The political case for a blanket cryptocurrency ban
stephendiehl.com
stephendiehl.com
This article should be re-titled "The Political Case for a Blanket Proof of Work Ban".
I don't think it's a terribly strong case but I suppose it depends on whether you agree that crypto is gambling and if you think gambling should banned. Anyway, I think lots of people stupidly speculate on things. I cast my vote by not speculating on those things. Should I be able to stop others from speculating?
"Crypto" - not the underlying tech which is potentially interesting and may have merit in some incarnation - but buying or trading "assets" grounded in the tech, is essentially a quasi-legal pump and dump scheme right now. There is a rich history of securities law that is designed to thwart predatory investment schemes, and all of that has been circumvented by allowing people to trade in these assets.
I generally agree that adults should be able to do what they want, but I don't think we have found a way to balance that with what right now is effectively one big fraud.
Currency/whatever crypto is, is just a system of trust. Logic is likely to have little to do with the downfall if it comes. Scrolling through the comments the Crypto-religious right is out in full effect and tbh, I understand it. For many people they have moved up many brackets of the wealth ladder and they probably should reject anyone coming for their system with vigor.
I think the downside of the crypto religious complex is going to be, that if any of these emotional arguments (coming to kill crypto) become mainstream and compelling, the tenor of arguments is going to push the crypto and no-crypto sides apart cartoonishly (think modern dems and republicans) and the choices of resolution will have to be loud and final.
Make no mistake, crypto is much closer to a political religious sect than it is a science.
Why do people look at bitcoin and claim all crypto are equal, throwing the baby out with the bathwater?
The "green" issue of Crypto mining is a harder regulatory issue for our government to get involved in, though. While on the one hand, I applaud their pro action, on the other hand, the hypocrisy is on a scale almost never seen. A government which has simultaneously rolled back environmental regulation, wildlife areas and expanded oil pipelines, shale extractions, fracking and offshore drilling while continuing a war on "terrorism", which is an ideal, not an enemy. A forever war, if you will. This is a polluter much bigger than crypto miners, so you'll excuse me if I have to take the concern about the environmental impact concern from the Senate all that seriously...... sorry. Went off the track. Either way, there are larger polluters to tackle than Crypto that take less control away from people.
None of the people I interact with and work with are gambling. We avoid that crowd because it's not sustainable nor does it create long-term value.
It's the same sort of hypocrisy as deplatforming Parler. While I did not weep for Parler, YouTube and Facebook are the largest platforms for alt-right/fascist propaganda. YouTube's "rabbit hole algorithm" is by far the most powerful engine of indoctrination, and while the most egregious stuff has mostly been kicked off the platform it's still full of "soft pill" fascist/racist material. I am not sure things like Qanon or the alt-right in general would even exist (to such a degree) were it not for YouTube.
A ban or tax on proof of work mining is tempting but it would just offshore that activity. I suppose you could ban PoW cryptocurrencies but there are many alternatives.
This is generally a shitty article.
Internal combustion engines are already really close to their peak efficiency vs emissions output and they still contribute a huge and growing amount to overall CO2 emissions. We need to design cities to curb the need for cars, replace as many as we can with electric, and design better, more accessible public transportation. Not seek more efficient internal combustion engines and promote their use.
Crypto-currencies account for an abysmally small number of financial transactions in the world. Literally inconsequential. And they chewed up an astounding amount of energy in order to process them. To scale that up to a world where everyone buys their bread and milk and candy bars with crypto-coins is... well not feasible would be the polite way to put it if you still understand physics and the laws of thermodynamics.
I think there are plenty of other reasons to ban crypto-currencies when we get to regulation and protecting consumers.
It wouldn't take much for the governments of the world to shut the whole enterprise down and I think they should.
They launched it as a parallel chain first, but it's going so well they've accelerated the plan to move the rest of the network to it. That's a relatively simple task and should happen in early 2022 at the latest, and possibly this fall. You can judge for yourself how hard it will be: https://notes.ethereum.org/@vbuterin/B1mUf6DXO
In my opinion regulatory action against PoW is all but inevitable. Ethereum is a platform, so there are powerful incentives to make it work more efficiently and use less power. Those plans are already well under way and, whenever Ethereum 2.0 gets launched, the power consumption of the crypto sector will drop dramatically and the network will be massively more powerful, attracting subsequent adoption. In this case, miners and developers have aligned interests. That's not the case for Bitcoin. Existing miners benefit from PoW, so I don't expect Bitcoin to migrate without some regulatory arm twisting.
I don't see the difference between that and "The Political Case for a Blanket Cryptocurrency Ban". The outcome is the same. Etherium has not proven proof of stake can work at scale. If it does that will be great. But it's no certain thing and it'll probably mean more Eth forks like Eth classic. Most other cryptocurrencies are tied to bitcoin's ecosystem to have value at all.
I disagree.
The author of the article is the worst kind of statist there is, and many of his arguments fall in the "big brother ought to protect their poor defenseless citizens, whether they like it or not".
The CO2 emission argument is just the icing on the cake.
Bitcoin and proof of work should totally be banned.
The truth is that no one uses cryptocurrency for anything. Ethereum is just as much a speculative store of value as Bitcoin is, if not moreso given the numerous competitors it has to contend with — Bitcoin arguably has none.
In a way, “speculative store of value” has merely been whitelabeled under the terms “digital gold” and “defi”. The people who claim increduously they’re buying ETH to do transactions are misrepresenting the situation to an extreme degree.
> Bitcoin and proof of work should totally be banned.
Where is your disclosure statement?
I believe that all cryptocurrencies are at their heart scams.
Proof of stake doesn’t change this dynamic.
As I see it, cryptocurrencies doesn’t actually solve any real, significant problems we face as a (global) society.
And to pick one important thing: they exclusively enable crypolocker randsomeware, and we know their devastating impact.
Dollars are abused too, but the dollar gives so much back, our societies are based on it.
I see no benefit to society of cryptocurrencies and I would really like to see them go.
Nothing good has come from them. Zero.
I can put a virus on someone's computer and make them mail physical dollars or make dead-drops or whatever to remove it, ransomware is not a problem of cryptocurrency.
While you may enjoy the benefits of a first world currency, check your privilege for just one moment and realise the world is much bigger than you would believe.
"The music video for “Despacito” set an Internet record in April 2018 when it became the first video to hit five billion views on YouTube. In the process, "Despacito" reached a less celebrated milestone: it burned as much energy as 40,000 U.S. homes use in a year."
One youtube video.
https://fortune.com/2019/09/18/internet-cloud-server-data-ce...
At the end of the day it comes down to where people want to put their energy allocations. Large scale Bitcoin and or cryptocurrency mining operations are mostly just other buildings with racks of computers.
The Mainnet has 2,289 active stake pool operators, which comes out to >99% decentralized, with 71.09% of the total ADA in circulation being actively staked on those pools ($26.83b/$37.7b). It has an incredibly active and healthy mainnet...
Cardano main net has been around a long time. It just doesn't support smart contracts yet.
I don't like proof of stake because again, the rich get richer in this scenario, which works against the decentralized core value of cryptocurrency.
In practice this just degrades to a situation very similar to ASICs, admittedly with the benefit that the hardware has a purpose beyond mining and with multiple (uninterested) manufacturers. In that way it is perhaps more decentralized, while also open to additional vulnerabilities. All in all it’s mostly just a way to differentiate from btc on a theoretical point rather than have any real advantage.
Still, as a currency or value holder, gold is simply a metal that people think has value. Crypto too has value because people think it has value. It is "mined" like gold, though newer coins don't have this quality due to Proof of Stake, thus reducing carbon emissions drastically. And if people are willing to trade paper or metal for digital objects, is it anyone's place to ban that trade? What about digital money for digital crypto, can we ban that?
All currencies like pieces of paper, digital objects, metallic circles, seashells, beaver pelts: They all have value because humans value them.
All currencies have value, not because "humans" value them, but because some organization of humans said "this piece of paper is legal tender". They lose their value when that political organization falters. What political organization is behind bitcoin etc.
Beaver pelts stopped being useful as a "currency" when there was no ready market for furs, it was never a currency, it was a fungible asset.
However, if a government does go down, then its currency evaporates.
I don't see it. Doesn't seem to apply to ponzi scheme, or facilitating cyber attacks, or the environmental impact. Perhaps you could give some explicit examples.
I'm glad some cryptos are moving to proof of stake, and I wonder if bitcoin will be able to make that transition too, or if the miners have too much to lose to let that happen?
Proof of stake is also a "mining" operation insofar as it produces a limited supply at a macro-predictable rate.
Beaver pelts or cars wear down over time though unlike gold, and the amount of crypto one holds is hard to display ostentatiously, at least for now. BAT, Steemit or crypto.com's card colors based on staking amounts seem to be ideas heading in that direction though.
The US dollar is not backed by any amount of bitcoin so I don’t expect to see this happen with bitcoin.
- it's rare but not too rare
- malleable
- doesn't rust or tarnish
- non toxic
- doesn't need the tech that platinum, the only other possible choice that satisfies the rest of the list, would need for it to become money instead
Useful and scarce == valuable.
https://www.visualcapitalist.com/why-gold-is-money-a-periodi...
This misses the point of bitcoin entirely. People need to understand Bitcoin solves a problem: a very big problem. This problem was caused by the gov and fed defaulting on it's obligation to maintain a stable currency. As a result, cash can no longer be used as a store of value. And by artificially suppressing interest rates, the fed/gov has eliminated yet another class of investement: fixed income. So with two major asset classes eliminated: cash and fixed income, it doesn't leave much else.
The only asset classes we have remaining are equities, real estate and commodities. Real estate, there's no easy way to invest in it in a scalable way. So, what are you going to do put ALL your money in Equities? with no diversification. People desperately need a store of value, they can't just work until their 120 year old.
Bitcoin solves this problem: it's a store of value. For a lot of people, bitcoin is NOT speculation, it's a long term buy and hold asset that you hold for a long time. And the tax rules encourage such buy and hold behavior. those that are selling the moment it goes up, are going to pay dearly in capital gains taxes 30, 40, 50%+ in some states.
Which is not a super rational thing to believe about an asset whose value has no relation to anything in the real world, and nothing to prop it up but the people who believe the same thing.
Bitcoin is up something like 800% for the year. It might be up another 800% in six months! Or it might go down to $10000! Or $1000, $100, $10 -- any of these would make exactly as much sense as the ~$60K we see right now.
Taxes aside, that strikes me as a pretty volatile place to be storing your value. Not everybody has the option of USD or CHF but still... it sure does look like a speculative bubble. (For actual "mania" maybe see NFT's instead.)
After all, if it should happen to be the case for the currencies we all use right now, it would be the first time that this experiment, which has been tried often enough throughout history, hasn't ended in that particular way.
We've put all our eggs in that basket, and it's working... so far!
I'm glad there's a hedge against that outcome though. If the worst happened, and the debt balloon triggers ECB, the Fed, and their Asian cousins, to initiate hyperinflationary money printing, we'll all be grateful that there's an alternative to going back to shipping convoys protecting boats loaded up with gold and silver.
I don't even think the aforementioned hyperinflationary spiral is inevitable, or even more likely than not. But I repeat, it is irrational not to consider it a real risk, given history, and that outcome would lead to immeasurable human suffering, which cryptocurrencies cannot prevent, but can at least ameliorate.
That was the case in 2017. Not anymore, things have changed.
the fundamentals of bitcoin are based on what people believe it will be worth and this has changed drastically in mid-2020. Mid 2020 is the year WallStreet "got" bitcoin. this fundamentally changed it's future path. You have all these hedge fund managers and institutions that are willing to pour trillions of dollars into this asset to gain some exposure. And now that, that's begun it's setting off a chain reaction.
You've got to remember, the impetus for all this. It's not that bitcoin is some ideal form of investment. The driver for bitcoin and equity growth is the destruction of an existing asset class: fixed income. That 100 trillion worldwide wealth of fixed income has to go somewhere (not that all of it has to get sold). either it will go into bitcoin or equities or gold. it could go to cash but then it'll get wiped out.
Do speculative bubbles have cycles, has any speculative bubble grown as much, crashed as hard, then grown even larger than bitcoin has multiple times? Bubbles only pop once, and bitcoin has fell as hard as any other bubble I know you are tempted to compare it to, only to retake the ground later.
Speculative, obviously, bubble? You might be crazy for thinking so.
Of course there is. It's called a REIT (Real Estate Investment Trust). If you want even more diversification, you can buy ETFs and mutual funds which hold multiple REITs in multiple market segments. You don't need to physically own a property to get real estate exposure...
> So, what are you going to do put ALL your money in Equities? with no diversification. People desperately need a store of value, they can't just work until their 120 year old.
You can buy bonds specifically indexed to inflation. In the United States, these are referred to as TIPS (Treasury inflation-protected securities). There are plenty of places to get exposure to these on the secondary market, eg: via ETFs.
I find it a bit silly to claim that you're interested in a store of value while holding a highly volatile asset like Bitcoin. By definition, a store of value should have low volatility and basically track inflation. Bitcoin has behaved far more like a speculative investment: yes, it's substantially trended upwards, but it's also been highly volatile. How do you reconcile accepting Bitcoin but rejecting equities, which have historically outpaced inflation by a significant margin?
the appeal of bitcoin is there's a fixed supply as opposed to fiat which can increase exponentially.
I never said reject equities. I want to invest in as many asset classes as possible, including equities, real estate and gold.
The macro picture for equities is looking a little less rosy than it did 30 or 50 years ago. Equities are supposed to follow earnings growths, which is basically just population growth + productivity per capita increases plus dividends. if you break the 3 of those down and compare them to the last 50 years, you'll quickly see, future fundamentals are less rosy: - labor population growth has slowed to 0.5%, from 1.5% - per capita productivity growth is at all time lows - and dividends for s&p500 are now at 1.5%, down from 4.5%.
Whereas the fundamentals for past growth were (4.5+1.5+2=8% real), the future fundamentals now show: (1.5+0.5+1.5=3.5%).
Cryptocurrencies actually bring several benefits and better solutions for the problem of trust in a store-of-value or exchange contract. The world needs Bitcoin now more than ever, we are already living in a multilateral world where US and China exert pressure to force international contracts to be denominated in USD abs RMB.
That is an awful deal when both countries can print unlimited amounts and distribute to their preferences like happened during this pandemic, specially in the US.
What you rail against is a feature not a bug. So many cryptocoin advocates don’t seem to understand how societies work.
The world can do without BTC just fine. Now more than ever. It doesn’t actually solve a problem we face.
Only those who have Bitcoin seem so adamant about it. No coincidence right? Because we know it needs more ‘suckers’ to buy into the ponzi because no value is ever created.
It’s not about suckers or even wealth, it’s about whether control should be given to a greater entity who may save us, or if such a thing is too important to trust to a very human and often flawed agency.
People who are adamant about Bitcoin were already sold on it before they found it. Just as those who adamantly oppose it.
At best, this is equivalent to banning beanie babies (no real negative affects for society, but stupid and a big overreach).
At worst, it's equivalent to banning the internet (sets the country behind decades as the rest of the world adopts the new technology and profits from it).
I'm claiming it's a bad, authoritarian move that isn't in the interest of their constituents, and is not in the spirit of US laws.
As they will tell you a every opportunity they get, they're an "independent" agency.
It's also not the equivalent of banning the Internet; perhaps - similar to banning gambling through the Internet. In the sense that it may be impossible to properly enforce, but can certainly happen and in some world states:
https://www.nodeposit365.com/features/countries-that-have-ba...
Again, none of this is to say cyptocurrencies should or shouldn't be banned; or even that governments should or shouldn't ban things at all, or exist at all etc.
The interesting question about Bitcoin is whether it could ever be robust enough that they couldn't successfully regulate or control it, even if they very much wanted to and most people agreed it would be appropriate for them to do so.
[0] ie: all of them
Print way too much money, run out of resources and room to pump, crash to rock bottom, start a war, then start over again is the historic cycle we are stuck on until we fix this.
When the People decides to do horrible things with money in its various ways, we see hardware manufacturers attempt to lock down hardware to prevent it (nVidia), we see the SEC collectively lose their shit, we see completely inconsistent rules from the IRS how to even handle it, and we see calls for its ban.
Rules for thee, but not for me.
There are all kinds of rules that apply to Wall Street that cryptocurrency seeks (and for the most part, has managed) to avoid. I don’t disagree there is an entirely different system of “justice” for wealthy, white collar, Wall Street criminals but to say Wall Street is without regulation while cryptocurrency is somehow beholden to rules is patently and laughably untrue.
That is whataboutism, to distract from - I believe - valid and substantiated criticism.
I agree that so much is wrong with Wall Street, but that is another discussion. That is a separate issue to me.
The elites put together the artifact that we call the Stock Market. And when the elites play there, they have pretty much a free reign to do as they wish. Sure, there are rules... But as how they're enforced is a whole other matter. And for even the rules that are enforced - if they only have a fine component, they are only meant for the lower classes. Fines for the elites are only a cost of doing business.
And my comments weren't exclusively of bitcoin or other cryptocurrencies. I remember what happened around late February 2021 regarding shorting GME and /r/wallstreetbets . It was yet another case of a hedge fund trying to bankrupt a company in the same way that Toys-R-Us, Sears, and others have had happen to them (by the elite class, no less). And when r/WSB fought against them, corporate elite sycophants like Robinhood and others forbid the very transactions. . When the masses comes together, the elites effectively unionize into a huge bloc, but that didn't save Melvin Capital.
What you call whataboutism is what I call "inherent rigging of the market by the elites against the middle class". It just so happens that the elites didn't get into cryptocurrency until much later, so we see these kinds of one-sided articles.
Whenever I see it, I notice people are often basically trying shut down an honest comparative analysis by another party.
Take a project like Brave for instance which is disrupting the online advertising model: https://brave.com/ (I am completely unaffiliated, just a fan of the project)
Can you look at this project and tell me with a straight face it is bad for the environment and should be banned by government? Because that's basically what Stephen has done when he lumped every crypto together.
It's easy to say ban "X" when that is never going to happen. If he was really interested in a solution he would acknowledge the benefits that people are getting out of Bitcoin and provide alternative solutions.
But meanwhile people will continue to complain about Bitcoin while it's market cap will continue to rise and it will keep on growing in usage.
All major banks are now planning serious efforts in the crypto space with massive investments. This isn't going to go away with magical thinking.
How can anyone respect such person? His job is as unethical as it gets. He is a monster and a woke hypocrite.
They've tied anonymity, opt-in advertisements, and micropayments into one thing. I think it would actually be more difficult to do this without a cryptocurrency.
I no longer think the environmental argument is really plausible here. Clearly crypto mining is emitting using a lot of power and some of that is CO2. But the competition is fiat; backed by fighter jets and nukes; literally. How is it that someone can't steal your money? The bank makes sure. How is it the bank can be sure? The cops protect them. How is it the cops aren't overwhelmed? The military protects them. Law and order stands on the backs of a lot of stuff and CO2. Bitcoin is an example of one little piece of this not needing all that stuff. Instead it's protected by this mining fleet. And if you want to contest ownership there's no one to invade, no one to attack; the best you can do is make a fleet and try to mine. It's a small step in the direction of getting away from all these endless wars and control. A little step away from needing to point guns at eachother to protect our pile of stuff. And this author is saying "point guns at them and make them give it up". That's crazy. Just leave them alone.
(If you need to point guns to save the environment, do that specifically. Carbon tax CO2)
At first glance, I find this an interesting take and it makes me rethink some things. But I don't think I find it very convincing, or at least it's too exaggerated. Fighter jets and nukes primarily protect physical property and institutions, not cash. The primary purpose of banks is to lend, i.e. to allocate resources, not to protect people's cash. And police don't spend much of their time on currency theft - it's much more about order in public space. A side effect of all these things is a stable society in which cash can thrive (backed by the idea that you can pay your taxes in it).
I'm willing to believe that bitcoin would survive certain modes of societal collapse that fiat currency wouldn't. I'm not sure that those modes are particularly likely to happen.
Most of our forms of fraud protection, like identity theft, bank robbery, etc, basically boil down to the government looking at you and going "boy, that's not fair what happened to you. Even though the closest thing we have to a hard store of value's been taken from you, we're just going to literally rewrite the books and set you back to the state where you had your money." It literally treats storage of money like a database restore.
The beauty of that is they can do that without losing anything (besides slightly inflating the system) - with hard currency (whether gold or BTC), they have to actually deplete their reserve of stored value.
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The most extreme example of this historically, was the national debt crisis britain had during the south sea bubble, where most of the country got wrapped up in a giant stock-buying scheme for a company that ended up having no value. This ponzi-scheme crashed, and it briefly looked like something like half the country was going to go bankrupt.
What was amazing about it was that the government realized they had absolute executive power, and just forcibly reset the economy. They just decreed that all of the debts related to it were cancelled, and dictated that individual assets which had been collateral for the debt (like people's houses) had to be returned to them. Many instances of "stores of currency value" got wiped out, but the important thing the government provided was a floor - you might have all the money you earned on south sea speculation deleted, but they guaranteed the average person didn't end up in poverty.
Typically, the concept of "military force" like fighter jets, aircraft carriers, etc in criticism about fiat currency (especially $USD) is about connecting the dots to explain the strength of that currency.
E.g., USA gets Saudi Arabia to sell oil denominated in $USD and in exchange, Saudi Arabia monarchy gets "protection" from invasion by enemies like Iraq. This is one concept of the "petrodollar". This military protection requires fighter jets, etc. This makes $USD valuable to acquire by other foreign countries that want to buy oil. In contrast, Bitcoin doesn't need the expense of the military to decree that it's valuable; people just voluntarily agree to exchange it for value. (E.g. exchange 10000 bitcoins for 2 large pizzas.[1])
The (wasted?) energy for defending the $USD is more diffused among different institutions so it's harder to measure -- and thus harder to criticize. In any case, energy usage also includes the Treasury Dept's Secret Service anti-counterfeiting force running around the world to stop fake currency. The Bureau of Engraving that prints the sheets of paper currency. US Mint stamping coins. All the above require enormous energy expenditure as well. Then you have the energy costs of the Fed Reserve, member banks, etc all doing settlement with each other and the associated security systems to protect from hacking. Bitcoin doesn't need any of that. Does bitcoin use more or less energy than the collective sum of energy to maintain integrity of $USD? I have no idea. What's the best complete accounting of the carbon footprint for $USD?
This is basically it. I don't know how bitcoin advocates expect property rights (in fact, any right) to be upheld in the absence of a coercive state. They have become so removed from reality that they don't see the most obvious things.
This is really not the case anymore in the 21st century, especially with interest rates where they are now.
> the core reason for cryptocurrencies; escaping inflation and control
Maybe in a whitepaper. In the real world, it's mostly about speculation and enabling crime.
> Law and order stands on the backs of a lot of stuff and CO2. Bitcoin is an example of one little piece of this not needing all that stuff.
Ok...? This is nonsensical.
> Instead it's protected by this mining fleet. And if you want to contest ownership there's no one to invade, no one to attack; the best you can do is make a fleet and try to mine.
Or someone can beat you up and make you give them your password. Rubber-hose decryption has a long track record and is trivial for the right actor to implement, this isn't some weird edge-case.
> It's a small step in the direction of getting away from all these endless wars and control.
Citation badly needed; how does cryptocurrency "get away from all these endless wars"?
> Carbon tax CO2
Ok, this is correct and not incoherent.
That’s the same line authoritarian governments used to demonize encrypted communications.
Speculation I could agree with... however,
Crime? Really? Got anything to back this up? The vast majority of crime is performed using cash.
If you live in a country with a highly functional banking system and no kleptocracy, Bitcoin is probably a bit puzzling unless you have family in Cuba. But it’s not puzzling at all for those of us who live somewhere in the middle of the broad spectrum between Switzerland and Somalia, because most places have a little kleptocracy. Argentina is a stable democracy, far from being “a failed state,”† but if you want to send US$500 abroad via non-Bitcoin means it’s basically impossible, and the only broadly available savings vehicle is real estate (“ahorrar en ladrillos”). This of course grossly inflates real-estate prices, with a substantial part of the capital city occupied by empty apartments someone bought “as an investment”. Historically, Argentines have saved by buying dollars, but that’s limited to US$200 a month now, and then only if you have a non-under-the-table job (about a third of total employment is under the table):
https://www.ambito.com/finanzas/dolares/cronologia-del-cepo-...
You can see that in September 02019 when this measure was imposed the price of a dollar was AR$63.50; now it’s AR$139. So whatever savings you had in pesos in 02019 have lost 57% of their value to peso devaluation.
In 02001 a lot of Argentines had saved dollars in their dollar-denominated bank accounts. This did not preserve their savings through the financial crisis that year; the cash-strapped government limited withdrawals to a trickle, then converted dollar deposits to pesos at a one-to-one rate, then released the exchange-rate peg, at which point peso went overnight from being worth US$1 to being worth US$0.25 before settling at about US$0.31 for the next few years. The US did something similar in 01933.
Some might suggest using “alternatives to banks like credit unions where customers—as owners—hold more power,” but Credicoop depositors suffered the same two-thirds confiscation of savings as depositors in for-profit banks. And they pay the same 3% tax on bank transactions including checks. That’s more than a fast Bitcoin transaction fee of US$15 for transactions over US$500 (though see below for data on current transaction fees).
This month there's a new development: every eligible person or company in Argentina (about 12% of the population, and about 20% of the bank-account-having population) gets locked out of their bank accounts until they comply with the government's new "economic census" program. At 5 days from the deadline there were still 700'000 depositors who hadn't complied:
https://www.cronista.com/economia-politica/que-es-el-censo-n... https://archive.fo/Os91S
But we’re not a failed state. There are no gangs of bandits roving the streets in Argentine cities (though there are some pretty bad slums where you’ll get robbed if you wander in without knowing anybody). Courts, free public hospitals, and roads continue to function, though there are more potholes than a year ago. Argentine infant mortality is 10 per 1000 live births, down from almost 20 in the late 01990s and the same as the late 01980s in the US; life expectancy at birth is 77 years, worse than Switzerland’s 84, but the same as China and Hungary, and better than Saudi or Mexico. (Somalia is 54.)
Most of the world is worse off than Argentina, although not necessarily in such a statistically transparent fashion. About one fourth of the people in the world are unbanked, 51% here in Argentina; even advanced countries like Russia, Hungary, and Uruguay have roughly a quarter of the population unbanked:
https://www.gfmag.com/global-data/economic-data/worlds-most-...
And if your family lives in a country like Iran or Venezuela subject to US sanctions, and you live in the US? Good luck sending them an ACH, instant or otherwise!‡ It’s well known that Bitcoin is very popular in Venezuela, which kind of is a failed state, so one of the Venezuelan governments is trying to tax Bitcoin remittances at 15%.
Bitcoin handles a few billion dollars per year in such remittances. This might seem like a trivial amount of money to someone in a rich country, but in poor countries, it’s enough to keep several million people alive.
Even in the US, it’s common for the police to confiscate large amounts of paper currency just because they can (“civil forfeiture”); US bank accounts are probably fine for US$100K but probably somewhat risky for US$10M if the bank thinks you don’t seem like the kind of person who ought to have it. US$10M in US$100 bills fits in a box you can wheel around on a dolly, but Bitcoin is a lot more practical. (And of course US$10M in dollar bills loses about US$200k per year to inflation.)
Transaction fees are high enough that you wouldn’t want to use Bitcoin to pay for a can of Red Bull or even a restaurant dinner. But it’s extremely practical as an alternative to Western Union or US$100 bills or gold, even with the current very high transaction fees. At the moment, the break-even point where the Bitcoin transaction fee is less than the 3.4% spread you’d pay to a jeweler or black-market money changer is around US$3000, because the median Bitcoin transaction fee in the last block was 1.7 millibitcoins, which is US$100:
https://btc.com/0000000000000000000ae1cdc00169e5fb6931d10584...
A month ago it was 0.31 millibitcoins:
https://btc.com/00000000000000000000476ab57eea9be8ada36e2680...
But there were transactions that made it into the last block with a transaction fee of only 0.082 millibitcoins, or US$5:
https://btc.com/81032a76e7ced9678996446ea05c91329d028af2fbfe...
So, Bitcoin doesn’t have to be a cypherpunk utopia to be a big improvement on the status quo ante. For those of you living in stable countries where your worries are things like “instant and extremely low-fee ACHs” and “decentralized utopia”, this may be very confusing, but try to remember that most of the world lives in places with much more pressing concerns, concerns that Bitcoin helps a lot with. And you may live there too, soon—the loyal subjects of Kaiser Wilhelm in 01913 certainly didn’t expect that in 15 years they’d be in the middle of a hyperinflation episode that remains legendary a century later.
____
† We’ve remained democratic since 01983, electing presidents from three different political parties (UCR, PJ, and PRO), and there’s no serious insurgency. It’s the economy and government policy that are ruinously unstable, to a point that seems satirical to anyone accustomed to the US, but is lamentably common worldwide. Rich people sometimes say they don't know of legitimate uses of Bitcoin outside of “failed states”.
‡ Family remittances are specifically exempted from the US sanctions on Iran, but good luck finding a US bank that’s willing and able to take that risk: https://www.wiggin.com/wp-content/uploads/2019/09/26580_advi...
Is this about DNMs? Because last I checked their volume is tiny.
just 2 points:
* using crypto will not make the military stop existing
* switching to Proof Of Stake would solve almost all bitcoin problems
...but bitcoin will not even consider keeping PoW and switching to argon2, since the investment of miners in dedicated hardware is too great
So I think honestly the bitcoin community is stuck. It will not change, not even when there are options that would only improve the technology underneath. Still stuck at less than 10 transactions/sec, I see.
As a tech enthusiast, bitcoin has lost all its value to me. As an investor, the quick value fluctuations and overall value increase are a great thing.
To me, the conclusion is that bitcoin is not anymore about tech (the project is completely static at this point), it's not about anonymity (it never was anonymous), it's not about distributed stuff (dedicated hardware and search for cheaper power are concentrating mining). It's just about quick investment that gets you money. Everything else feels like a lie.
This will also create a very severe problem: it makes it so the means of coin production exist solely in the hands of the coin owners today. Those coin owners won't ever sell you enough coins for you to be a competitive staker. At least with PoW, I can make more coins through extrinsic means -- i.e. better mining hardware.
But you can't change everybody's mind like turn off a switch. Adoption takes time and change people's mind is difficult, but it doesn't make everyone else to be lying.
Meanwhile, Bitcoin has undergone such massive speculative appreciation that everything around it has deflated in comparison. As a result, bitcoin is spectacularly less useful than it would have been. It is no longer useful as a method of transaction and really only a ledger and store of value.
this inflation argument is specious. It just isn't the problem that demanded an unregulated anonymous deflationary currency.
Target inflation is specifically intended to promote consumption. Consumption, particularly in the form of atoms, not bits, is approximately 90% correlated with greenhouse gas emissions, despite all our efforts to roll out renewables.
Setting the "inflation is good" argument alongside an article decrying the climate impact of inflation-resistant currencies is . . . well, it's an interesting take.
Unless and until we are manufacturing/growing and transporting consumptive goods via renewable and sustainable means, promoting inflation is most certainly contrary to climate stability.
How does the price of BTC, which is almost infinitely divisible, affect usage?
I see comments like "We're early, price can still rise, etc". Outside of a store of value any usage / institutional use for transactions wouldn't matter right? The BTC is a proxy for the money / collateral on the sides.
If I buy a hamburger with BTC:
If it is settled in BTC then the burger price would adjust often.
If it is settled in anything else, I just adjust the sat / slice of BTC I use.
Am I missing something? Outside of a store of value.
No one except for the owners of major BTC mining operations.
If a state actor, such as China, was motivated enough to identify, capture and coerce these miners it would be pretty easy to perform a 51% attack given that China accounts for around 65% of all bitcoin mining globally.
Yes, and the elephant in the room with Bitcoin is that it's only going to get easier. Despite the categorization of Bitcoin as non-inflationary, the computational power of the network is currently ~85% subsidized by block rewards that grant miners new coins (i.e., inflation). Once those are diminished through halvings, either transaction costs will have to go up about 7x to match the current incentive, or the network difficulty will come down as miners go offline. If the latter happens, not only will the hash rate go down, there will be a flood of mining hardware on the market as miners exit the game.
Oh, and if “layer two” solutions ever do take off, there will be downward pressure on transaction fees, too.
Ultimately, Bitcoin is backed by node operators and widespread social consensus. Thinking China can just split and control the network is a pretty serious misunderstanding of the power dynamic in this system.. one we all had demonstrated at the conclusion of the block size wars.
This is because people don't consider it likely. Once it happens, people will move to new crypto and will devalue any crypto that is too centrally mined by a single country.
It seems to me you're implying that the colossal environmental damage inherent to a Bitcoin-driven world economy would be offset by the abolition of militaries, police, and banks, but I don't see how you make that jump. $trillions of military spending are used to secure resources and strategic assets and ensure national security, not to defend against bank robberies. A world without militaries or police is unimaginably different from our world in so many more ways than just the medium of exchange.
And if you can't point guns at people to make them give up part of their pile, how will you implement the CO2 tax?
The soldiers lining up your countrymen and shooting them in the head so they fall into a ditch become the new owners of your countrymen's USD and milk caps, but not their Bitcoin or rai stones. This kind of thing (the "pillaging" part of "raping and pillaging") is historically a major incentive for going to war.
> If tanks roll over your capital city and your countrymen are made to kneel in a row, what good is it that you can refuse to give up the private keys?
If your seed phrase is erased from your brain by a bullet, it probably doesn't do you much good. But it will completely change your life if you manage to escape: a refugee with pockets full of gold is observably different from a destitute pauper; a refugee who has memorized two seed phrases is not observably different from a refugee who has memorized only one. That's the difference between starting a new life as a homeless beggar and buying a country estate to retire on.
> the colossal environmental damage inherent to a Bitcoin-driven world economy
You seem to be begging the question here; why should we expect a Bitcoin-driven world economy to produce colossal environmental damage? Mining Bitcoin with fossil-fuel energy is unprofitable, so we should expect Bitcoin to produce a colossal shift to cheaper renewable energy, which may reverse the colossal environmental damage caused by fossil fuels. Or it may not.
I'm extremely confused by this argument that I see again and again. If you want to avoid your assets losing value to inflation that you can buy assets that are resistant to inflation, such as stocks, real estate, land, gold, inflation-adjusted bonds ...
I just don't see that cryptocurrencies are particularly useful for that. What's the deal here?
B)Are stocks and bonds inflation resistant if they are priced in the inflating currency? Not just normal year over year inflation but the type of inflation that happens when you debase a currency. Regardless, I already own these, the first rule of investing is diversification.
C)gold is inflation resistant and tangible so I agree that is the best option if you are truly worried about SHTF but it’s also heavy and more expensive to secure.
Bitcoin, in my opinion, is a hedge on the hegemony of the US dollar which I see weakening going forward. The US dollar is the global reserve currency thanks to the global oil industry. That gives the US a lot of power. But between the switch away from oil, the weakening of the dollar, and the rise of China the US currency dominance looks to be coming to an end. There is no other currency that could act as a global reserve currency except China, which would essentially make China the worlds superpower. That is where Bitcoin comes in: it can be the new global currency instead of China when the US dollar loses its place. Gold and paper only has value because we imagine that they have value, I don’t see how Bitcoin is any more or less imaginary.
Hard assets like real estate, land, gold don't fit that bill, but each of their own tradeoffs. Right now cryptocurrencies are making gains against those hard assets so they are more attractive. An investor may wish to diversify among some or all of these options.
And I have my doubts whether Bitcoin mining is more destructive than gold mining. It's possible (it's a LOT of energy), but gold mining is also pretty nasty.
The reality is, as I have predicted long ago, if bitcoin becomes large portion of worlds financial flow it will just be taken over by financial institutions and perverted for their use.
These guys have much more experience at this (ie subverting financial systems) than you can imagine.
Bitcoin is not going to stop wars and bring law and order.
If bitcoin was supposed to be the safest method to move funds around then why people have higher chance of loosing their bitcoin for various reasons than almost any other kind of equity?
You are just naive.
Also bear in mind that much of that CO2 generated by the force you’re describing, aside from the people guarding the banks directly, is amortized across all the other things that force guards. Even if fiat were replaced by Bitcoin overnight almost all of it would still need to be around.
All of it is CO2. Let me explain.
When you burn energy for bitcoin mining, you don't just use capacity of your local energy producer, you are delaying removal of legacy power producers.
Before a particular power producer (for example burning coal) can be turned off, the capacity must be created from other sources (for example renewable). If you decide to start burning huge amount of energy, before those CO2 guzzlers can be turned off we will now have to build even more capacity -- exactly the amount you are burning to mine bitcoin, but it also means that while this is happening the CO2 is still being emitted.
This assumes that introduction of new renewable sources of energy is independent from bitcoin mining. As far as I know this is true.
Or in other words: if introduction of renewable sources of energy is independent of bitcoin mining, the energy production from these sources is the same regardless of whether the bitcoin mining exists or not. Logically what this means that what is changing is energy production from non-renewable sources and it could be explained that they are working at either higher capacity or their removal is delayed.
Increased demand for energy brings more energy supply into the market. New energy is mostly renewable energy.
Old plants are shut down when they are unprofitable. That can be because they're inherently too expensive to run, because the carbon inputs are being taxed too heavily (I think this is a good one), or because the governing body controlling the physical location of the power plant has declared them illegal (since you can't profitably sell something you're forbidden from selling).
I'm not making the "Bitcoin is good because it drives renewable energy investment" argument, which is too handwavey for my taste. I'm saying your argument is incoherent.
Reducing carbon emissions from power plants is mainly about pricing the externality they generate. Cryptocurrencies, in fact, any application for that generated power, neither harm nor help achieve that outcome. It's irrelevant special pleading, and it's a distraction from this urgent goal.
It is not. There are marooned renewable energy sources (dams) that have had limited usage (the dams being mainly for flood control) until miners came along. Building high capacity transmission lines to them wasn’t economical.
I don't like this meme. Fiat currency is backed by an entire democracy that includes a military, but the key piece here isn't the military, it's the democracy. Despite all the problems in the US and our economic system, the folks in charge of the currency generally have the right mandate (stable employment and stable prices).
Otherwise I can for example find the top 100 largest Bitcoin miners and walk up to their door with guns and demand all their Bitcoins or I'll blow up the mines.
And frankly, it takes energy to mine, so if crypto became integral to national political and economic interests, there is not going to be any net change in energy politics. You are not unlinking the petroleum and currency in those petrodollars, you're replacing it with something that directly links to two inescapably.
Nothing against desire to solve world problems but Bitcoin (edit: or any other example of a cryptocurrency) seems to be creating more problems than it purports to solve.
The author calls cryptocurrencies a "predatory investment scheme". In practice, is this not correct. Is it not the lack of "law and order" with respect to cryptocurrencies that allows for this to occur. Please explain. Show me how cryptocurrency is solving world problems. Evidence, not speculation.
When I was young people said that "money" itself was the root of all evil. Today, people online try to convince us that "fiat currency" is the problem. It does not feel like the same idealism.
The original Satoshi paper made his idea sound like it would be possible to implement as peer-to-peer^1 without third parties. All the implementations I have seen to date involve third parties. Doubtful a coincidence that the third parties are all profiting from that involvement.
1. The term now has multiple meanings. Here it is used in the original, Napster sense. Peer-to-peer networking, not, e.g., peer-to-peer financial. Edit: To clarify further what I mean by peer-to-peer, can person A and B, assuming each knows how to reach the other through the internet (address:port), conduct a transaction without involvement of a third party. For example, a requirement for person A or B to "sign up for an account" with anyone else in order to start using a cryptocurrency would be "involvement of a third party". If persons A or B needed to have a third party "mine" the currency before transactions between A and B could occur, this would also be "involvement of a third party".
Bitcoin sort of stopped being developed years ago and pretty much everything shifted over to Ethereum where the ethos of Bitcoin were further developed and most of the things people talked about in 2010-2013 were actually developed. For example, Uniswap is completely peer-to-peer and decentralized. Most of DeFi is. If you are at all interested in what is happening in this space it's worth taking a look at what exists and what is being developed.
Bitcoin is an energy hog, and not very exciting... but don't throw the baby out with the bathwater cause there's TON of exciting research on blockchain that's way better. I think long-term bitcoin may fall out of popularity, esp as all the new things hit w/ ethereum, cardano, and their competitors and all the sub-chains on them and level-2 making it so transactions aren't nearly as costly.
Not according to the Bitcoin genesis block, without which Ethereum never would’ve existed.
Or with all the mining concentrated in China, you can, as the Chinese government, take state ownership of all those miners and don't have to spend a jet or nuke to do it.
Who do you think is keeping the infrastructure (electricity, internet, companies that produce equipment,..) on which bitcoin runs safe?
Cryptocurrency is very niche tech at best, that most people will have zero use for - but it should nonetheless be available. The OP article does not account for this at all, and is thus extremely misguided.
Probably the article ignores it but not the governments or corporations who suddenly are worried about the environment.
You aren't escaping inflation. You're escaping a savings glut which is the mortal enemy of inflation.
Work towards ending racism; support young girls, women, and LGBTQ+ folks around the world; support environmental protections and projects that reduce food waste and increase water security; support fiscal policies that reduce wealth inequality; and topple authoritarian dictators and fascists.
In this techno-libertarian utopia when someone defrauds you and steals your crypto-coins your only recourse is to buy the justice you can afford. Exchanges have already done this to folks who've been defrauded and sought recourse.
Regulation and protections are in place to protect consumers just as much as they are there to limit damage from bad actors.
I don't buy this notion that the world would be better off without a central banking system.
This makes the violence worse every time the Americans stumble in and think they know how to fix a country by instilling new leadership.
Bitcoin (like gold since the gold standard ended) is just a "check" on Fiat currencies and can act as insulation from central banks that issue too much money too quickly.
Fiats will continue to exist alongside bitcoin/cryptos, they'll just eventually have to "compete" a bit more (i.e., not be printed so readily by gov'ts) or else they'll become significantly less relevant.
It has been small enough that a single Billionaire could bail it out when it got into trouble.
Once you hit the point where it'd take > $10B's to bail out Bitcoin it is going to unwind eventually in a bank run/panic.
This time is not different, and those who fail to understand the past are doomed to repeat it.
And its driven at this point by greed and "number go up".
And the reason why people like it is that they put $10 USD fiat in one day and draw out $100 USD fiat some time down the road, and its that ability to extract fiat from it that it is tied to. It isn't any kind of alternative. Everyone watches how much it climbs in USD denominated terms. Nobody remembers "1 BTC = 1 BTC" even as a joke any more.
Bitcoin is also extremely easy for the vast majority of the population to quit. You don't need it to buy groceries, you don't need it to pay your mortgage or your taxes. When the supply of $USD in the system goes to zero and the price collapses from a large enough height, there will not be any floor to it.
Lots of good reasons to do so, if only to prevent the democratic power over market regulation becoming "much less relevant".
https://medium.com/@simon.sarris/the-guns-of-bitcoin-1f77930...
Most of my friends can't afford investment in the market. So when the stock market goes up that's them losing value on their dollar and wages.
Inflation is fine for those who are part of the asset class.
"Fiat currency" isn't backed by violence. It's backed by production in goods and/or services. You can see this easily play out in command-control economies. The resource rich, like Venezuela back in the day, was a prosperous country for a few years. Gov controlled oil meant that's how they made money. When the price of a barrel of oil is high, they just pump that oil, increasing the need of the international community to purchase their currency, bringing up the value. When their oil wasn't needed due to diversification of supply and the drop in price, no one "wants" said currency since the country had nothing anyone wanted. Thus, the value goes down and you have hyperinflation due to high economic specialization. All the military equipment they bought and posturing, which led to a hilarious wannabe propaganda-scare video, during the good years didn't amount to shit. You really think if Bitcoin magically became the almighty currency, war would disappear? I'm serious when I say this, quit watching Sesame Street and other children's shows. Be an adult. Read a history book. No good change will come from praying to unicorns.
On average, less than 1% of a country's population is active law enforcement in the western world. It's just a hair over 1% in the US according to Bureau of Labor numbers and that includes all the admin/support/not-arresting LE as well. Y'all need to quit looking underneath your beds and checking your closest for the blue boogey man. They do a whole hell of a lot more than just "protect the banks". That's what G4S does with their tactical muffin tops. At that, here's a good example of the difference between what a police officer can do and what a sheriff deputy can do: https://www.npr.org/sections/thetwo-way/2011/06/06/137002727... This happens more often than you think throughout the country. We don't hear about it because banks and other financial institutions swiftly put gag clauses in settlements. Banks do a fantastic job of teaching you how you can't use the justice system in your favor when in reality, you have more power than you imagine. Stop watching them youtube videos and go to the local library to learn more about local laws and procedures.
Contest ownership... yea, still a problem with Bitcoin. Just look up "Bitcoin stolen" in your search engine of choice and there's article, after article, after article of theft and a cold day in hell's chance of retrieving it. There's nothing special there on that front. It's a preferred means of trade for the black market for a good reason.
On one level, I don't care about the crypto ponzi scheme being played out. Let it happen. Madoff tricked a whole hell of a lot of people for around 20 years. Good. What ruffles my feathers, pushing a political agenda because you want to be rich in monopoly money, then use it to buy ice cream. Then throwing a fit because the cashier won't accept it. Yea, the amount of excess CO2 created by crypto mining is a valid and big problem. It's another industrial sized country on the world grid because of it. You act like this is some magic cure for "the poors", to help distribute wealth and other fantasies. Because there's a magic mechanism for a rich cat in USD to not do the same in BTC? The same way they garnered wealth in USD, GBP, JPY or EUR will do the same thing in any other new currency, making the point to the "revolution" null and void. Oh wait, Musk already started that. What's that, they found a good way for a loophole in being able to issue refunds in USD or BTC according to how they see fit depending which is cheaper? Yea, that sweet sweet "for the people" currency not going into the hands of the, what is he now, 3rd richest? 2nd richest? But I guess that makes him a fellow poor too since he's not 1st. Great step forward for that great reset. Let me tell ya'.
Don't get me wrong, crypto's price is a ponzi scheme build on fomo. Scarcity shouldn't be the only thing required to create value. But here we all are proving time and time again that psychology at scale _can_ at times be more powerful then economic theory.
Also: > With a blanket ban on cryptocurrency, the economic engine of the American system would do what it does best, a new wave of investment from the private sector would be redirected back into productive enterprises and new ventures that could strengthen US markets and the Dollar instead of undermining it.
American banking infrastructure was antiquated and rotting in its own success before bitcoin was a thing. Paying money with a phone is still considered 'innovation' in the US as far as I've heard, lagging the EU, India, and China by a decade.
> Halt all wire transfers of dollars in and out of cryptocurrency exchanges. > Halt foreign entities trading in dollar cash-equivalent crypto assets. > Add Chinese and other foreign cryptocurrency exchanges hiding in tax-havens to sanctioned entities lists. > Regulate the sale of any existing cryptocurrency assets to US persons by classifying them as securities investment contracts moving forward.
I'm not sure what the Dollar is going to be in 20 years, but if the US did this, historians would look back at this action starting a new global divide that ends in war and/or the collapse of the US dollar.
Which brings up another point that gets glossed over but should be stated at least once in this context: The status of USD as a reserve currency for every bank around the world is what allows America to print so much money. It is a national security issue and the US will use force if the position is at risk.
And in the smoldering ruins of some unnamed city, someone can trade his bitcoins to buy a can of pre-war chicken and a pack of cigarettes because bitcoin escaped inflation.
That seems like a non-sequitur. Proof of work crypto generates an astonishing large amount of CO2 to little effect. Some other alternatives are bad in other ways, yes, but that doesn't make the CO2 go away.
I live in a small, peaceful, stable country with a very small military and very safe banks. If you're really trying to make some sort of argument that fiat currencies can't exist without a significant CO2 expenditure to try and enforce neoliberal orthodoxy at the barrel of a gun then that is very obviously untrue.
> Instead it's protected by this mining fleet. And if you want to contest ownership there's no one to invade
So your argument is that nobody will steal my fiat currency from my electronic wallet (aka, bank account) because of the police, but nobody will steal my crypto currency from my electronic wallet because of their respect for pure math; no need for law and order?
Respectfully, you might want to try and develop that argument a little further.
> It's a small step in the direction of getting away from all these endless wars and control.
Key driver of most wars is resources, especially energy, not money. I'm confident that we are not collectively dumb enough as a species to end up in a state where we're fighting wars to obtain energy resources to fuel blockchain mining, but that is a thing that can theoretically happen.
I think you're falling prey to the is/ought distinction. It would be nice if crypto currencies could somehow create world peace, resolve the contradictions of late stage capitalism, cure cancer, <fill in your dream here>. But they obviously can't, and I would suggest pretending otherwise is pointless.
U.S. dollars are backed by violence. Bitcoin is backed by math.
I don't know what you want backing your money in the world you hope to leave for future generations, but I know what I want backing mine.
The author positioned himself as the sole source of truth. Then, as a judge, deemed all cryptocurrencies and their operators as an evil. Then, wants to use the full powers of the United States (judicial, police, regulators, diplomatic) to enforce his ruling.
It's not even clear why this author should have any authority? He doesn't have any projects, ran any companies (or any mentions of that) or did any significant academic work. His whole blog is a crypto rage: https://www.stephendiehl.com/blog.html
Search alittle deeper and you see why he hates crypto so much.
He's CTO of Adjoint:
"Adjoint Treasury is a real-time payments and settlement platform for corporate treasury"
A.K.A, Crypto is stealing his thunder.
Indeed, and that makes it quite hard to to pay any attention to what he has to say or read to the end of the article.
There are easier ways around the "energy use dilemma": carbon tax. If your energy used for mining comes from renewable resources, then there is no issue.
This isn't an academic exercise, this is an issue that renewables operators are dealing with right now. Hydro-Quebec is the state-owned corporation which handles all generation, transmission, and distribution in the province of Quebec. As the name implies, the vast majority of Quebec's generating capacity comes from large hydroelectric facilities located in the north. The company sells hydropower to the northeastern United States during times of day when demand is high. This is a mutually beneficial arrangement: the profits from the sale of hydropower in peak periods allows Hydro-Quebec to subsidize its own ratepayers who enjoy the lowest electricity rates in North America, and the Northeast US in turn doesn't have to build as many peaking power plants which are typically gas-fired facilities that produce CO2.
However, the low cost of electricity in Quebec has made it extremely popular with crypto miners, to the point where Hydro-Quebec has been forced to place miners into a 300 MW allocation block [1]. Miners who didn't manage to get into the allocation block are charged a rate that is more than double the normal rate in order to try and disincentivize their activities.
If the crypto miners weren't in Quebec, this excess energy would be sold to the northeastern US where it would displace the capacity of some CO2-generating peaker plants. But because it's being diverted to crypto mining, the energy doesn't get used for that.
Don't know if that's the case with the author, but from what I've been seeing in social networks and such, it looks like some people have decided crypto is an alt-right thing (not true) and we should "cancel" it. Ironic, because there's nothing more conservative that banning crypto and sticking to fiat.
Bitcoin doesn’t create value at al in any sense.
And HF trading is a different beast, you won’t hear me defending them. But pointing at others is just whataboutism, to distract from unpleasant facts.
Boiling the oceans to make a few people rich(er) is not a valid reason to exist.
Money drives people to do insane things. Governments only care about the environment insofar as to stay in power and to keep their citizens from interrupting their gravy train.
Look at the numerous examples politicians using “green” initiatives to line their own pockets.
Attacking cryptocurrency is in their best interest because they can’t control it. Full stop.
They could, for example, pass laws that mandate backdoors, which would mean any cryptocurrency developers in the country would be thrown in jail if they didn't comply. They could also ban operating P2P nodes in the cryptocurrency's network. Due to the nature of P2P it isn't possible to hide the fact that you're running a node, unless you also close the entire network off to new users. (Case study: BitTorrent filesharing lawsuits) The government would just have to run their own nodes and connect to other users to collect information on who needs to be arrested.
I don't think people on HackerNews entirely appreciate how much their ability to do cool fun hacker stuff is a function of living in an advanced democracy where there are significant limitations on the power of government upon which the government has agreed to remain, people's innocence is presumed in criminal proceedings, and private actors trying to curtail said freedoms are looked upon with skepticism, if not outright legal condemnation.
If the people care about the environment and will vote people out of office who don't take care of the environment, that seems like a system that works. If a small number people are allowed to destroy the environment, that takes away the people's right to a livable planet.
>>Look at the numerous examples politicians using “green” initiatives to line their own pockets.
One can make money and help the environment it doesn't have to be one or the other
Hundreds of thousands of computer servers running almost 24/7, hundreds of thousands of people driving to work, burning energy on their development machines. Hundreds of billions of dollars spent on making products (and wasting energy) to support this industry, which then must be transported, wasting more energy.
We must ban this scourge: entertainment!
This entertainment industry (TV shows, movies, podcasts, video games, etc. used primarily for entertainment) adds nothing and is unproductive.
/s
But not totally sarcasm. Maybe bitcoin isn't truly solving all the problems we hoped it could. Perhaps those problems will be solved by a better version, maybe Ethereum or some other cryptocurrency.
Let's not kid ourselves into thinking that energy isn't wasted in other parts of the economy. What's a "legitimate" use of energy? I think most Americans, generally protective of individual rights, would say let the market decide.
If Americans want to pay for TV shows, let the entertainment industry burn energy to give it to them.
If Americans want to buy/sell/transfer Bitcoin, whether to watch their "investment" go up and down in value, or for some other reason, let them.
Bitcoin mining currently uses 10x the amount of power used by Google and 50% of what ALL DATACENTERS IN THE WORLD are using.
https://www.bbc.com/news/science-environment-56215787
This also means that our efforts to replace non-renewable sources of energy are being wasted as we are just adding capacity to bitcoin mining network. When you are paying your taxes and subsidize "green" energy know that part of your subsidy just goes to shit.
Let's also look at something else: the US department of defense:
"...The U.S. military also produced more greenhouse gases than Morocco, Peru, Hungary, Finland, New Zealand and Norway. According to the research from Brown University, the Pentagon would be the world's 55th largest CO2 emitter if it was a country..." [0]
I think reasonable people could disagree as to whether or not all those emissions were worth it. The point is that many people think the U.S. military is by and large a complete waste of resources analogous to the waste of the Bitcoin network.
If we're going to condemn Bitcoin, let's condemn all the other resource and energy wastes out there.
[0]https://www.forbes.com/sites/niallmccarthy/2019/06/13/report...
That’s not even mentioning Proof of Stake, which will essentially solve all of these problems.
1. False equivalence, since the environmental concern is about the generation of cryptocurrency not its social implications vs a crypto-currency-free world.
2. You've expanded this question so much that it is not possible to answer. The political structure that keeps money is use is basically the political structure of almost all world states, and capitalist/money-based economies. So the cost is about 100% of all energy expenditure. What's the alternative? You would need to imagine an anti-capitalist revolution creating a non-exchange-based economy (so not USSR-style either). I happen to think that's a swell idea, but you realize there is absolutely no way you can estimate how much less energy humanity would use up in such a different reality than today's.
I don’t see that ever happening. I don’t think governments can (or should!) give up that much control over the financial system.
And this argument actually reaches back to prove itself: since crypto will always be used for speculation and not fill a useful role in transactions, all the energy used is effectively wasted!
I didn't notice the difference in rates until just now, but California's cheapest off-peak rate of 14 cents per kWh is almost twice what I pay for electricity in Washington (8 cents per kWh). It currently costs me $6 to fully charge my car. If I had to pay California rates, charging would cost $11-38 depending on the time of day.
1. https://www.pge.com/en_US/residential/rate-plans/rate-plan-o...
2. https://www.forbes.com/sites/bradtempleton/2019/11/19/pge-ra...
Personally, I don't see much of a reason for Electricity neutrality. It's not like the power companies could use their discretion to disadvantage their competition. Nor does the contention for power lead to large barriers for entry.
And more pragmatically, banning crypto would be less politically suicidal than implementing a carbon tax
The environmental impact should be regulated, but other than that, governments should just stay out of it and let the cryptocurrency landscape be the wild frontier its proponents want it to be. May the best obfuscated smart contract code win, until no one wants to play anymore.
I suspect that a politician who thinks the crypto market is going to crash will wait for that to happen before implementing a ban. At that point you will not need to pay compensation and there will be political support for it.
In the meantime the government's best option is probably tight regulation and prosecution of any outright fraudulent operations.
It would raise some money you could use to mitigate environmental impact, but I'm not sure that a reasonable tax level would actually disuade anyone from putting their money in so less helpful from that point of view.
Note that the author of the post is based in London, UK: https://www.stephendiehl.com/
No, some people think scarcity and trustlessness make it a good store of value. This is not even addressed in the article.
> Cryptocurrencies disproportionately victimize vulnerable people and those in marginalized communities without access to traditional investments or financial advisory.
I don't see any good evidence for this, the goal of many DeFi projects is to increase access.
Overall an unfair and needlessly inflammatory evaluation. The idea that all cryptocurrency is a scam that "masses of dumb money investors" buy into is overbearingly pretentious, and a non-starter for legitimate criticism IMO.
Also, if you're going to bring ecology into it, then instead of advocating for the ban of cryptocurrencies, it makes much more sense to put your energy into banning the economic system which systematically incentivizes externalities (of which carbon pollution is one).
Granted it's a small sample set, but this rings _very_ true with respect to many people I "know" (acquaintances I'm connected to on various social media platforms) who've jumped onto the "crypto" bandwagon in recent times.
* Implement a universal carbon tax. Make CO2-based mining unprofitable.
* Require KYC/AML checks and tax reporting from all exchanges, and prosecute/block those that don't.
Wholesale banning cryptocurrency is a fool's errand without a massive restriction on general-purpose computing and Internet usage. So, let's attack the problems they create instead, since we already have the tools and legal precedent for doing so.
Fiats will continue to exist alongside bitcoin/cryptos, they'll just eventually have to "compete" a bit more (i.e., not be printed so readily by gov'ts) or else they'll become significantly less relevant.
Am I the only one who thinks this is a 2 way street and our governments are actively doing the same to our adversaries?
Or the other case could be that they feel they've lost out on investment, due to the fact that openness and decentralization is leading the charge in blockchain/cryptocurrency technologies, while he's trying to come up with a privatized solution... and why accept private when there's better and more established open alternatives already leaving their marks, no pun intended.
Instead of banning Bitcoin completely, just make it illegal for individuals to run cryptocurrency nodes or perform mining operations. In it's place, each government can then run their own cluster of nodes for the general public to use as a cryptocurrency.
This way, the general population has access to cryptocurrency, but government can monitor and control all of the transactions that take place to ensure that no illegal activity arises. In addition, governments could also control the issuance of private and public keys, which means that funds can be easily confiscated in the event of fraudulent behaviour.
Of course, the main issue with this setup is that the nodes will be centralized, and therefore are at a greater risk of physical attack. This can be solved through physical force, which will consume energy in itself, but will be far more efficient than using a globally distributed proof-of-work mechanism for protecting the transaction history of the currency.
Furthermore, in the event that a nation state scale attack takes place to try and undermine the transaction history of the government-run nodes, the force required to protect these ledgers can be scaled up to match it (e.g. war). However, I believe this to be an unlikely scenario, and so the overall cost involved with protecting the cryptocurrency would be less than what is currently consumed by proof-of-work.
In short; instead of using electrical energy to protect the integrity of the currency, we use physical force instead (which will be far more energy-efficient).
To me, this quite clearly solves the energy consumption, without having to perform an outright ban on the technology. This way, everyone benefits.
I don't mean any disrespect when I say this, but when I read comments like, after the initial shock subsides, there is always a realization that we all have such widely varying and disconnected worldviews that I simply don't understand how mass governance could every work without eventually succumbing to violent conflict... Not trying to make any comment on the underlying merit of either worldview, just that it's like we live in completely different realities... It's very depressing, to be completely honest.
There are a large complicated set of reasons why it isn't going to happen but the proof of this is that many governments have many reasons theyd love to ban crypto but they don't because in the end they perceive it to be either an economic or political loss and can't make it happen.
Anyway, this isn't keeping me up at night.
This is either false or unknowable, there are plenty of reasons why bitcoin speculation is happening, and it's because it has been a very long time since there has been a new desirable commodity.
>The largest elephant in the room is the environmental damage done by bitcoin mining.
This is very true, i don't think it's the largest elephant though.
>Cryptocurrencies disproportionately victimize vulnerable people and those in marginalized communities without access to traditional investments or financial advisory.
This is nonsense. Desperately marginalized communities have no access to safe economic vehicles, which bitcoin does, theoretically, provide.
>Cryptocurrency is, by design, the single greatest enabling factor in the rise of exponential explosion in ransomware extortion attacks. A network which is designed to evade sanctions...
This i believe is the best argument for banning it. There is no better tool for extortion in the world than an anonymous, unrestricted asset. We should expect to see a dramatic rise in kidnappings worldwide in the future as bitcoin becomes more accepted.
The author leaves out what I believe is the main reason I've stayed away from bitcoin, and it's another reason to ban it.
It's easy to steal.
It only takes one 0-day wipe you out, irreversibly, and completely. My bank could get hacked, but we, as a society, can just decide that I still have the assets I had before, the paper stocks and coupons are in a drawer somewhere. The loan contracts are in a filing cabinet (or they should be). I get my bank statements every month. There's some cash and some gold in a vault. A breach is, at least theoretically, reversible. That's not true with bitcoin.
>It only takes one 0-day wipe you out, irreversibly, and completely. My bank could get hacked, but we, as a society, can just decide that I still have the assets I had before, the paper stocks and coupons are in a drawer somewhere. The loan contracts are in a filing cabinet (or they should be). I get my bank statements every month. There's some cash and some gold in a vault. A breach is, at least theoretically, reversible. That's not true with bitcoin.
Isn't this more just an argument that cryptocurrency's are just riskier because unlike tradition financial institutions/investments they are unregulated and lack protections such as insurance etc. Maybe I am just getting caught up in semantics but a 0-day wiping out the value of Bitcoin/Crypto with no vehicle in place to restore that value to its owners if something were to happen just makes it extremely risky/highly speculative investment not necessarily easy to steal
Alright well that means it could also be true...
I think this misunderstands how bitcoin holders become wealthy. It works a bit like Van Gogh paintings - some guy produced something kind of cool but not worth much money at the start and then the reputation of the paintings increased and the price got bid up and now you'd say someone owning a $100m Van Gogh is wealthy. Similar with bitcoin - not worth much at the start, kinda cool, now worth a lot, you'd say someone with $100m in bitcoin was wealthy. Against that it needs 'greater fool' type buyers to buy your painting or coins but Van Goghs have held up well and I doubt in a century people will have forgotten cryptocurrencies or will see nothing special about having the original one.
"Halt all wire transfers of dollars in and out of cryptocurrency exchanges.
Halt foreign entities trading in dollar cash-equivalent crypto assets.
Add Chinese and other foreign cryptocurrency exchanges hiding in tax-havens to sanctioned entities lists.
Regulate the sale of any existing cryptocurrency assets to US persons by classifying them as securities investment contracts moving forward."
IMHO the problem is not cryptocoins themselves as is suggested here, but just proof of work.
A total ban would barely work anyway, as the system is completely decentralized, and to fully ban it we would need basically all countries to agree on the ban.
It’s quickly going to become impossible for governments to control cryptocurrency, unless they shut down the Internet. With ring signatures, stealth addresses, and shielded amounts, there’s no telling who has what cryptocurrency, who they paid, or how much was paid. Proof of stake and federated voting consensus are coming to privacy coins, so there’s no mining farms to shut down.
After this blanket ban, let's just move to a one-party democratic system too, like North Korea.
Unfortunately the price indicates a common belief that politicians’ ideas for the economy are worse.
So here we are...
That's wholly unacceptable.
True of: - Stocks - Housing - Commodities (precious or otherwise)
A few points: There are some interesting and somewhat out there justifications for the energy use, and there are a couple very simple ones: 1. Bitcoin emits less carbon than gold mining, and does the job of gold (as a store of value) to a much higher standard. 2. Proof of Stake could replace proof of work, eliminating any carbon emissions worth mentioning.
Bitcoin offers sound, secure, reliable money / store of value. The author elects not to even directly mention this because there is no good argument or replacement for this. If you say gold, read above.
The author believes he can just straw man serious bitcoiners (not the gamblers) into idealistic yet flawed cultists or something, when in reality the technology has no replacement, is greener than its competitor, and offers to the world, the service, and asset, of sound money.
The article appears in such bad faith (I’m willing to hear criticisms of crypto currencies, but only from those who demonstrate their ability to play with its basic mission statement and functionality; this article is pop-sci parroting) that I almost believe this is some kind of paid hit piece.
Should be:
>> no good argument against, or replacement for this
He's basically raising the "evil that is crypto" to levels that would make you believe that a large number people's lives are being actively ruined by Bitcoin.
I wonder how someone can get so angry with something that abstract ... I wouldn't be surprised if his agenda wasn't motivated by something less than noble.
>Halt foreign entities trading in dollar cash-equivalent crypto assets.
>Add Chinese and other foreign cryptocurrency exchanges hiding in tax-havens to sanctioned entities lists.
Lunacy! The author is effectively arguing for American global economic dominion! These are the exact steps you would want to take to ensure international isolation.
Isn’t the real aspirational promise of cryptocurrency really just a container that will retain the purchasing power of your savings with low friction?
The article supports that with a paywalled link to Financial Times. Here's the full-text archive: https://archive.is/yMsep
If you read it, you'll see that it says no such thing, and in fact mentions a number of major ICO projects that delivered. Their first example is Filecoin, whose purpose was to create an economy of peer-to-peer data storage. It's live now with over an exabyte of capacity.
Various smaller ICO projects not mentioned in the article have also delivered. Two I'm familiar with: Funfair, which does regulated gambling on Ethereum, and Monolith, which puts tokens on VISA cards for spending, without having to take custody of them.
When has the United States not been this way? The first explorers came over here hoping to find a trove of far East spices or gold, and make a killing. The Spanish did make a killing on gold for quite some years, even as they destroyed entire civilizations. Some American pioneers just wanted a piece of land on which to raise a family and support themselves away from tyranny. But many others were looking for gold or other quick riches. The history of our stock exchanges has been one pump-and-dump after another.
Diehl's other criticism, that crypto mining is environmentally destructive, has some merit, but is that a reason to ban an entire industry? What about people fortunate enough to be near hydroelectric plants, or people with solar electric or nuclear? Building extra coal-fired plants in China to power crypto operations does sound bad, but even China is moving away from polluting sources; they have a desperate need to clean up their environment and they are working hard on nuclear and solar alternatives, not to mention that they are developing cheap, affordable electric vehicles.
Every currency system is built on trust. The U.S. dollar, which is the world's reference currency, is increasingly shaky; last year the Treasury created more dollars in a single year than in all years previously. A lot of people are very worried that a currency collapse from excessive debt and a weak economy is coming in the not-too-distant future.
Crypto currency is an interesting and powerful new technology that may actually save us from monetary collapse; I wouldn't dismiss it as a dangerous boondoggle just yet.
At any rate, I don't see how Mr. Diehl's prescription for banning crypto could possibly be implemented; private companies have the right to create products for sale or trade as long as they are not dangerous. Even tobacco and guns, both known to potentially kill people, are still huge profitable industries albeit highly regulated.
Here's some use cases I've used in the last month:
I secured an instant loan based off collateral with faxing or calling my bank. Doing this at schwabb took weeks.
Another one, "thegraph" a distributed super computer to make public blockchain data indexed and queryable.
Another, Bitclout, a social network build on the blockchain.
Now the data of my social network is trustless distributed, verified and forkable.
I can build a business on top of it and I don't have to worry about getting the firehouse shut down like I did with Twitter.
Bitcoin was horse that drove the consensus making technical progress of distributed computing. The coins are less interesting than the distributed computing revolution.
IMO, currency is a belief system backed by Joules.
That is a very insightful definition ...
A blanket ban is a good idea. This cancer deserves no place in the economy.
As if that was different for the stock market or the rest of the economy... The entire economy is propped up by the money printers at this stage. Bitcoin and crypto are just better at getting hold of that freshly printed money for obvious reasons. If the government bans crypto, they will have to ban the stock market too.
On the one hand, yes, I'm sad that I didn't buy $100 of bitcoin ten years ago and hold until now. Who wouldn't be? But on the other hand, how does this even bear resemblance to an argument?
> "The political case for a ban on fossil fuels"
So sad that you didn't buy some Exxon huh?
> "The political case for a ban on tobacco"
So sad that you didn't buy some Philip Morris huh?
> "The political case for a ban on energy trading"
So sad that you didn't buy some Enron huh?
"So sad that you didn't buy some bitcoin huh?" is like the opposite of the sour grapes fable: "I was able to reach the grapes so they must be sweet".
Bitcoin is objective, hard, honest money. Many view that as a very good thing, myself included.
Governments steal inordinate amounts of energy from the populace with their money printing.
The Pharaohs built the pyramids using slave labor. This was a monstrous, immoral waste of human energy.
Modern governments accomplish the same thing with money printing.
That is the system Stephen Diehl supports.
Yes, definitely makes sense when the main usage of it is money laundering and mindless speculation