There is nothing baseless in saying that using 0.1% of the entire world's energy in order to do 3 transactions per second is beyond ludicrous, and an environmental disaster of massive proportions.
also the military/police/law/government defend you from being killed for your bitcoin.
That's an understatement. There are two restaurants within 100 miles of my home that accept BTC, let alone use LN.
If LN ever sees anything more than toy usage, it will fall over instantly, and become unusable.
1. The gold mining industry has nothing to do with bitcoin.
2. The gold mining industry has nothing to do with money.
3. The gold mining industry does not use anywhere near 0.1% of the entire energy production of the planet.
4. Just throwing the army in there for some reason, huh.
5. The lightning network does not "process an unlimited number of transactions".
6. The Lightning network does not scale.
7. Nobody knows how to make the Lightning network scale.
8. If the Lightning network worked, which it doesn't, it doesn't need to run on top of Bitcoin, so Bitcoin still does not need to burn 0.1% of the world's energy.
Because it’s a necessary to ensure you can buy and sell things when you want to.
Yeah, right, it worked so well for alcohol... It DOES (/s) work so well for drugs in the US right now... And hey imagine whether it's easier or harder to ban something that doesn't take any physical space in your suitcase and can be transacted with only internet connection.
"""and even though bans are not magic, even a half-arsed enforcement of such a ban is enough to prevent a currency becoming endemic."""
Only the US is incentivized to have USD be the world's reserve currency. Meanwhile, 7 BB people around the world prefer a denationalized reserve currency, countries will prefer to interact with each other with a less trackable currency (e.g. Iran and the current sanctions), and based on the usage of tax loopholes by every multi-national company (e.g. FB, Apple, Google) every business will prefer transacting in less trackable currency (especially with crypto-coin tumblers). This demand for a denationalized reserve currency will be supplied by some crypto-coin (maybe BTC, maybe something else). FWIW, I don't think having a "less trackable currency" is a "good thing", I'm just saying there are large organizations that benefit from it financially and therefore it will exist.
Frankly once the S&P companies purchase enough BTC (e.g. TSLA, Square, etc), a BTC 51% attack will need to be defended against by the US military to ensure national stability. If BTC (or any crypto-coin) can hit "too big to fail" in the US, the rest of the world's militaries will all build a defense strategy around BTC mining. As as consequence, cheaper energy will also be an investment into national security.
There are still more problems with BTC specifically, like "slow transactions" but as may here have said, we can either use a geographically sharded blockchain (e.g. BTC-California, BTC-USD, BTC-CAD, BTC-RUP), where each shard allows fast transactions, and slow reconciliation, or we will just leverage credit for fast transactions like we do today, with slow reconciliation between banks like we have today. I don't see "centralization" as a problem, because having bank accounts and credit are very useful as an individual (as individuals will likely only transact with credit cards like we do today).
Will BTC become "too big to fail" in the US? Unclear. Another crypto might get there first. However, there is no scenario where the world's reserve currency continues to be tied to a single nation.
The US is merely the largest reserve currency and has been trying to reduce that role for well over a decade now - being a reserve currency merely means foreign crises lead to dollar flight which has knock-on effects on US trade. There's no real upside - demand for dollars is based on the stabiliy and size of the US economy, nothing more. EUR, JPY and GBP also operate as reserve currencies due to the strengths of their economies.
https://www.ussc.edu.au/analysis/the-reserve-currency-myth-t...
https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-d...
What need there is for an international reserve currency is filled by the IMF's SDR, an asset whose value is based on basket of USD, EUR, RMB, GBP and JPY:
https://www.imf.org/en/About/Factsheets/Sheets/2016/08/01/14...
If that is the case, then BTC certainly isn't going to end the US military.
Increasingly, mining operations have to make special arrangements with entire power grids to suck up their energy and basically just burn it in arbitrary calculation. The scale at which this operates, and the increase over time, are both what makes up a lot of the problem, and what makes it impossible to hide.
If you'd prefer a world where people value bitcoin BECAUSE due to its unpopularity and externalities, governments resort to drone striking such operations when discovered, all I can say is: well, that solves the energy wastage issue, as blown-up ASIC farms aren't good at burning energy anymore. Maybe it solves the constant devaluation against energy cost issue, too! But I think you're missing the point and looking at only the end product of the industry.
In order for this scenario to become a reality, many governments would have to collaborate to make mining infeasible. But they would be incentivized to not collaborate so they can instead tax their miners and get the profits for themselves.
If you’ll excuse my admittedly also-naïve wargaming of their responses:
“Dear ISPs, this is the government. That stuff you do to block piracy and illegal porn? Do that for bitcoin.”
“Dear Banks, this is the government. Purchase of bitcoin is now a federal offence. Tell us if anyone tries to exchange them for money.”
“Dear The Power Company, this is a government order. Turn off power to these properties who are engaged in illegal Bitcoin mining.”
“Dear everyone, this is the government. Your taxes can only be paid in dollars, not in bitcoin.”
(Not that I would say such things will never happen, only that I expect America to become irrelevant on the world stage before it happens; and even in the most extreme USSR-mimicking scenario that is not something I expect before 2041).
Another scenario is if it grows slowly amongst the countries that have unstable currencies. Slowly it takes over the USD as the world currency. At a certain point, the US would have to allow it to participate in that economy.
Such nations collectively switching to a different currency like the Euro or the Yuan is way more plausible than switching to Bitcoin; and not only do none of the USA, the Eurozone, nor China have economic policies compatible with giving up direct control of inflation, the usefulness of a shared single currency isn’t enough to outweigh the political costs for the UK to use the Euro (famously), or South Korea to use the Yuan, or Canada to use USD.
Money in the scale of governments isn’t like money on the scale of individuals. For governments, money isn’t even like it is for the richest individuals, different as it is between the rich and normal people.
And why wouldn't a government whose citizens do not trust the government's currency, not incentivize its citizens to use a denationalized currency instead of funding potential threats?
e.g. The Venezuelan government would way rather its citizens use BTC over USD or Colombian currency, in order to ensure inflation/deflation is globally decided by neutral parties, rather than decided by a single foreign entity with potentially malicious intent.
> The Venezuelan government would way rather its citizens use BTC over USD or Colombian currency, in order to ensure inflation/deflation is globally decided by neutral parties
Why would those parties have Venezuelan interests in mind rather than their own? One of the arguments against the Eurozone (I’m not qualified to judge it on quality, but it is given as an argument) is that Northern Europe “should” have different inflation to Southern Europe to help boost the local economies. Can’t do that with a single currency, they say, and that would apply more the wider that zone spreads. A single global economy — fiat, digital, or metallurgical — would never be able to resolve it.
Yup! I agree, there will be many holdout countries. However, even the UK uses the USD as the world's reserve currency.
> Why would those parties have Venezuelan interests in mind rather than their own?
Venezuela was fucked because a handful of people are performing bad monetary policy. While the interests of each mining operation would be their own interests, in aggregate, the interests of all BTC mining is a globally averaged monetary policy. Unaffected by corruption, or stupidity (whichever you think is a more apt description of Venezuela's current monetary problem).
And what in the standard deviations of all nation’s needs?
I don't know what a globally averaged monetary policy will look like (or who it'll benefit the most), but I can say that for any population currently living with a monetary policy below the average (i.e. because of corruption or stupidity), it'll be an improvement and they will adopt a denationalized currency to get it.
No, the Venezuelan government has tried to create its own cryptocurrency called the Petro in order to have control of it.
https://www.reuters.com/article/us-cryptocurrency-venezuela-...
Legitimizing crypto currencies by creating one, without increasing trust in the government just results in more of the Venezuelan people buying a denationalized crypto.
> It’s possible that, as Jiménez suggested, Venezuela’s peer-to-peer bitcoin activity wouldn’t be where it is today without crypto-friendly initiatives from the government itself. It’s also possible that bitcoin adoption in Venezuela may be driven by the sheer rate of Venezuela’s hyperinflation, which outpaces other crisis economies. [0]
[0] https://www.coindesk.com/bitcoin-adoption-venezuela-research
Physical force is the strongest currency on Earth. Arguing it’s not is arguing millions of people die for entertainment rather than shifts of power.
If Bitcoin is the revolutionary future millions will die on that hill to make it so.
Now let's say in a few years, that inflection point happens where crypto sees an exponential rate of adoption. Every other country begins to use it, some ban it, many others adopt it. At that point, if not using crypto will put the US at a disadvantage, they have no other choice but to adopt it as well.
A semi-related example is the way many companies "disrupt" the markets e.g. Uber/Airbnb wasn't a threat to many cities, until it was. At which point, the demand for Uber/Airbnb outweighed the government's ability to do anything about it.
It's not the best example since some cities have done things about it and Uber/Airbnb, being a company, is easier to target.
With crypto, its decentralized nature makes it much more difficult to control and attempting to ban it will raise issues around free speech.
That's not to say countries won't try and succeed in getting it banned, though in the case of the US, I don't think it's as cut and dry.
You’re saying all militarized countries on Earth will come to a point where Bitcoin is prominent and they will forfeit their power over their citizens without any fight?
You’re proposing Bitcoin will bring world peace without conflict?
Also, I don't think I agree with the notion that adopting crypto would result in a country forfeiting their power over the citizens. There are plenty of ways to integrate crypto into existing governments while still maintaining control.
I'm not claiming this will happen, more of contemplating on how a global decentralized currency can take over.
As far as bringing world peace, I don't think a decentralized currency would do any such thing. It's probably one of the required steps towards it, but one of many.
Meanwhile, the USA could try to preempt this future, but only the USA is incentivized to have USD be the world's reserve currency. As such the USA would need to threaten every other country in the world to stop using BTC, but its not clear if that causes BTC adoption to drop, or the Streisand Effect to kick in.
And ofcourse, "mutually assured destruction" stops any large country from employing too large a threat against any other large country.
If we are talking about a coordinated aggressive action to cripple the economy of a superpower nation, you're basically triggering "mutually assured destruction". As such its most productive to assume that doesn't occur.
Why anyone out themselves in harm’s way like that?
Risk isn't inherently a deterrent. If the reward is perceived to be high enough, there will be a first adopter.
At this point Bitcoin and Eth have about a trillion USD of built up burned work. Is that enough to prime the pump for a POS-based world economy? I dunno. Probably?
Remember; the last time Bitcoin tried to change its mining algorithm, the democracy voted for a split. Ethereum has said they're moving from Proof of Work to Stake; I'm not surprised, given the Ethereum developers seem to abhor Work in all of its forms, including making progress on Ethereum itself, so we'll see if that actually happens in a few decades.
PoS is a theory right now, with some minor market traction, but nothing to the degree of BTC or ETH. Don't levy it as a promise which absolves the environmental sins of cryptocurrency, when its so obviously unlikely to do so. Bitcoin is the zeitgeist; its actively destroying the planet; its not moving to PoS.
They still have to migrate the rest of the network to it, but that's a relatively easy task. Once you have consensus, adding more data to reach consensus on is basically just adding a hash value to each block.
I don't think anyone seriously thinks Bitcoin will replace militaries completely.
May Satoshi save us all.
The importance of the role of the dollar as a reserve currency is also just an urban myth:
https://www.ussc.edu.au/analysis/the-reserve-currency-myth-t...
https://en.wikipedia.org/wiki/Petrodollar_recycling#Petrodol...
Most lay-persons don't understand it as a tax and therefore do not complain about it until they cannot afford things (housing, food, etc), and at which point the government distracts by bundling (hiding?) the inflation problem with the stagnant wage / income equality problem.
Eventually (every 2 decades) minimum wage in increased to catch up to inflation. Basically the inflationary tax strategy results in the US budget getting 2 decades of "extra taxes" (burdened by the lower middle class and the working classes[1]), then a reset, and then repeat.
[1] Note inflation as a tax strategy is actually a negative tax on low-interest debt holders like businesses, and home owners. It is also has a net-neutral effect on the investing class, because assets inflate proportionally. Meanwhile, credit card debt and other high-interest loans are not reduced as much (i.e. X% inflation of 19% credit card interest is a lot lower than, X% inflation of 2.5% mortgage interest).
> Say the US government issues a bond, some bank buys it, and eventually they sell it to the Federal Reserve. The US government has the same debt, and it seems to me that the only thing that has changed is that the bank now has cash where before it had a bond.
This is mischaracterizing the situation. It actually is: 1. A bank buys a newly issued bond; 2. The government spends that bond money on the private sector. 3. The Fed buys the bond by changing the values in its database (i.e. "printing money").
The best I can do to explain MMT is this:
1. The government spends as much as it wants and collects as much debt as it wants.
2. The government plays a game of chicken with the private sector (including other countries).
2.1. As long as everyone plays along, its a ponzi scheme that spirals upwards until it hits a ceiling (hyper inflation).
3. Meanwhile, until it hits the ceiling, it creates "manageable inflation" and/or deflates the rest of the world's assets.
3.1. As long as the rest of the world plays along (which it does), the extra cash funds innovation (i.e. the private sector) and improves quality of life world wide (i.e. better pharmaceuticals, cheaper computing, etc).
3.2. Meanwhile, in the US the "manageable inflation" is paid for by the poorest.
My personal thought: the world's interconnected market is so complex, that no one understands cause and effect (including the people making the rules). Currently, there is an emergent property of that complexity that the US, Japan, etc can "print infinite money" and some large group of people somewhere are left holding the bag worse-off for the US' decision, but no one really knows who this group is nor how much those people got fucked. Even the impacted individuals don't realize they are impacted because individually its a small impact, and innovation keeps improving their lives enough to not complain.
Hopefully a denationalized crypto (i.e. no ability for a single nation to print money) will help us simplify all of this to be understandable again.
From what I can read, no one knows how it works, people just know that it works.
Without a simpler design how can I know I’m not being harmed? I think this is one question that will help drive people to adopt a denationalized currency.
FWIW, I do not own any BTC or other crypto coins.
P.S. I highly recommend you research MMT. I think you'll find that no-one (including the most experienced economists) understands the details of how the emergent property works, they only understand that it works.
Because over the last decade the US has been quietly transitioning to the MMT mental model. MMT is how we got out of the 2008 recession and also how we are funding both the pandemic stimulus packages (in 2020 and again in 2021).
The inflation we previously discussed in this thread is, in my understanding, a direct consequence of MMT.
> "Congress has been showing us — in practice if not in its rhetoric – exactly how M.M.T. works: It committed trillions of dollars this spring that in the conventional economic sense it did not ‘have.’ It didn’t raise taxes or borrow from China to come up with dollars to support our ailing economy. Instead, lawmakers simply voted to pass spending bills, which effectively ordered up trillions of dollars from the government’s bank, the Federal Reserve. In reality, that’s how all government spending is paid for." [0]
> When President Trump signed the $2 trillion CARES Act into law, the federal government sold bonds to fund the new spending, expanding the government debt. However, the largest purchaser of those bonds was the Fed. ... As a currency issuer, the federal government can create more money to buy Treasuries and pay off its debts, making an involuntary default impossible. Under the Fed’s jurisdiction, it could purchase all U.S. Treasuries tomorrow and retire the entire U.S. federal debt, something Japan has already done with nearly half of its debt. ... Is the Fed’s financing of the debt created by the CARES Act fueling inflation? Not quite. The annual U.S. inflation rate currently stands at around one percent, half of the Fed’s two percent target. In fact, over the past decade, the Fed has struggled to increase the U.S. inflation rate. There actually is not enough spending (aggregate demand) in the U.S. economy to hit the Fed’s inflation goal. [2]
> Modern Monetary Theory (MMT) is alive and well in the United States. While MMT is derided by mainstream economists, the federal government is practicing MMT. From running massive federal government deficits, to the operations of the Federal Open Market Committee (FOMC) by the Federal Reserve Bank, the United States is practicing a policy of MMT that is currently underpinning the economy of the United States. ... The U.S. Federal Reserve (Fed) began its own form of quantitative easing (QE1) on November 25, 2008 by purchasing $600 billion in agency mortgage-backed securities (MBS) and agency debt. [3]
> While MMT may seem like a purely theoretical construct, it should be recognized that many governments, including the U.S. government, are effectively already putting MMT into practice. [4]
If you're still not convinced that the US is actively applying MMT in practice thats ok, lets wait and find out more. Meanwhile, thanks for catalyzing my motivation to research all of this! :)
[0] https://www.nytimes.com/2020/06/09/opinion/us-deficit-corona...
[1] https://www.cnbc.com/2020/04/29/op-ed-pandemic-moves-modern-...
[2] https://policy-perspectives.org/2020/10/23/modern-monetary-t...
[3] https://intpolicydigest.org/the-u-s-has-embraced-modern-mone...
[4] https://www.fa-mag.com/news/america-is-on-the-road-to-mmt-58...
However, the continued liberal application of QE 1. Could hit a hyper inflation ceiling (hurting the poorest). 2. Weakens USD compared to other currencies (as we have seen through 2020. Hurting every entity that holds cash i.e. typically the poorest). 3. Reduces the ability for the US to apply QE in the future. Hurting our ability to tackle the next crisis, which will predominantly hurt the poorest.
All of this to say, a portion of the lost trust in the USD is being put into crypto to hedge for the medium term, and (for better or worse) to create a long term denationalized currency where no handful of politicians can choose to use QE rather than making good fiscal policy decisions quickly.
I'm not making a judgement about its merits, it might end up horrible.
All I'm saying is, there is a trend towards denationalized currency as a hedge against bad monetary policy. Based on this trend something like BTC will likely become the new gold standard used for slow transactions (i.e. reconciliation) between governments and large corporations.
Will it be BTC? I don't know. Will it be a good thing? I don't know.
I do know, the trend suggests a particular future, and trying to root out the motivations suggest the trend will continue.
But, if you are willing to acknowledge both Square and Tesla are run by very intelligent people, these are quotes about their motivations:
> However, when fiat currency has negative real interest, only a fool wouldn’t look elsewhere. [0]
> Square believes that cryptocurrency ... provides a way for the world to participate in a global monetary system, which aligns with the company’s purpose. [1]
Based on my research into the motivations for BTC (or any crypto), these quotes are not unique. The majority of the root motivations seem to be 1. "to hedge against bad monetary policy" and 2. "to create a global monetary system" i.e. create a single global monetary policy.
Meanwhile, if enough S&P companies follow Square and Tesla the US government will find BTC is "too big to fail" and adopt it wholly. But I'm not convinced other S&P companies will follow. Lets see.
[0] https://twitter.com/elonmusk/status/1362600676174557186
[1] https://www.cnbc.com/2020/10/08/square-buys-50-million-in-bi...
> Why is there not a daily hackernews thread complaining about the energy consumption of the US military?
People are willing to pay a high energy cost for safety. Bitcoin doesn’t provide me any safety and it doesn’t have the strongest military in the world claiming it’s worth anything.
If you think Bitcoin will topple governments be prepared for a long future of conflict and casualties. Maybe it will be worth it but I doubt it.
So all in all it’s a massive energy waste thought experiment.
What makes you think the US wouldn’t put it’s population in front of the rest of the world in a life or death war scenario?
For instance, I have no problem paying taxes for social services. I have a major ethical problem with my tax dollars being used to fund military action. Bitcoin is not the only piece of the crypto puzzle but if I could keep my assets out of the hands of the US government, I would do it for purely ethical reasons.
What you’re proposing is that Bitcoin needs a massive shift in thought that overthrows all forms of militarized government. Possible? Maybe but highly unlikely without millions of people dying.
The new Bitcoin power would also need its own military to do this. So we’re back at square one or where we are today.
That is unless you think Bitcoin is also the answer to world peace which seems even more far fetched.
Who controls the power grid, the land, the roads, the infrastructure? How is that power enforced? Physical force.
No one gives away power without a fight. If Bitcoin is the future people will need to die to make it so.
The way the government forces you to make good on your tax obligations is wage garnishment: they tell your employer not to pay you but pay the government instead because you're in arrears. In general, I think you overestimate the willingness of third parties to become criminals for your sake.
What if the moon were made of cheese?
I don't see any connection between the growth of BTC and the shrinking of military budgets or the reduction of warfare.
In analogy, it is same reasons why we lock our doors and don't leave keys in parked car.
Do you seriously assume that some nations and some organization, do not, actively seek, how to take things that do not belong to them ?
It's not.
In comparison to what?
What do we get in return? Many consider the benefits to be worth it.
Fantastic question. I've been waiting 10 years for a convincing answer; still waiting.
Can you please just answer this - do you suppose they all halt what they are doing and wait for an undeterminate amount of time for you to also get it, before they can go on with their businesses and lives?
It is such a weird sentiment to me because it would never occur to me to devalue the value others get out of things I don't understand. I hate bonds, I don't "get" why anyone would want to buy bonds, people have tried to explain it to me. I decided that I will never buy a bond in my life because they are just the dumbest form of investment. I can hold that sentiment whilst saying "I don't get why they buy them but clearly there is a lot of value from the vehicle and it is clearly a valid form". I don't see why I should need to understand an monetary vehicle or like an investment vehicle to understand that some people do, and those people have a valid opinion.
Well, where are we now? What significant advancements have occurred since 2013 as a result of Bitcoin (other than the catastrophic climate impact)? What new technologies are powered by crypto other than niche, nerdy shit which no-one outside of a handful of enthusiasts cares about? Bitcoin is now 12 years old - if Bitcoin is the next World Wide Web, then who is the Google of crypto? Who is the Amazon? Hell, does Bitcoin even have a Lycos or a Yahoo?
And yes, I acknowledge that millions of people own Bitcoin and are trading it. But what reason is there to believe in Bitcoin, other than the fact that other people believe it? Yes, I know that you could say the same of fiat currency: dollars only have value because we believe they do. But the difference is that I use fiat currency every day to accomplish real things that have an enormous material impact on my life. The only thing I’ve ever used Bitcoin for is to buy drugs - what else am I ever going to do with it, except hope that the value increases so I can sell it to another speculator?
Maybe the crypto enthusiasts are laughing at me for asking these rhetorical questions as if there isn’t an obvious answer - in which case, let me know! I don’t want to miss out on the crypto wave if it really is as big as people keep telling me. But I’ve read books about Bitcoin, delved into crypto-related code, and spent many hours of my life studying blockchain technology and trying to understand what all the fuss is about. That was a couple of years ago, and I got bored and gave up. I’ve been telling myself to take another look given the recent price surge, but I just can’t motivate myself. What am I missing? Why do people act as if this is all so obvious?
For any task (beyond speculation and illegal activities) that bitcoin is used for, there exists other, usually much better services that can be used instead.
The claimed benefits of BTC are (1) to remove government control of money, and (2) to eliminate the need for trust, but (1) ignores why we have chosen to give governments control of money in the first place when gold still exists (and can be traded electronically), while (2) requires you to ignore the other half of the transaction where you buy something with the money rather than just putting it in someone else’s account — reports of being ripped off by a vendor goes back to Akkadian cuneiform, and things like chargebacks and courts are there to deal with this, putting rules on what was once anonymous shiny rock that anyone could mine in a literal rather than metaphorical sense.
Third party escrow services, the better business bureau, the police... all of these can (and should in many cases) exist with bitcoin. It doesn't have to be either/or.
It’s a catch-22: to be useful, it can’t be useful.