Bitcoin's value (not price, mind you) is still very questionable.
If you can see that, you can begin to exclude yourself from fiat money which requires centralized control of currency.
I trust rare numbers more than I trust the United States government.
That's such a silly statement. Rare numbers do not control the value of bitcoin, the market does. Your rare number might be worth half what it was in December 2017, and twice what it was a year before that. Tomorrow it might be worth nothing. Or $1000. Or $1. The rareness of the number is about as relevant as the colour of the dollar
Statements like that make Bitcoiners come across as digital survivalists, the internet equivalent of redneck militia.
> If anything we should welcome higher and higher energy use because it means higher standard of living for the humankind.
Why would it mean that? If we were talking about households using more and more it might, but it might not. My tv uses far less energy than the one I had twenty years ago but there's no chance I'm going back to that heap of CRT junk. Likewise all my other appliances, my car etc. My life has improved as my energy usage has decreased. But even if the opposite were true, it's not households, but industry that in this case is consuming more and more power. An industry that produces no goods, provides no service, does no research, improves only the lives of the direct owners of that industry. It's as if they're building enormous, energy sucking diamond factories, but with the added chance that diamonds might be worthless by the time they have them.
Even if I'm wrong, even if higher energy usage means higher standard of living, that's a short term outlook, because over a hundred year period it will mean a much, much lower standard of living for everyone who hasn't drowned or starved yet
And I disagree that higher energy expenditure overall will mean lower quality of life later on. We are swimming in energy even though we currently might not know how to convert some forms of it into productive use. That'll change.
By the way, don't get me wrong, I am totally for cutting waste on the local level just because it frees some of the money (and that is proxy for resources) for other, more productive uses.
Did you not just literally say that higher energy usage is itself a good thing?
Also on your point about production: My old tv had to be built, my old car also had to be built. It cost energy to replace them, but it does not equate to higher energy usage going forward.
I do agree with one thing you said though. We're swimming in unharnessed energy right now. If we can swap all the coal plants for fusion then maybe we can afford to waste energy on generating digital money, but right now bitcoin server farms mean more carbon in the atmosphere
You both understand each others points.
I think the point is that cryptocurrency mining is not valuable, at least not compared to the amount of resources required for it.
"Saying that this activity is pointless just because you are not seeing any value does not mean that it is actually pointless."
It also doesn't mean that it's not pointless.
"If anything we should welcome higher and higher energy use because it means higher standard of living for the humankind."
No. That does not logically follow.
"And just to address 'waste' here, energy is not free so 'waste' that actually wastes resources cannot go on for long lest the waster goes bankrupt."
This also does not logically follow.
Not at the cost that it currently takes. Personally, I ascribe far, far, far less value (if any) to any cryptocurrency mining compared to using the energy for other stuff, or not using it (and not having the mark up on graphics cards).
"but I think eventually it'll settle down to some stable level that is acceptable to all market participants."
The "market participants" would only be those mining crypto, though.
> The "market participants" would only be those mining crypto, though.
Not only them. All people who would use bitcoin in some capacity and benefit from it, they all would be participants in that market. Miners could not exists without them, in the end of the day they get their pay from packing transactions into blocks, no transactions - no pay.
Based on what? And if people aren't getting value from using the blockchain, why are they using it?
> far, far, far less value (if any)
Can you put a number on that, and justify it?
You're assuming rationality. You're also assuming they're actually paying for the electricity. And you're forgetting that they're not paying for the negative externalities of their energy waste.
"Can you put a number on that, and justify it?"
Take the smallest number you can think of. Now, take a number smaller than that.
Then explain why the people using bitcoin are being irrational. Are the miners processing transactions and receiving fees in return being irrational? Are the people using bitcoin to send and receive funds being irrational? Please enlighten us (and them, apparently).
> You're also assuming they're actually paying for the electricity.
They are.
> And you're forgetting that they're not paying for the negative externalities of their energy waste.
Classic case of moving the goalposts. The same applies to any economic activity requiring the use of electricity.
> Take the smallest number you can think of. Now, take a number smaller than that.
Dodging the question, I see.
It creates value for individuals at a bigger cost to society - a classic negative externality. Making drug dealing easier is immensely profitable and that's where all blockchain profits eventually come from - everything else is a smokescreen of intermediaries to create just enough deniability to let respectable business participate in the drug trade. It's just like outsourcing manufacturing to countries with lower environmental standards to profit from pollution (another example of something that's negative-value overall, but positive-value for the individual engaging in it).
In what way?
> Making drug dealing easier is immensely profitable and that's where all blockchain profits eventually come from
Do you have a source for this, or is this just what you believe?
Suppressing the drug trade is evidently something that society puts a high value on, given how much society spends on it.
> Do you have a source for this, or is this just what you believe?
Just looking at the whole blockchain ecosystem as a black box: any profit has to eventually come from outside, the rest is just moving that around. Speculators can move value around but aren't creating it. So who are the people getting something actually valuable in the real world from blockchain? I mean sure there's a bit of money laundering and evading capital controls, but the big one is drug dealing.
If I'm generous with the definition of "value", Bitcoin's main demonstrated value is as a speculative instrument. That is, something people gamble on. There are plenty of things for people to gamble on that consume less energy. Or none at all. For example, they could be gambling on the weather (as the degree-day markets do). There are other practical reasons -- much less common ones --people use Bitcoin, but those too can be done more efficiently.
Doing anything of value does require expending energy. But expending energy is no proof that anything of value is happening.
The government will keep printing more USD and being opaque...
BTC has 21,000,000 solutions ever ever ever.
(and USD is a decent currency, there are countries with hyperinflation)
Even if that’s different now (which I’m not sure it is), there will always be the next important cause.
I think it's primary value is for money laundering and hiding money transfers from the eyes of jealous lovers / spouses / governments.
That farmer driving the tractor down the field using energy in the form of oil is typically massively more productive than the manual pea patch laborer or even the era where "working animals" were helping with a lot of the farm work. Sure, the tractor using energy, but the tractor farmer is overall way more efficient.
It would be interesting to see how crypto's cost per unit compares with a relatively energy inefficient way of monetizing, paper currency and coins. Due to the various costs involved in manufacturing and distributing a coin or bill, I really can't say whether it's more efficient or less (and Google's not helping me here). What I think is fairly obvious is that most electronic cash systems do not have this initial upfront massive energy requirement crypto has, so best guess is from a resource perspective crypto is quite a bit less efficient than most electronic cash systems.
I used to have a 3000 sq ft house, a car, a job I spent 3 hours a day commuting to in my car, every labour saving gadget you can think of, climate controlled everything, etc. I even drove to the laundromat frequently to pay someone to do my laundry because I was too busy to do it myself.
Now, I live in a small apartment in the country side, generally only minimally heat and do not cool my apartment (temp ranges from 5C to 35C during the year), I work from home, do not drive, eat seasonal, local food, preserve my own food, etc. Admittedly I got married and my wife does the laundry :-P. The improvement in my life is like night and day.
Like I say, I'm playing devil's advocate and I don't really imagine that everybody would be happy with my lifestyle. However, I really do think that the assumption that more insulation from the reality of nature is not necessarily a "higher standard of living". For me, especially, it's quite the opposite -- which would have been very surprising to the younger version of myself.
Even economically, the modern world is moving inexorably towards a place where "labour" refers to mental labour, not physical labour. For people who frequent HN, I think it's kind of assumed that this all right and proper. However, when I was teaching English in the rural high school in Japan where I now live, most of my students wanted to be fishermen or farmers. But they know that this is the way to eternal poverty. You can't realistically make a living doing that kind of thing. They end up working unhappily in a factory.
As we've fuelled the increased standard of living by reducing prices for necessities, we've created a world where everything needs to be a massive enterprise with high volumes and super low margins. Even the other day I was joking with my wife that I will quit my current job as a programmer and open a shop making artisanal cheese. "How many cheeses do you think you'll have to make in a year?", she asked. "Only about 20,000 I think" was my reply. Again, in my rural Japanese town, only 20 years ago you would have found a tofu maker, a miso maker, a sake brewery, 4 or 5 fruit and veg stores all drawing from the produce of the local area. And while the JA (national food distributor) is great about prioritising local food distribution, gone are the days where you can set up a shop or produce a product for just your local area.
It's the ubiquitous cheap energy that enables this increase in scale. It expands deliverability (I can mail order low temp pasturised milk from 3 prefectures over and have it delivered in a refrigerated truck o_O). It allows super efficient, mega scale operations from far away to under cut local, high labour intensive operations and reduces prices. In may ways it's amazing.
But, I'm not sure "increased standard of living" is actually the best term for it.
However, one side effect of this is that increasing demand for clean, cheap electricity is a good thing. Miners are basically subsidizing the development of eco-friendly energy infrastructure which ends up being good for everyone.
It's literally waste heat from conversion of energy that could do some good, into numbers controlled by rich people. We might do better to just say outright 'all rich people, you now have twice as much money just for being you' and use the energy elsewhere… or use less and avoid cooking the planet.
In practice this is a dumb, bad idea even if you stand to benefit.
If bitcoin isn't benefiting any human being, why are so many human beings using it?
honest question: isn't crypto currency a closed system of speculators selling to speculators? From the outside, to me at least, it seems like an incredibly energy hungry ponzi scheme designed around printing monopoly money using ultra rare deep sea squid ink.
So are people using it for any purpose other than to sell it to the next rube?
All honest questions. I really don't know of any economically useful way that crypto currency is currently used for.
To speak plainly, I highly doubt you believe what you're claiming to believe (that cryptocurrecy is being used solely for speculation), which leaves dishonest rhetoric as the only alternative.
not at all. These were honest questions. I don't personally closely follow crypto, and outside of the occasional web anecdote of "there was some guy somewhere who once paid for pizza with btc" I've not seen or heard of the currency used for practical purposes.
Mining BTC requires exceptional investment, which basically makes it feasible only for the rich.
Understanding BTC requires technical knowledge 99% of the world does not have.
Heck, with all the regulatory hurdles, even using BTC requires more effort than most people have the time to expend.
(Yes, you can transfer BTC from one wallet to another fairly easily. But turning that BTC into actually useful local currency can be ridiculously complicated, depending on your local laws.)
Point-of-sale systems have been doing this for 15-ish years (in the US). We found value in that over using cash, and now many are finding value in blockchain over banks.
>now many are finding value in blockchain over banks
Debatable, people are using it for speculation, yes. But 90% of the people hyping blockchain probably don't even know what specific problem it solves and when this trustless model is even useful. It usually doesn't hold up to closer inspection.
Bitcoin speculators have profited from bitcoin, just like ACH industry investors and executives profited from $0.50 per transaction ACH fees. The only difference I see is bitcoin hasn't driven up the cost of goods for everyone.
So to be clear, we still need the POS systems plus we would also need the computers doing a meaningless busy-work math problem to generate the blockchain.
Cryptos could remove all barriers to entry for inter-personal financial exchange. This is something we take for granted, without realizing how much such barriers are really holding us all back. Or maybe we do realize it, but imagine these are necessary obstacles. Think of the, what now probably numbers in the dozens of, different payment platforms people jump through just to try to be able to give their money to people who they want to give it to (and all the new tertiary problems those said platforms then introduce into the process). It's really quite remarkably how backwards our global financial capabilities truly are.
I'm one of those people. Paying me is honestly pretty damn trivial and a solved problem.
Heck, I've hired people in the US and paid them online right from my bank's interface.
output "sound bite about bitcoin mining energy use unrelated to the article"
More pernicious are people who cloak themselves in ideology or Utopianism somthst they convince themselves that this waste of resources is a good thing. Some may even believe it, but most just don’t care and are too busy finding greater fools so they can make money.
Bitcoin is VALUED in a way similar to the stock market, where people collectively decide it's super good and useful because they're invested into the system. This process is exploitable, and is purely social engineering.
If it gets too big to fail, we're all in bad trouble, but we were already in trouble from many other things that have financially become too big to fail.
I would guess that collectively, millions of dollars are being spent each day on cancer research around the world.
These mining farms were built for a purpose. It’s not like all these spare ASICs were laying around waiting for somebody to find a use for them. The people running these farms would be on some other venture if cryptocurrency was never invented. And those ventures probably wouldn’t involve curing cancer either.