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Comment by hudon | Hacker News Reader

This seems like good news for speculators (disclosure: I still hold Bitcoin and worked at a Bitcoin exchange).

Having said that, "Wall Street" should be wary of enabling the use of a system that is using more electricity than the country of Switzerland [0] without any productive output. The energy consumption is rapidly rising too. Furthermore, Bitcoin's transaction throughput is dismally low compared to existing payment systems (Visa, PayPal, etc.) and "smart contract" systems like Ethereum seems to still not show any productive output aside from scams and severe bugs in wallets and contracts that lose millions of dollars.

I'm all for "wait and see", but have we ever done that with a technology that is literally using more electricity than a medium sized nation? When are we going to ask crypto-fans to be accountable for the burned energy? We're asking Google and Facebook to treat our data fairly, can we ask proof-of-work miners to treat our planet fairly? At least wait until the blockchain can solve a real world problem before burning through the mines?

[0] https://digiconomist.net/bitcoin-energy-consumption

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Don't refer to the Digiconomist BECI for electricity consumption figures. The author makes fundamentally flawed assumptions, causing him to overestimate the consumption by 1.5× to 2.8×, and likely by 2.2×.

BECI starts with calculating average mining revenues based on a 439-day (variable) moving average of the Bitcoin and Bitcoin Cash prices. Then BECI assumes a fixed 60% share of these revenues are spent on electricity costing $0.05/kWh. That is it. There is nothing sophisticated about his model. His first error is that 60% is not representative of current hardware; real-world data shows the lifetime average percentage is between 6.3% and 38.6%. His second error is that the averaging period is excessively variable and poorly justified: it has increased from 60 and 439 days and changed by twofold his electricity consumption figures.

For more info, see: http://blog.zorinaq.com/serious-faults-in-beci/

In reality, Bitcoin's consumption is only a third of the power generated by the Three Gorges Dam as of 4 months ago: http://blog.zorinaq.com/bitcoin-electricity-consumption/

He seems to support his 60% figure with a lot of evidence [0][1] and you have agreed in the past that if anything 60% is the number your model converges to as well...

Anyway, the discussion is a good one and I'm glad at least 2 people are concerned about this. This is exactly the kind of thing we should be truth-seeking on, as well as finding use cases... not if Wall Street is finally allowing people who don't know any better to keep fueling the beast.

[0] https://digiconomist.net/bitcoin-energy-consumption#validati... [1] https://digiconomist.net/re-serious-faults-in-beci

[0] and [1] present zero evidence for supporting 60% as a current valid estimate. [0] even misrepresents the Morgan Stanley report (which actually supports my numbers, not his): http://blog.zorinaq.com/serious-faults-in-beci/#critic-6-aut...

Alex of Digiconomist is very good at writing long verbose paragraphs that "seem" to support his model, but when we look at his actual data and logic, it's full of holes, flaws, and poor assumptions.

One of the things we both agree on is that in the future (1 year? 10 years?) the ratio will tend toward 40 to 60%. But that doesn't say anything about the ratio as of today.

Even if he's overestimating by 2.8x, it's still within the same order of magnitude. So the conclusion of Bitcoin using up country-scale amounts of electricity is a valid one.

It’s also not like there’s any requirement for reporting energy figures by miners. 2.8x seems, to me, a very good estimate for something with large errors inherently.

My beef with claiming Bitcoin consumes "as much as a country" is that it is uninformative, highly misleading. Countries span multiple orders of magnitude so it is like saying a vehicle weights "as much as a rock" when a rock could be 1 kg or 10 tons.

That's a really big "only" even if we accept all those assumptions.

How the cost is divided between burned electricity, hardware and human labour does not make any difference. It is all value burned on 7 transactions per second.

> and "smart contract" systems like Ethereum seems to still not show any productive output aside from scams and severe bugs in wallets and contracts that lose millions of dollars

Ethereum is a vibrant, growing ecosystem with many many ambitious projects that have or are nearing release (maker, golem, swarm, bat, you need to do some research because the list is extensive). the above statement is really ridiculous but unfortunately the kind of throw away comment that gets voted to the top of an hn thread. what a sad place this is!

Some of those projects sound very interesting, but potential and actual productive output are very different things. They have potential. But you can't pretend like BAT, for example, is out there revolutionizing the ad industry, because it isn't yet. I can't even find Brave market share numbers, but I am confident they are miles away from even reaching 1%. It has potential, sure, but that's a long way from the real thing.

Same for the others. Golem is a nice idea with a lot of potential, but as of right now, Azure, AWS, and GCE are where programmers go for rentable computer power. Maybe one day that place will be golem. Maybe not. Right now it is all just potential.

I think part of the parent's point is the potential of crypt-currencies is often touted, but so far little has been shown in actual results. How long until there are actual results?

Sure, if these projects were already blow away successes and completely disrupted their respective markets we wouldn't (hopefully!) be having this conversation. And I agree that skepticism is warranted here but at least with regard to Ethereum it is way overblown here on hn. Even if these projects haven't fully proven themselves yet what I think they do show is the strength and merit of the platform that has made them possible.

I know of these projects and some of my friends are investing and/or building them. I commend the ambition and really hope they one day turn into something great.

That's beside the point, though. Knowing that Ethereum and Bitcoin consume more energy than Iceland and Switzerland respectively, why don't we turn them off until they're providing actual use? I get that markets need time to figure out if a product is useful and useless things get built all the time, but has that discovery process ever been done at this scale before? For instance, if proof-of-work ends up spending as much electricity as the United States and we still can't use it for anything meaningful, shouldn't we be concerned? I know "turn them off" sounds silly, but you can tax the miners or impose energy consumption caps until there is a smart contract out there that is arguably benefiting society.

If concern for humanity's wellbeing on this earth is a "throw away" concern to you, then maybe you can provide an argument for why everything's going to be OK? Have we fixed global warming and I just didn't get the memo?

Ethereum does have plans to switch to 'proof of stake' (as opposed to its current 'proof of work') which would dramatically decrease the power consumption.

The discussion about the energy consumption of bitcoin can only be discussed because we know how much energy it takes to produce one BTC. What we don’t know is how many banks there are in the world with all the computers and mainframes they use to keep track of all the fiat money. And then of course the energy to produce a hardcopy of that money like knocking down trees and mining metals. So in my opinion we only can have a useful discussion about energy consumption of BTC when we also know the current energy consumption of the banking system. Which I think is a lot more…….

I'm not sure I buy this. If we know definitively that btc uses more energy than all of Switzerland, and we know that Switzerland doesn't spend >100% (or likely even >30%) of its energy on banking, and we know that Swiss banks clear more money than Bitcoin, then we have a reasonable point of comparison.

I understand what you're trying to say but this logic would only work if we knew that swiss bank operations 'based in switzerland' clear more money than bitcoin.

Credit suisse/UBS main operations are in London.

The domestic banking of a single small country is enough. You're talking about like 4m people getting paychecks every couple weeks at minimum. Paycheck deposits alone is more transactions than all of bitcoin.

There is no way the numbers come out in bitcoins favor here, the scale just isn't there.

As the article I linked to explains, 100,000 transactions on Visa uses considerably less electricity than 1 Bitcoin transaction.

If we can’t find any benefit that Bitcoin brings, then there should be a cost threshold where we start applying the brakes. In other words, how much energy are we willing to spend without a beneficial use case? With Visa and banks, we already know they serve hundreds of millions of people on earth—if not billions.

>. In other words, how much energy are we willing to spend without a beneficial use case?

That's quite a statement. Did you mean without beneficial use cases that you personally know of? Example I posted somewhere in this thread: https://www.forbes.com/sites/ktorpey/2017/12/31/bitpesa-ceo-...

The only indication that Bitcoin might be better than incumbents is this line: "According to Rossiello, it’s still the fastest and easiest way for her to pay her lawyer in San Francisco and developers in Europe."

The hint at her anecdote not holding true in the general case comes right after: "While BitPesa is still happy with Bitcoin for now, Rossiello did note that it’s annoying that on-chain transactions have become much more expensive.

Rossiello went as far as to say there will be a mass exodus away from Bitcoin if a countermeasure for high fees is not deployed within the next twelve months; however, she pointed to the Lightning Network as a possible solution to this issue."

OK so the CEO of a Bitcoin payment company is annoyed that Bitcoin is increasingly worse than alternatives and she is hoping the Lightning Network will redeem it, otherwise there will be a "mass exodus".

That's hardly a convincing case for Bitcoin being the better alternative for payments and reads more like all other blockchain things: an experiment. Experiments are good as long as we're keeping track of their costs and being honest about the results.

>That's hardly a convincing case for Bitcoin being the better alternative for payment

It obviously is for the CEO who continues to use Bitcoin despite the annoyances, so I'm not really following your logical leaps, nor do I have the energy to chase you through your goalpost moving. You said there are no beneficial uses, and I provided you with one example.

I'm looking for evidence that Bitcoin is better suited than alternatives. Your example is a CEO who is not sure herself but who is currently trying to make it work... but is ready to leave Bitcoin if it doesn't change soon. She said herself that if Bitcoin doesn't change, the alternatives are better and there will be a "mass exodus". That literally proves my point.

You can say that I said "beneficial use cases" and show me that you can actually send money using Bitcoin. But that's like me showing you a 5-wheeled car and saying "see, you can get from A to B in a 5-wheeled car therefore a fifth wheel is beneficial". That's not sufficient and the CEO of BitPesa seems painfully aware of this.

If Bitcoin is not better suited than alternatives, why is the CEO still using it despite their complaints?

Maybe she's hoping that Bitcoin improves before she needs to change the core of their system and value proposition, which would cost a lot of time and money? Who knows?

Then it sounds like Bitcoin is the best suited solution for her situation.

You are focusing on the wrong thing. Energy production is the issue, not energy use. There is an equilibrium to be found in the free market based on the value of BTC that is provided and the economic expenditure to mine it with the cost of electricity used to get there. Oh wait! I found the link in the causal economic chain! We don't put a price on carbon! Put your energy into yelling there and not at yelling at Bitcoin. Maybe Bitcoin will help shed a light on this overtly obvious problem.

Nations and corporations already compete at finding means of cheap or sustainable energy production. How does Bitcoin provide an efficiency here?

Furthermore, if we can't find a stable use case for the blockchain and there are no more greater fools investing--the bubble collapses and all the ASICs end up in landfills--does society suddenly stop innovating in energy production?

Can you point me to any good literature on this? I don't understand the point.

I'm not saying anything about finding cheap electricity. And the greater fool theory isn't true as you could apply this theory to fiat money as well (except it is more foolish since new money is constantly created without the consent of the holders).

The point is that the free market and algorithm finds an efficient equilibrium between what the users value it at (which is a reflection of its utility to them), what it costs to secure the network in relation to the reward paid for it. In these costs are electricity costs, for which miners will find the most efficient means such that they are profitable. The energy prices are determined by the economic actors producing it. The will charge what the market will bear such that they are profitable and competitive. All this is a wonderfully efficient system except for the fact that the externality you are worried about (pollution from energy production) is not accounted for anywhere in the system. In fact, it is almost incentivised, since it is likely that I can produce dirty power cheaper than I can clean power (although this is changing). If you did account for this, dirty power would become more expensive, miner using it would disappear or choose clean energy.

Hence, the problem is not "It uses too much energy! So wasteful!!!!" The problem is "We don't account for externalities!!!! So bad!!!"

Actually, recent research found that even when considering externalities, proof-of-work is considered wasteful:

"Another issue relates to the negative externalities arising in proof-of-work blockchains. First, as shown above, when choosing individually optimal computing capacity, miners fail to internalise the negative externality their investment generates for other miners by increasing difficulty. This implies that equilibrium capacity acquisition in proof-of-work mining is excessive. Second, proof-of-work mining generates greenhouse-effect negative externalities, whose order of magnitude is significant. As of January 2018, the electricity consumed for Bitcoin mining was equal to the electricity consumption of over 3,400,000 US households, with an average consumption per transaction of around 300 KWh. Pigovian taxation could curb overinvestment in mining, but it might also be difficult to put in place, given the international decentralisation of mining."

source: https://www.tse-fr.eu/sites/default/files/TSE/documents/doc/...

I fail to see your point here. I'm not sure how much clearer I can be. "proof-of-work mining generates greenhouse-effect negative externalities" is incorrect. Power production creates these externalities, and they are unaccounted for.

You’re proposing we fix energy production instead of fixing Bitcoin AFAIU. However, until we know how to do that OR until we have strong use cases for Bitcoin, why not put tight controls on proof-of-work mining to reduce electricity consumption?

The “let the market find equilibrium” philosophy is reckless when we’re talking about global environmental concerns IMO.

No, I am suggesting that the only problem here is accounting. If you have a price on carbon, the rest will sort itself out. The lack of this cost being accounted for creates the false equilibrium where we plunder the environment to efficiently meet our needs within an otherwise well designed economic system - that is only made better by Bitcoin.

I think when you have a technology which creates the same amount of power demand as all the people and industry in Peru, and rewards people for locating this demand in the part of the world with the cheapest dirtiest coal fired power and zero energy tax, it's disingenuous in the extreme to pretend it's not a huge part of the problem because hypothetical global carbon taxes might solve wider problems.

Crypto mining is part of the externalities accounting problem, and for that matter one of the chief motivating factors behind crypto currency adoption has the idea of being able to avoid things like carbon taxes and energy quotas...

I think you will need a citation for "one of the chief motivating factors behind crypto currency adoption has the idea of being able to avoid things like carbon taxes and energy quotas".

The chief motivating factor is a fair economic system.

By your logic anything energy intensive industry should be stopped because of the pollution it causes. Say goodbye to the Steel industry, Aluminium industry, Chemical industry, Textile Industry, Copper industry. https://www.ecofys.com/files/files/ecofys-fraunhoferisi-2015...

I guess this comes down to the fact you think it is more pragmatic, sensible, likely and beneficial to have Bitcoin miners stop mining. I think it is more pragmatic, sensible, likely and beneficial to have a price on carbon.

You're actually asking for citations for the idea that the theoretical point of Bitcoin is reducing government control of money and a large practical part of the BTC economy is regulatory evasion?!

I'm going to go out on a limb and say that the steel industry, aluminium industry, chemical industry, textile industry and copper industry have done more for humanity than Bitcoin. Use less electricity though...

YMMV, but I think it is more pragmatic, sensible, likely and beneficial to stop shitting on people's lawns than to evangelise wider adoption of a system for producing more shit, funnelling it more efficiently to lawns less likely to attract the attention of shit regulators, whilst insisting the real problem is that the lack of a global shit tax. (I'd have used a less fecal analogy like hazardous waste and clandestine disposal systems but that's a little too close to stuff I'm actually working on making more difficult in the day job!)

"citation for "one of the chief motivating factors behind crypto currency adoption has the idea of being able to avoid things like carbon taxes and energy quotas"."

"citations for the idea that the theoretical point of Bitcoin is reducing government control of money and a large practical part of the BTC economy is regulatory evasion?!"

Somehow, I had never encountered this argument before. This makes great sense.

It's not entirely clear how to put a price on carbon, though. And, bitcoin's censorship-resistance (which of course I laud as an amazing and important innovation) might make it harder to force everyone to account for externalities.

Is someone doing serious research, writing, and thinking on the relationship between crypto-blockchain tech and the economics of environmental externalities?

It isn't really crypto specific. It is energy producing utility economics. If we had a price on carbon it would effect this equilibrium everywhere. If you accept that we have to change, and sooner rather than later due to inevitability - see Elon's turd in a punchbowl reference, and you accept we aren't going to curtail the things that we find useful that cost us energy, then a price on carbon would bring this about much quicker than without it and is really the only sensible option. Compared with the status quo, burn more dirty fuel faster and cheaply to prevent the economics of green tech coming online, and then, hoping we can innovate our way out of the shitty punchbowl.

Chinese miners and other state subsidized miners will mine bitcoin at a loss to push out the competition and gain marketshare.

An obvious problem, sure, but no easy solution.

>I [...] worked as an engineer at a well-known Bitcoin company). >Having said that, "Wall Street" should be wary of enabling the use of a system that is using more electricity than the country of Switzerland [0] without any productive output

You worked at a Bitcoin company and don't understand the value of proof of work? Being able to trustlessly settle shared stated across the entire globe is unproductive output? The globe spend billions of dollars each year blowing up mountains to sift for gold that then sit in central bank vaults to collect dust. At least bitcoin mining can absorb some of the curtailed renewable energy and make the payback on renewables faster.

Has the growth in popularity of BTC affected the perceived value of gold? You seem to be asserting that crypto-coin popularity will save the planet by reducing gold mining, I'm very skeptical.

Advantages of gold over bitcoin:

If there's a total internet && computer && electricity apocalypse, a physical barter exchange with gold is more trustless than bitcoin. You can still transact bitcoin but there's trust involved.

Advantages of Bitcoin over gold:

No trusted third party (If you're moving sizable sums of gold, you're doing it with a trusted third party[TTP))

99.99226%[1] transaction uptime (Your TTP keep business hours)

No countries win the gold-geography lottery (Your country that has no gold reserves can still accumulate)

Instantly assay the value (gold takes time)

You can use latent renewable energy to mine bitcoin (the way that miners remain profitable is by using cheap hydro power that would be wasted if not consumed) No need to blow up mountains to sift for gold.

Bitcoin is programmable value (People in places without functioning judicial/commercial systems can create contracts with each other)

You cannot practically bring more bitcoin to market if the price increases (The price of gold dictates which gold fields are profitable to produce)

Most importantly, it separates money that citizens use and the onus of financial obligations that the oligopoly (Banker's bailout 2008) and political class (Endless war) place on citizens.

[1]http://bitcoinuptime.com/

There is no latent energy. There is only potential. That energy could have been used to split water, build a city or electrified train near the hydro plant, etc, etc.

Moreover, you fail to account for human nature. I'd be shocked if bribes have not already passed hands, to allow for use of electricity for bitcoin mining near hydro power in remote areas.

Bitcoin as of now, is by volume a mechanism for letting privileged people in China shift their wealth (including Face) from resources in China to somewhere outside of China, with Bitcoin as a proxy. All the while ignoring externalities.

All the other rosy bitcoin has potential and so on, may be true, but please, look at what it is right now and say with a straight face that it's great. What is it, 90% of hash rate in China?

Edit: the bitcoin block reward is irrelevant. When more value is being parked in bitcoin, the transaction fees are going to go up to match the lost rewards. And people will pay.

Further advantages of gold over bitcoin:

1) Has been used for millennia. Bitcoin was invented ten years ago.

2) Accepted as valuable by most of human population. Bitcoin mostly as valuable within internet echo bubbles.

3) Although price fluctuates, it's more stable than that of bitcoin, thus better suited as store of value.

4) Has applications for industrial uses or for jewelry, guaranteeing that your gold retains at least a base value. Same cannot be said of prime number data structures.

5) Doesn't corrode and doesn't depend upon hardware or storage media to be working.

I'm not saying that people should hoard gold, just that bitcoin is a pretty poor substitute.

And, BTW:

> No countries win the gold-geography lottery (Your country that has no gold reserves can still accumulate)

Pop quiz: the population of Germany is roughly on par with the population of The Democratic Republic of Congo. Do the citizens of the two countries currently hold the same amount of bitcoin? If not, how come?

>Although price fluctuates, it's more stable than that of bitcoin, thus better suited as store of value.

Price fluctuations are not what you care about with a store of value. What you care about is the elasticity of supply with respect to price. If the market price of gold increases, the production of it will increase (though to a lesser degree of other commodities). Bitcoin's supply curve is programmed with time as the only input. This means that no matter the change in price, supply cannot increase. This is a coup de grâce against every other existing store of value.

>4) Has applications for industrial uses or for jewelry, guaranteeing that your gold retains at least a base value. Same cannot be said of prime number data structures.

You don't want a store of value to have a myriad of other uses because those uses influence the price of the store of value. Say that 'Beautanium' becomes a more popular substance use for jewelry. Now Gold loses value. The only metric you care about in a store of value is the change in supply vs the available supply. This is Bitcoin's killer app, This is why it has value.

> If the market price of gold increases, the production of it will increase (though to a lesser degree of other commodities).

Yet the total amount of gold on this planet is finite, and as the millennia have passed, it has become increasingly expensive to dig it out of the ground. These are the same properties that people laud in bitcoin.

> Bitcoin's supply curve is programmed with time as the only input

As far as I am informed, bitcoin mining farms also tend to be connected to the power grid. May be just to keep the soft drink vending machine running. Dunno.

> This is a coup de grâce against every other existing store of value.

Limited supply is by no means unique to bitcoin. Gold and real estate share the same properties.

>the total amount of gold on this planet is finite You confuse yourself with two qualities: Scarcity and Controlled Supply. The two are not the same.

>> Bitcoin's supply curve is programmed with time as the only input

>As far as I am informed, bitcoin mining farms also tend to be connected to the power grid.

The electric grid has no influence on the supply curve of Bitcoin. Do you accept the fact that time is the only input for the supply function? It does not matter if there is one miner producing bitcoin or if bitcoin's price is $1 or $1MM dollars the same amount of bitcoins are produced.

>Limited supply is by no means unique to bitcoin.

Again seems like you completely misunderstand the difference between scarcity (limited supply) and controlled supply. There's a finite amount of water on the planet (because there's a finite amount of hydrogen and oxygen on Earth) too, does that mean water would make for good money? No because water is easily synthesized from other elements. It has a very multivariable supply function.

> The electric grid has no influence on the supply curve of Bitcoin.

Difficulty readjustment mitigates long term influence of electriciry market on Bitcoin supply curve, but doesn't prevent the current prices from short-term influences

> Do you accept the fact that time is the only input for the supply function?

No.

> It does not matter if there is one miner producing bitcoin or if bitcoin's price is $1 or $1MM dollars the same amount of bitcoins are produced.

First, this isn't true over short terms, though difficulty adjustment means it should be approximately true with a steady state allocation of mining resources over the long term.

Second, though, supply isn't production caapcity, it's the mapping of price to number of units sold.

>> Do you accept the fact that time is the only input for the supply function?

>No.

Do you accept that the following line is nominally linear? https://blockchain.info/charts/total-bitcoins?timespan=1year

If you do, then you must accept that time is the only input to the supply function.

If you don't, supply a source to show what variable you think is correlated to the change in bitcoin. The data indicates, time alone.

> Do you accept that the following line is nominally linear?

> If you do, then you must accept that time is the only input to the supply function.

Er, no, even assuming the omitted x-axis is linear, I don't. The other inputs being relatively constant or having variation which mostly cancelled out each other's effects over a one year period is indistinguishable, on such a chart, from time being the only input. (Plus, the implicit function to which time would hypothetically be the only input isn't a supply function, which is a mapping from price to quantity people are willing to sell.)

> 4) Has applications for industrial uses or for jewelry, guaranteeing that your gold retains at least a base value. Same cannot be said of prime number data structures.

This is really interesting. Gold has physical uses for constructs that were developed during the industrial revolution. And as you say are well tested.

Ethereum or BCH, have information uses, for constructs that either have been developed in the last 20 years, or are being developed in this "information revolution" era.

I think we are about 20 years early to really see if a thing with physical properties will actually be more valuable than something with "informatic" properties. My bet is that the latter will win, given that materials sit on a lower level chain of complexity than information management.

> 5) Doesn't corrode and doesn't depend upon hardware or storage media to be working.

Bitcoin corrodes?

You can encode your private keys in Gold if you want to.

Well, the whole thing is computer data, stored on media. Already these days it's hard to find hardware to read the 5.25" floppy disks that I stored my code on in the late 1980s, and that's just three decades. Preserving digital data is a continuous effort.

And yeah, you can encode your private keys in gold, and I kind of think that everyone should do that, to keep future archaeologists puzzled :-P

If your house burns down, there is a reasonable chance of recovering, eg, gold slag. Not so much chance of recovering the markings that were on that gold before.

It is difficult to compare the durability of gold and bitcoin. It does seem plausible, given the length of time we've been using it, that gold's value is completely related to its intrinsic properties and difficulty of mining.

Bitcoin can't possibly be valued on its intrinsic properties, because I can fork the entire technical edifice, start a new blockchain called it Bitcoin+1, and the fork will have no value vs the original.

There are products like Cryptosteel, which are designed specifically to be able to survive a typical house fire and a variety of other disasters.

Combined with a passphrase, it also means your money can't be stolen if your house is burgled. Gold would be a sitting duck in this case.

You're severely underestimating how much it takes to melt gold. I'd be surprised if you could do it with a burning house.

> No trusted third party (If you're moving sizable sums of gold, you're doing it with a trusted third party[TTP))

If you're using a computer, its hardware and software stack consist of one or more trusted third parties.

Although it's an interesting thought-experiment to compare the risks!

I've always thought the Bitcoin use-case (admittedly from a subset of Bitcoin users) of "Complete collapse in the banking system" but somehow the internet still works without issue was...somewhat tenuous.

It's not a collapse of all banking systems, but the fiat money system which is dictated by central banks (which are mostly private entities, not government bodies).

It means when governments want to borrow more money, their lenders actually need to have the liquidity available and can't just magic it out of thin air.

> No countries win the gold-geography lottery (Your country that has no gold reserves can still accumulate)

> You can use latent renewable energy to mine bitcoin (the way that miners remain profitable is by using cheap hydro power that would be wasted if not consumed) No need to blow up mountains to sift for gold.

... you do realize that this is a contradiction, right?

i mean yeah, its technically no longer a literal gold mine, but renewable energy sources where you can place power plants such as your mentioned hydro power aren't that abundant.

I happen to know an exec in gold mining (we had a brief fling), and she mentioned they do see bitcoin as a clear competitor to gold.

For what that's worth.

I understand the claims of proof-of-work. What I'm asking for is evidence. Do you have any scientific research indicating that Bitcoin will ultimately be an efficiency? Or is it a hunch? How much energy does Bitcoin need to consume before you demand evidence that it does as you claim?

Gold as a value store is kind of better tested in all circumstances.

Some time ago I wrote an essay on proof of work and gold: https://medium.com/@zby/proof-of-work-8d8265def194

Proof of work isn't a requirement for those things. Proof of Stake is virtually as secure, and in some cases more secure, than PoW. While also being much more environmentally friendly.

The "not as bad as" fallacy, also known as the fallacy of relative privation, asserts that:

If something is worse than the problem currently being discussed, then The problem currently being discussed isn't that important at all. In order for the statement "A is not as bad as B," to suggest a fallacy there must be a fallacious conclusion such as: ignore A.[0]

[0]https://rationalwiki.org/wiki/Not_as_bad_as

>"I'm all for "wait and see", but have we ever done that with a technology that is literally using more electricity than a medium sized nation? "

I keep seeing these types of posts every few months and they always seem very poorly thought out and presented. Almost like people did the actual analysis but didnt like the results...

Don't you need to compare this with the energy usage of the industries bitcoin is supposed to replace (banks, money transmitters, credit cards)? Also take into account the environmental benefits of a deflationary currency (people saving instead of buying crap they dont need)?

What about running web pages that are >99% ads, tracking, and other unwanted content by kb? Also blocking all that unwanted content. Did anyone set out before hand to calculate the energy usage of that?

It just seems so disingenuous to be concerned about the energy usage of this one thing (and its only possible because it happens to be particularly easy to estimate, an advantage!) every time I see it.

The problem with your assessment is that you’re assuming that Bitcoin is replacing banks and MSBs. If that was actually happening, you would be right, we should compare Bitcoin’s energy consumption with the industry it it replacing. But it is not happening, so why would we compare them?

The link I included does actually compare Bitcoin energy consumption to Visa by the way, and the difference is staggering.

>"The problem with your assessment is that you’re assuming that Bitcoin is replacing banks and MSBs."

I never assumed that, nor that it won't (like you just did). I just said "supposed to replace".

Here is an example. Someone came up with the number 1700 TWh per year for data centers, wifi, computers, phones, tvs, etc. I have no idea, so just use that for now: https://www.researchgate.net/publication/320225452_Total_Con...

Anyone familiar with whats on tv or the internet knows that 99% of all that is unnecessary, even unwanted, crap. That gives 1683 TWh being wasted each year on crap, yet people are only concerned about this 5%. I just want consistency so I don't feel like I'm being concern trolled.

EDIT:

Looking at the visa estimate I see right away it is underestimated by 40%:

>"In calendar year 2016, we used an estimated 674,922 gigajoules (GJ) of energy from Scope 1 and 2 sources [...] Of our total emissions, only 7% were from Scope 1 sources, with 54% from Scope 2 (primarily purchased electricity) and 39% from Scope 3 (mainly employee commercial air travel)."

https://usa.visa.com/dam/VCOM/download/corporate-responsibil...

So Visa alone is about 0.25 TWh per year.

Deflationary currency disincentives investing in the future. There's nothing good about it.

This argument makes no sense since by abstaining from consuming resources you are saving them for the future.

Bitcoin is not an economic manipulation machine like the Federal Reserve. It's purpose is not to stimulate or incentivize anything.

It gives less return on investments, however it also incentivizes those who don't invest (mostly middle and lower class) to hold onto their money instead of spending it immediately, because it's worth more in the future. Which could decrease consumption in the world and possibly create a more sustainable future.

Deflation seems bad from our current mindset of growth at all costs, and especially bad if you're one of the upper class who's investments return more than inflation, ensuring you'll keep your status.

But this could possibly bring a brighter future for humanity, where we tame the viral nature of capitalism and the rich getting richer at a far faster rate than the rest of society.

i have paid and been paid overseas in bitcoin. as have others.. how is this not valuable?

no one judge can take it away from me, and i value that as others do. i fail to see how a decentralized store of value and exchange is nil value

I think you're arguing for the remittance use case but this has been shown to be inefficient compared to other methods [0][1][2]. Maybe lightning network will change that but again, it is just a wild guess from crypto-fans right now... and that's my point: why are we spending so much on hunches? Why aren't we building this thing responsibly if we know it costs so much in electricity?

[0] https://www.coindesk.com/why-bitcoins-remittance-disruption-... [1] https://medium.com/cryptonight/bitcoin-doesn-t-make-remittan... [2] https://www.saveonsend.com/blog/bitcoin-blockchain-money-tra...

i am not talking about remittances though that is also a legit use case. i just meant overseas business.

i don't really see its electricity use as a big issue since market forces will inevitably reduce cost or increase supply.

part of the reason though people will put a lot into an experiment like this is that the network effect is important to its success. needs to be very liquid.

for me personally having a fungible electronic currency that cannot be taken away by law or inflation is itself valuable

>At least wait until the blockchain can solve a real world problem before burning through the mines?

What do you mean? Bitcoin already solves problems; e.g., https://www.forbes.com/sites/ktorpey/2017/12/31/bitpesa-ceo-...

> Bitcoin's transaction throughput is dismally low

A discussion on this cannot take place without a mention of the lightning network.

The vast majority of transaction have a low stake. Most amounts are fairly low, people respect the fact they have parted from some value. Using such a highly price consensus seems like overkill. What you want is to concentrate on the litigious ones, on the higher amounts; while still securing the rest.

This is exactly what is happening in the lightning network smart contract. Bitcoins are taken apart in a channel, and people can do their business as usual. The protocol concentrates the stakes in a single on-chain transaction; with a tremendous pressure in not settling on the last channel state. It sorts of changes the transaction representation space to its dual. From a white-list of all approved transactions -and nothing else- to a black-list of misbehaving business relations -all other consented transactions being allowed-.

Bitcoin's 7 transactions per second is demultiplied by some order of magnitude here. That represents about 3 channels per second. 3 licenses to indefinitely transact up to a certain balance.

The lightning network is about rationalizing the use of this high-priced consensus.

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As for the electricity consumption, I'm of the opinion that the halvenings will take care of that; In 10 years, the reward will have diminished by about an order of magnitude.

Bitcoin gained too much popularity too quickly if you ask me. I think a super-exponential difficulty adjustment would have been better suited (make it require an exp(x\^2) hash rate instead of exp(x)).

The growth of Bitcoin is capped exponentially, as it is based on human adoption. Only something super-exponential can regulate this properly.

But IMHO, this is only a slight inconvenience. We'll waste electricity but only in the next few years.

> Bitcoin's transaction throughput is dismally low compared

How are you measuring "transaction throughput"?

Proof of Stake is the answer.

There is even -less- evidence this can actually work at large scale without becoming centralized. By design the rich get gradually richer via staking and once enough nodes/coins are controlled by a single party they can change the rules of the network.

Maybe social dynamics work out to avoid this, but humans have a long history of trending towards various forms of plutocracies.

One of the reasons Ethereum forked was to avoid a single party (the DAO thief) controlling far too large a portion of the total ether which has big consequences in a future with PoS.

Are we going to continue fork networks every time one party gets too rich? We could. Unless of course that party is pretending to be many individuals and we can't tell. Hard to stop this without deanonymization and a loss of censorship resistance. To be fair PoW suffers similarly from mining power all clustering in cheap electricity areas and thus players like Bitmain have a scary amount of centralized control.

I am skeptical of PoW long term without much better globally distributed use of renewalable energy. PoS by dropping this anchor to the physical world seems even crazier.

I am however somewhat optimistic about Bram Cohen's "Proof of space and time" in his "Chia" project which attempts to move the PoW problem from proof of expended electricity to proof of burned disk space, which feels inherently greener and easier to geographically distribute.

Or neither of these PoW alternatives work and the lessons learned from them empower as of yet unknown innovations. Exciting times to be sure.

Greener?

It's not free to manufacture hard drives, in terms of materials, energy, CO2 etc. Proof of space and time merely shifts the pressure away from compute power to storage.

It has the potential to do for the storage market what PoW as done for the graphics card market - pump up prices and move useful tech out of the reach of most consumers.

Graphics cards and ASICs are high up front cost and ongoing electricity cost that forces them to geographical areas with cheap electricity. Disk based systems are still up front cost, but substantially less cost to operate. Chia style nodes could be very low compute/electricity overhead and could potentially run off raspberry Pis on solar or using spare storage on mobile devices that are already powered on for other uses.

Yes, but such a system would incentivise the mass acquisition of storage media, pumping up prices, increasong production and having huge environmental consequences.

Proof of storage is just another ecological disaster in the making and I sincerely hope it never takes off.

Excuse my ignorance but how are the PoS rich getting richer different than the PoW rich getting richer? Aren't the payouts proportional to the investment for both schemes? And can't Delegated PoS more or less eliminate 51% attacks for PoS?

The rich get richer either way, but PoW is more biased towards the rich because poor people will lose money mining due to electricity costs. That might not be the case with a staking pool.

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