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Comment by ballenf | Hacker News Reader

Bitcoin is far from unique in this. When gas prices fall people have been shown to drive more. And buy less efficient cars and drive them less efficiently (faster, more aggressively).

When water prices are lower people water their lawns more and take more baths.

When shipping ePackets from China is cheap, people buy more stuff from there.

I just don’t see how Bitcoin responding to supply and demand is different from any other consumable.

It feels like the argument makes the unstated presumption that Bitcoin has no utility, which is a separate debate. Bitcoin advocates would say that more and more miners arguably provide greater security assurances making the currency itself more valuable.

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>> This would be a reasonable stance if Bitcoin were just another activity, but it’s unique in its energy profile. What other technology is designed so that energy efficiency improvements are absorbed and nullified (through the difficulty adjustment mechanism)?

> Bitcoin is far from unique in this. When gas prices fall people have been shown to drive more. And buy less efficient cars and drive them less efficiently (faster, more aggressively).

I don't think that's true, or it's only true if you look at it from a consumption perspective that ignores important parts of the picture.

When gas prices fall, more energy is used, but travel miles increase. More work gets done per dollar.

When bitcoin mining gets more efficient or energy cheaper, the amount of bicoin "work" done stays constant, because the difficulty changes to compensate. It's like if roads got longer the cheaper gas gets.

> When bitcoin gets more efficient or energy cheaper, the amount of bicoin "work" done stays constant...

Not quite. The extra work it does allows the network to secure itself better. We don't have to agree with this energy use, but it does do something.

Do you believe the Bitcoin network would be insufficiently secure if miners were incentivized only by the transaction fees and not the block rewards?

Bitcoin has to withstand an attack from central banks of the world in the future. Just look at some comments from Christine Legarde to see what is coming. It's the war of media companies vs internet coming back, just with something much more important. I hope Bitcoin wins, but I think that nobody knows the future for certain.

Other cryptocurrencies? Maybe, I am not an expert on them. But definitely not bitcoin. Its transaction speed is simply way too slow. And it is not even close.

Most cryptocurrencies are a joke, trivial to attack by any state, or even somebody renting machines on AWS

> Bitcoin has to withstand an attack from central banks of the world in the future

Q: How do we imagine central banks would 'attack' a cryptocurrency, and how is a cryptocurrency (or its users/owners/proponents) going to defend against whatever form such attacks might take?

Buy / bribe miners to have a constant 50% attack even if they lose billions / tens of billions of dollars.

Bitcoin mining should soon be seen as national security threat for countries that have the most bitcoins, that's why having so much hashing power in China is dangerous.

> Buy / bribe miners to have a constant 50% attack even if they lose billions / tens of billions of dollars

(This is a genuine question, I'm not nearly as well-read on this as I should be) What would this achieve, and whom would benefit?

My naïve assumption would be that coordinated, deliberate (over-)regulating of cryptocurrencies and/or attempting to manipulate prices lower might be a) much cheaper, and b) much more effective.

If you bring enough political pressure to bear on any particular international financial flow, it takes quite a lot of (political!) effort to stand up to that.

Look at what happened between the US and Iran re: the reintroduction of sanctions; then look at the response from France, the United Kingdom, and Germany.[0][1]

Can Bitcoin and its backers (yet?) muster sufficient political muscle to respond if there's a coordinated political attack?

[0] https://www.europarl.europa.eu/thinktank/en/document.html?re... [1] https://ecfr.eu/article/commentary_trading_with_iran_special...

It's easy to censor Iran if you control the international clearing system.

What you suggest is more similar to banning gold, which happened 100 years ago in US. Where do you think gold price went after that?

> What you suggest is more similar to banning gold, which happened 100 years ago in US. Where do you think gold price went after that?

Where the gold price when after 1933 isn't that relevant to all those who were forced to sell their gold to the Federal Reserve at that time.[0]

Thought experiment: were your national government to pass a law forcing you to sell your Bitcoin to them at a price they pick, you would appear to have precisely two options: 1) sell, or 2) be prosecuted

There's plenty of precedent for 2) [1], so I'm guessing most people would end up opting to sell. That would appear to be the end of that... (?)

For clarity: no, I don't think this is right. It might happen anyway.

[0] https://en.wikipedia.org/wiki/Executive_Order_6102 [1] https://en.wikipedia.org/wiki/Executive_Order_6102#Prosecuti...

Any decent sized nation state could afford a 51% attack if they didn’t care about profiting on it and only wanted to wreck Bitcoin.

In theory sure, but how do you suggest to do it in practice?

Turn off electricity to half of residents because you have this crazy idea that doesn't help them? Buy miners just to get nothing out of it at the end?

Also what do you think other billionaires with Bitcoin holdings do? Sell it all, or counteract by buying even more miner equipments?

It would be a political disaster unless all natiom states work together to take over all miners...which is a possibility.

> Bitcoin is far from unique in this. When gas prices fall people have been shown to drive more.

This is human behavior responding to incentives. Yes, more energy is burned, but more people get places.

What I’m talking about is like if a car responded to the price of gas decreasing by 50% by revving in neutral until the total cost per mile was the same.

I think this is not what the parent poster was saying. The problem of bitcoin is not one of induced demand, where cheaper goods means that people become willing to use it less efficiently. Difficulty adjustment is as if every car monitored its MPG and then dynamically adjusted the engine until it became as efficient as a 2003 hummer.

When the mining efficiency is increased, that isn't translated into more bitcoins being mined or more people benefiting from bitcoin. The matching mining difficulty increase ensures that all that extra efficiency will be turned into waste heat.

Yes this is known as Jevon's paradox and is not unique to these situations

https://en.wikipedia.org/wiki/Jevons_paradox

We can't simply just rely on improvements in efficiency to solve these problems.

A fall in the price of a product (say, as a consequence of efficiency gains in the production process that shift the supply curve) increases the quantity demanded for that product. The end result of the efficiency gain is an increased consumption at a lower cost.

But when gas prices fall people either move those savings to cheaper, less efficient cars or get more satisfaction out of their driving?

Whereas there is very little change in the bitcoin mining, unless you have fetish for long zeros in hash values.

The zeros translate to "more secure network"

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