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Comment by simias | Hacker News Reader

I was not familiar with the original argument but it's so ridiculous at face value that I wonder if a rebuttal was necessary.

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.

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That's how free speech works in the modern world. You have to waste your time, energy, nerves to refute a total nonsense that zombie-like mob find useful in supporting.

An egocentric profit heavily overweights truth and sense.

> You have to waste your time, energy, nerves to refute a total nonsense that zombie-like mob find useful in supporting.

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]

* https://en.wikipedia.org/wiki/Sealioning

If there's no free speech, there's no reason to ever rationally justify anything because nothing can be disputed. If you take "correct opinion, rationally justified" as your definition of truth, then you cannot have truth without free speech.

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.

There's no simple solution to this problem but note that the problem is not so much that we're "bored of disputation" is that we're "overwhelmed with disputation".

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.

IDK... Whatever the quality of the original, this rebuttal is incredibly written and "Why Bitcoin is not a Battery" turns out to be an interesting topic.

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.

How was free speech in the .. non-modern world any different?

In the past it took real effort to broadcast your ideas to the world. People had to really believe in an idea to help it spread.

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)

I really hate this. I grade myself a C on spontaneous insight, but an A+ on insight after multiple rounds of editing alternated with multiple rounds of defense from the nitpicking of smart friends.

It makes you not want to venture anything online, or at least anything with your name attached to it. I have a deep fear that something dumb but pithy I've said will become a flag for morons long after I realized that I was completely wrong.

Same. I have a lot of ideas, a reasonably effective filter in the days time frame, and not much filter at the moment the idea pops up. I don’t post much and never where I expect many people will see it. I try mostly to agree with things I find true and important or fill factual data where I have the energy. (I posted answers to a lot of COVID questions on Twitter. Doubtful it had much effect but whatever.

When was the last time a tweet or any other online interaction of yours suddenly had millions of viewers? You're making it seem like this happens all the time.

In reality, while it is easier to broadcast your message to people all around the world in modern times, people still need to "really believe in an idea to help it spread". Unless you're already famous, just because you put it on a platform with potential millions of viewers doesn't mean that you'll actually get millions of viewers without trying really hard.

When the last time _my_ tweet reached millions of users is not the right question. We see that daily tweets go viral and are seen by millions, some things are seen by a billion people (though perhaps not virally in a short period of time). If people are pumping bitcoin with rampant speculation to get other people on the train to increase its value, just a handful need to go viral to increase value, not necessarily yours or mine specifically.

It's like the Birthday Paradox. The chances that someone in a room shares my birthday are small, but the chances that two people in the room share a birthday is large. It just takes a few of the millions of tweets to go viral.

I won't address your second point at length except to say that it's naive to think that with the ease of broadcasting, suddenly the wall is at rebroadcasting, which can be done with no more than a click and is significantly easier than creating the original message.

It's the ultra-modern equivalent of the modern TV soundbite of an off-the-cuff remark. Also a new phenomenon. And it really is a new phenomenon. Until the 20th century, almost no person's expression or idea would reach the global, national or even regional consciousness without having gone through many layers of slowly-building feedback and editorialization and comment.

It's like if someone in the early 20th century took random excerpts of someone shouting on a soapbox at an intersection, but published it on the front page of a national newspaper unfiltered. I'm pretty sure no one back there would have seen much value in doing that.

How would you know? The person who got the million views may have copied someone who copied someone who copied from you. You may have originated something but assumed you heard it from somewhere after it caught fire.

The life of ideas and clichés is largely independent of celebrity - if it hadn't been one twitter star that picked up some pithy arrangement of words that fit the zeitgeist, it probably would have been another.

The trying really hard part is just to be in the middle of things, and if you're successful at that, when you're the 1 out of 100 people who said the same thing, you're the one that gets the credit because you have 2M followers.

This is a good point, but it's not the point that matters.

Thee fact that 99% of Tweet are irrelevant doesn't abnegate the fact that millions of Tweets from 'nobodies' are broadcast daily and do impact the world.

Journalists decide on an editorial angle and chose random tweets to support their narrative.

Entire articles are written on random tweets.

You don't remotely need to be 'famous' to have massive social media impact.

In a civilization of self-seeking individuals, the objective of communications will be self-aggrandization there's little incentive in promoting the truth.

I think the blame here lies almost entirely with the "journalists", as they are supposedly the experts with the discenment to know when a an online comment is news worthy (almost never) and when it is not (almost always).

The point of having professions is the expectations that the professionals will be, well, professional.

I agree with the sentiment but may I suggest it may not be a recent phonemon - Churchill's famous quote "a lie can be halfway round the world before the truth has its boots on" suggests that it's a human problem - we like to hear easy lies rather than hard truths, and the internet just machine guns lies now, instead of of old musket fire lies of yore.

Democratizing the spread of ideas can help prevents privileged groups from controlling discourse. In the past you were subject to what you could broadcast on radio/tv or publish in print -- many of these options were out of reach for POCs, women, ppl in poverty.

Eric Weinstein discusses this with Lex Fridman in their latest interview - how communication was decoupled from being local to being decentralized, global, instantaneous: https://www.youtube.com/watch?v=ifX_JnBfxTY

Isn't it a good thing, that anyone can be seen by millions? You want to go back to the days where you had to own a newspaper or a radio station to be heard?

Worse, I think social media censorship exacerbates the issue in certain cases. For example pointing out that the number of unarmed Blacks killed by police is actually very low (https://www.lawenforcementtoday.com/poll-44-of-liberals-say-...) gets you mass reporting from dedicated activists and results in your post being blocked or account bans. Because the medium (Twitter) is itself editorializing the content through censorship, the mass amplification of bad ideas can happen unabated since others don’t get to push back.

It’s funny that “virality” was once seen as a positive feature of social media. Gad Saad, Professor of Evolutionary Psychology, explores the concept of “idea pathogens” (that infect minds and spread like viruses) in his book The Parasitic Mind (https://bookshop.org/books/the-parasitic-mind-how-infectious...). You can hear him speak about this concept in his interview on the Jordan Peterson podcast (https://www.jordanbpeterson.com/podcast/gadsaad/). Social media is the breeding ground for idea pathogens.

You probably get reported because that is a particularly silly hill to die on. Every niche gets these things wrong. Random example: "Majority of Republicans think evangelical Christians are more discriminated against than minorities" https://archive.thinkprogress.org/republicans-evangelical-ch...

You know what the actual problem is? That this number is larger than zero at all. Police violence in the US is completely nuts, there were 999 deaths in 2019 alone. The population-adjusted number from Germany is 55 (actual deaths by police were 14). Which is still too much.

Why do you think it’s too much? That seems arbitrary. Some people do bad things and risk harm to others. When those situations are immediately in front of someone like a policeman, action has to be taken. I recall reading an article digging into all the 2019 cases of unarmed blacks killed by police and only one seemed outright unjust - and the police in that case were charged. This made me feel the system by and large is working well.

But my main point isn’t to debate policing. It’s that reasonable discussion is disallowed due to vague content policies like banning “hate speech” (very fluidly defined) and the ability for coordinated brigades to mass report and block dissenting viewpoints. This allows one sided unrefined ideas to be the only ones in circulation, and they get amplified without anything to slow it down, without anything to add nuance.

> Why do you think it’s too much? That seems arbitrary.

Because, as stated, apparently police other countries manages to cope with dangerous situations without killing everyone in sight. Keep in mind that most of those situations aren't hollywood-style standoffs - many of the victoms are e.g. mentally ill during a psychotic episode etc.

> This made me feel the system by and large is working well.

We are talking about 2000% higher kill rates compared to other industrialized countries (Germany isn't particulary peaceful, just average).

If someone told you two people are dieing every month from poisonous McDonald's burgers, would you consider that low? And would you defend McDonald's on internet forums?

Should anyone defending McDonald’s be banned for doing so?

I would consider that low if they’re selling millions of burgers a month. Every large scale system has imperfections and it’s unreasonable to expect 100% safety or 100% perfection on some other metric. Then there’s the question of attributing the deaths. For example the people who died may have had other complicating factors.

If it ends up being food poisoning at some unacceptable rate of occurrence with provable link to McDonalds burgers, I would welcome investigations and incremental improvements. What I wouldn’t do is call for McDonalds to be defunded/abolished, or for fast food to be replaced by an alternative food system, or label anyone who disagrees as racist, or inject my ideology into schools/companies, or censor those who disagree. Nor would I participate in repeated rioting resulting in several deaths and billions of Dollars of damage.

Instead I would work within the system, in a legal and civil manner. I would welcome an open debate in the spirit of classical liberalism. I would want a nuanced understanding and nuanced set of actions to result.

Lastly - would I spend time defending McDonalds on forums? Probably not since it’s not that important to me and I have other fast food choices. But I only have one local police force to depend on. And the safety of my own family and property hangs in the balance. So I would definitely engage on that topic.

On your final point. What do you believe protects your family safety more, a police force or well educated and taken care of neighbors. What percentage on health and education and other services would you allocate tax dollars on vs policing?

> For example pointing out that the number of unarmed Blacks killed by police is actually very low (https://www.lawenforcementtoday.com/poll-44-of-liberals-say-...) gets you mass reporting from dedicated activists and results in your post being blocked or account bans.

No, this is because extremely online people fight each other by begging the owners of websites to censor their enemies. It has nothing to do with the bad argument, which John Birchers would see as ancient.

Less Zombies.

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.

I'm guessing here, but I think dandanua wants a world where people would listen to smart people like him to get their "true" information so that they don't have to waste their time and energy to refute "total nonsense". He'll be your savior.

More likely he wants a world where people act with integrity and don't spout lies in their narrow self interest, and that we probably need systems of integrity - from top to bottom (academia, journalism, families, churches, governance) in order to achieve that.

Unfortunately, that is not scalable. Even within academia, there is a lot of proof of work going on, it is a very natural phenomena if you look deeply enough. Consider some area of academia, you have to come up with a hypothesis, test it, collect data, analyze it and publish; your peers will review it and verify/refute it, there is no "top down" acceptance of someones word on face-value (if it is, then it is not science).

No, you're misunderstanding what the term 'integrity' means.

The notion goes far beyond narrow views of 'scientific reasoning'.

Integrity, far from 'unscalable', is an essential factor in the functioning of civil society and probably the #1 predictor of a successful ongoing civilization.

The difference between a rich and poor country is sometimes 'natural resources' but more often than not highly organized social order based around institutions and systems with integrity. In everything from 'Sushi Chef' to 'Parenting' to 'Early Childhood Education' to 'DMV' to 'Drug Regulation' and 'Accounting Principles'.

Sure, locally, those principles work, because you see and interact with the people often. But on the internet, it doesn't work, that's where I was going with "unscalable", I'm not claiming that you have to ditch "integrity" for something else, most of the large scale human endeavors can't just rely on integrity (on that large scale).

Yes, I'm mathematician and I love the idea that everyone can have an independent and consistent sense of truth. But the real world is far from this idealistic picture, unfortunately.

Math has nothing to do with Integrity, it's just a tool.

Yes, it would be nice to have an objective truth but we don't need that to know that bribing a or shooting a cop is 'bad'.

I am a mathematician and am fascinated that we built a global civilization through coordinated effort at a huge scale and our civilization transcends the abilities of any one person. Truth is shared.

In the past the channels were controlled by more centralized powers. So it depended more on the integrity and ability of those powers.

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.

There wasn't any. Barring Athens[1] in 5th BC, there's no free speech in the short history of humanity.

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.).

I'm just trying to understand your position better:

Would you say that false information harms you personally?

There's a name for this phenomenon: "The Unbearable Asymmetry of Bullshit"[0] It's orders of magnitude easier to put forth some total horseshit ideas than it is to refute them.

[0] https://quillette.com/2016/02/15/the-unbearable-asymmetry-of...

Also known as Brandolini's Law.

https://en.wikipedia.org/wiki/Brandolini%27s_law

> An egocentric profit heavily overweights truth and sense.

nice saying

Indeed. IMHO, this phrase really got the essence about the pandemic and disinformation.

I could go further, it captures the essence of "lying for profit" no matter the economic/political system.

I wouldn't say lying for profit but that profit somehow defines truth.

So then we should ban articles like this?

I know it's exhausting!

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.

> I was not familiar with the original argument but it's so ridiculous at face value that I wonder if a rebuttal was necessary.

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.

> There is no single reason for bitcoin to exist

Just from my lifetime: Hyperinflation in Venezuela and Zimbabwe. Inflation in Argentina. The housing bubble. The internet bubble. Banker bailouts. Our current everything bubble.

How does Bitcoin help? Deflation is actually bad for the economy because people hoard money. It would be stupid to buy things because money gets more valuable over time while things depreciate.

It's funny to me that deflation being bad is an orthodoxy despite the paucity of evidence for this. Can you point to a deflationary episode that was harmful? Japan had the "lost decade" of slow growth, but is slow growth bad? Is the absence of conspicuous consumption lamentable? In comparison, people starve and flee, and societies collapse under episodes of hyperinflation.

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.

Bitcoin doesn't stop bubbles or protect you from one any more than investment in another asset - in fact it's more than likely a bubble itself.

The bubbles I've observed have been a product of or exacerbated by artificially low interest rates and the money printing that enables them. If Bitcoin achieves its goal, it will remove or reduce the power of the government to print money and otherwise set interest rates, which will enable market-based interest rates to emerge.

You are confused on concepts of inflation and bubbles.

Bubble happens when an actual value of something gets disconnected from its price. When people buy something for ever increasing prices without regard for actual value because they believe the price is going to go up.

In a bubble only the price of that one thing goes up, in relation of everything else.

In an inflation prices are representing the value of products but as value of money decreases the numbers representing prices must go up. In this case the price increase is caused not by increasing demand for the product but rather increasing supply of money.

Printing money causes value of existing money to be diluted because if tomorrow we have twice the amount of money in circulation than today but we are still buying same amount of products and services, then we will need to pay roughly twice the price to keep market equilibrium.

I disagree. Consider the housing bubble - it was tipped off by the response to the internet bubble, low rates from the fed so that people would borrow to get the economy moving again, e.g. by buying housing. Low rates result in more lending and buying, more lending and buying leads to price appreciation (pay attention, as this sequence is playing out again now), and eventually enough price appreciation and easy money leads to irresponsible lending and mania. The depreciation of the dollar through easy money lending has indirectly caused the bubble through the practices it encouraged.

> Bitcoin is saving the world.

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 saved my world, and millions of others.

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.

You have no idea about me or my background. Stop trying to tell ME what I have experienced.

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.

> It saved my world, and millions of others.

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".

How is Bitcoin making the world a better place? Be specific.

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

The toxicity of a lot of Bitcoin advocates' comments on HN does not exactly make me feel like being invited to a fun movement.

"Have Fun Staying Poor" is in my opinion a disgusting remark to make to complete strangers.

> does not exactly make me feel like being invited to a fun movement

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.

Bitcoin being a net-negative investment doesn't exclude the possibility of a few winners. Much like some people do actually benefit from pyramid schemes.

Comparing Bitcoin to a pyramid scheme is a low IQ take, even for HN.

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

If bitcoin stopped existing today, the environment would be better off because right now the impact is negative. It could only become net-positive, if there are changes in the future. Even if you believe such changes will happen, I think you'll have to agree that this is speculation. It's not net-positive for the environment, it might be net-positive for the environment.

That's unrelated to it being negative-sum though. Running the numbers on this is trivial. You can only profit from bitcoin by selling it to someone else for more than you paid for it. Inevitably for some people to profit, some people have to lose a corresponding amount. This alone would make bitcoin zero-sum. Some people, miners, are special though in that they are by design always making a profit. That they extract from the network making bitcoin negative-sum.

As a consequence it's positive only for those people who find a loser to sell to, are miners or "shovel" makers (electricity, hardware, ...)

I suggest you take a look at the stranded energy market and rethink your premise.

Energy is, at this moment, being overproduced by design

The reason for this is because in case there is an emergency (like a snowstorm in TX) energy producers can switch on overdrive and heat homes.

By increasing the amount of energy capacity we have, we become more resilient to situations that require massive amounts of energy. Society needs an increase in energy production in order to uplift the lifestyle of the world, there is no way around that.

> There's simply no direct relationship between the cost of electricity and that of bitcoin that I can see.

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.

Mining bitcoin does convert electricity into value though (it's just O(1) as you said it, doesn't scale with more electricity added). Mining bitcoin allows you to exchange value on the network, THAT is what is valuable.

Mining bitcoin does not convert electricity into value. It converts electricity into currency. Currencies don't have value, they represent value. Their only intrinsic value lies in their ability to allow exchanges of goods.

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.

> Take regular currencies for instance ($€¥…): they do not convert paper into value, they use paper to represent value

Mostly, they use mostly-electronic ledger entries to represent value.

I'm sorry, but I don't think you understand bitcoin mining at all. Bitcoin mining is not just "making currency", the miners get a reward for minting a block, which is just a bundle of transactions. The new bitcoin they get as a reward is theirs to spend.

I'm aware of this clever mechanism, thank you very much.

Bitcoin needs a reliable way for transactions to work in a single thread (so the block chain doesn't turn into a block tree), and we avoid stuff like double spends. That's proof of work, coupled with a reward (in currency).

To avoid hyper inflation, Bitcoin automatically sets the difficulty so we create one new block every 10 minutes. That limits the number of transactions, but we can remedy that by just making making blocks bigger.

Now the value of a successful block mining is the transactions it represents. Without them, you wouldn't have a means of exchange to begin with. But the reward is a new Bitcoin. And that new Bitcoin by itself does not add any value. It just inflates the currency a little bit, effectively taking value from all other bitcoins. The total value represented by all bitcoins stays the same.

Now we can discuss pros and cons: on the bright side, mining a block enables a bunch of transactions. With a maximum block size of 1MB and 1 block every 10 minutes, we get 7 transactions per second. That's the real value of Bitcoin to humanity: 7 transactions per second, give or take.

As for how much those 7 transactions per second cost, well… there's all the hardware and the resources required to make it, and there's energy. A back of the envelope calculation tells me Bitcoin spent about 8 Gigawatts of power in early 2020, and now it's more like 14. That's 2 Gigajoules per transaction, or about 500KWh.

That's way too much energy for way too little value. Hence my thesis that Bitcoin as a whole is so wasteful that actively participating in it (especially if you're a miner), is unethical.

> (it's just O(1) as you said it, doesn't scale with more electricity added)

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.

I get the "worse" comment, but not the "even worse" one. The system is NOT incentivizing people to join and waste electricity, the returns are diminishing for mining (and it gets worse every 4 years), the amount of up-front capital for a mining operation increases. I think it'll reach a tipping point and stop growing entirely.

> Mining bitcoin allows you to exchange value on the network, THAT is what is valuable.

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.

How long does an international wire transfer take? how much energy does it consume? Seriously, if you are going to make a statement like "pathetically inefficient at moving value", can you at least be honest and actually understand the cost of fiat currency (why is it called fiat? what is a petrodollar?) and the banking system?

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)

When the facts are with you, pound on the facts, but when the facts are against you, pound on the table! Facts make Bitcoin look bad, and now someone's trying to witness to me, calling me "blind" and trying to change the topic to "petrodollars," a fantasy bogeyman, and drag in 50 other distractions.

I deliberately chose international wire transfers as the worst and most expensive way to move money. I assume everyone knows that you can move large sums of money domestically for mere pennies. Yes, that implies the total cost of the system is less-than-pennies per transaction, including human staff, hardware to run everything, taxes paid to governments which protect the system, everything. Yes, transaction costs are the right way to compare the cost of transactions, believe it or not.

Maybe Bitcoin is a FULL system. Big deal. If it's not going to share that FULL system with normal everyday life and its shared institutions, it bears the FULL costs of failing to share, as expensive as that may be.

Look, you can't both, compare it to some system that you know and then suddenly claim that I'm changing the topic to focus on the system you compared it to, at the same time. If you are comparing X to Y and I question your assumptions on Y, it is a valid way to understand the comparison. Your angry reply isn't going to diminish my stance. You don't have to use bitcoin, it's alright.

>how much energy does it consume?

I'll give you a hint: it's less than 1MWh/tx, which is what bitcoin uses today.

Can you share how you worked that out?

Yearly bitcoin consumption: 120TWh Blocks mined per year: 52560 (One every 10 minutes: 6 * 24 * 365) Transactions per block: ~2000

2283MWh per block. 1 MWh per transaction.

This is misleading, why are you using "transactions per block"? that's an incorrect metric, because blocks will get mined regardless of the number of transactions in it (in fact, you can batch WAY more transactions into a block). In the future, when you can account for millions of transactions per block, will you tone down this "bitcoin consumes a lot of energy" rhetoric?

Also, you haven't spoken at all about the other side of the equation. Have you accounted for all the externalities for the other monetary network you are comparing Bitcoin to?

We did that before, it's called a banking system, and it doesn't require nearly as much energy per transaction.

The banking system is just a part of the puzzle. What makes a particular fiat currency the banking system valuable? Zimbabwe had a banking system too, why isn't their currency worth as much as the US dollar?

It does have value, its the value to secure the Bitcoin network (at the moment worth $1 trillion). No additional tanks, armies and nuclear weapons needed.

> No additional tanks, armies and nuclear weapons needed.

Of course not. The existing ones you depend on to protect the necessary infrastructure and servers of bitcoin are already sufficient.

Exactly, the decentralized nature makes this possible.

...No, the existing armies of the world make it possible. Why do you think Coinbase, Kraken, etc, are in the US and not in Somalia? Hint: it involves a police and an army.

You are talking about centralized exchanges, which is something built on top of Bitcoin - much like the current banking systems. You are not required to use that with Bitcoin. With Bitcoin someone anywhere can have a "bank account" where the asset doesn't loose its value based on local circumstances.

I assume you argue that a single army/government could take out/control miners - which would be the better discussion to have. That's where we would talk about the value of the Bitcoin network.

No, I mean that bitcoin as a whole would be back to 2010 values should these exchanges not exist. The only reason bitcoin has value is that leeches decided to speculate on it, and leeches need a centralized exchange.

Centralized exchanges are the reason you don't pay 10000 bitcoin for a pizza. They're the reason why it's even accepter, because there's at least one large place that will exchange your coins for cash.

Calling Bitcoin owners leeches seems a bit of a stretch.

In my opinion there is little to absolutely no reason to ever change Bitcoin back to cash. Maybe take a loan against or rent it out to others for cash interest, if you really want cash.

I don't need a bank. I choose to use a bank for the services they offer. Switching currencies doesn't change this, I will still use a bank and a financial system. So bitcoin only helps me if customers are paying me in bitcoin.

I don't value trustlessness, and in fact lack of trust is a vacuum filled by evil.

Well there is a value, albeit a small one.

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.

Keeping a ledger of billions of participants making billions of transactions is a solved problem, and has basically zero cost when amortized over its utility. In 2020 VISA handled 3.5 billion accounts (cards), 140 billion transactions and $11.3 trillion in volume. Total operating expenses were $7.7bn, so just 0.07% of transaction volume.

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).

How does a Somali web dev get a Visa to pay for her servers or domain registrations? How will a Syrian restaurant owner accept Mastercard payments from his custumers? How can Wikileaks accept donations?

Do you not consider those 'economic value'?

Sure it's valuable, but it's hardly significant. You're talking about tiny fractions of a % of the global economy.

Ultimately I pay Visa etc. roughly 3% (the retailer "pays" but certainly passes that cost on to me) of all of my card transactions, which is the vast majority of money I spend outside of rent.

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.

> Ultimately I pay Visa etc. roughly 3%

It would be the same with Bitcoin. Retailers have no interest in eyeballing the Bitcoin exchange rate and dynamically repricing their goods every 5 minutes. Unless Bitcoin becomes price stable, or the currency in which they pay all their expenses, they'll always be deferring to payment processors.

Bitpay charge 1%, which isn't even that cheap.

> 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.

It's not "free". They spent a fortune in amortized equipment costs and energy to win that reward. The bottom line is the miners need to sell their 12.5 BTC block rewards to cover their real world costs (+profit). So, in a competitive mining environment, the block reward coupled with the market price is a proxy for the minimum cost of running the network. This is one factor in market prices.

Credit cards are not permissionless and the settlement is delayed by days.

Instant settlement doesn't necessarily provide 'value'.

I can arrive at a store entrance, and in 30 seconds be leaving with a new macbook, paid for on my VISA card. I can then pay it off 56 days later without paying any charges or interest.

If i couldn't do this the store would almost certainly make fewer sales.

> Well there is a value, albeit a small one. > Bitcoin is a ledger.

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.

How does any of that refute the claim that there is value in what bitcoin does or that it is a ledger? (who can deny that bitcoin is a ledger anyway? I'd like to see somebody define a ledger and what bitcoin does and show the contradiction)

I work with accounting systems on daily basis and also have accounting background.

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.

I'm not making the claim that bitcoin replaces an accounting firm?

>I don't see any possible way in which bitcoin is making this easier.

Who says it has to be easier or better? It does the work of handling transactions and keeping track of balances.

With bitcoin as a user you only have to pay a very tiny transaction fee in order to keep track of your account value and handle the transfer from one account to another. Is this better? Well you don't have to pay somebody to operate software and as long as you can access the bitcoin network there aren't any impediments to doing transactions.

But the point isn't if bitcoin is better or best or even good, just that is does the thing and doing that thing has value.

What are you talking about? People literally use the Bitcoin to transact, speculation notwithstanding. How is that not value?

People can use ANYTHING to transact. Seashells? Specs of rare metals? Pieces of paper with signatures? Bags of cocoa leaves? Bits in a computer database owned by a trusted party?

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).

Yes, and if actually used, those things have value too.

You might want to look into how much our existing banking systems consumes in terms of total energy. It might shock you.

Bitcoin mostly only contends with two costs – energy (computing hashes) and resources (making mining rigs). Meanwhile, traditional banking systems have crazy high energy and resource costs from: building physical banks, vaults, armored cards, paper money, coins, bank clouds, stock market clouds, cheques, payment networks (Visa / MasterCard)... the list goes on. Additionally, classical banking has incredibly high human capital costs – think of all the innumerous people involved in just maintaining a system of trust compared with the near-zero human capital cost of the Bitcoin network.

> You might want to look into how much our existing banking systems consumes in terms of total energy. It might shock you.

Actually working for a bank, I can tell you that banks do a lot more than just keep your money.

If you are not convinced try to move your entire financial life to bitcoin and tell me how you get cash, how you pay for fuel at gas station or pay your taxes.

Does bitcoin have inherently web application for you to log in and manage your account?

Does it have a call center for you to call to block your credit card?

What about a host of other services banks provide you just conveniently omitted?

That's the whole point – most of those things aren't needed for cryptocurrency because cryptocurrency is trustless. You pay for gas in the same currency you get paid in – crypto. There is nobody to call to cancel my credit card because some 3rd party does not control my credit card – I do. Ditto for "managing my account".

If I want to convert ETH to BAT or whatever, I just authenticate (using the same wallet as used above) to a thin wrapper around the network and everything happens on the Ethereum network itself. Meanwhile, if I want to convert USD to GBP, the layers below whatever service I actually use (let's say TransferWise) as the consumer is deeply nested, probably involving somewhere between 5 - 10 different entities.

I think you're struggling with the meaning of "provide value".

What exactly do you mean when you say something does not provide value?

I mean that it is accomplishing a task which has utility to some person.

I think you might be the one struggling with it. Calculating value (and its possible future) is actually my job description (I work on risk systems for one of the largest banks in the world).

If something "provides value" it means it generates net benefit after inclusion of various costs and risks.

If we take "provides value for humanity" it means bitcoin would have to make net benefit for humanity.

But that is not the case. Almost all people have other as convenient ways to transact money. So we only have actually very small minority of people who see the actual benefit.

These are mostly people who use bitcoin not to transact but rather to speculate on it -- they don't benefit on it because it makes transacting easier, it is just a pure game on whether the value of bitcoin is going to go up or down.

Another class of people for whom bitcoin creates value are the ones with access to capital, cheap energy and silicon to play the game of burning money for bitcoin.

Everybody else (ie. almost all people in the world) is left with no benefits and a disadvantage of worsening environment.

The energy must be produced somewhere. Even if the particular MWh for mining was produced from renewable sources, it could have been used to offset some non-renewable MWh, but now is lost to the space. The capacity to produce energy is being wasted.

Even if humanity produces 100% energy from renewable resources we are still long way to repairing our environment and that energy could have been used to maybe sequester some CO2.

"Normal" coin on normal account does not require so much energy to be burned.

Ah, there we are, we don't disagree. You are talking about net value and I am talking about absolute value which are of course very different.

Your definition of value would allow saying that "cheating on exams provides value". Which is absurd.

Cheating on exams only provides value for the chater, but everybody else has to pay some price for it.

shrug I don't think I can quickly convince someone of the utility of having both absolute and relative measures of things, there is a difference, they both have their uses, and restricting yourself to one usage and calling all others absurd isn't particularly helpful

Have you ever tried to buy a car with seashells? Or take them along for the vacation?

No, but I successfully bought a car with couple of magnetic disturbances on a disk at my bank and another time, with a stack of pieces of paper with fancy signature.

That these things have any value attached to them is only due to people agreeing to it and believing it. Which makes them no different from seashells. While seashells would be a lot less practical in todays world they have been used in the past.

Yes, exactly, and the systems built around that process of signing documents and having settlement through a bank I can guarantee used more energy (human/electricity/resources) than a single Bitcoin transaction would've.

Are you comparing the cost of the entire banking system's existence, to the cost of a single Bitcoin transaction? That seems like a pointless comparison.

Or are you dividing the cost of that banking system by the number of transactions it processes? I.e. comparing 1 transaction to 1 transaction?

On a per-transaction basis traditional banking uses a lot less energy than Bitcoin. Including the cost to run the bank's servers, the air conditioning in their buildings, the Christmas lights their employees put up, and everything.

How can I make such a bold claim? How could I possibly have calculated the energy usage of all those things?

Simple. Bitcoin does about 8.5 TPS which works out to around 268 million transactions per year. Bitcoin uses 0.55% of the world's energy production per cbeci.org.

The ACH network (US direct deposit system) processes around 23 billion transactions per year. The European SEPA network does about 22 billion. The UK's BACS accounts for another 8 billion or so.

So just counting those 3, that's 53bn transactions per year, which is 197x what Bitcoin does. If their energy cost per transaction was as bad as Bitcoin's, then that would take 0.55 * 197 = 108.35% of the world's energy production. There literally isn't enough energy in the world for the banks to be as inefficient as Bitcoin. And we're only handling direct bank debit/credits in the US and Europe so far, we haven't even touched on credit card stuff, international wires, anything in Asia, etc.

The price of Bitcoin is determined by speculation, not its value.

It's both. Bitcoin had value before there was rampant speculation on the value of Bitcoin.

What value? In terms of defining the 'value' of an asset in real finance terms you would look at future cash flows (In fact - in some finance circles the definition of an asset itself is a collection of future cash flows).

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.

Something does not need to be an asset to have value.

Does the US dollar not have value?

The fundamental value of the US dollar is that you can pay US taxes in it. If you don't pay your US taxes in US dollars, the IRS will get you. ;-)

However, its actual value is higher because people have decided to use it as money.

Seems pretty hand-wavy. Plenty of people derive value from using USD without ever paying US taxes.

Fair, I thought we were talking about some sort of intrinsic/actual value, rather than purely speculative value.

Clearly anything that someone is willing to trade for something else has some sort of 'value'.

Right, I think a problem with a lot of these discussions is that people are using (at least) three different conceptions of what "value" means.

- value based on intrinsic utility (gold/oil)

- value based on potential future utility (stocks)

- value based on extrinsic utility (USD/coordination)

The issue, of course, is that people disagree which category Bitcoin (and other cryptos) belong to. The other problem is that a singular thing doesn't necessarily only belong to one category. For example, I put gold in the intrinsic category, but it probably belongs in the extrinsic category too, as gold is used as a medium of exchange that is not directly tied to its intrinsic properties, but merely has intrinsic properties that are useful in that regard (fairly scarce, not varnishing, etc).

Thanks, that's a really good post and agree with everything.

Maybe it's also useful to separate out the second bullet into:

- value based on potential future [extrinsic] utility

- value based on potential future [intrinsic] utility

There is a difference in buying stocks which have future cash flows that the value is theoretically based on (which are typically generating revenue/profit/dividends because of the business activity) to speculating on forex or bitcoin (where you are just speculating that someone will be willing to pay more than you bought it for in the future).

>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.

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.

> Mining Bitcoins is like Iceland smelting aluminum?

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.

> There's no value created by crunching random SHA-256.

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.

The only value in bitcoin mining is bitcoin. The value of aluminium remains outside of speculation as it has inherent utility, while the value of bitcoin only comes from speculation and a very very minimal use case as currency which has been solved hundreds of times in more coat effective ways (even with other crypto, but most importantly outside crypto).

Where has borderless money been solved more cost-effectively than Bitcoin outside of cryptocurrency?

Have you done a study into how expensive existing fiat systems are, when all is said and done?

Nothing has inherent value, all value is subjective. This bad economic theory has been dismantled for over two centuries now.

Replace inherent value with non-monetary value if that's what you mean.

Nah. That's just and example of neoliberal economists trying to bury things they can't quantify while pretending to be a hard science.

But bitcoin has tremendous value. Just ask anyone who can't get bank account for some reason. Now you can transfer funds from abroad cheaper and faster than before.

There’s value created from every watt of electricity used to smelt aluminum. Almost all of the electricity used to crunch SHA256 hashes computes the wrong hash for the block.

> There’s no value created by crunching random SHA-256

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...?

> There's no value created by crunching random SHA-256.

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.

Original argument posted earlier: https://news.ycombinator.com/item?id=26609247

> There's no value created by crunching random SHA-256.

They're not random. There's randomness in their construction, yes, but they're encoding trust.

> The value of bitcoin is driven by speculation

I agree, but isn't that how all fiat money behaves?

Saying it has no value is incorrect. It's seemingly the price to pay for securing $1 trillion.

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.

> There's no value created by crunching random SHA-256.

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.

I think the big problem is the amount of energy this thing is costing, and the huge load it puts on the GPU market, which could very much be a speculative bubble. There is a lot of difference between your examples and Bitcoin :

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.

>... and the huge load it puts on the GPU market

Point of correction: Bitcoin is mined with ASICS not GPUs

The labour theory of value? You seem just to be bringing out 1800's economic theory and trying to apply it directly to 2021 bitcoin.

Theory that has been replaced, I should note, by neoclassical and Keynesian economics.

Van Gogh has a value to rich people who have most of the money. Ask yourself this, is it ok to have a world that caters to what a few people care about?

> has a value to rich people who have most of the money

so you're agreeing that value is entirely dependent on subjectivity and circumstance?

Only if you consider money as the only measure of value, which I disagree. Just because someone has all the magic government credits (money) doesn't mean they are the end all of measuring value no? There are plenty of things people value but would never pay money for it, or in most cases just don't have the money.

Enjoy staying poor.

Bitcoin becomes more secure from 51% attacks the more electricity (cost) that is required

But the network is only incentivized to be exactly secure enough from Sybil attacks that nobody bothers to try one. There’s no added value in being more secure to Sybil attacks beyond that. Just like there’s no added value in hiring extra fire-fighers once every fire gets an instant + effective response.

—————

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.)

Sure but there’s also the benefit of mining coins right? So depending on the cost of Bitcoin it may be worth Alice spending an extra £100 on mining power to beat Bob, if the payoff is great enough.

Saying this I do agree with you about proof-of-work, I work on a proof-of-stake chain myself.

Yeah, that property is what would create the sigmoid curve in the ideal case: PoW chains aren’t inflationary (rather the opposite) so competition reduces mining margins to effectively zero, which translates to fewer and fewer people bothering to grab at surplus profit as the number of miners grows and that surplus profit goes to zero.

It’s why you see consolidation into mining consortiums. An inflationary PoW chain wouldn’t have that — everyone would be incentivized to mine for themselves (like a gold rush.)

Probably a dumb question, but would that also theoretically increase the likelihood of someone to doing a 51% attack as there would be fewer unique users mining as electricity becomes more cost prohibitive?

There are some economic and game theoretic elements in play here. Say you wanted to reverse a trade and could afford a 51% attack, the cost of the chain would drop massively so you’d not benefit by having a load of Bitcoin. The whole community could just fork from that point and pretend it never happened. And people with skin in the game would fund mining to keep the security up to avoid this happening.

Overall though the number of miners will reduce to a small group because the cost is prohibitive, however it should still be secure.

Could this be addressed more cheaply by moving from proof of work to proof of stake?

Yes, although I believe technically proof of stake isn't as secure as proof of work (although it's secure enough) because you're essentially picking randomly from a weighted sample based on how much the sample owe of the underlying token.

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