Bitcoin is not a Battery – it is a Sink
elad-verbin.medium.com
elad-verbin.medium.com
The economic equilibrium of the Bitcoin economic model is as follows: the total cost of all electricity invested into the network over a 10-minute period strives to be equal to the present financial value of 6.25 Bitcoins. If electricity becomes cheaper, then more electricity gets poured into the system, producing the exact same output. That is why Bitcoin is not a battery — Bitcoin is a sink: its economic output is constant, regardless of the amount of resources poured into it.³ When miners pour more electricity into Bitcoin, they don’t get more Bitcoin; instead, the entirety of the Bitcoin network becomes more secure. Security is not a commodity,..
.. Bitcoin is indeed incentivizing the creation of cheap power sources, but those sources are not going to be used for anything...
I learned more about bitcoin in a few minutes than so many hours of people talking while saying so little. Glass of ice water in hell. I can now deduce that the "equilibrium energy cost" of bitcoin is currently $45m per day.
I think the subject matter falls into a tricky space. You need to start with some sort of economist-ey bias to even think that bitcoin could be a battery... considering that it does not store energy or physically exist. Either way, it can be interesting to consider why or why not.
To me, it's interesting that this is a type example for mistake that knowing just enough economics makes you more prone to.
Anyway... I expected a bitcoin-ey article, so I came in with an eye roll. OTOH, I was kind of curious about the energy economics of bitcoin. You blazed through a great, concise explanation of the key facts en route to winning your argument. As a through-away, you perfectly framed the energy debate between bitcoin and etherium's approaches... trying not to start a fight with either of them before you finish the previous one.
The counterexample is aluminium, which is a commodity. It can be stored, resold. Security cannot. You output the same number of bitcoins regardless of electricity input. There's no storage or saving that can be recovered later. With aluminium, you would have more aluminium.
The reason it's like this is because the price of bitcoin isn't affected by electricity prices and electricity prices aren't affected by bitcoin prices.
Proof that energy has been expended has no intrinsic value at all. If it did, we would not throw out burnt toast. But it is mere entropy.
If you have money you can get the energy (i.e. access to the battery) of someone or some thing.
Assuming you don't have access to the battery/money you probably would have to do some work (i.e. contribute to the battery) so that you can access the big battery/monetary system and hence exchange your energy with the energy from someone else (i.e. You make shoes and I make shirts, at some point in time you need a shirt and me a pair of shoes, so we exchange our energy)
Point is: battery needs to be always at the most efficient capacity.
The argument in general is that Bitcoin mining is a better-than-nothing use for stranded energy, which does not then imply that it is a "battery". Quibbling over what qualifies as a battery is besides the point, I think.
What is the point of this hand-waving, meaning-erasing, semantic drift then?
The term "battery" has a definition, the term "store of value" has a definition too, a different one. It that what they're groping for? There is no need for this amateur-hour waffle.
I hear otherwise, actually
Actually, never mind. shees... Nerds. Go on. I deserve at least 6 downvotes for that. We have standards to maintain.
I'm not sure what you mean by "directly".
I feel like the argument of "Bitcoin is a battery" was never well done in the first place, since obviously batteries usually have to actually "store energy" and eventually "output energy" again. Something Bitcoin does not do.
But really it's really about it being the gateway to the altcoin universe, where actual useful stuff is being built. The Bitcoin Core team has fallen prey to corruption and collusion with miners, unf.
It's digital tulips, not digital gold.
Because everybody takes Bitcoin and it's got huge name recognition, it's sort of a gateway to the actual useful stuff.
Bitcoin obviously should have been patched 1 million times already, but the fault on all its issues is on the Bitcoin Core team, who are AWOL and have refused to fix any issue that's relevant for years.
Pretty sure Ethereum scaling as a currency is even worse that bitcoin.
Ethereum has some very interesting features, but performance is not one of them.
https://medium.com/starkware/on-the-road-to-starknet-a-permi...
https://medium.com/matter-labs/zksync-2-0-roadmap-update-zke...
there's lots of that stuff on the internet to be sure
> will
They are currently capable of 2K - 10K TPS, which is substantial. But with sharding they'll achieve 200K TPS.
I expect them to get better. The Bitcoin Core team is basically not a factor anymore.
Typical HN/SV response when it comes to Bitcoin. I'll give anyone on here $1000 in BTC/USD/ETH if they document how to run a full node on Ethereum before May 2021. It's impossible to do without state of the art tech and bandwidth.
Bitcoin on the other hand, can be run on a Raspberry Pi, and people can agree on how many Bitcoin exist at ANY time.
How many Ethereum exist right now? Pro tip: Nobobdy can agree
Not gonna make it... also if you looked into the costs it would lose you money if you took me up on that bet.
I have a better idea: Stacks sats and stay humble.
Prove it
> I'm still glad to take your $1,000 if you'd like a full tutorial
Post your tutorial on twitter on how to run a full node from scratch, using your own hardware, and I'll give you $1000 to buy some NFT's
I don't see why running a full node is such a huge problem. Do you think this means ETH will somehow fail to scale? Seems like the team could solve this eventually, while Bitcoin team hasn't solved anything for a long time.
Look up #SupplyGate on Twitter
> I don't see why running a full node is such a huge problem.
Of course you don't lol
> Do you think this means ETH will somehow fail to scale?
Yes
> Seems like the team could solve this eventually
"Eventually" .... Yeah move fast and break things typical SV logic
> Bitcoin team hasn't solved anything for a long time
Scoreboard
#supplygate seems to be a bitcoin-eth debate. I think bitcoin is a dead project, in terms of innovation.
Explain then - what's the issue with lack of full nodes?
How will ETH fail to scale, and why wont a competitor like Algorand or Tezos pick up the mantle?
I think this piece misses. Electricity and hash power does translate to economic value. It gives you more share of the 6.25 reward. The author's argument is made by conflating economic value and security into one.
As a whole, the system produces 6.25 bitcoins every 10 minutes. The reward is a constant. But the BTCUSD price can go up. And it has always been going up. That means it's always profitable to invest in mining.
The original piece from Nick Grossman also misses. There're two problems with using Bitcoin as a battery. The first problem is Bitcoin has an unbounded energy use [1]. If its price continues to go up forever, that means we'd spend unbounded energy. The second problem is volatility. Unlike the aluminum example, Bitcoin has no intrinsic value. It has no practical applications like aluminum. Its price is pure speculation. With Bitcoin, we're converting energy into a volatile asset.
Bitcoin can be a battery. But it's a fairly bad one. It stores value with high volatility. The problem hindering Bitcoin's adoption is volatility. Changing the narrative from digital gold to battery won't fix the problem.
[1] https://bitflate.org/post/2021/02/05/the-bitcoin-price-parad...
But this is zero-sum competition for a portion of a fixed supply. In the aggregate, more electricity does not buy more Bitcoin because it is a fundamental principle of the Bitcoin system that the supply of Bitcoin cannot be increased in response to anything.
What also seems to be thrown out with the bathwater in this discussion is that for the project of intermediary free money, with a long time horizon, the subsidy is only a small reason Bitcoin will have ever been mined.
It's fine for a VC to conclude "I believe the properties of Bitcoin’s battery are powerful and profound, and will lead to the kinds of solutions I point to here."
But when the author's firm invests in Bitcoin companies, that's not exactly a surprising conclusion.
- the author owns this asset type and they publicly support it - they would benefit from the price going up; maybe they just want to feed the hype. Therefore the author can't be trusted.
- the author doesn't own the asset type and they publicly support it - their actions contradict their public opinion. Therefore the author can't be trusted.
I would rather look into how good of an argument someone is making than trying to guess the reasoning behind their portfolio.
The tech is not that interesting and I would never want to build with or on blockchain. If I had to, I'd probably use Hyperledger. This is from someone who tried out all of the main ones. Blockchain does not replace anything in my stack, rather it adds a highly risky component and makes me a target of higher interest to the malicious.
I won't go into the group think and egos that are pervasive in the ecosystem, other than to day they are a huge turnoff.
Similarly, I bought some bitcoin to donate money to sci-hub, because I believe the good that they do is greater than the negative effects of a single additional bitcoin transaction, and sci-hub doesn't offer any alternative methods. I don't have to like bitcoin to weigh pros and cons and make an educated decision to use it for a specific purpose.
Then as for holding it, I was paid out in bitcoin for a short time and waited a while before converting to fiat in order to not pay miners multiple times. During that time I was both holding bitcoin as well as being of the opinion that this blockchain+PoW tech has lost the novel factor and we should get over the hype rather than spend more and more energy on it when we're already consuming a hundredfold more energy than we can currently produce without direct CO2 emissions.
It's not as simple as: you use it, therefore you must love it (or conversely, if you don't use it you must hate it; some people might be interested in the tech but still not believe it's an investment vessel befitting of their risk profile).
Does it matter why they are lying or spinning the truth? The only thing we should care about is that they were lying, so we need to look at the arguments themselves, otherwise we risk loosing impartialness because of our own feelings about cryptocurrencies.
Can't make this stuff up
AirBNB alone has a market cap of $104 billion, while Coinbase has a valuation of $90 billion.
(AirBNB loses money and has pretty much saturated their market, so they can't grow much. Why are they worth $104 billion?)
BTC might be giant waste of resources, but it's curious that the comparisons imply that it's BTC versus no energy usage, instead of BTC versus traditional banks with their giant datacenters all over the country and world. Might be worth at least a mention in the comparison?
The modern financial system has required an insane amount of capital (energy, resource, human) in order to get where it is.
It seems very Luddite to think that the pure-digital system is not more than capable of outpacing (in terms of efficiency and effectiveness) a system that involves massive amounts of human capital, when that (humans > machines) has literally never happened in human history in the long-term.
You wouldn't be allowed to do this unfortunately.
Yes, existing banking is just "database queries", which are of course more efficient than transactions on a blockchain. BUT in order for people to trust those database queries, you need to build a monstrous behemoth of energy/resource/human expenditure to maintain that trust. If I just spin up a PostgreSQL database and tell people "hey, I'll store transactions for you – super energy efficient" obviously nobody will use my system (e: without utilizing supplemental systems for trust). Think about how much human/energy/resource expenditure goes into just making counterfeit-proof paper money – humans designing anti-counterfeiting measures, building money printing machines to make good on those ideas, using plastic/metal threads and such in each and every dollar, humans checking your $100 at the grocery store with a pen / UV light / whatever, people making those pens / UV lights, Secret Service agents investing time and money to find and stop counterfeiters, etc.
In cryptocurrency, "counterfeit-proof" comes merely at the expense of more clock cycles. The benefit of which is obvious (to me at least) as the world moves towards 100% renewable energy.
Here's a graph to illustrate the point. txns is the cost of an actual transaction. trst is the cost to maintain trust on top of transaction cost. Worth noting that at some point (hopefully), both "txns" rows will be entirely renewably-powered, while the "trst" rows have a good number of processes that are not made more efficient with the onset of renewables.
[trad banking]
txns: #
trst: ##############################
[crypto]
txns: ##########
trst:
Bitcoin doesn't save me from living my life and needing financial services. I choose to transact with people I trust or intermediaries I trust.
We will still need the OTC, FDIC, SEC, the Fed the Treasury, even if it is all denominated in bitcoin.
This happens all the time and there are more of those nobodies than people in the cryptocurrency space.
It might not be bitcoin, but it certainly won't be Bank of America coin.
It might be that BTC is 10X worse, 100X worse, but it's head-scratching that the comparison remains between BTC, with its externalities and so sorth, carbon footprint, and null. BTC might fail miserably (it may already have) but the claim is it can be a store of wealth and a possible transaction system.
I thought articles were marked down with the passage of time and by the flamewar coefficient (comments-to-points ratio) but neither goes anywhere near explaining this.
Is there something massively wrong with it that I'm not seeing? I thought it seemed like good analysis and a great explainer for the subject.
From the start the most frequent real world use cases were buying drugs and illegal services online (silkroad), and eventually other cases like ransomware (cryptolocker, wannacry), and a few other marginalized cases.
So in my view the mainstream adoption and glorification of Bitcoin is a tragedy, that I do think Satoshi himself (or Hal Finney) would eventually disagree with. The result of it is a colossal amount of wasted energy that could be prevented with traditional technologies (banks, public records, government databases), or more efficient alternatives (proof of stake, other forms of consensus) and hopefully more transparent as well.
I don't think it is necessarily going to play out that way. While I can't think of a single use case that Bitcoin fulfills that the alternatives don't, digital currency, of some kind, is inevitably going to play an increasing role in our lives.
What is now known as "cryptocurrency" (blockchain based tokens) are just one kind of digital currency. There are at least 2 other kinds I can think of:
- Centralized databases of fiat-exchangeable equivalents (A "Fedcoin", Amazon vouchers etc)
- Federated Chaumian/Brandian anonymous digital cash systems (the forgotten cryptocurrency).
Personally I think it's only a matter of time before we get a digital currency based on one of these models sponsored by central banks / governments.
I just think it is a matter of time before someone hits the right social cords with the right crypto and the wind is sucked out of BTC overnight. There are certainly tons of people trying.
Also the equipment used to mine cryptocurrencies doesn't magically appear. What percentage of the world's mining operations for copper, lithium, silver, etc. goes to building crypto-mining rigs? How does that total output compare to the 3k tons of gold?
[1] - https://www.visualcapitalist.com/wp-content/uploads/2020/03/...
I don't know how much of that $75B/year translates to CO2 emissions, etc, or how it compares to BTC or what have you, but you can buy a lot of externalities for $75B.
I'd put my estimate at something like 30-150 megatons of CO2/year for gold, just because I'd be surprised if they spent less than 10% of the cost of mining gold on fuel, or more than 50%. So I'd be neither surprised if gold generated less CO2 / year than Bitcoin, or if it generated like 4x more.
Bitcoin consumes 'more electricity than Argentina'
Bitcoin is a ten year old project, written in mutable code, that's invisible, intangible, and essentially replicable by any number of competing crypto projects or forks. It may be useful, or it may not be. It may stick around, or it may disappear. Either way, it's not seriously comparable to gold.
The same cannot be said for BTC.
Bitcoin is a short circuit in the system. It is a fault. It is where our resources disappear without bringing any useful value other than rewarding the one who can burn more but leaving everybody else worse overall.
Satoshi Nakamoto has great dreams, but basic human greed has struck again.
FBA (Federated Byzantine Agreement) DLT are the real successors to PoW. They provide no incentives for running/"securing" the network instead the people who wanna use it runs it themself that and obviously they have no interest in wasting resources or making the usage expensive.
The second thing that is very unlikely is that bitcoin will move away from PoW. The miners are in control. If they dont want to move away, people can only fork and at that point the general consensus is that the fork is no longer "the real bitcoin".
As far as I can tell the general consensus about what is "the real bitcoin" is where bitcoin's fiat that is supposedly absent is actually hiding.
Thats the next best definition I could find Bitcoin doesn't fit in there at all.
Staking however does not make sense if the reward is paid trough inflation that cancels each other out assuming most of the supply is staked. So where does the money come from that actually pays to run the network and pays the profit that stakers make? It must come from fees.
Now you have a misalignment of interests. User want low fees and high security and stakers want high fees (an potentially low security to justify more staking and staking rewards for doing so). The free market meets somewhere in the middle, however a blockchain was supposed to remove the middlemen that sucks out value and provides little and overprices benefits (expensive security). Now you have just decentralized the middlemen but its still there and sucks outs value optimized for profit.
Meanwhile the actual user already have aligned interest (secure and cheap) and the simplest way to make sure the actual user run the system, is if you remove the incentives. If there is no way to make profit from just running it, then the only reason to run it, is if you make profit form using it. An backwards if you make profit form using it then you are willing to pay to keep it running an secure. Thats sustainable and optimized for use.
A PoS system could only be achieved, if all tokens are hold by the people who use the system and holding are directly proportional to their usage. For obvious reason this would never happen.
The speaker is an ex-btc dev and one of the creator of the first public FBA based blockchain. (which obviously mean hes biased but good arguments are good arguments)
Also a very important factor is the cost to run it is cheap because there is a shared incentive to have performant software and energy efficient hardware. And the "people" who actually would want to run a node 24/7 are most likely companies who already have the hardware and the IT team to maintenance it etc. etc. The additional cost my be a few thousand dollars per year but that's not much for such a company.
BTW networks using this tech are running since 8+ years and consistently have more Tx than bitcoin [1] Its rather unlikely that not enough "people" could be found to keep it running.
[1] https://bitinfocharts.com/comparison/transactions-btc-eth-xr... (note that the yellow line only shows payment type Tx but there is also a DEX and other types of Tx like an offer create Tx (for trading) these are not shown since these do not exist on BTC. The total number of all Tx from all types would be way higher between 5 and 10 Millions per day.)
With regard to throughput, yes XRPL is higher than Bitcoin network, though a similar number of txns to Ethereum, which A. has smart contracts B. hasn't yet integrated their Layer 1 scaling solutions (sharding, PoS) which apparently should increase throughput by many multiples.
Yes, all of them where run by Ripple to provide geographical decentralization. This is purely to achieve a high uptime and ofc demonstrate that the software works. The actual consensus mechanism ofc is(was) not decentral at all at that time. Similarly when satoshi started mining the first blocks it was also not decentral. Its kinda impossible to start decentral unless you agree with other parties to start at a specific time but technically everyone involved "colluded" for this so it kinda still defeats the point. Maybe there is a better way to start such a network but looking back, it doesn't really matter since in the beginning no one used/trusted it anyway and nothing of value could be moved since the tokens had no value so who cares if one party had full control. Currently neither Ripple nor any other entity has enough nodes to enforce or prevent a change. Last year the first amendment (a feature update) was accepted without the votes from ripples nodes. Decentralization is ofc open in one direction so its neither perfect nor finished but at lest it goes in the right direction unlike for example BTC where the mining power coming from china seems to increase year after year. AFAIK the XRPL dev team currently works on a feature that should increase reliability if a larger part of the nodes fail or get disconnected from the others. This would allow more decentralization without risking the network to halt if for example a geographical region is cut off from the rest of the network. Currently if too many nodes are disconnected at once the network would halt to prevent unintentional forking. Like if the network would be spited in halve it stops rather than both sides making different forward progress.
>though a similar number of txns to Ethereum
Actually it way higher because the XRPL has a build in DEX the vast majority of transactions are offers which usually aren't counter because they dont move value they just offer it, which may or may not result in an actual exchange and transactions that move value. But the comparison is kinda pointless anyway since XRPL Tx are almost free no one can really know which of the transaction are "meaningful" compared to eth/btc where ofc no one would make any Tx that isn't "meaningful" to them simply because it costs quite a lot.
There is also a research paper for scaling the XRPL even more but I'm p sure its implementation is on hold because it simply doesn't make much sense at the time with 5-10M Tx per day there is still 10k% grows possible and there is an existing off-chain solution for high throughput channels as well.
But I'd rather talk about whether or not Bitcoin is worthwhile progress or not. The current banking system might not be as wasteful from an energy usage perspective - but might have other environmental costs - plastic, paper printing, transportation costs. How do those compare?
And is Bitcoin progress - in the sense that it eliminates the state from printing and controlling the currency? If not, then what would progress look like?
Personally, I don’t think the absence of well-regulated banks and central banks under a degree of democratic oversight would be progress; but there is some value in making the underground economy somewhat structured and relatively transparent.
It’s a bit like the Japanese yakuza: everyone knows it exists, members are very visible, the state tolerates it as long as it stays under certain limits, and so on. This is not perfect but it’s a better and more desirable situation than full-out war like in Mexico, for example. Similarly, we currently have little or no visibility of dirty money; we know it’s pumped in our “clean” banking systems but we don’t really know where, we’re in a constant struggle to uproot it before it taints the rest. Wouldn’t it be better to keep all that in its own dedicated system? Btc can be that.
We could build a digital currency that was secured by public cryptography, totally anonymous, tradable without involving central authorities, and verifiable offline/by third-parties. It would require no blockchain, consume no natural resources (anymore than, say, VISA), and plug seamlessly in to the existing banking system.
No government, however, would allow such a beast to be on the Internet: global, unrestricted, and free of capital controls. In order to redeem or refresh the tokens you'd need to be a citizen and have a bank account.
That's the only unique selling point for Bitcoin.
I've seen this argued in articles about Bitcoin's energy usage, but not a thorough analysis (either way). Has someone written one?
Comparing transactions is one way of measuring it, but I can't fault the proponents for saying it's a bad analogy. The number of transactions is indeed quite unrelated to the current power draw. But it's not hard to see that even the transaction system without the mining is already less efficient than a few database servers per bank for each bank in the world.
Now, Bitcoin doesn't have to provide power to people operating phones for customer support and other things that people expect from their bank, so in that sense you save a bit, but then there are still developers working on the bitcoin ecosystem, and there's this minor issue called miners that also use a small amount of power on top of it all.
That's much harder to cost and argue which is why I'd like to see a serious analysis on this
I realise that using the phrase "the banking system", as the quote does, makes it ambiguous.
It's like the bud light of crypto in a world where most people aren't aware yet that bud light isn't the only beer.
The block rewards are a small portion of the reason a miner like Fidelity would secure the network... it's about preserving the past as well.
If you think about it, everything is done in one place or another because it's advantageous to do it there. We grow food out in the countryside because we don't find it economically sensible to grow potatoes in Mayfair, where we'd rather have hedge funds.
Are potatoes then a solar panel, used to capture and transport energy to fund managers?
I mean sure, but in a trivial way that doesn't really illuminate any economic issue. Specialization has been known for some time.
Seems a bit sketchy for the other article to be on front page, but its newer, more-upvoted rebuttal to be removed
@dang if you see this, I would love to understand the reason
YC has a vested interest in crypto. They also have vested interests in carbon removal.
I'm just surprised to see the censorship.
But mining bitcoin and capturing excess heat produces a provably scarce and globally accessible digital asset.
You are not transferring energy across time or space. Instead you are directly converting cheaply available energy (usually hydro) into monetary value that can be easily transferred through time and space.
I have seen effective points made on both sides of the electricity usage argument. There is certainly a strong incentive to use the lowest cost energy to mine, and there is significant waste in energy production that is beginning to be harvested for bitcoin rather than lost entirely. I might be buying into the propaganda, who knows.
However, the more I learn about bitcoin, the more I believe it will be around for a very long time. I'd rather debate how to use the wealth that it is generating to develop more sustainable economies than argue over terminology. Let's build walkable cities that don't need cars, where the buildings are dense and energy-efficient, renewable energy production is distributed and owned by communities, and locally grown food is abundant. The value bitcoin is storing needs to be put to work eventually. The systems to do this are starting to come into place, there's no new technology needed.
This article is about how energy economics of bitcoin currently work. Quite an interesting topic, besides the headline.
I see PoW as a liability for the whole cryptocurrency system. For this reason I think the transition to PoS will be like the Whigs vs. the Republicans. One simply does not survive.
Mining Bitcoins is like Iceland smelting aluminum? Mining bitcoin "converts electricity into value"? Preposterous.
The value of bitcoin is driven by speculation, and in turns that increases the incentive for the miners, not the other way around. There's no value created by crunching random SHA-256.
As a thought experiment, let's assume that tomorrow a breakthrough slashes in half the cost of energy worldwide. Nuclear fusion reactors become viable or something. That would probably make aluminum cheaper, since processing it is so energy-incentive.
But what about bitcoin? It'd just lower the bar for mining to be profitable, and it'll temporarily increase the size of the mining pool as the difficulty adjusts, but that's about it.
There's simply no direct relationship between the cost of electricity and that of bitcoin that I can see. There's not even a direct relationship between the cost of electricity and the service provided by bitcoin. Bitcoin doesn't become more or less useful based on the cost of mining, it's always one block every 10 minutes give or take.
An egocentric profit heavily overweights truth and sense.
See also:
> Sealioning (also spelled sea-lioning and sea lioning) is a type of trolling or harassment that consists of pursuing people with persistent requests for evidence or repeated questions, while maintaining a pretense of civility and sincerity.[1][2][3][4] It may take the form of "incessant, bad-faith invitations to engage in debate".[5] The term originated with a 2014 strip of the webcomic Wondermark by David Malki.[6]
That's not the same as saying "free speech leads to truth". It's saying "truth cannot exist without free speech". The fact that some people are "bored of disputation" is not a good sign.
It's always the same issues: making a bold, unsubstantiated, potentially inflammatory claim like "Vitamin E is the future of medicine and you should all take supplements, don't listen to what big pharma says!" takes only 10 seconds. Debunking the claim however would require some time and effort, mainly because proving a negative is always more time consuming that making a wild claim.
A lot of economics and social theories generally use a lot of metaphor. A lot of mistakes get made by habitually applying an incorrect metaphor as a model. Battery is a sensible metaphor for aluminium. It is not a good metaphor for bitcoin. I'm pretty sure the original author made that error honestly. Either way, I learned a lot about bitcoin's energy economics.
These days a throwaway tweet or blog post can be seen by millions before there’s been any chance to debate the argument on a smaller scale (and either refine or abandon it)
Pre-modern zombies weee much harder to find under Napoleon for example. His famous aphorism "I prefer lucky generals" was a reference to the ability of Marshall Ney to shoot two zombies in the head at 100 yards with one round.
Abraham Lincoln, Zombie hunter was actually a biopic.
Often, they were abused.
But at the same time, central entities are considerably more knowledgeable than individuals.
The CDC is a rational source of information about COVID - even if it's not perfect.
Your average neighbour is a very bad source.
We now live an era wherein the immediate payoff for hustling lies or partial lies is much greater than the act of having constant integrity, wherein the payoff is much longer, possibly even not even within a single lifetime, i.e. it takes decades of conscientious behaviour within groups to advance civilization.
Looks like ppl get fed-up with "free speech" very easily. Especially when they assume they're "obviously right!" :-)
[1]: Some limits apply (slaves, etc.).
Would you say that false information harms you personally?
[0] https://quillette.com/2016/02/15/the-unbearable-asymmetry-of...
nice saying
I could go further, it captures the essence of "lying for profit" no matter the economic/political system.
HN readers have been a zombie-like mob when it comes to ignoring Bitcoin, it's sad to see a otherwise smart group of people miss out on the biggest thing since the Internet.
Apparently a huge number of blinded people run in amok preaching how Bitcoin is saving the world.
It is not.
There is no single reason for bitcoin to exist other than perpetuate value for people who are invested in it while also burning energy at a rate of not a very small country.
It needs to be repeated until enough people inept in financial or technical matters understand it.
Just from my lifetime: Hyperinflation in Venezuela and Zimbabwe. Inflation in Argentina. The housing bubble. The internet bubble. Banker bailouts. Our current everything bubble.
The classic example of functional deflation is in technology: computers have been under substantial deflationary pressure from the increase in performance year over year, yet people still have bought computers, and the industry has still prospered despite this.
Likewise, civilization was largely built on hard money economies, and prospered, despite the difficulty of debasing within them. It has largely fallen under soft money conditions, as in the the Weimar Republic, or the debasement of the late Roman Empire.
Note that this "deflation is bad" orthodoxy is propagated by the same economic regime that embraces inflation as beneficial, and profits from the printing of money.
It saved my world, and millions of others.
All the things HN pundits love to talk about, but when it comes to actually making the world a better place, people like you become Luddites and naysayers.
HFSP
It definitely didn't. It may have made you money, or given you a creative programming outlet, or friends. You could also get that from dealing large amounts of cocaine, but you wouldn't be able to pretend you were a revolutionary.
100 Million people have benefitted from Bitcoin and it's censorship resistant network.
If you can't figure out why this trillion dollar network has value, I can honestly say I am jealous of your financial and anglo centric privilege and hope you never acquire any Bitcoin, you obviously don't deserve it.
How? Be specific.
> [...] but when it comes to actually making the world a better place [...]
How is Bitcoin making the world a better place? Be specific.
> HFSP
I had to look this one up. For anyone wondering, apparently it means "Have Fun Staying Poor".
Improving the lives of 100 million people by giving them a way to save money without a government agency. If you can't figure out why that has value, you're probably are a beneficiary of anglo centric privilege, and in that case I hope you NEVER buy any BTC.
> I had to look this one up.
Remember it. It won't be the last time someone says this to you
"Have Fun Staying Poor" is in my opinion a disgusting remark to make to complete strangers.
I heard Ethereum has a GREAT community, they even do synchronized dances in Unicorn outfits! Also they are moving towards PoS, so it won't boil the oceans like BTC.
You should really look into it! People from SV/HN find it much friendlier than the toxicity in the BTC community.
Please do like the OP and make better FUD so we can clown you in the comments further. Also, Bitcoin is a net-positive for the environment no matter how "mean" people like me are to you. Run the numbers
Miners get 12.5 BTC every 10 minutes. That's the direct relationship between the cost of bitcoin and the cost of electricity. If miners (total combined) spend less electricity, they'll buy more hardware. If they're spending more electricity, some of them will go bankrupt reducing total electricity consumption.
I'm simplifying it a little bit, because miners also get transaction fees, but those are similar to the main reward and logic still works.
Take regular currencies for instance ($€¥…): they do not convert paper into value, they use paper to represent value. Now does printing more of it makes it better at enabling exchanges? Not necessarily. There's a point beyond which you just get over-inflation (a little inflation can be very beneficial, though).
Now Bitcoin is definitely not at the point where it does causes over-inflation (else its valuation would drop). But you do need to compare it with other currencies, and its energy consumption is a big fat drawback. A deal breaker in my opinion. Barring perhaps some extreme cases, using proof-of-work crypto currencies is simply unethical: too much harm, not enough good.
Mostly, they use mostly-electronic ledger entries to represent value.
Worse: It does the inverse of scaling. The more electricity that is added, the less efficient it gets.
Even worse: The system is designed to incentivize more people to join and waste electricity, by paying them to do so.
Moving value is valuable, but the resources expended in moving it do not provide value; rather, they come at a cost, like gasoline in your car.
And Bitcoin is pathetically inefficient at moving value. The average transaction fee has been floating around, what, $15-$30 USD? This is international-wire-transfer pricing range, if it's a single transaction and you don't do these transactions very regularly with your bank.
Don't count the value it provides on the wrong side of the ledger.
Bitcoin is a FULL system, you're seeing the whole thing, the mining is for securing the network AND moving value. Can you say that about any other system (that you are already so used to and blind to how it works)
Of course not. The existing ones you depend on to protect the necessary infrastructure and servers of bitcoin are already sufficient.
Bitcoin is a ledger.
If you hired an accounting firm to keep track of who had which assets and handled transactions, there is value being created... valuable work being done.
This value probably isn't being generated very efficiently (there's an interesting study to do, actually figure this out and don't rely on somebody's intuition) and the "value" isn't being actually utilized very widely: how much of bitcoin being used doesn't fall into the categories of A) generally morally objectionable B) toy uses fiat -> BTC -> txn -> fiat which didn't need the BTC middleman or C) speculation. [ not much ]
Mining bitcoin would seem to transform a lot of electricity into a little accounting, not free of value, but likely demonstrably of low value.
At current prices, just the block rewards make the Bitcoin network running cost something like $37bn/year.
As a ledger it's strictly inferior in every way. (The ability to take bitcoin 'offline' by holding your private key, or exchanging it on secondary markets, is not a feature of the blockchain itself. These features can exist without a blockchain).
Do you not consider those 'economic value'?
I wonder where the 50x difference goes.
> At current prices, just the block rewards make the Bitcoin network running cost something like $37bn/year.
The block rewards are "free", it is hard to come up with a way to account for the cost of something which is invented from thin air.
The better comparison would be how much the electricity and mining hardware per year is used compared to the transaction work done.
Logic would say, though, that the money spent mining and the BTC->USD value of block rewards would be similar (that is the margins on bitcoin mining tend towards zero).
However with the volatile pricing of bitcoin, you would have to generate a BTC->USD value for each block reward and not convert a year's worth of rewards on a particular day's (or minute's) spot price.
This is false.
Let's say I am shady business that launders money.
Is bitcoin helping stop my laundering?
No... I just use regular money which can't be tracked so easily...
In essence, bitcoin makes it easier to track money of people who don't mind their money is being tracked or are inept enough to understand their money can be traced.
Ledger does not replace need for accountants.
We already have a bunch of software for ledger (that also doesn't require to burn huge amounts of energy).
Banks are ledger and if somebody like a government want to get info from that ledger it has been quite easy recently -- even Swiss banks relented and have been forced to submit information.
Accountants are people who specialize in knowing how to categorize stuff before it is put on a ledger in a way that meets requirements of local law and makes business more easy to conduct.
I don't see any possible way in which bitcoin is making this easier.
Bitcoin does not provide value, it is just one of possible alternative to use to make transacting easier.
Unfortunately, bitcoin also burns energy at a rate of small country which is quite unnecessary but will make every person poorer (if only for making our environment worse).
A bitcoin doesn't create cash, it just becomes more valuable if you find someone else that is willing to pay more for it than you did (i.e. the 'greater fool theory'). This is why it is speculative - i.e. in the absence of it generating revenues, people are just assuming that someone will buy it for more than they did in the future because of scarcity.
So you are saying increasing security, uncounterfietability, censorship-resistance, and decentralization of money distribution has no value?
The central banks/treasuries spending $$$$ yearly to secure their money and governments spending $$$$ on militaries, intelligence, LEO, etc... to add layers of security would disagree with you.
Increased hash rate leads to higher prices and increased prices lead to higher hash rate. Both are true here, this loop is a key component of the NGU (Number Go Up) technology in Bitcoin.
It can be argued that producing new aluminum with cheap power is also kind of a sink. There is plenty of aluminum that has already been produced, if we keep producing new cheap aluminum we are in fact incentivizing using aluminum for cheap single use products and decentivizing recycling. A lot of this new cheap aluminum will end up in landfills, hence the sink.
Sure there is. It’s a way to reach consensus on a sequence of transactions that defines the history of Bitcoin. This is what enables Bitcoin to be decentralized, digital money. Unless you believe this has no value then crunching random SHA-256 hashes does indeed have value.
Have you done a study into how expensive existing fiat systems are, when all is said and done?
Replace inherent value with non-monetary value if that's what you mean.
I wonder if crackers and cryptoanalysts could put some of that to good use, generating massive rainbow tables and the likes. It would be a bit like using spent plutonium for weapons. I guess someone who knows the subject already looked into it...?
You can't buy drugs in modern world without Bitcoin. That's the value. And regardless of whether we see it as "good" or "bad", in the eyes of the people who are buying drugs, it's pretty significant.
They're not random. There's randomness in their construction, yes, but they're encoding trust.
I agree, but isn't that how all fiat money behaves?
Maybe the better way to look at it is, how expensive is it to secure $1 trillion with other means in a decentralized and permission-less fashion?
There is no alternative to compare it too even. So I think we are still in price discovery phase for Bitcoin.
So I shouldn't have to pay high wages if my employees aren't creating anything of value?
People seem to pick and choose when they believe the labor theory of value.
The point of the matter is that value *is* what people are willing to pay for something.
You could argue that a Van Gogh is just arbitrary colors applied to a canvas, it's not worth anything inherently other than through the subjective valuations of other people.
The labour of your employees hopefully adds something you can show to your clients : it’s a lot less speculation on your part.
Van Gogh is a name in the art world, and has a well documented place in art theory. Van Gogh is hardly speculative.
Point of correction: Bitcoin is mined with ASICS not GPUs
Theory that has been replaced, I should note, by neoclassical and Keynesian economics.
so you're agreeing that value is entirely dependent on subjectivity and circumstance?
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The problem with Proof-of-Work systems that prevents this logic from actually translating to a sigmoid curve in number-of-miners, though, is that any left-over electricity that isn’t going into “good” mining, could instead be going into Sybil attacks. It’s as if every potential fire-fighter who isn’t hired as a fire-fighter, instead has a chance of being recruited by “Big Fire” to one day work together to all set fires at once.
If-and-when governments actually establish their own cryptocurrencies, massive distributed purchases of electrical capacity for the sake of mounting a Sybil attack are exactly the sort of thing that state intelligence agencies will try to track and prevent ahead-of-time, such that nobody will ever be able to gain that capacity in the first place. Just like right now nobody can really build a stockpile of plutonium.
But as long as governments don’t care, and attackers are free to be economic actors buying up electrical capacity, then there is a specific effect we see today: rather than the network’s electricity consumption just growing to a certain absolute amount, the set of all Proof-of-Work networks are incentivized together to consume a certain percentile amount of global excess electricity consumption — 51% of it, specifically. Such that, at any point, there’s not enough electricity left over to even theoretically mount a Sybil attack against the largest network. (The smaller PoW networks? Basically screwed.)
Saying this I do agree with you about proof-of-work, I work on a proof-of-stake chain myself.
Overall though the number of miners will reduce to a small group because the cost is prohibitive, however it should still be secure.
https://bitcoinmagazine.com/business/bitcoin-will-save-our-e...
Renewable generation must be paired with storage to get past a certain % of share in the energy mix. BTC mining is analogous to just turning off windmills or solar panels during times of excess production. Presence of BTC miners removes market pressure on grids that make storage feasible.
BTC is actively harmful to the environment. Proof of work is an abomination.
Is there something better than minting new money that we should be using this energy on, and to which we can economically distribute said energy from locations with excess capacity?
That’s an interesting thought experiment but, wrong. Other than utilizing low cost electricity that would otherwise be wasted, there’s no way to transmutate bits into electricity.
There’s a lot of bikeshedding about the wastefulness of minting virtual money with electricity. End of the day, people will do whatever they want to generate profit. Some poor bastard in Africa is toiling away right now in a dangerous mine to extract gold ore for investors. Right now, it makes economic sense to buy Electricity in China to produce internet money and bypass capital controls.
CO2 extraction from our atmosphere for long term storage or creation of CO2-neutral carbon-based fuels for applications that require fuels with high energy density like airplanes.
The mining of Bitcoin uses as much resources as people are willing to pay for the resulting coins.
The same holds true for gold.
3000 tons of gold are mined per year. Which is worth about $150B. So the mining probably uses resources of about $150B as well.
The value of bitcoins mined per year is $15B.
So Gold mining probably uses about 10x as much resources as Bitcoin mining.
Bitcoin requires a constant supply of electricity to maintain its utility. Without electricity, Bitcoin would collapse.
Gold’s utility as a medium of exchange and a store of value is secure in a crisis, bitcoin’s is not.
The exchange of Bitcoin costs just as much as people are willing to pay for it. That amount can go arbitrarily low.
This is simply untrue. We're not talking about simply moving your wallet on a pendrive.
In this context moving bitcoin means changing ownership and this simply cannot happen without electricity.
I'm curious about this: What portion of the electricity used for mining is needed to prevent the collapse of bitcoin? My understanding is that the answer looks something like "however much is required to make a 51% attack impractical." If that's right, how should we go about estimating it? Should we understand "practical" to mean "profitable", or should we be thinking more about unprofitable, terroristical attacks?
We'll talk again in 5 years time.
Also, gold is the one most manipulated market in the world, having both banks, central banks and governments actively interfering in its price discovery.
It is incredibly clear. Millions of kWhs go in, hashes are computed, a couple of bits of information are stored. Nevertheless BTC holders go to extraordinary lengths to justify the status quo.
Bitcoin gets exactly the treatment it deserves.
50% of gold is used as an asset to store value. This half is just a more cumbersome store of value than Bitcoin. It costs more money to store and move gold than to store and move Bitcoin.
That might not be true if you consider that it is dramatically easier to lose $1b of bitcoin by forgetting the key, but there is almost no way you could lose $1b of gold by forgetting the combination or losing the key to the safe.
And if you stored bitcoin for 20 years on a key without moving it, would you really be that confident that after 20years you would still have access to it? That the media you used to store the key on didn’t degrade? That you have the correct password. I can be extremely certain that the gold bars I have now will be exchangeable in the future.
With bitcoin when storing money, there is a much bigger risk of it going to zero when you are storing it.
You mention keeping gold in a safe. The first question to assess the safety of that gold would be where that safe is.
Bitcoin doesn't "move fast and break things"... it just keeps chugging along every 10 minutes adding new blocks and ignoring the naysayers crying about the energy usage.
If they were really concerned, they would stop taking flights across the country to talk about their useless startup at a conference nobody wants to be at.
Instead they try to police the world's energy, and don't realize Bitcoin will drive unsubsidized renewable energy faster than any government program.