The Crypto-Chernobyl
stephendiehl.com
stephendiehl.com
I think not, despite all the chaff crypto-fanatics throw at you when you question their ideology. It would've been far better and make more sense if the $238 billion invested in Bitcoin today in the forms of CPU power, brains, and cash was put into actual economic activity rather than idling and burning resources in an attempt to fulfill the greater-fools theory.
But it seems all about lambo money.
How much does it consume to mint fresh ones when the old ones are damaged?
Bitcoins don't wear off, the ones we've been mining now will be in use for possibly centuries to come once the block reward is zero and only transaction fees will fund the miners.
By then, mining will decrease a lot because people won't be willing to pay as much transaction fees as miners currently earn from minting coins.
So this is completely equal to the question of how much energy our physical coin minting has cost us - except that physical coins actually are damaged and will be replaced! In the end they might consume more energy!
Sure, they just get trapped in a wallet that's lost in a hard-drive failure.
New ones don't have to be minted because the existing ones are divisible with 8 decimal places, and that can easily be increased. Instead of minting new ones, the value of the existing ones increases, resulting in the decimal point of the value of a Bitcoin slowly shifting.
And the amount of currency which humans use typically is so small that storing the numbers to represent them is basically free, no matter if the decimal point shifts a bit. I would blind-guess that 128 bit will probably be enough until the heat death of the universe.
At lot less than what it takes to mine bitcoin. And bitcoin is a tiny, tiny, vanishingly small fraction of "all metal coins we have in circulation".
The definition of "crime" itself is murky - are the citizens of sanctioned countries criminals because they're just trying to survive by participating in the global economy despite a stupid feud between governments they have no power to change?
Same thing for drugs - the much of the violence associated with them is caused by their illegality. You decriminalize them and a huge chunk of that violence goes away, and so does the need for cryptocurrencies if people can now legally buy it and can use conventional currencies without fear of repercussions. Violence going away has also a viral effect, as drugs are typically what supports other violent/criminal enterprises (such as weapons smuggling) - if drug operations no longer operate in the shadows, it removes their need for other bad things such as weapons.
If we assume cryptocurrencies are wasteful, we need to obviate the need for them. The cat is out of the bag when it comes to controlling the technology (it's just cryptography at the end of the day, that could theoretically be done on paper even if all computing devices are outlawed), so the best we can do is merely remove any need for it. Put the future of our planet ahead of some government's interests.
The energy cost of cryptocurrencies just represents the effort it takes to provide a currency immune to government interference. If there was an easier way (like if the government didn't interfere with fiat currencies) nobody would use crypto.
Even if ransom payments were made completely impossible, it would just move the problem - malware operators would then trade the stolen data directly or use it to extort users or profit from it in some other way. Hell, the stolen data itself could become a currency.
Also, how large of a part does ransomware play in criminal use of cryptocurrencies?
Finally, you could argue that "honest" ransomware (in the sense that they keep their promise not to further misuse the stolen data if the ransom is paid - which they have an incentive to keep otherwise the entire business model would collapse) provides a market-driven solution to security & privacy breaches, something that governments still can't solve as demonstrated by the Equifax case.
Cryptocurrencies have allowed ransomware to grow massively.
The safest safe haven asset: a global currency of fixed supply controlled by computer algorithms.
Essentially the author posits Earth’s ecosystems don't have room for another Argentina. But they arguably don't even have room for half of the current human population. Particularly a human population that exploits nature to the tune of millions of acres of clearcut forests and billions of animals per year — the latter almost entirely for their value to our taste buds alone.
Perhaps it’s time one of these systems came to an end.
You mean the USD?
bitcoin: 0.1% of all electricity, 7 transactions per second
THE ENTIRE REST OF CIVILISATION AND EVERYONE IN IT: 99.9% of electricity, a heck of a lot more than 6,993 tps
you're welcome!
(notice how 0% of coiners who raise this point ever provide a number)
And in response to the list of of Bitcoin's negative impacts, the only defense is that it might protect someone's wealth, which only reveals how little its proponents care about anything except their own wealth.
Hard disagree. The problem with inequality is that too many people have too few assets. Increasing the security of property is a powerful way to mitigate this by giving people safe havens in which to store their wealth.
People have too few assets because they aren't paid enough for their labor to be able to save, and another class of wealth won't increase the value of labor.
Bitcoin won't make that worse, either, but what it will do is impede democratic efforts to redistribute wealth to the poor, thus "protecting wealth" ... from the people.
People have too few assets because they are constantly forced by society to support parasites.
> People have too few assets because they aren't paid enough for their labor to be able to save
Yeah, between zero percent interest rates and quantitative easing, the government and the oligarchs keep eating the fat out of their wages and they don’t have any money left over. Of course this is the point of monetary policy so we invented bitcoin to provide those people with a save haven.
> and another class of wealth won't increase the value of labor.
It makes wealth accessible to labor.
> impede democratic efforts to redistribute wealth to the poor, thus "protecting wealth" ... from the people.
You misspelled “oligarchs” as “poor” and then again as “people”
The outcome? Widespread poverty, depressions, wars, etc.
What makes you think that wouldn't happen again with Bitcoin?
Why do you think gold certificates can’t be manipulated?
> The outcome? Widespread poverty, depressions, wars, etc.
You’re missing the part where you substantiate your opinion that “poverty, depressions, wars, etc.” are the result of a stable currency.
> What makes you think that wouldn't happen again with Bitcoin?
I’m not sure “again” is warranted given that the invention of government fiat has done nothing to mitigate “poverty, depressions, wars, etc.”
Also I’m not claiming that bitcoin will end war for all time. Just that governments/banks can’t currently print more than 24 million or so.
It's not a fringe view:
Economists, such as Barry Eichengreen, Peter Temin and Ben Bernanke, blame the gold standard of the 1920s for prolonging the economic depression which started in 1929 and lasted for about a decade.[35][36][37][38][39] It has been described as the consensus view among economists.[40][41] In the United States, adherence to the gold standard prevented the Federal Reserve from expanding the money supply to stimulate the economy, fund insolvent banks and fund government deficits that could "prime the pump" for an expansion. Once off the gold standard, it became free to engage in such money creation. The gold standard limited the flexibility of the central banks' monetary policy by limiting their ability to expand the money supply. In the US, the central bank was required by the Federal Reserve Act (1913) to have gold backing 40% of its demand notes.[42]
https://en.wikipedia.org/wiki/Gold_standard#Depression_and_W...
> I’m not sure “again” is warranted given that the invention of government fiat has done nothing to mitigate “poverty, depressions, wars, etc.”
I don't agree, from a US perspective, based on comparing the depressions, poverty, and wars we had before and after the end of the gold standard in 1971 (say, in the 50 years before and after).
It still needs to be substantiated.
> In the United States, adherence to the gold standard prevented the Federal Reserve from expanding the money supply to stimulate the economy, fund insolvent banks and fund government deficits that could "prime the pump" for an expansion.
Argument by authority combined with argument by assertion.
why do you think that devaluing people’s money and inflating the price of assets that the wealthy already own is going to help poor people feed themselves? Per Krugman, the point of quantitative easement is to decrease wages in real terms while keeping the same nominal price.
To oversimplify: Bitcoin has a limited supply, the majority of which is already held in too few hands, many of whom have a HODL attitude that prevents circulation. It also has transaction fees and technical obstacles that prevent circulation.
How can Bitcoin ever be widely adopted as money without strangling the real economy? Fiat isn't perfect, but at least it allows concentration of wealth to be countered by issuing more fiat money, even if too much of that goes to the rich.
And if Bitcoin won't be widely adopted as money, how is it going to be anything more than an speculative asset traded from one hand to another, with any profits extracted from a new speculator (sometimes called a pyramid scheme)?
This leads to greater concentration of wealth. Since people don’t seem to understand that, we have this feedback cycle where policy leads to concetration of wealth, which cause people to advocate policies that lead to further concentration of wealth, over and over again. People need to break the cycke by realizing that printing money causes assets (held by the rich) to appreciate, and wages (earned by everyone else) to decrease in real terms.
That is NOT true:
The Bitcoin block reward is cut in half every four years - an exponential decay! In the long-term it will be zero, miners will only earn transaction fees.
This means that there will be a supply vs demand market, where supply is the willingness of people to pay transaction fees, and demand is miners who consume them.
And there is only a finite willingness to pay fees! So the energy usage has a finite upper boundary through the limited supply of fees.
It's right in the source code, this is not just a personal opinion!
And we're not talking black or white here.
It's not that miners suddenly will earn zero money.
It will just decrease to the point where it may make sense to sell some of the equipment. That equipment might still be somewhat profitable, just not as insanely high as it is now.
Yes, some Bitcoin mines use cheap renewable energy. However, renewable energy isn't free. If it wasn't going to mining, it would be transferred through the power grid to other locations that rely on non-renewable energy sources.
> the vast majority of crypto mining happens at dedicated farms in energy cost optimal locations such as Iceland where you can have clean geothermal energy
To put it in perspective, the energy usage of:
Bitcoin network: 121.36 TWh per year All of Iceland: 18.68 TWh per year.
Bitcoin uses 6.5X more energy than the entire country of Iceland combined.
> it would be transferred through the power grid to other locations that rely on non-renewable energy sources.
Not at all. Electricity is not easy to transport nor store.
Do you know there are many days with negative prices of electricity in many locations in EU, because the electricity can't be economically transported even across the rather small region?
> Bitcoin uses 6.5X more energy than the entire country of Iceland combined.
Given the benefit of Bitcoin, that's excellent!
Do you live next to a power plant? Or even in sight of a power plant? No, because we have a power grid to move this electricity around.
I can assure you that new power generation plants are built with electricity transportation in mind. Surely you don't think that power plants are being built in the middle of nowhere with absolutely no way to use the electricity until Bitcoin conveniently came along with power-intensive proof-of-work requirements?
> Have you forgot about the existence of China (and its enormous hydro-dams)?
Please don't be facetious. Obviously I have not "forgotten" about China. However, you can surely agree we'd all be better off if new hydroelectric power was used to take older fossil fuel plants offline rather than performing arbitrary proof-of-work calculations.
Of course I do. There are solars and wind turbines all around me, not even talking about the natural gas and coal powerplants I can see right out of my window near the edge of the city. And every year there are many gigawatts of electricity from these exact powerplants right next to me that go to waste because it can't be transported nor stored economically. Thankfully now there are some Bitcoin miners paying at least something for some of that waste electricity, so my own electricity can be cheaper.
> Surely you don't think that power plants are being built in the middle of nowhere with absolutely no way to use the electricity
I don't think that's what's happening. Powerplants are built close to human settlements. Even very nasty fossil fuel powered powerplants are right there. Even the nuclear powerplants are very close to major settlements. Surely we would've built them very far away if that was a possibility. Chernobyl was the one exception, because it secretly powered a gigantic radar called Duga.
> However, you can surely agree we'd all be better off if new hydroelectric power was used to take older fossil fuel plants offline rather than performing arbitrary proof-of-work calculations.
I can assure you there isn't a single Bitcoin miner preventing that. The reasons are different - it's not easy to transport or store electricity. Any electricity used for Bitcoin mining is waste electricity - electricity that can't be put into the grid for profit and would be generated anyways, regardless of Bitcoin. It's not economical to mine Bitcoin with ordinary grid electricity.
> Please don't be facetious. Obviously I have not "forgotten" about China
Why have you tried to compare Iceland's total energy output with Bitcoin energy consumption, then? That doesn't make any sense if you had China in mind.
When I look at wholesale electricity prices, it's 3 times more than you can earn with Bitcoin mining. Please explain to me: Why would powerplants not use electricity for profit if they could? Or are you saying that Bitcoin miners are losing money to mine Bitcoin?
People are paying for the power, just not the same people as are getting the bitcoins mined with it.
This is easier to arrange in places with more retail corruption, like China, Russia, and Venezuela, than in (say) the US, where corruption is wholesale, concentrated higher up. But mining on US military bases and naval vessels, by contractors, is probably not negligible; or at commercial nuke plants where the marginal cost of generation is negligible and ratepayers have already been robbed to pay for construction. The variety of ways found to steal abstract property has always been very, very large, and bitcoin miners are not a bit shy.
We cannot assume the stolen power is all or mostly renewable. For example, we may guess that Venezuelan, Nigerian, and Saudi mining uses power from oil, Russian largely from gas, Chinese from coal.
The fraction of bitcoins mined from stolen power may be estimated by comparing the market value of new coins to the retail value of the power that was needed to produce them.
One hour's wages spent on Bitcoin a decade ago is worth how many hours' wages now?
How would Bitcoin make all time spent be equal?
“Bitcoin uses a lot of energy” utterly doesn’t mean anything on its own like this.
It’s infuriating to see such an intellectually dishonest and disgraceful, disingenuous line of argument taken with even the smallest modicum of seriousness.
This just needs to be ignored out of existence.
Stephen is bombastic in all the worst ways, while insulting and looking down on other engineers. I’m willing to look past Stephen being the author and give the general story of Bitcoin power consumption a fair shake despite it (and a clear-minded assessment suggests it’s a total non-story), but Stephen being the author absolutely does not help with credibility.
If Bitcoin is a flash in the pan phenomenon and it one-day collapses into nothing then comparisons against countries like Argentina are inaccurate (Argentina is likely to continue existing).
To extrapolate into the future you would have to have some assumptions. Some would be fixed, such as Miners would only mine if they could do so profitably, Mining scales with electricity consumption. Some would be tunable such as cost of electricity, value of Bitcoin
The long term energy consumption seems intrinsically tied to the long term value. This seems at odds with the surprising correlation between those who dismiss the utility of crypto currency and those who express concerns about the energy consumption
1) You can buy or sell a billion dollars of it in a day without moving the price too much. (current transaction volume is 7.6B per day)
2) Given some level of physical security, it's a very difficult asset to seize or freeze. This is useful for anyone who could be affected by government/non-government asset seizure.
3) As an individual you can literally put your entire net worth into BTC wallet on your cellphone, and walk across any border in the world.
4) Overall, while BTC is volatile - it's been a ridiculously good asset to hold long returning ~2000x over the last 8 years.
Considering civil forfeiture laws in the US, politically motivated asset seizures globally, and the general risk of being de-banked and robbed of any savings - we're likely to see more use of BTC as a store of value. It's a useful exercise to understand if we've replaced gold with watts and hashing power.
If you judge my electricity consumption don’t be angry when I judge yours! Better to have a free market and price in externalities.
If you want more settlement with same store-of-value properties, use Bitcoin Cash.
I think you've misunderstood. The mining fees you cited are for those 7 transactions per second. Miners collect fees for processing those transactions.
Focusing on the dollar amount of those Bitcoin or how many times a Bitcoin can be re-used is irrelevant. If anything, it's bizarrely wasteful that Bitcoin requires the energy consumption of a medium sized country just to continue confirming that your balance hasn't changed.
Hm...
now the only fiat currency with any value on earth.
on the up side, the earth has cooled a bit and we all drive electric cars and fly to the moon for holidays.
Adding to the demand at this point does not help anything or anyone.
> imagine if keeping your car idling 24/7 produced solved Sudokus you could trade for heroin
Thats just a failure to understand the value proposition of bitcoin. Its a medium of exchange that has a hard limit on inflation, no greater fool required. Hence, the comparison of ice cubes and fiat currency.
Edit: this (older?) article says 4.6 transactions per second and a propagation (read: transaction) time of 14 seconds. This is with near-zero percent of transactions in the world taking place in btc. https://hackernoon.com/the-blockchain-scalability-problem-th...
Thats something people will have to decide for themselves.
> Considering the energy cost and environmental consequences this article references, we'd need the ice anyway.
Don’t worry, when it melts they will make more.
- That's what governments do with fiat money.
I think you may be conflating recent bandwagoners with enthusiasts.
“There’s a limit to the number of bitcoin but the government can print as many dollars as they want” is a value proposition that bitcoin enthusiasts are likely to be familiar with.
It seems presumptive to think that this entire enterprise is being sustained by ideological purity and noble goals, rather than a ton of people interested in trading a valuable (in fiat!) asset, facilitating capital flight from restrictive regimes, attempting to justify Tesla's stock price, etc. Occam's razor would suggest more people are driven by the profit motive from bitcoin than actually realizing a utopian future.
We have plenty of data, we have the discussions and promotion efforts surrounding bitcoin where the contrast between the hard cap on bitcoins and the continually depreciating fiat currency was a prominent selling point.
> It seems presumptive to think that this entire enterprise is being sustained by ideological purity and noble goals, rather than a ton of people interested in trading a valuable (in fiat!) asset, facilitating capital flight from restrictive regimes, attempting to justify Tesla's stock price,
Its not really ideological purity to be aware of the fact that one asset is designed to depreciate and another asset is not. Its just basic fundamentals. Why would enthusiasts and bandwagoners sink money into bitcoin in order to support tesla’s stock price? That sounds like a conspiracy theory.
> facilitating capital flight from restrictive regimes
Thats certainly another value proposition that appears alongside the hard cap on units.
> than a ton of people interested in trading a valuable (in fiat!) asset
Why would a ton of people be interested in trading an asset? What indication do you have that they are unaware of the implications of the asset trending higher and higher relative to fiat?
> Occam's razor would suggest more people are driven by the profit motive from bitcoin than actually realizing a utopian future.
Doubtful. The simplest explanation is that they are purchasing based on the stated reasons that people have purchased up until now. Your alternate hypothesis is more complicated, so Occam’s razor does not suggest this.
The best promotion for BTC is simply its price, the ease of setting up a Coinbase account, and mooning memes of $100k/coin.
> Why would enthusiasts and bandwagoners sink money into bitcoin in order to support tesla’s stock price?
Tesla, currently less than 1% of the global auto market, is worth more than several of the largest automakers combined. Musk pushing "to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity" by buying into an asset which is currently in a bull cycle is a good way to attempt to justify that price.
> Why would a ton of people be interested in trading an asset? What indication do you have that they are unaware of the implications of the asset trending higher and higher relative to fiat?
Simply compare the price of BTC now to where it was a year ago, and take a look at its trajectory on the chart.
> Your alternate hypothesis is more complicated, so Occam’s razor does not suggest this.
Animal spirits are self-explanatory.
https://qz.com/1971100/buying-bitcoin-after-an-elon-musk-twe...
How is the astronomical price a promotion? People want thing when they can get them for less, not pay a record price for them. If you think bitcoin is a good deal at its current price then you must believe there’s some underlying fundamental that makes it worth tens of thousands of dollars.
> the ease of setting up a Coinbase account, and mooning memes of $100k/coin.
There’s no value proposition to having a coinbase account except acquiring cryptocurrency. One doesn’t even need to hold btc to post or enjoy memes. These have little and nothing to do with the cause of the high price.
> Tesla, currently less than 1% of the global auto market, is worth more than several of the largest automakers combined. Musk pushing "to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity" by buying into an asset which is currently in a bull cycle is a good way to attempt to justify that price.
That explains why Musk would buy it. That does not explain why anyone else would buy it.
> Simply compare the price of BTC now to where it was a year ago, and take a look at its trajectory on the chart.
Obviously, if there weren’t fundamentals, now would be a good time to sell.
> Animal spirits are self-explanatory.
Animal spirits are an unnecessary hypothesis for this event.
Because people are expecting it to get to $100k, which means it's a hot commodity in a speculative bubble. Not everyone who buys into a bubble believes that the underlying fundamentals justify the price in the long run- they just believe that there's room to grow, and that there are greater fools to sell to.
> These have little and nothing to do with the cause of the high price.
Just like the ease and lack of fees of Robinhood spur more stock-buying, Coinbase makes trading crypto easy and facilitates more bandwagoners who further pump up the price.
> That explains why Musk would buy it. That does not explain why anyone else would buy it.
I brought up that reason with Musk in mind. And Tesla buying it has direct second order effects- it popularizes and legitimizes BTC and cause more to buy into it, whether they're familiar with the underlying intentions of BTC or not.
> Obviously, if there weren’t fundamentals, now would be a good time to sell.
People buying in now believe there's still room for the price to rise. An asset with solid fundamentals (Tesla stock, GameStop call options) can also be wildly overvalued. I'm sure similar conversations were happening in 2018.
> Animal spirits are an unnecessary hypothesis for this event.
Look at the market. Look at the economy. Everything is animal spirits now in search of yield.
Zirp explains exactly why asset prices are inflating, as I said before, animal spirits are an unnecessary hypothesis.
> Because people are expecting it to get to $100k, which means it's a hot commodity in a speculative bubble. Not everyone who buys into a bubble believes that the underlying fundamentals justify the price in the long run- they just believe that there's room to grow, and that there are greater fools to sell to.
When there are underlying fundamentals, as in the case of bitcoin, its not necessary to speculate on why people might buy a thing otherwise. Certainly there are people who buy because its trendy. Thats not really relevant though.
As for it "not depreciating," I claim that's because people believe it should go up, i.e. BTC is worth something (meaning you can exchange it for USD at a favorable rate) because people say it should be -- by fiat of the speculation market rather than fiat by a central backing agency. If it were only worth something because it "didn't depreciate," it BTC rises would correlate strongly with inflation. Since there's been essentially no inflation since BTC has been created, that's obviously untrue.
I would also take issue with the assertion that it is, in fact, scarce. Scarcity means nothing when you literally have something that is arbitrarily subdividable.
PS, the USD is also "ledger money." Well over 90% of USD only exist as bits in a computer system. It's essentially the same as a private blockchain.
So that allows it to be a medium of exchange with a stable number of outstanding units, which is an improvement over USD.
> Why should I be transacting using a record of someone's solution to a useless math problem to begin with?
People who want to transact don’t wonder why they need an exchange medium.
> As for it "not depreciating," I claim that's because people believe it should go up, i.e. BTC is worth something (meaning you can exchange it for USD at a favorable rate) because people say it should be -- by fiat of the speculation market rather than fiat by a central backing agency.
Why should anyone care about your opinion on btc? You don’t even seem to understand why a currency should be scarce (in the economic sense).
> If it were only worth something because it "didn't depreciate," it BTC rises would correlate strongly with inflation. Since there's been essentially no inflation since BTC has been created, that's obviously untrue.
Obviously, you’re mistaken about inflation.
> I would also take issue with the assertion that it is, in fact, scarce. Scarcity means nothing when you literally have something that is arbitrarily subdividable.
“Scarce” here refers to the economic sense of the word, not its common analogue.
> PS, the USD is also "ledger money." Well over 90% of USD only exist as bits in a computer system. It's essentially the same as a private blockchain.
This would be a good opportunity for you to reflect on why USD are decreasing in value while BTC are increasing.
And why should anyone care about yours? You seem to be operating under the extreme naiveté of someone who believes that the massive presence of bandwagoning speculators, would-be manipulators like the Elon Musk/Winklevoss billionaire cheerleaders, Chinese miners buying massive amount of asics, various schemes such as Tether, are irrelevant to Bitcoin. A currency is subject to real world conditions and influence by real-world actors. It's not a system that can exist only perfectly in a vacuum.
> This would be a good opportunity for you to reflect on why USD are decreasing in value while BTC are increasing.
You can say the same of $TSLA, $GME, or any other meme of the moment. Why did BTC increase in value in 2018- until it didn't?
No reason at all, thanks for the reply.
> You seem to be operating under the extreme naiveté of someone who believes that the massive presence of bandwagoning speculators, would-be manipulators like the Elon Musk/Winklevoss billionaire cheerleaders, Chinese miners buying massive amount of asics, various schemes such as Tether, are irrelevant to Bitcoin.
Not at all.
> You can say the same of $TSLA, $GME, or any other meme of the moment. Why did BTC increase in value in 2018- until it didn't?
Price != value.
As well, I'm not questioning the need for an exchange medium. I'm questioning why a certificate that says someone solved a useless math problem is a valid exchange mechanism.
> Why should anyone care about your opinion on btc?
Apparently you do, just not enough to be civil about it. If I had to speculate as to your motivation, I would say that it's because my point of view is dangerous to your interests. That is, if everyone thought the same as I did, BTC would be worth $0, just like I claimed in an earlier comment.
You also claim I don't understand inflation, but don't care to explain it to me. Well, here it is: inflation is the result of too much money chasing too few things. That's it, nothing else. As I've mentioned, that's also the reason the price of BTC climbs relative to USD. More people want to buy BTC with USD than they did yesterday. It's as simple as that. What you don't seem to understand is that the value of a currency is relative to the things people want to buy with it.
Let's illustrate the point with a hypothetical. Suppose a magical genie snaps their fingers and suddenly, everyone's USD bank balance gets multiplied by 10. What happens then? People still value the things they were buying with USD yesterday the same, so, prices will just go up by a factor of 10. You can call that the USD depreciating, or you can call it the price of goods increasing. Those things are equivalent.
See, the whole problem with your argument is that BTC only has any value whatsoever with respect to USD and other currencies. With fairly limited exceptions, you can't buy things with BTC, so it's not exposed to the true value of things one would theoretically buy with it.
One final question: do you take issue with my statement that the USD essentially is a blockchain-based digital currency? If so, how? If not, why bother with BTC?
Oh, and you still haven't explained why BTC should be worth anything at all. I thought you were one of those "enthusiasts" who understood those things? Is there a reason you don't want to explain it to me so I can become an enthusiast as well?
In this case, the value is as a unit of account that is (mostly) guaranteed to be, not just scarce, but have a hard limit on quantity. This links back to your first sentence, and people’s desire to be able to make several transactions or hold funds without depreciation.
> As well, I'm not questioning the need for an exchange medium. I'm questioning why a certificate that says someone solved a useless math problem is a valid exchange mechanism.
This also connects to your first paragraph. The simplest answer is that value is subjective and the people using it value it for that purpose.
> Suppose a magical genie snaps their fingers and suddenly, everyone's USD bank balance gets multiplied by 10. What happens then? People still value the things they were buying with USD yesterday the same, so, prices will just go up by a factor of 10. You can call that the USD depreciating, or you can call it the price of goods increasing. Those things are equivalent.
This is a good example. Now imagine what happens if when the genie snaps his fingers, all the white people in NY, DC, and SF have their bank balances multiplied by 10 and the rest of us don’t. What happens to prices of the things white people in ny/dc/sf buy? What happens to the profits of people who sell to them? What does the market look like for the rest of us, who are now competing with people who have 10x as much money for the same goods? Do you see now how the FED’s actions distort the economy and cause certain people to benefit to the detriment of others?
> One final question: do you take issue with my statement that the USD essentially is a blockchain-based digital currency? If so, how? If not, why bother with BTC?
USD are an electronic ledger but they aren’t a blockchain. BTC are desireable because of the hard cap on the number of units, which means that a person who holds BTC is protected from the risk of their currency being diluted by additional units.
> Oh, and you still haven't explained why BTC should be worth anything at all. I thought you were one of those "enthusiasts" who understood those things? Is there a reason you don't want to explain it to me so I can become an enthusiast as well?
Tbh I’ve explained it a few times and I’m not convinced that you’re actually interested in understanding. You’re spending a little too much time inferring things about me (incorrectly, mind you).
> Whataboutism arguments regarding traditional currencies and the financial sector are a completely absurd response. Yes, a real currency like the Euro and by proxy the Eurozone absolutely emits more CO2 than bitcoin.
lol, and there it is.
I've never seen such a concerted effort to hammer this misinformation into peoples heads as I have for the last few days. Like I said, the concern has been raised and addressed before, but this volume of messaging is new.
This article is not proposing to 'waste energy' on folding proteins.
This article points out that other systems may also consume a lot of energy, but they give our societies a ton of value in return.
Yes. I submit to you this article. Consider the framing of bitcoin's utility and the immovability of the status quo.
> This article is not proposing to 'waste energy' on folding proteins.
No, that accompanies the handwringing about POW - you can substitute an number of other silly suggestions: SETI, fusion reactor modeling, etc.
> This article points out that other systems may also consume a lot of energy, but they give our societies a ton of value in return.
Have you maybe considered the possibility that, I dunno, bitcoin replaces the fiat currency - as intended from the outset of the entire endeavor?
"BOINC superblocks fetch a participant’s BOINC recent average credit, also called researcher RAC. RAC is based on a participant’s earned BOINC credits. !!!>>>*Credits and RAC are defined by BOINC*<<<!!!"
Eventually, credit may reflect network transfer and disk storage as well as computation.
Credit has no monetary or other value; it's just a measure of how much work your computers have done.
Total credit: The total number of Cobblestones performed and granted.
Recent average credit: The average number of Cobblestones per day granted recently. This average decreases by a factor of two every week.
The cost of operating US dollars as a transactional concept is many, many, many orders of magnitude greater energy cost than Bitcoin.
Right now Bitcoin is an additive to the financial system, and actually promotes more usage of fiat. So if you were to compare the manifold energy consumption to Bitcoin, you need to somewhere also calculate those other effects.
I can't find a reference, but there's a good phrase that talked about how for every new innovation that comes out and is going to "completely replace X", the actual equilibrium always turns into a hybrid of the legacy systems and the new systems. Much like we've seen with Bitcoin.
So at least at this point, I find your argument disingenuous, because it doesn't take into effect the interplay of the systems.
That still leaves us with bitcoin being an environmental disaster and a net loss for humanity, apart from the few people who are benefitting from the pyramid scheme right now; Thus, changing none of the arguments against it.
In 2021, most transactions aren't made with paper cash and metal coins. It doesn't matter, though, because Bitcoin certainly isn't replacing traditional systems. The waste of Bitcoin is additive on top of any existing energy usage.
Recent estimates compare the energy cost of a single Bitcoin transaction to around 700,000 credit card transactions, all things considered. ( https://digiconomist.net/bitcoin-energy-consumption/ )
Notably, traditional transactions only get more efficient as our datacenters become faster and more energy efficient.
Meanwhile, Bitcoin continues to consume ever-increasing amounts of energy while the number of supported transactions stays the same.
There was a Dutch company I knew that was using a distributed protocol to combine data computation in people's homes and have the heat be an actual dependable byproduct. I hope they're doing well. Such a cool idea.
https://ourworldindata.org/cheap-renewables-growth
2019 Prices
Coal - $109/MWh
Solar - $68/MWh
On shore wind - $53/MWh
Basic economic theory dictates that energy consuming businesses would seek out the lowest cost sources of energy to maximize profits.
If Bitcoin was using renewable energy, that's still renewable energy that could be used to replace older fossil fuel power stations. Instead, we're burning 121 TWh per year to perform arbitrary proof-of-work calculations. That requires us to keep 121 TWh of older generation capacity online.
There's no free lunch, especially when it comes to power generation.
A bitcoin mining operation at a geothermal vent in remote Iceland is not taking away energy units from people in India.
You could scream into the abyss, or you could enrich your future. Some people keep screaming, year after year, while others keep on building, earning, working and playing.
Its ALWAYS a Red Queens race. This is good actually, because our lives are enhanced by the resultant technology to solve our problems. What I feel is missing from these comparisons to waste is a sense of scale. Quoting Gigajoules of usage should be seen as a plus to the scale of any technology. Its never waste. It means its working!
Waste is when a finite resource like the atmosphere is ruined. Energy is everywhere. It is everything. We harness it to achieve our goals and solve our problems. Energy is never truly wasted.
And the environmental consequences of the network are not opt-in, they are born by us all even if we do not use the currency. Thus can energy be said to be wasted: it is bad for us all, not just the spender, when Gigajoules are spend when spending millijoules would have equivalent of better results.
> Knowing how many SHA256^2's my rivals can hash a second is also pretty useful information
For?
In general I do not want refund features at all, and think its Bitcoins strongest features and usefulness. It is this that gives it its value. No do overs. Permanence.
Gold also sucks because you cant transfer it globally in 10 minutes, move it trivially and takes up no space. Millijoules are insufficient to globally protect the ledger, sorry. If someone wanted to undo my transaction, they need Gigajoules to undo it. I don't think you quite understand what is required to protect a ledger. There is no waste. I'm sorry you don't feel the same way. Bitcoin doesn't care.
Re: hash speed? The physical attack price of infrastructure and energy allows a defender to calibrate their defense spend.
In either case you need trust. That’s the point.
Thus “trustless” is not a benefit of BTC. Existing systems do literally everything else that Bitcoin can do, and more besides, only faster better and with less side effects.
> Millijoules are insufficient to globally protect the ledger, sorry. If someone wanted to undo my transaction, they need Gigajoules to undo it. I don't think you quite understand what is required to protect a ledger.
To me it appears that it is you who does not understand.
We don’t need the BTC ledger. It adds zero value. It solves no novel problem. There is nothing, at all, which it does uniquely well, including the claim made about it removing the need for trust, which is a false claim because it does no such thing.
> The physical attack price of infrastructure and energy allows a defender to calibrate their defense spend.
It does not help you calibrate. This isn’t Alice and Bob, nor is the the Cold War nuclear race. The BTC structural worry is any one group gaining more than half the total hash rate, when there are many competing groups. No individual can defend against a big group — just like old money, which again means you need to go back to exactly the kind of financial system we already have with simple non-blockchain ledgers kept by banks and accountants.
I encourage you to let go of your preconceived notions and spend a few hours, days, months or years reading and experiencing it. Contribute code. Build something with it. Earn it. Spend it.
"My argument" Try this new novel technology, it solves problems for me, and many others. Its unlike anything we have seen before. Its a whole new field that is complex and touches on elements of game theory, economics, computer science and sociology. It's been working without fail for 12 years, with many years of innovation ahead. No signs of stopping, and captivating some of the best minds of our time. As it evolves, we learn more about ourselves and the nature of the things we build.
"Counter Argument": Nobody needs it. It doesn't work. It uses too much energy. You are wrong about all the things you have experience with. I do not have the imagination to see how this is useful to anyone. Existing things are better.
Cool dude.
re: calibrate. Check the certificate or the TLS connection to this website -- you may notice that SHA256 is used for certificate public key hashing/message authentication as a cryptoprimitive in the x509 encoding and ciphersuites. I encourage you to think of a thought exercise where a practical security metric of this cryptoprimitive might be useful and to whom.
I don't think we can convince each other of our positions.