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Comment by janoside | Hacker News Reader

Nic Carter's rebuttal to a Bloomberg comparison between Bitcoin/Visa, including assessments of total and per/transaction energy usage:

"First of all, Bitcoin and Visa are fundamentally different systems. Bitcoin is a complete, self-contained monetary settlement system; Visa transactions are non-final credit transactions that rely on external underlying settlement rails. Visa relies on ACH, Fedwire, SWIFT, the global correspondent banking system, the Federal Reserve and, of course, the military and diplomatic strength of the U.S. government to ensure all of the above are working smoothly.

Any energy comparison must take the above into account – including the externalities from the extraction of oil, which implicitly backs the dollar. As those who make this comparison inevitably fail to mention, the dollar’s ubiquity is partly due to a covert arrangement whereby the U.S. provides military support to countries like Saudi Arabia that agree to sell oil exclusively for dollars. It’s worth noting that the grossly oversized U.S. military, whose presence worldwide is necessary to backstop the international dollar system, is the largest single consumer of oil worldwide."

https://www.coindesk.com/what-bloomberg-gets-wrong-about-bit...

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Nic Carter's point is intentionally obtuse and belies his conflicted interests.

The reality is that if you scaled up the bitcoin system linearly so it provided as much transaction capacity as Visa (let alone the entire world economy) [edit or rather worded differently if each Visa transaction consumed as much power as a Bitcoin transaction], it would require a number of times more power than the entire world produces, and produce as much e-waste as the entire world put together. Obviously this is not how bitcoin scales because even if you did that it would still process 7 tps.

That is, however, proof that it is drastically less efficient on a per transaction basis even factoring in any and all possible externalities including the army and mining and the fed (lol). This is a proof by contradiction.

Anything else is a talking point and also trivially falsifiable. The US Army protects the US not the dollar and its budget would not be reduced in a Bitcoin powered world. Neither would its oil consumption because tanks don't fill up on bitcoins.

The ubiquity of the dollar specifically is also irrelevant as we're not comparing crypto to US Dollars but rather to well-managed fiat systems. Any and all. Not just one albeit dominant one.

This is obvious stuff if you think about it for a half second without trying to justify the unjustifiable.

> The reality is that if you scaled up the bitcoin system linearly so it provided as much transaction capacity as Visa (let alone the entire world economy), it would require a number of times more power than the entire world produces, and produce as much e-waste as the entire world put together.

It's fair to judge Bitcoin's energy use by its tps, but the above is not true. Energy use and tps are, as you then acknowledge, not related. It is possible to increase the number of tps by many multiples. The trade-off is centralization due to hardware requirements.

Once they increase it, which they won’t for philosophical reasons, I’ll update my assessment. Until then it’s strictly fair and accurate.

It’s representative of the world in which we live today not some hypothetical world that could exist in the future - that the team has promised and failed to deliver for a decade. I can make up numbers for visa that match too.

After all climate change doesn’t care about hypotheticals.

"Until then it’s strictly fair and accurate."

Your argument is about as convincing as "well you couldn't make a payment billion dollars because a penny weighs 1 gram, and their combined weight would be too heavy to transport"

How so? I said on a per transaction basis by falsification it’s not possible, factoring in all externalities for a Bitcoin transaction to be more efficient than visa. It is not. End of story. The scaling is a thought experiment not a plan.

Your counter example is nonsense.

Could it be in the future more efficient given unspecified future changes? Who knows but it sure as shit isn’t today. I was pushing back on Nic’s theory on pricing in externalities.

"Future changes"? "Who knows"?

The more efficient changes ALREADY HAPPENED years ago in the form of Lightning network.

The Bitcoin blockchain is the bedrock of this new peoples currency and upon it has been built the Lightning network which is a Bitcoin integrated sidechain for cheap and small transactions.

Lightning facilitates Bitcoin transaction capacity to scale in a ludicrously efficient manner and has now been technically maturing for years now. Please keep up.

The number of lightning transactions and channels rounds to zero, so in a way, I did include them. Same number of channels, about half the capacity per channel, same quantity of locked up value (about 1000BTC total) and the same number of users since 2019. [1]

Of course it's not a solution to scaling, because it requires one on-chain transaction to open, one to close, and if an intermediate node happens to go down your funds are locked. It's garbage. Vastly overcomplicated garbage.

By the way to just open a single channel for everyone on earth today and close it will take about 70 years, so right around the year 3000 if you (very optimistically) factor in births and deaths. And about $265 billion dollars at current fee rates - $18.99 as quoted today. Elon better pony up! This of course assumes the blockchain isn't used for anything else in the interim.

How small can the transactions be if a channel open/close costs almost $40?

The only L2 solutions that scale are permissioned, centralized and/or trustful. Because that's how you scale. And you can back those with anything as none of the guarantees of the underlying asset are conferred to these L2 networks simply because they notionally operate on top of Bitcoin for net settlement and the (soon to be unlawful) non-custodial wallet.

[1] https://bitcoinvisuals.com/lightning

> By the way to just open a single channel for everyone on earth today and close it will take about 70 years, so right around the year 3000 if you (very optimistically) factor in births and deaths. And about $265 billion dollars at current fee rates - $18.99 as quoted today. Elon better pony up! This of course assumes the blockchain isn't used for anything else in the interim.

LOL. Nice. I like it even better than my other favorite example, that issuing a paycheck in Bitcoin to the 125 million full time employees in the US would take about a year to process.

They will not increase it. I am merely pointing out the idea "to do twice the number of transactions it would consume twice as much energy" is not correct, because raising the block size would not necessarily increase energy consumption.

That’s not the point I’m making. The point I’m making is it takes more energy per transaction even after factoring in all specified and unspecified externalities because it’s not thermodynamically possible for visa to use as much energy per transaction. Visa would have to consume roughly 3X the entire worlds power output to match the sheer waste of Bitcoin.

> ... climate change doesn’t care about hypotheticals.

But increasing the block size limit wouldn't reduce the energy consumption. It would just make Bitcoin support a higher maximum transaction count per second, which perhaps the market doesn't even need or care about.

I would love to see you defended active tire fire in your backyard with the same logic.

Can you explain what you mean?

The power consumption of Bitcoin is proportional to the price of Bitcoin, it is not related to the demand for making transactions or how many transactions are being made.

You folks keep saying that like it’s a good thing but in my opinion that is a scathing indictment of the system. You’re talking about something that’s intentionally anti-efficient. It’s the only technology I’ve ever seen in my entire lifetime but becomes less efficient when more people try and use it. It’s horrifying.

[edit; to your reply: that sounds like a bad solution and I think you know that lol]

That fact says nothing about the efficiency. What it says is that market forces will decide what level of energy they want to dedicate to the security of the network. Whatever the market is willing to pay, it will be 100% efficiently spent on outcompeting attackers on the network.

> that sounds like a bad solution and I think you know that lol

I don't think it's a good or bad solution. It is basically just the same as how market forces control the values of fiat currencies which in turn affects how much energy is required to secure them.

Through a proof of waste of limited resources system. Just spell it out and I’ll agree.

[edit: this isn't about the army. this is about currency. stay on track, stay on topic - both of those things can be bad and having two of them can be additively much worse; having a debate with you is like trying to grab a fistful of jello, absolutely impossible]

Exactly, just like how with fiat currencies, the military serves as a proof-of-waste system which does nothing productive except to compete with other militaries. They compete by intentionally burning their limited resources (young individuals' lives) so as to make an enemy attack cost-prohibitive, thus securing the network.

> The army is to defend the country and its people, and would not be reduced in a bitcoin powered world.

Yes, they also defend other things besides the country's financial interests. So you'd expect them to cost a little more than Bitcoin, which only defends holders' financial interests. I am simply pointing out how they use the same proof-of-work system to accomplish it.

If the widespread adoption of Bitcoin led to a devaluation of existing fiat currencies, then you would expect military spending to go down (in terms of bitcoins). But I don't think that Bitcoin's adoption will decrease the use of fiat currencies (by any significant amount).

> both of those things can be bad and having two of them can be additively much worse

It's not clear why they would be additively worse. Creating a new place to store wealth doesn't increase the overall amount of wealth.

I agree that it is not a good thing that proof-of-work systems are wasteful, but perhaps it's the only way of solving the problem.

Proof-of-stake systems look promising but there are still some open questions about how it should be implemented and what the implications are for network security, and it will be at least a few years before they become battle-tested enough to have the same level of trust as Bitcoin.

> I agree that it is not a good thing that proof-of-work systems are wasteful, but perhaps it's the only way of solving the problem.

Obviously not, the other solution is by fiat, which has been working for milennia, and it's not about to stop.

Yes, but I just explained how fiat is secured by a system almost the same as proof-of-work (which you dismissed as "off-topic").

It's completely off topic, because the existing financial system is an emergent property of the state. It's a free-loader. Very limited energy is expended specifically to maintain the financial system. The bulk of it is to maintain the state which you have to do whether the financial system is shells, legos, gold or bitcoin. It's an irrelevant point, a red herring, nothing more.

After all far be it from replacing Visa and Mastercard, Visa and Mastercard have simply added crypto so you actually have to remove them from your energy savings estimates.

Further I disproved the energy utilization point in the original conjecture as impossible. If you have something to add add it and show you work.

Sorry man, you're just not right on this one. Number go up, we get it. That doesn't make it a fundamentally good, useful or interesting technology. All this flailing/pointing at everything that moves with no calculation, no evidence, is just to distract from the fundamental fact that it's a wasteful, borderline useless casino.

Show. Your. Work.

> the existing financial system is an emergent property of the state. It's a free-loader. Very limited energy is expended specifically to maintain the financial system. The bulk of it is to maintain the state

It isn't a matter of how much the financial system consumes. It is a matter of how much the state consumes to protect the wealth of its citizens (of which fiat is just an emergent property like you say).

> Further I disproved the energy utilization point in the original conjecture as impossible. If you have something to add add it and show you work.

You will have to clarify what point you mean or what work you want me to show.

> Number go up, we get it.

Please don't talk to me so disrespectfully. I have no interest in speculating on the price of cryptocurrencies.

When I say "number go up" I'm not being disrespectful to you, I'm borrowing a turn of phrase from the Bitcoin community which they use to justify just about anything. Apologies if that or anything else I said rubbed you the wrong way, tone often fails to carry on the internet.

What I'm saying is that I have, quantifiably and mathematically, shown that it's not possible for a crypto to take less energy than a visa transaction, due to thermodynamics.

Your retort continues to be that "the state spends way more energy and resources defending the currency that you're not factoring in" -- but you've failed to quantify that in any way. It spends some quantity, ok, I understand that. You haven't replied how much, you haven't done any analysis. Without any justification you state that it's at least as big if not bigger than a Bitcoin transaction.

I want to know why, when I've shown it's not thermodynamically possible.

I'd love to know how much of the state's "energy expenditure" you apportion to "currency protection," and how much that would decrease in a world where the entire economy is denominated in cryptocurrency. Some justification - anything - would be a great starting point, but so far you've just stated it as fact, in many unrelated contexts. This is not a generally accepted or understood fact.

Thanks for the clarification.

Regarding your crypto energy argument, I think I addressed this in the other thread but I will try to explain again.

With the current 1MB block limit and current valuation of Bitcoin, you are absolutely right that the transaction rate per kilowatt can't exceed Visa.

The argument in Nic Carter's post which you are missing is that transaction rate per kilowatt is just one possible way of judging the usefulness of a monetary system.

Monetary systems can be useful for reasons other than their high transaction rate (for example, they might support a particularly high transaction volume, or have a particularly high cost to attack).

Increasing the maximum possible transaction rate per kilowatt would be as simple as increasing the maximum possible block size, since transactions are effectively free (it is only finding blocks which costs money).

There are trade-offs associated with changing the block size limit, but those trade-offs have nothing whatsoever to do with the energy usage of Bitcoin. Changing the block size limit won't affect the energy usage. If the market had enough demand for increased transaction rates, either Bitcoin will be forced to increase the block size or it will simply be outcompeted by a different coin which already has.

> Your retort continues to be that "the state spends way more energy and resources defending the currency that you're not factoring in" -- but you've failed to quantify that in any way.

I actually don't know that that is true, and I didn't mean to imply that I know that for sure.

But, it is what you would expect assuming the market is accurately pricing Bitcoin for the value it provides them.

If it weren't true, and USD is actually cheaper to secure for the value it provides, then it is an easy arbitrage opportunity where you can short Bitcoin and buy the relatively-cheaper-to-secure USD instead. Eventually with enough market participants it is sure to eventually reach the "fair price".

Unfortunately for Bitcoin, it needs more than “many multiples” in order to actually handle function as a currency. At 4tps they’re several orders of magnitude short of what the market actually needs.

That's why second-layer technologies like the Lightning Network are being built.

Bitcoin doesn't have to function as a currency to be wildly successful (since being a currency isn't the only relevant use case), but with second layer networks it will be able to.

How can you say "if you scaled up the bitcoin system" and "this is not how bitcoin scales" in the same argument?

Bitcoin could handle arbitrary scaling with little power-usage increase had it not been intentionally hamstrung by (for lack of a better term) "small-blockers". This is because the primary power usage of bitcoin (mining) does not scale linearly with transactions/block. The transactions to include are usually considered once by the miners who then make iterated attempts at solving by modifying the block nonce, not the included transactions.

When that changes I’ll update my math. Until then it doesn’t matter. Its less efficient on a per transaction basis by falsification. It is fundamentally thermodynamically impossible for it to be more efficient today on a per transaction basis. It’s been 14 years. Time to look in the mirror and stop making excuses for its devastating waste.

The case I am making is that it is not possible for Visa to use as much power as Bitcoin on a per transaction basis based on today's energy usage, factoring in all exernalities - because the world would be out of power.

I am simply countering Nic's trivially incorrect position.

You countered the position, but you did not spend time understanding it.

As an example, ACH is an FTP based system that largely runs once a day (maybe 2-3x now), fed by various backing mechanics for the bank itself, including the Fed and whatever else you’d want to suck in.

Visa’s transaction rate is completely orthogonal to that system. Visa could 10x their transaction rate without touching that underlying system if they wanted to, as could something attached to Bitcoin. So your argument about scaling Bitcoin up counters a poor understanding of the initial position—so poor as to make it a different position entirely.

It's not worth understanding because the goalpoast shifts every 5 minutes. Bitcoin is like a religion. Every point you tear down they come back and say ah but wait! The princess is in another castle!

Because there's nothing there.

The whole thesis of Bitcoin is that it's trustless, decentralized and permissionless. It's also obvious that it doesn't scale beyond a single Costco or a mid-sized flea market. The only way to scale it is "Layer 2" networks which fundamentally are trustful, centralized and/or permissioned. Because that's the only way to scale. You can back those L2 networks with anything. Gold. Shoes. Dollars. GME shares if you ask Bittrex in any non-US market. There aren't even any guarantees these un-audited, un-accountable, un-regulated exchanges aren't selling more bitcoins than exist the way you oversell seats on a plane. Should be fine unless there's a run.

If all you want is a one-way message for net settlement between banks, I recommend you investigate SWIFT and ACATS.

The system doesn't do what it says on the sticker. The only reason anyone cares is number go up. And number only goes up if you go through the kind of crazy mental gymnastics Nic did.

[edit: ACH is dead, long live RTP [1], and guess what, RTP doesn't use one Argentina of electricity either somehow]

[edit: My argument isn't about scaling, it's about Wh per transaction, which Nic is strictly, totally and completely wrong about; let's stay on topic]

[1] https://www.theclearinghouse.org/payment-systems/rtp

"if you scaled up the bitcoin system linearly so it provided as much transaction capacity as Visa ... it would require a number of times more power than the entire world produces"

This is a complete fantasy - power consumption is driven by the desire to secure the network, it is not related to transaction volume.

There is an argument that power consumption would have to be significant because attacking the network has to be cost- prohibitive, and there are people working on POS and similar approaches.

Etherium is actually attempting to scale, their talks are very interesting .

That's not how Bitcoin scales. The amount of transactions doesn't matter. Bitcoin can have a limited number of on-chain settlement transactions and unlimited number of off-chain payment transactions (Lightning, Paypal, Visa, etc.) and it doesn't consume a single bit of more energy. Energy consumption is proportional to its value and the current block reward.

That's not what I am arguing as it's not what Nic is arguing.

Nic doesn't say that Bitcoin consumes less power than you think on a per-transaction basis. He says that Visa consumes way, way more if you price in nebulous externalities.

I am rejecting his thesis by saying that if Visa used as much power per transaction as Bitcoin we'd need to generate 3X as much power as we currently do.

The quote is: "Any energy comparison must take the above into account – including the externalities from the extraction of oil, which implicitly backs the dollar."

I'm taking it into account. And I'm saying he's wrong.

Per-transaction basis is completely meaningless math. Both systems can be scaled as I said. The point is that it's more expensive to run the US dollar system than Bitcoin.

Well ok do you have any basis for that or is that speculation?

Per-transactions costs matter a lot, you can’t just hand wave that away if you’re hoping to actually persuade anyone.

As far as scaling Bitcoin goes: prove it. It’s been a decade and it still does 4tps.

https://www.binance.com/en/cards

Pointing to a Visa card to solve crypto scaling is probably not the argument I’d go for.

That's exactly how the Bitcoin's payment layer scales. Visa is just one solution, but that's probably the most popular one. The settlement layer doesn't have to scale, because it's possible to scale the payment layer. You get all the benefits of sound money with the usability of fiat money.

It scales by using the system that Bitcoin was supposed to replace?

Again, that’s not an argument for Bitcoin, just so we’re clear. This is an argument for visa instead.

Eh, that was an example that everyone can grasp. A more inline alternative would be Lightning Network.

No, Visa is a payment network that works with any currency. Bitcoin replaces the US dollar, not Visa.

>As far as scaling Bitcoin goes: prove it. It’s been a decade and it still does 4tps.

Sure. The Lightning Network already exists, is working and in use, and can in principle do essentially unlimited TPS.

Bitcoin doesn't need to scale to millions of TPS to be successful (since payments and microtransactions aren't its only use case), but it so happens that it can do that through second layer technologies.

Per-transaction is only meaningful if you believe Bitcoin's only utility is by competing with Visa for everyday transactions like buying a cup of coffee.

But if you find that Bitcoin is a digital, permissionless, borderless, uncensorable store of value, a better gold than gold, then it doesn't need millions of transactions per second.

Bitcoin is just fine as the most secure settlement layer and long-term store of value for large, infrequent and expensive transactions.

Fiat money isn't going anywhere, Visa doesn't need to be replaced, and Bitcoin doesn't need to pay for your coffee to be useful. It can do what it does best, coexisting with fiat systems and other cryptocurrencies.

> Bitcoin is just fine as the most secure settlement layer and long-term store of value for large, infrequent and expensive transactions.

It's not, because its inability to scale means folks are pushed onto L2 which has none of the guarantees you mention.

If I buy real estate or fine art to defend against the money printer, my transactions are large, infrequent, slow and expensive.

As Bitcoin's use as a store of value increases and transaction throughput remains constant, transactions will be larger, less frequent and more expensive.

I won't get pushed out onto L2 just like I'm not pushed to liquidate real estate or art collections. I don't transact in long-term stores of value more than once every few years, and then I expect the transaction will be large, slow and expensive.

These guarantees aren't needed for most daily transactions. Using Visa with Bitcoin is fine, and does not undermine the security of the currency.

Your absolute right, those guarantees are not needed in most circumstances, which is why bitcoin is irrelevant.

Users can choose to adopt the trade-offs of second layer solutions if and when it is convenient for them, and with whatever portion of their wealth that they like.

Almost like classical finance has worked forever. Remind me what we’re Expending this energy for again? Or are we closing in on the end of the speedrun?

For situations in which the risk profile of traditional fiat currencies doesn't meet your needs.

It is a strawman to say that Bitcoin can only be useful if it replaces all traditional financial instruments.

I've never said that. I've said it does literally nothing better than classical systems. That point remains in contention. The idea that it's somehow everything and nothing at the same time, just a perpetual number go up machine, is a pro-crypto argument.

> Nic doesn't say that Bitcoin consumes less power than you think on a per-transaction basis.

Sure he does:

> Second, metrics like the “per-transaction energy cost” are misleading because transactions themselves do not cost energy; nor does bitcoin’s CO2 footprint scale with transactional count.

The point is that transactions per second isn't the unit of value by which Bitcoin is priced. Bitcoin is not competing with other monetary systems simply on the basis of transactions per second, but also network trustworthiness/security

You stopped reading half way through my sentence. He’s not disputing Bitcoin energy usage he’s disputing visa. That’s what I wrote.

I did read it but I cut out the irrelevant part.

He's not disputing the per-transaction cost of Bitcoin OR Visa, and is explicitly pointing out how looking at it on a per-transaction basis is misleading.

He is disputing the overall total network costs, not considered on a per-transaction basis but in terms of the total value provided by the network to all its users.

Transactions per second is just one of the factors that could add value to a monetary system, but it isn't the only one.

I think you’re being intentionally disingenuous like Nic, but at least he was clear: “ Any energy comparison must take the above into account – including the externalities from the extraction of oil, which implicitly backs the dollar.”

I factored it in with my calculus and you and nic are wrong. If you believe otherwise please show your work like I did not gut feelings.

TPS is a means to an end re disproving the thesis not a talking point about utility.

I am not looking at value in terms of TPS. TPS an intermediate step in my calculation. I am looking at total system usage. Sorry bud, your system is the digital equivalent of rolling coal and no amount of mental gymnastics will change that.

But by all means show your work and let’s talk about it, don’t just say “nope try again” haha that’s what people who have no leg to stand on do.

Right, he is comparing the total usage of the network including externalities. But not on a per-transaction basis, since that would be meaningless, as the transactions per second can be scaled arbitrarily with almost no change in energy consumption.

The problem here is not about including the externalities (although that is an important thing to consider). The problem here is that it is a mistake to look at the value only in terms of transactions per second when transaction rate is just one factor by which you can judge a monetary system. It's not necessary for Bitcoin to compete with other monetary systems in terms of transaction rate for it to be useful.

Show your work!

How many transactions/day is Lightning handling? I recall this same discussion in late 2017. Have they managed to successfully get people using it yet?

Roughly zero, and no. [1]

[1] https://bitcoinvisuals.com/lightning

There is no number there on the number of transactions, simply because it’s impossible to measure. It’s only possible to see the lightning transactions flowing through your own node.

Each channel accommodates theoretically infinite amount of transaction.

More knowable question: who actually uses the lightning network to accept payment for goods and services?

https://foldapp.com/

https://store.blockstream.com/

https://acceptlightning.com/list.html

Several major exchanges have announced that they are implementing LN support. Still very early days.

Looking at that list, most of those are clearly crypto enthusiasts. I don't think "HODL Monkey" is a good indicator of where the market is going; ditto with exchanges.

As always, call me when I can buy a latte with it.

This shouldn't be surprising. The early adopters of a finicky new technology are always going to be enthusiasts.

You can buy a Starbucks gift card on fold app using LN and currently get 3% back in sats.

But seriously, why would anyone spend a ton of effort right now integrating a coffee shop directly with LN in the first world? Traditional payment systems work fine. Bitcoin was never primarily concerned with replacing Visa. Think bigger.

Is someone in the third world chomping at the bit to pay $40 to open and close a single LN channel when that’s 10% of the GDP per capita of some of those countries you plan to help? Probably not. The only places you can get away wanging people with such egregious fees simply don’t need crypto.

> Is someone in the third world chomping at the bit to pay $40 to open and close a single LN channel when that’s 10% of the GDP per capita of some of those countries you plan to help? Probably not.

In such cases, there is no reason such users can't "enter" bitcoin through a second layer such as the Lightning Network.

Why would they do that if it isn't real bitcoin?, you might ask. Well, for one, their local, tin-pot-dictator created currencies are often worthless, meaning that even second-layer bitcoin is a far more sound and reliable currency.

And who is to say $40 for an on-chain transaction is an "egregious fee"? It turns out having access to the world's most secure, decentralized, unstoppable, set-in-stone, uncensorable, trustless, non-inflationary monetary network is a valuable thing. Maybe so much so that $40 per on-chain transaction is a bargain in the bigger picture.

> In such cases, there is no reason such users can't "enter" bitcoin through a second layer such as the Lightning Network.

Yes there is they need a channel, which costs $20 to open and $20 to close.

> And who is to say $40 for an on-chain transaction is an "egregious fee"? It turns out having access to the world's most secure, decentralized, unstoppable, set-in-stone, uncensorable, trustless, non-inflationary monetary network is a valuable thing. Maybe so much so that $40 per on-chain transaction is a bargain in the bigger picture.

Ah you're a comedian too!

What does calling someone a "comedian" add to the conversation?

@quartus, you're right, I apologize.

I was referring to the idea that a $40 channel fee might be palatable or even negligible for folks such as those in Malawi whose GDP per capita is $400 per year.

>Yes there is they need a channel, which costs $20 to open and $20 to close.

No, they don't need to open a channel via the blockchain. They can have an account with a third party, for example.

If you do that you lose 100% of the guarantees of the blockchain -- that account is centralized, permissioned and trustful. At that point they don't need the blockchain, smh.

Although it's true you introduce some level of trust in that scenario, it's patently false that you lose all the benefits of bitcoin. A company offering accounts via Lightning would have all of the standard reasons not to cheat customers.

And again, keep in mind we are talking about access to money -- a money that cannot be debased -- for those people living in the poorest and most terribly governed areas of the world, where debasement, hyperinflation, and the utter destruction of savings is commonplace.

Even if they don't get the full benefits of on-chain bitcoin transactions, they will still be light years ahead of where they were relying on failed local currencies. A massive improvement even in the worst case scenario, helping to lift real-world folks out of poverty. This is something to applaud and cheer for, not shake your head at or mock.

You pay zero with the Phoenix wallet: https://phoenix.acinq.co/

What does “think bigger” even mean here, aside from memes about Bitcoin prices going up? If your competitor is cheaper, more popular, more reliable, and more widely supported, aren’t you just straight up losing?

FWIW I have been buying lattes for bitcoin (a couple of which with lightning) in multiple countries since ~2012

Good point, thank you for the correction.

You can't directly measure the number of transactions happening on lightning network unless every non leaf node publishes it's numbers, and even then you'd have to trust they're telling you the truth.

And it's even more complicated than that, because you'd have to take the data from every node, and reconstruct complete paths to identify a single transaction.

And yes, I personally use the Strike app + Fold app to collect satoshi rewards by buying gift cards for shopping. Strike also has a beta app that uses lightning as the rails for global p2p transfers, e.g. you can instantly send USD to EUR. https://twitter.com/JackMallers/status/1346867753253220356

> Have they managed to successfully get people using it yet?

I was trying to figure out the same thing a month back[0], but most of the responses I got boiled down to "you're asking the wrong question". It's hard to wade through the crowd of "it's just digital gold", but the best response I got[1] is that it works decently for places that accept it, but there are hiccups, usually around liquidity.

[0] https://news.ycombinator.com/item?id=25675472

[1] https://news.ycombinator.com/item?id=25676779

How do completely incorrect comments like this get upvoted?

Well that might be because they’re correct my dude! Feel free to weigh in with your analysis. Nobody’s been able to spot a hole in the logic.

No, anyone who understands the Bitcoin protocol knows that energy doesn't scale with transactions. Read the paper. You could have your laptop sign a million transactions and it would be secure.

Energy scales with competition to sign transactions. Read the Bitcoin white paper my dude.

I did, and frankly, it shows a shocking lack of understanding of economics. Which is why we find ourselves in this situation.

It's no different than you saying "read the bible!"

It's completely different than the bible because it can be proven by yourself, no faith needed. There is the whitepaper and there is source code. But since you are so cynical as to not believe people, and didn't seem to understand the whitepaper, I'll explain it to you:

Transaction blocks are generated at a fixed rate, no matter how many miners are operating. This is done by adjusting the difficulty of finding a sha256 hash on the data of the transaction block. You simply need to find a hash by adding some random data to the block until you find a hash that ends in 0. The more 0s at the end of the hash, the harder to find.

Generating a sha256 hash is easily done by a laptop computer. But when huge farms of ASICs are finding the hash very quickly, the difficulty goes up to throttle the transaction rate, and many more hashes must be calculated in order to find one that meets the criteria. This is where the energy use comes from - the hash difficulty, not the number of transactions in a block - thus it scales with competition to sign blocks, rather than the number of transactions.

This may arise from a misunderstanding of how Bitcoin works, but TPS have nothing to do with energy consumption.

That alone should say something.

Yeah that say that like it’s a good thing but all I’m reading is a scathing indictment.

> The reality is that if you scaled up the bitcoin system linearly so it provided as much transaction capacity as Visa... it would require a number of times more power than the entire world produces

Scaling Bitcoin's tps does not increase its energy usage. The tps and energy usage vary independently of each other. Bitcoin does not require any more energy usage to handle more tps than Visa. In fact, if we include off-chain transactions which are settled on-chain it already can.

> The US Army protects the US not the dollar

What is the value of the dollar if the United States ceases to remain a sovereign polity? The dollar is part of the United States.

The first paragraph is a fair consideration. The second is a complete stretch. It's not as if America would suddenly stop providing military support to Saudi Arabia if we suddenly switched to bitcoin. An America that historically used Bitcoin would be even more incentivized to "secure" fossil fuel nations.

Take a look at OPEC companies that have priced oil in other currencies:

Iraq started pricing oil in euros in 1999:

https://www.theglobalist.com/iraq-the-dollar-and-the-euro-5/

Iran started pricing oil in yuan in 2012:

https://www.bbc.com/news/business-17988142

What's our geopolitical relationship with Iraq and Iran now?

So they changed their pricing currency and then we became enemies? Or we were enemies, and they changed their pricing currency because of that... lol

The US CIA overthrew the democratically elected government of Mossadegh in Iran and then received backlash for it in the form of the Iranian Revolution [0][1].

[0] https://nsarchive.gwu.edu/briefing-book/iran/2017-06-15/iran...

[1] https://en.wikipedia.org/wiki/Iranian_Revolution

The first Gulf War began in 1990, and the Iranian Revolution took place in 1979. The causality may well have taken place in the reverse of what you suggest.

Yep. You'd think if the reason the US restarted their war with Iraq was using Euros as a reserve currency, they might have made a bit more fuss about those pesky Europeans creating the Euro with the explicit goal of being a global reserve currency a few years earlier...

Being the largest reserve currency has more costs to the US than benefits overall and policy has been to try and reduce that exposure for the last decade or so.

https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-d...

Being a reserve currency means any financial crisis in the world tends to affect your currency and trade, not a good thing.

It's not as if America would suddenly stop providing military support to Saudi Arabia if we suddenly switched to bitcoin.

No, but now that the US is a net petroleum exporter, puling the plug on the whole Middle East is a real possibility.

Not all oil is the same. There's a reason that while Canada is massively a net exporter of oil (especially to the United States), boats from the Middle East show up on the regular. Common misconception. [1]

[1] https://www.aboutpipelines.com/en/blog/why-does-canada-impor...

If the Saudis started selling oil in bitcoin they'd probably lose their military support and/or be overthrown.

It is difficult to justify why the US is providing militarily support to the Saudis without invoking oil and dollars. They are a pretty shady regime and not the sort of people the US wants to be supporting. And the Saudis don't seem to be trading with America as much as China [0, 1].

[0] https://tradingeconomics.com/saudi-arabia/exports-by-country

[1] https://tradingeconomics.com/saudi-arabia/imports-by-country

The Saudis are also well-liked by the US and much of the Western leaders because they buy billions in arms. Nevermind the crucifictions, decapitations, and dismemberments.

Reminds me of one of by favourite Frankie Boyle jokes: "Our government was angry about Khashoggi. We sent the Saudis a strongly worded arms invoice."

While the term "petrodollars" makes sense prescriptively, saying that the KSA would be "overthrown" if they started settling transactions in something other than dollars is pure hyperbole. The macrobullshitters that keep throwing around this idea of ongoing US coercion are doing so with absolutely no proof. Sure, there's some soft power things going on, but they settle in USD because USD has been the de-facto currency for world trade (and thus currency reserves) for some time now. IF anything, we see a movement away from USD into a currency basket with a high weighting of USD over the coming decades.

Do people not seriously think about why the Iraq war happened? Everyone accepts that the WMD rational was disingenuous, so then why?

It just so happened to coincide with Saddam starting to sell oil for Euros, and France and Germany just so happened to oppose the war.. but it's probably nothing to do with oil and dollars.

Gaddafi wanted to sell oil for Gold. In that case Europe and the US were on board with removing him. Why then, when he'd been in power since the 70s?

Decisions and strategies worldwide do not make sense if you don't acknowledge that such things happen. That e.g. an oil country moving away from the dollar is something the US would do nasty things to avoid - and the reasons for that fall in the category of "conspiracy theory", but that is the case because no official tale makes sense. You know it is not about the weapons of mass destruction, because these were proven lies, and you know they did not tell these lies to "save the people from a despotic regime" after decades of "we don't care", because there are other examples of despotic regimes (including KSA) the US does not bother or has friendly relationships with.

So, what would you think is the reason the US invaded Iraq?

I think it is a very worthwhile observation, that existing, comparable systems also have massive 'externalities', only they aren't measured in kwH.

That is a general defense of the form of the statement, but not a defense of the statement itself.

The dollar is not the largest cause of perpetual US entanglement in the Middle East. Oil dependency, on the other hand, may be.

Amazingly, due to fracking mostly in west Texas, the US is now a net oil producer. We should really change our Mid-East foreign policy to reflect that fact.

The Saudis have chopped a guy to pieces and his the body at the embassy in a foreign country.

Imagine the headlines if Russia did that in US. Yet they are sill 'allies'

Ask yourself which of those things would go away if BTC replaced Visa. Only then should it count towards the cost.

Somehow I doubt BTC would lower military spending.

> including the externalities from the extraction of oil, which implicitly backs the dollar

This isn't true. Internationally the thing that backs the dollar is the U.S. economy. People know they can spend dollars to get anything they need. Domestically what drives the dollar is that it's the only way you can pay taxes.

I suppose you could say that oil is used to defend the U.S. economy but that's a stretch.

>>including the externalities from the extraction of oil, which implicitly backs the dollar

>This isn't true.

Basic economics and the law of supply and demand says that it is true.

>when demand increases and supply remains the same, the higher demand leads to a higher equilibrium price and vice versa.

https://www.investopedia.com/ask/answers/033115/how-does-law...

On the other hand Visa actually works for its intended purpose.

And Bitcoin is a paper asset backed by absolutely nothing.

Bitcoin is a global settlement layer. it is not a representation of something else, it's the final product on its own.

You're not going to say that in a prison system cigarettes are not backed by anything for them to be used as a currency.

I take my comment back. Bitcoin is backed by 'the market can stay delusional longer than you can stay solvent'

You can say that about any currency. An 80 year old billionaire still needs someone to care for him, just like an 80 year old pauper. He relies on the hope that his dollars will be accepted, to look after his medical and care needs as well as security and ownership needs.

My understanding is that because people have mortgages in dollar (or other useful money), you can be pretty confident that many people are going to be motivated enough to get some dollar (they have to pay their mortgage with it)

On the other hand, no one is going to be in a difficult situation if they cannot get bitcoin.

Well the whole idea of Bitcoin being a store of value isn't that its price is stable between 2017 and 2018, but its non-inflationary in long run (something which isn't true for the time being, it is inflationary.

However, the idea is that between 1971 (the closing of the gold window), and now, USD and all fiat currencies lost 99% of their value. The same is not true for Bitcoin on a similar time frame (i.e. 30+ years).

The US government is functionally bound to the dollar, and its size is enough to guarantee the continued functioning of the dollar. On the other hand bitcoin is backed by speculators and criminals, hardly a stable foundation for a currency or commodity.

Ah see this is where you're wrong. The tokens are proof that huge quantities of energy were wasted. It's a proof of waste algorithm.

Would the need for oil and military go away were we to switch to using bitcoin for everything? Why are those coupled to the dollar's energy usage?

Seems to depend on how well your tinfoil hat fits.

You still need to use oil, but you don't have to use dollars. The support for dollars relies on a lot of things including the government and thus the military, which are big costs and oil consumes. If the dollar didn't rely on the military power of the US, why is the Bretton Woods meeting and the post war monetary policy so important to it's dominance (something practically no one disputes)? Why is it that the US seems to care so much about pricing oil in dollars? You don't need a tinfoil hat (as other comments suggest) to notice the US government has a strong interest in everyone using our currency and that where the gov has a strong interest, it also uses it's guns.

For some reason the Euro does not need all that "grossly oversized military" to be a proper, stable and usable currency. That alone kind of contradicts the entire grossly overstretched argument of this Nic Carter guy.

While I am also skeptical of the parent comment's quotes. The Euro is still backed by a centralized state(s) which does indeed have a monopoly on violence and require huge amounts of resources to maintain legitimacy. Crypto currencies demonstrably do not need these kind of resources. The rest of what people preach about crypto might be Bullshit, in a strict sense, but they are right about the anarchism thing.

All states by definition requires a monopoly on violence and resources to retain legitimacy. The currency is just a freeloader, and the consumption of resources to sustain a cryptocurrency is purely strictly additive.

The European Union has a huge standing army if they were counted as one force? Over 1 million active personnel. The US by comparison has 1.4m and China 2.0m

Ok here is a puzzle: is there any electricity provider who accepts BTC?

BTC runs on fiat money.

The goal is for everyone to accept it, but bitcoin is still on a journey to become store of value and medium of exchange.

it'd be a very long journey. the deflationary nature of btc means that people generally don't want to pay in btc, since it would be expected to become more valuable in the future.

That doesn't make any sense.

My amazon stock that I hold is going up in value, and is therefore "deflationary".

But it would be silly to say that I would never have a reason to sell those stocks.

I sell things, whether they are dollars or stock or crypto, because I want to buy something.

if you had 1 amazon share (worth $3286 right now), and $3286 in USD cash, and you wish to buy a $3286 computer, would you rather sell the share to obtain the cash, or transact using your existing USD?

I would have no preference.

It's the same thing.

The only difference maybe, is regarding friction. IE, maybe it is a bit more difficult to immediately sell the Amazon stock at a store.

But transaction friction is different than the deflation argument.

Actually, I'm aware of several Chinese miners which pay their (hydro) supplier in BTC.

But it's also unusual.

Bitcoin is designed to be deflationary. Anyone who pays anything in BTC is economically irrational.

Accordingly, is anyone who saves fiat money also economically irrational?

Actually I would say yes, they are. Once you have a reasonable cash buffer and are out of the danger-zone for random financial ruin most people should invest all excess rather than be paid a pittance for their bank to do it for them.

Yes. Which is why no one invests for the long term by amassing cash alone (fiat money). They invest it in stocks, assets, real estate, and other non-cash holdings.

The common fallacy in Bitcoin circles is that Bitcoin is the only way to keep your money safe from inflation.

In reality, inflation means that your house, your car, your stock investments, and other holdings are also worth more in dollar-denominated amounts. The only thing that becomes less valuable is cash (and fixed return investment vehicles and such).

How else is BTC miner supposed to pay for expenses?

That's not scope 1, 2 or 3 accounting, more like scope 23 at this point. And scope 0.1 for bitcoin.

> Visa relies on ACH, Fedwire, SWIFT, the global correspondent banking system, the Federal Reserve

do you have a good link that explains how this all works and how these different components interact?

For rather deep dive: https://www.coursera.org/learn/money-banking/home/welcome

Something shorter: https://gendal.me/2013/11/24/a-simple-explanation-of-how-mon...

Bitcoin fans when you complain that transactions are expensive, slow, and always irreversible:

"Bitcoin isn't a replacement for Visa or for your checking account. It's a store of value. It's not for day-to-day purchases."

Bitcoin fans when you complain that Bitcoin is massively wasteful:

"If you compare it to every cost that can be attributed to the existing financial system as a whole, including military spending, it's cheap."

Please provide meaningful evidences for these claims?

I might be in a bubble, but it seems my intake of bitcoin information is balanced enough that most things are not this polarized.

Its getting to a point where it can be a component in the Gross Domestic Ignorance calculation.

Also bitcoin fans say all that swimming in millions of dollars the vast amount of people could never get in a lifetime by simply owning bitcion.

This strikes me as a terrible argument. Yes, Visa is a small part of the whole system. It's also the only part that Bitcoin does anything to replace. Moving numbers from one column to another is trivial. If that were all the banking system needed to do we could run the whole world economy off my laptop with software I wrote in a month.

You can't do "non-final credit transactions" on Bitcoin.

You can't take out a mortgage.

You can't manage investments.

You can't pay for groceries without waiting a half an hour.

You can't buy a $1.25 pack of gum.

Bitcoin is complete and self-contained because it is inextensible and feature-poor. It cannot solve the problems the banking system solves. Its solution is the classic "you didn't need it anyway".

And then Bitcoin fans realize that yes, they did in fact need those things after all. We can watch them reinventing the entire modern banking system before our very eyes. The main differences are that they run everything on the world's worst database, they insist on calling their banks "exchanges", and that they think it's OK to have all their money stolen every so often.

(Bitcoin also lacks the ability to prevent money laundering or to enforce judgments. I'd consider that a bug. Other people might consider it a feature. In either case, it means Bitcoin is solving a much easier problem than normal banks.)

This nails it!

Unless your fiat money is not actually real and is just a made up number by the Fed. Bitcoin may not be useful in the local store, but if it can make fiscal, fair rules that the globe works within - I’ll take that.

The other mad comparison is that Bitcoin is globally distributed. If Argentina was globally distributed it would eat far more energy than Bitcoin.

What this really means is that Bitcoin is out of reach of a nation state attack.

For the local store, there’s always Nano currency.

Fiat only needs to hold its value for as long as it takes you to purchase assets and investments with. At 2% inflation it does. End of story.

Anywhere you drag your thesis out beyond that needs to take into account that you are fighting a straw-man. That's not what currency is for. Currency is a temporary, intentionally lossy (to encourage investment and velocity of money), store of value and medium of exchange. It is not an investment. It is not a long-term store of value.

> What this really means is that Bitcoin is out of reach of a nation state attack.

Right except 70% of the hash power is concentrated in a few mining pools in the PRC. A strongly worded memo from Xi that unless you permit their compromise of the network you'll find a new hobby mining minerals in Xinjiang, and party's over.

> Right except 70% of the hash power is concentrated in a few mining pools in the PRC. A strongly worded memo from Xi that unless you permit their compromise of the network you'll find a new hobby mining minerals in Xinjiang, and party's over.

What attack are you imagining? Chinese miners cooperate to do a double-spend... on who? And how does it help them to destroy international trust in the coin and make their own assets worthless?

They can nuke the currency by executing a 51% attack on anyone. There’s no fundamental value to Bitcoin except faith/trust. Kill the trust kill the chain.

The "fair players" could simply coordinate to make a hard fork from before the attack.

They sure could, with the remaining 30% of the hash power. Thing is, continuously forking isn't a recipe for a store of value or currency or anything else.

You are right that wouldn't make for a good store of value. But Bitcoin actually does not get attacked "continuously" so that is not an applicable criticism. It is conceivable that such a thing could happen but we can expect it to happen approximately never given the incentives in place.

Economic incentives sure, but if it becomes America's currency and it's mined by the Chinese, economic incentives no longer have primacy.

Don't they? Then what does? I just don't see what the benefit of conducting such an attack would be.

Coinholders would practically not be impacted: they could just take their existing keys and bring them into the hard-forked software and continue like normal. Mining might be disrupted for a short time, but is that so harmful to the enemy to be worth spending millions in electricity?

I have been hearing this argument for over a decade now.

In another decade, when this mythical attack on this scale l (as it applies to BTC. Some smaller coins have been attacked, but they are nowhere on the same scale) continues to fail to materialize, are you going to say the same thing?

I just want to know how many decades from now of your position being falsified, that you need to wait for you to change your mind.

Or will you never change you mind? Is you position truly unfalsifiable, no many how many decades go by?

> as it applies to BTC. Some smaller coins have been attacked, but they are nowhere on the same scale

So what I'm hearing is everyone knows it can and does happen at a smaller scale but you just can't bring yourself to believe it could ever happen on a bigger scale. This seems like the creationism vs evolution argument.

I find this particular criticism of the currency pretty weak too for what it's worth as It's got much bigger issues. Like the sheer magnitude of its waste.

However, I do find the argument disqualifying when petitioning to make Bitcoin the "one world currency" when 70% of the hashpower is in a totalitarian ethnostate that can just screw it up at will. Conceptually it amounts to giving up sovereignty of your currency to the PRC.

> but you just can't bring yourself to believe it could ever happen on a bigger scale

What I asked was for what would make your position falsifiable, in terms of time that an attack does not happen. How many decades from now do we need to wait.

My position is falsifiable, on the other hand. If a major attack, on the scale of the whole BTC network gets broken for weeks and weeks on end, then my position is falsified, as I do not think such attacks, on that large of a scale, are going to happen, therefore if one does I would be wrong.

Yours, on the other hand, does not seem to be. It seems like there is no possible timeline, for attacks on that scale failing to materialize, for which you will admit that such attacks are not coming.

I don’t disagree with your assessment though I would say the potential alone is disqualifying. I understand if you don’t. Your positions is quite consistent and compelling.

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