A faster, more efficient cryptocurrency
news.mit.edu
news.mit.edu
‘Would you be happy if the crypto-utopia you bring up happens in the next 10 years, and all value is stored/transacted through a cryptocurrency, but it was a coin that you do not possess now, nor could you transfer any of you current currencies into it?’
Say tomorrow someone releases the one true coin, but no one notices. All other cryptocurrencies drop to zero value, then a crypto miracle occurs - the one true coin is uncovered and almost overnight becomes the defacto monetary standard. Would crypto fans be satisfied?
This is a long way of asking: do you want cryptocurrency to succeed if you knew that you could not profit from it doing so?
Money isn't effectively and fairly distributed and it's obviously not a pipe dream.
Credit Suisse found that 97% of bitcoin is held by 4% of addresses (though some may belong to exchanges): http://www.businessinsider.com/bitcoin-97-are-held-by-4-of-a...
Still doesn't seem like a pipe dream.
Money is heavily regulated.
Crypto are not.
it didn't pop-up from nothing
crypto currencies need to be acquired using either real currencies or through some form of mining, that requires real currencies to acquire the resources needed to bootstrap it
the crypto space is already a place where rich got richer, less rich got sometimes more rich, most of the times nothing changed for them, really poor individuals from really poor countries couldn't even get started
The point of cryptocurrencies wasn't to make people rich. Anyone can buy in at market value and start using coins for their stored value. That is the point. Your anger in the fact that crypto didn't magically create money where there was none before is misplaced.
Really poor individuals from poor, economically wrecked countries had quite a lot to gain from the accessibility of cryptocurrency. Look at Venezela's attitude towards Bitcoin.
On owning them.
> Anyone can buy in at market value and start using coins for their stored value
Not everybody can, that's the point.
Almost nobody can, expanding the first point.
It's not really a democratic and open process.
It involves a lot of prerequisites that are usually not met by the general population.
> Look at Venezela's attitude towards Bitcoin.
You mean Maduro's?
AFAIK Maduro made bitcoin mining illegal in Venezuela and arrested more than a few miners.
Or do you mean the Petro Coin (a total scam currency) that Maduro tried to force down Venezuelan's throats?
Now expand on this point. What about crypto is preventing people from owning some that isn't also preventing them from owning regular money?
> You mean Maduro's?
It's pedantic to differentiate between a State and its actors when discussing policy like this. I mean Venezuela.
I'm talking the Petro Coin, the raids, everything. The whole policy was a response to fears of increased economic freedom for Venezuela's poorest citizens at a time when the government was trying to offload the pain of its bad economic decisions onto them.
No, it was a scam.
Those of us who have been here since the beginning just want cryptocurrency to succeed and flourish and fulfill its roles, and we already know Bitcoin won't be the answer so we're all waiting on The One True Coin.
Someone who is a fan of cryptocurrency itself is a fan of the ideas behind it and what it can bring to the table. People who are only satisfied in the outcome if they become rich are clearly not interested in the real benefits of cryptocurrency. So asking fans of cryptocurrency this question is a waste of time because the answer should be the same.
The point of my comment was to highlight to OP that they have a categorization problem. Just because a division exists doesn't mean you get to call No True Scotsman.
I want a cheap, fast, decentralized solution for token ownership with a great user experience. I want to build back-end solutions for crypto-tokens representing digital collectables, in-game items, etc.
I need a critical mass of users before these services start to become viable as a business model. Thus I need a cryptocurrency for tokens to succeed in a meaningful way. And I want this regardless of whether I own the native token of this network.
Personally the computational overhead makes me weep a fair amount; we're simultaneously trying to save the planet while making our payment methods several orders of magnitude more expensive in terms of power. But if there was a "coin" that was comparative in terms of energy expenditure with what currently exists then I'd be more than happy to "lose" my wealth in other coins. That is a very low price to pay for such a system.
Imagine a currency that everyone is born with a certain amount of, with the only price of admission your ability to prove your identity. Suddenly, we have solved the problem of proof of work for allowing this to be a distributed ledger since the trust can be based on reputation. Also, we can impose limits such as perhaps a logarithmic scale of wealth interpretation, where ten million dollars isn't all that much more than one million, if it's all in the hands of one person.
The digital age could be an age of fairness, if we choose to use these tools to design a fair game instead of an unfair one. Note that I mean "fair" not in the sense of two people starting out exactly equal, but where the winner can use their advantage to win more over time until the "match" is over, but one that tends towards a fairness equilibrium, where the advantages gained by one person or group over others are minimized over time or at extreme scales.
This is how I write when I have gotten less than 4 hours of sleep, but hey, I can dream. :)
Would that be a new age of fairness?
A currency is just a measurement device, it's not a replacement for resources, I don't know why people forget that so often.
The decline in rate of inflation is what prevents punishment of the older adopters. Inflation is inherently punishing of people who are saving an asset, because it steals value from them, or at least would do if demand didn't outpace supply.
If bitcoin offered the same reward to newcomers as it did to the people who adopted it 10 years ago, then nobody would've adopted it 10 years ago, and the result would be that everybody is punished, because the world at large would've ignored a great innovation.
You can't have both! Either you punish the savers by taking value from them and giving it to newcomers, or you let savers keep their value which pushes up the price for newcomers as demand increases. Socialist ideology fails to understand economics as usual.
Now you might argue that the rate of bitcoin's reduction of inflation is just too high, and should've been more gradual, or over a longer period of time. There might be some merit to that idea, but nobody could've accurately guessed the rate at which adoption would occur for a brand new technology.
After everyone is aware of what Bitcoin is, it doesn't really matter how long you make the halving. There will still be risk-takers and there will still be laggards. Some of the laggards will leave it until they can no longer go around with their eyes closed and must acquire some Bitcoin in order to make some purchases. Others will acquire it now (and 10 years ago) even when it is an extremely risky investment. Most people are somewhere in between.
So you have the option right now that you can either: Acquire some Bitcoin while it is apparently still cheap (relative to where it may be in a few years)
Or you can: Chose not to acquire some bitcoin because you think it is overpriced, and in a few years, complain again that bitcoin is overpriced, when it is worth significantly more than it is today.
Late adopters punish themselves by ignoring economic reality, either intentionally (because they are driven by ideology), or accidentally (because they don't take the time out to learn). Once you grasp it, there is only one direction which bitcoin can go over the long term.
There was a brief moment where companies began paying employees in crypto.
If cryptocurrencies ever become mainstream, banking services will be built on top of them, just as they were originally built on top of gold.
The only thing I can think of that cryptos let you do cheaper than banks is rapid, relatively frictionless funds transfer, so I’ll admit their utility there. But other than that, what banking services do cryptos give you?
Besides, you're paying for the legal and institutional protection anyway. If crypto made money transfer more efficient, they'd use it and still have the value add of a large institution backing transactions.
$80M DAI issued so far...
They can also try to outlaw bitcoin, but they have a bit more trouble stealing it.
Can I transmit my gold in any quantity that I want to anyone in the world with an Internet connection for a few dollars in fees?
Because your alternative is to trust the crypto infrastructure, which is far less trustworthy.
In reality most of the exchanges and sites dealing with crypto were (and probably still are) built by absolute amateurs with no checks and balances on their apps from a security perspective. Its scary as hell that people trust those sites with their actual money.
What was stored on the encrypted laptop was all of the cold storage wallets containing the majority of the digital assets.
No less idiotic, but an important factual distinction.
actually banks have failed in the past, this infrastructure not yet
Man, what are you talking about? There's a new "$100 million in coins go missing" story every 6 months.
Coins go missing from exchanges, which break the basic private key rule. People use exchanges for convenience because as clever as cryptocurrency is, it has no answer to the exchange problem.
Bullshit. No "religious" following of rules can protect you against a zero day exploit somewhere in your system.
Actually, there are smart contracts which act as exchanges. Not for all currency pairs yet, but it's on the way.
https://www.coindesk.com/crypto-exchange-zaif-hacked-in-60-m...
As of now, paying for goods and services with cryptocurrencies is relatively risky; it's hard to get recourse if you're scammed; and the standard credit card infrastructure with chargebacks and fraud protection is comparably more trustworthy.
As of now, storing cryptorcurrencies is risky. And I'm not even talking about the shady brokers/exchanges that can steal or lose their customer's money. You can store it yourself as well as you can - but, as it turns out, most people aren't that good at storing it securely, so all kinds of risks and breaches (e.g. hacking your devices to get access to your secrets) are more common than for bank accounts but, also, the consequences are more severe - if your bank account gets drained in an identity theft attack, very often these funds are recovered or compensated, not so with crypto. So again, the existing financial infrastructure with regulation, FDIC or similar insurance in case of fraud or insolvency, mandated consumer protection in case of scammed credentials - it's more trustworthy than the commonly used processes&procedures&infrastructure of crypto storage.
Payments are only relative small function of financial sector. Much more important is to act in credit markets, i.e take deposits and issue loans. How did you think that crypto removes need for fees (interest rate) and trust in those applications?
All the more incentive to not lose them!
Recourses:
- Backed up dat file - Backed up wallet password - Recovery phrase
There, now you have 3 separate ways to not lose your btc!
In other words, banks multiply money right now, but you cannot multiply cryptocurrency.
It's much more honest and clear.
If I do, there is practically zero difference how banks would work with crypto and fiat. And that promise can be used as money just like it can now with fiat. Thus banks would be able to monetarily multiply crypto at will as well.
If not, well, how exactly are you planning to stop me and my bank making such a contract? You know, the bank can pay me some interest on my savings is I let them lend the money forward, so both banks amd my incentive is to allow the lending of my deposit.
We use bank money now because it's more convenient than paying with gold. But imagine that paying with gold was more convenient and preferred. In that case, we would see money in the bank as an investment, not as a wallet.
Your employer does not wire transfers money to your bank, but to your wallet. He pays you "in gold" so to speak. Same when you go shopping etc. There is no bank involved in transferring money anymore.
If you put money on the bank, you cannot use those credits to pay other people, as you are able to do now. Because people expect "gold", not bank credits.
You are correct that in a cryptocurrency world, banks could still have fractional reserves. But the main difference is that there will be a clear distinction between "real money", which is cryptocurrency, and "bank notes", which are a promise of the bank to pay you cryptocurrency. Right now, you cannot make the distinction between the two.
This is also the reason why they were able to let the gold standard disappear, because nobody would notice. If everyone trades in gold, the gold standard cannot just be abolished.
Basically a cryptocurrency world is a gold standard, where gold is the preferred way of paying.
This would also mean that banks will go back to how they operated when there was no central bank. And even further back than that, because payments are more conveniently made with "gold".
The reason nobody does this is because there is no good reason to -- banks in the US are extremely reliable and trustworthy.
What if my real employer doesn't live close to me because he's in a different country? Should he send cash in an envelope? Which cash? The one from my country? From his country?
What if you live in Venezuela, would you still trust the government money?
So no, this is not possible with USD bills.
> banks in the US are extremely reliable and trustworthy
https://en.wikipedia.org/wiki/List_of_banking_crises#21st_ce...
"Massive bail-outs of financial institutions and other palliative monetary and fiscal policies were employed to prevent a possible collapse of the world financial system."
This means a new one popping up every month... Which in turn means that they are useless as currency.
Cryptocurrency doesn't do this.
http://time.com/4567605/india-currency-change-queues-delhi/
The original statement was:
> I think there's value in reducing the politically privileged's means to dominate their power over the general populaced
We can argue whether there's value in that. But if you're asking /how/ bitcoin et al can do that, the answer is that it removes direct control over the currency from nations and parliaments.
They may still be able to wield indirect control through a variety of other means, but that /is/ less control than simply being able to declare 500 and 1000 rupee notes valueless.
So the question becomes, why should the supermarket or the utility company accept crypto payments instead of dollars, when they know the former can lose 20%-99% of its value overnight, while the value of the latter is guaranteed to be kept stable by the government?
People and companies want to have a central, stable issuing authority they can trust.
Absolutely true, see EcoCash. It's a fascinating case study.
>and crypto very explicitly doesn't solve the problem that businesses will need to trust the issuing entity before they switch to using a new currency.
Trust is a relative thing. EcoCash is issued by a mobile phone provider. That should be crazy (who would trust verizon to issue currency?) except that _literally no one_ trusts the Zimbabwean government to issue currency any more, so the phone provider won by dint of a) being in the right place at the right time and b) being relatively more trustworthy.
Actively building trust is something you need to do if you've got a pile of venture capital burning down that you need to pay back before you go broke. However, cryptocurrencies are usually not VC-backed products, and therefore don't have time-bombs strapped to them. Bitcoin is doing extremely well in Venezuela right now as faith in the bolivar drops through the floor. Cryptocurrencies are at this point extremely well position to be conveniently accessible any time people's faith in their national currency drops enough for them to start looking elsewhere. This is a slow burn situation.
>People and companies want to have a central, stable issuing authority they can trust.
I'd love to see a citation on that. People trust a wide array of deities and insist that the deities other people trust don't exist. This is a Homo economicus argument, it seems unlikely that we can quantify what people want and how they trust so easily. My anecdotal observation is that people want to have something that sounds plausible enough that they feel comfortable not researching the details. If people wanted a central stable issuing authority they wouldn't accept fractional reserve banking.
> I'd love to see a citation on that.
Didn't you just provide two examples yourself (Zimbabwe and Venezuela) that alternative currencies are being adopted precisely due to the lack of a stable central issuing authority?
Cryptocurrency doesn't diminish a government's ability to enact financial policies within their sovereign borders.
It's interesting how something which was built on the idea of decentralization by design has given way to a clear power structure, where those who have the sway to control the fate of the technology have largely used it to pursue their own personal enrichment over the health and success of the system as a whole.
To me it's evidence that some form of governance is required to build something which can actually serve the greater good. I also would like to see a stateless currency work out, but there are clearly still quite a few problems to be solved before that will even seem like a possibility.
Care to elaborate? Some examples?
Example? Community decision making when forks occur.
> largely used it to pursue their own personal enrichment
I'll let someone else provide examples of that one :)
Another example would be exchanges: a vast majority of people do not use cryptocurrency in a peer-to-peer fashion, but instead go through a small number of centralized exchanges, which have been known to freeze withdrawals, have been riddled with theft, fraud, and a playback of all the financial schemes dreamed up in the last few centuries which have not yet been regulated against in cryptocurrency (pump and dump, Tether etc.).
On top of that, the crypto media sphere seems to be completely unreliable: I've seen many headlines which are deliberately misleading with the intent of stoking a one-sided, glowing narrative about cryptocurrency (I.e. a crypto startup opens their account at Chase bank and the headline reads: "X Coin Begins Partnership with J.P. Morgan Chase", and related online communities are heavily moderated to support the official viewpoint while silencing others.
Long story short, when I bought a little bit of Bitcoin to play with a few years ago, I could buy a coffee with it, and I could even make purchases with it on Amazon. Since then it's gotten much less useful to the average user.
>Another example would be exchanges
Interestingly enough, with regards to bitcoin, there was a huge powerplay that happened a couple years ago. And this debate proved who had the real power.
A couple years about, almost every major exchange, bitcoin company, merchant payment processor, and bitcoin miner, wanted increase the bitcoin blocksize, in order to reduce transactions fees to users and help adoption.
(Even though this directly hurt the miners, the miners still wanted it, because they supported adoption. Crazy, I know)
But, this change didn't pass, because the 4 or 5 people who controlled the bitcoin core github repository, and reference client disagreed with the changes, it prevented it from happening.
And this was in spite of the fact that almost every single major player in the space wanted this change.
So crazily enough, the central authorities of the bitcoin protocol, are the couple people who hold the keys to a github repository.
This is blatant re-writing of history.
A fork was written, Bitcoin Cash, but most people/miners/companies didn't want to use it. It was widely known and the differences/advantages/disadvantages were discussed ad nauseum for months/years.
A Github repo can't force people to run it's code instead of another.
> And this was in spite of the fact that almost every single major player in the space wanted this change.
So why did they keep running Bitcoin Core instead of the fork?
Because it turns out that controlling a github repo is a very powerful power.
> A fork was written, Bitcoin Cash
This has nothing to do with Bitcoin Cash. This has to do with 2XSegwit. An initiative that was supported by every single major miner, all of the exchanges (coinbase, gemini, kraken, ect), as well as the major merchant payment processors (IE, bitpay, and all the others).
There are statements after statements made by all of these players, where they stated support for it. Unfortunately, it seems like the people who control the bitcoin protocol, the developers, had too much power, though.
Did you disagree that every major miner, and Bitcoin business like coinbase and BitPay, put out messages in support of the 2X Segwit agreement?
You say this like it's a fact but I feel like it's the opposite. There aren't many compelling examples of this. And to the extent that there are, they exist in a competitive market and their fate is determined by users and investors, who weigh the cost of the greed vs the benefit of the technology and reward/penalize accordingly.
It might not be worse but IMO it hasn't proven to be better.
That's the decentralisation of power that has occurred.
You don't have to prove your identity. You don't have to prove anything to anyone. You just download some software and generate a private key. Bitcoin is to money what the internet was to book publishing.
For example, if there are problems with scams or whatever (e.g. impure gold scams, or cryptocurrency manipulation), people may choose non-coercive governance, like banks (e.g. through something like GNU Taler with a bank-backed currency). You could do this with any currency you choose, so which currency you use has little impact on the structure of government and how it interacts with the population, provided the government stays out of it. Because of this, fiat and resource-based currencies are equivalently acceptable for libertarianism.
So yeah, maybe cryptocurrency is tangentially related to libertarianism in that many libertarians are interested in them as an alternative to central, coercive banking, but that's about where the relationship ends. Libertarianism doesn't care if you have governance, as long as that governance doesn't use force.
And since cryptocurrencies aren't really used for real transactions, we can't really see how they would fare in a competitive currency market.
They used to be. I made online purchases and bought coffee in real life using Bitcoin just a few years ago. The evolution of Cryptocurrency has been away from any real-world usefulness, and toward its current incarnation as a largely speculative instrument.
And I would argue that in fact this has been the result of a Libertarian experiment playing out. Everything about Bitcoin has been opt-in: in principal anyone is free to own a node, and the community would have been free to opt-in to a governance structure which would have discouraged actions which made Bitcoin less useful to the majority of users, but this is not what happened. Instead power was consolidated in the hands of a few, who chose their own self-interest to the detriment of the larger community.
I am not a fan of coercive government, but I struggle to see how the story of cryptocurrency to this point does not provide evidence that some strategy is needed, beyond maximal personal liberty, to discourage bad actors from causing disproportionate harm to the collective.
That is a brilliant question!
Instead of all the endless bickering between crypto-fans and -haters reaching from technology to fiscal policy to society, it reduces the conflict to one simple test, as a sort of precondition.
Anecdata, but just going through my set of acquaintances, personal profit was always a factor. And I never even thought to question it. In hindsight, however, it seems (1) such an obvious thing to do, and (2) makes it clear to me that my acquaintances probably wouldn't give a damn about crypto if there wasn't a chance to profit from it.
I mean, the only reason Bitcoin went mainstream in the first place is not because of the technology (which existed for a decade), but because there was a extreme bubble (again) and mainstream people wanted to get rich quick.
I'm talking just about the positive potential of Bitcoin as a technology. There are many downsides and the current landscape of cryptocurrencies is not so great.
My vision is that crypto is going to be used like credit/debit cards, as a way to use money digitally, but it will backed against fiat.
But the problem is not the technology (it is there and exists for decades), but the laws. Better concentrate on that problem.
There's no way the current system can have a stable and uniform API that works globally.
For example: https://www.coindesk.com/crypto-gaza-west-bank-bitcoin-pales...
* To those people who say, "You can't compare crypto to a company because companies pay dividends," that is specifically why I chose Amazon as an example, a stock that does not pay dividends.
As an example of a tech, if someone asked me would you want self driving cars to succeed if you could not profit off of them, I would say that's a resounding success. A lot of people are excited about this tech because of the improvement in their daily lives, not because of a profit motive. Compare that to crypto
1) I would want Amazon-like businesses to succeed -- in the sense of "someone who finds a sustainable way cut the fat out of retailing" -- even if I could not profit as a shareholder. But I still think I would benefit (as a buyer) from that success.
2) I would want decentralized, arbitrary-money-printing-proof cryptocurrencies like Bitcoin to exist as a shield against governments that inflate away their money (like Venezuela or Zimbabwe) or abuse their central bank status for bailouts (in the first world), even if I could not profit as a holder (sorry, HODLer) of the currency. But I still think I would personally benefit as a prudent saver and (non-politically-connected) investor.
Similar reason people find gold appealing I suppose.
Hyperinflation is a symptom of economic problems, not the origin of it. If you find a way to prevent nominal inflation by crypto, it doesn't prevent the related problems. There's a good reason why we got rid of the gold standard, which had all the same problems as a crypto-based economy would have, and was unsustainable because of that.
Since you mention bond positions, if they'd were denominated in non-inflationary crypto, in any such scenario they'd drop anyway - if it wouldn't be possible by inflation, then it'd happen by defaults. Which would also mean a default of all credit institutions. Which would then mean the disruption of most businesses who rely on these institution. Which would then mean nonpayment of salaries. Which would then cause a lack of demand, causing even more economic problems. Compared to that, a semi-orderly inflation (up to the extent that is required) is preferable to a cascade of defaults. The vast majority of the money in economy is anyway in the "I owe you" form, and crypto doesn't change that; even if all the economy would move to a cryptocurrency, only something like 2-5% of it could be in the form of "hard coin that I control" and the rest of it is in debt relationships between various businesses.
It sucks to get paid in some paper that's now nearly worthless - however, the alternative isn't to get paid in hard crypto, in such a scenario the possibility to get paid in full doesn't exist. So if we don't have the possibility to get paid in a devaluated currency, then people either don't get paid at all, or have to suddenly invent a new worthless paper currency and build an infrastructure for it, at a time when they don't really have the time and resources to do it. This isn't a hypothetical example - such "currencies" have developed in e.g. various long-term conflict zones.
How so? For a net debtor, deflation is potentially ruinous.
So, anecdote: I live in Argentina, work for an UK based company. been doing that for the last 10 years.
Before I could trade bitcoin in an almost frictionless way (I.e., before I discovered Localbitcoin.com) my routine was to go to the ATM after the payment got into my european bank account, do a few extracts per day, rinse and repeat until I got all the money I needed.
Rate per extraction was around a few euros if I didn't hit minimum, to a certain % (That at times could be 5%, but can't quite recall as last time was 6 or so years ago). Minimum depended on the current economic situation of my country at the time (I suppose I don't need to explain that).
So, why not wire the money to your local bank account, you might ask?
Well, last time I checked (I moved a year ago to Buenos Aires and haven't checked how it goes here because I don't need to) the process for wiring money to my local bank account was as follows:
(Argentina is not inserted into the international SWIFT system !!!) I had to wire the money to a specific bank account in the US, that belonges normally to the bank I was checking, but couldn't really say. I had to wire the money there from my european bank account with certain conditions, so it could be recognizable that the money belonged to me.
Then, after some time (Could be as short as 2 weeks, but no bank would assure it would work like that every time, and wait times of 1 month or more were totally possible, considering how the Argetinian banks operate, i.e., mob-like) I would get my money _in the local currency_ with the corresponding loss due to exchange rates. AND (that's kind a really big AND, I need bigger caps) the "charge" for the operation was around 100 bucks. PER OPERATION.
"Thats too much" I said. "Yeah, people tend to group operations in half years so transfer is justified" was the answer I got.
I tested this at 3 different banks, got the same reply in all 3. Seriously.
So, now I trade bitcoin. I buy them in the UK, transfer them to my wallet, and use a broker to get the money in my account. The broker takes 2% on all operations, plus their rate is around 2% below of the current BTC price, but I don't mind. At least I'm getting ripped by somebody I want to get ripped by.
And then we have the speed issue: Since Segwit, it can take as little as half an hour to do the whole operation.
2 months ago I woke up with the money in my EU bank account (I'm not an early raiser, may I say), and by noon I had completed all operations and was just waiting for the broker to deposit the money in my local bank account.
BTW, the reason for me using a broker, is that minimum operation volume in LocalBTC is 0.2 BTC, and with the price hike at the middle of 2017 that became a problem; that, plus mostly everybody in Argentina that deals in BTC are fucking histerical trying to do a quick buck, so they start getting nervous if they don't close the operation in under 30 minutes.
And just in case you want to know how the banks operate here, another anecdote:
The dollar fucking doubled it's rate between May and September last year. The measure the gobernment used to stop the rate rise was to take the credit rate to above 70% (Yes, that's a seven followed by a zero).
Then, a lot of people here manage their finances both with credit and debit cards, because it's a lot easier (Unless you want to be carrying a lot of bills in your pockets).
So, what do banks do? They fuck merchants over, by delaying as much as they can transferring the money, because they put that in the financial market (We're speaking in the weeks here, above 3 of them). Even with the fines and shit, they are making shitloads of money. So, that mean that merchants get fucked over twice: they don't get the money in time, and when they get it prices might have changed a lot, so in a lot of cases they end up losing money.
Regarding the questions re:cryptocurrency I'm here for a long time, not a fun time. I mean, I have no problem if I have some fun with it, but it's not the end goal. And it's going to be fun if crypto takes off, as countries / governments are going to have to deal with the implied loss of power.
The banks where I checked where #52, #55 and #77
All in all, I received the same information in all 3, even thought they all have a SWIFT code assigned (So that probably mean they don't even have a registered account for the bank).
Here's a page from a rather large bank, where the process is exposed:
http://comex.bancogalicia.com/optimice-su-operatoria/bancos-...
It's in spanish, but if you click in either "Dólares" or "Euros" you get some bank icons below (3 in "dólares", 2 in "euros") with the details of the bank accounts where you could send the money. For any other currency, you have to call to get the instructions.
Can't get any more clearer.
Deposit in euros [1] Deposit in dollars [2]
[1] https://www.santanderrio.com.ar/banco/wcm/connect/d475bed5-9...
[2] https://www.santanderrio.com.ar/banco/wcm/connect/08c65dcd-d...
By the way if you are buying BTC, Kraken is much cheaper than 2% (more like 0.2%) and I think they take GBP.
It does sound like the banks are iffy.
I'm not sure you need a swift code, probably just a bank account number/sort code.
>The recipient gets money in their currency directly from TransferWise''s local bank account.
I have not tried Argentina as I have no business there but have sent money to Indonesia which is another tricky place and it worked fine. Fair enough re Kraken - they do GBP to BTC, not BTC to pesos.
Dude. Each country has their own way to sort stuff internally. For instance "sort code" is not something you find in countries like Spain (I have a bank account there; sort code is something found in the UK).
Nor are they found in this country. Here, we have what it's called CBU (Uniform bank key).
Again, when you go to a bank branch, _IF_ there's any relation between your bank account and a SWIFT account, they never tell you that information
And, considering that even in the cases you agree to do the transfer, you do not do that to a bank account in the SWIFT system that belongs to the branch but to a bank account in another country, I doubt we are integrated.
My family and friends said i was stupid, utopist, being conned, wasting my time, and so lany things.
Btc was banana money at first, and only people believing it would be a great thing as a concept made it work. We didn't expect to make banks, it was a happy side effect of a mad naive bet.
All great things start like that. Comics are now the thing, but 20 years ago were still for pationate nerds.
"But the fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright Brothers. But they also laughed at Bozo the Clown."
-- Carl Sagan
Going to share another quote, which I think is relative here -
“Those who are crazy enough to think they can change the world usually do.” - Steve Jobs
That's really rude.
Of course, if you don't ever try it, you can never be right for any reasons.
Bitcoin is IMO likely somewhere in between. It kickstarted a new concept in IT but money is a really simple (although powerful) usecase. I'm more interested what will be done with the concept in the future.
He wasn't even right. He was wrong in his estimation of the earth circumference, and lucky that America was there between both oceans...
As an idea, a hope, the starting point for iterating on the future of money.
As a way to make the society think and debate.
And as all that, I think it had been successful.
* Mining has become highly centralized, the opposite of its original intent.
* Transaction fees are too high to justify its use in every day transactions and small transfers.
* Very few merchants accept it for every day transactions, and the number has decreased over time.
Generally though, merchants wouldn't bother accepting it. Alongside the fees and whatnot, adoption is too low, fees are too high, time to confirm is too high, and it can complicate some legal stuff (like issuing VAT invoices).
Despite being a dominant force in film, they're selling poorly today.
Anyway, I would love cryptocurrency to succeed, and in an efficient manner (say we get all the problems worked out of proof of stake).
I guess I put too much faith in law enforcement.
This is what traditionally legal system with the power of violence used to deal with before. Now we see it implemented as a code. This part is more exciting to me than trying to sidestep whatever misguided government (not just US) rules and actions are.
EDIT: Perhaps proof of work based on burning energy, which is expensive and tends to bring centralized parties, is not the best way to ensure rules are enforced, but the fact the whole thing is open source is great in my opinion.
As far as I can see, there's no significant incentive to mine other than money, so miners want money, so you can persuade them with money.
The "consensus" is fundamentally an auction.
The internet is a technical embodiment of the First Amendment (freedom of speech, freedom of press, freedom of religion, right of peaceable assembly, right to complain about the government).
Bitcoin is a technical embodiment of some of the Fifth Amendment (due process -- protection against deprivation of property, and even life/liberty if you accept the unremarkable proposition that it's hard to live freely if you can't buy anything).
Having these technical protections in place are important regardless of their impact on or benefit to any one person.
How is it in any way different than having money in your bank account? If the government wants to, they can decide to take all your money from all your account, but they can also decide to throw you in jail until you hand over the keys to your Bitcoins. In the end there is no difference.
Meanwhile, the Technological Singularity people are working on the other half of the problem you describe.
And what's this Singularity nonsense of which you speak?
And if you want to have a discussion whether there are alternative ways to achieve specific valuable outcomes, count me out. This thread is about whether cryptocurrencies have any potential valuable outcomes besides the potential of lottery-style winnings for early adopters.
Ah, but this unwillingness to consider "why couldn't we do this without crypto", leading to rejection of study of centuries of useful economic and monetary theory development, is precisely what predicates the failure of cryptocurrencies to achieve potentially valuable outcomes.
That's precisely why I bring it up. If a thing is a) valuable/useful and b) possible without cryptocurrencies, why has it not been done before? The fact that it has not, suggests that either a) or b) is false.
and yes i think most cryptocoin loonies want any one of them to succeed , the potential is so crazy high, that wishing otherwise would be foolish
While I have invested in crypto and believe it has great potential, one of its touted benefits by its supporters is also one of its biggest pitfalls, namely that its money supply is predetermined. The inability to actively manage a money supply given exogenous shocks to the economy is a big problem.
With the latter you're constantly guessing and tweaking the model and roughly every 10 years there's a crash and the economists say okay, NOW we have it perfect and we'll never get it wrong again.
Why do you need an unlimited money supply? The only thing causing these shocks is that the economy is doing whatever it wants and then the economic model collapses.
The difference here is that inflation is predetermined and set instead of printing money on demand like we do in the traditional financial system.
What, specifically, do you think the consequences of a stable money supply are?
That’s an interesting speculation, but it remains to be seen what will happen when inflation is near zero.
If people value transacting on the network, then they will pay the necessary fees to keep it running. If they don’t then it will go down.
I suspect this isn’t the big issue people think it is, regardless there’s no way to “prove” that transaction fees won’t be enough — everyone from miners to speculators by owning mining equipment and Bitcoin are specifically betting that transaction fees will be enough.
If the network is used more it will be more valuable, which means the reward value will increase as the inflation decreases. If nobody uses the network then it'll be worthless, which at that point it doesn't matter since nobody is using it.
It only makes sense to take on debt if you have a productive way to put that money to use (Eg a business) that has a higher rate of return than the interest rate.
This cycle can continue forever, and the faster this cycle occurs the higher our GDP.
Gold, which, by the way, has an extraordinarily high energy and environmental cost to extract.
https://en.wikipedia.org/wiki/Gold_reserve#Officially_report...
The market moved on to other forms of money centuries ago.
Any supply of money will do, the idea that money should increase in supply along with population growth (or some other arbitrary metric) otherwise we’ll permanently live in a deflationary disaster is an imagined monster — we live in the here and now, therefore people have to spend some amount of money to live (food, housing, entertainment, etc) regardless of whether they perceive the purchasing power of money to increase in the future. By centrally planning (and thus inflating) the amount of money in circulation during financial crises the only thing that is accomplished is a re-inflation of the bubble — essentially they’re sowing the seeds of destruction again, causing the next bubble in an attempt to cure the last one.
Please read this explanation of the financial crisis, I’d be happy to comment further if you have specific critiques on this article (and no I didn’t write it):
https://www.unqualified-reservations.org/2008/10/misesian-ex...
> Any supply of money will do.
That is just nonsense. If you have a fixed money supply, given that economic growth is happening, would result in a naturally deflationary currency. That is a terrible place to be for the system as a whole as no one has any incentives to spend or invest in anything as money itself will simply gain value over time just sitting as cash. Thus, that money isn't being used / circulated. Having a ideal velocity of money has significant multiplier effects and deflationary currencies are fundamentally flawed.
The problem then is: if you want a low rate of inflation but there is a natural variation in the growth rate due to the cyclic nature of the economy, then how to create a system that could do that without a monetary authority.
Again, you HAVE to spend money to live (otherwise you die). It’s impossible to live without food and water, most people want to live in a house, most people want entertainment, etc. None of those things can be had without spending money.
Also, if your argument is correct, why don’t people put 100% of their money into the stock market (which reliably goes up over long periods of time) and instead choose to spend it?
Once it becomes too useful as a value store, it stops being used for trade, which hurts the economy.
So therefore some inflation is a good thing, it means the money keeps moving. If you want to store value you do that with assets other than money.
In what world is this true? Time preference is a real thing, and it is unrealistic to assume that 100% of the population will put off non-essential consumption and investment because the price of a Ferrari will decrease by 2.353% next year. Time is a very important factor in the consumption/investment decisions that people take, and modern mainstream economics neglect this fact both on the micro-level and on the macro-level, which is why crazy theories about the neccessity of inflation-rate targeting are able to arise. Most people put their savings in a bank account which the bank lends out to businesses to invest in projects - if anything more savings will lead to more investment than otherwise, which is more important to the bedrock of an economy than spending on consumption.
Also worth pointing out that the period during which the United States experienced its most significant economic growth (mid to late 1800s) was during a period of severe deflation of the dollar.
Keynesian economics (and more generally monetary policy) and inflation-targeting (i.e. the neccessity of having a positive inflation rate) is both theoretically disproven by the existence of time preference (a time preference of zero is literally impossible, it means starving to death) and its heterogenous distribution in a population, as well as empirically by looking at the periods of deflation in the U.S. dollar during the 1800s and the associated economic growth.
Have we seen this to be a problem within the context of Bitcoin?
In that world, there would also be nothing to stop anyone else from just taking your money by force and without any consequences.
The loudest voices against government regulation of finance usually belong to those with the least understanding of it. Most of the regulation is just there to protect market participants.
If I am a victim of fraud and lose my money, I have the concept of the rule of law to help me get my money back. In a decentralized world there is no way to get my money back.
Besides, it is the government's job to help society function well, in part by making the economy successful. Money is just a tool to do that.
The governments ability to print money has absolutely nothing to do with its police force.
If someone steals money from others, then the police should go in and arrest them. The police don't need a printing press to do their job.
It is perfectly possible for the rule of law to exist, and for decentralized currencies, to also exist at the same time.
there are going to be consequences. It's just that they will be enforced by smart contracts instead of governments..
if that 's the only problem with cryptocurrencies, it can easily be solved with insurance
Indeed. And not just because they're absolutely terrible at it: giving control over money creation to a government is like giving a drug addict the keys to the heroin factory.
Deflationary tokens are not much good as a currency but they are good as a Ponzi scheme.
This is what most "blockchain" enthusiasts get wrong. They think it is just about technology, and thus, they can come up with "a better bitcoin."
They're missing that the predetermined monetary policy is the key innovation of Bitcoin, and that by creating a new "blockchain" which prints new money, they are shooting themselves in the foot, because they can't ever be "a superior bitcoin" when they have inflation as part of the parcel.
A free market does not really care about whether some people have the opinion that deflation is bad. At the end of the day, nobody can change Bitcoin's monetary policy, and it will be left to the free market to decide whether or not they are going to put their money in this, or whether they're going to bet on inflation.
I would have much more faith in a cryptocoin's potential as a currency if the predetermined monetary policy was something like Friedman's k-percent rule: https://en.wikipedia.org/wiki/Friedman%27s_k-percent_rule
Of course this would vastly reduce the Ponzi aspect for early owners which might remove most of the appeal.
And I still wouldn't have much faith in it since I doubt being decentralized is enough of a benefit for people to switch away from government currency and normal banking.
A majority of hashing power in the network could change Bitcoins monetary policy.
A majority of hashing power attempting to change monetary policy spins off a forked coin which does not have economic value because it does not have economic users.
If the overwhelming majority of bitcoin users (98%+) wished to do so, they could possibly change the monetary policy. Of course this will never happen, because there are die-hards like myself who will always stick with the non-inflationary bitcoin.
And then, the market decides whether to stick with the non-inflationary coin, or to use an inflationary one.
The worst that a majority of miners could do the the non-inflationary bitcoin is temporary denial of service, or attempted double spending of their own money. It's going to cost them an awful lot in electricity to try either, and they're not going to get that money back unless they're generating coins that are in demand to buy.
You seem to be assuming that anyone interested in crypto is in it for the money.
I assure you, that's not the case. To me, getting the money supply out of the clutches of governments is the most important aspect of crypto-currencies.
To answer your question: Which crypto wins and how much it'll be worth are the last of my concern, as I will profit, along with all of society, from getting the govt to surrender management of something they're basically terrible at.
If the cryptocurrency was at least somewhat open and efficient, then I would be extremely happy. If it was more like a payment layer that only a few large banks could use, I would be still be happy, but much less so.
Most cryptocurrency fans seem to be optimistic investors looking to join in on the massive returns seen by investors in 2016-2017. Most of them care more for generating 'hype' and seeing an increase in the value of the coin they hold, just so they can dump their holdings later. I don't think they'd be too interested in a coin that inflated in value that they didn't hold (they'd probably instead promote something they did hold). Most cryptocurrency fans do not hold one particular coin, and generally change which coin they advocate for pretty often.
Cryptocurrency communities are generally pretty toxic and non-constructive environments. I've been part of a couple, and I've noticed multiple times a massive decline in the quality of the community (and, sometimes, in development as well) as the cryptocurrency got more popular (and more people joined the community).
$100: Absolutely.
$1000: Tough, but I'd do it if it meant the promised change to financial services
$10000: Unlikely, I'd rather keep my non-perfect coins
$100000: No way.
The reason is that I think that while governments can be better at monetary policy, they need competition to keep them in check. Other currencies technically provide that competition, but they can be suppressed via legislation in a given jurisdiction, and this is, in fact, commonly done precisely where such competition would have practical sense (e.g. countries with hyperinflation often try to regulate and even outright ban currency exchange; or the various historical bans on private ownership of bullion gold in many countries).
Bitcoin is always there, available to anyone who has Internet access and can get past "great firewalls" (and when people's money are at stake, they are surprisingly good at learning such things). Consequently, the government can only do so much to its own money before it starts losing that competition - Venezuela is one ongoing example.
Plurality is the name of the game. History has endless examples. Yes nothing would last but...the better monies would move to a better monies. It's called competition. There is very little competition when it comes to monetary policies. Crypto will foster more of it. It can get messy but hopefully it won't get deadly.
However if there is a slight chance I might profit from it, I'll gladly take those odds.
An overnight crypto miracle won't happen, by the way. Money is too important and requires too much trust for an overnight success to occur.
Every year that the BTC network runs without a major exploit, is another year of confidence in the network protocol's security. Unlike some software categories that are prone to rapid disruption, money is not one of those things.
Disruption occurs a lot slower for very important reasons. People have to trust in a crypto currency in order to store value in it and exchange value for it. That takes time, to test in production if any major exploits exist.
It's not trivial what Bitcoin has accomplished this far.
There are a lot of questions and speculation here about this paper and Algorand. I would be happy to try an answer them to your satisfaction. Some context may be helpful first, though. This paper is an innovation about one aspect of our technology. Algorand has a very fast consensus mechanism and can add blocks as quickly as the network can deliver them. We become a victim of our success. The blockchain will grow very rapidly. A terabyte a month is possible. The storage issue associated with our performance can quickly become an issue. The Vault paper is focused on solving this and other storage scaling problems.
The Algorand pure proof-of-stake blockchain and associated cryptocurrency has many novel innovations aside from Vault. It possesses security and scalability properties beyond what any other blockchain technology allows while still being completely decentralized. Our website, algorand.com, and whitepaper are great places to start to learn more.
If you learn best from videos then I suggest you watch Turing award winner and cryptographic pioneer, Silvio Micali, talk about Algorand: https://youtu.be/NykZ-ZSKkxM. He is a captivating speaker and the founder of Algorand.
Ethereum is scared or that so they are implementing some hybrid form.
Bitcoin is doomed from my perspective, because of the focus on proof of work and the confirmation times. When you realize that algorand is super fast, there is no "confirmation time", and there is no waste in energy to mine, then it is hard to back up any cryptocurrency focusing on proof of work.
> Algorand has a very fast consensus mechanism and can add blocks as quickly as the network can deliver them. We become a victim of our success. The blockchain will grow very rapidly. A terabyte a month is possible. The storage issue associated with our performance can quickly become an issue. The Vault paper is focused on solving this and other storage scaling problems.
What prevents a person from using a chain like IPFS?
Ethereum Casper PoS has been under review for quite some time.
Why isn't all Bitcoin on Lightning Network?
Bitcoin could make bootstrapping faster by choosing a considered-good blockhash and balances, but AFAIU, re-verifying transactions like Bitcoin and derivatives do prevents hash collision attacks that are currently considered infeasible for SHA-256 (especially given a low block size).
There was an analysis somewhere where they calculated the cloud server instance costs of mounting a ~51% attack (which applies to PoW chains) for various blockchains.
Bitcoin is not profitable to mine in places without heavily subsidized dirty/clean energy anymore: energy and Bitcoin commodity costs and prices have intersected. They'll need any of: inexpensive clean energy, more efficient chips, higher speculative value.
Energy arbitrage (grid-scale energy storage) may be more profitable now. We need energy storage in order to reach 100% renewable energy (regardless of floundering policy support).
Bitcoin is software and can easily implement these features but the community is divided and can't reach consensus on anything. Lightning Network as layer two solution is pretty good from what I know.
Ethereum improvements are coming along very slowly and that's good. They're the only blockchain with active engagement by thousands of multiple parties.
Aragaon and Vault's papers might sound good, but who knows how they'll turn out in production.
Ripple only runs ~7% of validator nodes; which is far less centralized control than major Bitcoin mining pools and businesses (who do the deciding in regards to the many Bitcoin hard forks); that's one form of decentralization.
Ripple clients can use their own UNL or use the Ripple-approved UNL.
Ripple is traded on a number of exchanges (though fewer than Bitcoin for certain); that's another form of decentralization.
As an open standard, ILP will further reduce vendor lock in (and increase interoperability between) networks that choose to implement it.
There are forks of Ripple (e.g. Stellar) just like there are forks of Bitcoin and Ethereum.
From https://ripple.com/insights/the-inherently-decentralized-nat... :
> In contrast, the XRP Ledger requires 80 percent of validators on the entire network, over a two-week period, to continuously support a change before it is applied. Of the approximately 150 validators today, Ripple runs only 10. Unlike Bitcoin and Ethereum — where one miner could have 51 percent of the hashing power — each Ripple validator only has one vote in support of an exchange or ordering a transaction.
How does your definition of 'decentralized' differ?
- it is very hard to audit the chain for bugs. If someone finds a bug to create coins through thin air you probably won't notice it.
- regulations by states is made hard. If you are required to pay taxes, and you live in a society, then these things do matter.
If you want cryptocurrencies to work, we need cryptocoins that are not encrypting transactions.
Another way to think about it: if Bitcoin somehow worked without mining, that's no reason for demand or usage of Bitcoin to go down. The value of bitcoins comes from network effects and scarcity.
> Vault reduced the bandwidth for joining its network by 99 percent compared to Bitcoin and 90 percent compared to Ethereum, which is considered one of today’s most efficient cryptocurrencies
1) Since when are these considered efficient? I don't think anybody in the know would say this. They're the most popular, but no means the most efficient.
Bitcoin is 250GB, so 90% of that is still 25GB to join the network, which is still ahhh enormous amount. And what's the baseline for comparison here? Were all of bitcoin's transactions replayed on an Algorand test network for this comparison? Or is this a metric from some test usage? If the latter then that's a huge issue since it grows in size.
2) On top of that you're saying it could accrue a terabyte a month in data. What type of usage is this under? Is that on current bitcoin transaction levels? 2017 transaction levels? A steady state tx/s? Is a backup of this data needed or is it throwaway and summarized in the latest blocks? If it's still needed then that's a decentralization issue because not many people will be maintaining full nodes.
3) What type of specs are affected by these changes? Can you still perform atomic swaps? That's a pretty standard requirement nowadays and would hinder the Blocknet and exchange interiperability.
Algorand's consensus per the YT video you linked is step 1. 1 user is randomly chosen to propagate a new block (can user make up a fake block? let's assume not) step 2. 1000 users randomly selected vote on that block and if they agree, it's DONE. (what if 1000 users are in the same country/company, etc. how do you prevent collusion on fake blocks)
This is hilarious. So the only thing you rely on for consensus is 1001 random 'users' input weighted by stake? What happens when your network is bombed with 1000tps and you need to contact 1001 staked users for every block? There are also vulnerabilities such as the recent "fake stake" bug that affect pure POS coins which I won't go into.
Now about the article referencing Vault. I believe NANO came up with this bootstrapping feature:
> Each user account only ever stores the balances of the accounts in its assigned shard
Yes they are replicating NANO's block lattice structure using "shards" with an insecure way of trusting any future chain that includes your old tx's but gives no guarantee on the state of any other account. As I understand it, I can be fed a fake chain while bootstrapping and accept phony funds as long as my balance shows up, right? ...Assuming this feature worked without any security holes, what's to stop other coins from implementing it? You don't need an entire cryptocurrency for it, it's just a feature and if it worked everyone would be using it. The sharding problem has not yet been solved and there are coins like Ethereum that are trying really hard to make it happen.
It's really sad to see this low-quality content come out of MIT. This looks like someone trying desperately to get a piece of the Crypto pie using MIT's reputation as a get rich quick scheme. Just for kicks I looked through reddit/r/cc and found only 5 dead posts mentioning Algorand with no comments on any of them. Their website makes all these claims about "pioneering a sortition algorithm" that looks "totally legit" if you ask me.
But the amount of energy being used to mine bitcoin is a real problem - it's not just a technical challenge (like the problems above). This is something that literally affects every human being.
Of the 203 comments (at the time I am posting this), there are only two uses of the word "environment". One of these is about the "regulatory environment".
Let's say Bitcoin, Ethereum, or another coin achieves an economic value & level of efficiency that makes mining an accessible investment for low-income people. Instead of server farms in Iceland, mining would be done by millions of people around the world. Some of the energy used for this would be renewable - but plenty of this is going to be coming from coal. In that sense, the coin would create an economic incentive to pollute (there are plenty of these already), and there's no way to regulate that kind of decentralized network. (That's the whole point)
My favorite summary of crypto is something along the lines of: leaving your car running while it solves sudoku puzzles in exchange for drugs. The drugs part isn't as relevant anymore, but the rest is.
I'm not here with an answer. There are many problems that I think crypto can solve and I'm glad it is something on the horizon.
But we need to talk about the environment.
They do significantly more than this, even if you wanted to (incorrectly) classify all of their products like this, they actually do more than that to entice people in.
They have a search engine. Does that really need actually pointing out?
The majority of the data that is getting pushed around during a page load is ad delivery or tracking code to inform the ad delivery. That is a lot of servers, load balancers etc etc working hard pushing around ad code. The actual text of a news article is a tiny part of the whole workload.
Once the site is being loaded by your browser (ie you have downloaded all the JS and your machine has parsed a few MB of ad/tracking code), depending on the site's ad provider(s) there is potentially a real time auction going on for every ad slot on every page load. Multiple ad networks hold automated auctions within themselves which are rolled up into an auction between the winner of each of those auctions. There are literally banks of big beefy servers scattered around the world bidding on ad slots 24/7.
A breath-taking amount of energy and bandwidth get used up to display an annoying 'sweater for dogs' ad next to a news article.
I think if anything it creates an incentive to use renewable energy. If miners are able to pay less for power, they make more money. As the cost of renewables continue to drop, more miners will move to it.
A larger demand for energy likely means more polluting forms of energy will come back into service/stay in service to meet the demand.
The exception to the latter is where excess energy is created because a method of energy production is created to meet peak demand, but generates more energy than is needed off-peak. While some of it could be stored, storage is inefficient and it is better to sell the excess energy cheap, so that you can continue to expand your energy production capabilities.
Miners take advantage of off-peak energy excess, whilst at the same time, increasing the on-peak demand. This means that the provider of the cheap renewable energy source needs to invest in producing more, and cheaper energy to meet the higher peak demand.
However, as a trader, you will only ever buy what you expect to be able to sell. It would be pointless stocking up on goods which you aren't going to sell, especially in FMCG where you need to sell them before they go out of date, else you lose all of the money on your purchase. Sales are almost always the constraint under normal operation.
Suppliers are attempting to create new demand by creating new markets. They usually offer freebies or discounts for new products in order to gain penetration, but it is then up to the market to decide whether that demand warrants them to continue producing the good. Without demand, they cannot continue to produce, because it would be a loss making endeavour.
Electricity can be seen under the same lens. Like FMCG, it loses value with time rapidly, because it gets lost as heat through storage, and it also costs to store. An electricity producer is never going to create more than they expect that they can sell. They might produce a bit more than actual demand as the means to try and capture new markets for greater long-term profits. Mining is part of this - if they can capture a new market for bitcoin mining, they will generate profit in the long term by continuing to supply that demand.
That's like saying the energy used to run the security system in a bank is being peed away.
Your comment misses the point that it is still a monumental and needless waste.
Probably 95% of it is being used for speculation/gambling and scamming the uninformed. 4% on drugs, and 1% on anything else. I'm being generous here. Bitcoin advocates are pool sharks, they want the rest of the world to be their marks.
Who the hell pays rent with bitcoin? Who buys groceries with bitcoin? Bitcoin could drop off the face of the earth this instant and I wouldn't shed a tear.
As someone else in this thread pointed out, there's only 500,000 active Bitcoin addresses, and yet the Bitcoin network consumes the same amount of electricity as the entire country of Denmark
A 310L fridge [1] (random one I found) for context uses about 280 kWh per year [2].
I think it's pretty ridiculous to say that the average bitcoin transaction provides approximately half the value (in the best case scenario) as having the ability to refrigerate food for a year. I'd say "pissing away" is a pretty fair comparison.
[1] https://www.lg.com/au/fridges/lg-GB-310RPL
[2] http://www.energyrating.gov.au/calculator
With [2] you will need to put the model number in the "Brand or Model" box
It is a subside to renewables, where they can make money on energy that would have been thrown away. It allows better managements of the peaks and troughs that commonly plague reneweable energy sources.
You want to help level out peaks and troughs of electricty production: Improve battery technology, don't just waste the energy generating sha256 over and over.
Before: The energy from a hydro plants gets wasted when it is night time.
After: Now they get money.
The hydro plant is now making money on something that they were just throwing away, previously, and thus it is a subsidy.
Hydro plants can usually turn off relatively quickly. They can be used as pump storage, which is an incredibly efficient way of storing energy - >70% efficiency [1].
[1] https://en.wikipedia.org/wiki/Pumped-storage_hydroelectricit...
They generally have high capex and low opex, having a strong outstanding demand by a centralized consumer willing to build a data center nearby makes the business case for a solar farm more attractive.
Bitcoin mining will accelerate environmental friendly energy production because excess energy can be converted into Bitcoin instead of going to waste. Miners who don't use excess energy will be priced out and there is plenty of excess energy around the world.
*Don’t have a citation but there may be some research on this being published soon, it’s an open secret in the industry.
There absolutely is a free lunch.
In renewable energy, there is a massive amount of "free" energy that is not being used for anything, and is literally being thrown away, because it can't be stored or used during the time of day that it is generate.
That energy is free. There is zero downsize to spending it on guessing number. It might even be negative value energy, actually.
Did you know that sometimes energy prices go into the negative, and people will pay you to use it? Something to do with the electric grid, and difficulty of destroying energy, I am not sure.
I would expect that mining has become an arbitrage market that narrows in on the cheapest possible electricity anywhere in the world, and as such is dominated by excess "free" electricity from e.g. hydroelectric power that is generating more electricity than can be used (or transported).
Green energy is not necessarily the cheapest form of energy. If it were, it wouldn't even be _hard_ to stop burning fossil fuels and prevent climate change.
https://www.nytimes.com/2018/09/19/nyregion/bitcoin-mining-n...
When did miners go to NYS for natural gas power? Are they still there, or did they get undercut by hydro from somewhere else in the world?
Thus, there's no analogy to the challenge the rest of the world faces in moving away from fossil fuels.
Anyway - https://medium.com/coinshares/beware-of-lazy-research-c828c9...
Problematic topics are usually omitted from discussions when they are complex or not obvious and in the forefront. The conversation goes elsewhere, and we turn our heads to follow it.
From this article:
> As with many dubious claims, it shouldn’t come as a surprise that much of it is underpinned by a single, leisurely researched source: Digiconomist.
> In fact you’d be hard pressed to find many articles in the press pushing the environmentalist, anti-PoW narrative that do not link back to that one source. But hey, can you really blame them in today’s sound bite media environment? Research is hard and time consuming.
The author's POV is a little different in that he is addressing anti-bitcoin alarmists - but, underlying this is the argument that research and shared knowledge on the topic is scarce. This is the kind of content I want to see more of.
I'm happy this comment sparked some discussion here.
"""
The Takeaways
* Contrary to what you’ve heard in the media, bitcoin mining is not an environmental disaster. In fact, it is one of the cleanest billion-dollar industries on the planet.
* The combined total bitcoin mining network draws less power than global gaming consoles running 4 hours per day.
* Bitcoin mining is mainly powered on renewable energy, at levels more than four times higher than the global average (>77.6% vs ~18.2%).
* Every year, enough hydro power is wasted in Yunnan and Sichuan alone to power the Bitcoin mining network many times over.
* Bitcoin miners are highly mobile and can therefore serve as cornerstone demand for low-cost stranded renewables.
* By increasing profitability and lowering reliance on subsidies, bitcoin mining can positively contribute to the development and scaling of renewable energy projects wherever conditions are the most favourable.
"""
We all want a faster, more efficient, cheaper cryptocurrency, and those features are linked to its ecological efficiency.
Suggesting otherwise is not just disingenuous - it is malicious.
It uses much more raw energy because it services the financial needs of most of the planet. Bitcoin dubiously services the needs of a handful. This is so obvious that I suspect you're not arguing in good faith.
You: "the banking system is idiotically expensive using much more raw energy"
Me: "it uses much more raw energy because it services the financial needs of most of the planet".
Edit: typos
politics - maybe, military - not necessarily, just an artifact of infancy of our civilization.
> Those things won't go away because of cryptocurrency
those things will become irrelevant to financial system based on bitcoin, which is good enough for me.
Just an artifact of all of human history.
>those things will become irrelevant to financial system based on bitcoin
I don't think there is any point in further discussion; we are simply living in two different realities. The military and the military industrial complex are not going anywhere, certainly not because of cryptocurrency, the notion is laughably absurd.
if there's a chance to exclude them from the equation on security of financial system - it's a no brainer.
I'm not a fan of the current implementation of cryptocurrencies but you have a point here. Plenty of wars and armed takeovers have been driven by the prospect of accessing financial systems and therefore plenty of resources are spent to prevent that from happening.
Estimated energy consumption - 46TWh [0]. Average transaction rate seems lower than 4/s at all times so let's use 4 [1]. That makes 126M/year.
Visa process 111B transactions per year [2] and mastercard 65B [3] for a total of 176B.
If those transactions alone were as energy expensive, then that would account for about 64,000 TWh.
Global energy consumption (all kinds) is about 110,000 TWh
For traditional banking to be more expensive in energy per transaction, it would seem to need to account for more than about 60% of all energy used if all banking were only these card payment services and nothing else.
Appreciate any checking of figures or calculations, though unless there's something very wrong the rough outcome should be the same given that I've only included a slice of transactions.
[0] https://digiconomist.net/bitcoin-energy-consumption
[1] https://www.blockchain.com/en/charts/transactions-per-second...
[2] https://s1.q4cdn.com/050606653/files/doc_financials/annual/2...
[3] https://s2.q4cdn.com/242125233/files/doc_financials/2017/Q4/...
edit - noted. Avoid crypto threads on HN as they're like discussing things on reddit.
And by the way with payment channels all your numbers are irrelevant anyway because your assumption of 4 tx/sec goes out the window. Try again with 4 trillion tx/sec. And keep in mind that there is no upper limit.
They seem fairly important to me, but OK, what metric are you comparing on to claim that the current banking system is using far more raw energy?
Bitcoin has a market cap of $70B and daily volume of transactions of $10B.
NYSE covers about $20T alone for just 4000 companies. Scaled up, bitcoin would be over 10% of world energy use.
SWIFT seems to deal with about $5T per day https://www.fincen.gov/news_room/rp/files/Appendix_D.pdf so that'd be bitcoin taking about 20% of total global energy use if scaled up.
By what measure do you want to back up the claim that the current system is far more energy intensive? I'm trying to find one and honestly struggling.
how much damage financial and environmental have politicians and military have caused over the last 5 thousand years? yep, take that into account in your calculations.
i'll repeat and lets see how much good faith you have: payment channels encapsulate potentially unlimited amount of transactions which completely refutes all your calculations.
edit - I haven't, and my last comment contained nothing to do with per-transaction figures.
I've asked what basis you made your initial claim on, and provided several options where I've looked - transaction rate as currently happens with bitcoin, market cap and daily volume of transactions. None look even vaguely reasonable - so again, what was your initial claim calculated on? What measure were you using and where did you get your numbers? Have you actually tried to work it out?
> i'll repeat and lets see how much good faith you have: payment channels encapsulate potentially unlimited amount of transactions which completely refutes all your calculations.
We have current use, how does that actually compare to the current banking system you were saying uses more energy?
And that's also the solution.
The reason people are interested in decentralized trust is that the existing system of centralized trust is a dumpster fire. Politicians want to use the banking system to attack their enemies, but not all politicians are good and not all of their enemies are bad, and there is a vast amount of collateral damage.
You can't get your payments processed if you're a terrorist, but also if you're suspected of terrorism without any real evidence, or suspected of political heresy without any real evidence, or suspected of supporting someone else who is suspected of political heresy without any real evidence or due process etc.
People who are afraid to reveal their identities because they have powerful adversaries are impeded from raising money for their cause, or even just making a living, and it's really not obvious that this results in less radicalization. Things that make people angry and scared generally don't.
But it's all caused by AML/KYC laws. The promise of Bitcoin is that you can't have your accounts locked out and your funds stolen because a lazy or corrupt politician in a foreign country leaned on a bank that leaned on a corporation that decided your business was worth less to them than the effort required to resist, regardless of your guilt or innocence.
So now we have a choice. Either we stop using the banking system as a tool for surveillance and political pressure, which cuts the legs off the demand for cryptocurrency, or we keep trying to do that and then all the innocent and guilty people who it was impacting get together to build a workaround, and the rules are ineffective regardless but now people burn an extra billion tons of coal.
The relative ease with which your assets can be frozen, compared with how difficult and opaque it is to get them unfrozen; is something I have witnessed many times and I feel is absolutely unfair. This leads to self-censorship and dissuades the public free exchange of ideas.
If Bitcoin can eventually fund for example; a pro-democracy movement in China or a pro-secular movement in the Middle-East, then it is definitely worth all its flaws.
You know that one of the major motivations for Proof of Stake is environmental, right? Proof of stake eliminates the energy waste problem. That is one of its major motivating factors.
You do know that idea of pos is older than PoW, yet nobody cared for it exactly because you end up with financial system run by politicians - exactly where you started.
Bitcoin has a history of huge factional schisms over changes that should have been a no brainer (increase block size to increase tx throughput).
Instead political wars have been fought as the Core dev governance gridlocked and stagnated leading to the Bitcoin Cash fork (amongst others).
point is - pos is based on trust, pow is based on laws of physics.
At least, in case of pos, it is run by politicians with skin in the game...
Besides you seem to be missing one important fact about energy - it is very expensive to store much of it, which is why many bitcoin farms use up available excessive energy because that way it makes them more profitable and the grid more stable.
Carbon output, on a global scale, which is already hard enough to keep under control. We don't need yet another massive source of energy use, particularly one that gives us virtually nothing in return.
Bitcoin, like aluminum before it, can be used to "export" electricity from places where it's cheap and hopefully renewable, like a hydro power plant.
https://hackernoon.com/the-reports-of-bitcoin-environmental-...
Bitcoin is one way to use energy. There are hundreds of thousands of other ways.
When you say Bitcoin "hurts the environment", what, concretely do you mean? Presumably, you mean it in a stronger sense than "using energy to produce food hurts the environment" or "using energy to run an ER hurts the environment".
That is, you think that relative to the benefit provided, the use of (harmful) energy to run bitcoin miners doesn't justify its environmental cost.
Which is great, but I could say the same thing of Ferraris for show-off producers in LA, or Hello Kitty backpacks.
What justifies focusing our attention on Bitcoin per se, and not those? Do you plan to publish a universal, agreed-upon list of things whose social value doesn't justify its environmental cost?
The real problem is energy users not bearing the full environmental costs of what they do.
The thing is, we have a well known solution to that: cap the total carbon emissions, or tax them in a way that reflects the harm.
Yes, Bitcoin creates an incentive to use energy. And it will be spent by miners who weigh the costs of the energy against the value of the Bitcoins produced. Like every other good on the market, it will respond to incentives created by laws.
If the damage of energy isn't priced in, then there will be too many resources spent on mining relative to the environmental cost. But this is true of every other good as well.
All Bitcoin does is amplify the problems of the existing failure to appropriately price energy. But this is true of literally every other energy-using good in existence!
There is no reason to single out Bitcoin. To blame it for environmental problems is special pleading or privileging a hypothesis.
"I don't want wiggins at my university. They cheat!"
'Well, a certain percentage of any demographic is going to ch--'
"Irrelevant! We're talking about wiggins!"
EDIT: Should probably add the disclaimer that I'm long Bitcoin.
Bitcoin has about 500k active bitcoin addresses [2], most of which contain less than $100 [3].
So what are we actually getting for all this energy usage, and couldn't we get that same result for a fraction of the energy usage?
[1] https://digiconomist.net/bitcoin-energy-consumption
[2] https://bitinfocharts.com/top-100-richest-bitcoin-addresses....
[3] https://bitinfocharts.com/comparison/bitcoin-activeaddresses...
https://drive.google.com/file/d/0B1s8219SGDIjMnkzdFI2QjhwNm8...
My gut instinct is that the vast majority of all computing cycles used by humanity are completely wasted on irrelevant tasks and inefficiencies.
Rendering images is useful work. Processing transactions is useful work.
With gaming computers, increasing energy costs means increasing detail and complexity in the images that can be processed.
Bitcoin is wasteful because the increasing energy costs does not increase the total number of transactions that can be processed.
I can't imagine the processing being done by my computer right now is all strictly necessary to read and post these comments, and I'd wager this site is more efficient than most these days. Still I accept reality and pay these costs in order to talk with you on the internet because this is the world we live in. It looks like these nice people at MIT are working on some of the inefficiencies of cryptocurrencies, so let's rejoice.
Yes, that's exactly the point. Bitcoin is insanely inefficient because PoW is insanely inefficient. Unlike other "inefficiencies" where there is a logical relationship between "energy spent" and "useful work accomplished", with PoW there is no such relationship since the energy isn't spent doing useful work (i.e. processing transactions). Yes, more power into the network makes it "more secure" by making it "more expensive" to perform a 51% attack. The increased expense is distributed across the network in the form of increased difficulty. If a 51% attack was already implausible (which most bitcoin enthusiasts would say is true), then making it even more expensive doesn't actually do anything useful.
Trust-less consensus may be the same. Nature doesn't care either way.
Well it depends what you are considering. Arguably, yes, your computer finished the HTTPS connection long before you got around to reading the words on the page itself. But the scale of an idle CPU compared to a 100% CPU is not even close. Mine is sitting at 2% use while I type this.
You could put that money into mining actual gold, and literally make 4x as much as mining bitcoin [0].
[0] https://www.theguardian.com/technology/2018/nov/05/energy-co...
Trustworthiness always depends on your use case.
If you are transacting small amounts of money (less than is spent on mining a block) then waiting for 3 confirmations is probably sufficient to consider the transaction settled. But what if you send a transaction with a 100 times higher value than goes into mining a block then you will need to wait for over 100 confirmations till you can be sure it doesn't make economical sense for anyone to try to double spend your transaction by orphaning the first block your transaction was in (with a very simplified incentive model not taking into account other transactions in these blocks).
Thus the money spent on mining blocks determines how much value can be transferred in one block. Allowing for higher value transactions is good thing imo, is necessary for its success as digital gold and therefore justifies the higher energy consumption (especially since there don't seem to be any alternatives with similarly good or better robustness against attacks yet, proof of stake can't work under the same assumptions bitcoin does [1]).
> Allowing for higher value transactions is good thing imo
PoW systems are the only ones where "higher value transactions" need security proportional to their size.
> PoW systems are the only ones where "higher value transactions" need security proportional to their size.
Every other currency is either backed by men with guns and transactions are reversible (fiat) or you have to spend a roughly proportional amount of resources securing it (e.g. gold). I didn't look at the data, but judging by US military spending I'd guess that the strongest economies also have to spend the most to keep their system safe.
You can still argue that the assumption of pseudonymous actors in bitcoin makes the proportion factor larger (=system less efficient) than for systems that can use identities and attribution and I'd agree with that. But that's only because it can operate with less assumptions (no identities), which I see as a feature.
So what? Men with guns are also the foundation of property rights, law and order, and national sovereignty; they are not an extra cost of fiat currency, they underpin the government's ability to maintain order and structure within society. I shouldn't have to explicitly point this out.
> transactions are reversible (fiat)
Cash payments are not reversible. Reversible payments are also a feature that nearly everyone wants.
> spend a roughly proportional amount of resources securing it (e.g. gold).
Gold is not a currency.
> that's only because it can operate with less assumptions (no identities), which I see as a feature
Untrue. A centralized anonymous payment system is technically possible, the limitations are strictly legal.
It was for millennia.
Cryptocurrencies are not secured by the hashrate, but by the cost of exceeding the hashrate of the network.
Think of bitcoin mining as a raffle. You can buy as many raffle tickets as you want, and so can everybody else. Each raffle ticket costs $1, and so people buy tickets until the prizes start getting spread out too much. The next day, though, the raffle tickets are only 10 cents apiece. However, the prizes are still the same, so the break-even point is still the same when expressed in dollar value. As a result, the same amount of money is spent, just buying 10x as many raffle tickets.
In this analogy, each hash performed by the miners is buying a raffle ticket. The block reward is the prize at the end of the raffle. Going from CPU mining to GPU mining to ASIC mining each increase the efficiency of performing a hash, analogous to lowering the price of a raffle ticket. Just as lowering the price of each raffle ticket results in an increase in the number of ticket sales without changing the total value of ticket sales, so decreasing the cost of each hash results in an increased number of hashes performed, without changing the total amount of electricity spent to perform those hashes.
I agree it doesn't sound like the most efficient system and these incentives are somewhat perverse, but there weren't any systems like this before bitcoin. If cryptocurrencies do have valuable attributes that cannot be attained by conventional currencies and bitcoin introduced these concepts to the world in the first viable way and the popularity of these networks has lead to people researching more efficient analogues such as proof of stake and the techniques mentioned in the original article then can't we still say that the existence of bitcoin had a utilitarian benefit for the world? If the popularity of bitcoin goes down and these more efficient networks supplant it then the total energy-expenditure should be minuscule compared to the total energy usage of all humans over all time. Given the the rate at which these technologies seem to be maturing it will likely still be a lower expenditure than bootstrapping many other equally useless human endeavors.
Furthermore, the decentralized nature of bitcoin cannot last indefinitely, and arguably has already ended. All mining nodes need to have a record of all balances, in order to verify that incoming transactions are valid. This places a limit on the ability to contribute to trust by mining, and will result in further centralization of miners. If a cryptocurrency were to replace fiat currency, it would not be a change from centralized currency to decentralized. Rather, it would be a from a centralized currency controlled by an elected government to a centralized currency controlled by conglomerations of miners.
I have done my best to understand their use, their applications, and their limits. With that in mind, I believe cryptocurrencies to be a obfuscated form of pyramid scheme, with additional externalities of heavy power use.
Are you saying the number of transactions the market will demand of a system is independent of the trust of the system? If I need to move $250,000[1] in one hour with ~100% certainty are you saying an IOU from a bank janitor is equivalent in value to a bitcoin transaction? An increase in attack costs increases the types of transactions that can occur safely on L1. The number of L2 updates are unbounded by L1 transaction capacity, increase attack costs gives the market confidence L2 updates cannot be erased.
A high cost to signal which money you're willing to use filters out fraud attempts. Which should I trust more, Malory Money who double-pinky swears to run her Malory Money servers 5 years from now but is signaling with no costs or Bobby Bitcoiner who signals by billions of dollars in single-use capex (ASICS)
[1] 12.5 BTC/block * 3850 $/BTC * 6 Blocks/hour < tx.value()
No. I'm saying that if a 51% attack is practically impossible today, the increasing amount of energy consumed to secure the same amount of transactions is wasted. It's also a sign that the system is broken because the amount of energy consumed has no practical impact on security. Reasoning otherwise would suggest it is justified to consume infinite energy because that would be infinitely secure.
It appears you think a 51% attack is when an external agent attempts to out hash the network. This is only one type of 51% attack.
A 51% attack means there is a almost equal amount of hash rate being applied to two divergent, consensus equivalent chains. This can happen in above scenario or when existing miners attempt to reorg blocks (See ETC 51% attack) There is nothing stopping this behavior from occurring at any point in time. The only check on this behavior is the cost to rewrite history, decrease this cost, and you increase the profitability of such attacks.
And also unlike bitcoin, when you pay the salary of 450k+ soldiers, among other jobs and such created, that's likely a lot better for the economy than random people converting electricity into crypto tokens. What does bitcoin provide in terms of add-on benefits like jobs? The ability for power companies to maximize profits by having their supply used more fully?
Edit: Additionally, you can argue that the US army does not provide too much security, because it doesn't take someone more than a few seconds to look at the world and see the world is not 100% safe. There are numerous areas such that, if money was not a concern, could be made safer and more profitable by adding more security. Creating infinite trust in bitcoin would... do what exactly? Let nerds buy drugs on the internet?
Jobs are only useful if they waste people's time? Mining is a job. Mining can also become green much faster than constantly moving around millions of tons of vehicles can.
> Additionally, you can argue that the US army does not provide too much security, because it doesn't take someone more than a few seconds to look at the world and see the world is not 100% safe.
I would argue it decreases security, with all the wars and disruption it caused in the last decades.
https://hackernoon.com/the-reports-of-bitcoin-environmental-...
The argument summary of your article is hand waving, claims that the sum usage of software designed to be increasingly energy wasteful (Satoshi's random nonce lottery as a means of increasing CAPEX and decreasing production output)
You cannot look at bitcoin by any measure and say that it's a practical success for any of its goals. And given the amount of energy it uses to perpetuate its own failure, it's nearly sinful to keep it going.
That said, I do support some form of decentralized currency. Not because people are ever going to be smart enough to be their own bank or because I think some currency will magically topple governments and financial structures, but mainly so people can transact without overly-censorious middle-men who take a cut while adding nearly no value.
We have the internet, now. Payment networks should have died years ago. I'm glad this problem is being worked on. However, it's possible to solve without using a country's-worth of energy to support a pathetic ~10 transactions per second.
Great! I look forward to seeing your solution in action.
I said it's possible. I didn't say it was easy. That said, PoW on a small scale is an interesting experiment. On a large scale, it's a horrible way of allocating energy usage. So while the databases running on PoW are working, they are a stupid waste of energy.
I welcome any alternative.
I think it's more accurate to talk about the amount of value the Bitcoin network is storing than the transactions per second.
Bitcoin currently has a market cap of $68B. I'm not aware of any other distributed system that's worth that much money. It's definitely interesting that a fully distributed system has been able to achieve that valuation without any centralization or governing authority (debates over developer and miner power aside).
Market cap is a farcical number to look at for a thinly-traded asset on unregulated markets. If I make my own new cryptocurrency, print 100 million tokens, and then talk my friend into buying one for $10, does that mean my token has $1 billion market cap?
No it isn't. The market cap of bitcoin, which is a bullshit number anyway as already explained, is dwarfed by other forms of distributed wealth storage such as (but certainly not limited to) old fashioned pieces of gold. Gold is distributed. If you revise your assertion to be distributed and digital then perhaps you're correct. But the more qualifications you tack on, the less impressive your claims to fame become.
Don't bother mistaking me for some sort of gold bug either. Real Estate is another form of distributed wealth storage that blows bitcoin's pathetic market cap out of the water.
Bitcoin just needs electricity.
Gold is fantastic. Apart from its physical properties, we all agreed to assign value to it and it's been working for thousands of years.
But wouldn't it be great to have gold in a digital form? Something easily divisible and transferable, yet as gold is, not dependent for its value on some 3rd party? Something that is truly yours not just IOU. Which can keep value.
Forget about Bitcoin, how would you envision something like this?
Apart from technological problems, we have a problem of initial trust and distribution. Please stop here and think for a moment, this is a hard and interesting problem. I'm not saying you can solve it with a few minutes of thinking but just after a few moments some things clarify.
Now imagine we do have it. We did it. Because it would be a cool future where we do have this digital gold. Is it a safe storage of value? What if some better digital gold 2.0 comes along? If people would prefer to move their wealth to it then the 1.0 would become less desirable, so its value should drop. But if it does, then it's not a good storage of value after all.
You can devise a system in which 1.0 tokens can be exchanged to 2.0 but then you cannot change the initial distribution.
If all that thinking is not enough, it is interesting to ponder impact of an actual perfect storage of value system on society. Wealth can be leveraged to generate more of it.
Not that it's something completely new, we had a few close enough matches throughout the history. That's what most wars are about. Although it's easier to go get something if you know where it is.
Hi can you let me how I can immigrate out of my country with $10e6 without thieves at the airport taking my wealth? If we can figure this out, man bitcoin is totally KIA. Also can you let me how how I can costlessly assay gold when I accept it as payment? or make the supply of gold only dependent only on time and not how it currently is (price and time)? Whenever the price of gold goes up, they mine more of it :C this makes its Store of Value property worse than bitcoin. Looking forward to your reply and our future endeavor together. /s
You're supposing that the vast majority of people using bitcoin are using it to exfiltrate money out of countries. That niche application is very far from the reality of what most bitcoin advocates are doing.
But yes, digital exfiltration may be easier than physical smuggling. That's supposing a lot about what forms of control are implemented in that country at at it's borders.
Given that some forms of cryptocurrency can be stored using only a memorized passphrase and nothing else, (ie. a brain wallet), it's pretty much guaranteed that getting cryptocurrency put of the country would be easier.
Most cryptoanarchists are deluded nerds who would fold in less than 5 minutes of waterboarding. Do you think these thugs who are willing to look up your ass for a few pieces of gold aren't willing to violate you in other ways? Of course you don't believe that, you've merely failed to seriously consider that possibility.
The only reason smuggling BTC sometimes works right now is because they're not looking for it.
Then you were refuting a position I never espoused. My point wasn't that gold is easier to exfiltrate, but rather that BTC isn't necessarily easier to get out. If the border agents of the tyrannical government you're fleeing know you to have wealth, and are informed about bitcoin, they have many options available to them to prevent you from leaving with your wealth, including simply forbidding you from leaving at all. At that point, you'll have to smuggle your body out, so smuggling a few pieces of gold along with your body isn't a huge inconvenience.
If on the other hand the border agents don't know that you're trying to smuggle wealth out of the country, then it shouldn't be to hard to get through the border no matter what method you choose.
The one scenario in which BTC seems clearly superior is when the border guards are simultaneously alert but ignorant. Looking very carefully for money, but totally oblivious to the possibility of BTC. This might work during the present, but don't count on this remaining true forever. If enough people start using BTC for this, tyrannical governments will wisen up pretty quick.
1. The government doesn't know you have any money, but you are targeted in a random search.
2. The government does know you have money but doesn't know how much. Simply give them X out of Y cryptocurrency keys. They won't know you have any more.
I don't know how much exposure you have to tyrannical regimes, but they aren't as efficient as you seem to think, in that they don't really have much grasp on how much money people own, nor are able to find out instantly.
They also do care about how they are perceived and aren't going to grab some tourist and with no proof whatsoever, torture him to death because he might possibly have some cryptocurrency.
It's a single example of the value of decentralized property rights. Say I'm an alcohol maker in Sharia-law country, I want to be able to make wine but prevent the state from expropriating my wealth because they ban alcohol. Say I live in a country which mandates that all business ventures with returns less than 2% a year will have their profits stolen (read: inflation) I can use bitcoin to escape that oppression.
The moment Bitcoin becomes a viable way to subvert the state, they'll just change the laws. And if people actually start using it to smuggle money internationally the feds will get involved. The entire idea that Bitcoin can subvert the state is absurd.
And if you don't believe me, look at the evidence. ICOs got regulated. Silk roads got shut down.
And furthermore, while it's convenient to use oppressive regimes as examples for this Bitcoin "feature", it's way, way more likely the 1% (you know, the people who actually have money) will use it to hide their wealth from wealth redistribution policies demanded by liberal democracies.
Does that sentence make much sense? Government decrees don't eradicate goods, they create make black markets.
>if people actually start using it to smuggle money
If? People already use bitcoin to evade capital controls in China, Venezuela etc
>the 1% will use it to hide their wealth from wealth redistribution policies demanded by liberal democracies.
You're confusing equity (something you own) and equality (rights that you have). Bitcoin promotes equality (each client has the same rights). Arbitrarily making certain people unequal (different people have different rights, some have their wealth stolen, some don't) always leads to more inequity. Voting about who to steal from doesn't legitimize theft. If people who generated wealth through voluntary exchange want to protect their property rights from theft, I won't deny them that. Agents who use the state to expropriate wealth through artificial privilege (the real enemy here) want to perpetuate the existing system, not encourage a neutral rights network such as bitcoin.
> Does that sentence make much sense? Government decrees don't eradicate goods, they create make black markets.
Your argument is that Bitcoin will let you subvert existing state monetary policy and other regulations. My argument is that once that happens on a significant scale, states will change their policies and enforce them more or less with state violence.
A good example is anonymous payments via a tumbler. As soon as these payments start seriously foiling law enforcement, states will outlaw tumbler services. If that doesn't solve the problem, and the problem is severe enough, they'll outlaw Bitcoin. The way they would do that is to outlaw exchanges and pursue them over Tor the same way the pursue dark web markets, by enlisting banks, employing cyberwarfare and other espionage, and ultimately with on the ground law enforcement.
It's very, very hard (maybe impossible) to solve a political problem with technology, unless that technology is weapons. It's immoral in a democracy because it by definition subverts the will of the people.
>> if people actually start using it to smuggle money
> If? People already use bitcoin to evade capital controls in China, Venezuela etc
I mean "on a significant level minus state actors".
> equity vs. equality.
I think if you're a "taxes are theft" person then we have deeper disagreements, because I'm a "property is theft" person. But those antipodes aside, Bitcoin no more promotes equality than regular currency does, in fact there are lots of services that only let you do certain things with certain account balance amounts.
Furthermore, I have no idea what you mean about a "neutral rights network". Do I get to vote on things because I hold Bitcoin? Did I miss the votes on various forks? Does my vote count equal to one of the Winklevoss'?
I think the exact opposite is true. Not only is there no voting, but holders of lots of Bitcoin (which you can only accrue with actual currency or mining, which you need to spend actual currency to get the equipment for) have far more power over the Bitcoin network than I do. I have no idea what "rights" you think I get through Bitcoin, but I'm pretty sure the answer is "none".
EDIT:
Also, come on, I'm fine with "crypto" meaning "cryptocurrency" now, but it absolutely doesn't mean that "cryptography" means "cryptocurrency" now. This is a hill I am willing to die on.
There's also an issue of debt differences. One of the big 'benefits' of inflation is that it makes old debts worth less. This is a major incentive for pursuing investments on debt. Not only can you see investments on money beyond what you presently have, but the debt that you took on becomes worth less - meaning it takes a smaller share of your profits each year assuming the principle is not growing. For instance during the government auto bailouts Ford took on a loan for billions of dollars of debt from the government. The interest rate on that loan is sub-inflation. Unsurprisingly, they aren't paying it back since each year it becomes worth less, and given enough time, it will become worthless.
By contrast when a lower income individual takes on debt, it's often 'consumed' such as in the case of education. And the debt becoming worth less over time is not true if an individual's income is not keeping pace with inflation. And another big issue is that lower income individuals are also often going to be seeing rather high interest rates on their loans further diminishing any theoretic benefit of inflation.
---
This is not to say inflation is bad. You can create a comparably negative argument against deflation. I don't really have much of an opinion one way or the other. We've seen how depressive systems can end. And while our current inflation and debt driven system has not yet collapsed, it's not looking as stable as it once did to put it very mildly. I think in 20 or so years (and especially once the petro dollar is 100% dead) we'll have a much better idea of the pros and cons of each system.
Even if you could somehow do this, you would be incredibly vulnerable to extortion, and I doubt you would actually really want to do this even if you had the capability. There are people that have significant wealth that exists outside of "official" legal capacities (drug lords, dictators of small nations, etc.). They have to spend incredible effort on maintaining security of their assets. Pretty much the only thing that works is giving an army of people a better deal than they can get from someone else to steal your wealth from you.
You already can: bitcoin.
>I doubt you would actually really want to do this even if you had the capability
If I'm a Jew in 1930s Germany or a grocery store owner in Venezuela and I see the writing on the wall that my government is constantly deriding me, saying I'm the scourge of and leach on society, I'm going to immigrate out of the country. They've banned all institutions from services me, I benefit from having access to a means to store wealth that's independent from a government. To disagree is to be excessively myopic and optimistic.
I didn't disagree with any of that. My position is that if you are actually in that situation, bitcoin doesn't help that much, and no technology can. If you attempt to actually execute this plan, the risk is extremely high that you will be detected, and a corrupt government doesn't have any shortage of ways to force you to comply with whatever they come up with.
Are there any examples of a Venezuelan moving a significant amount of wealth out of the country via bitcoin?
But judging by the trade volume in Venezuela, they're clearly using it for something.
https://www.cnbc.com/2019/02/14/venezuela-crisis-bitcoin-tra...
https://cointelegraph.com/news/how-venezuela-came-to-be-one-...
I guess you mean "how can I violate capital control laws"?
This is begging the question.
nearly no value = many more transactions per second for much less energy cost.
Objectively? No, I'm pretty sure that isn't "a complete fucking waste" to the people who are benefitting from it. Which is literally the definition of "subjective."
Removing externalities of electricity pricing solves this. That's the point. If a kilowatt of electricity usage costs enough to offset its environmental impact, then who cares if a tiny minority of people are doing some wacky confusing things with their computers?
The day that markets actually price externalities into the costs of goods and services, whether by benevolent owners or force of regulation, I'll gladly declare Bitcoin useful.
It doesn’t make sense to make the environmental argument for things that you consider wasteful, but not for other things that other people may consider wasteful.
Yes, I agree that my argument would be completely irrelevant if only something that will never happen happens.
Until then, I'd rather see some form of distributed currency that doesn't rely on pissing finite resources away to function.
I get where you're coming from, but our planet is at a critical point right now objectively. Pouring pollutants into the atmosphere so people can play with FunBux is an incredibly stupid use of resources. Yes, markets should price in externalities. That would solve SO MUCH MORE than just bitcoin's energy usage. But unfortunately that concept is at odds with market capitalism, and as such, I believe my critique of bitcoin stands. Markets are not rational, prices are not accurate, bitcoin is a polluting waste of energy.
The same could be said for people changing their behavior because you complain about it on a message board that the people in question don't even read. Nobody's going to stop using Bitcoin because you don't like it, so why bother?
That said, I think the cryptocurrency world is moving in that direction anyway. Most of the more exciting new cryptocurrencies use non-PoW consensus mechanisms, eg. IOTA = tangle, Ethereum Casper = PoS, EOS = DPoS, Stellar = SCP. And there's a strong economic incentive for that: when you reduce the cost of computation, you can use those computations for more applications, which drives adoption, which increases the value of peoples' cryptocurrencies. The challenge is that the fundamental benefit cryptocurrencies offer is computational trust, so until people are confident that these other consensus mechanisms are at least as immune to attack as PoW is, they're unlikely to switch away from Bitcoin.
Perhaps someone who did actually read what I wrote will realize that there are many, many things that do what Bitcoin does without the power usage of Bitcoin and perhaps seeks those as an alternative (like, PoS coins). And originally, the argument was "this is an environmental crisis," someone said "no it's not because of ferraris and backpacks," and I countered and said, yes, it's an issue. Why does anyone argue on an internet forum? I guess in the hopes of changing minds. I hope you would not find debate a waste of energy, at least not in a democratic form of governance.
> until people are confident that these other consensus mechanisms are at least as immune to attack as PoW is, they're unlikely to switch away from Bitcoin.
Yeah, that's the real meat of the argument, I suppose. We know PoW is at least difficult to attack. I am very happy that other consensus mechanisms are being explored though. I'm also not convinced existing non-PoW consensus mechanisms won't be as secure trust-wise as PoW.
I guess the overall point of this is that, yes, there's nothing I can do about people doing horribly wasteful things. But let's not pretend that bitcoin isn't horribly wasteful. Let's call a giraffe a giraffe. And maybe it's ok to be a giraffe if you're aware of the trade-offs, but it's certainly not a gazelle just because you're uncomfortable with the properties of giraffes.
Say you don’t care much about professional sports. Of course you would think that any innovation that reduces the energy requirements of professional would be great (more efficient arena lights, climate control, etc.). But I think it would be inappropriate to single out sports as a waste of energy, because it is only a “waste” because you don’t happen to receive and of the benefits.
I guess the issue I have is such a tiny minority of people are using such an excess of energy to do something that adds very little value to society. Even if the value of bitcoin is subjective, there's still a tiny minority of people consuming vast amounts of energy to derive what value it does bring them.
It just feel disproportionately harmful at a time when our top scientists are blue in the face from telling us to reduce carbon emissions.
I understand that it's not my place to judge what people derive value from. I also would argue that energy should be neutral (similar to my views on internet access). I guess my biggest gripe is probably something you and me share in common: the understanding that market mechanisms allowed this waste to happen in the first place. So you're definitely not wrong, and your argument about externalities is well-taken.
That’s why we have environmental regulation, as imperfect as it is.
This implicitly means a society does make choices about how energy is used. Therefore, a discussion about societal priorities amongst individuals is essential.
Likewise with regulation related to finance and money.
Energy and money. Among the most highly regulated things in all societies.
I agree with the poster that POW cryptocoin systems are a shocking waste of electricity.
In addition, the only use cases that have proved viable are illegal or highly destructive to the social fabric.
When you look at the sheer amount of money transferred from losers to winners, it’s clear that this is not a benefit to anyone. The scams, the hacks, the thefts. Bitcoin and it’s ilk are parasitic systems that weaken the host.
To compare to Ferraris, well Ferraris are a niche product, are already regulated, and have a historical component that accounts for their hedonic properties.
To compare bitcoin to hello kitty backpacks is just a category error, which belies that the argument is disengenuous.
As for the stuff about cryptocurrencies being associated with scams and wealth inequality, to me that’s entirely independent of environmental impact and should be dealt with (and probably can be dealt with using existing laws) regardless of the environmental impact.
This sounds very much like you've decided that you don't like Bitcoin (and that's fine, with good reasons) but you have rationalized it with an argument that is almost certainly inconsistent with the rest of your worldview. Bitcoin isn't any more bullshit than countless other systems/goods, the argument based on environmental externalities is a very weird reason to draw such an absolutist line given all the other (arguably) bullshit systems that incur the same costs.
Either we have a fully managed economy (which I'm pretty sure the historical consensus is clear on) or it has to be guided by attaching costs to externalities.
All this is doing is just picking on Bitcoin because people don't like it. There is no principled economic or environmental argument here, just a biased rationalization applied inconsistently.
You just proved their point. The beneficiaries of Bitcoin – like you – have a subjective viewpoint. You are few, and, objectively the cost to the stakeholders (inhabitants of Earth) is disproportionate to the benefit to the shareholders (the relatively few people who hold Bitcoin and actually profit from it). Objectively, it's largely a method to siphon real wealth from many to few, bearing a striking resemblance to Tulip Mania. That doesn't mean that all crypto and blockchain tech is somehow inherently evil, it's just not doing a lot of public good in this particular incarnation. One can argue it does the opposite by facilitating criminal enterprise.
Your point about externalities is correct but moot, as no one is successfully passing on the full cost of electricity production to the consumer.
That's a different claim, and I agree with it. In fact, the entire point of my comments in this thread is that I want environmental regulations that internalize all the costs of energy usage.
I can memorize 20 words and cross whatever border I want with $100 million in my brain, and full confidence that that money is mine. That's pretty damn cool.
> I do support some form of decentralized currency. Not because people are ever going to be smart enough to be their own bank or because I think some currency will magically topple governments and financial structures, but mainly so people can transact without overly-censorious middle-men who take a cut while adding nearly no value.
It sounds like you're projecting what you think Bitcoin should be.
> We have the internet, now. Payment networks should have died years ago. I'm glad this problem is being worked on. However, it's possible to solve without using a country's-worth of energy to support a pathetic ~10 transactions per second.
10 transactions per second on the L1 network (averaging $10k-20k each), and many thousands possible today on L2. Plus a way to securely store the transacted value.
To argue that a small country's worth of energy being used to secure Bitcoin is a poor use of resources, you really have to consider how much energy the worldwide banking system consumes in all its complexity to do the same thing. I don't know how to do that calculation, but my point is there's more to it than you're seeing.
You have to also consider which energy is being used. Dirty energy is certainly part of it. But a lot of the energy used is through geographic renewables arbitrage. For example, there are hydro power facilities in China that were built and never fully utilized or connected to the main grid. You can set up miners nearby those facilities to use the surplus energy, and as long as you are connected to the internet, you're good to go.
It's also a potentially great incentive for governments to start NEW renewables facilities, because they have a way to use the surplus power until their populations grow to use the full capacity of those plants.
No, you can have 30K BTC in your brain, but unfortunately the USD value fluctuates so wildly that as a store of value, it's useless.
> It sounds like you're projecting what you think Bitcoin should be.
Probably, yes. Bitcoin is a failed project. It spawned many others, some of which may be successful. I am interested to see how they do.
> To argue that a small country's worth of energy being used to secure Bitcoin is a poor use of resources, you really have to consider how much energy the worldwide banking system consumes in all its complexity to do the same thing. I don't know how to do that calculation, but my point is there's more to it than you're seeing.
That's assuming that banking is JUST storing and sending value. Banking does a whole lot more. I understand the drive behind taking that power away from banks, but it's just not going to happen until one can fluidly exchange USD for some for of highly-stable distributed currency. And once that happens, banks are still going to exist and handle most of the transactions! Please, take a stroll in r/cryptocurrency or r/bitcoin and see how many people are whining about how their private key got lost or stolen or etc etc. Banks exist because they not only store value, but protect it in numerous ways. They will continue to exist past whatever cryptocurrency-revolution people envision.
> You have to also consider which energy is being used. Dirty energy is certainly part of it. But a lot of the energy used is through geographic renewables arbitrage. For example, there are hydro power facilities in China that were built and never fully utilized or connected to the main grid. You can set up miners nearby those facilities to use the surplus energy, and as long as you are connected to the internet, you're good to go.
Great? So a fraction of the energy would have been wasted anyway. Fine, use that for bitcoin mining. For everything else, it's pouring carbons into the atmosphere so idiots who don't know how investing works can leverage 100x on margin while the exchange they're betting on is manipulating the price to call their bets and wipe them out.
> It's also a potentially great incentive for governments to start NEW renewables facilities, because they have a way to use the surplus power until their populations grow to use the full capacity of those plants.
Really? "Let's buy a bunch of toxic waste and dump it into the river because the government will be incentivized to not output toxic waste" isn't the best argument for why bitcoin is useful.
From an outside perspective, I don't think it's worth continuing the discussion as is. Perhaps you should both come back in a few hours when everyone is a bit calmer.
No, this is an important distinction. Bitcoin isn't liquid enough to count as actual money and proponents of the idea that sending bitcoin is the same as sending money are glossing over the cost to buy bitcoin, and the cost of transferring it back to actual money on the other side.
Having access to 30K BTC doesn't do you much good if nobody is willing to trade you goods or real money for it on the other side.
Seeing how Americans Elected Trump, I can't imagine the USD being better than BTC over 10 years.
https://makerdao.com/en/whitepaper/
It's an Ethereum-based scheme that's tied in value to the U.S. dollar. That sounds good. The methods to achieve that look... complex... to say the least. If they work, then there's at least one of them that's stable so long as there's no serious problems in it and/or Ethereum. Well, that sounds promising. ;)
It's a bunch of math that uses market mechanisms to try to solve the problem of stability when the only real answer for the question "how do I stabilize a cryptocurrency" is "for each unit you issue, you have a bank account with $1 matching USD in it."
Maker essentially banks on the fact that a bundle of cryptos (ETH and a few others) will not drop past a certain amount in relation to USD over a given amount of time. They've been correct, so far, but that doesn't mean there won't come a time when the markets drop past whatever magical threshold they've set.
I'm not putting down the project, I followed it closely for a while and a lot of work went into it. My point is you can't really have a stablecoin unless you have the USD to back it up.
An interesting plot twist will be if Maker derives from other stablecoins (ones backed by USD reserves, like GUSD) and not ETH.
Circulating supply fluctuations don't seem to have much of an influence on crypto prices (as seen with quarterly Binance Coin burns for instance)
That is a big "if". Stability is a principle which has been tried time and again in fiat money and failed. Too many times to count. See GBP peg etc. for examples.
If something is unstable, it is because the market deems it to be. Adding an artificial support goes against that same market.
Cryptocurrency circles like to talk about government control being a bad thing. But in the same vein cheer stablcoins which exert near similar control - by algos or by adding coin supply. They want to have their cake and eat it too.
Yes, for those amounts. But for several purposes, unfortunately most of them 'evil' (money laundering / terrorism), this works fine. I know it's used a lot for people in countries where getting currency out above a certain threshold is very hard unless you are at the highest level of corruption with great success. They are not so bothered with losing a few 1000$ by fluctuation as their goal is getting it out and converted to something else (safer) (USD/EUR) asap.
Tomorrow, who knows. if North Korea or Russia or China turn half of the US into a nuclear wasteland, the banks are unlikely to function very well for those who remain. There are hundreds of such scenarios that could play out in the next 50 years -- Bitcoin is a great disaster hedge, if nothing else. Everyone should have 1% of their portfolio be crypto, IMO.
The criticisms of its fluctuation are valid, but like you said, there are plenty of people today for whom the fluctuations are tolerable for their use case. As the fluctuations get less, it will become tolerable for even more.
Technically the brain is just another layer of encryption to the data. And that level of encryption can often be solved by the purchase of a $5 wrench.
does this number include off-chain transactions?
Oh wait, you're bringing sin into the argument. My bad, I thought we were being rational.
And just a side-note, it irks me when people say that bitcoin uses as much energy as the country of Iceland like that's some kind of horror. Iceland is pretty damn small, with a population smaller than the mid-sized city I live in.
If the purpose is to limit environmental impact, why are we choosing by subjective value instead of actual impact?
You're just describing capitalism there ;)
That said, I don't think a complex economy can really operate very well without some form of market (at least not until we're at 80%+ automation). And with markets come waste.
I guess I'm not saying anything should be done about bitcoin, but rather that I personally believe it's a complete waste of energy when there are already many better alternatives.
It's only an artificial limit of Core fork of Bitcoin.
Increasing it to 10 000 transactions per second doesn't use more energy for mining. https://www.reddit.com/r/btc/comments/7nn5wa/bitcoin_cash_is...
We mean that mining Bitcoin is extremely energy-intensive by design. This is to say that the energy consumed by Bitcoin's economic activity is deliberately and gratuitously significant, not incidentally so. Moreover, the energy consumed by Bitcoin mining scales commensurate with how many Bitcoins have been mined thus far.
So yes, that makes it categorically different from other energy-expensive activities like farming or hospital maintenance. We are actually economically incentivized to consume less energy over time in most energy-expensive activities. With most cryptocurrencies, energy consumption is a design imperative.
Just because one thing is bad doesn't mean the other thing isn't also bad.
I feel the parent comment shares this common intuition that there must be some way to design and code any crytocurrency to offer the same features without having to consume so much energy in the process.
I'm no expert on cryptocoins but we surely can agree that any hope to see them mainstream won't rely on countless power plants to brute force computational puzzles.
Perhaps a more direct analogy is "literally miming gold hurts the environment (since I highly doubt renewable energy is significantly leveraged in the supply chain)".
> That is, you think that relative to the benefit provided, the use of (harmful) energy to run bitcoin miners doesn't justify its environmental cost.
It makes me wonder if you couldn't somehow tie a renewable energy certificate (1) to a mined coin. I suppose green coin (2) is a similar, albeit indirect concept (i.e. value is from a unit of carbon sequestration).
1.) https://www.epa.gov/greenpower/renewable-energy-tracking-sys...
For myself, that is not what I mean when I use the phrase.
Bitcoin hurts the environment because Bitcoin, by design, wants to use as much power as available to secure it - and conversely is vulnerable to anyone who has significant power available, and so it had to design itself so that the rational thing to do is to commit that power to Bitcoin itself.
Bitcoin automatically adjusts its difficulty based on the computational speed of the network over the past few thousand blocks. There is a target mining speed of one block every ten minutes. If someone throws more computational power at Bitcoin, Bitcoin itself will adjust to the additional available power, so that nothing more gets done, it just uses up the power. This is not a claim that the benefit is too low relative to the additional energy; this is a claim that the benefit is zero, by design, relative to additional energy, and that this property is inherent to Bitcoin.
There is a reason to single out Bitcoin and blame it for environmental problems. No other product, concept, or idea in human history (besides Bitcoin clones) has been designed in a way where it expands gas-like to all the energy available to it (... except perhaps capitalism itself, and funny enough, people are claiming that capitalism too must be stopped to avert irrecoverable climate change).
I'm supportive of other forms of cryptocurrency without this property (weakly supportive, given that I haven't used any of them in detail, but they seem promising). There seems no particular reason to use Bitcoin if alternatives exist without the burn-all-the-available-energy property.
You're right that a core part of its design is making sure real computational resources are spent on it. That means the (total, social) cost network as such will scale with the size of the economy, not the number of transactions. So, in a sense, there's (something that looks) like an arms race going on, where more resources spent on it don't mean more transactions. Point taken.
But that doesn't mean there's zero net benefit. The benefit is a permissionless network that no one can control unless they produce more computation than the rest of the network. So, the benefit of each miner coming on is raising the attack threshold and increasing your confidence that it won't be attacked. At equilibrium, the cost will be some fraction of the economy, not all available growth or energy (like a gas). That amount of energy that this involves will decrease as energy is taxed.
That's pretty much the dynamic of gold mining under a gold standard: the larger the economy, the more money being spent mining (literal) money.
I agree that it's a high price to pay, but I don't think the benefits should count as zero. Being able to bypass financial choke points so you can donate to Wikileaks is definitely a positive.
So I don't think there's a comparison in how the economy correlates. As long as gold is mineable in the earth, a growing economy mines more gold. But a growing economy demands more energy, which can go either to the economy or to Bitcoin. Bitcoin has no way of saying "I want this portion of the energy in the world, and no more," the way that mines are naturally filled with resources other than gold; all it can say is "I want all the energy possibly available."
(If you could store energy and use it as the basis of a Bitcoin-style network, such that your limited resource was energy itself and not loss-of-energy-per-unit-time, it would kill basically all of these arguments. There would be other arguments about the fairness of OilFuturesCoin, but it wouldn't be these, and it would basically be the arguments about any natural-resource standard.)
And yes, the benefit of Bitcoin is a permissionless network, but the entire question is whether this energy-monster property of Bitcoin is required to have a permissionless network. You could donate to Wikileaks just fine with, say, Stellar's consensus protocol, could you not?
Hypothetical scenario: a hardfork of Bitcoin is developed that maintains all of these wonderful properties — impossible for any one party to control, bypasses financial choke points, impossible to censor — but requires orders of magnitude less energy. It utilizes a variety of clever mechanisms to achieve the same goals without using Proof of Work calculations to secure the network. This sort of thing is what the exactly what the MIT team in the article is attempting to accomplish, it's not an intractable problem.
Would you support switching over to the new fork? I would. It does all the things I like about Bitcoin without this big carbon footprint. No downside.
But do you know who will never support the fork? Bitcoin miners. They've invested millions in custom hardware to let them process proofs of work as quickly as possible. They have a massive economic incentive to continue to use PoW. Forever. Even if there exists a better way.
Maybe in this world the price of BTC would go down as people moved to alternatives. I'd like to think people would be ashamed to use an unnecessarily inefficient currency. But when I hear Bitcoin advocates dismiss environmental concerns as irrelevant or shift the blame onto government tax policy, it doesn't make me terribly optimistic.
... You know, when you put it that way, there's another problem with this argument. "Bitcoin is good because governments shouldn't be interfering with my ability to give money to Julian Assange. They shouldn't even know that I'm paying him. And if it hurts the environment, well, that's the fault of governments not taxing energy usage appropriately. They should be paying close attention to what people spend money on and dissuading uses that have harmful effects for society, as determined in their sole opinion."
Also life. Evolution, birth, and metabolism also result in all available energy going into increasing the complexity of the system. The real reason we have an environmental crisis is because there are 7.5B of us, but few people recommend destroying all life on earth to save the environment.
It's not about how many. It's not about how many.
It's about how systematically detached we are from sustainable ways of life.
Humanity, to some extent, competes with capitalism for resources. But while resources are not at their limit, we can grow together, and capitalism seems to bring us benefits. Humanity also competes with Bitcoin, which is a much newer system that has become seriously competitive very quickly, and it's much less obvious that it's the best or even only way to solve the problems it sets out to solve.
It's not special pleading if I'm equally annoyed by Ferraris and other environmentally disastrous forms of conspicuous consumption. I don't know enough about Hello Kitty backpacks to have a serious reason to be against them.
It's perfectly consistent for me or anyone else to leave a negative comment about Bitcoin on an online forum and then as much or far more to tackle a different issue that I/they consider pressing. And this, largely, is how it seems to be playing out: nobody has been arrested for using wasteful PoW schemes yet, because we have bigger fish to fry.
And at least in broad strokes, it is possible to determine benefit to harm ratios. It is esntially uncontroversial to say "Coal Rollers"[1] do more harm relative to good than candy manufacturing or face lifts.
And a cap/tax carbon emissions would be great. But that hasn't happened, effectively isn't going to anytime soon and is more complex than it seems. Consider that spikes in green energy use will drive its price such that petroleum becomes more attractive in spite of a tax. And there is no way to correctly price carbon emissions when the effect will be felt by hundreds of generations and the extent of the harm is still unknown. It is, after all, simpler to try to persuade a smaller interest just to stop mining (even though that too has almost no chance of happening).
I have no idea whether Bitcoin is being unfairly singled out or not. But since the thread is about mining efficiency, it is the logical topic rather than say deforestation.
So it's not a-priori impossible that it does more harm than good. And even if not a catastrophic problem, surely it would still be nice to reduce the harm if possible.
[1]https://www.businessinsider.com/conservatives-purposely-maki...
The only reason to single out bitcoin is that it’s a highly visible waste.
But just because there’s multiple ways we waste a ton of energy, does not mean we shouldn’t fix any of them.
I think his argument is that it shouldn't matter whether it is a good expenditure of energy or not. Environmental costs should be priced in the energy costs. Then it wouldn't matter for the society and for the environment how much energy you use or waste.
Bitcoin doesn’t use energy, bitcoin is energy, or more specifically bitcoin is as much energy as people value the function and security of money.
Trying to reduce it is absolutely misguided - if you figure out a thousand times more efficient way to generate sha hashes (mine bitcoin), it won’t matter in the slightest - bitcoin mining difficulty will rise thousandfold and exactly the same amount of energy will be spent going forward.
Or a little more precisely a bitcoin is a provable record that a significant quantity of free energy was once turned into heat. So it does use energy, in the creation and once it is created, that energy is wasted unless the created also needed to heat something.
don't be naive, you can't block bitcoin any more than you can block porn.
besides, internet is no longer the only information transfer medium bitcoin can work over.
Well that's nonsense for a start.
Bitcoin simply shifts trust from a middleman to a vendor I am interacting with.
A middleman that is highly regulated, with all sorts of protections and restrictions in place to protect me.
A vendor who has a financial incentive to rip me off, and thousands of years of history to show us just how much they do when given the chance.
The trustlessness of cryptocurrencies is a lie. They move trust from a small number parties you can actually trust most of the time, to a huge number of unknown entities with perverse incentives.
all you have is trust that the bank will provide you $100 when you ask for it.
when you have 100BTC, you actually have 100BTC.
how is that hard to understand?
So where's the safety there? Its imaginary.
You can trade any fraction of a coin with or without an exchange. Exchanges facilitate trading, but they aren't required.
And btc hasn't been 20k for over a year -- in fact it never got there as I recall. It's been trading around 3k for the last few months.
not your keys - not your bitcoin. that's the mantra in crypto world. you're just repeating nonsense you've heard somewhere.
whether exchange gets hacked is irrelevant to bitcoin i own if i'm the only owner of the keys.
not true for any money you're currently holding (if we judge from the position you're arguing for), those are completely imaginary indeed.
Don't care.
> all you have is trust that the bank will provide you $100 when you ask for it.
Yup, turns out this trust is pretty good, it's backed up by all sorts of regulations and insurance, all sorts of protections and security, and in the last resort by the state.
> when you have 100BTC, you actually have 100BTC.
Who cares? When I have $100 in my wallet, I actually have $100.
You completely fail to address the point - when making a transaction, removing the bank from the picture actually hurts purchasers and demands far more trust.
yeah, tell that to Venezuelans.
> You completely fail to address the point - when making a transaction, removing the bank from the picture actually hurts purchasers and demands far more trust.
that wasn't actually the point, or at least was completely off target, but sure, i can address it - banks are providing some useful services, banks won't stop providing those services on top of cryptocurrencies, they will just have to face the reality that nobody is going to inflate them out of their financial screw ups.
and finally, if you're fine trusting politicians to run your financial system and regularly screw you up with inflation, financial meltdowns, bankruptcies, etc - i'm ok with your choice. just get off your high horse and don't claim nothing should be attempted to fix that by and for people who are fed up.
Or BTC hodlers who've seen an 80% crash, perhaps.
> banks are providing some useful services, banks won't stop providing those services on top of cryptocurrencies
Then they, and I, have no incentive to use cryptocurrency.
>finally, if you're fine trusting politicians to run your financial system and regularly screw you up with inflation, financial meltdowns, bankruptcies, etc
So far the current sytems in western democracies have outperformed any other system, ever. Further, having a centrally controlled currency is a good thing, yes, it allows monetary supply to be altered and manipulated to support the economy. Unlike, say, gold, which turned out to be a bad choice for a currency.
I'd far rather have monetary policy set by a government, or a quasi-independent entity like the Bank of England, than by some geeks and a bunch of miners.
> claim nothing should be attempted to fix ...
Your 'fix' doesn't actually fix anything and it makes a lot of things worse. That's why you get called on it.
zoom out, you're embarrassing yourself.
> Your 'fix' doesn't actually fix anything and it makes a lot of things worse. That's why you get called on it.
that's just like your opinion man. no reason to continue, time will prove who's right.
Not really, I'm not the one pointing at other currencies and how much they've dropped in value, that would be you.
Personal plug: https://www.konstantinschubert.com/2018/11/28/proof-of-stake...
I used to be very skeptical of bitcoin and cryptocurrency, but I'm even more skeptical of the recent anti-crypto propaganda all over social media.
3 years ago, crypto was going to save the world. Now, we are talking about environment? What gives? What's with the relentless anti-crypto propaganda?
Nevertheless it is safe to assume that the energy use is significant, even at half or a tenth of Digiconomist estimates it is still quite large. It is broadly true that the energy use of Bitcoin is related to the value of Bitcoin, via the mining reward.
The arguments against the energy use that are based upon the merits of Bitcoin are not valid. If Bitcoin is useless and doomed it stands to reason that the energy consumed is a waste, but that is true of anything. To argue specifically against the energy consumption you have to make the case that it is not worth the cost even if Bitcoin is a success.
If you assume that the costs and profit for mining are more-or-less static then the mining network will use roughly the same amount of energy if Bitcoin doubles in value every reward halving. That flattens out to about a 20% increase in value every year. To accept that the energy use will continue at this rate you would have to also accept that Bitcoin will increase in value at that rate. To date Bitcoin _has_ increased in value quicker than that, which is why the energy use has grown so high. Hardly anyone would argue that the increase in value will be sustained perpetually. If just holds its value the mining reward and power consumption will reduce accordingly. If Bitcoin ends up worth pennies, the consumption will be minima.
Furthermore, Bitcoin mining adds options to _how_ electricity is generated and consumed. Being able to convert electricity into money not only acts as a stimulus for cheaper energy generation but as a motivator for building new capacity. We are already at a point where Solar and Wind are becoming the choice not only for Environmental but also Economic reasons. Any new power plant needs customers, those customers take time to appear. If a power plant sold excess generation at cost to mining facilities the investment required to build a new plant is greatly reduced. This presents the possibility of developing nations introducing power generation to areas that currently have little or none.
If Bitcoin did end up stimulating the increase of carbon neutral capacity and efficiency, then people in the future might end up making the argument that Bitcoin ended up carbon negative.
A big part of a decentralized database's design is its protection against DDoSing. Proof of stake is very low environmental cost but you'll discover that the proof of stake networks with low fees can be DDoSed extremely cheaply.
Other networks use the networking architecture to protect against DDoSing.
> amount of energy being used to mine bitcoin is a real problem
Yes, it is. Although I'd like to say that if bitcoin energy use has a crowding-out effect, like an electric car does, then I'd favor mining bitcoin resulting in more hydropower dams being built than people doing business that can't be centralized like mining can and requiring liquid (dirty) fuels.
Datacenters as a whole can be made really efficient and are, in my opinion, a decent investment that can be repurposed better than e.g. an office building full of people doing traditional banking.
So it's not super straightforward even if on net we don't need cryptocurrency miners and I of course agree that it's bad for the environment.
The whole point of proof of stake is to avoid the energy waste that proof of work requires to secure a blockchain. It's not just a technical challenge -- it's one potential solution to very problem you're describing.
Is proof of stake actually going to work at scale? I don't know for sure, and I don't think anybody else really does -- but the point is that not only are people talking about the environment, they're actively working on solutions.
Does that make it a good use of energy? That is debatable, but energy is used for all sorts of things. How much energy is spent producing weapons, bombs, tanks, etc.? How much is spent producing addictive drugs? Cigarettes? Non-recyclable plastics? How much is spent on illegal surveillance of individuals? Why is it that no one ever talks about these examples?
It is very likely that Amazon, Google, Facebook, Apple, Netflix, Microsoft, etc. each use orders of magnitude more energy than Bitcoin does yet no one ever talks about that either.
Bitcoin gets trashed because people believe that the energy used to run the Bitcoin network is wasteful, but the energy used for other things is not. I am sure that opinion is shared by the majority of folks here as well, but that is what it is. It is an opinion. Does Facebook really improve our lives in a way that can totally justify the energy needed to run it?
Seriously?
By the way, the negative environmental impacts will be significantly reduced after ITER is ready.
Once we have clean energy production for everything, bitcoin will have minimal environmental impact?
That's ignoring the fact that fusion is still a very long way from commercial availability.
I just feel like it's a bit ridiculous to downplay the environmental impacts of bitcoin mining by saying "it'll be fine when we have fusion!" because we don't have fusion today, and it's likely to be a very long time before fusion is commercially available.
Also, your initial comment said:
>By the way, the negative environmental impacts will be significantly reduced after ITER is ready.
ITER is not a commercial reactor. Even after it's construction is completed (expected to be, what, 2025?), we still have a long way to go before you can use fusion power to mine bitcoin.
Meanwhile, climate change is happening now. We need to be reducing emissions now.
I didn't, I just said it won't be an issue when ITER is ready, which it probably will, and in our lifetime. We don't need to have it available to us, it would be enough for those miners to use it and the impact would be significantly reduced. I am not saying that it isn't a problem right now, because it is, but it won't always be the case so there is a long-term solution in the happening, which is good to know.
I am not saying we shouldn't reduce emission and whatnot right now, of course we should.
One could argue that Bitcoin should reach the limit sooner, so that mining difficulty would not increase so much, but the mining incentive is mainly a bootstrapping strategy for a currency. Now that everyone is familiar with how the ecosystem works, another coin could launch that was identical in every way except a shorter period of time before all coins were mined.
If you think the amount will be roughly equal, then you are predicting that transactions that end up in blocks will need to voluntarily contribute an amount equivalent to the block reward in order for the system to continue functioning. This seems unlikely to me.
Isn’t the difficulty level calibrated based on 10 mins per block? I don’t see how your statement above can be true. Seems like it goes from one reward every 10 mins (on average) to 0 rewards as soon as the last one is mined.
https://hackernoon.com/the-reports-of-bitcoin-environmental-...
How much energy was used to establish and perpetuate the existing fiat currency infrastructure? Has any such comparative analysis been done? Without such an analysis, it seems a little premature to unilaterally declare that bitcoin is a real problem by comparison.
The exiting infrastructure does far, far more than cryptocurrencies do, including credit, investment, protection of funds and all sorts of stuff.
The smart contracts languages can have whatever intent they like, the fact is that comparing the power use of a full financial system to something which is effectively operating as a bad payment processor is so wrong it's funny.
Really, none at all to, for instance, provide physical cash? A function of current financial systems and in some countries commercial banks?
Interesting.
No more to run mobile phone wallet apps?
No more to run PoS systems?
No offices full of traders?
No helplines, advisors or support for customers?
No teams of developers puttig together trading strategies and algorithms, and building smart contracts?
No datacenters opportunistically precalculating smart-contract outcomes to try to get ahead of the market?
You're once again only looking at a tiny part of a system, and comparing it to something much more complex.
Great, put it in context then:
A. What is the total energy content of the resources consumed each year?
B. What percent of A is lost to "waste" such as powerplant and grid inefficiencies?
C. What percent of the remaining is spent on crypto?
D. What other things are consuming the same order of magnitude or higher than crypto?
E. Which energy use described in D is easiest to make more efficient without harming the purpose/quality?
Then improve #1 discovered in E until it is below #2, then start work on #2, etc.
I think you will find stuff like getting everyone to use i.reddit.com instead of reddit.com and netflix to stop their annoying auto-playing previews should come before anything to do with crypto.
If cryptocurrency mining goes to countries with subsidized energy and they become part of maxing out that country's energy output, the country may be forced to create new energy sources to provide to the population (aka, higher environmental impact + cost). This push may be partially blamed by the cryptocurrency servers.
In other words, not all cryptocurrency mining servers as utilizing just the extra capacity casually created by a city/state.
Bitcoin mining is a business and it comes to the country. Goal achieved.
Do you have any evidence that this is happening and, if so, that its costs outweigh the utility of energy exported to the rest of the world?
- Attempts to side-step the law (however misguided the law is)
- Trivial to do using a typical centralized database (e.g. Federal Reserver or VISA)
- Tantamount to waiting for a greater fool to buy out the current players
The economist-in-me appreciates that non-legal activities are perfectly capable of both demanding and supporting a novel financial instrument on their own, I only exclude it from my question because it's a rather obvious application and I would like to probe beyond that.
There are a lot of people in the world that live in places where the law is far more gone than "misguided." For these people, it's not a question of "whether" to side-step the law but "how." You may not care, but they do.
People who bring this up are almost always people who have never lived anywhere near real poverty or conflict. Barring individual cases, the vast majority of the world's less privileged have neither the means nor the knowledge to buy crypto in any shape
The hard part is not adoption within poverty-stricken nations, rather adoption in developed nations with complicated tax codes and lack of incentives for merchants to invest in more payment processing tech is the true challenge ahead.
My country - India - has the world's largest number of poor. Even if these people were to get smartphones, there are already deeply entrenched players (PayTM, Google Pay) who offer free and instant transactions.
This is true for a lot of African countries as well. No reason for anyone to use a new currency when there's already M-Pesa and UPI and PayTM that use the currency they already know and trust.
Prepping makes sense to the mainstream once they experience a disaster. And those disasters are being manufactured even now by mis-management of debt.
I know of Ukrainian developers being paid in ETH for that reason.
Adult cam models in some countries are another example.
FWIW, complianceless payments are dejure illegal by definition. So any economic activity being made possible by them is roadkill of the current regulatory environment, legally speaking. A nice example of Bastiat's "That which is not seen".
A transaction does not become illegal just because some class of players do not want to become part of it.
There are many LEGAL activities that people do not want to show up in a central database. For example, think of many things related to love and relationships.
"tantamount to waiting for a greater fool to buy out the current players" <= this is like investing works in general, or? ;-)
Unfortunately cryptocurrencies aren't just a central database they're a distributed database - all transactions are public. You can try using a tumbler service but since these are obviously money laundering havens they're not going to last long.
Not the case, see payment channels.
It is trivial to look up the signed transaction to the specific address in the digital currency's blockchain. Hence, the shipping company can handle that situation.
On the other hand, try to get an irrefutable digital proof of payment from a bank. For example, get them to email you anything to you, anything at all, that you can use as proof that you paid last month's rent. A bank cannot do that, not even to save themselves from drowning.
Whenever you need to digitally prove payment to a third party, you need to use a payment method that can provide such proof.
I don't see why the shipping company needs to verify anything themselves - they just need a call from the owner of the goods directing the shipment.
And when it comes to trade between untrusted parties, it starts slow. To build trust.
Though crypto is great to making faster payments, that's sometimes an issue, and it can save the seller from the buyer's scam, but on the other hand completely exposes the buyer to the seller's scams. (Because cryptocurrency transfers are non-reversible usually [as in ever, except with a hard fork].)
If you want to explore the utility of crypto go check out different online communities that focus on that, some decent ones on reddit. The level of discussion on HN is usually "crypto baaad, centralized goood". As an economist I'm sure you expect more. Unless you want those ideas reinforced, keep the discussion here!
I think they subconsciously see it as an attack on state-sovereignty or something like that. The ability to tax and redistribute. That's just me reading between the lines.
I rather like the level of discourse on HN in general - it's not unusual to find someone providing a high-level though-out response on various subjects. Asking the right question is also hard, but not as hard.
- micropayments: the products that that enables - web-native currency: Makes it easier for apps to integrate money. Games, chat, maybe torrents we're told - easier to transfer money between institutions (maybe easy in the US but it's super hard in Canada)
For example, while it'd be a bit of a hack, you could fairly easily re-use even the various Certificate Transparency blockchains to trade stocks.
Also, I wouldn't say that the incentive mechanisms keep the ledger running. Rather they keep the PoW consensus mechanism running; in all existing trustless decentralized currencies it's your node that verifies the ledger is working correctly, and other people are voluntarily distributing the data without a reward.
I am curious why you think that those 3 cases are somehow not valid or interesting enough in their own right?
But... it also brings financial service options to people who have no opinions or only truly awful options.
If you are a non-homeless American, you don’t need crypto. American banks are bending over backwards to serve you. But, if you are a homeless American. Or if you are one of the unbanked billions around the world. Or, if you are a Venezuelan, Nigerian, etc... then the establishment is either dismissing you or actively working to screw you.
Crypto can bring tremendous value to all of them while bringing very little to the establishment by simply acting as a PayPal alternative for the extreme poor. If it manages to survive that, it will get better and better. Eventually it will creep up to becoming useful for rich westerners.
I think I can buy that. The unbanked could become centrally-banked like all of us as their countries develop, but there is a competition between that and the cryptocurrency which could wedge itself in at this point and outcompete the local government simply because the government is small and lacks in experience (maybe corrupt too). Another contender here is WeChat and similar centralized payment technologies, but they too are hamstrung by their own current governments (I'm sure that Payapal is) giving breathing room to competition.
It is not obvious to me which one of the three will win among the unbanked.
In the long run I think banks will win amongst the unbanked.
It's also worth considering that crypto is effectively the greatest experiment the world has ever seen in free banking: https://en.wikipedia.org/wiki/Free_banking. Hypothetically, this could be done with paper+metal currencies, or centralized digital currencies; but for whatever reason, crypto is getting a regulatory pass where past "experiments" have been shut down hard by states who claim a monopoly on issuing currency, for better or worse.
Rather than viewing blockchains through the narrow lens of "Money 2.0", I think it's more relevant to view both money and blockchains as social technologies to solve coordination problems, and then inquire about those technologies' performance characteristics, incentives, externalities, and moral hazards. I think there's longterm potential for blockchain use cases to find traction; but at the same time, it may be that centralized solutions simply achieve superior results, in the same way that Amazon out-competes mom-and-pop retail, and Netflix out-competes buying DVDs. (The market lessons of the last twenty years seem to indicate that consumers value cost and convenience vastly more than abstract notions of freedom.)
Only question is when it will end.
- Attempts to side-step the law (however misguided the law is)
- Trivial to do using a typical centralized database (e.g. Federal Reserver or VISA) - Tantamount to waiting for a greater fool to buy out the current players
The 3rd point is the same for any fiat currency on forex and many governments are the same as the ICO shills.
I'm not justifying them just stating that in many cases the gamble on currency is the same.
You did present a nice Strawman but I'll bite. Ok. I get asked about cryptos quite often also. So if not a digital currency like BTC then what?
Why use cash? Only criminals use cash! Really! If LE should catch you having more than x,xxx.00 in cash they should arrest you? Why? Because obviously you are trying to do something illegal. (civil forfeiture)
Trivial to do tx with 3rd parties???? What with what? PayPal? There have been no alternatives, or equivalent to cash in the electronic age to date. Including BTC. Although BTC is an attempt to provide similar means as cash (fiat) in a global digital sense.
Then again there is this which is perfectly good: https://en.wikipedia.org/wiki/Contaminated_currency
In areas that are ahead in digital payments technologies, cash is dying out very fast.
In the US, you may want to use cash (as a seller) to avoid transaction fees. But in countries like Norway that has implemented a cheap national debit payment system (BankAxept), that's not been a big issue. Now the banks in Norway has implemented a common payment app as well (Vipps), which is free for transactions between individuals.. this has started to kill off cash in all the areas it held out before (sales of used items, buying cookies from scouts, etc)
> What with what? PayPal? There have been no alternatives, or equivalent to cash in the electronic age to date.
If you ask me, that's because making payment systems is actually extremely hard. It's just that cryptocurrencies pretend it's not, by simply ignoring a whole lot of real-world issues that you would address if you were making a payment system that wasn't trying to make blockchains fit the problem.
Most of the challenges with payment systems are social. Challenges related to what happens if there's an error, a scam, a theft, etc. Cryptocurrencies just avoid it all by saying there is never any errors, even when any reasonable person would say there is.
If you think there's no alternatives, I'd say you're very US-centric. Outside the US there are lots of places that are already most of the way there.
Security that no third party can just take your money anytime, without your explicit signature.
Liquidity for new tokens issued by projects / communities without great access to global markets and exchanges.
Programmable money that follows rules you can rely on when you invest in a project / deposit money into a community / donate to Haiti.
UBI on a community level funded by community members or donors
Analytics on how money is flowing around available to everyone and not just stored in a central database with information asymmetry.
These can be combined. For example Analytics can help you figure out the cost of food in your community, then vote for a level of UBI that eliminates food insecurity, and adjust this amount on a daily basis through direct democracy (Provably Random Polling.)
Intercoin’s mission is to make access to local fintech more available to local communities and online projects, without having to rely on central banks for monetary policy or the IRS for collecting taxes and being able to calculate eg the Consumer Price Index on the community level
More info at https://intercoin.org see the presentations and whitepaper.
Besides that, just because something is illegal doesn't make it wrong. Many nations restrict transactions that are not reasonable to restrict.
So what's wrong with side-stepping bad laws (but also monopolistic players in the financial space such as PayPal and Western Union)?
Your second bullet point is mutually exclusive with the first.
But national currencies are getting increasingly shaky, even the USD where it appears Congress has no political will to control the US national debt and deficit, and where the GOP blows bigger deficit holes with tax cuts and the Dems are talking about MMT. Not to mention the risks to the Euro and Yuan, along with the many smaller countries with distressed currencies.
It’s interesting to me that cryptocurrrency skeptics and critics seem to regularly ignore this as a use case, when in fact it is the most important one (maybe even the only one). It seems many people can’t bring themselves to believe that modern national currencies can fail and don’t need an independent hedge, even though the 1800s and 1900s were full of exactly that.
https://en.bitcoin.it/wiki/Genesis_block
"The coinbase parameter (seen above in hex) contains, along with the normal data, the following text:
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"At the moment cryptocurrencies seem a good be worse than fiat. Imagine your salary or mortgage was a set number of bitcoins.
There were probably a number of initial uses imagined but if you look as Szabo's twitter pretty much the first link is The Crypto Anarchist Manifesto about circumventing government and libertarian freedom which I think was a big part of the inspiration.
(https://mobile.twitter.com/NickSzabo4/status/107401811082955... )
Yes they’re volatile, but they’re new, immature tech, with shallow market depth. None of those things will last forever.
Course, you could just use Visa gift cards for these kinds of usages. It's probably a bit more convenient to do it this way, rather than keep topping up a card.
Some other use cases noting that cryptocurrencies tend to have public ledgers.
It's perfectly legal for me to, for example, donate money to WikiLeaks. But Visa and Mastercard aggressively canceled every merchant account that allowed people to donate to WikiLeaks through the Visa and Mastercard systems, apparently because of secret pressure from US government officials who were unhappy about some of the things that WikiLeaks revealed. The Snowden revelations — which may not have been legal, so they are peripheral to your question — very likely wouldn't have happened without WikiLeaks being able to support him, which they could only do because they could receive Bitcoin.
Similarly, many Patreon accounts are getting canceled because their owners have published things that are embarrassing to Patreon, but not illegal (typically, racist remarks). If Bitcoin becomes mainstream, there won't be a centralized authority like Patreon that is in a position to end people's livelihoods because they publish politically undesirable viewpoints. (Right now, those viewpoints are viewpoints that are odious to you, but there's no guarantee that that will be the case in the future; it's easy to imagine Patreon bending to Chinese government pressure to censor people who talk about Falun Dafa persecution or Tiananmen Square, for example, even in countries where that is legal.)
As another example, many Venezuelans are having difficulty fleeing the country, even though fleeing the country is technically legal, due to both official corruption and armed gangs. You could argue that it's not clear what is and isn't legal in Venezuela right now because there are two competing governments, but neither of those governments authorizes demanding bribes from would-be émigrés.
As yet another example, it's perfectly legal in Iran and France for French companies to do business with Iranian companies. But, because much of the world financial system is controlled by the US, it can be difficult in practice; see https://www.washingtonpost.com/world/europe/europe-says-it-w... for more details. Regardless of whether US law is misguided or not, under well-established principles of international law dating back to the Peace of Westphalia, it certainly does not apply to French companies doing business in France with Iranian companies in Iran.
So, in a sense, I think you're right that the main purpose of cryptocurrencies is to sidestep violent coercion. I think you're terribly naïve about how much illegal violent coercion is actually "the law", although that's understandable if you've never lived outside a developed country.
There are other uses as well; it's a dramatically better way to send money overseas, for example. Last time someone sent me money via Western Union, I had to go to three different locations, stand in line for twenty minutes, hand over a massive amount of personal information (perfectly suited for identity fraud or targeted home robbery) to an unaccountable third party, sign a false statement, and walk out the door into a dangerous neighborhood with a pocket full of small bills. For this "service", WU charged me/them about 10% of the money sent, and also didn't inform me when it arrived. Bitcoin transactions require none of this nonsense and cost much less; the last Bitcoin payment I received from overseas cost 0.3%, and I received a notification in a few minutes in my Bitcoin client of the transaction.
2 - Trivial to do using a typical centralized database (e.g. Federal Reserve or VISA) -> Bitcoin, Ethereum and others can do Smart Contracts which means delayed sending, multi-sender transactions that serve as escrow and in the case of Ethereum programmable using it's own language to do any number of actions/apps. The important feature is that this is handled by the network using your own transaction, you don't have to set up the escrow through a company like VISA, Paypal, etc.
3- Tantamount to waiting for a greater fool to buy out the current players -> This is true of all CC because it's an open, yet small market. The earlier you get in, the better your outcome. However, it's not like CC's NEED to explode in price to be useful, competitive or solve a real-world problem. Getting rich is a secondary effect of having a functional CC reach adoption. Look at MemeCoins like Doge and Banano to see adoption is easier when everyone abandons the idea of getting rich off a coin.
And I don't see why you dismiss the importance of the first one. What if I'm trying to flee the country with something to my name, like Venezuela. Tough luck?
Ethereum is not considered one of today’s most efficient cryptocurrencies, not remotely. One of the most full-featured perhaps, but not efficient. Not even Bitcoin is since the invention of the MimbleWimble protocol, and more recently the even more efficient Coda Protocol. The real efficiency comparison is against those two.
If someone corrupted enough voters, they could theoretically create a "Vault certificate" for an invalid block (e.g. one which spends the same coins several times), and other nodes would accept it. That wouldn't be possible with CODA, unless someone broke their cryptographic primitives.
In Coda we use zero knowledge proofs to stand in for downloading / checking the blockchain. This means you get the identical computation to normal blockchain syncing, but in only the size of the zero knowledge proof and your account, which ends up being both constant and ~20kb. Which makes a big difference if you want to use Coda from a phone or browser.
Check out this video if you want to understand more of the tech behind it: https://www.youtube.com/watch?v=eWVGATxEB6M
And feel free to ask any other questions as well!
I haven't looked particularly into if any consensus / security assumptions are different either with Vault, but that could be another place for them to get down to a few hundred MBs without zero knowledge proofs.
I haven't heard anyone say this about Algorand. Can you provide more details? Lets say a bug causes all the Algorand nodes to crash. After a patch is released 90% of the network comes back online. What prevents the selected users from arriving at consensus over the next block?
To walk through a plausible example: let's say 3 Chinese services control 35% of the stake of Algorand. Without warning or any public announcement, the Chinese government steps in and forces them to turn off their servers. The Algorand network will now stop functioning as it can't reach 2/3rds. Hours go by and no one is able to transact. At this point, the network needs to decide how to proceed. Does everyone just agree to take a complete loss?
Most likely, a group of other stakers would work on a proposal to deal with it, maybe by removing the offline tokens. How do they get consensus for this proposal? And, if they do it, what do they do if the Chinese stakers come back online?
Your question has changed into: "doesn't the system break when a malicious party controls 35% of the stake?"
To which the answer is yes. If a malicious party can control 35% of the stake, that is very bad.
I should add, though, that if you know your machine is going to be taken down, you can mark your account as "offline" via a special transaction, which will allow the network to proceed without you by increasing the probability that others will be chosen to be on a committee.
That didn't happen in this case. The Chinese government never took anyone's keys or controlled any stake, which is the point of the example.
The malicious parties don't need control. They don't need to take anyone's keys or access their servers. They just need to be able to bring it offline, which is much easier to do.
Which raises the question I asked and you didn't answer: if 35% of the stake goes offline with no signs of coming back, how do participants reach consensus?
It is true that if 35% of the participating stake is suddenly prevented from contacting the network, no new blocks will be created. The word "participating" is important -- you can have stake that is not participating in the agreement protocol, but that is still spendable.
The only way I can think of to mitigate the scenario you've described would be this: before going offline, you can broadcast a transaction which essentially removes your stake from the pool of participating coins until you're able to come online again. This would ensure the network can proceed without you.
Algorand has a lot of interesting technology and may have some use cases. But it's more like a distributed database / voting system than a true cryptocurrency.
* Bitcoin loses consistency
* Algorand loses availability
I'm glad Algorand exists so that systems which value consistency over availability can be built.
In your terms, both bitcoin and algorand have weak availability.
https://coinmarketcap.com/historical/20171029/
Coinmarketcap just reflects what people invest in at a certain time, it doesn't mean that these investments are rational or are based on highly calculated decisions. A lot of coins in the top 100 are copycats, tokens or just concepts, very few are fully functional products.
and after
In NANO every account is a virtual blockchain. This means when you want to send funds, you have to "mine" a low-difficulty block on your own account and simply publish the results of that block to the network. No one does any real mining in NANO, you can think of "mining" your own blocks the same as signing or encrypting messages. Check out https://nanospeed.live for a speed test.
I'm not related to their team or that website and I don't own NANO, but I do follow their news and liked that site.
Disclaimer: built some apps on top of Nano, decently pleasant experience. I keep up a bit with the development of the node software.
Is this enough? I'm guessing that if bitcoin would grow to support even 1% of global payments, that 99% performance increase is not going to cut it.
I called out Coda because it's both an independent system and aimed at a very similar set of issues, but it's absolutely a different approach. Figured it might be of interest to folks who were looking at this article.
Seems they've moved to a Proof of Stake solution, rather than a Proof of Work. Ethereum was meant to switch to it, iirc, but never did.
https://people.csail.mit.edu/nickolai/papers/leung-vault-epr...
It would be difficult to come out with a new approach that simultaneously advanced the state of the art in every possible scalability dimension. Each individual approach might give a 2-10X improvement on that particular aspect, but it also means that the "bottleneck" keeps shifting, and trending towards scalability.
Source: I'm an academic blockchain researcher.
I've ran a full node for some time to support the network, the whole blockchain size was about 5GB, but the downside of zero transaction fees is that there is less incentive for people to run full nodes. I stopped mine out of boredom when the market crashed.
Unfortunately the market is so full of overhyped projects and buzzwords that people are no longer interested in something that just works.
It's an interesting issue, although it's a good question if it is possible to stop network spam. Bitcoin's solution to network spam is to limit the amount of transactions and charge a fee, with the fee going up the higher the demand for a transaction.
I don't see this setup working with Nano, as much of the protocol is designed around not having fees. After all, deciding who gets the fees and splitting it (among top representatives?) causes even more processing on the network.
XRP, EOS, Tether, Stellar, Tron, Cardano.
All with >$1bn cap.
It achieves 10,000 tx/s on chain and transaction times below 1 minute.
Just tell me how much electricity is require for each transaction. How much is required for minning, Maximum possible transaction per second. etc.
I still believe in Blockchain, one way or another for many possible use case once all the technical / unit cost problems are solved. But I remain extremely sceptical of Cryptocurrency.
I'm no expert on blockchain, but crypto taught me very very very powerful and insightful investing lessons.
Disclaimer: I own some nano
If users cannot verify the amount of coin in the network this is useless.
Quote "Vault, a cryptocurrency that lets users join the network by downloading only a fraction of the total transaction data. It also incorporates techniques that delete empty accounts that take up space"
Security is of critical importance to cryptocurrencies, and it's hard to take anyone seriously on that subject if they can't even get the fundamentals of web encryption right.
e.g. Do you think the advancements are novel, or just a mashup of ideas already tried in other blockchains?
Do any other cryptos do the "breadcrumb" shortcut?
I think proof of space-time (Bram Cohen’s and spacemesh.io’s currencies are examples) is a better way forward.
But basically the deal crypto developers are trying to make with me is to trade US backed dollars for "fun bux". These developers are usually very smart people - often much smarter than I. But I don't like smart. Take US dollars. Little pieces of green paper are very uncomplicated and if anyone starts copying them armed thugs show up at their house to have a very serious discussion. And my corner chemist takes dead presidents on delivery no questions asked.
the complaints people have with state currency are basic political problems that cryptocurrencies are not going to resolve. the basic feature that gives state currencies reliability is the backing of the state. without that, and states will never want to give that to cryptocurrencies, they will always be commodities with no stability and no real use value. and all the people who have bought in already will need to sell to a new generation of suckers, regardless of if they conceptualize it like that or not.
It will make miners fitter with no cost to the environment.
As a result I certainly don't trust Bitcoin with anything more than pocket change. I would, on the other hand, put money on Algorand. A Bitcoin attacker could conceivably DOS a handful of honest miners/network relays (given that mining seems pretty centralized), sequester a third of the mining network, and mint money.
No matter how much DOS power you have, you cannot mint money on Algorand without a substantial proportion of the stake.