to create the BC network, the software, the HW and everything else.
https://cbeci.org/
> The Cambridge Bitcoin Electricity Consumption Index (CBECI) provides a real-time estimate of the total electricity load and consumption of the Bitcoin network. The model is based on a bottom-up approach initially developed by Marc Bevand in 2017 that takes different types of available mining hardware as the starting point.
> The first number refers to the total electrical power consumed by the Bitcoin network and is expressed in gigawatts (GW). This figure is updated every 30 seconds and corresponds to the rate at which Bitcoin uses electricity. The second number refers to the total yearly electricity consumption of the Bitcoin network and is expressed in terawatt-hours (TWh). We annualise Bitcoin’s electricity consumption assuming continuous power usage at the aforementioned rate over the period of one year. We apply a 7-day moving average to the resulting data point in order to make the output value less dependent of short-term hashrate movements, and thus more suitable for comparisons with alternative uses of electricity.
The parts of PS4 and Bitcoin that are expensive are different. It makes zero sense to compare the expensive part of Bitcoin to the cheap part of PS4
Do you think the bitcoin mining rigs materialize themselves out of thin air? Those things get constantly replaced because they get inefficient due to the rising hashrate and advancements in chip efficiency.
No you really can't. Gaming employs large amounts of people, sustaining economic growth as well as innovation (GPU development was originally sustained by demand related to gaming) . Bitcoin has little economic impact relative to its energy use.
The money spent by interested parties indicates otherwise.
Feel free to present a case where the economic impact of gaming is less than Bitcoin (feel free to include every crypto-currency ever made in that comparison).
Market caps in speculative, unregulated markets aren't indicators of economic relevance. Gaming facilitates billions in production on a yearly basis. Crypto related activity produces very little in comparison. And no, someone buying billions worth of Bitcoin doesn't count (just like people buying GameStop stock doesn't reflect the economic impact of the gaming industry).
Market caps in speculative, unregulated markets aren't indicators of economic relevance. Gaming facilitates billions in production on a yearly basis. Crypto related activity produces very little in comparison. And no, someone buying billions worth of Bitcoin doesn't count (just like people buying GameStop stock doesn't reflect the economic impact of the gaming industry).
Don’t move the goalposts. Bitcoin has little economic impact relative to its energy use you wrote. Oh, but it does. Miners created something of value, others bought with real money substantially greater than the cost of creation - and durable enough to resell indefinitely (with mundane care & handling). The only ones fit to establish “economic relevance” here are those who actually bought Bitcoin, with an estimated total resale value of $650B. Picasso's Les femmes d'Alger was sold for $179.4 million in May 2015; the economic impact of Pablo painting for a few days was indeed enormous. Those vs gaming, where while making/marketing games is profitable the tremendous energy going into playing them produces no lingering resale value of any form.
So no actual arguments then (just more pumper nonsense around prices). If you have no interest in economics, why attempt to pretend you do (see your Pablo reference as an example of why you might've not paid attention in Econ 101). Why not just say: "buy bitcoin because moon money" and move on.
Your point is true until it's not true, or Bitcoin fails.
You could make the same argument about any nascent technology that hasn't succeeded or failed yet.
You could make the same argument about any nascent technology that hasn't succeeded or failed yet.
Rather than a case, how about a framework to evaluate going forward: the market. Given enough time, I'm pretty sure the market will root out the "real value" of bitcoin and keep assessing the "real value" of gaming.
Let's watch for 5-10 years. If you're right about bitcoin, I bet its price will be much lower and you can gloat. If you're wrong, I bet its price will be much higher (because I agree with the basic assessment that gaming "feels" much bigger today). Luckily, we can both place our bets based on our best assessments of the future.
How confident are you that you can present a substantive case against bitcoin that matches the diligence that Ross Stevens has done for years? https://www.youtube.com/watch?v=lczPTYf_tvA
Let's watch for 5-10 years. If you're right about bitcoin, I bet its price will be much lower and you can gloat. If you're wrong, I bet its price will be much higher (because I agree with the basic assessment that gaming "feels" much bigger today). Luckily, we can both place our bets based on our best assessments of the future.
How confident are you that you can present a substantive case against bitcoin that matches the diligence that Ross Stevens has done for years? https://www.youtube.com/watch?v=lczPTYf_tvA
Asset values don't reflect economic impact/relevance (as in a $100MM Picasso doesn't indicate $100MM of economic activity). That's why GDP is used as an indicator for economic growth, not market caps.
Market cap is an estimated resale value under current/predictable conditions. GDP is a total of cumulative annual transactions. We can measure Bitcoin both ways, and each is remarkable.
Hopefully anyone reading this will take a minute to look up GDP.
The comment above, in a nutshell, is what's enveloping the current crypto environment. Maybe one day we'll get past it (or maybe this is just it).
The comment above, in a nutshell, is what's enveloping the current crypto environment. Maybe one day we'll get past it (or maybe this is just it).
As it happens I just listened to a long talk by him, perhaps this one. He kept arguing that "bitcoin isn't volatile, because the price of various things measured in bitcoins keep falling".
Either he doesn't know what volatility means or he is trying to scam people.
Either he doesn't know what volatility means or he is trying to scam people.
Money spent by interested parties only indicates that there is money to be made. It doesn't mean anything about the usefulness of bitcoin.
I think video games are a silly waste of time but I don't necessarily want to outlaw it. If playing one round of Mario Kart consumed several megawatt hours of energy though, I don't think anyone would want it to be allowed.
This is the slippery slope logical fallacy.
We already do apply such laws. Car manufacturers are required to sell a certain number of EVs. Emissions must meet standards. Appliances have energy ratings. etc. etc.
If Bitcoin were regulated so that those using the excess output of hydroelectric or other fixed output systems could do so for free, but everyone else was taxed appropriately, then that would actually probably do very little because that is largely the situation already: far from being an anonymous decentralized anarcho capitalist future, it is just large organized crime syndicates in China and Russia generating the transactions. And for all these reasons, the US should make it illegal.
We already do apply such laws. Car manufacturers are required to sell a certain number of EVs. Emissions must meet standards. Appliances have energy ratings. etc. etc.
If Bitcoin were regulated so that those using the excess output of hydroelectric or other fixed output systems could do so for free, but everyone else was taxed appropriately, then that would actually probably do very little because that is largely the situation already: far from being an anonymous decentralized anarcho capitalist future, it is just large organized crime syndicates in China and Russia generating the transactions. And for all these reasons, the US should make it illegal.
So things that the majority don't like / understand should be illegal because they use resources? You can't see the issue with that?
And that still doesn't really answer whose job it is to ban all these things, and what mechanism would be used to enforce it.
And that still doesn't really answer whose job it is to ban all these things, and what mechanism would be used to enforce it.
> So things that the majority don't like / understand should be illegal because they use resources? You can't see the issue with that?
There is a difference between majority not liking and only like 0.2% of the world consuming more energy than _a whole country_. There are 5million bitcoin users, they are consuming more electricity than 44 million people's daily lives. Think about the scale of imbalance here.
There is a difference between majority not liking and only like 0.2% of the world consuming more energy than _a whole country_. There are 5million bitcoin users, they are consuming more electricity than 44 million people's daily lives. Think about the scale of imbalance here.
While the phrase "a whole country" sounds dramatic, that doesn't really put the usage into perspective compared to those other examples.
For example MGM claims their properties in Nevada consume 171 MW. That's more than 65 of the countries from this list: https://en.wikipedia.org/wiki/List_of_countries_by_electrici...
For example MGM claims their properties in Nevada consume 171 MW. That's more than 65 of the countries from this list: https://en.wikipedia.org/wiki/List_of_countries_by_electrici...
Let me rephrase that. 5 million people are using more energy for small parts of their daily transactions than 44 million people in their entire daily lives. Sounds pretty dramatic to me. Even if we say that the argentinian electricity consumption is 10x lower than anywhere else, it will still be 5million people's partial amounts of transaction and 4.4 million people's daily lives (which includes all the transactions they make daily).
It is good practice to question if a technology is worth the social cost of wasting so much electricity. This is literally how Bitcoin is built, as it keeps growing, it keeps consuming an insane amount of electricity, for a very little amount of transactions per day. This is call ethics, doesn't mean it should be illegal, but there is value in questioning it and investigate if perhaps there are better solutions than wasting energy.
If the majority is 99% and that other fraction of 1% use an ENORMOUS amount of resources on their hobby, then yes it is reasonably to consider making it illegal.
You conveniently omit the social cost.
Enforcing could be done via banning any payment with bitcoin.
Enforcing could be done via banning any payment with bitcoin.
Well not really. Most people buy coins because they believe the price will climb and never use them for buying. For the retailers who accept bitcoin many are in smaller countries where the law wouldn't apply and many semi-legimate uses (ordering weed by mail) would continue to accept payment this way because their activity is more illegal (carrys a bigger punishment) than the new bitcoin law would.
What is the point of BTC price climbing if you wouldn't be able to convert it to cash or pay for goods?
> So things that the majority don't like / understand should be illegal because they use resources?
If they produce a net negative for the majority and only benefit a small number of people, then yes.
We don't go around driving tanks, do we?
I love tanks, but there's a reason why we can't drive them to go to the mall.
If they produce a net negative for the majority and only benefit a small number of people, then yes.
We don't go around driving tanks, do we?
I love tanks, but there's a reason why we can't drive them to go to the mall.
"for very little added value"
That's an awfully subjective claim and one I find to be contentious. I think even today Bitcoin's impact on global politics has already provided massively more value to global society than all of the resources it has spent on electricity.
That's an awfully subjective claim and one I find to be contentious. I think even today Bitcoin's impact on global politics has already provided massively more value to global society than all of the resources it has spent on electricity.
[deleted]
> Who investigates and what is the outcome?
The public? Something that benefits a few at the expense of the many is the canonical case for regulation.
(I don’t think we should ban or even really regulate Bitcoin. Not at this point.)
The public? Something that benefits a few at the expense of the many is the canonical case for regulation.
(I don’t think we should ban or even really regulate Bitcoin. Not at this point.)
> at the expense of the many
I think you've misunderstood something. Those people are buying their own electricity...at their own expense. So, you want to bring arbitrary restrictions to electricity - as if we didn't have enough issues with net neutrality already.
I think you've misunderstood something. Those people are buying their own electricity...at their own expense. So, you want to bring arbitrary restrictions to electricity - as if we didn't have enough issues with net neutrality already.
The market could solve this problem properly if there were a global carbon tax, but unfortunately, there isn't.
Assuming bitcoin is using carbon poluting sources. Some of the bigger miners in China use hydro/dam energy. The miners in Iceland are using geothermal.
from @umanwizard:
>The market could solve this problem properly if there were a global carbon tax, but unfortunately, there isn't.
"Solve it"? How so? Crypto mining is largely powered by renewables (40% according to one source in Sep 2020). It is a race to find the most energy efficient way create power to make it worthwhile to mine, which has some positive effect on society by driving innovation. No idea if that is a net positive, but this is not black and white issue at all the way many here are framing it.
>The market could solve this problem properly if there were a global carbon tax, but unfortunately, there isn't.
"Solve it"? How so? Crypto mining is largely powered by renewables (40% according to one source in Sep 2020). It is a race to find the most energy efficient way create power to make it worthwhile to mine, which has some positive effect on society by driving innovation. No idea if that is a net positive, but this is not black and white issue at all the way many here are framing it.
> Crypto mining is largely powered by renewables (40% according to one source in Sep 2020).
That’s one source and less than half does not mean “largely” in standard English usage. More importantly, almost nobody uses Bitcoin so a key question would be how that’d change if usage could be scaled up to, say, even 0.1% of daily transactions.
That’s one source and less than half does not mean “largely” in standard English usage. More importantly, almost nobody uses Bitcoin so a key question would be how that’d change if usage could be scaled up to, say, even 0.1% of daily transactions.
For bitcoin to use an equivalent amount of carbon as visa per transaction, it'd need to be 99.9999% powered by renewables and visa would need to be 100% powered by fossil fuels.
Except that most of the energy is subsidized by China or other countries.
Ah, so they are paying for the adverse effect on the climate. That's alright then. /s
We have solar power, hydroelectricity, nuclear power, wind turbines...if the mere fact of electricity existing has an adverse effect on the climate, I can tell you one thing:
It's not bitcoin's fault.
It's not bitcoin's fault.
Cool. 63% if electricity still comes from fossil fuels: https://ourworldindata.org/electricity-mix
So, ca. 76 of those TWh/year are still carbon heavy.
So, ca. 76 of those TWh/year are still carbon heavy.
Yes - nowadays I think pretty much everything that uses a lot of energy comes under scrutiny, and, in particular people look to see if the same outcome can't be achieved with less energy
That’s...what money does: evaluate supply vs demand, identifying the relationship of value between options, decided by those with a vested interest. Such a system inherently evaluates cost vs benefits in a holistic networked manner (vs wishful thinking by the uninvolved).
let the market decide then, step away- don't mine, don't use Bitcoin if you prefer
gold mining uses tons of energy we knew automobiles will pollute the environment, why didn't we stop using them altogether?
gold mining uses tons of energy we knew automobiles will pollute the environment, why didn't we stop using them altogether?
The market won’t decide optimally because the costs (climate change) are socialized across the whole population but the benefits are not.
It’s basically saying if you don’t like pollution don’t pollute, which is flawed in ways I don’t have to explain.
It’s basically saying if you don’t like pollution don’t pollute, which is flawed in ways I don’t have to explain.
The Personal Responsibility Vortex is a decent explanation.
https://www.youtube.com/watch?v=SjNRtrZjkfE
https://www.youtube.com/watch?v=SjNRtrZjkfE
ya then debate about it, write about it, learn about it
may be you are right , may be you're wrong
just don't be too sure that you know better than most
may be you are right , may be you're wrong
just don't be too sure that you know better than most
But then again, gold actually has legitimate uses that benefits most people (electronics).
Automobiles pollute, sure, but the vast majority of people benefit from vehicles.
But what, if any, benefit does bitcoin offer to the public - other than being a speculative asset?
Automobiles pollute, sure, but the vast majority of people benefit from vehicles.
But what, if any, benefit does bitcoin offer to the public - other than being a speculative asset?
We have several times more bars of gold than the amounts used for industry/jewellery, we could have stopped mining it decades ago if that was a serious argument.
yes, keep learning
gold is not that useful in utility sense tbh, less than 10% is industrial use.
gold is not that useful in utility sense tbh, less than 10% is industrial use.
Being able to store their wealth without being affected by the endless money printing is the benefit.
We should spend money creating public transit infrastructure to reduce the useof cars in urban areas. Not only is it more efficient in terms of transportation, it wastes much less energy and emits much less CO2. The fact that we haven't is a policy failure.
Incidentally, why would we ever let the market decide when the market consistently throws externalities under the bus?
Incidentally, why would we ever let the market decide when the market consistently throws externalities under the bus?
I will agree with "letting the market decide" on the energy expended in Bitcoin when there is an effective and globally enforced carbon emissions tax that adequately compensates the potential damage caused by these emissions.
Other industries and activities, such gold mining, automotives, food production, tourism, etc., must of course also be covered by said carbon tax. However, what makes Bitcoin particularly noxious compared to them is that it intrinsically carries a financial incentive to expend more energy as time moves on.
Other industries and activities, such gold mining, automotives, food production, tourism, etc., must of course also be covered by said carbon tax. However, what makes Bitcoin particularly noxious compared to them is that it intrinsically carries a financial incentive to expend more energy as time moves on.
The market is deciding. It is destroying our world. But for market winners there is no problem for a long time to come, while 'the market decides' ever more in their favor.
We are lazy.
The original Model T could run on ethanol (not perfect, but better than gasoline in many regards for pollution, and back then IDK if they would have noticed) and Henry Ford was fond of the idea of biofuels; at the time I think he was fond of Potatoes for the purpose.
The original Model T could run on ethanol (not perfect, but better than gasoline in many regards for pollution, and back then IDK if they would have noticed) and Henry Ford was fond of the idea of biofuels; at the time I think he was fond of Potatoes for the purpose.
I wouldn't attribute this to only laziness. At the time people weren't yet aware that burning fossil fuels would cause climate change. It's also pretty cheap to just pump fossil fuels out of the ground. On the other hand, people back then did know that fried potatoes taste quite good. And you can turn them into vodka too.
The problem with biofuels derived from crops in that era is that people were actually starving to death on a regular basis.
Capitalism always seeks a very local optima of maximizing profit with absolutely no question about the cost of "externalities". I put that in quotes because on a finite planet (that at the dawn of industrialization felt infinite) there's no true externality.
Energy is how our society is able to maintain its existence and current quality of life. If you over extended that energy usage you are looking towards total collapse of that system. That's what "unsustainable" means, that the system cannot be sustained in it's current state indefinitely.
We already rely on fossil fuels to over extended the carrying capacity of the planet for humans by nearly and order of magnitude. Ignoring climate change and other sustainability issues, the inevitable end of fossil fuels would mean billions of lives lost, even if we were able to stabilize the current global population.
I suspect, ultimately we will learn that humans are no different than bacteria in a petri dish: completely unable to do anything but consume all available resource even at their own eventual peril. But if you have any hope that we as a species can avoid the fate of any other species placed in a similar situation, then you, at the very least, have to recognize that "markets" can't solve this problem.
Energy is how our society is able to maintain its existence and current quality of life. If you over extended that energy usage you are looking towards total collapse of that system. That's what "unsustainable" means, that the system cannot be sustained in it's current state indefinitely.
We already rely on fossil fuels to over extended the carrying capacity of the planet for humans by nearly and order of magnitude. Ignoring climate change and other sustainability issues, the inevitable end of fossil fuels would mean billions of lives lost, even if we were able to stabilize the current global population.
I suspect, ultimately we will learn that humans are no different than bacteria in a petri dish: completely unable to do anything but consume all available resource even at their own eventual peril. But if you have any hope that we as a species can avoid the fate of any other species placed in a similar situation, then you, at the very least, have to recognize that "markets" can't solve this problem.
What you are talking about is a typical Malthusian understanding of reality. At some level, there are physical limits that cannot be exceeded. On a practical level, those limits are vastly beyond what we can currently comprehend or use, and the entirety of human history is a testament to doing more and more with less and less. (With blockchain technology being a notable exception of always doing the same amount of stuff with more and more resources)
Also, as a small aside... the concept of an externality is not about pollution or waste. It is about a cost that is imposed on people other than the individual responsible for the cost. The finitude of the planet is immaterial to the existence of externalities.
Also, as a small aside... the concept of an externality is not about pollution or waste. It is about a cost that is imposed on people other than the individual responsible for the cost. The finitude of the planet is immaterial to the existence of externalities.
But how do you set differential electricity prices by type of use? That seems nightmarish to try to enforce. So you criticize the miners, but what can actually be done about it?
We do that somewhat by limitations in the grid itself. A simple example is that different kind of outlet you use for your washer dryer machine.
The kind of outlet one sees for 240V is to keep you from plugging your 120V iPhone charger into it, not because it's any kind of limitation on the grid. You can have European-style (or Australian, or Vietnamese, or...) outlets in your U. S. house if you like, and pull 220V out of every outlet in your house, you'll just have to do a ton of rewiring. (Theoretically; if I've forgotten something, it's because I've never heard of anyone converting a U. S. house to use non-U. S. appliances.)
Agreed, but there's more to it I think. The primary design goal of the system is don't accidentally start a fire or electrocute yourself. The other effect however is the inverse, a mechanism by which the power company can come up with the right distribution of transformers to get the power to your home. If you have not been wired by an electrician to handle that much electricity, your block may not be sufficiently wired and fused to deliver that much. Because presumably the electrician checks such things before putting buildings on the grid.
What's different about it? All my 230v devices use the same outlet and plug. Or is that on a different voltage and current, power rating alltogether?
If you don't have a 240V circuit handy you can just find two 120V circuits on opposite phases and wire them together
> a minuscule percentage
This is true right now considering how nascent this is, but what happens if adoption picks up?
One thing I’d like to see discussed is what the marginal power cost of Bitcoin is. From where I sit, the vast majority of power consumption is fixed per block, and occurs regardless of whether you have 1 or 10,000 transactions.
This is true right now considering how nascent this is, but what happens if adoption picks up?
One thing I’d like to see discussed is what the marginal power cost of Bitcoin is. From where I sit, the vast majority of power consumption is fixed per block, and occurs regardless of whether you have 1 or 10,000 transactions.
Bitcoin is valuable even if adoption never does pick up. It's a money system with certain properties that can't be found anywhere else, and it's a money system that's that's half decent.
The existence of Bitcoin forces all other money systems around the world to be at least as good as Bitcoin, or citizens will flee into Bitcoin.
Bitcoin adds value simply by existing, even absent serious adoption.
The existence of Bitcoin forces all other money systems around the world to be at least as good as Bitcoin, or citizens will flee into Bitcoin.
Bitcoin adds value simply by existing, even absent serious adoption.
How many products and services are bought every day with conventional monetary systems?
How many products and services are bought every day with Bitcoin?
I suspect BTC will have as much impact on conventional currencies as a fly landing on an aircraft carrier.
How many products and services are bought every day with Bitcoin?
I suspect BTC will have as much impact on conventional currencies as a fly landing on an aircraft carrier.
Bitcoin also spends about as much money as a fly landing on an aircraft carrier. Sorry Argentina, but you just don't use that much electricity in the context of the global economy.
Companies like Tesla are buying Bitcoin, not because they intend to transact with Bitcoin but because it gives them protection against inflation within the US economy, and it gives them a stash of money that cannot be forcibly shut down, allowing them to do business even in jurisdictions that don't want them there.
If you are looking at just the "products and services" you are missing the forest for the trees.
Companies like Tesla are buying Bitcoin, not because they intend to transact with Bitcoin but because it gives them protection against inflation within the US economy, and it gives them a stash of money that cannot be forcibly shut down, allowing them to do business even in jurisdictions that don't want them there.
If you are looking at just the "products and services" you are missing the forest for the trees.
There’s so many things wrong with this comment.
Until people start accepting bitcoin for bread, rent and salaries, Tesla most certainly does not have a “stash of money that cannot be forcibly shut down”. It has something that might be able to be exchanged into a local currency to buy those things.
What’s more, that stash of bitcoin most certainly could be forcibly shut down at the stroke of a pen. Tesla is a public US company listed on a US stock exchange. If the USA decided tomorrow to criminalise BTC, Tesla would be left with a huge 1.5bn hole in its accounts and a huge number of very pissed off investors.
Moreover, if Elbonia doesn’t want Tesla there, how in the hell are Tesla cars going to arrive at ports? How are they going to be registered? How are Tesla going to deploy charging infrastructure? BTC has exactly squat to offer in terms of dealing with jurisdictions that don’t want them there.
BTC isn’t some magic wand that lets you operate in a fairy dimension where none of the rules of reality apply.
Until people start accepting bitcoin for bread, rent and salaries, Tesla most certainly does not have a “stash of money that cannot be forcibly shut down”. It has something that might be able to be exchanged into a local currency to buy those things.
What’s more, that stash of bitcoin most certainly could be forcibly shut down at the stroke of a pen. Tesla is a public US company listed on a US stock exchange. If the USA decided tomorrow to criminalise BTC, Tesla would be left with a huge 1.5bn hole in its accounts and a huge number of very pissed off investors.
Moreover, if Elbonia doesn’t want Tesla there, how in the hell are Tesla cars going to arrive at ports? How are they going to be registered? How are Tesla going to deploy charging infrastructure? BTC has exactly squat to offer in terms of dealing with jurisdictions that don’t want them there.
BTC isn’t some magic wand that lets you operate in a fairy dimension where none of the rules of reality apply.
Just because Tesla doesn't have the ability to sell cars in Elbonia doesn't mean they don't have some form of commerce requirement with Elbonia. Maybe they are paying devs to work on the UI, or paying a computing company to run simulations.
Bitcoin is already accepted by many for rent and salaries. Bread is not likely to ever happen because transactions are too inefficient, but that doesn't mean you can't viable have an economy based on larger exchanges.
Bitcoin is already accepted by many for rent and salaries. Bread is not likely to ever happen because transactions are too inefficient, but that doesn't mean you can't viable have an economy based on larger exchanges.
I often wonder if the release of Zelle around 2017 (near instant, fee-free transactions between personal and business bank accounts between certain US banks) was motivated by a perceived crypto threat.
The power consumption is linked to network size and has nothing to do with the block itself. If anything the marginal power cost is linked to the price of a Bitcoin, as the higher it climbs the more incentive to mine, the greater the competition and therefore the greater the mining difficulty/energy required. The only way to really lower energy consumption is to lower the price I can get for a Bitcoin but with the current economic conditions I don't see that happening anytime soon.
How is power consumption related to network size? I agree that the power consumption of the network is directly related to the value of the bitcoins mined (and I supposed the transaction fee/tip size).
I think by 'network size' the GP is referring to the network hashrate.
For proof of work networks to function securely, the network as a whole must have a much higher computation rate than an attacker.
Obviously capabilities increase the whole time, so the bitcoin network needs to be able to adapt - to do this, it adjusts its 'difficulty' approximately every two weeks. The power usage corresponds directly to the difficulty level set by the network.
If you add more miners, the difficulty will increase, and power consumption will go up, if miners leave, the difficulty will decrease and power consumption will go down.
For proof of work networks to function securely, the network as a whole must have a much higher computation rate than an attacker.
Obviously capabilities increase the whole time, so the bitcoin network needs to be able to adapt - to do this, it adjusts its 'difficulty' approximately every two weeks. The power usage corresponds directly to the difficulty level set by the network.
If you add more miners, the difficulty will increase, and power consumption will go up, if miners leave, the difficulty will decrease and power consumption will go down.
Network size increases competition to mine blocks faster, leading to demands for higher hash rate, leading to higher power consumption.
That's not how Bitcoin mining works.
A certain amount of bitcoin -- the amount determined by a schedule that was defined before the network became operational -- is given as a mining reward every 10 minutes. The incentives of the individual miners is such that the expenses of the miners (collectively) equals the mining reward -- and the major mining expense is electricity.
If the mining reward is cut in half, the electricity consumption of the network is cut in half, too.
In contrast, if the rate of transactions changes or the number of miners change, electricity consumption stays the same. (More precisely, the expenses of running the network equals the mining reward plus any transaction fees, and since the blocks are of fixed size, for more transactions to compete for space in the blocks increases transaction fees, but I am guessing that transaction fees are currently a small fraction of the mining reward.)
A certain amount of bitcoin -- the amount determined by a schedule that was defined before the network became operational -- is given as a mining reward every 10 minutes. The incentives of the individual miners is such that the expenses of the miners (collectively) equals the mining reward -- and the major mining expense is electricity.
If the mining reward is cut in half, the electricity consumption of the network is cut in half, too.
In contrast, if the rate of transactions changes or the number of miners change, electricity consumption stays the same. (More precisely, the expenses of running the network equals the mining reward plus any transaction fees, and since the blocks are of fixed size, for more transactions to compete for space in the blocks increases transaction fees, but I am guessing that transaction fees are currently a small fraction of the mining reward.)
It is how the mining works from a bird's eye view.
> A certain amount of bitcoin -- the amount determined by a schedule that was defined before the network became operational -- is given as a mining reward every 10 minutes. The incentives of the individual miners is such that the expenses of the miners (collectively) equals the mining reward -- and the major mining expense is electricity.
The 10 minute rate is true, but the expense is not collective. I as a miner am in active competition with my fellow miners and am incentivised to find ways to decrease costs (electricity), but only mine. In fact it would be in my best interest to increase the electricity cost of a competing miner in order to force them off the network, and if I win the block it is only my personal power backing that block.
> If the mining reward is cut in half, the electricity consumption of the network is cut in half, too.
Not necessarily. If the reward is cut in half but the price of BTC has risen considerably since starting mining operations then I will remain on the network as the profit is sufficient to continue. This is why the "halving" event that Bitcoin goes through has never had a major impact on either the price of BTC or the scale of mining operations globally.
> In contrast, if the rate of transactions changes or the number of miners change, electricity consumption stays the same. (More precisely, the expenses of running the network equals the mining reward plus any transaction fees, and since the blocks are of fixed size, for more transactions to compete for space in the blocks increases transaction fees, but I am guessing that transaction fees are currently a small fraction of the mining reward.)
This is very wrong. The expense of running the network is equivalent to all the energy burned by the entire network in order to find the next block. This isn't felt by the individual miner in any way other than a potential increase in competition to find the block, but taken as a whole the network is for example now considered to be using the total energy consumption of Argentina.
> A certain amount of bitcoin -- the amount determined by a schedule that was defined before the network became operational -- is given as a mining reward every 10 minutes. The incentives of the individual miners is such that the expenses of the miners (collectively) equals the mining reward -- and the major mining expense is electricity.
The 10 minute rate is true, but the expense is not collective. I as a miner am in active competition with my fellow miners and am incentivised to find ways to decrease costs (electricity), but only mine. In fact it would be in my best interest to increase the electricity cost of a competing miner in order to force them off the network, and if I win the block it is only my personal power backing that block.
> If the mining reward is cut in half, the electricity consumption of the network is cut in half, too.
Not necessarily. If the reward is cut in half but the price of BTC has risen considerably since starting mining operations then I will remain on the network as the profit is sufficient to continue. This is why the "halving" event that Bitcoin goes through has never had a major impact on either the price of BTC or the scale of mining operations globally.
> In contrast, if the rate of transactions changes or the number of miners change, electricity consumption stays the same. (More precisely, the expenses of running the network equals the mining reward plus any transaction fees, and since the blocks are of fixed size, for more transactions to compete for space in the blocks increases transaction fees, but I am guessing that transaction fees are currently a small fraction of the mining reward.)
This is very wrong. The expense of running the network is equivalent to all the energy burned by the entire network in order to find the next block. This isn't felt by the individual miner in any way other than a potential increase in competition to find the block, but taken as a whole the network is for example now considered to be using the total energy consumption of Argentina.
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I think you are _very_ mistaken.
> If the mining reward is cut in half, the electricity consumption of the network is cut in half, too.
That's not true it all -- there is no difficulty adjustment when the reward is halved. There may be pressure on some miners to stop mining, but that adjustment is not immediate and can also be compensated for by change in the price of bitcoin.
> In contrast, if the rate of transactions changes or the number of miners change, electricity consumption stays the same.
Given the network is operating at peak transaction rate already, there's not much change here. Neither block size nor the transaction count has a meaningful affect on the computations required to "solve" a block. The merkle tree for the transactions is computed once, but most of computation is finding a nonce, that combined with the rest of the block header, produces a hash with a certain number of leading zeros.
Changing the block size or transaction count doesn't meaningfully change electricity consumption.
> If the mining reward is cut in half, the electricity consumption of the network is cut in half, too.
That's not true it all -- there is no difficulty adjustment when the reward is halved. There may be pressure on some miners to stop mining, but that adjustment is not immediate and can also be compensated for by change in the price of bitcoin.
> In contrast, if the rate of transactions changes or the number of miners change, electricity consumption stays the same.
Given the network is operating at peak transaction rate already, there's not much change here. Neither block size nor the transaction count has a meaningful affect on the computations required to "solve" a block. The merkle tree for the transactions is computed once, but most of computation is finding a nonce, that combined with the rest of the block header, produces a hash with a certain number of leading zeros.
Changing the block size or transaction count doesn't meaningfully change electricity consumption.
I agree with your final 2 paragraphs.
>that adjustment . . . can also be compensated for by change in the price of bitcoin.
It can. When I wrote that if the mining reward is cut in half, the electricity consumption of the network is cut in half, too, I assumed that the price remains constant.
A miner must pay for the electricity he or she uses. Where do you think the money comes from to pay for the massive amount of electricity used by the network?
Do you imagine that rich people (i.e., people who can afford to lose money) are buying the electricity for pro-Bitcoin ideological reasons?
I don't: I believe that it comes out of the revenue made (collectively) by the miners. In other words, the payments for the electricity are parts of (individual) plans to make money through mining.
And I believe that if that (collective) revenue were cut in half -- especially if miners and prospective miners knew of the halving in advance (particularly, before they decided what mining hardware if any to buy) -- then money spent on electricity is approximately cut in half, too. (Because otherwise the plans to make money would not work.)
You are correct that the adjustment in the hash rate is not immediate after a halving of the mining reward. Mostly that is because miners who recently bought mining hardware have to continue mining after the halving to continue to pay for their hardware.
If the halving was announced in advance, then the halving will start exerting downward pressure on the mining difficulty months in advance of the actual date of the halving. The major cause of that downward pressure is miners opting not to upgrade their hardware and prospective miners opting not to enter the mining business in the first place (the effect of which is to make it take longer for the remaining miners with their non-upgraded hardware to solve the proof-of-work puzzles, which in turns causes the software to reduce mining difficulty to return the average time between successive blocks back to 10 minutes).
Basically, it takes many months for newly-manufactured mining hardware to pay for itself, and that delay is the main reason the response to a reward-rate halving is slow. But again the response starts months before the actual halving; and the cumulative effect of the halving on the rate -- more precisely the effect the rate has on how much electricity is consumed by the network over the years -- is approximately the same as it would be if the effect of the halving on the rate were instantaneous.
It is the fact that one of the major expenses (namely, hardware) of the miners is "lumpy" (requires an upfront expenditure that is then recouped over many months) that obscures the simple relationship whereby the collective expenses of the mining community approximately equals the collective revenues of that community -- where most of that revenue is from mining rewards, which is equal to the price of bitcoin (or the value of bitcoin if you prefer) times the rate at which the network dispenses bitcoins from miners as rewards. What makes me confident that expenses = revenues is that miners are rational and consequently are capable of taking into account scheduled halvings of the rewards to mining and the "lumpiness" of the cost of mining hardware (and many other factors).
>that adjustment . . . can also be compensated for by change in the price of bitcoin.
It can. When I wrote that if the mining reward is cut in half, the electricity consumption of the network is cut in half, too, I assumed that the price remains constant.
A miner must pay for the electricity he or she uses. Where do you think the money comes from to pay for the massive amount of electricity used by the network?
Do you imagine that rich people (i.e., people who can afford to lose money) are buying the electricity for pro-Bitcoin ideological reasons?
I don't: I believe that it comes out of the revenue made (collectively) by the miners. In other words, the payments for the electricity are parts of (individual) plans to make money through mining.
And I believe that if that (collective) revenue were cut in half -- especially if miners and prospective miners knew of the halving in advance (particularly, before they decided what mining hardware if any to buy) -- then money spent on electricity is approximately cut in half, too. (Because otherwise the plans to make money would not work.)
You are correct that the adjustment in the hash rate is not immediate after a halving of the mining reward. Mostly that is because miners who recently bought mining hardware have to continue mining after the halving to continue to pay for their hardware.
If the halving was announced in advance, then the halving will start exerting downward pressure on the mining difficulty months in advance of the actual date of the halving. The major cause of that downward pressure is miners opting not to upgrade their hardware and prospective miners opting not to enter the mining business in the first place (the effect of which is to make it take longer for the remaining miners with their non-upgraded hardware to solve the proof-of-work puzzles, which in turns causes the software to reduce mining difficulty to return the average time between successive blocks back to 10 minutes).
Basically, it takes many months for newly-manufactured mining hardware to pay for itself, and that delay is the main reason the response to a reward-rate halving is slow. But again the response starts months before the actual halving; and the cumulative effect of the halving on the rate -- more precisely the effect the rate has on how much electricity is consumed by the network over the years -- is approximately the same as it would be if the effect of the halving on the rate were instantaneous.
It is the fact that one of the major expenses (namely, hardware) of the miners is "lumpy" (requires an upfront expenditure that is then recouped over many months) that obscures the simple relationship whereby the collective expenses of the mining community approximately equals the collective revenues of that community -- where most of that revenue is from mining rewards, which is equal to the price of bitcoin (or the value of bitcoin if you prefer) times the rate at which the network dispenses bitcoins from miners as rewards. What makes me confident that expenses = revenues is that miners are rational and consequently are capable of taking into account scheduled halvings of the rewards to mining and the "lumpiness" of the cost of mining hardware (and many other factors).
I agree with pretty much everything you said about the costs and rewards of mining and where the pressure points are. What I don't agree with is the simple statement:
> if the mining reward is cut in half, the electricity consumption of the network is cut in half
This would only happen if half of the miners shut off their equipment as soon as the reward adjustment occurred, which does not happen [1]. Even then, that doesn't change the electricity consumed by a single miner producing a single block, since that is governed by the difficulty parameter, which also did not halve and took multiple weeks to bottom out before increasing again [2].
There is no simple function between block reward and network or block electricity consumption.
1. There was a drop of 120PH/s to 90PH/s within a week after the halvening. https://www.blockchain.com/charts/hash-rate
2. You can see a similar curve of difficulty _following_ the hash rate of network, albeit over multiple weeks. https://www.coinwarz.com/mining/bitcoin/difficulty-chart
> if the mining reward is cut in half, the electricity consumption of the network is cut in half
This would only happen if half of the miners shut off their equipment as soon as the reward adjustment occurred, which does not happen [1]. Even then, that doesn't change the electricity consumed by a single miner producing a single block, since that is governed by the difficulty parameter, which also did not halve and took multiple weeks to bottom out before increasing again [2].
There is no simple function between block reward and network or block electricity consumption.
1. There was a drop of 120PH/s to 90PH/s within a week after the halvening. https://www.blockchain.com/charts/hash-rate
2. You can see a similar curve of difficulty _following_ the hash rate of network, albeit over multiple weeks. https://www.coinwarz.com/mining/bitcoin/difficulty-chart
Almost, but because of the incentives, the greater the adoption, the more valuable each individual block reward actually is. The more valuable each individual block reward is, the more energy you can afford to spend attempting to mine it.
You can't fit 10,000 transactions in a block on BTC.
Via Tesla, bitcoin is now implicitly held by all investors in the S&P 500, including, very likely, you. You are now a benefactor of bitcoin's growth, whether you're aware of it or not. This trend, where bitcoin quietly confers benefits to growing constituencies of people who remain completely unaware of the fact, will continue.
And, at the same time, there are many people, in less fortunate circumstances, for whom the benefits of bitcoin are felt much more acutely: https://twitter.com/gladstein/status/1357757736394444800
The "minuscule percentage" you quote (without reference) is very likely already clearly incorrect and will continue, over time, to become more incorrect.
And, at the same time, there are many people, in less fortunate circumstances, for whom the benefits of bitcoin are felt much more acutely: https://twitter.com/gladstein/status/1357757736394444800
The "minuscule percentage" you quote (without reference) is very likely already clearly incorrect and will continue, over time, to become more incorrect.
When the alternative is simply just using Proof of Stake and lowering the energy consumption by an estimated 99%, yes, we can be judgmental of how others use energy in this specific case. It's not Bitcoin/PoW or no cryptocurrencies at all, that's a false dichotomy, if that's what you're implying.
PoS lacks fairness.
To participate in PoS, you need an existing stash of coins, which is inaccessible for many individuals from countries where cryptocurrencies are outlawed. Not forgetting to mention that participation in consensus would indirectly require going through KYC.
PoW, on the other hand, is akin to buying Bitcoin with electricity - a borderless natural resource.
To participate in PoS, you need an existing stash of coins, which is inaccessible for many individuals from countries where cryptocurrencies are outlawed. Not forgetting to mention that participation in consensus would indirectly require going through KYC.
PoW, on the other hand, is akin to buying Bitcoin with electricity - a borderless natural resource.
> PoS lacks fairness.
I dislike the way that cryptocurrencies have managed their initial allocations, but it's way better than the way that fiat currencies have managed their initial allocations (usually encoding generations of violence, rascism and oppression).
To 'participate' in PoS (by which you mean mining a block I suppose), you can buy all the stake you need from other people, just like if you want to 'participate' in stock ownership, or land ownership or ownership of nearly anything else in the world.
> PoW, on the other hand, is akin to buying Bitcoin with electricity - a borderless natural resource.
Well.... if you try to mine BTC these days with a standard computer on a standard electricity tarif, you're not going to have a fun time.
Given the fact that to reasonably 'participate' in PoS you need only the kind of computer you already have and an easily acquired stake, while to reasonably 'participate' in many forms of PoW you need unusual, expensive custom hardware and cheap electricity, I'm not at all convinced that PoW has anything better to say about 'fairness'.
I dislike the way that cryptocurrencies have managed their initial allocations, but it's way better than the way that fiat currencies have managed their initial allocations (usually encoding generations of violence, rascism and oppression).
To 'participate' in PoS (by which you mean mining a block I suppose), you can buy all the stake you need from other people, just like if you want to 'participate' in stock ownership, or land ownership or ownership of nearly anything else in the world.
> PoW, on the other hand, is akin to buying Bitcoin with electricity - a borderless natural resource.
Well.... if you try to mine BTC these days with a standard computer on a standard electricity tarif, you're not going to have a fun time.
Given the fact that to reasonably 'participate' in PoS you need only the kind of computer you already have and an easily acquired stake, while to reasonably 'participate' in many forms of PoW you need unusual, expensive custom hardware and cheap electricity, I'm not at all convinced that PoW has anything better to say about 'fairness'.
> I dislike the way that cryptocurrencies have managed their initial allocations, but it's way better than the way that fiat currencies have managed their initial allocations (usually encoding generations of violence, rascism and oppression).
Just a nit, but I would argue that those encoded privileges are still present; just now with the added indirect layer of "People who were adjacent to the cypherpunks mailing list circa 2009"
Just a nit, but I would argue that those encoded privileges are still present; just now with the added indirect layer of "People who were adjacent to the cypherpunks mailing list circa 2009"
> a borderless natural resource.
Wow, I never knew ASICs grew on trees.
Wow, I never knew ASICs grew on trees.
Moreover, anyone who can stake their tokens to produce blocks will never sell you enough tokens that you'll be able to compete with them for future block rewards. Put another way, the value of a staker's token-minting stake is at least equal to the expected ROI over its lifetime (much like how the value of a stock is worth its expected dividends over time). PoS is a digital manifestation of a hereditary aristocracy -- you can almost never buy your way in; you have to be a first mover.
You need WAY more than just electricity. In order to have any chance of receiving any amount of bitcoin, you also need specialized equipment, connection to the network, and access to a mining pool.
Those three things would give a government interested in banning cryptocurrencies plenty of leverage to disrupt mining operations in their country.
All they would need to do is regulate the import of ASIC mining hardware; sinkhole any traffic that looks "bitcoin-y" (damn the collateral damage, we're fighting fascist communist pedophile terrorist drug traffickers here!) and similarly block access to any known mining pools.
They could go even further and introduce severe and draconian penalties to anyone producing, possessing, or using cryptocurrencies (which of course would be selectively enforced).
At this point, once you factor in the real-world element, the fact that, in theory, you only need electricity to produce bitcoin becomes such a small part of that equation.
I think at that point why not use PoS (or better yet, a DPoS scheme), if there isn't any real-world benefit to PoW? I think the tradeoff of introducing a small amount of revocable trust in exchange for RADICALLY reduced energy consumption is pretty clearly worth it, given the real world constraints.
Those three things would give a government interested in banning cryptocurrencies plenty of leverage to disrupt mining operations in their country.
All they would need to do is regulate the import of ASIC mining hardware; sinkhole any traffic that looks "bitcoin-y" (damn the collateral damage, we're fighting fascist communist pedophile terrorist drug traffickers here!) and similarly block access to any known mining pools.
They could go even further and introduce severe and draconian penalties to anyone producing, possessing, or using cryptocurrencies (which of course would be selectively enforced).
At this point, once you factor in the real-world element, the fact that, in theory, you only need electricity to produce bitcoin becomes such a small part of that equation.
I think at that point why not use PoS (or better yet, a DPoS scheme), if there isn't any real-world benefit to PoW? I think the tradeoff of introducing a small amount of revocable trust in exchange for RADICALLY reduced energy consumption is pretty clearly worth it, given the real world constraints.
You can participate in most(all i am aware of) PoS chains with any amount of underlying tokens, in the same way you can participate in a mining pool if you lack the hashrate to mine independently.
There will be independent PoS validators who can afford upfront costs, but there are independent miners too who purchase lots of hardware. In PoS the next block is randomly distributed, so those with better hardware dont outperform. So you can validate off a solar powered raspberry pi or nuc if you'd like and not underperform someone with a highend gpu, so the hardware cost is much lower, added to this in long run it will be cheaper to participate in staking than having to replace gpus/asics to mine with.
I don't see how this leads you to think it is unfair in comparison to mining? Upfront costs pretty similar, running costs cheaper, long term hardware replacement costs much less.
There will be independent PoS validators who can afford upfront costs, but there are independent miners too who purchase lots of hardware. In PoS the next block is randomly distributed, so those with better hardware dont outperform. So you can validate off a solar powered raspberry pi or nuc if you'd like and not underperform someone with a highend gpu, so the hardware cost is much lower, added to this in long run it will be cheaper to participate in staking than having to replace gpus/asics to mine with.
I don't see how this leads you to think it is unfair in comparison to mining? Upfront costs pretty similar, running costs cheaper, long term hardware replacement costs much less.
They both require large financial investments don't they? And both PoW and PoS have pooling options if you want to invest less.
I'm not seeing much difference in terms of accessibility. In theory PoS is easier because PoW requires actual hardware and/or more technical knowledge.
I'm not seeing much difference in terms of accessibility. In theory PoS is easier because PoW requires actual hardware and/or more technical knowledge.
You pay electicity with fiat money.
Solar panels are a thing. Depending on the region you are setting them up in, a couple dozen panels and a battery could reliably power an ASIC 24/7.
Hydro, wind are other possibilities.
Hydro, wind are other possibilities.
“You don't need to buy electricity, you can just build your own power plant!”
Sure. You can easily create your own conventional fiat currency too, you just need to set up your own nation.
Sure. You can easily create your own conventional fiat currency too, you just need to set up your own nation.
PoW lacks fairness, most of the rewards go to folks who can allocate capital to very expensive mining operations. I would actually argue that PoS might be more fair/accessible than PoW is now.
What is fairness? In voting, we usually consider a system which permits those with more money to vote more times to be unfair. PoW is fair only if wealth is distributed fairly.
In voting, we consider voting more than once to be a criminal offense.
(For values of "we" denoting various constitutional democracies of the so-called free world.)
(For values of "we" denoting various constitutional democracies of the so-called free world.)
Good luck with that. The bitcoin core folks can't even agree to change blocksizes to increase transaction throughput. Switching to PoS is highly unlikely.
True, but the rest of us can switch blockchains.
Good luck with that too.
It's already being done. There is a ton of financial transactions in the DeFi space happening on Ethereum right now and other protocols on other chains are rapidly being developed and rolled out.
I'm not saying ether is a ghost town, I'm saying good luck making bitcoin an irrelevance to the point its energy use drops.
Ether is the number 2 coin and has been steadily gaining on Btc. Do you think everyone uses Btc exclusively?
No, but I don't think ether uses PoS either (though I know they've been trying to move to it for years).
Further, whether or not some folks move to ethereum is more or less irrelevant to whether BTC carries on doing what it's doing. The problem is not individuals making the switch, it's getting enough people to switch in order to reduce the energy footprint of BTC.
Further, whether or not some folks move to ethereum is more or less irrelevant to whether BTC carries on doing what it's doing. The problem is not individuals making the switch, it's getting enough people to switch in order to reduce the energy footprint of BTC.
They've been trying for years but now it's been running smoothly in production for several months. They plan a few minor tweaks, then after watching it some more they'll migrate the legacy chain to it. That's a fairly simple software engineering task, rather than the difficult research challenge that PoS has been until recently.
The other big change on the way is a massive increase in scalability, which I'm hoping will help move the market in a more sustainable direction.
The other big change on the way is a massive increase in scalability, which I'm hoping will help move the market in a more sustainable direction.
> $X is now considered by some important for our future finance system. While not everybody agrees, this may be more important than countless other ways we use energy, for much more trivial reasons. [...] Being judgmental about how others use energy they pay for reeks of hypocrisy, virtue signaling and holier-than-thou attitude.
Et voilà!
"Some" people think $X is now important, and thus, the rest of the world shall no longer be able to produce judgements on either $X or "those people".
I think it is definitely up for debate, and we can ask questions such as how absurd $X actually is (or is not), how absurdly wasteful (or not) $X is, how many "some people" is, whether the assumption that $X is important for $Y is true (or not), etc.
Please...
Et voilà!
"Some" people think $X is now important, and thus, the rest of the world shall no longer be able to produce judgements on either $X or "those people".
I think it is definitely up for debate, and we can ask questions such as how absurd $X actually is (or is not), how absurdly wasteful (or not) $X is, how many "some people" is, whether the assumption that $X is important for $Y is true (or not), etc.
Please...
Important difference between Bitcoin and everything else you mentioned: there is no incentive to improve the energy-efficiency of mining. We went from CPU to GPU to ASIC mining, each time reducing the per-hash energy consumption, and all the miners did was hash more using the same amount of energy. Whereas, for example, the energy used to watch porn -- energy spent by all the routers, switches, and servers involved -- will be reduced if technological improvements allow the same task to be accomplished with less energy.
Spending material wealth on mining is what makes it secure. We work on improving the per-hash cost because it makes it more difficult for someone with a brilliant technological innovation to compromise the security of the system.
And there is incentive to improve the total energy use. Every participant in the system pays for the electricity that secures bitcoin in the form of inflation and transaction fees. If some alternative to Bitcoin can provide all the same benefit but with less inflation and lower fees, then there is a good reason to switch to that alternative. And people are trying to innovate here continuously, the blockchain sector at this point is getting more investment than the AI sector.
And there is incentive to improve the total energy use. Every participant in the system pays for the electricity that secures bitcoin in the form of inflation and transaction fees. If some alternative to Bitcoin can provide all the same benefit but with less inflation and lower fees, then there is a good reason to switch to that alternative. And people are trying to innovate here continuously, the blockchain sector at this point is getting more investment than the AI sector.
Basically your argument is, "Bitcoin may not incentivize improvements in energy efficiency, so we should scrap Bitcoin and use something more efficient." Great, let's do it. The technology is already here, in fact, the technology was always there. Have a consortium of banks operate a distributed public ledger. The banks will charge fees to include transactions on the ledger, just like miners charge fees now, and the economic incentives to raise or lower fees will be similar -- but the fees will be lower because the consortium members will not need to cover the electricity cost of mining, only the cost of operating their servers.
The only problem Bitcoin mining solves is the lack of identification among the miners (i.e. the "Sybil attack" problem). Seems pretty obvious to solve the problem by introducing identity, particularly given that the large miners / mining pools are not really anonymous. Sacrifice the small miners who contribute little to the system, set up a consortium, and enjoy whatever benefits the distributed ledger provide without the waste.
(Yes I know, banks are evil, how dare anyone suggest that we acknowledge any authorities in a system, why should we trust the banks, etc.)
The only problem Bitcoin mining solves is the lack of identification among the miners (i.e. the "Sybil attack" problem). Seems pretty obvious to solve the problem by introducing identity, particularly given that the large miners / mining pools are not really anonymous. Sacrifice the small miners who contribute little to the system, set up a consortium, and enjoy whatever benefits the distributed ledger provide without the waste.
(Yes I know, banks are evil, how dare anyone suggest that we acknowledge any authorities in a system, why should we trust the banks, etc.)
This is a pretty classic HN take. "It's really easy... just do X".
This is a multi-trillion dollar opportunity, if it's that easy, then just do it!
This is a multi-trillion dollar opportunity, if it's that easy, then just do it!
Nope, not the same. Bitcoin mining does not "produce" hashes, it "produces" Bitcoin blocks. All that changed with the improvement in hashing speed is the number of hashes that must be computed before a block is added to the block chain.
i dont follow. moving from cpu to gpu to fpga to asics (each a gain in efficiency) did not reduce electricity consumption, because it in effect accelerated the rate at which the hashing complexity was raised by the network, in effect negating up any efficiency gains. that's exactly the phenomenon.
One bitcoin transaction uses FIVE HUNDRED THOUSAND TIMES more energy than one Visa transaction [1]. This is like lighting a cigar with a $500 bill and going "what, I have to light my cigars somehow, and inevitably it'll cost something. I spend money to meet my goals."
[1]: https://www.statista.com/statistics/881541/bitcoin-energy-co...
[1]: https://www.statista.com/statistics/881541/bitcoin-energy-co...
Compared to the cost of lighting a cigar with a matchstick, it'd be more like lighting it with a penny. Despite Visa transactions being cheap, bitcoin transactions are also very cheap -- you spend more power turning on your living room light for a few seconds. Probably best if we keep things in perspective.
Further: https://hackernoon.com/the-bitcoin-vs-visa-electricity-consu...
Further: https://hackernoon.com/the-bitcoin-vs-visa-electricity-consu...
Okay, so the gist of that article is that bitcoin burns about a third as much energy as the entire global institution of banking, based on some extremely back-of-the-envelope calculations.
Bitcoin's current market cap is about $600 billion. There are quadrillions of dollars worth of capital in the the world, mostly managed by banks. Bitcoin remains EXTREMELY inefficient in comparison.
Bitcoin's current market cap is about $600 billion. There are quadrillions of dollars worth of capital in the the world, mostly managed by banks. Bitcoin remains EXTREMELY inefficient in comparison.
When it became blindingly apparent that mining diamonds, gold and rare earth metals was proving harmful to societies (pollution, war etc.) countries put into place regulation to ensure that future mining would be conducted in ways to try and eliminate these harms.
Mining bitcoin is a growing contributor to energy consumption, and subsequently environmental damage and harm.
Similar precedent?
Mining bitcoin is a growing contributor to energy consumption, and subsequently environmental damage and harm.
Similar precedent?
Kind of but not really. People aren't upset at _how_ bitcoin is using electricity, they are upset at how much bitcoin is using electricity.
If you want to save the environment, regulate the production of electricity irrespective of how that electricity is put to use. Let the market figure out how to allocate the electricity to various tasks.
If you want to save the environment, regulate the production of electricity irrespective of how that electricity is put to use. Let the market figure out how to allocate the electricity to various tasks.
Energy consumption does not necessarily mean environmental harm. That's not a law of the universe at all.
Where do you think energy being consumed comes from?
Depends on the source, right? For example, in Iceland it's mostly geothermal power plants. And that's why electricity is so cheap there, and that's why, despite being one of the smallest countries in terms of population, it is #4 for Bitcoin mining: https://www.cryptoknowmics.com/news/bitcoin-mining-top-5-cou...
That’s a neat slight of hand trick you’ve pulled off there, connecting Bitcoin to entertainment in order to shame those of us concerned about Bitcoin energy usage.
Everything else you’ve listed provides subjective value to the user, which makes them hard to attack. Who can say what the value of skiing is to a society in terms of kWh? There is no way to objectively compare the value of energy spent on a ski lift vs. driving to see friends; that’s all subjective value.
But the issue is that Bitcoin isn’t supposed to provide subjective value, it’s supposed to provide objective value; it’s literally supposed to be money. Once you remember that it’s supposed to literally be money, then comparisons to ski lifts become extremely disingenuous. It also becomes fair to compare Bitcoin against other competitors that provide the exact same service to society, comparisons that make Bitcoin look very wasteful indeed.
Everything else you’ve listed provides subjective value to the user, which makes them hard to attack. Who can say what the value of skiing is to a society in terms of kWh? There is no way to objectively compare the value of energy spent on a ski lift vs. driving to see friends; that’s all subjective value.
But the issue is that Bitcoin isn’t supposed to provide subjective value, it’s supposed to provide objective value; it’s literally supposed to be money. Once you remember that it’s supposed to literally be money, then comparisons to ski lifts become extremely disingenuous. It also becomes fair to compare Bitcoin against other competitors that provide the exact same service to society, comparisons that make Bitcoin look very wasteful indeed.
it does provide objective value. bitcoin is a store of value. digital gold.
even if it never proves to be a viable currency, a secure digital store of value is objectively useful. especially if you're in a country experiencing institutional failure, risk of hyperinflation and so on.
even if it never proves to be a viable currency, a secure digital store of value is objectively useful. especially if you're in a country experiencing institutional failure, risk of hyperinflation and so on.
> it does provide objective value. bitcoin is a store of value. digital gold.
The only reason I don't laugh at these arguments is because I'm utterly exhausted by hearing them. The value prop for bitcoin is, fundamentally, circular. It's valuable because it's money (like gold!), but when you point out how it's an objectively crap currency, it's suddenly a store of value. When you ask why it has value, it's because it's the currency of the future. Round and round it goes.
> even if it never proves to be a viable currency, a secure digital store of value is objectively useful.
I mean, you're just asserting that it stores value. But, why does it have value?
The only reason I don't laugh at these arguments is because I'm utterly exhausted by hearing them. The value prop for bitcoin is, fundamentally, circular. It's valuable because it's money (like gold!), but when you point out how it's an objectively crap currency, it's suddenly a store of value. When you ask why it has value, it's because it's the currency of the future. Round and round it goes.
> even if it never proves to be a viable currency, a secure digital store of value is objectively useful.
I mean, you're just asserting that it stores value. But, why does it have value?
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> But the issue is that Bitcoin isn’t supposed to provide subjective value, it’s supposed to provide objective value; it’s literally supposed to be money.
Money's value is also subjective, I'm not sure what you think is objective about it.
Sounds like you're just trying to dodge the comparison.
Money's value is also subjective, I'm not sure what you think is objective about it.
Sounds like you're just trying to dodge the comparison.
Definitionally, money’s value is not supposed to be subjective.
> Definitionally, money’s value is not supposed to be subjective.
Not only is that not true, but if to was it would just render “money” a non-concept, because definitionally value (in general, not just of money) is subjective.
Not only is that not true, but if to was it would just render “money” a non-concept, because definitionally value (in general, not just of money) is subjective.
Ah, the “everything is subjective” rabbit hole. No thanks, that’s never a useful conversation.
The purpose of any monetary system is to facilitate the exchange of goods and services. That’s why humans make money; to avoid the need to barter or depend on social credit systems that don’t scale well. This provides us some objective goals with which we can compare and contrast monetary systems against; while what one does with money is subjective, we can objectively compare the efficiency and ease with which a monetary system can facilitate transactions. In this area Bitcoin does terribly. This is probably why Bitcoin advocates have mostly moved onto “it’s a store of value”, that’s more a more defensible proposition.
The purpose of any monetary system is to facilitate the exchange of goods and services. That’s why humans make money; to avoid the need to barter or depend on social credit systems that don’t scale well. This provides us some objective goals with which we can compare and contrast monetary systems against; while what one does with money is subjective, we can objectively compare the efficiency and ease with which a monetary system can facilitate transactions. In this area Bitcoin does terribly. This is probably why Bitcoin advocates have mostly moved onto “it’s a store of value”, that’s more a more defensible proposition.
> Ah, the “everything is subjective” rabbit hole
“Everything is subjective” is a (reasonable) epistemological argument about all access to data about the world being through subjective lenses, and thus all conclusions about the world being grounded in subjectivity. But that's not the sense in which value specifically is subjective.
Value specifically is subjective because value is dependent on the subjective utility functions of people who have (or who might seek to acquire) the good and it's competing/alternative goods.
> This provides us some objective goals
That's about the value of a monetary system not the value of money, but both the specific goals, and more particularly how they are weighted against each other, remain subjective and the source of considerable disagreement.
“Everything is subjective” is a (reasonable) epistemological argument about all access to data about the world being through subjective lenses, and thus all conclusions about the world being grounded in subjectivity. But that's not the sense in which value specifically is subjective.
Value specifically is subjective because value is dependent on the subjective utility functions of people who have (or who might seek to acquire) the good and it's competing/alternative goods.
> This provides us some objective goals
That's about the value of a monetary system not the value of money, but both the specific goals, and more particularly how they are weighted against each other, remain subjective and the source of considerable disagreement.
> we can objectively compare the efficiency and ease with which a monetary system can facilitate transactions.
Ok. How much does ease of use matter for the value of a currency? 50%? 20%? 80%? What about all it's other characteristics?
You can certainly be objective when comparing each characteristic in isolation but the value of the currency depends on how all of them are weighted against each other, and that is completely subjective.
Just like the value of anything else. Even the same person might change the weights they use to value something depending on what's going on in their life.
Ok. How much does ease of use matter for the value of a currency? 50%? 20%? 80%? What about all it's other characteristics?
You can certainly be objective when comparing each characteristic in isolation but the value of the currency depends on how all of them are weighted against each other, and that is completely subjective.
Just like the value of anything else. Even the same person might change the weights they use to value something depending on what's going on in their life.
Ah, I see where this went wrong. I really should have been using the word "utility", not "value". This would've gone much smoother if I'd used that word throughout instead of "value".
The original poster's argument was that we all "waste" power watching pornography and going on skiing trips, so how dare we judge Bitcoin. My counter argument is that they're mixing up energy usage between subjective and objective utility in an attempt to shift Bitcoin into a harder to compare category.
Subjectively, how can we judge the relative utility of a kWh spent on entertainment? The utility of each of the activities listed (minus Bitcoin) are all literally in the eye of the beholder; we can't possibly hope to compare the utility of a kWh spent on pornography vs. skiing. Obviously we can compare energy usage per minute of each, but comparing the utility of a kWh spent running a ski lift vs. PornHub's servers really just breaks down to which form of entertainment you value more.
My issue is that Bitcoin is supposed to do something objective; it's supposed to be money. This means that we absolutely can (and should!) sit down and compare it against its alternatives on numeric values, such as kWh consumption. The moment one starts actually comparing Bitcoin against its direct competitors in measurable categories it starts looking really bad, which is probably why its proponents try to prevent that.
> You can certainly be objective when comparing each characteristic in isolation but the value of the currency depends on how all of them are weighted against each other, and that is completely subjective.
Back to value now.
Ideally currencies aren't supposed to have value per se, rather other things are supposed to have value in terms of it. Obviously this runs into the reality of multiple currencies and exchange rates, but at the local level it actually works this way. You and I might disagree about the relative value of a product, but we express our own disagreement in terms of dollars. We don't disagree about the relative value of the dollar itself. This is why inflation is usually measured in the shift of common goods and services in terms of dollars, since measuring the value of the dollar itself is a fool's errand.
As far as the value of Bitcoin in terms of USD, that's a subject that has been pretty thoroughly dug into. I doubt that I'll add anything new and interesting here.
The original poster's argument was that we all "waste" power watching pornography and going on skiing trips, so how dare we judge Bitcoin. My counter argument is that they're mixing up energy usage between subjective and objective utility in an attempt to shift Bitcoin into a harder to compare category.
Subjectively, how can we judge the relative utility of a kWh spent on entertainment? The utility of each of the activities listed (minus Bitcoin) are all literally in the eye of the beholder; we can't possibly hope to compare the utility of a kWh spent on pornography vs. skiing. Obviously we can compare energy usage per minute of each, but comparing the utility of a kWh spent running a ski lift vs. PornHub's servers really just breaks down to which form of entertainment you value more.
My issue is that Bitcoin is supposed to do something objective; it's supposed to be money. This means that we absolutely can (and should!) sit down and compare it against its alternatives on numeric values, such as kWh consumption. The moment one starts actually comparing Bitcoin against its direct competitors in measurable categories it starts looking really bad, which is probably why its proponents try to prevent that.
> You can certainly be objective when comparing each characteristic in isolation but the value of the currency depends on how all of them are weighted against each other, and that is completely subjective.
Back to value now.
Ideally currencies aren't supposed to have value per se, rather other things are supposed to have value in terms of it. Obviously this runs into the reality of multiple currencies and exchange rates, but at the local level it actually works this way. You and I might disagree about the relative value of a product, but we express our own disagreement in terms of dollars. We don't disagree about the relative value of the dollar itself. This is why inflation is usually measured in the shift of common goods and services in terms of dollars, since measuring the value of the dollar itself is a fool's errand.
As far as the value of Bitcoin in terms of USD, that's a subject that has been pretty thoroughly dug into. I doubt that I'll add anything new and interesting here.
> Ideally currencies aren't supposed to have value per se,
According to whose ideals? Currency is a thing used as a medium of exchange. Like any thing used in trade, it will have value determined by supply and demand, both to individuals and in broad markets, and like all things that value will vary individual in ways that are subjective but in some broad patterns predictable (e.g., declining marginal utility is true of money as it is of anything else, though the fungibility of money suggests that the decline should be slower in terms of how much additional utility you can derive from money, compared to other things, before losing any given proportion of starting marginal utility.)
> You and I might disagree about the relative value of a product, but we express our own disagreement in terms of dollars.
That's not because we agree on the value of dollars ($/util) but because we agree to use dollars as a currency of account and/or medium of exchange.
> We don't disagree about the relative value of the dollar itself.
Relative to... what? I mean, the entire idea of mutually beneficial trade requires disagreement on relative value of the goods exchanged, and that doesn't change when one side of the exchange is dollars. So, yes, we probably do disagree on the most relevant relative value of dollars to the exchange, otherwise the exchange wouldn't happen.
I don't care how you value something (in terms of how much utility it gives you), I care how much utility it will cost me to get it from you. I don't need to concur with you on the value of the dollar to exchange dollars with you for goods.
> This is why inflation is usually measured in the shift of common goods and services in terms of dollars, since measuring the value of the dollar itself is a fool's errand.
Measuring what you can exchange something for is measuring it's (market) value, which is the only measurable (on a ratio level) kind of value. Subjective utility can be measured (with difficulty), but only to an ordinal level (x > y), and only for an individual.
According to whose ideals? Currency is a thing used as a medium of exchange. Like any thing used in trade, it will have value determined by supply and demand, both to individuals and in broad markets, and like all things that value will vary individual in ways that are subjective but in some broad patterns predictable (e.g., declining marginal utility is true of money as it is of anything else, though the fungibility of money suggests that the decline should be slower in terms of how much additional utility you can derive from money, compared to other things, before losing any given proportion of starting marginal utility.)
> You and I might disagree about the relative value of a product, but we express our own disagreement in terms of dollars.
That's not because we agree on the value of dollars ($/util) but because we agree to use dollars as a currency of account and/or medium of exchange.
> We don't disagree about the relative value of the dollar itself.
Relative to... what? I mean, the entire idea of mutually beneficial trade requires disagreement on relative value of the goods exchanged, and that doesn't change when one side of the exchange is dollars. So, yes, we probably do disagree on the most relevant relative value of dollars to the exchange, otherwise the exchange wouldn't happen.
I don't care how you value something (in terms of how much utility it gives you), I care how much utility it will cost me to get it from you. I don't need to concur with you on the value of the dollar to exchange dollars with you for goods.
> This is why inflation is usually measured in the shift of common goods and services in terms of dollars, since measuring the value of the dollar itself is a fool's errand.
Measuring what you can exchange something for is measuring it's (market) value, which is the only measurable (on a ratio level) kind of value. Subjective utility can be measured (with difficulty), but only to an ordinal level (x > y), and only for an individual.
What do you mean by "objective value"? My belief is that such a thing doesn't exist.
> Being judgmental about how others use energy they pay for reeks of hypocrisy, virtue signaling and holier-than-thou attitude.
It's impossible to have a good debate if you from the get-go insult everyone that disagree with you and heighten bitcoin to something not allowed to be criticized because some people believe it can be important in the future. As if that absolves something from all sins.
It's impossible to have a good debate if you from the get-go insult everyone that disagree with you and heighten bitcoin to something not allowed to be criticized because some people believe it can be important in the future. As if that absolves something from all sins.
> Bitcoin is now considered by some important for our future finance system
Yeah, but those people are wrong. It's perfectly reasonable to judge them for doing harmful actions in service of a wrong belief.
Yeah, but those people are wrong. It's perfectly reasonable to judge them for doing harmful actions in service of a wrong belief.
Beliefs that used to be "wrong" and now are considered right: abolitionism, homosexuality, marijuana.
How do you know this is a wrong belief that will stay wrong?
How do you know this is a wrong belief that will stay wrong?
The existence of other beliefs that were overturned, even ones with a high emotional value now does not support unrelated ideas.
Put more simply: just because gay rights campaigners were ultimately vindicated doesn’t mean you’re their modern equivalent.
Put more simply: just because gay rights campaigners were ultimately vindicated doesn’t mean you’re their modern equivalent.
> How do you know this is a wrong belief that will stay wrong?
How do you know it won't?
Just because some beliefs that used to be "wrong" are now considered "right", does not mean all beliefs that used to be "wrong" will in the future be considered "right".
As the quote says, "They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown."
How do you know it won't?
Just because some beliefs that used to be "wrong" are now considered "right", does not mean all beliefs that used to be "wrong" will in the future be considered "right".
As the quote says, "They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown."
Maybe a better comparison would be mutually assured destruction. Enormous, world-level resources spent towards trying to ensure an outcome for something that no one wants to have happen. Those enriched along the way were the purveyors, not the population.
This is a bit of a tangent, but I think often of how wrong it is that we allow indoor marijuana production in places like Canada and the Western USA where it's legal. What a horrible waste of energy.
I don't know for certain, of course; I just very strongly suspect it.
Ah, the brave crypto millionaires marching and fighting for human rights.
Why are they wrong? People who consider Bitcoin important are not a homogeneous mass — are you saying all those people are wrong, or some portion of it?
I believe that everyone who thinks Bitcoin is important to the future of the global financial system is wrong about that particular point. (They might be fine people in other ways, or have other reasons to like Bitcoin, sure).
Ok but why.
Here is a primer on why BTC and crypto are important to the future of the global financial system.
https://research.stlouisfed.org/publications/review/2021/02/...
Here is a primer on why BTC and crypto are important to the future of the global financial system.
https://research.stlouisfed.org/publications/review/2021/02/...
Why are they wrong?
They're completely ignoring the concept of magnitude, and realistically their claim is "we use energy for other stuff, so there's nothing wrong with using massive amounts of energy for X". They're making an implicit premise that using large amounts of energy, which causes harm to humans, is okay. If you accept that premise, okay fine, but I don't.
As another poster here shared, a single transaction uses upwards of hundreds of kwh. That kind of energy that moves thousands of pounds hundreds of miles, or power a typical US household for almost an entire month.
As another poster here shared, a single transaction uses upwards of hundreds of kwh. That kind of energy that moves thousands of pounds hundreds of miles, or power a typical US household for almost an entire month.
If you think this creates a financial system that's much more transparent and solid than the current one which is completely broken, than that energy usage is worth it. Also you shouldn't look at it in terms of energy/transaction, the energy consumption isn't a function of transactions.
A fully trusted and decentralized financial system is great, but it's not going to change the fundamental power relations that cause so much harm in our society. To me that makes the process not worth it
I believe the research is useful, but to base an international currency around it with these costs is not
I believe the research is useful, but to base an international currency around it with these costs is not
As long as it stops a few people in the world controlling the money supply, that's a big win from my perspective.
I've never really understood why people ascribe such magical capabilities to Bitcoin. Bitcoin has really bad wealth inequality, arguably worse than the rest of America does.
> If you think this creates a financial system that's much more transparent and solid than the current one which is completely broken, than that energy usage is worth it.
Bitcoin is capable of handling 4 transactions a second. If you've created a financial system that consumes more energy than Argentina and can't actually handle the transaction requirements of a decent sized mall, then I'd begin to wonder what definition of "solid" you're using.
> Also you shouldn't look at it in terms of energy/transaction, the energy consumption isn't a function of transactions.
We can look at energy consumption per block, but there's no way to slice and dice this in a way that doesn't make Bitcoin look like a massive waste of energy compared to competitive systems.
Bitcoin is capable of handling 4 transactions a second. If you've created a financial system that consumes more energy than Argentina and can't actually handle the transaction requirements of a decent sized mall, then I'd begin to wonder what definition of "solid" you're using.
> Also you shouldn't look at it in terms of energy/transaction, the energy consumption isn't a function of transactions.
We can look at energy consumption per block, but there's no way to slice and dice this in a way that doesn't make Bitcoin look like a massive waste of energy compared to competitive systems.
Because Bitcoin is not important to our future finance system. It does not solve any problem that any meaningful fraction of people cares about.
While you might believe that, the market disagrees with you.
That is not true. For example I hold bitcoin. But I also don't believe that bitcoin will replace the financial system or will serve any real purpose in the future.
I am just speculating on its value.
People speculate on loads of assets which have no real life utility. For example, art or classic cars.
People speculate on loads of assets which have no real life utility. For example, art or classic cars.
Just because you are speculating doesn't mean other who also hold it are speculating. Personally, I hold it because I don't want my dollars to get perpetually diluted because of endless money printing, stimulus, bailouts, etc.
Also, Bitcoin has value and if you wanted, you unlock it and spend your money without even selling your asset, there was a discussion the other day about defi, highly recommend checking out MakerDAO if you want to have a practical use for your Bitcoins.
Also, Bitcoin has value and if you wanted, you unlock it and spend your money without even selling your asset, there was a discussion the other day about defi, highly recommend checking out MakerDAO if you want to have a practical use for your Bitcoins.
You're getting a lot of replies but I don't see anyone answering the initial questions. Some really rough math for playing video games:
Assuming I'm playing with someone across the country, I hop 13 routers in a quick traceroute.
Assuming each router is commercial hardware (~400W) and my traffic completely saturates them, that's 5,200W.
Plus the two machines at the end of each line, assuming they're beefy gaming PCs/servers with 1,000W power supplies at 100% load just for this game. That's 2,000W.
Playing a 30 minute Starcraft game comes to 3.6kWh, or two orders of magnitude less than a bitcoin transaction. It's almost certainly less than that since my assumptions were very conservative.
~~~
For something live like a concert, a 54,000 sqft hall uses about 1,100 kWh of power per day (lighting, HVAC). Plus 15kW of speakers for a 6 hour concert is 1,190 kWh. Divided by the 6000 people attending, is 0.2 kWh per attendee. Adding a 10 mile solo drive per person is about 3 kWh. Or again about 2 orders of magnitude less.
~~~
These aren't good comparisons when I could do hundreds of each of the activities you listed for the cost of one transaction.
Assuming I'm playing with someone across the country, I hop 13 routers in a quick traceroute.
Assuming each router is commercial hardware (~400W) and my traffic completely saturates them, that's 5,200W.
Plus the two machines at the end of each line, assuming they're beefy gaming PCs/servers with 1,000W power supplies at 100% load just for this game. That's 2,000W.
Playing a 30 minute Starcraft game comes to 3.6kWh, or two orders of magnitude less than a bitcoin transaction. It's almost certainly less than that since my assumptions were very conservative.
~~~
For something live like a concert, a 54,000 sqft hall uses about 1,100 kWh of power per day (lighting, HVAC). Plus 15kW of speakers for a 6 hour concert is 1,190 kWh. Divided by the 6000 people attending, is 0.2 kWh per attendee. Adding a 10 mile solo drive per person is about 3 kWh. Or again about 2 orders of magnitude less.
~~~
These aren't good comparisons when I could do hundreds of each of the activities you listed for the cost of one transaction.
and this post reeks of missing the point. people should be judged for how they consume energy because excess consumption is simply wasteful, and in the middle of the ongoing global catastrophe called climate change - isn't something we can exactly afford
obviously this raises the question of what is and isn't excessive, but I think there are apparent cases where the benefits of excessive energy consumption people clearly don't out weight the cost - see flying, cruises, rampant shopping, etc.
I think Bitcoin and similar cryptocurrencies fall into that category, especially when there are other coins that require nearly as many resources to function
obviously this raises the question of what is and isn't excessive, but I think there are apparent cases where the benefits of excessive energy consumption people clearly don't out weight the cost - see flying, cruises, rampant shopping, etc.
I think Bitcoin and similar cryptocurrencies fall into that category, especially when there are other coins that require nearly as many resources to function
[deleted]
> Being judgmental about how others use energy they pay for reeks of hypocrisy, virtue signaling and holier-than-thou attitude.
No, seeing a bunch of rich nerds wasting massive amounts of energy in a time of environmental crisis so they can make millions convincing people a store of value is actually a currency, and then getting mad about it, is not hypocritical.
> While not everybody agrees, this may be more important than countless other ways we use energy,
It's not. It's a massive waste. Stop killing the planet.
No, seeing a bunch of rich nerds wasting massive amounts of energy in a time of environmental crisis so they can make millions convincing people a store of value is actually a currency, and then getting mad about it, is not hypocritical.
> While not everybody agrees, this may be more important than countless other ways we use energy,
It's not. It's a massive waste. Stop killing the planet.
Hell, just consider that it's a store of value that costs $12B+ / year to secure.
I don't know that name-calling adds much value to the conversation, but I will say it's a failing strategy to try and make value judgements for other people. The way forward is technological advancement. That has always been the case. We're not going to solve climate crisis by stifling anything as should be evident just by looking at China. I'd imagine we're all much better off supporting green energy rather than pointing fingers at anyone who has a different value judgement for how that energy should be used.
>How much energy does watching porn consume?
I guess if you got stats on how much porn they watch in Argentina you would be well on your way to answering this question. Same for the rest.
I think the more interesting thing is: as bitcoin becomes more difficult to mine energy needs go up, but countries are working hard to bring their energy usage down. Can bitcoin be overtaken on the downward journey by a country, or will it always be bitcoin overtaking countries on its upward swing. Is there some country decreasing its usage as bitcoin increases its, and the two pass each other like ships in the night.
What is the next country most likely to be surpassed by bitcoin?
I guess if you got stats on how much porn they watch in Argentina you would be well on your way to answering this question. Same for the rest.
I think the more interesting thing is: as bitcoin becomes more difficult to mine energy needs go up, but countries are working hard to bring their energy usage down. Can bitcoin be overtaken on the downward journey by a country, or will it always be bitcoin overtaking countries on its upward swing. Is there some country decreasing its usage as bitcoin increases its, and the two pass each other like ships in the night.
What is the next country most likely to be surpassed by bitcoin?
Stats not even needed.
If the enegry used in Argentina <= energy used in bitcoin transactions.
and, if people living in Argentina are doing any of the things listed (watching porn, etc).
Then the energy used to watch all the porn in Argentina must still be included as part of the Energy use of Argentina; thus less than the use of bitcoin. (I guess this would have to assume the porn is also hosted in Argentina; but I would imagine at least 1 porn unit is hosted and viewed internally to Argentina).
If the enegry used in Argentina <= energy used in bitcoin transactions.
and, if people living in Argentina are doing any of the things listed (watching porn, etc).
Then the energy used to watch all the porn in Argentina must still be included as part of the Energy use of Argentina; thus less than the use of bitcoin. (I guess this would have to assume the porn is also hosted in Argentina; but I would imagine at least 1 porn unit is hosted and viewed internally to Argentina).
obviously, but you still don't know how much greater the bitcoin amount is the porn amount.
Also how much bitcoin is mined in Argentina, obviously less than 50% of the world's bitcoin - but how much less!?!
Also how much bitcoin is mined in Argentina, obviously less than 50% of the world's bitcoin - but how much less!?!
If those damned Argentinians would just mine bitcoin exclusively, we could all get on with our lives.
We also need to talk to South Africa about Youtube.
We also need to talk to South Africa about Youtube.
> as bitcoin becomes more difficult to mine energy needs go up
Difficulty adjusts up and down as needed to maintain an average of 1 block every 10 minutes, it doesn't just tend to infinity.
It's mostly correlated to the block reward, miners won't spend more money on energy than they get back from mining blocks.
Difficulty adjusts up and down as needed to maintain an average of 1 block every 10 minutes, it doesn't just tend to infinity.
It's mostly correlated to the block reward, miners won't spend more money on energy than they get back from mining blocks.
I may be confused here. But the regulation mechanism to get to 1block/min is to ask miners to do more computations, right? Making the problem harder in this context does have the effect of more power consumed. A block is an answer to the riddle who's parameters are being regulated. So the block rate is not important, number of computations is. And that is directly linked with power consumption.
It's 1 block every 10 minutes.
The difficulty adjustment goes both ways, if blocks start taking longer than 10 minutes to be mined (for example if some large miner stops mining for some reason) the difficulty goes down, which likely means less energy is used.
You're correct that the actual adjustment is on the number of computations, so the correlation to energy use isn't direct, different machines can be more or less efficient at making those calculations.
The difficulty adjustment goes both ways, if blocks start taking longer than 10 minutes to be mined (for example if some large miner stops mining for some reason) the difficulty goes down, which likely means less energy is used.
You're correct that the actual adjustment is on the number of computations, so the correlation to energy use isn't direct, different machines can be more or less efficient at making those calculations.
So basically the more popular bitcoin is, more inefficient it is. Great.
Not necessarily, depends on the ratio between users and value of the block reward.
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I mean it's just a standard economic argument concerning the use of scarce resources. All your examples have a higher impact on the real economy vs. Bitcoin. As in, these industries employ large numbers of people and sustain economic growth to some degree, in contrast Bitcoin services a comparatively limited population engaged in limited productive activity relative to its energy use.
People are free to be judgmental about anything they like.
People are free to be judgmental about anything they like.
Even more directly - How much energy does all the world's "legacy" Fintech use?
Banks, exchanges, government tax agencies, accountants, money printing, retail cash machines (ATM, registers, etc) and all the way to gold mining.
Banks, exchanges, government tax agencies, accountants, money printing, retail cash machines (ATM, registers, etc) and all the way to gold mining.
If you want to analogize 1:1, a bitcoin transaction consumes approximately five hundred thousand times more energy than a visa transaction [1].
[1]: https://www.statista.com/statistics/881541/bitcoin-energy-co...
[1]: https://www.statista.com/statistics/881541/bitcoin-energy-co...
Please read. Nic Carter is a good place to start.
https://www.coindesk.com/what-bloomberg-gets-wrong-about-bit...
"First of all, Bitcoin and Visa are fundamentally different systems. Bitcoin is a complete, self-contained monetary settlement system; Visa transactions are non-final credit transactions that rely on external underlying settlement rails. Visa relies on ACH, Fedwire, SWIFT, the global correspondent banking system, the Federal Reserve and, of course, the military and diplomatic strength of the U.S. government to ensure all of the above are working smoothly.
Any energy comparison must take the above into account – including the externalities from the extraction of oil, which implicitly backs the dollar. As those who make this comparison inevitably fail to mention, the dollar’s ubiquity is partly due to a covert arrangement whereby the U.S. provides military support to countries like Saudi Arabia that agree to sell oil exclusively for dollars. It’s worth noting that the grossly oversized U.S. military, whose presence worldwide is necessary to backstop the international dollar system, is the largest single consumer of oil worldwide."
"First of all, Bitcoin and Visa are fundamentally different systems. Bitcoin is a complete, self-contained monetary settlement system; Visa transactions are non-final credit transactions that rely on external underlying settlement rails. Visa relies on ACH, Fedwire, SWIFT, the global correspondent banking system, the Federal Reserve and, of course, the military and diplomatic strength of the U.S. government to ensure all of the above are working smoothly.
Any energy comparison must take the above into account – including the externalities from the extraction of oil, which implicitly backs the dollar. As those who make this comparison inevitably fail to mention, the dollar’s ubiquity is partly due to a covert arrangement whereby the U.S. provides military support to countries like Saudi Arabia that agree to sell oil exclusively for dollars. It’s worth noting that the grossly oversized U.S. military, whose presence worldwide is necessary to backstop the international dollar system, is the largest single consumer of oil worldwide."
Obviously there's more infrastructure behind USD transactions than just Visa. But that doesn't change much about my initial comparison — Fedwire energy costs are low and amortize across many transactions, as is true of the rest of the infrastructure you list.
And if you want to start talking about the Fed and US imperial power, then we have to start talking about the bitcoin hype industry which exists to pump the value of various cryptocurriencies. Cruises, conferences, etc, etc. Besides, it's not as if we could get rid of US imperialism or oil extraction by switching from USD to BTC. You're just naming tangentially-related institutions with high externalities, not actual costs of USD transactions.
This is a deliberate obfuscation on the massive inefficiency in Bitcoin's transaction infrastructure. We don't need to talk about geopolitical power to talk about Bitcoin's transparent wastefulness.
And if you want to start talking about the Fed and US imperial power, then we have to start talking about the bitcoin hype industry which exists to pump the value of various cryptocurriencies. Cruises, conferences, etc, etc. Besides, it's not as if we could get rid of US imperialism or oil extraction by switching from USD to BTC. You're just naming tangentially-related institutions with high externalities, not actual costs of USD transactions.
This is a deliberate obfuscation on the massive inefficiency in Bitcoin's transaction infrastructure. We don't need to talk about geopolitical power to talk about Bitcoin's transparent wastefulness.
A better comparison with Visa is perhaps an intra-exchange transaction, such as Bakkt? Or perhaps a Bitcoin Lightning transaction?
When bitcoin provides 1% of the services that the "legacy" financial world does, let's talk.
Nobody uses the gold standard anymore.
I tried to make this point on Reddit, and was downvoted to a smoking hole in the ground by people who were complaining that they can't get GPUs to play games, and that it's not eco-friendly. Of course, playing games on high powered GPUs is super eco-friendly, as are many other ways of making money...
Half of them think people are mining Bitcoin on GPUs, and almost none of them know about Proof of Stake coins. Not that I want to excuse the egregious power consumption of PoW coins, but I do wish the holier-than-thou crowd would at least do a little more research.
Half of them think people are mining Bitcoin on GPUs, and almost none of them know about Proof of Stake coins. Not that I want to excuse the egregious power consumption of PoW coins, but I do wish the holier-than-thou crowd would at least do a little more research.
Yes, high powered gaming isn't eco friendly either, but can we please stop ignoring magnitude and utility in this thread?
You can power a typical US household for almost an entire month using the energy of a single bitcoin transaction. What utility does Bitcoin bring with that single transaction? Is it worth the measurable harm it's doing to our ecosystem and human lives?
You can power a typical US household for almost an entire month using the energy of a single bitcoin transaction. What utility does Bitcoin bring with that single transaction? Is it worth the measurable harm it's doing to our ecosystem and human lives?
I wasn't ignoring it, only pointing out that they were ignoring the eco-unfriendliness of their preferred use of GPUs (single users with single GPU, also not mining fulltime probably since it's in their PC). Please tell me you see the hypocrisy.
I'm personally fully onboard with Bitcoin and all PoW coins being crap and wish they would die, leaving only PoS coins in the crypto space.
I'm personally fully onboard with Bitcoin and all PoW coins being crap and wish they would die, leaving only PoS coins in the crypto space.
Some people are really out of touch. By the time they found out about Bitcoin in the past couple years it had moved past GPU mining almost a decade ago.
The price of all cryptocurrencies more or less move in tandem, so that when Bitcoin has a good time, so does all the cryptocurrencies that can be mined with GPUs.
Most people have a job and game part-time. GPUs in gaming rigs are not powered on 24/7. Let's be honest about this.
> How much energy does watching porn consume? Playing video games? Watching a movie? Browsing Facebook? Using a ski chair? Visiting an amusement park? Going in vacation? Cooking your favorite type of food? Making ice cream? Driving to your friends? Listening to music? Concerts? Having a party? Banking? Casinos?
The difference is that, for all of these, the incentive is to lower the energy usage. For Bitcoin, the incentive is to increase the energy usage, until the amount of energy used costs the same as the amount of Bitcoin received by the miners.
The difference is that, for all of these, the incentive is to lower the energy usage. For Bitcoin, the incentive is to increase the energy usage, until the amount of energy used costs the same as the amount of Bitcoin received by the miners.
The almighty dollar rights all wrongs. If I’m paying for it, what do you care? This is a slightly dressed up Tragedy in The Commons.
What if the externality is not into the price? When the externality of it (pollution, global warming, etc) is not within the price, then yes, we do care, because you aren't paying the true cost and you transfer that cost to me.
If you have a carbon tax? Then sure. But if you dump all your emission on the rest of us and wash your hand because "you paid for it", then yes, we will question the value of a waste of energy because that's really the only thing we can do.
If you have a carbon tax? Then sure. But if you dump all your emission on the rest of us and wash your hand because "you paid for it", then yes, we will question the value of a waste of energy because that's really the only thing we can do.
Yes, you are agreeing with me. A tragedy in the commons is a negative thing. That’s why I used that language.
Yeah I don't really understand -- normally people buying things (energy) at a price the supplier is willing to sell is good. If energy is priced appropriately, this shouldn't be a problem.
Are people concerned with the negative externalities of energy usage? If so, it seems like the real issue is that all energy use is "bad", anything that causes people to severely increase their energy usage is especially bad, and bitcoin is one such thing.
But even though it's bitcoin in practice, the real issue seems like not being able to correctly price energy.
Are people concerned with the negative externalities of energy usage? If so, it seems like the real issue is that all energy use is "bad", anything that causes people to severely increase their energy usage is especially bad, and bitcoin is one such thing.
But even though it's bitcoin in practice, the real issue seems like not being able to correctly price energy.
> Are people concerned with the negative externalities of energy usage?
YES.
> anything that causes people to severely increase their energy usage is especially bad
YES.
This is not hard. The earth's climate is being affected by the emissions from our energy demands. Most nations are trying to control emissions and one major way of doing that is energy efficiency. Bitcoin comes along and is anti-efficient, incentivises using as much power as is still (just about) profitable in mining, and creates nothing but a speculative financial instrument on the back of it. It looks like the worst kind of insult to anyone that gives a crap about climate change.
YES.
> anything that causes people to severely increase their energy usage is especially bad
YES.
This is not hard. The earth's climate is being affected by the emissions from our energy demands. Most nations are trying to control emissions and one major way of doing that is energy efficiency. Bitcoin comes along and is anti-efficient, incentivises using as much power as is still (just about) profitable in mining, and creates nothing but a speculative financial instrument on the back of it. It looks like the worst kind of insult to anyone that gives a crap about climate change.
Maybe this is too idealistic, but like I said, the root issue feels like energy not being priced correctly (i.e., in a way that captures the true costs of energy consumption to the climate/planet).
Rough analogy to "safer systems over safer processes": if an intern presses a big red button that brings down google, the problem isn't that they pressed that button, it's that there's a button any intern can just press to bring down google.
The fact that the market allows trades that are net negative is a bug. Bitcoin just happens to be the intern that pressed the button.
BUT, if we're in a state where we can't get rid of the big red button, it seems reasonable to get people to stop pressing it in the interim.
Rough analogy to "safer systems over safer processes": if an intern presses a big red button that brings down google, the problem isn't that they pressed that button, it's that there's a button any intern can just press to bring down google.
The fact that the market allows trades that are net negative is a bug. Bitcoin just happens to be the intern that pressed the button.
BUT, if we're in a state where we can't get rid of the big red button, it seems reasonable to get people to stop pressing it in the interim.
Pricing in the 'true' externalities is a hard problem in itself to define. It's a problem that would require some sort of global standard (maybe in 20 years then), and one that would be pushed back upon by a large number of industries and interests.
There are baby steps in some places, and there is massive progress in some countries towards renewables and carbon-zero energy. But in the current state, huge increases in energy consumption are a bad thing.
So I think we're in a state where we could potentially get rid of the big red button but a lot of people don't really want to and the realistic chances of doing so are basically zero. And in that situation, yes, we call out the button pressers.
There are baby steps in some places, and there is massive progress in some countries towards renewables and carbon-zero energy. But in the current state, huge increases in energy consumption are a bad thing.
So I think we're in a state where we could potentially get rid of the big red button but a lot of people don't really want to and the realistic chances of doing so are basically zero. And in that situation, yes, we call out the button pressers.
> If energy is priced appropriately, this shouldn't be a problem.
It's not a problem only in the ethical framework of the free market, where the morality of any kind of consumption is judged only by its cost to society.
So for example, in the free market ethics, it's perfectly acceptable, when the water is generally scarce, for somebody to have a swimming pool in their garden (definitely not a necessity in that situation), as long as he can pay for it.
But many, if not all, societies do not fully accept this ethical framework. Often, we collectively agree to limit frivolous usages of extremely scarce resources.
It's not a problem only in the ethical framework of the free market, where the morality of any kind of consumption is judged only by its cost to society.
So for example, in the free market ethics, it's perfectly acceptable, when the water is generally scarce, for somebody to have a swimming pool in their garden (definitely not a necessity in that situation), as long as he can pay for it.
But many, if not all, societies do not fully accept this ethical framework. Often, we collectively agree to limit frivolous usages of extremely scarce resources.
Climate change. Carbon taxes don't exist right now. So you aren't paying for it.
People who use disproportionately large amounts of electricity should absolutely be judged (yes, this includes things other than btc).
People who use disproportionately large amounts of electricity should absolutely be judged (yes, this includes things other than btc).
Yes, I agree. This is why I described it as a tragedy in the commons.
Some people do say that whatever anything costs is what it is worth.
If Bitcoin uses that amount of energy now, imagine how much it will consume when a large amount of the population actualy uses it for payments.
How many people use it for payments is not the right metric, it’s not the payments that cost a lot of electricity it’s the competition to win block rewards where more energy means a higher chance of mining a block.
Indirectly, if a lot of people use it for payments it may be worth more and attract more mining competition.
Indirectly, if a lot of people use it for payments it may be worth more and attract more mining competition.
Bitcoin and most(all?) crypto currencies pretty much suck for payments. I think a BTC transaction costs around $16 USD just to get it on the blockchain now. Plus transactions are not private, and they are permanently public, so even if your BTC Address is unknown today, doesn't mean it won't be known tomorrow.
There are perhaps, some reasonable arguments for using crypto-currencies, but buying groceries is not on the list. Buying Houses... *MAYBE*, since that information is already public anyway.
There are perhaps, some reasonable arguments for using crypto-currencies, but buying groceries is not on the list. Buying Houses... *MAYBE*, since that information is already public anyway.
Like it or not, we live on the same planet. I have to smell your farts, and inhale your air pollution, and your CO2 output ruins my climate. You can use energy however you want when you pay for all the externalities yourself. Right now, you can't. In aggregate, this concept is known as social responsibility.
If you combine the energy costs of delivering streaming video and the client side costs of playing video and executing JavaScript I have no doubt porn far outstrips Bitcoin. Hell, I bet JavaScript bloat from adtech alone and exceeds the totally energy budget of France.
There are 3.4 billion internet users.
It takes about 30 W to watch video in a browser [1].
Assuming every internet user watches 85 minutes of video per day [2] (517 hr/year), video consumption is 52 TWh per year. Or less than half of than the bitcoin network.
Google uses 12 TWh per year [3]. Assuming Google is entirely focused on serving the world's video (it likely could), that still is ~half of the bitcoin network.
(France consumes about 480 TWh per year [4])
[1] https://techcrunch.com/2013/06/05/microsoft-internet-explore...
[2] https://www.marketingcharts.com/digital/video-110520
[3] https://www.forbes.com/sites/robertbryce/2020/10/21/googles-...
[4] https://en.wikipedia.org/wiki/Energy_in_France
It takes about 30 W to watch video in a browser [1].
Assuming every internet user watches 85 minutes of video per day [2] (517 hr/year), video consumption is 52 TWh per year. Or less than half of than the bitcoin network.
Google uses 12 TWh per year [3]. Assuming Google is entirely focused on serving the world's video (it likely could), that still is ~half of the bitcoin network.
(France consumes about 480 TWh per year [4])
[1] https://techcrunch.com/2013/06/05/microsoft-internet-explore...
[2] https://www.marketingcharts.com/digital/video-110520
[3] https://www.forbes.com/sites/robertbryce/2020/10/21/googles-...
[4] https://en.wikipedia.org/wiki/Energy_in_France
Seems like I lost my bet if those numbers are correct, kudos on doing the math!
Bitcoin isn’t religion (although it has many religious-like followers), so there aren’t dogmas you cannot question.
Energy usage of it is ridiculously high and people are totally allowed to question how wasteful it is, no matter if you allow them to.
Energy usage of it is ridiculously high and people are totally allowed to question how wasteful it is, no matter if you allow them to.
But here's the thing: This article didn't say anything bad about Bitcoin's energy usage. It's simply quantifying it.
If quantifying the energy usage of Bitcoin makes you angry, you should probably self-reflect a bit.
This is a very unbiased source, and nothing they have published is untrue.
If quantifying the energy usage of Bitcoin makes you angry, you should probably self-reflect a bit.
This is a very unbiased source, and nothing they have published is untrue.
I mostly agree. As long as the price of energy is adequately priced, we should be able to make our own decisions on what amenities we need. You need a F150? Great, but be prepared to pay for its use. Naturally, the question immediately becomes, who decides what is adequate, which is not fun.
Incidentally, I am learning about bitcoin now since it is clearly becoming mainstream and it is related to my job. I am trying to build a miner ( I don't want one click zerohash solutions for variety of reasons ) on Ubuntu derivative ( POPos ) and now I am stuck troubleshooting pool connections. Anyone could recommend a reliable resource? I am starting to get really aggravated by having to google every single error encountered.
Incidentally, I am learning about bitcoin now since it is clearly becoming mainstream and it is related to my job. I am trying to build a miner ( I don't want one click zerohash solutions for variety of reasons ) on Ubuntu derivative ( POPos ) and now I am stuck troubleshooting pool connections. Anyone could recommend a reliable resource? I am starting to get really aggravated by having to google every single error encountered.
> As long as the price of energy is adequately priced.
It's not, and doing so is a hard problem, requiring a global solution, against the wishes of many interests and industries. It doesn't seem likely any time soon.
It's not, and doing so is a hard problem, requiring a global solution, against the wishes of many interests and industries. It doesn't seem likely any time soon.
Why is not wanting to waste electricity on Ponzi schemes so triggering?
It is a really low form of argument to simply use the word "triggering". Implying that the original poster doesn't have any real reasoning behind what they are writing, no original thoughts or responsible viewpoints that they have worked on - instead that they are "triggered", - thus are reacting in a simply emotional way. Implying that somehow all of their argument can be simply discarded.
Really? You mean that just because you have used the word "triggering" (there are no other meaningful arguments in your comment), that would somehow invalidate an argument? What grade is that logic from?
Really? You mean that just because you have used the word "triggering" (there are no other meaningful arguments in your comment), that would somehow invalidate an argument? What grade is that logic from?
Lol at calling anything “low” as a form of argument and expecting to be heard
Agreed. Governments and financial institutions are having to resort to "virtue" and "value" arguments against bitcoin, instead of technical arguments:
- Bitcoin consumes so much energy! Think of the planet!
- Iran, China, and Russia mine bitcoin! They are our enemies!
Indeed it does reek of hypocrisy. Oh, now you care about the environment and international competition? Please...
- Bitcoin consumes so much energy! Think of the planet!
- Iran, China, and Russia mine bitcoin! They are our enemies!
Indeed it does reek of hypocrisy. Oh, now you care about the environment and international competition? Please...
A maximum of 178 things on the planet consume >= to the electricity of Bitcoin.
99.44%/0.56% = ~178 according to their estimate. So if you want to compare, the premise is that there are no more than 178 things on Earth more valuable per watt, no more than 178 things to compare to... That is absurd.
99.44%/0.56% = ~178 according to their estimate. So if you want to compare, the premise is that there are no more than 178 things on Earth more valuable per watt, no more than 178 things to compare to... That is absurd.
[deleted]
The problem is that Bitcoin doesn't need to use this much energy. We've now discovered distributed consensus algorithms that don't rely on Proof of Work, so it's really quite terrible we still waste so much by using an outdated consensus algorithm.
A lot of the interest in BTC is driven by media and the fact that it is the oldest and original blockchain solution. The newer solutions like Ethereum, and even newer like Cardano and Polkadot are game changing because they use proof of stake instead.
Bitcoin can be used as a store of value (among other garbage text that people have thrown into the blocks as a joke) but the newer blockchain solutions also allow from "smart contracts" which BTC does not.
Personally I don't see why Elon Musk invested so much in BTC instead of things like ETH which are much better solutions and stores of value.
Bitcoin can be used as a store of value (among other garbage text that people have thrown into the blocks as a joke) but the newer blockchain solutions also allow from "smart contracts" which BTC does not.
Personally I don't see why Elon Musk invested so much in BTC instead of things like ETH which are much better solutions and stores of value.
I'm not aware of any other consensus algorithm that is proven to be as secure as PoW.
They are known as "proof of stake".
The way it works is that "validator" nodes confirm the blocks. The validators are randomly chosen based on the percentage they have staked.
You stake by owning the coin and locking it up using a staking mechanism tied into the protocol. This locks up your coins for a set period of time.
If a validator does not validate correctly or fakes the transactions then they run the risk of being "slashed". Slashing means they forfeit what they have invested.
Usually you need to stake $10K+ USD but there are also pools where people can combine their money.
Both pools and proof of work mining farms suffer from large groups consolidating the validation power.
One of the newer blockchains (Caradano) introduces the concept of a penalty for large pools in favor of having lots of smaller validators to make the network more resilient to a single group having too much validation power. This encourages decentralization.
The way it works is that "validator" nodes confirm the blocks. The validators are randomly chosen based on the percentage they have staked.
You stake by owning the coin and locking it up using a staking mechanism tied into the protocol. This locks up your coins for a set period of time.
If a validator does not validate correctly or fakes the transactions then they run the risk of being "slashed". Slashing means they forfeit what they have invested.
Usually you need to stake $10K+ USD but there are also pools where people can combine their money.
Both pools and proof of work mining farms suffer from large groups consolidating the validation power.
One of the newer blockchains (Caradano) introduces the concept of a penalty for large pools in favor of having lots of smaller validators to make the network more resilient to a single group having too much validation power. This encourages decentralization.
Proof of Stake has proven quite robust. None of the larger PoS coins have been compromised (despite much theoretical discussion), and newer ones such as Cardano seem to address early objections. Peercoin has been around for a while without any issues.
The fact is, I see all of those massive distributed consensus algorithms as much more robust than they appeared initially. 51%/double spend attacks in practice are extremely hard to occur because of the exposure/publicity of the ledger and how hard it would be to capitalize on crashing the currency (PoS/PoW does not change it).
The fact is, I see all of those massive distributed consensus algorithms as much more robust than they appeared initially. 51%/double spend attacks in practice are extremely hard to occur because of the exposure/publicity of the ledger and how hard it would be to capitalize on crashing the currency (PoS/PoW does not change it).
> Proof of Stake has proven quite robust.
They're not mathematically provable and the jury is still out. Attackers who know some exploit might be waiting for the much larger Ethereum to switch to PoS so they can reap maximum profit.
They're not mathematically provable and the jury is still out. Attackers who know some exploit might be waiting for the much larger Ethereum to switch to PoS so they can reap maximum profit.
Here's the paper of Cardano's provably secure PoS algorithm https://eprint.iacr.org/2016/889.pdf
Excellent questions with interesting answers. OP’s observation begins a fascinating discussion. I’ve been roughing out minimal cost of living, finding baseline around 5¢/hr; need to re-cast to kWh units.
How many of those directly convert electricity into profit?
How many of those businesses have been rent seeking countries/states/locations that subsidize electricity for their populations?
Electricity is one of those things most of society has deemed an essential good, and as such has subsidized it for the poorest among us. Bitcoin farmers are abusing that system to turn the government subsidies into personal profit for a handful.
Let's not even begin to equate THAT to someone going to a concert put on for the benefit of and at the cost to those participating.
How many of those businesses have been rent seeking countries/states/locations that subsidize electricity for their populations?
Electricity is one of those things most of society has deemed an essential good, and as such has subsidized it for the poorest among us. Bitcoin farmers are abusing that system to turn the government subsidies into personal profit for a handful.
Let's not even begin to equate THAT to someone going to a concert put on for the benefit of and at the cost to those participating.
Well it's like any other business that runs on electricity. AWS converts electricity directly into profit. They provide a service for paying customers, just like a miner does. I'm sure many datacenters are located in places where electricity is cheap, hell I bet some datacenters get it even cheaper with lobbying.
Can you list an example of AWS building a datacenter, in secret, in a location with subsidized power? I GUARANTEE YOU Amazon lets the local municipality know when they're building a new datacenter and they aren't getting subsidized rates.
> Electricity is one of those things most of society has deemed an essential good, and as such has subsidized it for the poorest among us.
Sounds like an argument for giving subsidies to the poor instead of anyone using electricity.
Sounds like an argument for giving subsidies to the poor instead of anyone using electricity.
> Being judgmental about how others use energy they pay for reeks of hypocrisy, virtue signaling and holier-than-thou attitude.
Are you actually seeing this or are you conflating criticisms of bitcoin with criticisms of bitcoin miners? Because I feel like I see a lot of the former and very little of the latter, but maybe I'm looking in the wrong places.
Are you actually seeing this or are you conflating criticisms of bitcoin with criticisms of bitcoin miners? Because I feel like I see a lot of the former and very little of the latter, but maybe I'm looking in the wrong places.
It's a salvo in the imminent central banks attack against this serious threat, that would compete with their fiat experiment. They are not sure yet whether to use the environmental angle or the "terrorist use of Bitcoin" like Yellen announced .
> reeks of hypocrisy
says the bitcoin holder that profits from it's adoption.
I own zero cryptocurrency, they are not aligned with my investment strategy. But I do think they are an experiment worth pursuing.
This is the most concise and crystallized attempt at putting this (certainly popular and in some ways inevitable) argument into relatable words. Kudos.
I do agree that most of these articles are picking on bitcoin.
I think the main problem people have is the actual result of the mining is useless, say compared to using all those computers for MI or Folding @ Home.
I think a better solution would be to get rid of these random bytes and replace them with a Folding @ Home or similar solution, where the computing power you donate results in you getting X bitcoin. Things that are a positive on society, rather then a negative.
But then again that is me being judgmental on others, maybe people care a ton about that string of random alphanumeric characters.
I think the main problem people have is the actual result of the mining is useless, say compared to using all those computers for MI or Folding @ Home.
I think a better solution would be to get rid of these random bytes and replace them with a Folding @ Home or similar solution, where the computing power you donate results in you getting X bitcoin. Things that are a positive on society, rather then a negative.
But then again that is me being judgmental on others, maybe people care a ton about that string of random alphanumeric characters.
The actual result of mining is defending the network against double-spending (and censorship, to a degree — though this is more fragile). Insofar as you believe that Bitcoin-the-currency is itself a social positive, the mining process has a positive effect. (But also a very meaningful cost, which leads us to a subtler question — is it a net positive?)
this is a really dumb argument that is trotted out every 4 years. There's also already a FoldingCoin that's been around since 2014. https://bitcoinexchangeguide.com/foldingcoin/
For PoW to work it must be a costly signal. If you introduce positive externalities of mining (such as Folding @ Home) the system isn't sustainable.
For PoW to work it must be a costly signal. If you introduce positive externalities of mining (such as Folding @ Home) the system isn't sustainable.
Mining a single bitcoin block takes way way more energy than every one of the things you listed. Somebody on a different thread estimated you could drive a Tesla down the whole California coastline for the energy used processing a single BTC transaction.
So yes, I absolutely do judge people who leave an SUV idling in their driveway 24/7 because "you never know when I'll need to jump in and run away from government agents"
So yes, I absolutely do judge people who leave an SUV idling in their driveway 24/7 because "you never know when I'll need to jump in and run away from government agents"
> Somebody on a different thread estimated you could drive a Tesla down the whole California coastline for the energy used processing a single BTC transaction.
Bitcoin energy consumption is not a function of the number of transactions. A node broadcasts a transaction which miners then include in a block which, within limits, can have an arbitrary number of transactions. It is the Proof of Work(PoW) contest to find a valid hash for the block at a certain level of difficulty that creates a valid block.
Further, with Layer 2 solutions, a single transaction in a Bitcoin block can be "dense" with the value of an arbitrary number of transactions that occurred in Layer 2. That is Bitcoin providing the settlement layer.
Importantly, because Bitcoin is a timechain where the current blockheight represents the entire history of Bitcoin.
"The average cost per transaction isn’t an adequate metric for measuring the efficiency of Bitcoin’s PoW, it should be defined in terms of the security of an economic history. The energy spend secures the stock of bitcoin, and that percentage is going down over time as inflation decreases. A Bitcoin “accumulates” the energy associated with all the blocks mined since its creation. LaurentMT, a researcher, has found empirically that Bitcoin’s PoW is indeed becoming more efficient over time: increasing cost is counterbalanced by the even greater increasing total value secured by the system."[0]
[0] : https://danhedl.medium.com/pow-is-efficient-aa3d442754d3
Bitcoin energy consumption is not a function of the number of transactions. A node broadcasts a transaction which miners then include in a block which, within limits, can have an arbitrary number of transactions. It is the Proof of Work(PoW) contest to find a valid hash for the block at a certain level of difficulty that creates a valid block.
Further, with Layer 2 solutions, a single transaction in a Bitcoin block can be "dense" with the value of an arbitrary number of transactions that occurred in Layer 2. That is Bitcoin providing the settlement layer.
Importantly, because Bitcoin is a timechain where the current blockheight represents the entire history of Bitcoin.
"The average cost per transaction isn’t an adequate metric for measuring the efficiency of Bitcoin’s PoW, it should be defined in terms of the security of an economic history. The energy spend secures the stock of bitcoin, and that percentage is going down over time as inflation decreases. A Bitcoin “accumulates” the energy associated with all the blocks mined since its creation. LaurentMT, a researcher, has found empirically that Bitcoin’s PoW is indeed becoming more efficient over time: increasing cost is counterbalanced by the even greater increasing total value secured by the system."[0]
[0] : https://danhedl.medium.com/pow-is-efficient-aa3d442754d3
> within limits
And those limits come up to the theoretical maximum of was it 7 or so and in practice around 4
https://www.blockchain.com/charts/transactions-per-second
Also PoW is hilariously inefficient. Because the amount of energy one needs to spend is basically related to the amount of value one could grab by cheating, so if all economy would be based on Bitcoin we'd be talking about basically cooking the planet due to PoW.
When Satoshi originally devised PoW it was more about owning the hardware and using that as basis for voting. Energy costs were miniscule. He simply didn't foresee the, now obvious, result that it will became a function of burned energy rather than amount of hardware out there.
And those limits come up to the theoretical maximum of was it 7 or so and in practice around 4
https://www.blockchain.com/charts/transactions-per-second
Also PoW is hilariously inefficient. Because the amount of energy one needs to spend is basically related to the amount of value one could grab by cheating, so if all economy would be based on Bitcoin we'd be talking about basically cooking the planet due to PoW.
When Satoshi originally devised PoW it was more about owning the hardware and using that as basis for voting. Energy costs were miniscule. He simply didn't foresee the, now obvious, result that it will became a function of burned energy rather than amount of hardware out there.
> And those limits come up to the theoretical maximum of was it 7 or so and in practice around 4
> https://www.blockchain.com/charts/transactions-per-second
The link you provided indicates transactions added to the mempool per second! The mempool is a cache of broadcast transactions from which miners pick transactions to be added to the next block.
At the current block height, 2700 transactions were in the block. https://mempool.space/block/00000000000000000007a3688746c1d0...
> Also PoW is hilariously inefficient. Because the amount of energy one needs to spend is basically related to the amount of value one could grab by cheating
Your statement is entirely unclear. Could you restate it? For Steelman purposes, I'll ignore the non-sequitur about cheating.
You claim that algorithm x is inefficient in absolute terms? Assuming you're an engineer, you know that engineering operates by comparisons and tradeoffs. PoW is how Bitcoin provides final settlement of transactions and unforgeable costliness compared to existing systems of money (e.g. fiat) and money transfer(e.g. visa, paypal, swift) which are all centralised and built for censorship, while bitcoin is decentralised and censorship resistant. And it provides final settlement of transactions every hour for thousands of transactions. "Finality" and "Unforgeability" are the terms you should attend to. These are both tied to hashrate which is tied to the profitability of mining the heaviest chain.
"Bitcoin has unforgeable costliness, because it costs a lot of electricity to produce new bitcoins. Producing bitcoins cannot be easily faked [..]" [0]
"So what are settlement assurances exactly? They refer to a system’s ability to grant recipients confidence that an inbound transaction will not be reversed. Wire transfers using a messaging system like SWIFT are popular in part because they are practically impossible to reverse. They are considered safe for recipients because originating banks will only release the funds if they are fully present in the sender’s account. [...] recipients of a Bitcoin transaction can have extremely high confidence that, once buried under a few blocks, a transaction is unlikely to be reversed."[1]
> When Satoshi originally devised PoW [...] Energy costs were miniscule.
I'm not sure what you mean. In general, energy costs seem to be dropping over time https://ourworldindata.org/grapher/levelized-cost-of-energy
> [Satoshi] simply didn't foresee the, now obvious, result that it will became a function of burned energy rather than amount of hardware out there.
I'm wary of trying to interpret Satoshi, but here are his own words:
"I think the case will be the same for Bitcoin. The utility of the exchanges made possible by Bitcoin will far exceed the cost of electricity used. Therefore, not having Bitcoin would be the net waste. [...] Each node’s influence on the network is proportional to its CPU power. The only way to show the network how much CPU power you have is to actually use it." [2]
[0]: https://medium.com/@100trillionUSD/modeling-bitcoins-value-w...
[1]: https://medium.com/@nic__carter/its-the-settlement-assurance...
[2]: https://satoshi.nakamotoinstitute.org/posts/bitcointalk/327/
> https://www.blockchain.com/charts/transactions-per-second
The link you provided indicates transactions added to the mempool per second! The mempool is a cache of broadcast transactions from which miners pick transactions to be added to the next block.
At the current block height, 2700 transactions were in the block. https://mempool.space/block/00000000000000000007a3688746c1d0...
> Also PoW is hilariously inefficient. Because the amount of energy one needs to spend is basically related to the amount of value one could grab by cheating
Your statement is entirely unclear. Could you restate it? For Steelman purposes, I'll ignore the non-sequitur about cheating.
You claim that algorithm x is inefficient in absolute terms? Assuming you're an engineer, you know that engineering operates by comparisons and tradeoffs. PoW is how Bitcoin provides final settlement of transactions and unforgeable costliness compared to existing systems of money (e.g. fiat) and money transfer(e.g. visa, paypal, swift) which are all centralised and built for censorship, while bitcoin is decentralised and censorship resistant. And it provides final settlement of transactions every hour for thousands of transactions. "Finality" and "Unforgeability" are the terms you should attend to. These are both tied to hashrate which is tied to the profitability of mining the heaviest chain.
"Bitcoin has unforgeable costliness, because it costs a lot of electricity to produce new bitcoins. Producing bitcoins cannot be easily faked [..]" [0]
"So what are settlement assurances exactly? They refer to a system’s ability to grant recipients confidence that an inbound transaction will not be reversed. Wire transfers using a messaging system like SWIFT are popular in part because they are practically impossible to reverse. They are considered safe for recipients because originating banks will only release the funds if they are fully present in the sender’s account. [...] recipients of a Bitcoin transaction can have extremely high confidence that, once buried under a few blocks, a transaction is unlikely to be reversed."[1]
> When Satoshi originally devised PoW [...] Energy costs were miniscule.
I'm not sure what you mean. In general, energy costs seem to be dropping over time https://ourworldindata.org/grapher/levelized-cost-of-energy
> [Satoshi] simply didn't foresee the, now obvious, result that it will became a function of burned energy rather than amount of hardware out there.
I'm wary of trying to interpret Satoshi, but here are his own words:
"I think the case will be the same for Bitcoin. The utility of the exchanges made possible by Bitcoin will far exceed the cost of electricity used. Therefore, not having Bitcoin would be the net waste. [...] Each node’s influence on the network is proportional to its CPU power. The only way to show the network how much CPU power you have is to actually use it." [2]
[0]: https://medium.com/@100trillionUSD/modeling-bitcoins-value-w...
[1]: https://medium.com/@nic__carter/its-the-settlement-assurance...
[2]: https://satoshi.nakamotoinstitute.org/posts/bitcointalk/327/
2700 transactions for 10 minutes comes at 4.5 per second. So yeah, matches.
> Your statement is entirely unclear. Could you restate it? For Steelman purposes, I'll ignore the non-sequitur about cheating.
By cheating I meant making a sidechain that would become longer than the mainchain, thus enabling a double spending attack. If the amount of money to be made in double spending attack is higher than honest mining someone will make it, the only thing protecting against that is that the cost of mining must be large enough compared to value being transferred.
>I'm not sure what you mean. In general, energy costs seem to be dropping over time
Back when it was CPU mined. Before even the first GPU mining. It was just about proving that you have an actual HW dedicated into the task.
Exactly as mentioned in the quote that you said. He didn't have a clue that it would become dedicated HW that has only a single function, burning energy to calculate SHA256 and nothing more.
Also do note that the whole concept of non mining node was foreign. Instead of the original design of nodes that mine we're in situation where nodes don't mine and most mining happens in centralized farms.
> Your statement is entirely unclear. Could you restate it? For Steelman purposes, I'll ignore the non-sequitur about cheating.
By cheating I meant making a sidechain that would become longer than the mainchain, thus enabling a double spending attack. If the amount of money to be made in double spending attack is higher than honest mining someone will make it, the only thing protecting against that is that the cost of mining must be large enough compared to value being transferred.
>I'm not sure what you mean. In general, energy costs seem to be dropping over time
Back when it was CPU mined. Before even the first GPU mining. It was just about proving that you have an actual HW dedicated into the task.
Exactly as mentioned in the quote that you said. He didn't have a clue that it would become dedicated HW that has only a single function, burning energy to calculate SHA256 and nothing more.
Also do note that the whole concept of non mining node was foreign. Instead of the original design of nodes that mine we're in situation where nodes don't mine and most mining happens in centralized farms.
> By cheating I meant making a sidechain that would become longer than the mainchain, thus enabling a double spending attack.
A double spend attack can only spend the attackers coins.
> If the amount of money to be made in double spending attack is higher than honest mining someone will make it, the only thing protecting against that is that the cost of mining must be large enough compared to value being transferred.
That's precisely the game theory and why the network remains secure. It's addressed in the whitepaper and fundamental. Economic incentives are the security model. [0]
I'm not sure what the rest of your points have to do with settlement finality and assurances so I can't address them.
There's been a decade of analysis of Bitcoin engineering. I'm yet to hear anyone venture an original criticism that hasn't been rigorously and extensively rebutted already since genesis.
[0]: https://blog.lopp.net/are-chinese-miners-threat-bitcoin/
A double spend attack can only spend the attackers coins.
> If the amount of money to be made in double spending attack is higher than honest mining someone will make it, the only thing protecting against that is that the cost of mining must be large enough compared to value being transferred.
That's precisely the game theory and why the network remains secure. It's addressed in the whitepaper and fundamental. Economic incentives are the security model. [0]
I'm not sure what the rest of your points have to do with settlement finality and assurances so I can't address them.
There's been a decade of analysis of Bitcoin engineering. I'm yet to hear anyone venture an original criticism that hasn't been rigorously and extensively rebutted already since genesis.
[0]: https://blog.lopp.net/are-chinese-miners-threat-bitcoin/
> 2700 transactions for 10 minutes comes at 4.5 per second. So yeah, matches.
The reason I linked to a block was so that you could see that transactions can have arbitrary numbers of outputs. See: https://news.ycombinator.com/item?id=26099812
The reason I linked to a block was so that you could see that transactions can have arbitrary numbers of outputs. See: https://news.ycombinator.com/item?id=26099812
The only reasonable metric is energy usage per NECESSARY effect. If bitcoin spends inordinate amounts of energy on storing historic transactions, that is not our problem. That is not a value most people care about.
That argument is similar to saying a nuclear power plant is ridiculously expensive because it started operating last week and is currently only connected to a single factory.
The energy usage of Bitcoin doesn't meaningfully go up with more transactions, so pretending that each transaction uses some specific amount of energy is just misleading.
The energy usage of Bitcoin doesn't meaningfully go up with more transactions, so pretending that each transaction uses some specific amount of energy is just misleading.
Not really, a nuclear power plant will generate energy for decades, bitcoin will just keep wasting energy.
And if the maximum daily number of transactions is more or less fixed, and the total energy spend is also relatively stable, then it’s very easy to calculate the energy cost per transaction.
And if the maximum daily number of transactions is more or less fixed, and the total energy spend is also relatively stable, then it’s very easy to calculate the energy cost per transaction.
> And if the maximum daily number of transactions is more or less fixed, and the total energy spend is also relatively stable, then it’s very easy to calculate the energy cost per transaction.
You don't understand how transactions work.
A transaction can have arbitrary value, an arbitrary number of inputs, and an arbitrary number of outputs.
Therefore Bitcoin has infinite throughout and 1 hour confirmation/finality latency.
An example:
My company has 100 engineers each paid USD10k in bitcoin per month. We generate 1 transaction worth USD1M with 100 outputs.
Similarly when paying numerous suppliers for hardware, machinery, logistics, transportation, catering. 1 transaction of high value with numerous heterogeneous outputs.
Transaction count is not the correct way to measure the throughout of the Bitcoin network at a given block height or over several retargets.[0]
[0]: https://medium.com/@hasufly/an-analysis-of-batching-in-bitco...
You don't understand how transactions work.
A transaction can have arbitrary value, an arbitrary number of inputs, and an arbitrary number of outputs.
Therefore Bitcoin has infinite throughout and 1 hour confirmation/finality latency.
An example:
My company has 100 engineers each paid USD10k in bitcoin per month. We generate 1 transaction worth USD1M with 100 outputs.
Similarly when paying numerous suppliers for hardware, machinery, logistics, transportation, catering. 1 transaction of high value with numerous heterogeneous outputs.
Transaction count is not the correct way to measure the throughout of the Bitcoin network at a given block height or over several retargets.[0]
[0]: https://medium.com/@hasufly/an-analysis-of-batching-in-bitco...
It still seems like a valid metric, you just need to multiply the number of bitcoin transactions with some factor for the average number of outputs. That number will be pretty low and quite stable over time.
> It still seems like a valid metric, you just need to multiply the number of bitcoin transactions with some factor for the average number of outputs
Nah. You don't need to double and triple down on wrong ideas and metrics that are scientifically spurious. You know calculus so you know multiplying by averages won't tell you what you want to know.
Transaction count relative to energy usage doesn't tell you what's valuable about the observed system and its energy consumption, which is its decentralisation, censorship resistance, assurances, and trustlessness.
Assuming you care about logic, simply update your broken mental model.
Because batching will increase as Bitcoin grows, and has practically infinite throughput, its efficiency improves exponentially by securing more value relative to energy consumption.To secure ever more value using the Bitcoin network, humans are incentivised to find and build more efficient energy sources.
Further, an arbitrary number of transactions can occur securely offchain and get aggregated and finalised on-chain i.e the settlement layer. In fact this is how the future will be. See Lightning, Liquid, other L2 designs. The order of operations is first to have a bulletproof settlement layer.
Bitcoin was designed to be the single planetary currency. Spend time studying it and you'll realise that Satoshi was smarter than all his current critics who all imagine they've brilliantly and uniquely perceived some fatal flaw in Bitcoin's engineering, game theory or economics.
Remember, if Bitcoin were a company, it would currently have a market cap of >USD800B. Few programmers can build anything that valuable let alone critique it meaningfully.
Let go of useless, poorly reasoned concepts. Humble yourself and study Bitcoin. It's a wonderful optimistic scientific discovery on par with fire, antibiotics, and electricity. http://lopp.net/bitcoin-information.html
Nah. You don't need to double and triple down on wrong ideas and metrics that are scientifically spurious. You know calculus so you know multiplying by averages won't tell you what you want to know.
Transaction count relative to energy usage doesn't tell you what's valuable about the observed system and its energy consumption, which is its decentralisation, censorship resistance, assurances, and trustlessness.
Assuming you care about logic, simply update your broken mental model.
Because batching will increase as Bitcoin grows, and has practically infinite throughput, its efficiency improves exponentially by securing more value relative to energy consumption.To secure ever more value using the Bitcoin network, humans are incentivised to find and build more efficient energy sources.
Further, an arbitrary number of transactions can occur securely offchain and get aggregated and finalised on-chain i.e the settlement layer. In fact this is how the future will be. See Lightning, Liquid, other L2 designs. The order of operations is first to have a bulletproof settlement layer.
Bitcoin was designed to be the single planetary currency. Spend time studying it and you'll realise that Satoshi was smarter than all his current critics who all imagine they've brilliantly and uniquely perceived some fatal flaw in Bitcoin's engineering, game theory or economics.
Remember, if Bitcoin were a company, it would currently have a market cap of >USD800B. Few programmers can build anything that valuable let alone critique it meaningfully.
Let go of useless, poorly reasoned concepts. Humble yourself and study Bitcoin. It's a wonderful optimistic scientific discovery on par with fire, antibiotics, and electricity. http://lopp.net/bitcoin-information.html
If you want to be more precise, just tally up the total number of outputs then. It won't make bitcoin more efficient as a means of payment.
> what's valuable about the observed system and its energy consumption, which is its decentralisation, censorship resistance, assurances, and trustlessness.
The thing you need to understand is that nobody cares about this, except a small fringe of libertarians and computer scientists. Sure, it's cool that it's possible but not a single one of these would come up if you ask the man in the street (or your average economist in the street for that matter) what he wants from money.
> Humble yourself and study Bitcoin
I built a prediction market that used bitcoins in 2014, and ran a small but profitable crypto quant fund a few years later. I think crypto currencies are fun and there are one or two legitimate use cases, but the way you and other zealots look at bitcoin as a kind of panacea is just insane. Your fervour borders on a religious mania.
In reality there is still almost nothing that crypto can do that anyone actually wants, and bitcoin is far from the best even at what it actually does.
And no, the fact that the price of bitcoin is high does not indicate that people think it's useful. It's still a purely speculative asset, almost nobody uses it as a medium of exchange, and those who do are either criminals or zealots. Close to zero non-criminals use it because it solves an actual problem in the real world.
Not saying this will never change, but that is where we are now, more than a decade later.
> what's valuable about the observed system and its energy consumption, which is its decentralisation, censorship resistance, assurances, and trustlessness.
The thing you need to understand is that nobody cares about this, except a small fringe of libertarians and computer scientists. Sure, it's cool that it's possible but not a single one of these would come up if you ask the man in the street (or your average economist in the street for that matter) what he wants from money.
> Humble yourself and study Bitcoin
I built a prediction market that used bitcoins in 2014, and ran a small but profitable crypto quant fund a few years later. I think crypto currencies are fun and there are one or two legitimate use cases, but the way you and other zealots look at bitcoin as a kind of panacea is just insane. Your fervour borders on a religious mania.
In reality there is still almost nothing that crypto can do that anyone actually wants, and bitcoin is far from the best even at what it actually does.
And no, the fact that the price of bitcoin is high does not indicate that people think it's useful. It's still a purely speculative asset, almost nobody uses it as a medium of exchange, and those who do are either criminals or zealots. Close to zero non-criminals use it because it solves an actual problem in the real world.
Not saying this will never change, but that is where we are now, more than a decade later.
> The thing you need to understand is that nobody cares about this,
Um. Don't be obtuse and obdurate. This conversation is getting really tedious. Look at the market, look around the world. Actually research the statements you make. There are already millions who care.
> I built a prediction market that used bitcoins in 2014.
You built on bitcoin yet you never understood how transactions work? That's deeply disturbing. Nonetheless, I sincerely wish you good luck. I respect your effort at building and sincerely hope you keep building winning products.
The market will decide the victor. See you on the builder's battlefield. That's where all the action is. En garde!
> the way you and other zealots look at bitcoin as a kind of panacea is just insane. Your fervour borders on a religious mania.
P.S. I totally want Bitcoin to be declared a religion, if only for the possible tax advantage! Fun times.
> not a single one of these would come up if you ask the man in the street (or your average economist in the street for that matter) what he wants from money.
[sigh] If you asked them what they want they'd have said they want a faster horse, not a car. The purpose of travelling and talking to people is to discover their problems and pain-points not what they imagine the solutions are. The innovator then inserts a solution into the machine.
> bitcoin is far from the best even at what it actually does.
You keep making these vacuous statements yet you don't even have a grasp of what Bitcoin actually does because, apparently, what it does has no value to you. I mean, good for you. What you don't seem to realise is that your inability to look at reality looks like a religious mania.
Now, respectfully, I have to bow out. Code to write, Bitcoin to build on.
Um. Don't be obtuse and obdurate. This conversation is getting really tedious. Look at the market, look around the world. Actually research the statements you make. There are already millions who care.
> I built a prediction market that used bitcoins in 2014.
You built on bitcoin yet you never understood how transactions work? That's deeply disturbing. Nonetheless, I sincerely wish you good luck. I respect your effort at building and sincerely hope you keep building winning products.
The market will decide the victor. See you on the builder's battlefield. That's where all the action is. En garde!
> the way you and other zealots look at bitcoin as a kind of panacea is just insane. Your fervour borders on a religious mania.
P.S. I totally want Bitcoin to be declared a religion, if only for the possible tax advantage! Fun times.
> not a single one of these would come up if you ask the man in the street (or your average economist in the street for that matter) what he wants from money.
[sigh] If you asked them what they want they'd have said they want a faster horse, not a car. The purpose of travelling and talking to people is to discover their problems and pain-points not what they imagine the solutions are. The innovator then inserts a solution into the machine.
> bitcoin is far from the best even at what it actually does.
You keep making these vacuous statements yet you don't even have a grasp of what Bitcoin actually does because, apparently, what it does has no value to you. I mean, good for you. What you don't seem to realise is that your inability to look at reality looks like a religious mania.
Now, respectfully, I have to bow out. Code to write, Bitcoin to build on.
> The energy usage of Bitcoin doesn't meaningfully go up with more transactions,
No it just always always goes up regardless of transaction volume as the block-difficulty increases infinitely. You've built a system that by design can literally only become less efficient.
It's actually even worse and stupider than if it were a per-transaction energy usage.
No it just always always goes up regardless of transaction volume as the block-difficulty increases infinitely. You've built a system that by design can literally only become less efficient.
It's actually even worse and stupider than if it were a per-transaction energy usage.
> No it just always always goes up regardless of transaction volume as the block-difficulty increases infinitely.
[sigh] The difficulty adjustment is so a block is issued on average every 10 minutes. It therefore does not increase infinitely but both increases and decreases depending on the amount of hashpower in the network.
https://en.bitcoin.it/wiki/Difficulty
[sigh] The difficulty adjustment is so a block is issued on average every 10 minutes. It therefore does not increase infinitely but both increases and decreases depending on the amount of hashpower in the network.
https://en.bitcoin.it/wiki/Difficulty
Has it ever decreased?
> What is the maximum difficulty?
> There is no minimum target. The maximum difficulty is roughly: maximum_target / 1 (since 0 would result in infinity), which is a ridiculously huge number (about 2^224).
> What is the maximum difficulty?
> There is no minimum target. The maximum difficulty is roughly: maximum_target / 1 (since 0 would result in infinity), which is a ridiculously huge number (about 2^224).
> Has it ever decreased?
Obviously.
https://www.coindesk.com/bitcoin-mining-difficulty-large-dro...
Obviously.
https://www.coindesk.com/bitcoin-mining-difficulty-large-dro...
Furthermore nothing about bitcoin is "necessary", even in some loose consumer-demand sense of the term.
- There are other, better cryptocurrencies that don't bake the planet.
- There are other, better financial infrastructures that process more transactions and provide a better stable store of value.
- There are other, better distributed computing networks that do more than calculate sha256 over and over again.
- There are other, better cryptocurrencies that don't bake the planet.
- There are other, better financial infrastructures that process more transactions and provide a better stable store of value.
- There are other, better distributed computing networks that do more than calculate sha256 over and over again.
> That is not a value most people care about.
People in a free market pay for what they care about. To date, those who use Bitcoin have been happy to pay for the energy the network consumes. In the end, that is all that matters.
People in a free market pay for what they care about. To date, those who use Bitcoin have been happy to pay for the energy the network consumes. In the end, that is all that matters.
Markets don't account for externalities. That's the reason this is an issue — people as individuals are willing to pay for the energy they spend mining cryptocurrency, but as a society it's a huge waste of energy and a massive source of carbon that is entirely unnecessary. Like, I don't just want to say "the tragedy of the commons" over and over again, but you can't just wave your hands and go "the free market will ensure that we don't emit too much carbon"
> individuals are willing to pay for the energy they spend mining cryptocurrency, but as a society it's a huge waste of energy and a massive source of carbon that is entirely unnecessary.
Society is made up of individuals. Assuming you don't believe a small cabal of individuals should, in the name of society and ideology, force other individuals to follow their dictates, the questions then are:
- will eliminating Bitcoin really reduce carbon emissions to a meaningful extent compared to other sources of carbon emissions?
- How much are individuals willing to pay to reduce carbon emissions? i.e. skin in the game. One way to pay to reduce Bitcoin's carbon emissions would be to sufficiently/relentlessly short Bitcoin to tank the price or develop/invest in an alternative green currency and let the market decide which is best.
- How much, in carbon emission, are individuals willing to pay for the benefit of a given technology like Bitcoin?
Society is made up of individuals. Assuming you don't believe a small cabal of individuals should, in the name of society and ideology, force other individuals to follow their dictates, the questions then are:
- will eliminating Bitcoin really reduce carbon emissions to a meaningful extent compared to other sources of carbon emissions?
- How much are individuals willing to pay to reduce carbon emissions? i.e. skin in the game. One way to pay to reduce Bitcoin's carbon emissions would be to sufficiently/relentlessly short Bitcoin to tank the price or develop/invest in an alternative green currency and let the market decide which is best.
- How much, in carbon emission, are individuals willing to pay for the benefit of a given technology like Bitcoin?
You really don't get the concept of "tragedy of the commons" do you? The problem is that the people that use bitcoins are not the only ones that pay for them.
We all pay because of the negative externalities involved with producing electricity. They are not part of the price of electricity currently.
If all countries had robust carbon taxes or similar schemes, then you could possibly argue that the price of bitcoin reflects their true cost. Possibly. But definitely not now.
We all pay because of the negative externalities involved with producing electricity. They are not part of the price of electricity currently.
If all countries had robust carbon taxes or similar schemes, then you could possibly argue that the price of bitcoin reflects their true cost. Possibly. But definitely not now.
> If all countries had robust carbon taxes or similar schemes, then you could possibly argue that the price of bitcoin reflects their true cost. Possibly. But definitely not now.
This contradicts your earlier point that markets can't resolve negative externalities. Presumably a tax will cause a marked market response.
Further, Bitcoin's price is a reflection of demand, not cost. In the long run, however, the price of any currency will likely converge to its cost of production, which is also why fiat is fundamentally a poor store of value.
> You really don't get the concept of "tragedy of the commons" do you?
The tragedy of the commons is mostly in the word "commons", as opposed to "private property".
I merely have a different opinion on how negative externalities should be resolved. [0]
> We all pay because of the negative externalities involved with producing electricity [...]
Such a statement is too nebulous to be useful. Consider that what "we" pay is entirely subjective based on what individuals value. I know people who care deeply about every part per millon of carbon emission while others don't. How then do you propose to determine what "we" pay? Who is this "we"?
Are you going to somehow convince nonplussed people that they are paying for some particular externality that they don't care about? Suffering and loss are subjective.
You want carbon taxes, enforced by some authority who can presumably accurately determine the correct price for such things. All I can say is good luck.
And how many other externalities would you like taxed? At what granularity? Perhaps households or individuals should pay carbon taxes too? What about all that energy wasted on Christmas lights?[1] What's your preferred maximum level of elictricity production that will guarantee carbon neutrality? Is carbon neutrality the most important thing and everything else a distant second?
However, for those who care deeply about the matter, they can make their preferences and values felt right now and every day in the market, which is especially easy to do in cryptocurrency markets.
Organise a coalition to short Bitcoin to protect the environment. Surely there are many of you just on HN alone given that this article was on the front page. Shorting is a form of taxing. Drive the price to 0. Save the environment. If one is not willing to have skin in the game to stop Bitcoin's energy consumption, they are just larping as saviours of the environment.
[0]: https://mises.org/library/austrian-theory-environmental-econ...
[1] https://www.nsenergybusiness.com/features/christmas-lights-e...
This contradicts your earlier point that markets can't resolve negative externalities. Presumably a tax will cause a marked market response.
Further, Bitcoin's price is a reflection of demand, not cost. In the long run, however, the price of any currency will likely converge to its cost of production, which is also why fiat is fundamentally a poor store of value.
> You really don't get the concept of "tragedy of the commons" do you?
The tragedy of the commons is mostly in the word "commons", as opposed to "private property".
I merely have a different opinion on how negative externalities should be resolved. [0]
> We all pay because of the negative externalities involved with producing electricity [...]
Such a statement is too nebulous to be useful. Consider that what "we" pay is entirely subjective based on what individuals value. I know people who care deeply about every part per millon of carbon emission while others don't. How then do you propose to determine what "we" pay? Who is this "we"?
Are you going to somehow convince nonplussed people that they are paying for some particular externality that they don't care about? Suffering and loss are subjective.
You want carbon taxes, enforced by some authority who can presumably accurately determine the correct price for such things. All I can say is good luck.
And how many other externalities would you like taxed? At what granularity? Perhaps households or individuals should pay carbon taxes too? What about all that energy wasted on Christmas lights?[1] What's your preferred maximum level of elictricity production that will guarantee carbon neutrality? Is carbon neutrality the most important thing and everything else a distant second?
However, for those who care deeply about the matter, they can make their preferences and values felt right now and every day in the market, which is especially easy to do in cryptocurrency markets.
Organise a coalition to short Bitcoin to protect the environment. Surely there are many of you just on HN alone given that this article was on the front page. Shorting is a form of taxing. Drive the price to 0. Save the environment. If one is not willing to have skin in the game to stop Bitcoin's energy consumption, they are just larping as saviours of the environment.
[0]: https://mises.org/library/austrian-theory-environmental-econ...
[1] https://www.nsenergybusiness.com/features/christmas-lights-e...
> This contradicts your earlier point that markets can't resolve negative externalities. Presumably a tax will cause a marked market response.
Not at all. Things like carbon taxes internalise the externalities. It makes all electricity consumers pay the true cost of electricity, at least as far as can be determined.
I know that libertarians are as dogmatic as any marxist, but it seems to me that you should be more interested than anyone else in internalising the true cost of things into their price?
If you want to rely on the market as much as possible, then all the more reason to make sure that the cost of making things includes all the costs. Only then can consumers make a considered purchase.
As the text in your link so eloquently puts it:
"Social inefficiency arises when the social costs associated with external effects, such as air or water pollution, are not incorporated into the cost of producing the pollution generating product or its market price."
Almost every single one of your statements here reflect a misunderstanding of my argument, basic economics and/or your own Austrian philosophy.
Not at all. Things like carbon taxes internalise the externalities. It makes all electricity consumers pay the true cost of electricity, at least as far as can be determined.
I know that libertarians are as dogmatic as any marxist, but it seems to me that you should be more interested than anyone else in internalising the true cost of things into their price?
If you want to rely on the market as much as possible, then all the more reason to make sure that the cost of making things includes all the costs. Only then can consumers make a considered purchase.
As the text in your link so eloquently puts it:
"Social inefficiency arises when the social costs associated with external effects, such as air or water pollution, are not incorporated into the cost of producing the pollution generating product or its market price."
Almost every single one of your statements here reflect a misunderstanding of my argument, basic economics and/or your own Austrian philosophy.
> Almost every single one of your statements here reflect a misunderstanding of my argument, basic economics and/or your own Austrian philosophy.
You think I don't understand my own thoughts (which aren't Austrian but merely mine). Meanwhile I think you don't understand what I'm expressing. Thus, we agree to disagree. Thanks for the conversation. Bonne chance.
You think I don't understand my own thoughts (which aren't Austrian but merely mine). Meanwhile I think you don't understand what I'm expressing. Thus, we agree to disagree. Thanks for the conversation. Bonne chance.
The link you posted to refute my points very clearly and eloquently repeated my point.
I'm not saying people are not willing to pay for it, I'm saying it's inefficient and specifically that the metric mentioned is not relevant.
> I'm saying it's inefficient
Compared to what else that provides a decentralised, censorship resistant monetary network without trusted third parties required to secure it?
> the metric mentioned is not relevant
It's relevant in explaining the energy usage relative to economic value and architecture of an engineered monetary system.
If you have a metric that can explain Bitcoin's design and value proposition with respect to energy consumption better than Dan Held's explanation, you should propose it and logically demonstrate your idea's superior explanatory and predictive power.
Compared to what else that provides a decentralised, censorship resistant monetary network without trusted third parties required to secure it?
> the metric mentioned is not relevant
It's relevant in explaining the energy usage relative to economic value and architecture of an engineered monetary system.
If you have a metric that can explain Bitcoin's design and value proposition with respect to energy consumption better than Dan Held's explanation, you should propose it and logically demonstrate your idea's superior explanatory and predictive power.
> Compared to what else that provides a decentralised, censorship resistant monetary network without trusted third parties required to secure it?
I don't particularly feel that any of those characteristics are very important, and I think most people would agree.
> It's relevant in explaining the energy usage relative to economic value and architecture of an engineered monetary system
Again, that is not how you construct a metric for how cost efficient something is. You start with the "job to be done" of the object. And storing all historical transactions forever is seldom desirable.
If you want to measure the efficiency of electric cars vs combustion engine ones you look at things like miles/Wh or CO2 emissions/mile.
You DON'T look at explosions per second or something like that. It might explain how combustion engines work but it is not the goal of a car.
I don't particularly feel that any of those characteristics are very important, and I think most people would agree.
> It's relevant in explaining the energy usage relative to economic value and architecture of an engineered monetary system
Again, that is not how you construct a metric for how cost efficient something is. You start with the "job to be done" of the object. And storing all historical transactions forever is seldom desirable.
If you want to measure the efficiency of electric cars vs combustion engine ones you look at things like miles/Wh or CO2 emissions/mile.
You DON'T look at explosions per second or something like that. It might explain how combustion engines work but it is not the goal of a car.
> I don't particularly feel that any of those characteristics are very important, and I think most people would agree.
Bitcoin doesn't care what you feel. It exists as an engineering artifact, continues to exist and functions to serve the needs of those who use it. Those who use it don't pay for it with their feelings but with their hard earned money. You evaluate a piece of engineering for what it aims to achieves not what you feel it should achieve.
Bitcoin at block height 670061 has a market cap >USD800B. That's a lot of people who feel the characteristics of Bitcoin are valuable.
Cf. A statement like: "I don't particularly feel HD screens on a phone are important and I think most people would agree that they're a waste and bad for the environment. Therefore HD screens shouldn't be in smart phones."
> if you want to measure the efficiency of electric cars vs combustion engine ones you look at things like miles/Wh or CO2 emissions/mile.
> You DON'T look at explosions per second or something like that. It might explain how combustion engines work but it is not the goal of a car.
Again, Dan Held said:
"the efficiency of Bitcoin’s PoW, should be defined in terms of the security of an economic history."[0]
That history is perhaps analogous to the entire lifetime travel distance of the vehicle. Let a coin be a vehicle. There are 21M coins. Let a block be a mile long and infinitely wide (for transactions of any value can be contained in a block without limit to the value), for instance, and you can get your miles/Wh. Or just humbly study the Bitcoin timechain and understand what it does and why it does it.
[0]: https://danhedl.medium.com/pow-is-efficient-aa3d442754d3
Bitcoin doesn't care what you feel. It exists as an engineering artifact, continues to exist and functions to serve the needs of those who use it. Those who use it don't pay for it with their feelings but with their hard earned money. You evaluate a piece of engineering for what it aims to achieves not what you feel it should achieve.
Bitcoin at block height 670061 has a market cap >USD800B. That's a lot of people who feel the characteristics of Bitcoin are valuable.
Cf. A statement like: "I don't particularly feel HD screens on a phone are important and I think most people would agree that they're a waste and bad for the environment. Therefore HD screens shouldn't be in smart phones."
> if you want to measure the efficiency of electric cars vs combustion engine ones you look at things like miles/Wh or CO2 emissions/mile.
> You DON'T look at explosions per second or something like that. It might explain how combustion engines work but it is not the goal of a car.
Again, Dan Held said:
"the efficiency of Bitcoin’s PoW, should be defined in terms of the security of an economic history."[0]
That history is perhaps analogous to the entire lifetime travel distance of the vehicle. Let a coin be a vehicle. There are 21M coins. Let a block be a mile long and infinitely wide (for transactions of any value can be contained in a block without limit to the value), for instance, and you can get your miles/Wh. Or just humbly study the Bitcoin timechain and understand what it does and why it does it.
[0]: https://danhedl.medium.com/pow-is-efficient-aa3d442754d3
Excellent analogy. No government would allow a car where the gas mileage decreased proportionally to how far you’ve driven since the car was made. That would be a very silly way to waste fuel.
> a car where the gas mileage decreased proportionally to how far you’ve driven since the car was made.
Torturing metaphors: it's more useful to say that the gas/mile (kw per block) fuels all 21 million cars simultaneously, not just one car, and ensures that all the roads they've travelled remain useable, and that anyone in the world can use a car at any time and verify the journey it made and the cargo it carried. Further, each car can carry an arbitrary amount of cargo (the value of the transaction).
Torturing metaphors: it's more useful to say that the gas/mile (kw per block) fuels all 21 million cars simultaneously, not just one car, and ensures that all the roads they've travelled remain useable, and that anyone in the world can use a car at any time and verify the journey it made and the cargo it carried. Further, each car can carry an arbitrary amount of cargo (the value of the transaction).
That wouldn’t be correct, because it wouldn’t be possible for everyone in the world to rely on bitcoin.
And in any case, there are other ways to build a global system for transferring money that is many orders of magnitude more efficient, so there is still no reason for society to support the cost of bitcoin, because it’s a terrible alternative.
And no, people don’t want or need a completely decentralized, trustless etc payment system. It’s a non-goal.
And in any case, there are other ways to build a global system for transferring money that is many orders of magnitude more efficient, so there is still no reason for society to support the cost of bitcoin, because it’s a terrible alternative.
And no, people don’t want or need a completely decentralized, trustless etc payment system. It’s a non-goal.
I'd really like to know the energy cost of HD streaming in general. Including god damn hi-res GIFs.
I've always wondered what the cost for HDCP encryption on our media wastes.
> How much energy does watching porn consume?
Just about all of mine
Just about all of mine
> Bitcoin is now considered by some important for our future finance system.
Really? give us a source, one who isn't either a grifter, a shill, or a criminal.
Really? give us a source, one who isn't either a grifter, a shill, or a criminal.
https://research.stlouisfed.org/publications/review/2021/02/...
Bitcoin may not be around for ever if it isn’t upgraded to be more efficient, but public and private blockchains are here to stay and have real use cases.
You can be a salty Luddite if you want, but assuming proponents are mostly grifters, shills, or criminals just tells me you don’t have a clue.
Bitcoin may not be around for ever if it isn’t upgraded to be more efficient, but public and private blockchains are here to stay and have real use cases.
You can be a salty Luddite if you want, but assuming proponents are mostly grifters, shills, or criminals just tells me you don’t have a clue.
"As such, DeFi may potentially contribute to a more robust and transparent financial infrastructure."
check your comprehension.
check your comprehension.
Does it count if they're all three?
Oh, come on. All of those things, except for travel, draw roughly zero watts compared to Bitcoin.
One Bitcoin transaction is about 750 kWh. That's enough to power a typical home for a month. It's enough to drive about 500 miles in an electric car, or (with vigorous handwaving based on EPA numbers) about 200 miles in an efficient gasoline car.
Bitcoin uses about 1/3 the energy of all the datacenters in the world. There are about 120 million Bitcoin transactions per year. If we assume 360 million people are using services that run in datacenters (obviously too low), one Bitcoin transaction uses as much electricity as the server time to support one user across all the services they use for a year.
>Being judgmental about how others use energy they pay for reeks of hypocrisy, virtue signaling and holier-than-thou attitude.
This is an engineering problem.
One Bitcoin transaction is about 750 kWh. That's enough to power a typical home for a month. It's enough to drive about 500 miles in an electric car, or (with vigorous handwaving based on EPA numbers) about 200 miles in an efficient gasoline car.
Bitcoin uses about 1/3 the energy of all the datacenters in the world. There are about 120 million Bitcoin transactions per year. If we assume 360 million people are using services that run in datacenters (obviously too low), one Bitcoin transaction uses as much electricity as the server time to support one user across all the services they use for a year.
>Being judgmental about how others use energy they pay for reeks of hypocrisy, virtue signaling and holier-than-thou attitude.
This is an engineering problem.
A transaction or a block? Multiple transactions are recorded in a single block. The massive computational power is used to certify and lock down blocks at a time, not individual transactions.
A transaction. A block can hold a limited number of transactions, so the throughput is limited. It works out to about four transactions per second on average.
The cost to "mine" a whole block is even more ludicrous.
The cost to "mine" a whole block is even more ludicrous.
That energy consumption provides a ton of benefits for a very large group of people.
The energy consumption of Bitcoin makes a few thousand people rich and that's about it.
Yes other things consume a lot of energy, maybe even more, but that doesn't justify the energy consumption of Bitcoin.
The energy consumption of Bitcoin makes a few thousand people rich and that's about it.
Yes other things consume a lot of energy, maybe even more, but that doesn't justify the energy consumption of Bitcoin.
So where can I buy futures on this?
Bitcoin needs to be exterminated.
Why do they have to mine bitcoins at this point? There are enough in the market just transact and trade with them.
Mining is the process by which new blocks of transactions get added to the ledger. There are no transactions if nobody is mining.
When a miner mines a block, they are rewarded with the sum of all fees paid by transactions in the block, plus a subsidy, which is 50 >> height/210000. The subsidy is the process by which the available bitcoin supply is released into the market - a predictable rate which cannot be accelerated. Miners can chose to NOT claim the subsidy if they want, but would be doing so at their own loss.
When a miner mines a block, they are rewarded with the sum of all fees paid by transactions in the block, plus a subsidy, which is 50 >> height/210000. The subsidy is the process by which the available bitcoin supply is released into the market - a predictable rate which cannot be accelerated. Miners can chose to NOT claim the subsidy if they want, but would be doing so at their own loss.
Political clickbait. Many global activities use more electricity than Argentina. Please ban
The sudden barrage of anti-bitcoin news looks slightly suspicious.
Check my account history. You'll see I'm very critical of proof of work schemes and you'll find that it goes back to 2012. You'll probably also find me being enthusiastic about Bitcoin until ~2015 when it became clear what it really is. That more and more people are realizing this, especially as the problem gets bigger and bigger, is only hopeful to me.
I trust you. It's only I'm seeing a surge of anti-bitcoin news since Tesla bought some.
[deleted]
I'm here for the bad takes by the hodlers.
proof of work is immoral if you’re an environmentalist. that’s why tesla acquiring BTC was especially egregious
Exactly my thought. They could have picked a more environment friendly cryptocurrency (e.g. Nano).
It would also had a relative bigger impact on the price, and so Tesla could have made a lot more money with such a move.
It would also had a relative bigger impact on the price, and so Tesla could have made a lot more money with such a move.
btc considered harmful
a good and rational use of resources, it's not like we are in the middle of a planetary ecological disaster or a possible end-of-civilization climate change crisis. Capitalism at its finest.
Imagine if all real currency was replaced by bitcoin.
How much green house gases would be generated to keep our economic engines going and also who would be genrating this money?
What would the economic outlook of the world look like during covid if it happened in a world where all currency was bitcoin?
How much green house gases would be generated to keep our economic engines going and also who would be genrating this money?
What would the economic outlook of the world look like during covid if it happened in a world where all currency was bitcoin?
The world would definitely be a bad place.
[deleted]
Criticism a about bitcoin power consumption betrays an understand of even elementary economics. Replace bitcoin with beanie baby, and one could have made a similar argument in the late 90s about beanie babies causing a fabric shortage or fabric being wasted on toys that could instead be used for better purposes. When the beanie baby market crashed, the problem effectively fixed itself, as there was this sudden glut of fabric. Additionally, increased demand for bitcoin production means more power will generated, similar to how increased demand for cloth due to beanie baby production lead to more total cloth being produced overall. It is not like cloth for clothes was diverted to create beanie babies. The increased production of power to mine bitcoins is funded by bitcoin profits, and represents a consensual economic transaction between two parties, not wastefulness.
Of course, then you can talk about externalities such as climate change but I am ignoring this for now and just talking about the criticism of wastefulness.
Of course, then you can talk about externalities such as climate change but I am ignoring this for now and just talking about the criticism of wastefulness.
That doesn't explain how humanity can reach collective consensus to burn energy to further ruin our planet because we can't reach collective consensus on how to efficiently exchange goods and services.
That's what, you know, governments are supposed to be fixing.
I am being brainwashed on a daily basis to turn off electronic devices, I pay extra for electronic devices to be marginally more energy efficient, I am crossing local law if my car idles for more than 60 seconds but it is fine to be burning energy on massive scale as a detail of computing algorithm.
Not to mention I can't buy decent graphics card because of how prices are inflated by miners.
Let's face it. If you are mining bitcoin you are effectively engaging in a destructive operation where you accept small extra payment for burning much larger amount of energy away. While the rest of the world tries to minimize our carbon footprint you are wasting part of the infrastructure that makes it possible for a cut.
That's what, you know, governments are supposed to be fixing.
I am being brainwashed on a daily basis to turn off electronic devices, I pay extra for electronic devices to be marginally more energy efficient, I am crossing local law if my car idles for more than 60 seconds but it is fine to be burning energy on massive scale as a detail of computing algorithm.
Not to mention I can't buy decent graphics card because of how prices are inflated by miners.
Let's face it. If you are mining bitcoin you are effectively engaging in a destructive operation where you accept small extra payment for burning much larger amount of energy away. While the rest of the world tries to minimize our carbon footprint you are wasting part of the infrastructure that makes it possible for a cut.
And not criticizing the excessive consumption betrays a lack of understanding in physics, engineering and several areas of economy as well
Was there a fabric shortage in the 90s?
Beanie babies created impacts far beyond fabric.
- Consider the small plastic pellets, which will eventually work their way into delicate ecosystems and devastate the ecology for a millenium or more.
- Since beanie babies were considered a store of value, countless tons of plastic storage bins and millions of cubic feet of climate controlled storage space are consumed to store beanie babies.
- Back of the napkin calculations indicate that over a billion dollars has been spent heating and cooling beanie babies since 1996.
- Beanie babies take up alot of space, driving demand for self-storage facilities.
- When sold on the internet, consider the electricity, excess heat, etc generated by Ebay, as well as the carbon footprint of producing and disposing of cardboard, tape, labels, etc and the carbon consumed in shipping them.
- The human toll is real as well. At least a dozen UPS drivers have been seriously injured while delivering beanie babies.
- Consider the small plastic pellets, which will eventually work their way into delicate ecosystems and devastate the ecology for a millenium or more.
- Since beanie babies were considered a store of value, countless tons of plastic storage bins and millions of cubic feet of climate controlled storage space are consumed to store beanie babies.
- Back of the napkin calculations indicate that over a billion dollars has been spent heating and cooling beanie babies since 1996.
- Beanie babies take up alot of space, driving demand for self-storage facilities.
- When sold on the internet, consider the electricity, excess heat, etc generated by Ebay, as well as the carbon footprint of producing and disposing of cardboard, tape, labels, etc and the carbon consumed in shipping them.
- The human toll is real as well. At least a dozen UPS drivers have been seriously injured while delivering beanie babies.
I’m no expert, but https://nano.org/ seems to solve this quite nicely.
Yet the amount of environmental destruction and pollution done by Argentina to support their massive livestock industry is something Bitcoin will never achieve.
Two things can be bad
Cool, I guess this fast function in our code that is measured in ms is of same badness as this slow function in our code that is measured in days.
Given that we are not interested in what these functions do, my choice would be to optimize the fast function.
Electricity used by Argentina generates massive amounts of destruction and pollution. The electricity used by Bitcoin is probably not even close.
Given that we are not interested in what these functions do, my choice would be to optimize the fast function.
Electricity used by Argentina generates massive amounts of destruction and pollution. The electricity used by Bitcoin is probably not even close.
It's a bit hard to begin arguing against someone who thinks that a country of people is less deserving of using energy than a massive online gambling scheme riddled with scams, that happens to consume as much energy as 45 million people.
Where does one even start?
Where does one even start?
I'm not sure where I said what you believe I think.
My opinion is that using more electricity than Argentina is not as dramatic as the comments make it out.
Bitcoin is never going to be as destructive to the environment as these countries.
Saying that PoW is immoral or that Bitcoin is horrible because of electricity use is fine. But the immorality or horribleness is magnitudes away from what the rest of the stuff using electricity does to the world.
If we want to optimize something, make reductions, Bitcoin is at the bottom of the list, rationally.
My opinion is that using more electricity than Argentina is not as dramatic as the comments make it out.
Bitcoin is never going to be as destructive to the environment as these countries.
Saying that PoW is immoral or that Bitcoin is horrible because of electricity use is fine. But the immorality or horribleness is magnitudes away from what the rest of the stuff using electricity does to the world.
If we want to optimize something, make reductions, Bitcoin is at the bottom of the list, rationally.
One could argue that livestock is more useful than Bitcoin, since it feeds people. Of course I agree we should reduce meat consumption.
15 years ago we had been leaving computers running in the background to download and share data over P2P networks, nowadays it's to mine cryptocurrencies. How sad.
At least there was a point to the former: you got content. With bitcoin, just move the money to Helium or something and if everyone does it, you have the same investment scheme. There is nothing intrinsically valuable about Bitcoin, it's just that everyone agrees to put money into it. We can easily move away and still have an investment scheme. You can't easily move away from downloading movies yet still have that movie on your hard disk to watch. There is a difference here.
The mining of Bitcoin uses this amount of electricity.
How much resources does the mining of gold use?
Afaik, 3000 tons of gold are mined per year. Which is worth about $150B. I would expect the mining uses resources of about $150B as well?
By my calculation, the value of bitcoins mined per year is $15B:
900 Bitoins per day = 328500 Bitcoins per Year
328500 * $45000 = $15B
So I would expect that Gold mining uses about 10x as much resources as Bitcoin mining.
How much resources does the mining of gold use?
Afaik, 3000 tons of gold are mined per year. Which is worth about $150B. I would expect the mining uses resources of about $150B as well?
By my calculation, the value of bitcoins mined per year is $15B:
900 Bitoins per day = 328500 Bitcoins per Year
328500 * $45000 = $15B
So I would expect that Gold mining uses about 10x as much resources as Bitcoin mining.
What's your point? Gold is useful. One of the most versatile metals. You can find gold almost en every electronics, or medical implants, or scientific equipment, or in space telescopes. BTC isn't even useful data. It's just a number. What an utterly disingenuous comparison.
Bitcoin is useful too. It's impossible to quickly and reliably transfer money between many places (e.g. Africa and Europe, USA and Africa, USA and EU) by any other way than Bitcoin.
African banks will steal your money if they have a chance to claim it was lost in transport. Transfers between EU and USA take so much paper and gasoline (to travel to banks) that Bitcoin must be more ecological.
And transfers between many country pairs are totally impossible without Bitcoin.
African banks will steal your money if they have a chance to claim it was lost in transport. Transfers between EU and USA take so much paper and gasoline (to travel to banks) that Bitcoin must be more ecological.
And transfers between many country pairs are totally impossible without Bitcoin.
There's levels of usefulness. Not dissing your argument but gold is still way more useful. There's has to be better ways to solve the problem you mention. Like they say, Bitcoin is a solution looking for a problem.
Gold is not much useful to millions of Nigerians while Bitcoin is praised daily there. I think if there was another solution, we would be using it already.
Fight the bitcoin climate crisis:
https://senatusspqr.medium.com/fight-the-climate-crisis-usen...
This site is called Hacker News, and yet there is a surprising amount of resilience to accept the utility provided by Bitcoin and cryptocurrency, with the same old tirades that keep being repeated ever since Bitcoin was worth less than $1.
The ecosystem has grown and has been finding real world applications. If you are still of the opinion that cryptocurrency is exclusive to buying drugs, laundering money and scamming people, you have a lot of catching up to do.
The ecosystem has grown and has been finding real world applications. If you are still of the opinion that cryptocurrency is exclusive to buying drugs, laundering money and scamming people, you have a lot of catching up to do.
I am very interested in actual real-world applications. Because I'm following HN and I haven't seen any.
Currently, it seems to me that Bitcoin is mostly an enabler for crypto-ransomware and other illegal stuff.
Currently, it seems to me that Bitcoin is mostly an enabler for crypto-ransomware and other illegal stuff.
Please put on your critical thinking hat for a minute.
Using electricity is not the same as contributing to carbon emissions. Bitcoin is mostly mined in areas overflowing with excess green energy, and thus contributes negligibly to carbon emissions.
The idea that all electricity generation is bad and therefore all electricity usage is bad is completely ridiculous. Instead of working so hard to figure out how to hate on some technology you feel like you missed out on, maybe try understanding it for a minute, and realize the massive net benefits it offers to society.
Using electricity is not the same as contributing to carbon emissions. Bitcoin is mostly mined in areas overflowing with excess green energy, and thus contributes negligibly to carbon emissions.
The idea that all electricity generation is bad and therefore all electricity usage is bad is completely ridiculous. Instead of working so hard to figure out how to hate on some technology you feel like you missed out on, maybe try understanding it for a minute, and realize the massive net benefits it offers to society.
(1) power is not free, even green energy. It has production, labor, and material costs.
(2) using the term 'excess' green energy is a false statement. There is no such thing as excess green energy while a bulk of the grid is still coal/gas/etc.
(3) Bitcoin has led to a drain on GPU availability and in turn on the finite capacity of our semiconductor fabs. Arguably for nothing.
(2) using the term 'excess' green energy is a false statement. There is no such thing as excess green energy while a bulk of the grid is still coal/gas/etc.
(3) Bitcoin has led to a drain on GPU availability and in turn on the finite capacity of our semiconductor fabs. Arguably for nothing.
> There is no such thing as excess green energy while a bulk of the grid is still coal/gas/etc.
Are you saying transporting and storing electricity is free or easy? Can you source that please? As far as I know many megawatts of electricity go to literal waste every day because it's actually extremely hard to store or transfer.
> power is not free, even green energy. It has production, labor, and material costs
Indeed. And thanks to Bitcoin powerplants can be paid for electricity that will be generated anyways but would go to waste, thus making green energy cheaper.
> Arguably for nothing.
For trustless, quick and reliable transfers of money, which are for example improving the life of many Nigerians.
Are you saying transporting and storing electricity is free or easy? Can you source that please? As far as I know many megawatts of electricity go to literal waste every day because it's actually extremely hard to store or transfer.
> power is not free, even green energy. It has production, labor, and material costs
Indeed. And thanks to Bitcoin powerplants can be paid for electricity that will be generated anyways but would go to waste, thus making green energy cheaper.
> Arguably for nothing.
For trustless, quick and reliable transfers of money, which are for example improving the life of many Nigerians.
> Can you source that please?
This is like asking for a source on where 5G was shown not to cause corona. There is a difference between critical thinking and questioning generally accepted statements. You know as well as anyone that energy transportation isn't free or easy, why ask as GP to show that? You're implying that it's more environmentally friendly to build a big power plant in the middle of nowhere, then ship a bunch of ASICs there as well, and then mine bitcoin, rather than just not do that and use the investment money to renewable energy somewhere else. Heck, even if you did build a power plant in the middle of nowhere and intend to ship computers there, why not ship machine learning there?
For example I know that DeepL has megawatts of GPUs for learning for the purposes of translation. There is no latency issue here, they can do this anywhere in the world. It's clearly better to use the energy for these purposes than for mining proofs of work.
This is like asking for a source on where 5G was shown not to cause corona. There is a difference between critical thinking and questioning generally accepted statements. You know as well as anyone that energy transportation isn't free or easy, why ask as GP to show that? You're implying that it's more environmentally friendly to build a big power plant in the middle of nowhere, then ship a bunch of ASICs there as well, and then mine bitcoin, rather than just not do that and use the investment money to renewable energy somewhere else. Heck, even if you did build a power plant in the middle of nowhere and intend to ship computers there, why not ship machine learning there?
For example I know that DeepL has megawatts of GPUs for learning for the purposes of translation. There is no latency issue here, they can do this anywhere in the world. It's clearly better to use the energy for these purposes than for mining proofs of work.
I think you misunderstood greatly. What I am saying is that powerplants are built close to human settlements because electricity can't be economically transported or stored, and that there are many times when electricity is given out nearly or completely for free as there is too much of it and it can't be stopped - actually there are many times when powerplants pay you for taking electricity - and that's when Bitcoin miners step in. I'm sure they'd happily give that electricity to DeepL too, if they asked.
> What I am saying is that [...] there are many times when electricity is given out nearly or completely for free as there is too much of it and it can't be stopped
No, that's a different argument. Your second point says that, not your first. I just replied to your first.
For the second argument, that's less crazy, but still not true. Electricity thrown away is a very very trivial amount compared to the amount Bitcoin uses. And there are still surpluses that are thrown away despite cryptocurrencies using power. Bitcoin doesn't tap into the grid and run only when there is a surplus; virtually all miners run it regardless of the current energy price on wholesale markets. If they didn't, we'd see huge fluctuations in the hash rate and they should match the renewable electricity production closely. It clearly doesn't do that, so apparently it's not being used this way and doesn't fund renewable energy that would otherwise not be built.
> I'm sure they'd happily give that electricity to DeepL too, if they asked.
Oh come on now, that's like arguing that "I'm sure the thief would have given the bike back if asked nicely!" Have you ever heard of a power company asking "who has the best purpose for this power that I'm uselessly producing here?" I've only ever heard "it looks like we'll need more power for <some purpose> soon, therefore we will build <some power plant> in <some place>".
No, that's a different argument. Your second point says that, not your first. I just replied to your first.
For the second argument, that's less crazy, but still not true. Electricity thrown away is a very very trivial amount compared to the amount Bitcoin uses. And there are still surpluses that are thrown away despite cryptocurrencies using power. Bitcoin doesn't tap into the grid and run only when there is a surplus; virtually all miners run it regardless of the current energy price on wholesale markets. If they didn't, we'd see huge fluctuations in the hash rate and they should match the renewable electricity production closely. It clearly doesn't do that, so apparently it's not being used this way and doesn't fund renewable energy that would otherwise not be built.
> I'm sure they'd happily give that electricity to DeepL too, if they asked.
Oh come on now, that's like arguing that "I'm sure the thief would have given the bike back if asked nicely!" Have you ever heard of a power company asking "who has the best purpose for this power that I'm uselessly producing here?" I've only ever heard "it looks like we'll need more power for <some purpose> soon, therefore we will build <some power plant> in <some place>".
In the first point I am asking the commenter to source their claim that electricity could be easily transported to places where fossil fuels are used. I am saying that it's not feasible to transport it there and Bitcoin is not the reason why we're not doing that.
> Have you ever heard of a power company asking "who has the best purpose for this power that I'm uselessly producing here?
Yes, that's exactly what they ask. Have you actually tried to visit a powerplant and talk to them about this? I did. This is exactly what they ask when they can't find enough demand for their electricity - they need someone to take it, that's why negative electricity rates exist.
> they should match the renewable electricity production closely. It clearly doesn't do that
Geothermals, nuclear, hydro, wind + global network with a huge amount of participants = it's hard to distinguish individual localized factors.
> Electricity thrown away is a very very trivial amount compared to the amount Bitcoin uses.
Not at all. Annualized waste electricity from EU is multiples more than what Bitcoin uses annually. Then we count in China, India, ...
> I've only ever heard "it looks like we'll need more power for <some purpose> soon, therefore we will build <some power plant> in <some place>".
Nobody is building powerplants for Bitcoin (except for very few geothermals) - it's absolutely not profitable. It's much better to put that electricity into the grid for consumer or industrial usage; providing it to Bitcoin miners is done when nobody wants more electricity but they have it anyways.
> Have you ever heard of a power company asking "who has the best purpose for this power that I'm uselessly producing here?
Yes, that's exactly what they ask. Have you actually tried to visit a powerplant and talk to them about this? I did. This is exactly what they ask when they can't find enough demand for their electricity - they need someone to take it, that's why negative electricity rates exist.
> they should match the renewable electricity production closely. It clearly doesn't do that
Geothermals, nuclear, hydro, wind + global network with a huge amount of participants = it's hard to distinguish individual localized factors.
> Electricity thrown away is a very very trivial amount compared to the amount Bitcoin uses.
Not at all. Annualized waste electricity from EU is multiples more than what Bitcoin uses annually. Then we count in China, India, ...
> I've only ever heard "it looks like we'll need more power for <some purpose> soon, therefore we will build <some power plant> in <some place>".
Nobody is building powerplants for Bitcoin (except for very few geothermals) - it's absolutely not profitable. It's much better to put that electricity into the grid for consumer or industrial usage; providing it to Bitcoin miners is done when nobody wants more electricity but they have it anyways.
> Using electricity is not the same as contributing to carbon emissions
Until all electricity comes from renewable source, then yes it is.
> The idea that all electricity generation is bad and therefore all electricity usage is bad is completely ridiculous
All _frivolous_ electricity usage is obviously bad.
Until all electricity comes from renewable source, then yes it is.
> The idea that all electricity generation is bad and therefore all electricity usage is bad is completely ridiculous
All _frivolous_ electricity usage is obviously bad.
I think that you miss the tradeoff. By using so much electricity, we have:
1) It's not being stored (where they do). In some places they pump water or use other methods, which help to aliviate demand/offer tension when needed.
2) It's actually pushing prices up in the demand side, which means it's making everything else more expensive.
3) If Bitcoin really becomes widely adopted, this problem will increase by who knows how much.
In a setting where we're worried about the impact of our energy pipeline, the use of bitcoins goes the other way around.
1) It's not being stored (where they do). In some places they pump water or use other methods, which help to aliviate demand/offer tension when needed.
2) It's actually pushing prices up in the demand side, which means it's making everything else more expensive.
3) If Bitcoin really becomes widely adopted, this problem will increase by who knows how much.
In a setting where we're worried about the impact of our energy pipeline, the use of bitcoins goes the other way around.
> Bitcoin is mostly mined in areas overflowing with excess green energy
I thought it’s mostly mined in China?
I thought it’s mostly mined in China?
My understanding is that there's a surplus of hydroelectric dams, that were built far from any reasonable amount of electricity demand, which is why there's excess green energy in (parts of) China.
> Bitcoin is mostly mined in areas overflowing with excess green energy
Source? I thought it’s mostly mined in China?
Source? I thought it’s mostly mined in China?
Do you have numbers to back what you are saying or you are just pulling numbers out from thin air?
It's hilarious to see the naysayers about Bitcoin say that BTC is not usable. Now it's worth almost 50 grand and all they can come up with is expensive transaction fees which in hindsight, are really not that expensive, and the energy consumption of maintaining the Bitcoin network.
It sure is a lot better than using human lives, usually & most likely forced labor, to mine real Gold. Right? After all, energy is free when you're using solar power to mine your Bitcoins or any other coins. Does the energy really goes to waste when it provides heating? Etc?
It just seems like people are running out of excuses at this point. I wonder what they'll be saying when BTC hits $100,000.
It sure is a lot better than using human lives, usually & most likely forced labor, to mine real Gold. Right? After all, energy is free when you're using solar power to mine your Bitcoins or any other coins. Does the energy really goes to waste when it provides heating? Etc?
It just seems like people are running out of excuses at this point. I wonder what they'll be saying when BTC hits $100,000.
> It just seems like people are running out of excuses at this point. I wonder what they'll be saying when BTC hits $100,000.
At what price will I be able to buy a cup of coffee conveniently?
At what price will I be able to buy a cup of coffee conveniently?
>>It sure is a lot better than using human lives, usually & most likely forced labor, to mine real Gold. Right?
Bitcoin is purported to be an alternative to fiat money, not gold. And most governments can print fiat money at will, with virtually no energy.
Bitcoin is purported to be an alternative to fiat money, not gold. And most governments can print fiat money at will, with virtually no energy.
> Bitcoin is purported to be an alternative to fiat money, not gold. And most governments can print fiat money at will, with virtually no energy.
That's not completely true. Bitcoin is purported to be an alternative to fiat money because it's purported to be an alternative to gold.
The argument for Bitcoin as a replacement for fiat money actually rolls up 2 big arguments into 1:
1. That fiat money should be replaced with money backed by some commodity like gold (the Goldbug argument)
2. That cryptocurrency is the ideal underlying commodity because it's more easily transferrable than gold.
To clarify, I don’t have a strong position on either of these arguments.
That's not completely true. Bitcoin is purported to be an alternative to fiat money because it's purported to be an alternative to gold.
The argument for Bitcoin as a replacement for fiat money actually rolls up 2 big arguments into 1:
1. That fiat money should be replaced with money backed by some commodity like gold (the Goldbug argument)
2. That cryptocurrency is the ideal underlying commodity because it's more easily transferrable than gold.
To clarify, I don’t have a strong position on either of these arguments.
The State printing fiat money is essentially stealing time from people who have laboured to create wealth. That wealth is pilfered through devaluing the money supply, with those close to central bank who receive the new money first benefiting from it.
Bitcoin fixes this theft problem, and demand for it will continue to increase for as long as this theft occurs.
The only way bitcoin can be stopped is if central banks start contracting the supply of their money, which you and I know will never happen.
Bitcoin fixes this theft problem, and demand for it will continue to increase for as long as this theft occurs.
The only way bitcoin can be stopped is if central banks start contracting the supply of their money, which you and I know will never happen.
> governments can print fiat money at will, with virtually no energy
I get what you're saying, but that's not really true. You have to account for the military spending required to preserve the legitimacy of your fiat currency. Any nation-state can afford the same printing presses you have.
I get what you're saying, but that's not really true. You have to account for the military spending required to preserve the legitimacy of your fiat currency. Any nation-state can afford the same printing presses you have.
And what is the cost of the massive capacity for and monopoly on violence that nation-states derive this capability to print money out of thin air from?
Twice a silly price is still just a silly price.
I'm tired of this BS about Bitcoin and pollution. So tired that yesterday I wrote this [0]. Of course you might be in complete disagreement with me, but please read it and let me know what you think. Be kind. I am trying to have a good conversation about it, not to impose my view.
[0]: https://simon.medium.com/bitcoin-and-pollution-the-definitiv...
[0]: https://simon.medium.com/bitcoin-and-pollution-the-definitiv...
It's not BS. The world in general is trying to find ways to be more energy efficient and up pops bitcoin, now using more power than a country of 44 million people. It's ridiculous.
As is your reference on that article - "Most bitcoin mining is using energy at the source that was uneconomical to use for other purposes, because of the loss experienced in transporting the energy to economic centers", which just links to one of your own comments on HN!
The rest appears to be handwaving - "Gold is worse!" or "It'll move to proof of stake!"
(edit: the link to the comment is not the OPs own, but it is an HN comment which just contains an assertion about green energy use)
As is your reference on that article - "Most bitcoin mining is using energy at the source that was uneconomical to use for other purposes, because of the loss experienced in transporting the energy to economic centers", which just links to one of your own comments on HN!
The rest appears to be handwaving - "Gold is worse!" or "It'll move to proof of stake!"
(edit: the link to the comment is not the OPs own, but it is an HN comment which just contains an assertion about green energy use)
>which just links to one of your own comments on HN!
I found this bit hilarious. I guess he's banking on people not actually clicking the source links? Medium journalism at its finest.
I found this bit hilarious. I guess he's banking on people not actually clicking the source links? Medium journalism at its finest.
How do we determine how much/little energy usage is acceptable though? Is it okay for Google to use about as much energy as Tunisia? Maybe Bitcoin provides more economical value than Argentina? How much energy has and is being expended during the mining of all the gold that is just being used as store of value?
(Mostly playing devil's advocate here. I would personally be for strong carbon taxes on electricity.)
(Mostly playing devil's advocate here. I would personally be for strong carbon taxes on electricity.)
> How do we determine how much/little energy usage is acceptable though?
Well, a purely electronic financial instrument that pretty much by definition cannot produce anything, and provides little but an arena for speculation, would seem to me to be a bad thing to introduce to a world that's trying to reduce energy use.
If you want to get into "well people clearly value it", the evidence being the money they pump in, well then any energy expenditure is justified if it is profitable, and this conversation is pointless.
> How much energy has and is being expended during the mining of all the gold
This is just whataboutery. Gold can be a problem as well.
Well, a purely electronic financial instrument that pretty much by definition cannot produce anything, and provides little but an arena for speculation, would seem to me to be a bad thing to introduce to a world that's trying to reduce energy use.
If you want to get into "well people clearly value it", the evidence being the money they pump in, well then any energy expenditure is justified if it is profitable, and this conversation is pointless.
> How much energy has and is being expended during the mining of all the gold
This is just whataboutery. Gold can be a problem as well.
What I meant by "BS" is that most discussions about Bitcoin and its polluting effects are very superficial, and ignore some of the facts that I try to highlight in my post.
> just links to one of your own comments on HN!
No, the comment that I reference on HN is not mine, it's by someone else. BTW, I quite agree with it.
> The rest appears to be handwaving
I don't see why. We have used, and are still using, Gold as store of value. Each year gold pollutes tens of times more than Bitcoin. The ones criticizing Bitcoin should have been criticizing Gold all along; and they should criticize Gold way more than Bitcoin even now.
> just links to one of your own comments on HN!
No, the comment that I reference on HN is not mine, it's by someone else. BTW, I quite agree with it.
> The rest appears to be handwaving
I don't see why. We have used, and are still using, Gold as store of value. Each year gold pollutes tens of times more than Bitcoin. The ones criticizing Bitcoin should have been criticizing Gold all along; and they should criticize Gold way more than Bitcoin even now.
Mining gold is environmentally problematic, but no new gold needs to be mined when gold is transferred from one person to another. Bitcoin transactions require new blocks to be added to the block chain, and therefore more "mining" must take place.
There is a bigger problem, however. If a gold miner finds a more energy-efficient mining process, they will use it because it is more profitable. No technological improvements make Bitcoin mining more energy efficient (miners are incentivized to expand their operation rather than to mine at the same rate using less power), because the whole point of Bitcoin mining is to prove that electricity was utilized. That means that there is no real solution to Bitcoin's pollution problem, other than scrapping Bitcoin entirely and replacing it with something more energy-efficient (like a distributed ledger operated by a consortium of banks).
There is a bigger problem, however. If a gold miner finds a more energy-efficient mining process, they will use it because it is more profitable. No technological improvements make Bitcoin mining more energy efficient (miners are incentivized to expand their operation rather than to mine at the same rate using less power), because the whole point of Bitcoin mining is to prove that electricity was utilized. That means that there is no real solution to Bitcoin's pollution problem, other than scrapping Bitcoin entirely and replacing it with something more energy-efficient (like a distributed ledger operated by a consortium of banks).
Bitcoin's energy consumption is a function of the number of miners, not the numbers of users. Just because more people transfer and use bitcoin doesn't mean more energy is used.
Every transaction requires at least one block (typically several) to be added to the block chain, and the block size limit means that, in fact, energy consumption in Bitcoin is proportional to the number of transactions. Beyond technical details, there is also the economic incentive: miners are paid to include transactions in new blocks, and if there are more transactions (thus higher demand) the fee will rise and miners will consume more power in order to collect the higher fees.
Transfers use energy, though
> No, the comment that I reference on HN is not mine, it's by someone else. BTW, I quite agree with it.
I've seen this claim made a few times now: that most Bitcoin is mined using renewables, at source. Where's the actual evidence for it?
I've seen this claim made a few times now: that most Bitcoin is mined using renewables, at source. Where's the actual evidence for it?
> No, the comment that I reference on HN is not mine, it's by someone else. BTW, I quite agree with it.
Ok, misread that. Either way it's just an HN comment, it's not proof of anything much. Gold mining is terribly polluting, yep, but your attitude to it is pretty much the definition of whataboutery.
Ok, misread that. Either way it's just an HN comment, it's not proof of anything much. Gold mining is terribly polluting, yep, but your attitude to it is pretty much the definition of whataboutery.
You ask commenters to be kind and say you want to have a good conversation but start your comment by declaring the viewpoint you disagree with as BS.
I would suggest that is not an effective way of starting a conversation.
I would suggest that is not an effective way of starting a conversation.
In the spirit of actually answering your question, first let’s just say that complaining about critics treating something named BitCOIN by its creators and something that has been promoted as an alternate currency from its creators to at least a decade of its supporters as a currency (Its the top cryptoCURRENCY) as currency is unfair to say the least.
The whole shift of calling it a store of value as opposed to currency that Bitcoin supporters have started over the past couple of years is very clearly a post hoc justification for its existence.
The problem, however, is that BTC isn’t even a very good store of value. Golds pricing has never collapsed 10x over the matter of months and nor has it risen 5-10x over the matter of months. As a result BTC isn’t even a very good store of value.
It’s currently, at best, a pure speculative asset. It’s like the GME trading from a week ago taken to its logical extreme. A speculative asset that has no relationship to its underlying fundamentals. Much like how GME’s price was completely divorced from any fundamentals of the company, BTC is like saying let’s do that thing, but why even bother with tethering GME the stock to an underlying company. Let it just exist on its own.
That’s what BTC is at the moment. GME if GameStop didn’t exist.
The whole shift of calling it a store of value as opposed to currency that Bitcoin supporters have started over the past couple of years is very clearly a post hoc justification for its existence.
The problem, however, is that BTC isn’t even a very good store of value. Golds pricing has never collapsed 10x over the matter of months and nor has it risen 5-10x over the matter of months. As a result BTC isn’t even a very good store of value.
It’s currently, at best, a pure speculative asset. It’s like the GME trading from a week ago taken to its logical extreme. A speculative asset that has no relationship to its underlying fundamentals. Much like how GME’s price was completely divorced from any fundamentals of the company, BTC is like saying let’s do that thing, but why even bother with tethering GME the stock to an underlying company. Let it just exist on its own.
That’s what BTC is at the moment. GME if GameStop didn’t exist.
People don’t want conversations about Bitcoin, they want to defend their financial positions.
I should have explained the "BS" part at the beginning of my comment in a different way.
I think that comparing Bitcoin energy consumption with a country (it used to be Chile, now Argentina), while technically correct, misses the big picture.
I also avoided a discussion on the true cost of having a global currency like the US$, which one might argue pollutes far more (military, etc).
I think that comparing Bitcoin energy consumption with a country (it used to be Chile, now Argentina), while technically correct, misses the big picture.
I also avoided a discussion on the true cost of having a global currency like the US$, which one might argue pollutes far more (military, etc).
> I think that comparing Bitcoin energy consumption with a country (it used to be Chile, now Argentina), while technically correct, misses the big picture.
I think a comparison like that actually is the big picture.
Maybe your arguments point though to more nuance.
I think a comparison like that actually is the big picture.
Maybe your arguments point though to more nuance.
You'll have a hard time convincing people that Bitcoin is OK by comparing it gold since most people who think Bitcoin is wasteful would also think mining of gold is very wasteful. Moreover, I feel like you're making the mistake you highlight in your first paragraph: conflating 'mining' in gold with 'mining' in BTC. Bitcoin mining is necessary for transactions to occur, not so for gold. It's a very foggy comparison as far as I can tell.
Your comparison to VISA links to a source that says that better comparison is Fedwire and that it only settles 1% of the money that FedWire does. So Bitcoin significantly loses to VISA in transaction count and FedWire in value settled. So I'm not convinced by your argument. And how much energy does Fedwire use? Presumably much less than VISA.
Your comparison to VISA links to a source that says that better comparison is Fedwire and that it only settles 1% of the money that FedWire does. So Bitcoin significantly loses to VISA in transaction count and FedWire in value settled. So I'm not convinced by your argument. And how much energy does Fedwire use? Presumably much less than VISA.
It would be more apt to comparing the cost of transacting Bitcoin to that of recycling gold instead of mining it, which is not zero, but is substantially less than mining and that's where again, Bitcoin takes another lump. Recycled gold is useful; it's a precious metal obviously and one immune to most forms of oxidation, so once reclaimed, it can be used again in the next generation of smartphones and what have you.
Gold is however undoubtedly a good comparison pick for Bitcoin; it's something with a few natural pros on it's side that's been hideously overvalued for largely irrational reasons. Like... this metal is advertised as the "right" basis to back currency but I also have some of it in nearly every gadget I own? Then how rare can it possibly be if a small amount comes in a $15 audio decoder for goodness sakes!?
Gold is however undoubtedly a good comparison pick for Bitcoin; it's something with a few natural pros on it's side that's been hideously overvalued for largely irrational reasons. Like... this metal is advertised as the "right" basis to back currency but I also have some of it in nearly every gadget I own? Then how rare can it possibly be if a small amount comes in a $15 audio decoder for goodness sakes!?
>VISA handles $30B/day
>Mastercard handles $11B/day
>Bitcoin handles $10B/day
Impressed. I didn't know Bitcoin transactions accounted for such huge volume almost as large as MasterCard. I use MC almost every day for almost everything. Is there people like, entirely living with BTC?
Impressed. I didn't know Bitcoin transactions accounted for such huge volume almost as large as MasterCard. I use MC almost every day for almost everything. Is there people like, entirely living with BTC?
Looking at the transaction amounts isn’t very informative, as one is primarily used as a speculative asset, the other two are actual payment methods. A better comparison would be looking at daily trading volume on the stock market.
To help put the difference more in scope, Visa and MasterCard each did over 100 billion payment transactions (nearly 300B combined) in 2019[0], yet Bitcoin still is over 3 orders of magnitude lower at around ~130 million (350k daily average x 365 days). The key distinction is the fact that the average Bitcoin transaction (currently ~$100k) is far higher than the average credit card transaction.
[0] https://www.statista.com/statistics/261327/number-of-per-car...
To help put the difference more in scope, Visa and MasterCard each did over 100 billion payment transactions (nearly 300B combined) in 2019[0], yet Bitcoin still is over 3 orders of magnitude lower at around ~130 million (350k daily average x 365 days). The key distinction is the fact that the average Bitcoin transaction (currently ~$100k) is far higher than the average credit card transaction.
[0] https://www.statista.com/statistics/261327/number-of-per-car...
I like it.
Is Bitcoin mining comparable to gold mining? It should rather be compared to the logistics and trading of gold maybe?
Is Bitcoin mining comparable to gold mining? It should rather be compared to the logistics and trading of gold maybe?
reads like another whataboutism article
If I understand the system correctly, the vast majority of bitcoin energy consumption comes from the mining process, which is not strictly required (at least not anymore, with 18+ million BTC now mined and in circulation). I can spin up the bitcoin software on my home PC to participate in the network, sending and receiving bitcoin, and confirming some transactions, and the power consumed would be low. Much less than running a 4k graphics 3D game.
Because of that, banning bitcoin ownership and trading seems to be overkill or missing the point... Just regulate/limit mining, or even better put a capacity on electricity usage or have tiers where the more you use, the more expensive it is, making mining not worth it after a certain point.
All that said, government regulation will be extremely challenging here as it would require cooperation of nearly every country on Earth, and we've seen how difficult that is.
Because of that, banning bitcoin ownership and trading seems to be overkill or missing the point... Just regulate/limit mining, or even better put a capacity on electricity usage or have tiers where the more you use, the more expensive it is, making mining not worth it after a certain point.
All that said, government regulation will be extremely challenging here as it would require cooperation of nearly every country on Earth, and we've seen how difficult that is.
Mining Bitcoin is a necessity if you want to transact, so you can't eliminate it. Basically, validating transactions is very costly, so people doing it get rewarded with "mined" bitcoin.
If miners stop mining, you cannot transact in it, at least with the current "proof of work" approach. There are some alternatives, like proof of stake, but they are not mainstream yet.
If miners stop mining, you cannot transact in it, at least with the current "proof of work" approach. There are some alternatives, like proof of stake, but they are not mainstream yet.
The mining process is _how_ transactions are verified and recorded. Bitcoin doesn't work without it. Mining is a misnomer. You aren't finding bitcoin. It's a reward for solving a problem that proves you participated in helping record transactions for the network.
No, the expensive mining process is required to build the block chain and prevent double spending. It is also used to determine who gets block rewards (transaction fees). Bitcoin will continue to consume more and more power forever
> Just regulate/limit mining
It's designed to be unregulatable.
It already uses the model where you can decide not to mine if it will cost you too much electricity.
It's designed to be unregulatable.
It already uses the model where you can decide not to mine if it will cost you too much electricity.
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You don't understand the system correctly. Mining bitcoins is also confirming transactions, which is the sending and receiving of bitcoins. Yes you could use your home PC but you would never find a block and so never confirm a transaction.
> Just regulate/limit mining, or even better put a capacity on electricity usage or have tiers where the more you use, the more expensive it is, making mining not worth it after a certain point.
Isn't that the exact method used, electricity is metered, the more you use, the more expensive it is.
Yes it drives up the price for everyone else because there's demand, but by that argument we would need to look at other energy intensive activities, like heating and driving, which feels like a step backwards.
Isn't that the exact method used, electricity is metered, the more you use, the more expensive it is.
Yes it drives up the price for everyone else because there's demand, but by that argument we would need to look at other energy intensive activities, like heating and driving, which feels like a step backwards.
"First of all, Bitcoin and Visa are fundamentally different systems. Bitcoin is a complete, self-contained monetary settlement system; Visa transactions are non-final credit transactions that rely on external underlying settlement rails. Visa relies on ACH, Fedwire, SWIFT, the global correspondent banking system, the Federal Reserve and, of course, the military and diplomatic strength of the U.S. government to ensure all of the above are working smoothly.
Any energy comparison must take the above into account – including the externalities from the extraction of oil, which implicitly backs the dollar. As those who make this comparison inevitably fail to mention, the dollar’s ubiquity is partly due to a covert arrangement whereby the U.S. provides military support to countries like Saudi Arabia that agree to sell oil exclusively for dollars. It’s worth noting that the grossly oversized U.S. military, whose presence worldwide is necessary to backstop the international dollar system, is the largest single consumer of oil worldwide."
https://www.coindesk.com/what-bloomberg-gets-wrong-about-bit...